The British Narrator: Hello,
glad you could join us.

What you are about to hear is not
financial advice, legal counsel,

or investment instruction.

The views, thoughts, and opinions
expressed are only those of

the hosts and guests and do not
comprise professional advice.

Due dearly follows where money flows
and what is impacted because of it.

You'll hear references to things that
will always be available in the show

description or episode notes for you
to dive deeper into and check out.

Enjoy the show.

Carl Joseph-Black: What's good y'all?

I'm Carl,

Jonathan Jackson: I'm Jonathan

Carl Joseph-Black: And this is Due Dilly.

We wanna welcome you out back.

We're doing episode two right now, IP over
everything, how to protect what you make.

Want to give y'all some
context around who we are.

I'm Carl Joseph Black.

I'm a corporate attorney.

I represent tech companies
startups, investment funds.

And Jon..

Jonathan Jackson: I'm Jonathan Jackson.

I'm an entrepreneur, operator,
writer, a strategist.

I focus on helping people build
flywheels, narrative infrastructure

and business operations.

Carl Joseph-Black: Cool.

So today we're gonna talk about the value
of your ip how to protect it, and all

of the different business structures that
you can put together, either using your

IP or around your ip that not only ensures
that you're good money, but also ensures

that you can build different growth.

I guess we should start with what IP is.

IP is value that increases or decreases
based on a plethora of things.

And what matters is how
you have it structured.

So think of a piece of IP as
something that you create.

If you decide to put words on a
piece of paper, that's your ip.

If you decide to turn the camera on
and record yourself, that's your ip.

If you decide to draw something
on paper, that's your ip, you

sing on a beat, that's your ip.

Anything that you create yourself
whether it's artistic or it's technical,

that could fall under a patent.

That's also a form of ip.

And although it sounds very simple and.

Clear cut, but we see IP everywhere.

IP is Mickey Mouse.

IP is Pikachu.

IP is Drake's last soundtrack.

IP is the Uber algorithm, right?

IP is everywhere.

And we interact with it every day.

And because it's that important, you
should treat it that way because if you're

a creator, you're creating IP on a regular

Jonathan Jackson: Hold on.

I, so IP is intellectual property, right?

Yes.

Okay.

And so what makes it property though?

'cause everything you talked
about makes sense, but if it's

in the world and I made it how?

Do I own it?

Carl Joseph-Black: So there's a bunch
of different ways you can own your ip.

And the way IP is broken down, it's either
a patent, a trademark, or a copyright.

So if it's something that you wrote
down in a book, that's a copyright,

that's usually something written.

It's copyrightable.

If it's a logo, let's say
something you designed

That would fall under what
we would call a trademark.

Typically it's like a name.

And then if it's something very technical,
let's say like an algorithm, or let's

say it's a a very unique type of
lock that you would enter your key in

That would probably fall
under what they call a patent.

Okay.

So those are the three
different types of ip.

Now the reason why it's called property
is because it's something that's yours.

It's something that
you took as an element.

Reformatted into something
that they call novel.

Or different than that currently
existed in the marketplace before

you did that particular act.

Jonathan Jackson: So it's a
new imagination of something

that could have existed.

So I could take something that
used to exist, put a different spin

on it, and then it becomes my ip.

Carl Joseph-Black: Yes.

And that it becomes your IP because
of your particular contribution to it.

Okay.

Jonathan Jackson: How different does it
need to be to avoid me just stealing it?

If I took that shirt and just
changed the color from Navy to

lighter blue, did that make it my ip?

Carl Joseph-Black:
Technically speaking, yes.

Okay.

Now if you decided to keep this
particular logo on that shirt.

Then technically it's not, because
this logo that's on this shirt

actually belongs to IME Leon Door.

And that's their ip.

Okay.

So you cannot just make this a
whole different color and then

decide to still use their logo.

'cause that logo is their ip.

And they filed this logo with
the U-S-P-T-O, the United

States Patent and Trademark

Jonathan Jackson: Office.

So that would be infringement.

Carl Joseph-Black: Yes.

That would be trademark infringement.

Jonathan Jackson: Which is illegal.

Carl Joseph-Black: Which is fully illegal.

And they will sue your pants off.

All right.

Heard you say last, yeah.

Yep.

So the thing with ALD, the way
they've been able to increase the

value of their IP is by releasing
more novel new types of clothing

with this logo or any other logo that
they've registered with the U-S-P-T-O.

Speaker 5: Mm-hmm.

Carl Joseph-Black: And the
value that they've assigned.

To their creations.

You know, ALD comes out with
a new capsule collection.

They either do a spring what is it,
spring, summer, or fall, winter drop.

They set a price to it.

They style it a particular way.

All of the styling is
usually their creation.

And they assign values to
all the articles of clothing.

That in its own right along with
the story, the brand guidelines,

the styling guidelines, the story
that they've built around this brand

actually creates a value for that ip.

For that intellectual property.

Speaker 4: Okay.

Carl Joseph-Black: And that's
the opportunity that a lot

of creators have today.

They don't necessarily have to go into
clothing, but they can do it differently,

whether they're creating videos, whether
they're creating written material,

whether they're using their brand name
to go and decide to create new products.

These, this is the opportunity
that they have available today.

So when you think about it that way,
it's something that's really important

and it's something that should
really, really, really be protected.

Jonathan Jackson: So I, I guess
then if, 'cause I, I think part

of the challenge that I see is that
IP is talked about so frequently,

but it's not protected rigorously.

So it seems like everyone's
yo, I wanna own my own ip.

But we're not actually talking
about tangibly what does that mean?

Because there's the reality of what your
IP is in the world, and then there's

the structure required to protect it.

And so I'm, I think in this episode,
it's important to explain the

difference between what it is to hold
your IP well and then to protect it.

So how do you make sure you
can transact with it, but

that it's actually still safe?

Carl Joseph-Black: Yeah.

So I guess we could dig into
how to protect the IP first.

And then we'll move into
how to transact with it.

Typically and historically, when an artist
goes and makes something, no matter what

it is, they historically they create it
and then they go about their business.

And they get, they claim
the right to their creation.

Personally.

And that's fine and dandy until you're
at last lap with your girlfriend and

some dude is trying to holler at her
and you smack the daylight out of him.

And he sues you for battery

Speaker 4: uhhuh,

Carl Joseph-Black: and when he sues
you for battery and gets a judgment

in civil court from the judge.

And he says, well, you smacked me so
hard that I can't see out my left eye.

Mm-hmm.

Then now you owe him $250,000 Sure.

So that he could get LASIK or something.

Jonathan Jackson: Yeah.

Carl Joseph-Black: But you
don't have 50 $250,000 in cash.

Tough.

And you don't have any other assets.

He's coming after your ip.

Because of the judgment.

Because of the judgment, and
because you personally own this ip.

Mm. Right.

As an artist.

Mm-hmm.

As a creator.

So what you do is if you're smart,
you go and you file a company,

whether it's a limited liability
company or what, you know, most

folks online call an LLC, right?

Or you go out and you file a C
corporation, and what you do is you

put that IP in that entity, right.

So that you could walk around
freely smacking people.

Uhhuh, you shouldn't be smacking people.

I just want to make sure that people know
not to smack nobody after this episode.

Yeah, yeah, yeah.

But nonetheless, you can walk
around freely now knowing that your

IP is safe from smacking people.

Jonathan Jackson: Yeah.

Yeah.

Carl Joseph-Black: Now.

When you have it into, when you have it
in this entity, you should actually put

the rest of your IP in that same entity.

And that entity should operate, as a
holding company for your assets, for

your intellectual property assets.

Jonathan Jackson: Okay.

Carl Joseph-Black: Period.

So if you're going and you're filing
for a trademark because you've created

a logo for the brand that's associated
with you, you should file that

trademark under the LLC that you own.

Mm-hmm.

And you should be the
majority owner of that LLC.

Mm-hmm.

And you should make sure that you
file, write a very thorough operating

agreement for that LLC so that you can
ensure that you retain ownership and

that if something happens to you, that
it gets passed over to your family.

Jonathan Jackson: Right.

Carl Joseph-Black: That's
how you protect your ip.

Now if we're in the conversation
of transacting with your I ip.

Speaker 5: Yeah.

Carl Joseph-Black: I think that requires
a bit of detail, I feel like because.

It's definitely gonna vary
based on what we're looking at.

Okay, so I'm wondering, I do
want to answer that question that

you asked specifically based on
what answer you are looking for.

Jonathan Jackson: Okay.

So what if I'm, let's say I'm an
artist, so I do, uh, music, but I want

to tour, I want to maybe do merch,
and I'm thinking about like collabs.

I want to be more communal.

If I have my ip, so right, my recordings,
my even my logo for the merch.

Should I have a holding company?

Should it be like a separate LLC?

Should it be just like a gang of
LLCs and they talk to each other?

Like what?

Like what do I do?

Carl Joseph-Black: Yeah, so, so for
this particular example, if you're an

artist and I. There's so many different
types of artists, but for this context,

we're gonna, we're gonna say it's music.

Yeah.

Right?

So you're a musician and you own all
your masters, you own all of that, right?

Um, you also create a
bunch of logos and stuff.

You have all of that also in your LLC.

All of that is protected
in that one entity.

Now, if you want to create a clothing
brand specifically what you're

going to do is you're going to
actually create an operating company

just for the clothing brand itself.

And what you would do is you would
license the particular IP that you want,

that clothing brand to carry between,
you would create a licensing agreement

from your holding company to the entity
that's operating the clothing brand.

So basically it's almost like
you're lending to yourself.

Access to your ip.

and The formal legal definition
for that is a licensing agreement.

Okay.

Which is what you see a lot
of your favorite artists do.

What they tend to do is they license
their name, image, and likeness to

other entities for collaborations for
brands that they create themselves.

And the reason why they do that is
because a bunch of things can happen when

you're running a clothing line, right?

A clothing business.

You can say, I guys, I'm dropping
this new capsule collection.

It's alpaca, you sell it, and
some kid buys it and that kid's

skin is allergic to alpaca.

And now they break out.

And they wanna sue you for selling them an
item with no warning label on it, right?

Mm-hmm.

If your IP was inside
of the clothing company

Speaker 5: mm-hmm.

Carl Joseph-Black: Your IP
would be at risk of litigation.

Jonathan Jackson: Mm-hmm.

Carl Joseph-Black: Right?

Because if that kid won, they
would wanna bleed your bank

account and whatever's left.

And if the IP is in that, whatever's
left, they're coming for that IP too.

Right?

So now what you get to tell the judge,
you get to say, Hey, your Honor,

well no IP is in this entity, just
money from selling alpaca clothes.

Mm-hmm.

So that's all they get.

They just get that.

That's all they've got.

Then they say, well, what
about the logo you was using?

And you get to say, Hey, that was
under a licensing agreement with

a separate entity, so that IP.

It doesn't fall under the scope
of assets that this particular

person can get a judgment on.

Jonathan Jackson: Mm-hmm.

Carl Joseph-Black: Does that make sense?

Jonathan Jackson: That makes sense.

So if I'm thinking about the IP I
have and then doing things with it, it

makes more sense to actually license
it to another entity as opposed to just

doing it out of one singular entity.

Right.

Because that would expose me to
potential liabilities or issues,

because wherever I'm transacting from
is where the issues could come from.

So the structure of what I, the
structure of what I put things in

matters just as much as what I make.

Carl Joseph-Black: And there's a bunch of
examples in the marketplace that we have.

But I like to use Drake
as the best example.

Of course you do.

Last year.

Last year.

Last year.

Um.

During a whole battle situation,
folks are doing some diligence on

Drake and they found that Drake has 52
companies in which he's either either

a full owner or he is a. Majority
or minority stakeholder in Right.

And in all of these companies, I want
to actually pull up some of the names.

So Frozen Moments, LLC is an entity
that Drake owns, and that's typically

the entity that he keeps all of his Ip
N that's all the masters that he owns,

um, that he has full ownership over.

That's the one that he transacts with.

But then has Drake related LLC away
from Home Solutions, LLC, more life

Investments, LLC Graham, a DG Investments,
L-L-C-A-D-G, Vanguard ip, LLC.

Then he has other corporations,
which my assumption here is

that there are C corporations.

He has nata, freehold, Inc. Dream
Crew Holding Inc. A DG Songs Inc.

Right.

So what it sounds like to me is
that Drake is using a lot of these

entities to perform particular things.

So if you hear that Drake has entered into
a new deal with some new entity let's say

he enters a deal with Nike, he's probably
using Nocta Freehold Inc. As the entity.

With Nike.

Instead of Hi Drake.

Mm-hmm.

Right.

Because if Nike wants to sue
Drake himself, that means the

embassy in Toronto is at stake.

And that's the assumption.

My assumption is that

The embassy in Toronto is in Drake's
name, but it's probably also under some

sort of entity, whether it's an LLC
or an a C Corp or just a proper entity

that's under, Canadian jurisdiction.

Jonathan Jackson: So, okay,
let's switch form for a second.

So, let's say I'm not a musician,
but I'm a, I'm a creator.

Let's say I'm in health and wellness and
I'm about to do my first ever expedition.

I'm gonna go hike Kilimanjaro and,
you know, I gotta get ready for it.

I gotta train.

But it's an opportunity
for me to actually.

Invite potentially new investors,
collaborate with brands, whether

they're fitness or they're outdoor.

But I have structure, but I
also need capital to do it.

What, it doesn't sound like this is
a HoldCo situation 'cause the thing

I'm doing is temporary, but it's big
enough where there could be opportunity

and I want to actually invite partners
in, but I don't wanna simply just

give the IP of the experience away.

Like what, what, is there a
structure for something like that?

Carl Joseph-Black: Yeah, so, so
it's interesting because a lot

of influencers, they typically do
transactions one of like a few ways,

and a lot of them, what they do is they
say, Hey look I want to get a brand.

To sponsor this particular activity.

Mm-hmm.

Right.

But the issue and the difficulty
with brands doing that, which

is why it's usually reserved
to the largest influencers.

The difficulty with that is that

most of the people that the brands, most
of the people that the influencers are

catering to their audiences, um, I'd say
probably like 40% of the time, 30% of the

time, people ain't buying the products.

They're looking at that and
they're like, okay this influencer

is doing this to make money.

That's it.

So we're gonna click, like, we're gonna
comment, we're gonna whatever, but

like, unless this particular product
is actually a product we're interested

in, we're probably not gonna buy it.

Right?

Sure.

So to me, I think that that particular
model is growing stale and everyone sees

that particular model going stale, and
it's been going stale for a long time.

So while I was in law school, I
kind of came up with a different

type of model that would work for
influencers specifically in that type

of format that you were talking about.

So venture capitalists are basically
people who invest in startups.

Mm-hmm.

Right?

And when they raise money they usually
raise it, they, they call it a fund.

And that fund raises, let's say a billion
dollars and then they deploy that capital

to these tech companies that they invest
in with hopes that these tech companies

blow up and they get to take that money
home and return it to their investors.

And the entity that they use to do
this is called a limited partnership.

It's an lp, it's usually a
Delaware Limited partnership.

And the way the structure of that entity
goes is that there is a general partner.

That general partner is usually the VC
person, the person who's raising the money

saying they're gonna deploy the capital.

And then those limited partners, and
those limited partners are the investors.

Mm-hmm.

Right.

For me the way I viewed it,
I was like, yo, why don't we

just use this for creators?

Speaker 5: Mm.

Carl Joseph-Black: And this is like
2018 when I came up with this idea.

But basically, in short, like what
you could do is you can have the

artist be the general partner.

And their particular entity.

I would always advise for
them to create a new entity

Speaker 2: mm-hmm.

To

Carl Joseph-Black: play
the general partner.

Speaker 2: Right.

Carl Joseph-Black: But that new
entity would be the artist's

representation in a general partnership.

And then the limited partners could be.

One, a brand that wants to make an
investment in that artist for some level

of exclusivity or in this particular
instance, your friend who wants to do

this particular activity they can
invest and have exclusivity in that.

In the project.

In the project.

So your friend is wearing
Patagonia, Uhhuh the whole time.

And that's the only thing they're wearing.

Jonathan Jackson: Got you.

Carl Joseph-Black: But that's
part of Patagonia's investment.

And it's not a brand payment,
it's an investment in it.

And this is why this is very,
this is why I'm using the word

investment very specifically because
Patagonia's making an investment.

So they're only wearing Patagonia.

But then your friend is
probably friends with LeBron.

And LeBron loves this idea
and thinks that they could put

together a really cool documentary.

His documentary would be awesome.

So LeBron decides to put some money
in LeBron's now an LP with Patagonia,

and then a beverage brand could decide
that they want to be an LP as well.

Jonathan Jackson: Mm.

. Carl Joseph-Black: And maybe they'll
create a special bottle or maybe

they'll always make sure that this
person gets helicoptered cases

while they're climbing a mountain.

, But they also make an investment in this
thing, and it's only about the project.

So the project, let's say the project
is supposed to produce a documentary.

They'll only have ownership of
this documentary, but nothing else

that's part of your friend's IP.

Outside of that.

They only have ownership over the
IP in that particular project.

That's in the limited partnership.

Jonathan Jackson: Can the limited
partners take different amounts

of ownership in the project?

Carl Joseph-Black: Yes.

Yes.

So it will be determined based on
how much they invested in a limited

partnership and for what points.

So you could say it's 20% or 10% or 30%.

. Based on what their contributions
to the limited partnership is.

Jonathan Jackson: Mm-hmm.

Carl Joseph-Black: But remember,
the creative freedom will still be

in the hands of the artists because
they're gonna be the general partner.

And the general partner gets to
do what they have, gets to do

what they have to do creatively.

'cause they're the person who's steering
the ship on the creative project.

And the, so that's an

Jonathan Jackson: operating
agreement thing then?

Carl Joseph-Black: It's not
specifically an operating agreement.

It's called a limited
partnership agreement, an LPA.

Jonathan Jackson: What's the difference?

Carl Joseph-Black: The difference
is that an operating agreement

is specifically for LLCs and.

LPAs are for limited partnerships, and
they typically have different terms.

They have, and from a statutory
perspective, they're looked

at differently by each state.

Mm-hmm.

So limited partners in a limited
partnership have different rights than

members of, a limited liability company.

Like what?

So for example members in
a limited liability company

have audit rights, right?

Statutorily, they have audit rights but
in a limited partnership agreement, that's

something that has to be negotiated

Jonathan Jackson: audit.

Like they can look inside
of the financials of the,

of whatever the company is.

Right?

Right.

Man, that's like a,
just a mandatory thing.

They usually have.

So for

Carl Joseph-Black: LLCs members have it
off rip, it's a statutorily protected.

It's a statutorily protected, right.

But in an LPA, that's typically,
that's typically contracted.

Mm-hmm.

So it's not, the statute doesn't give
limited partners the right off rip.

Instead you have to
contract it in the LPA.

Okay.

Jonathan Jackson: Mm-hmm.

Carl Joseph-Black: Okay.

Jonathan Jackson: So because it's a
project and it's a one-off, they're

not necessarily concerned with that
because you know what you're getting.

Right.

Because it's a project, it's
not the, it's not an entity.

Carl Joseph-Black: Okay.

Which is why they're very different.

. The LLC is something that's supposed
to have a longer duration of time.

Jonathan Jackson: Right.

Carl Joseph-Black: But a fund is
typically has a shorter lifeline.

Jonathan Jackson: Mm-hmm.

Carl Joseph-Black: Usually funds exist for
about 10 years from a venture perspective.

Speaker 4: Sure.

Carl Joseph-Black: So the assumption
is that if you're working on a project.

That project is gonna live
in a shorter lifeline.

Speaker 4: Mm-hmm.

, Carl Joseph-Black: Yeah, a fund
will last 10 years, but maybe your

project's gonna last two years.

So as a result, there's not as many
statutorily codified rights for those

people of that type of entity versus
an LLC, which has a longer lifeline.

Jonathan Jackson: Okay.

That makes sense.

What other formats could you use as a
creator if your, because not everybody

wants to be Disney, but some people
actually might have that ambition that

they actually want to create sort of
something that's multi-generational

in terms of duration that has sub
corporations attached to it.

What kind of structures are
there if you're actually

building something to scale?

This environment because
it sounds like you have the

artist HoldCo that makes sense.

You've got the LP model and structure.

That makes sense.

Are there other things that could
hold IP like a C Corp itself?

Like how does that work
relative to an LLC?

Carl Joseph-Black: Yeah, so C
corporations typically are entities

that like, that exist for scale,

Speaker 4: right?

Carl Joseph-Black: Typically your
largest corporations are probably like

C corp, Disney's probably a C Corp.

Jonathan Jackson: Mm-hmm.

Mm-hmm.

Carl Joseph-Black: And the reason
why they're that large is because

those entities are made for hundreds,
if not thousands of investors.

Delaware C Corp are usually
the ones that like, are used

for this particular purpose.

Now they're opening up , now
other companies are favoring other

states as of late, but Delaware is
still like the national standard.

Jonathan Jackson: Mm-hmm.

Carl Joseph-Black: Right.

And the reason why it's a national
standard is because investors have a lot

of rights and the executives have a
lot of responsibilities to the investors.

That's the reason why they love Delaware.

Mm-hmm.

And there's a lot of law there.

There's been a lot of fights there.

And the court of Chancery is basically the
Supreme Court of like corporate activity.

Speaker 4: Mm-hmm.

Carl Joseph-Black: In terms
of setting a standard.

They're not the Supreme Court.

Right.

Obviously, uh, the Supreme Court of
the United States, they're not that.

But typically if you're, if you're a
person who's looking to like actually

build something as large as Disney,
you'll set up a C Corp. And what

you'll do is you'll make sure you
get all the proper documentation you

need so that you can get the proper
investment so that you can do that.

And typically it'll be a C corp.

You'll have you'll have what
they call an intellectual property

assignment agreement, which means
that all the IP that you're going

to create as the CEO of this company
is going to go to the company.

Mm-hmm.

Right.

And if you have any existing IP that you
would like to contribute to that entity,

you would list that in your intellectual
property assignment agreement as well.

Along that you'll also have to hire
yourself, and you'll probably need like

a simple agreement in future equity,
which basically is an agreement that.

You give to investors before you actually
grow to a level where you convert them

into shareholders, and then you'll
need tons and tons and tons of other

paperwork because you're just so big.

And if you're gonna IPO some day, like
Disney, you'll have to go through that

whole, you know, regulatory process . With
the federal and some state governments.

Jonathan Jackson: Okay.

So it sounds like we have

structures that are ideal for
IP and the movement of ip.

So from an artist or musician perspective,
where IP is essentially a day one activity

if you're making songs or making art.

And then you have this LP model
for short term projects, like

a tour, like a event series.

Mm-hmm.

Like a. Festival that has a clear start
and end date where you could actually

have partnerships involved that are
not taking ip, but are taking portions

of that singular event or moment.

Yeah.

And there's an agreed to start and stop
and very clear outcomes that works on.

Carl Joseph-Black: Yeah.

And the beauty of that second model
that we spoke about, the limited

partnership model is that, I don't know,
from my perspective, I believe that

brands actually can make more money.

And the reason why I think brands
can make more money is because

brands are not throwing their money
away at an influencer and then

like hoping that people buy stuff.

Instead, what they're doing is
they're actually taking equity

in the IP that's being created
out of that particular project.

Which means, let's say if we're talking
about a festival, like a brand would get

a piece of the profits from that festival.

Mm-hmm.

Even if they didn't make sales.

Right.

For their particular brand.

Mm-hmm.

Right.

So like a brand.

And that's typically why
brands always have like sour

tastes in their mouths, right?

Because they were hoping that
if you wore Lululemon, that

people would buy more Lululemon.

But like maybe you're
not a yoga person, right?

So like, yes, you got a lot of
followers, but people aren't

looking at you to buy yoga products.

So as a result, people aren't
buying the Lululemon units.

But like, if Lululemon owned a piece of
your 10 city yoga tour, let's say, if

you did that in collaboration with let's
say you did it in collaboration with the

biggest yoga studio in New York City.

Mm-hmm.

And they owned a piece of it.

Even if Lululemon didn't move any units,
they would still own a piece of the tour.

So if they owned a piece of
the tour, they would at least.

Be able to recoup their initial
investment and maybe even

leave with a little bit more.

Which is why like I made that
model that way because it allows

influencers and brands and creators
to actually work together in a way

that everybody gets to eat on, right?

And then at the end of the day, also it
creates something that is repeatable.

'cause it forces creators to actually
go and create bigger and better

things and be more ambitious and
have access to capital to do that.

And many companies already have, like
venture they have venture funds.

So you know, instead of them
actually putting money in.

As much tech as they do, they would
also just put the money behind creators

Jonathan Jackson: if
the structure's there,

Carl Joseph-Black: if
they have the structure.

Yeah.

So you as a creator, you would've
to call a lawyer to put together

a LP model, make you the gp, make
them the lp, draw up a really good

LPA, and Lululemon could send you an
investment wire as part of that fund,

Jonathan Jackson: because the
actual investment is for the thing.

You're making the thing not necessarily
into the person who's making it.

Carl Joseph-Black: Precisely.

It's in the project,
it's not in the person.

So the risk is limited.

Because we, we see that this happens
with creators all the time where

you know, you, and you know, let's
say if you're a brand and you're

sending wires to a creator, right?

Um, you're sending wires to a
creator, they're doing their thing,

and then, um, they crash out.

Creators crash out all the time, right?

So like, if they're gonna crash
out as a brand, you're like, oh my

God, I can't believe I invested so
much money in the creator, right?

The IP just lost a
bazillion dollars of value.

We're cooked and we're deeply
associated with this creator, right?

So like, instead you could just limit
your risk to a project and still

recoup a piece of the project's.

Earnings.

Jonathan Jackson: It's also interesting
if the creator themselves, they

work in something that's sort of
less brand safe or maybe on the

edge or something that is sort of,

it's funny 'cause things that
are cringe are either early in

culture or late in culture, right?

So someone's like, either too early or
you're too late and everyone's like, Ugh.

But it sounds like in a model like
this, you could actually take the

kind of risks that you profess to
want to take without having to deal

with the massive headache of someone
actually just having too much for loco.

Yeah.

And going nuts one night.

Yeah.

So you can actually create almost like a
moat around the thing you want to test.

You don't violate an autonomy.

You can actually deploy capital and have
an agreement where you know exactly what

the alignment is and there's incentives
that are structured collectively.

Yeah.

So no one is sort of incentivized
to be a bad actor for no reason.

Carl Joseph-Black: Precisely.

And the interesting part about it all is
that if you could deploy capital silently,

you don't even have to do it in this like.

Yo, I just received
investment from such and such.

They might just say, yo, we want
to deploy capital silently on this.

We want to own a piece of it.

We want to see how you do it.

Right.

Sure, we'll give you a free supply of
our products as well in this project.

That'd be great if you gave it
out for free to everybody, right?

Mm-hmm.

But they don't have to
be an official sponsor.

They could just deploy the capital
silently and eat a piece off of it.

Jonathan Jackson: It's just like how
pension funds just operate generally.

Yeah.

Or university endowments.

Yeah.

Who are massive investors in large blue
chip VC funds that like you wouldn't know

because of how they think about their
responsibility to their shareholders.

They're.

Interested in playing long-term games.

So they're not, look, they're looking
at the entire life cycle of not

just the fund, but the actual firm.

And so the, the value of the LP
relationship is that they re-up off from

fund one to fund two, to fund three.

And so there's a vintage almost
model of we were early and we

were, we had convictions.

So you could play that same game.

Carl Joseph-Black: And in that particular
space, like what tends to happen is

the early folks get side letters.

Um, so what they do is they just
always get better terms in new funds.

They always get better terms.

There's always a side letter for them.

So they're running around telling
you, yeah, the price is two and 20.

That pension fund who was super
early is getting 1% management fee

and they're probably getting 10% on,
and the VC fund is probably getting

10% on a return instead of 20%.

Interesting.

Right?

So like they're always getting preferable
terms because of taking that risk early.

And as an artist, you can do the
same thing with a brand, right?

Like let's say if you're trying this
festival thing year one and that brand

decides, Hey look, we're not gonna like
be a sponsor because you're trying this

for the first time and that's too risky.

But we do believe in you as a person
and we think this idea is really good.

We're gonna slug you silently
and take a piece of this.

Mm-hmm.

But what we want is if this
thing kicks off and does well,

we want sponsorship rights.

Speaker 5: Mm-hmm.

Carl Joseph-Black: When.

You decide to do it.

And yes, we're gonna cut a check

Speaker 5: mm-hmm.

Carl Joseph-Black: To be a formal sponsor.

And that's not gonna be something
that you have to return capital on.

Speaker 5: Mm-hmm.

Carl Joseph-Black: But we want
sponsorship rights if this blows

up, because we know that if it does
blow up, that our competitors are

gonna want sponsorship rights on it.

Speaker 5: Mm-hmm.

Carl Joseph-Black: And they're
gonna cut you probably a bag just

as big as us, or maybe bigger.

Mm-hmm.

So we also want to like,
actually lock in, limit their

Jonathan Jackson: exposure.

Carl Joseph-Black: Yeah.

We wanna lock in a good
price and be good money on it.

Mm-hmm.

You know what I mean?

Mm-hmm.

So these are some really creative ways
that you can actually structure deals

with brands that actually can return
capital and limit their brand exposure.

Jonathan Jackson: And you
can do this with people.

Right.

So this is another interesting element
of the model is that if my friend is

starting something, if this agreement is
done well, I can be their first LP and

I don't have to, I am investing in them.

I'm actually investing in their project.

Yeah.

So I don't have to have the risk of
just giving them the money personally.

I can actually give the money
to the thing they were doing.

So then their incentive is aligned
to the creation, completion

and execution of the project.

Mm-hmm.

As opposed to me just
wiring them money Yeah.

And hoping that they execute.

Right.

Which is how every friendship dissolves.

Carl Joseph-Black: Precisely.

And it's interesting 'cause you
know, the other, the risk is

on the other side too, right?

Where you say, Hey, okay, let's say
I'm gonna invest in you as a creator.

I'm gonna invest in your
holding company in your LLC.

Right?

You know, maybe you gave them
$5,000, but you gave them $5,000

for like 20% of their LLC.

Mm-hmm.

Right?

But like they turned into Mr. Beast.

You know what I mean?

Yeah.

It's like, yo, like that's come on.

Right.

Like you're, you're act Everybody
in the room understands that they

literally got too much for too little.

But obviously if you're thinking about
economic incentives, the one person

that gave the $5,000 for 20%, it's
like, well, that's what you agreed to.

Mm-hmm.

So I want my $20,000 of your billion.

Yeah.

I want the 20% of your billion.

But then on the other side, Mr. Bees is
like, yo, bro, like, you know how many

different iterations from back then I am.

Yeah.

Right.

So like the LP model actually
just gets to hold everybody up

to a particular period of time.

It, it limits risk on both sides.

Mm-hmm.

And it allows folks to prove,
so it's like, all right, cool.

You did amazing on this project.

You returned capital.

So you know, one, what are
you doing X and two like.

Do you want me to actually deploy
additional capital to something else?

And you can have a separate
conversation about that.

Mm-hmm.

Right.

But at the very least, everything's
limited to that particular

project or that activity.

Jonathan Jackson: Cool.

Are there any new mo, a lot of these
are sort of iterations on old standing

models or things that have been
sort of reconditioned or reimagined.

Are there new models that are out there?

Are there new things that like
people are developing because these

things came into being somehow?

So are there like new things
for the moment that we're in?

Carl Joseph-Black: Yeah so there's
a bunch of new stuff happening and

it's really cool to see it happening.

So in the last, I'd say 10 years maybe.

Maybe 15 years.

Um, we've had the Public Benefit
Corporation created or the

Benefit Corporation B Corp.
You probably heard about it.

A lot of companies are walking around
saying they're B Corp because public

Benefit corporations or B Corp are
basically companies that as part of

their profit incentive, they also have
an incentive to do good and they make

it a part of their mission to do good.

So like, just like

if you're a standard C corporation and
you could sue a CEO for not maximizing

shareholder value, like you can also
sue a CEO under the B Corp model,

you could sue a CEO for not living
up to their model or their mission.

So if their mission is to give free
shoes in Africa if they haven't

given one shoe to Africa in two years.

You can be like, yo, you're
actually going against something

that's statutorily mentioned in
Delaware, in Delaware statute.

But on top of that, it's in your
like initial investment docs.

It's in your initial corporate docs.

You're going against
your corporate bylaws.

Mm-hmm.

Right.

So we can sue you for
breaching that as an investor.

Speaker 5: Mm-hmm.

Carl Joseph-Black: So those are
public benefit corporations and

a lot of them are out there.

Actually

my former managing partner was one
of the people who like put together

the Public Benefit Corporation.

He was one of the first writers to
actually advocate first for different

states to actually codify them.

So now I think they're in like 40
or 50 states, all 50 at this point.

You can make a, you can make a
ben, a public benefit corporation

in New York, Delaware, Maryland.

You could do 'em in California.

So that's really good because

this whole idea of capitalism,
folks are like, corporations

only exist to do bad things.

That's all they do.

And now that we have something
that can hold, like executives

accountable it's good to see.

So our hope is that obviously companies
will be doing better as they move forward.

Now, something that's super, super, super
on the fringe that I'm really excited is

the a corp that artist corporation, which
is the brainchild of Yancey Strickler.

Um, Yancy Strickler is the is a
co-founder of Kickstarter and he actually

did a TED talk on the A corp. And his
whole idea is taking the best parts of.

All types of corporate
structures that exist.

So he wants the best of the LLC,
the best of the C corp, the best of

a nonprofit and the best of an S
corp. And he wants the best of all

of these to operate for the artists.

And that's because

artists need a better entity
for them to, house their ip.

And artists need actually a more
collaborative type of entity

structure that works for intellectual
property specifically, and not

just monetary gain or not just for
capital, if that makes any sense.

Jonathan Jackson: Mm-hmm.

So in this model, it sounds like the
artists can formalize the value of

their IP from the beginning as opposed
to having it measured by the market.

Carl Joseph-Black: Yeah.

So, so to kind of break down that
question that you had, so when you

put together an LLC with you and five
friends and you're putting together

an operating agreement, there's a
section in an operating agreement that

has what they call a member schedule.

And that member schedule asks for your
name, address, how to contact you.

They ask you for how much equity you
have or how many membership units

you have, and then they ask you for
what your capital contribution is.

And like a hundred percent of the time,
the legal, the legally binding or the

perspective that a court is looking
for, or what they're looking for to fill

that slot is some sort of dollar amount.

So they're looking for you to
say, I contributed $10,000,

that's why I got 50% right?

But that doesn't necessarily exist for ip.

That doesn't have a value yet.

You can't say my brand instead
of $10,000 because your brand

and that value is subjective.

So in the current space that we're
living in, a lot of our investments

are capital driven and a lot of our
contributions are capital driven.

Speaker 5: Mm-hmm.

Carl Joseph-Black: But from my
understanding of what Yancy Strickler

is looking for in building the artist
corporation or the A corp, is that

he wants the ability for people's IP
contributions to actually have the same

value as money or capital contributions.

He wants them to actually
be one and the same.

And that's actually interesting
and exciting to see because.

Between parties, right?

Between people who are
setting up a company.

They know how valuable the
IP is to the company, right?

If you are the best cartoonist
that I know, and I'm trying to

make the new version of Cartoon
Network, I know how valuable your

IP is to this corporation, right?

And if I'm the person who wrote
SpongeBob Squarepants, you also know

the value of my physical writing, right?

But we both haven't created the
thing yet because we're just

putting together this structure
so that we can formalize our work.

So our IP has value, but it hasn't
been realized as of yet because

it hasn't been created, right?

From my perspective at least,
you know, reading through all of

Yancy's work, watching his TED Talk

it looks to me that he's trying to
create an entity where artists are

able to do that without having some
sort of monetary US dollar amount

attached to that activity, because we
do know how valuable creativity is,

but the issue with creativity is that
it's not as tangible as dollars are.

Jonathan Jackson: It's
interesting because I think that

this is one of the challenges that
is persistent is in a, we have a lot

of conversations about AI automation,
what's gonna stand, what's gonna matter.

But because artistry is a.

Act of faith in many respects.

When you start to talk about what
is it worth, it is deeply subjective

in terms of the permanence.

Like no one's asking like what
is the Sistine Chapel worth?

No one is like, man, I, I, I
wonder if can Hinley Wiley is

making valuable work, right?

Like, that's not the conversation.

And even when you see one sell,
you're like, wow, it sold for X.

But that actually doesn't change the
value of what he made or what he did

or how he made that come to life.

And so I think

an artist, corporation's interesting
because this is the kind of thing

had it existed, I think there's
different conversations that would be

happening around people who never got
the opportunity that we know they needed.

Or artists that were valuable,
but they had to choose between

investment and integrity.

And so like the structure, even the
legal element of that, you know,

policy has to catch up to culture.

It's never in reverse.

Yeah.

So y what Yancy's doing is interesting
because what he's saying is in this

environment we need a new paradigm
and it needs to be actually policy.

It can't just be vibes.

So like he's trying to make this
the A corp form that you can, if

you're on Northwest Registered agent,
it's one of the selection criteria.

Mm-hmm.

Which requires state legislation, national
legislation, people writing policy,

legal scholars, artists, operators.

Right.

That's like, it takes a coalition.

It the same way the PBC came today.

Like people have to decide.

This is actually a sea change and that
it's not just worthwhile, but important.

Carl Joseph-Black: Yeah.

It's

the thing that we're also seeing happen,

that yancy's also seeing happen is that

the new resource is creativity.

That is the new like
creativity is like oil.

Creativity is like

gold.

Creativity is like plastic, right?

Like it's a natural resource, but that
natural resource comes from human beings.

And we've seen the effect of
that natural resource and how

it has affected humanity, right?

And how it's actually helped
humanity move forward.

But we've never we've only
made limited strides in.

Codifying or protecting
that level of creativity.

It's why we have, you know, in,
in terms of IP law, we are like,

Hey, we can take that and structure
it and make it an asset.

If we put it inside of a company,
it could be a tradable asset.

But in terms of the creation of it,
the point in time when it doesn't

necessarily fully exist in its rawest form

And the rawest form is in,
is when it's in your brain.

Jonathan Jackson: Mm-hmm.

Carl Joseph-Black: That's where
the rawest form of creativity is.

We haven't been able to create a
legal structure that protects that.

Or that, that represents
the value of that.

Without putting dollar on it.

Without putting a dollar on it.

And what Yancy, in my opinion is doing
is he's saying, Hey, let's actually

see if we can allow that to happen.

But amongst artists at
this stage, amongst artists

but the interesting thing, and
that's why I'm really excited about

it, is I wanna see how cause it
doesn't fully exist yet, right?

And he's advocating and putting together
a team for people to advocate for this

on a state and on a federal level, right?

So like what I'm excited to see
also is what the rights that these

artists are going to have inside of
the entity as owners of the entity.

And like, what rights are the
shareholders going to have, right?

Um, because he's making an entity
that can be run by artists,

for artists, but supported by.

Outside investors.

So like an investor will be able to invest
in an A corp and own a piece of it, but

he, they might, they won't own the ip, but
they'll own a piece of the profit or the

revenue that comes from that structure.

, the, A corp also will be able
to take grants from nonprofits.

And as a result of that, that's
usually typically reserved only

for nonprofit organizations, unless
it's a for-profit grant that's given

by like the state or something.

Usually grants are for nonprofits.

That's usually where they go.

But he wants to create an entity
that can accept that because

one of the most important things
about artistry is patronage.

Yeah.

So he wants that to stay.

He wants them to have the ability
to have an and a treasury for

all the artists to have access to.

He wants them to have insurance
so that they can pay for health

insurance for themselves, right?

So all of these are gonna live inside
of this entity, and all of the artists

are gonna be what he calls members.

Although we have the flow chart, but
it's gonna be interesting to see who has

rights to what, like how does this look
legally from a statutory perspective?

Because every state gives rights to
people who are inside of these entities.

Like members of an LLC have
rights, shareholders of a c

corporation have shareholder rights.

So, so because these people have rights,
what are the rights that the artists

are going to have on a state level?

Um, and that's also gonna
make a determination to

where people decide to file.

Because if an artist has more
rights in California mm-hmm.

Through the California a corp Yeah.

Than they do in the Delaware, a corp, then
most folks are gonna file in California

Speaker 5: mm-hmm.

Carl Joseph-Black: Instead of Delaware.

Jonathan Jackson: Mm-hmm.,

Carl Joseph-Black: But if investors
have more rights in the A corp in

Delaware, they might say, well, in
order for you to receive an investment

from me, you need to be a Delaware,
a corp, not a California, A corp.

Speaker 4: Yeah.

Carl Joseph-Black: So these
things are gonna be interesting

to see how they develop.

But I, but to me, I think the
future for creatives, for creators

in general is really bright.

Because what this tells me is that
the marketplace itself, not only the

fact that legally these things are
happening, that means financially,

they've either been happening or they're
brewing heavily and people are seeing.

The marketplace shift and
change toward these folks.

So they're trying to figure out like, hey,
one, how do we protect them, but also how

do we get more capital in their hands?

Jonathan Jackson: Yeah, I agree.

I think I'm,

I'm optimistic too.

I, I think for a long time there's
been this false dichotomy between

you sort of like being an artist and
making money, and I think that varies,

you know, um, depending on industry.

There's this idea called the
power law, which is based on

the Pareto principle, right?

So 80% of what you see happen
comes from 20% of the effort.

Power law essentially says that
if you were to look at sort

of VC, for instance, right?

You see.

80% of the take home
from 20% of the firms.

Or , like on YouTube, 80% of the
interest coming from 20% of the creators.

And I think the creator
economy has a power law.

Media has a power law.

There are outsized actors that
are often referenced as examples

that are actually not the example
of the messy middle, right?

The middle class, if you will, of creators
that are doing really well, growing,

wanna make a sustainable income, take care
of their people and love what they do.

And I think that requires structure, that
requires policy, that requires public

private partnerships, and it requires
sovereignty so that you have an artist

who wants to take a risk and you have the
ability for that risk to be capitalized

well with the right kind of capital.

Not all money's created equal.

What I mean by that is some
capital is not patient.

Some capital needs a return, other
capital, and oftentimes philanthropic

there, the incentive of where that
money comes from is not looking to

beat the s and p there's a longer
headway, which is why they can be

attractive, but they're hard to get,
which can make them unattractive.

And so if you don't know who you
know, everything has a network effect.

So I think what Yancy's trying to do,
and I think what we are trying to talk

about is this idea of structure as an
opportunity and not as a boogeyman.

Carl will just spend almost an hour
as a practicing lawyer talking about

what it means to think about this
from the perspective of an artist

that has intellectual property, a
creator that's making something,

whether that be streaming university
like Kai Cenat , which is ip.

Whether that be a show on Patreon,
whether that be, , a hiking expedition

or whether that be a one V one
tournament that you're doing in your

neighborhood that , you're actually
deciding to film and made a logo for it.

Those things all equal out
across the layer of ip.

They might be different types
of intellectual property, but

they are all owned and operated
by the person who made them.

And so I guess my hope and my
ambition for this episode is that

people can see structure as a thing
that is for them, structure as

an opportunity to build something
distinct and structure as a thing.

You have not just a right to, but I would
say you should have a conviction towards.

If you're trying to be out here and
build something sustainable and something

that you can continue to profit off
of, and that is investible because

that's the other thing that I think
an has done really well is to think

about art has always been investible.

The kind of investor is changing.

Speaker 5: Yeah.

Jonathan Jackson: And we didn't even
really talk about the tokenization

opportunity or the Web3 implications
of being able to tokenize IP and having

that live on the ledger, which makes it
interoperable, which means you can always

know who purchased your art and you
can always have a chain of provenance.

There's a whole world that this structure
enables, that is coming online that,

I think we want people to know about
and to feel empowered that you don't

have to be a lawyer to get started.

You actually just may need support
to actually get it to completion.

But the structure is approachable,
it's accessible, and it's achievable.

. Carl Joseph-Black: I think
the opportunity is enormous.

Lawyers get a bad rap out here, bro.

They get a really bad rap because,
, most of the time folks see lawyers

doing like one particular thing.

Jonathan Jackson: Celino and Barnes,

Carl Joseph-Black: you
know what I'm saying?

Celino and Barnes better call Saul.

Like those are the types of folks
they see lawyers play a role as.

The money slash return on the paperwork
I send out consistently has to be like,

If we were to say every piece
of paper that I ship from

my office is worth a dollar.

Jonathan Jackson: Mm-hmm.

Carl Joseph-Black: The return
is like a thousand dollars.

For every person, like
every piece of paper I ship.

If I make you a SAFE agreement, you're
probably gonna raise millions of dollars

on that safe agreement, but you're
gonna pay like $1,500 for it, right?

And I create that context because,
, most folks look at lawyers , as

a sinkhole where you put your
money and never get it back.

But like the paperwork, the structures
that people are putting together

for you, the returns on those are
so crazy based on your execution.

It's insane.

So it actually makes more sense for
you to, at the very least, get your

lawyer on the phone and talk to
them about what it is that you want.

Done.

And they don't necessarily even have to
do it, but at least having a conversation

with them so that they can give you some
sort of guidance actually, like yields

such a high return for you that like it
can actually turn something that you just

had an idea of into millions of dollars.

And it actually works the other way
where it's like a lawyer being in the

room or you talking to that lawyer
before making that decision can actually

save you millions of dollars, right?

Like you could have said, Hey,
yeah, like I just thought of my

LP fund and I'm gonna da da da da.

And yeah, I made
everybody sign the papers.

And you're like, Hey, did you check to
see if they're accredited investors?

Because if.

If the SEC finds out that you're
doing that and you're not checking

if they're accredited investors,
they will clean you completely out.

Did you check that?

And like that one question actually
could save you millions of dollars.

And it's just a form that you have to make
sure people fill out right themselves.

But like that one form, that one piece
of paper, that hour, two hours that

you spent with your attorney actually
saves you a couple s or vice versa.

That structure that they put
together that costed you a certain

amount of money, actually yields
you like 10 or $20 million.

If you're gonna take this game that
you're playing seriously, you know

that the that the money's there
out, the money's out there for you.

You know that folks are innovating
in that space and,, there's people

like Yancy that's putting together
innovative structures so that you

can go out there and do cool things.

Your lawyer's on your side too.

So that's my that's part of my hope
throughout this conversation that

folks just realize oh wait, hold on.

The lawyers aren't people that we
throw money away to instead they're

people we make investments in

.
Jonathan Jackson: Mm-hmm.

Carl Joseph-Black: So that's my hope.

Jonathan Jackson: Well, there you
have it, we just got an hour

of free legal advice from Carl.

So we're up.

Carl Joseph-Black: Wait, wait.

Hold on, hold on, hold on,
hold on, hold on, hold on.

Yo, this is not legal advice.

This is not legal advice.

This is for purely entertainment value.

You get legal advice from your lawyer.

That's who you get legal advice from.

All right?

Jonathan Jackson: Yeah.

That's why I'm

not a lawyer all.

This is not legal advice.

Carl just gave us an
hour of entertainment.

I'm Jonathan.

This is Carl.

You know what?

The vibes are out here.

Don't follow us.

Don't follow a scammer.

Follow the money.

Carl Joseph-Black: Follow the money.

The British Narrator: Due Dilly is
researched and hosted by Carl Joseph Black

and Jonathan Jackson, audio engineering
and camera operation by Wolf Taylor.

Video editing by Sean Ferra and
Stefan Lawrence Illustration

and design by the Duro Arts.

Filmed on location at WTF Media
Studios in New York City, and I'm

your reliable British narrator,

born and raised in South London.

For deeper insights and context,
visit duethedilly.com That's

D-U-E-T-H-E-D-I-L-L y.com.

See you next time.