[extropy-chat] Virtual companies

[Gregory L. Cartwright]

Dan,

    I've been thinking about your post for the last couple of days.

    I am not quite sure why you would deem this set up as a "virtual
company."  It's a company being run out of your house or an executive suite,
much (if not all) of it being done by yourself.  Nonetheless,  the company
exists, is registered as a corporation with some US state, presumably has an
EIN, pays taxes, has at least one employee, and is providing some sort of
service or product.

    I am an attorney and one of the major areas of my practice is helping
people with start ups.  Over the years, I've notice a trend especially among
computer programmer types (if they are, in fact, a "type").  They seem to
have more than the usual dose of DIY in them than the other entrepeneurs I
deal with.  I suspect that this is because so many have learned their skills
more or less on their own.  Most all them (even those with degrees in CS or
a related field) learned most everything from a combination of hacking,
reading manuals, dissecting someone else's code or from other programmers.
The danger, of course, is that they then try to apply this same DIY
philosphy to their businesses, often with bad outcomes.

    I have seem many, many victims of this mentality.  Many believe that
contracts for a "similar"  project can be cribbed from the internet, and all
they have to do is "fill in the blanks."  Or they can incorporate themselves
on line.  Seldom, if ever, are the contracts properly drafted, often times
with terrible results -- creating liabilities where none should have existed
or giving away rights they should not have.  The same goes with the
incorporation.  Much of what is done is not done correctly.  Of course, not
following corporate formalities properly is one of the things we look at
when trying to pierce the corporate veil (meaning ignoring the corporation
and going after the shareholder(s) to satisfy a judgment.) In other words,
by not doing the incorporaiton correctly, you leave yourself open to
potentially significant liabilites that otherwise could have been avoided.
Just as I counsel my business clients to think about insurance, getting a
CPA, getting a good IP contact, and a banking contact, I also suggest I
handle more, rather than less.  A cynical person will see this is being in
my best interest, and it is. It is also in my clients' best interest as
well.

    Your post in general though is taken for the broader truth I suspect it
was meant to convey:  corporations are a type of person (and pretty cool),
and the transaction costs to starting and running a business HAVE been
greatly reduced.  No argument there.

    Just my two cents worth.

Greg





----- Original Message ----- 
From: "Dan Clemmensen" <dgc at cox.net>
To: "ExI chat list" <extropy-chat at lists.extropy.org>
Sent: Friday, February 11, 2005 6:47 PM
Subject: [extropy-chat] Virtual companies


> You can very nearly exist on completely on the Internet.
>
> I got laid off from a dying core router startup in February '04.
> Instead of looking for a job, I spent March-July trying to start
> a company. I gave up, but in the process, I learned how to create
> a virtual company. This turned out to be massively simpler, cheaper,
> and faster than the last time I started a company back in 1983,
> even though a credible company needs more presence today than
> it did back then.
>
> For fun, I decided from the outset to use free software unless
> there was a compelling business reason to do otherwise, and to
> virtualize rather than capitalize.
>
> It was an interesting experience, and setting up the company
> was inexpensive.
>
> For a legitimate-looking business card, you need the following:
> Company name
> Your name
> your title
> business address
> email address
> URL
> phone number
> Fax number
> and of  course the business card itself.
>
> Name: Crystre corporation. Rather than pay for a trademark search,
> I did a set of Google search until I found a name I liked that had no
Google
> hits.
>
> Phone number: My very own toll-free phone number and human answering
> service.
> found on the web and comparison shopped in less than one hour.
>
> Fax Number: My very own toll-free fax-to/from e-mail gateway, found
> on the web and comparison shopped in less than 30 minutes
>
> My name (from my parents, but take your choice.)
> My title: Pick one.
>
> Email: This is slightly more complex. I decided that I wanted serious
> control of my web presence, but for cheap. I elected to rent a virtual
> server
> to which I have root access and complete control. I then installed a web
> server and
> a mail server.
>
> URL: I shopped around on the web for a name registrar, and registered
> five domain names:
> crystre.com, .org, .biz., .info. and ,net. I found a free DNS service
> and pointed the
> domains at my virtual server.
>
> Business address: I found the nearest UPS store on the web.
>
> Business card: searched the web, found a small-volume printer with a web
> interface,
> designed a card on my Linux machine using Gimp, and sent them the image.
>
> Incorporation: searched the web for help. found multiple incorporation
> services, picked one,
> filled in the forms on the web.
>
> Accounting: Do not even think about starting a business unless you have
> accounting training or
> you are willing to pay a competent accountant. Pick an accountant you
> trust, and do what your
> accountant tells you to do. In my case, I've done it before and I have a
> friend who is a CPA and
> likes to help new starts. He is retired and a Windows guy, but was
> willing to work with me
> "for fun" and experimented. I installed SQLedger. (open source)
>
> Banking: Web bank.
>
> Corporate credit card: Web.
>
> Billing for all of the above: I started using my personal credit card
> with automatic (web) billing.
> After I activated the corporate credit card I shifted the accounts to
> it, still with automatic billing.
>
> Conclusion. The web has radically simplified the creation of a
> Corporation, even as it raised the
> expectations of the people the corporation must interact with. A
> Corporation is a "legal person"
> so in some sense I was creating a new "life form."
>
> Lessons learned:
>
> If I were to try this again, I would do a few things differently:
>
> First, the incorporator did not add a lot of value. Having done this
> once, I now know how to
> incorporate without help by finding the correct forms, etc., on  the
> state government sites.
>
> I would use a different domain name service. the one I picked is horrible.
>
> I have abandoned my answering service. It was the largest monthly
> expense, and it was
> awkward. I have shifted to a Vonage account with voice mail. This choice
> depends critically
> on what your customers expect.  I would now re-examine the combined
> "office presence"
> companies with a view to finding one that provides fax, phone answering,
> and physical mail
> forwarding.
>
> My running costs are below $100.00 per month.
>
> Why is this Extropian??!
> two reasons: practical and theoretical.
>
> Practical: You might want to create a company. It's not hard any more.
>
> Theoretical:  I created a new legal person with considerable power.
> Although I've nearly abandoned
> it, it lives on in a manner that would have been unthinkable 20 years
> ago. With a tiny bit more effort
> this corporate person would be a lot more active, with e-mail
> responders, blogs, wikis, etc.
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