Building Your E-Business

Chapter 6

Understanding Legal Issues

One of the first things an e-business entrepreneur should do is establish a relationship with an attorney experienced in business startups and, if possible, with e-business startups.

E-businesses may be more complex legally as their business moves across jurisdictional boundaries, even internationally.

Copyrights and Trademarks

A copyright is a form of protection for the author of published or unpublished original work, including writing, drama, music, art, and other intellectual property.

A trademark is a distinctive symbol, word, or phrase used to identify a product and distinguish it from products of another business.

A business guards its own copyrights and trademarks, and needs permission to use those belonging to others.

http://www.cnn.com/2004/TECH/internet/01/19/offbeat.mike.rowe.soft.ap/

Copyright Information

Content Liability

An e-business may be exposed to potential liabilities for defamation, libel, copyright infringement, obscenity, indecency, and other liability, on the basis of the content and hyperlinks at its web site.

To protect against potential lawsuits, an e-business should have its attorney draft an appropriately worded disclaimer of liability to be posted on its web site.

www.amazon.com www.buy.com

Information Privacy

Potential customers may be hesitant to purchase products or services online or to provide valid information, for fear that the information will be misused or sold to others.

An e-business should have a clear policy on how it handles and secures the information it collects at its web site.

www.truste.com

Taxation

Taxation is a complex issue. – The collection of sales and use taxes is a state matter and

varies as to jurisdiction.

The Internet tax freedom act, originally passed by congress in 1998 and recently extended to 2006, places a moratorium on new internet taxes.

An e-business should establish a relationship with an experienced attorney to help sort through the legal and tax issues it faces.

Tax Facts

Leasing Commercial Office Space

Many startup e-businesses begin at an entrepreneur’s kitchen table and quickly expand to temporary office space, often a spare room.

Signs that an e-business has outgrown its temporary home office space include: – The need to add employees, a need for more

storage– Insufficient electrical outlets– Insufficient phone lines– A need to add telecom services – The need for more office equipment

If an e-business needs conference room facilities, or if meeting with clients and business associates in a home office undermines an e-business’s credibility, then it’s time to move to commercial office space.

Facilities Plan

The amount of space you need now and in the near future

How space is to be divided into offices or work areas

Requirements for electrical wiring infrastructure Telecommunications and other office equipment

needs Amenities such as break rooms, reception areas,

conference rooms, and elevators

Physical location of facilities, including exterior appearance, access to adequate parking, and access to nearby businesses that employees could patronize, such as restaurants and childcare centers

Facilities’ proximity to major roads and public transportation

Facilities’ proximity to a pool of qualified prospective employees

Security requirements Property damage and liability insurance

requirements

Facilities Plan (cont’d)

Hiring Employees

The key to success for any business is its people. A key issue for a startup is hiring.

– Chief technologist– Chief financial officer– Marketing– Staff– Some VC’s require that firm hire Other Senior management

with “experience”

Must be concerned with the “burn rate”

Issues for hiring:– Compensation– Salary– Perks – such as?– Stock options / equity

Evaluation of fit with firm Attracting qualified individuals to work at a startup

firm

Hiring Employees (cont’d)

Building Your Brand

A brand is a combination of name, logo, and design that identifies a business’s products or services and differentiates the products and services from those of competitors

Begins with the selection of a name; make it memorable. i.e. Dell Corporation or Ask Jeeves

May use a reference to Web, Cyber, Net, etc. in name

Questions – p. 201

Consider a consultant

Domain Names

Identifies the firm on the Internet May use all or a portion of the firm’s actual name Obtain domain name from an ICANN accredited

name registrar Someone else may own the rights to the name You may register your name and variations of it. You may also want to register the alternate top level

domains (.Com, .Net, .Org, and others) to preserve your rights and brand identity.

Domain Names

Memorable & easy to enter Cybersquatters vs. Domain name brokers Mlb.com

Top Level Domain Names

Selecting the Technology

An entrepreneur must make many technology decisions.

Software must be selected to handle sales transactions, inventory monitoring, accounting, and internal record keeping.

The e-business must decide whether to develop the e-business’s computer systems and web site internally, or to outsource these functions.

Technology Software Options

ERP Systems

Enterprise resource planning (ERP) refers to a system that integrates all aspects of a business, including planning, manufacturing, human resources, accounting, finance, sales, and marketing.

ERP systems are usually built on top of databases that store all of the data needed by the different systems.

J.D. Edwards, PeopleSoft, Oracle, and SAP

Customer Relationship Management Systems

Customer relationship management (CRM) systems, sometimes called e-CRM systems, use software and the Internet to help an enterprise manage its customer base

SAP, Oracle

Data Mining

Making data work Finding interesting statistics & correlations (hidden

patterns) that can help a business better attract & sell to customers

– Ex. 60% buy A also buy B Data warehouse

– Database that contains huge amounts of data, such as customer or sales data

– Terabytes of data – Blockbuster (p. 207), reel.com (p. 209) Web mining

– Same as data mining, except data from web sources

Independent Software Vendors

Independent software vendors (ISVs) are companies that develop and sell software applications for a variety of operating system platforms such as Microsoft, Apple, IBM, and Hewlett-Packard.

Value Added Reseller (VAR)

A value-added reseller (VAR) is a company that modifies an existing software product by adding its own “value,” such as a special computer application, and then resells the software as a new product or software package.

MicroAge, ASG, Merisel

Technology Service Providers

There are many different kinds of technology service providers available to a startup e-business.

These different service providers offer a range of overlapping services and are known by an array of confusing acronyms

– Internet Service Providers– Internet Access Providers (same as ISP)– Web Hosting Companies (2000 $1.8 billion industry)– Application Service Providers (PeopleSoft example)– System and Web Integrators

Service Providers

Outsourcing Web Operations

Using a Web hosting service provides an e-business with several advantages.

An ISP or Web hosting service has a staff available 24 hours a day with the technical knowledge to keep the servers and network connections running.

An ISP or Web hosting company can provide a level of redundancy that an e-business may not be able to provide for itself, including redundant hard drives on the servers, backup power from generators, and redundant connections to the Internet.

Outsourcing Web Operations (cont’d)

One disadvantage of outsourcing Web site operations is lack of control.

One solution to this lack of control is for an e-business to provide its own servers and software and simply co-locate its servers at the ISP or Web hosting company facilities.

Outsourcing Web Operations (cont’d)