Episode 849 | Legal Threats, AI as Platform Risk, Building Confidence, and More Listener Questions (Rob Solo)

Rob Walling (0:00)

Welcome back to another episode of Startups For the Rest of Us. I'm your host, Rob Walling, and in this episode, I tackle a handful of listener questions on topics ranging from how often are terms of service threats legitimate, AI as platform risk, how to focus, and when to throw in the towel. Before I dive in to those questions, my new book, Idea to Traction, comes out in just a month or two. You can get on the waitlist now, and you'll receive my 9 to 5 audit, which is a resource we put together to help folks find SaaS ideas at their day job. And you'll get an invite to a live Q&A that I'm hosting on October 13th. It's all about early stage SaaS. Idea to tractionbook.com if you want to find out how to stop building SaaS that nobody wants in the age of AI.

Let's dive into my first question. This is from Anonymous.

SPEAKER_2 (1:06)

Hi, Rob. Thank you for the excellent podcast. And I was at MicroConf just recently, and it was such a great time. I have a question about dealing with competitors and how you relate to that in your overall philosophy of relating to competitors. Also specifically, I've had one competitor over something really small threaten like a very vague, quote unquote, terms of service issue. It felt like a legal threat or something like this. I didn't know what to think of it. There was another sort of issue with another competitor that didn't feel really significant, but it felt like they were trying to maybe get in my head.

Is threatening something about terms of service, something that is common in SaaS? Do you think I actually did something wrong? Do you have experience of this? Do other people have experience with this in terms of vague terms of service threats? How often should you really listen to them or should you just ignore them? Thank you, Rob, for the excellent podcast and your generosity.

Rob Walling (2:00)

Well, thanks for that question, Anonymous.

This is one that I'll say it's both easy and it's hard to answer. What's hard to answer is did you do something wrong? That I don't know. If you've had two competitors threaten you with something, that is unusual. The normal number of terms of service threats that most SaaS companies, especially kind of early stage, receive is zero. That's the most common number. However, the second most common number is one. And I say this a little tongue in cheek, but I'm invested in 241 SaaS companies. And I've seen, how many have I seen in the last 10 years, let's say, of these types? And it's not always terms of service, right? Sometimes I'm just talking about like Cs and Ds, Cs and Ds from competitors, or I don't like your alternative to or your versus page, right? You did Drip versus MailChimp. This is hypothetical because this never happened, but you did Drip versus MailChimp and you said things that are not true about MailChimp. Again, that didn't happen, but it's just an example so you understand. So I have seen maybe 12 of those, literally 15, in the past 10 years. And so what that shows you is at least across my portfolio I'm invested in, it is far less than one per company.

Now, if you've received two similar things, that makes me think you might be walking on the more aggressive side of this, or maybe you've done something quote unquote wrong or illegal or illicit or that people think is unethical. I don't know without knowing the specifics. So that's kind of my short answer is, are they common? Not that common, but more common than you might think. I mean, geez, lawsuits are more common than you might think, being hacked is more common than you might think, co-founders imploding, employees stealing from me. There's all these things that due to the law of large numbers, I have seen multiple examples of all the things that I've just mentioned. So the advice that I give founders when they face this is to evaluate whether they think they have done something wrong. To talk to a lawyer is number one, but I get it, that's expensive, right? And if you're doing a few hundred dollars a month and you've received two of these and you don't want to pay a lawyer $700 or $800 an hour to evaluate this, I get it, that maybe a conversation, this is not legal advice, but maybe a conversation with ChatGPT and or Claude, like at the most expensive, the highest deep thinking mode of your LLM of choice, feeding in what they've sent you, what you have put on your website, what's actually happening and trying to get an opinion. Now, I will say this, be very cautious. I've heard that there, well, there is no attorney client privilege between you and an LLM. And so if later it does become a lawsuit and in discovery, they subpoena your LLM chat, your conversations, they can pull those into discovery much like they're an email or a private message. And so anything you say in there can and may be used against you in a court of law. I mean, that's legit. So this is where I'm saying, you got to kind of be careful with this, take the risk into your own hands as to how you talk about that. But realistically, if you can afford an attorney, you should talk to an attorney, although they're usually going to say, well, it's not worth litigating. If someone sues you, it's going to be very, very expensive for both sides. They probably don't want to sue you either. So A, do you think you did something wrong? B, is it worth standing up to them and saying, no, I'm not going to change it, and just responding with agree to disagree type thing? Or is it something that's not that hard to change? I have known folks change their versus pages very subtly to try to get around these types of complaints. I have known some founders who ignore C&D or not really, not necessarily C&D threats from lawyers, but when it's an angry email from a founder, how serious is that? When you get something from an attorney, that's like the next level up, right? A huffy letter from an attorney is like, oh, they spent some money and some time to get an attorney to draft something to put into your inbox.