jakestein

I agree that a cloud service agreement is more complicated than a SAFE, and that's a result of the fact that the underlying deal is more complicated.

We use the SAFE as an example of a standard contract because it's one that our target users are familiar with. We believe that there are a lot of lessons worth learning from the SAFE's success, along with other standard contracts like the NVCA Model Docs, IAB Standard Terms, ISDA Master Agreement, etc.

Our users have signed thousands of contracts and closed millions of dollars of deals, so it's working for at least some commercial contracts. Of course, this is a tiny percentage of the overall market. Our bet is that it can become a much larger portion of the market, even if it doesn't get to 100%

Thank you!

You're totally right that lawyers want to live in Word. In the MVP version of the product, we tried to get everyone into the web app. Some people loved it, but we hit a brick wall whenever someone needed to go to Word.

We've since added native export to Word at every step in the contract lifecycle. One of our most requested features is the ability to easily re-import those Word files back into the same workflow after they've been edited, and we're working on a project right now to make that happen.

There will definitely be deals where the standard agreements don't cover every term that is important to the parties involved. We have a few ways to address the kinds of nuances you're talking about.

The variables in the cover page are intended to handle the things that vary from deal to deal in most commercial software transactions. Those are basically the selectable boxes you referred to (or blanks to be filled in, etc).

For things not captured by those variables, there's a section on the bottom of the cover page called "Other changes to the standard terms." Users often choose an entry from the Language Library for that section, but they (or their attorneys) can write their own custom assignment language or whatever other specific term they need.

If there are a small number of edits in the "Other changes" section, it can be helpful to know that all of your agreements have their unusual elements in the same section. On the other hand, if a company or their attorney consistently needs to make a large number of edits in that section, it might be a sign that the standard contracts are not a fit for them.

When that does happen, we'd love to hear about it. That sort of thing is very helpful for us in thinking about what we can improve in future versions.

It sounds like you're way more experienced than me with commercial real estate. I've done a handful of office leases, and I had a similar experience with tons of negotiation and arguing. It was a tremendous pain.

On the other hand, I live in Pennsylvania, and I bought my house using the PA Standard Agreement for the Sale of Real Estate. https://www.parealtors.org/standard-forms/ I spoke to a local real estate attorney who told me that there's no point in trying to negotiate the boilerplate in the doc, and I should only focus on a handful of variables like price, escrow, closing period, etc. He said that virtually all of the houses in our area are sold on the standard contract.

So my hope is that we can make tech commercial transactions more like my experience buying a house and less like my experience signing an office lease (or your experience with the agency agreement).

The known default point is a big one, and making deviations visible is something we spend a lot of time thinking about. In our software, we make it easy for our users (and their customers) to know that nothing has been sneakily modified.

We don't yet have a straightforward way to do that for people who are using the contracts on their own outside the software. The best bet for now is probably something like a text diffing tool or Microsoft Word's built in comparisons.

We have some ideas for a native validator for the standards that IMO would be a better solution for those kinds of cases.

I agree that ours isn't necessarily the right model for every industry. We do plan to expand beyond tech eventually. When we do that, we would need to work with a new set of attorneys with experience in that field as you suggest.

On your question about how to tell whether the forms are truly neutral, you don't have to take our or the committee's word on it. Since the docs are public and available for free, you and/or your attorney are welcome to review them. Lots of companies have done that and decided that they do represent a balanced standard, but some decide it's not for them.

We work closely with an attorney who specializes in the practice of law. They've helped us to strike a balance between offering something that we hope is useful while not running afoul of the UPL rules.

We would not need a customer's key in order to access a contract. However, only certain members of our team have the ability to access contracts, and they only do that when needed for support or to fix a bug. We log all instances of accessing a customer's account.

Stats like those I shared above are from a combination of what users tell us and from aggregated, anonymized metrics across our app.

The short answer is yes, we do plan to add versions for other countries. I expect Canada to likely be the first country we add, followed by the UK.

That's good feedback on our pricing, thanks for that. One thing I'll clarify is that this is just for customers with whom you sign contracts. If you have self serve customers that do click through agreements, we don't charge you for them.

A common pattern we see among our users is that they have a high volume of low priced customers on their self serve plans, and then a smaller number of high dollar customers on something like an enterprise plan. These enterprise customers are the ones where you need to sign contracts and have negotiations. That's more the case where our software is helping, and it's only these that we charge for.

And yes, you're always welcome to use the open source docs for free if the software doesn't make sense for you.

This is well said and a really important point that I often forget to highlight. If we're successful, the big companies will see a huge benefit.

I've interviewed a bunch of folks on enterprise procurement teams. They won't be early adopters, but they do want something like it to exist.

I agree that many of the transactions on the IAB Standard Terms and ISDA Master Agreement are automated and don't involve negotiations. There are, however, also higher dollar value ad buys and derivative transactions that use those standard agreements and do involve negotiation.

I had a helpful conversation with an attorney who was previously at Facebook about this. They use the same basic addendum to the IAB Standard Terms for most of their ad sales, and they sometimes negotiate it with large customers.

We see a similar pattern among our users, where their lower dollar, high volume transactions don't involve negotiation, but their bigger deals do.

We don't yet have the same distribution as the IAB or ISDA, but our goal is that over time more and more companies will be able to focus just on the variables in the cover page of our standard agreements because their team has already reviewed our standard terms.

That's really interesting, I'm not familiar with FAR and DFAR but spent a few minutes reading about them and I'm looking forward to learning more.

We do plan to expand beyond SaaS later on. What kinds of products and services does your company sell to government?

I had not heard of ConsensusDocs, thanks for sharing. I'm especially fascinated by cases like these where you have to pay for access to the standard contracts. Looking forward to learning more about them.

Sounds good re the other question, thanks in advance

I had heard of the AIA forms but not the NAEB, thanks for sharing that one. Looking forward to checking it out.

I really like the framing of "an enduring organization that is widely trusted." Many of these are industry associations, but YC doesn't fit that criteria with the SAFE. Your definition captures all of the examples I can think of.

We were not ready for the huge amount of traffic from HN, but we've got everything sorted out now :) Thanks!

That's great to hear. Please let us know if we can help once you get started

Totally agree that this won't work for all companies or situations. You're right that our initial target market is technology companies, although many of our users are outside Silicon Valley.

I also agree that getting large companies to agree to use the standards will be hard, but there examples of them adopting other standard contracts:

Here's Bank of America entering into the ISDA Master Agreement for financial derivatives https://www.sec.gov/Archives/edgar/data/1065696/000119312511...

and Disney using the IAB Standard Terms for online ads https://disneyconnect.com/dpep/disney-ad-guidelines/

We've already seen our users closing deals with Fortune 500 companies using the standard contracts, but we have a lot more work to do on that front.

I'd also be interested to know which standard contracts you've seen in the construction industry. We're always trying to learn from other, related projects

To your point about advice on what the blocks mean, we've started to do two things related to this, and I'd be interested to know if either are close to what you have in mind.

1) We have a language library (https://commonpaper.com/language-library/) of optional sections to add for specific use cases. Most of them don't yet have much context beyond the language itself, but here's a page where we provide an explanation https://commonpaper.com/standards/mutual-nda/account-mapping

2) In certain places within the app, we have tooltips with short explanations and links to longer help articles. So when you hover over "Auto renewal" we pop up the text "At the end of this contract, do you want your customer to automatically roll into another contract on the same terms? Learn more."

I suspect you might enjoy signing an NDA with Vandelay Industries https://app.commonpaper.com/pages/eceaa29b0494074a

Great point on optional blocks/special terms. We have a project on the roadmap to make it easier to incorporate entries from the language library into your agreements https://commonpaper.com/language-library/

We're always looking for additional ways to help people understand the agreements and figure out how to configure them. I agree LLMs could provide help there, and it will be fun to figure out the right way to leverage them

There are a few related things here:

By making contract review and negotiation faster, we speed up your sales cycle and grow revenue faster. Faster sales cycles mean that you get paid faster, which in turn means that you can recycle cash into new customer acquisition investments and grow faster. We wrote a blog post about the math of how sales cycle speed translates to revenue growth here: https://commonpaper.com/blog/impact-of-accelerating-sales-cy...

Some of our users work with attorneys, and some do not. For the folks who do work with attorneys, we still make those relationships more efficient because the scope of negotiation is more narrow. As a simple example, if the attorney helps the founder understand the implications of increasing or decreasing a liability cap, it's straightforward for them to apply that info on their own for many deals in the future. With traditional bespoke contracts, if they see a bunch of redlines to a paragraph about liability, it's much harder for them to reason about whether or not this is safe to sign.

We try to help users understand what sort of information tends to go in each variable, but we stop short of providing customized advice. So we can help people understand that a liability cap might be a fixed number (eg $1 million), a multiple of fees paid (eg 1X the last 12 months fees), or unlimited. But we can't advise them on whether or not their particular company should take the risk of a particular level of cap in order to close a particular customer. That's the sort of thing they should talk to an attorney about.

I really appreciate that, and stay tuned for a standard BAA coming soon. If you'd like to get a preview, email me jake at commonpaper.com

I agree that the edge cases make this extremely challenging. That goes both for making the standard contracts and the software that manages them.

For each contract, we go through a multi-month process with 40+ attorneys to vet the standards against all of the permutations they've seen without making the agreements too complex.

On the software side, this is a big part of the value of structured data. We make it easier to keep track of the different variations you've agreed to in different contracts. It's a tricky balance to make sure our users are never constrained from closing new customers while still making sure the software sticks to and takes advantage of the standards.

Oh wow, I have been researching standard contracts for years and I keep finding out about new ones. I'm going to read up on these Finnish standards, thanks so much for sharing.

Oh interesting, I could see how a percentage of the transaction's value could totally change the incentives and behavior compared to hourly billing. Thanks for sharing that and for signing up

Some of them are six-figure deals. I don't personally know about any seven-figure deals, but we only find out about a minority of the use of the agreements.

The NDA is definitely the highest volume agreement, however. And a lot more of the deals are for 10k than $300k.

That's a good point, and the magnitude of the impact of speeding up sales cycles can be really surprising if you haven't done the math. We wrote a blog post about this last year with a model in Google Sheets that you can customize for your business, but the TLDR was that while holding everything else constant, moving the sales cycle from 4 month to 3 increases ARR by 46%. That's with the same starting capital.

Full blog post and math here: https://commonpaper.com/blog/impact-of-accelerating-sales-cy...

That's totally fair, and it might be partially a function of price point. If, say we can help our customers close a bunch of deals at $20k each, that's very different than a company who has an average price point of $1k each. You're always welcome to use the agreements for free separate from our software.

One thing I'll note is that we do support importing contracts on customer paper / or deals executed outside our system. We only have a subset of our features for those, but all of your contracts can be together in the same system.

On the options making sense together, the standard agreements are created by 40+ attorneys specializing in tech law and commercial contracts. They design our contracts to reflect what is industry standard with a focus on creating a fair and balanced starting point. That being said, each company chooses how they want to configure their own cover page. We provide tooltips and help articles on what the terms and variables mean, and companies can work with their attorney to set it up initially or include them in the workflow. We can intro our users to attorneys who are familiar to with the standards and do good work.

I appreciate that, and you're right that overcoming the cold start problem is the key to establishing a standard. We've tried to learn what we can from how YC published the SAFE, as well as other standard contracts like the NVCA model docs, IAB standard terms, ISDA master agreement, etc.

For us, it's about providing day 1 value to the users of the contracts that does not depend on the agreements already being widely adopted. One example of that is our Stripe integration, which enables our customers to automatically bill their customers once they sign a contract. This uses the information already in their contracts, and it saves a lot of manual work and helps them get paid faster, and is separate from the negotiation benefits.

The other thing I'll point out is that our users have been seeing more success in using the standard contract from when we released our original NDA. Instead of losing an arm wrestling match because they have less leverage, they can say something like, "We adopted this standard agreement created by a committee of attorneys." That doesn't work every time, but we've seen some companies cut the percentage of their deals on customer paper in half.

We've seen a big range of reactions from attorneys. While we have some big supporters (and committee members) at law firms, we've gotten more traction with in-house counsel. I think it's at least partially because of the reasons you outlined. I do hope to get all the law firms on board as a channel eventually, but for now, we're focusing our energy on the companies themselves.