Law for Startups: Data Protection

Mike Buckworth dropped into Club Workspace’s Clerkenwell venue on Monday night to give us our monthly legal healthcheck. Data Protection was the subject of the night. Mike explained the law regarding Data Protection and how it effects startups and small businesses.

To kick off his presentation, Michael explained why data protection is more important today than, perhaps, ever before. With so many online services that users have to sign-in to or sign-up for, we disclose personal data every time we lift the screen of our laptop.

What you don’t want, Michael continues, is for the people who handle your information to sell or share your data. You don’t want them to provide your email address to a third party who will spam you, for example.

The legislation and precedent

The data protection law that we are bound by in the UK comes from Europe. Michael explained that there are two main pieces of European legislation that impact on the UK’s "Data Protection Act". These are the "Privacy & Electronic Communications Directive" and the "Data Protection Directive".

This means that the legalities of data protection is 'ostensibly' uniform throughout Europe. However, even though the mechanics of each nation’s legislation is similar, the way in which the law is applied differs from country to country. Michael gave this example: data protection infringements in Spain are punishable with a prison sentence, in the UK they trigger a fine that 'not everyone' receives.

Those who commit an office under the UK’s Data Protection act can receive a fine of up to £5k in the lower courts or an unlimited fine in the upper/appellate courts.

If your business handles other people’s data

Mike explained that the Data Protection Act is relevant to Tech Startups more than most. If a tech startup is building a website or an app that requires user-data to function, then they need to comply with data law.

There is a 'cast-list' in data law terminology. There is the Data Controller, the Data Processor and the Data Subject. The Data Controller is the person who collects the data. The Data Processor is anyone who uses the data. The Data Subject is the person whose email address, name, phone-number, address, etc. is being handled.

In law, the Data Controller is responsible for the actions of the Data Processor. Mike explained that this can be more complicated than a 'boss' presiding over someone in the same office. If the you’re a holiday-comparison-website and you legally pass the personal information of your Data Subject to a hotelier in France (who becomes the Data Processor) and they commit an offence, you could be liable.

Michael ran through the main documents that you need in place if your business handles personal data. You’ll need a Privacy Policy on your website. Mike mentioned that it’s worth getting a lawyer to build this with you, as they know what to include. You definitely need a Data Licence - without one you cannot handle personal information. If your company wants to legally share the data of others you will need a 'Data Transfer Agreement'.

The eight principles of the Data Protection Act and you

The Data Protection Act includes eight principles with which you have to comply if you are to avoid legal reprimand.

The data in question needs to be 'fairly and lawfully' processed. It also can only be 'processed for a limited purposes.' Limited purposes means that you cannot merely harvest data because 'it might be useful in the future'. You have to provide a specific reason for collecting the data otherwise you have no right to do so. The data has to be used adequately and not excessively. This is to rule out the unfair bombarding of Data Subjects with spam, for example.

The data that you collect has to be accurate and up-to-date. Mike explained that this is something that businesses fall foul of quite often. If you keep information on your records that is drastically out-of-date, you are in breach of the data protection act. The wording of the act states that data cannot be kept for 'longer than necessary'.

The Act also specifies what is meant by secure. For example, if you collect 'sensitive' personal data - the sexuality, religious views or politics of a Data Subject, for example - these details must be kept in a separate spreadsheet from the 'personal data' - name, email address, DOB etc. Also, certain information has to be encrypted. Consult the act for further details.

The final point is that the data cannot be transferred to a country that doesn’t have an equivalent to the Data Protection Act. If you wish to share data with a third-party who is bound by the law of a nation whose legislature does not make adequate enough provisions for data law, then you will be in breach of the Data Protection Act.

The difference between personal information & sensitive personal information

If your business collects information that is defined as 'Personal Information' in law then you will need a 'Data Licence'.

Personal Information in law is any information from which a 'living person' can be identified. There are complex definitional praxis which determine what details classify as 'Personal Information', but Michael blitzed through these, offering this rule of thumb: if you’re collecting a person’s name, then the data classifies as 'personal information'.

'Sensitive Personal Information' - and the reasons why this can be collected - is a slightly different issue in law.

Sensitive Personal Information is information that pertains to a person’s racial or ethnic origin, political opinions, religious opinions, membership to Trade Unions, physical or mental fitness, sexuality or their criminal history.

This information can only be collected by a company if you have explicit personal concent or if the collection of this data has become necessary in the context of employment.

Michael cleared something up here straight away. The term 'context of employment' means that if the Data Controller has ascertained a person’s 'sensitive personal information' during their term of employment. Such as, if the Data Subject works with children and is therefore obliged to undergo a CRB check. What the term 'context of employment' does not mean is that prospective employers are allowed to ask candidates questions about their 'sensitive' personal information at interview. That is not allowed in UK law.

What if you are a startup who wants personal privacy?

When you register a business your name and address become public knowledge. For most business owners, this is not a problem. However, if you’re starting a business and want to keep your personal details secret, there are a few simple steps that you can take.

You can use a 'Nominee Structure'. You will need to talk to a lawyer to put this in place, but doing so means that your name is protected.

Your personal address can be obscured from prying eyes by simply purchasing a registered address. Doing so allows you to use an established business address in lieu of your home address.

Thank You

As ever, a mammoth blog has followed Mike’s advice night! Thank you to the man himself for sharing such beneficial information and thank you to everyone who came along. I hope that you all enjoyed your Club Workspace experience! A massive thank you, of course, to Paul and Marina of Dreamstake, who co-hosted the event with Buckworth Solicitors. 

Club Workspace Member Showcase 2: Aniboxx, ClipDO and Rockshore

After a successful debut two months ago, the Club Workspace Member Showcase made its triumphant return. Our Member Showcase nights are an opportunity for Club Workspace members to connect with each other after a hard day’s work.

The event was hosted in collaboration with MBA and Company, who provided a selection of beers and ciders for the evening. As these bottles were shared around, our Clerkenwell venue began to hum with the sound of small-business conversation.

Then came the main event. The networking is an amuse-bouche for the piece-de-resistance: the Member Presentations.

At every Member Showcase a couple of our members take to the stage in order to share their startup & small business stories. Last time Nick, Tim, Gerard and Sinead were very well received. Sinead - whose book-launch is being hosted by Club Workspace next week - was there to support her fellow members Tunde and Jon this time around. Tunde spoke about animation company Aniboxx, and Jon shared stories about two tech companies that he has built from the ground up: ClipDo and Rockshore.

Aniboxx

Tunde made it clear from the off that Jide Johnson, his business partner at Aniboxx, was a big part of the company’s success. Even though he was busy last night, I can vouch for Jide’s skills. I’ve sat next to him whilst he’s been animating. That man has talent!

Without further ado, Tunde leapt into an explanation of why animated video is useful for businesses. He explained that, when a user lands on your website, you have about six seconds to capture their imagination. Traditional video is useful for hooking people to some extent, but Tunde explained that animated content can combine recorded content with moving animated imagery, kinetic typography and other attention-grabbing elements.

Not only is animation an attractive, aesthetically appealing option, but it also allows organisations to communicate complex ideas in a way that is very easy to digest.

To visualise what he meant, Tunde played us the Aniboxx showreel. Please feel free to take a look at it yourselves! The audience was so entranced by Aniboxx’s reel that we ended up watching three more videos from Aniboxx’s portfolio. This wasn’t Tunde’s idea, I promise - the play button was hit due to popular demand!

ClipDo

After Tunde successfully turned Club Workspace into an Aniboxx cinema, Jon Slinn began his presentation. Even though Tunde and Aniboxx were a tough act to follow, Jon Slinn was more than up to the task.

Jon bought a wealth of experience in the tech scene onto the stage. He spoke first about ClipDo.

ClipDo is an app that allows you to copy text from whatever you’re reading online - whether it be The New York Times, Wired Magazine or the Workspace Blog - and ping it to your Kindle to read later.

The way that ClipDo was monitised is that they sold advertising space. Jon explained that ClipDo’s advertising stats were amazing. To illustrate his point, Jon shared ClipDo’s Click through rate (CTR) stats. A CTR is how many times an ad needs to appear before a user clicks it. John explained that for Facebook, the average CTR is around 3000. Banner ads are closer to 2000. Google is much better, it’s usually around 400-500, but is ‘always’ under 1000. ClipDo’s average CTR is 164!

Having such a good CTR-average meant that ClipDo could charge more per-click. Facebook average £1 PC, Banners £2, Google around £3. ClipDo’s average cost-per-click was £3.29.

Even though all of these stats sound like good news, Jon told us why ClipDo couldn’t make more than around £10k in 6 months: Volume.

The big lesson that Jon Shared with everyone was that volume is what you need with a tech startup similar to ClipDo. You need to pick up 50,000 new users a day! Jon says that Dropbox, Instagram and Twitter are prime examples of the kind of volume you need. ClipDo, unfortunately, wasn’t they honeypot that Jon had hoped.

Rockshore

Jon then moved onto Rockshore, a tech company that he founded long before the Kindle was in existence.

Rockshore works with real time information, building systems that enable people to make decisions that require lots of data to be cross-references. For example, Rockshore develop systems to help turnaround at airports and train stations.

Needless to say, Rockshore have been a huge success. To demonstrate this, Jon showed us all a graph on the projector, and there was a massive hockey-stick going from left to right - and the variable on the left axis was Pounds Stirling, in millions.

Speaking as a successful tech founder, Jon urged all startups to get a team around them right from the beginning. Starting up on your own in tough, so why bother? Jon said that - all in - starting a tech company from scratch with a team of five costs around £250k. Jon then set about explaining how to smash this figure into pieces.

Firstly, do not pay yourself. You have to be extremely strict. Give yourself enough to pay your rent, and to pay for 18 months worth of beans on toast - don’t take any money away from the business for luxuries - like tomato ketchup.

Secondly, don’t pay your staff. Offer them share options - people will take them! Check out this Workspace Blog about share options to find out how.

Thank You

Thank you to Jon and Tunde for sharing such valuable advice. Another massive thanks goes to MBA and Company for sponsoring the event. The biggest thank you goes to all of the new faces and members that came along to the Member Showcase. The more the merrier! Keep your eyes peeled on Twitter and Inspiresme for Member Showcase 3!

Club Workspace Member TasterLab Wins the Startup Competition at the London Innotech Summit

We are delighted to extend our warmest and most heartfelt congratulations to TasterLab, who won the Startup Competition at London’s prestigious Innotech Summit on Friday 13th April.

TasterLab are an online service that allows busy people to try something new and their founder, Ben Chappell, is a Club Workspace member. It has been a pleasure to watch Ben’s business grow and expand and we are delighted that he has encountered such success.

Interview with Ben Chappell, TasterLab’s Founder

Ben was back at the Club Workspace venue in Clerkenwell on Monday, so we took the opportunity to chat to him about his rather eventful Friday afternoon:

Ben! Congratulations on your big win! How does it feel?

Yeah, I’m chuffed. Absolutely chuffed. It was fantastic to be shortlisted, so to win is amazing. Especially as we only entered the competition a day before the entries closed! I only found out about the competition after I did a guest-lecture at Hult International Business School. After my talk they recommended that I entered the competition.

Was it the first competition that you had entered?

Yes it was! 100% record!

For those who haven’t used your site yet, what does TasterLab do?

We are an online discovery tool. If people are searching for a new hobby, we’re the place to go! We help busy folk meet likeminded people whilst they discover a new hobby. There are loads of hobbies on the TasterLab site, too. From latin dancing to cooking via French Lessons and Scuba Diving! On the site our users can look at consumer-reviews, and also read analysis of the ‘taster’ sessions that has been provided by experts and journalists. The taster sessions that are available on the site are either discounted or, in some cases, free.

We are also 'anti-search'. We know that people who come to out site don’t necessarily know what they want to do. If you’re searching for a new hobby, you want something you haven’t tried before, right? Therefore our website provides users with a broad range. A big choice. We’re a discovery tool, not a search engine. Think about it, Google’s rubbish if you don’t know what you want!

What’s TasterLab’s startup story?

Well, TasterLab’s new website launched in November 2011 after we secured some Angel funding. Before that we had been around for eighteen months. The site is a lot meatier now, before it was scaled down. 'Lean', I suppose you could say!

What’s next for TasterLab?

Next we are hoping to raise some 'series B' funding and when we secure that funding we’re looking for a web developer to join us full time. So if you know anyone! We’re looking for a full time PHP Developer, we’re offering a comepetitive salary and share options. Thanks!

Congratulations Ben, and we’ll see you at Thursday’s Club Workspace Member Showcase for a drink!

About the Innotech Summits & The Startup Competition

The Innotech Summit was a hotly anticipated event that had been marked onto the calendars of entrepreneurial, startup and tech royalty for many months. London’s Mayor Boris Johnson provided the opening address, and tech & creatives giants such as Milo Yiannopoulos, Jeff Lynn and Paul Alexandrou delivered keynote speeches.

The Startup Competition gave grass-roots London tech companies the chance to shine. The Innotech website described the competition as an opportunity for tech startups to get ‘in front of prestigious hi-tech venture capitalists, professors and innovators in order to pitch for investment.’

When this high-stakes Startup Competition rolled around, TasterLab took their deserved place in the limelight. By winning the competition, TasterLab secured £5k worth of mentoring and support from The Innovation Warehouse, and have gained some invaluable exposure.

Entrepreneur First's inaugural 'Graduate Cohort Announcement' made at Club Workspace

Club Workspace were delighted to host Entrepreneur First’s ‘Graduate Cohort Announcement’ at our Clerkenwell venue.

The press conference commenced at 9:30 on the morning of Thursday 5th April. The Entrepreneur First team were joined by a healthy number of the UK’s leading press people for the announcement of the first ever graduate cohort.

What is Entrepreneur First?

When the press conference began, Matt Clifford - Entrepreneur First’s CEO - explained the genesis of Entrepreneur First.

Matt explained that Entrepreneur First was the ‘national graduate scheme for aspiring entrepreneurs.’ Entrepreneur First came about because the buzz around student entrepreneurship was more voluminous and impassioned than anyone had first expected. However, even though the student-entrepreneurship scene was ablaze, this level of interest and engagement wasn’t being sustained after graduation.

Students were, and still are, dissuaded from becoming entrepreneurs after graduating due to the risk involved with taking the leap. What Entrepreneur First aims to do, is to de-risk the process of becoming an entrepreneur.

Introducing the first of ‘Graduate Cohort’

Alice Bentinck, also of Entrepreneur First, took to the floor to explain the project.  She told us that there were over 400 applicants at the beginning of the process, a number that has since been whittled down to 34. The final ‘cohort’ of 34 was decided after a succession of telephone interviews, face-to-face meetings and a rigourous final selection process.

The final 34 have already met, and two have already decided to combine their ideas and to work together! In August the cohort of 34 will undergo an entrepreneurial ‘bootcamp’ in Cambridge. During this fortnight in the ‘shire they ‘will begin the process of turning their ideas into innovative, fast-growth businesses.’

All of the cohort members will be in touch with Entrepreneur First every week. Their progress will be observed and supported.

Sponsors and Guests

To help usher in their new project, Entrepreneur First gave their sponsors and friends the opportunity to speak from the Club Workspace stage.

Pete Smith, the COO and CoFounder of Songkick, was first to speak. He was one of many entrepreneurs who aided Entrepreneur First in the interviewing and selection process. A poignant nugget of advice that Pete shared was that ‘there is no ‘time of life’ when you’re ‘ready’ to run your own business, you just have to jump in.’

Tamara Rajah, Associate Principal at McKinsey & Company praised Entrepreneur First’s efforts. She was sure that the scheme would increase the number of graduates who made the plunge and leapt straight from matriculation into entrepreneurship. By providing student-entrepreneurs with a network and with contacts, Tamara explained, Entrepreneur First were enabling them to make the transition with fewer risks.

Oscar Jazdowski, the Head of Organisation for the Silicon Valley Bank UK, spoke next. Oscar was an enigmatic speaker who explained that the SVB were not ‘just another bank’, they want startups to succeed! And that’s not PR-friendly altruism either, if startups succeed, then they succeed too. Simple!

Microsoft’s man from Senior Corporate Affairs gave the penultimate address. Stephen Uden provided an excellent sound-bite, ‘the future and growth isn’t about big businesses, it’s about small businesses’.

Before handing back to Matt to round up, Stuart Fraser of the City of London Corporation rounded-off the sponsor talks. Stuart began, ‘well, we were a startup about 160 years ago... it’s been going rather well!’ On a serious and interesting note, Stuart spoke about connecting the city to the startup space - ‘we’ve got everything you need in the square mile, we want to share that knowledge with entrepreneurs!’

Thank You

It was an absolute pleasure to have Entrepreneur First back at Club Workspace in the Clerkenwell Workshops. We met a lot of new faces today, and we would be delighted to welcome any of them back if they’re ever in the area in the future.

All the very best of luck to the Graduate Cohorts!

Law for Startups @ Clerkenwell Workshops

Capitals and shares was the topic of conversation at Clerkenwell Workshops on Monday evening as Michael Buckworth led a programme of seminars for startups highlighting the most pressing legal issues for newly formed businesses.

The focal point of the evening was the in-depth presentation from Michael himself, solicitor and founder of Buckworth Solicitors. The session covered a host of key points including the legal implications of setting up a new company, the class and valuation of shares and the rights and obligations of shareholders.

The interactive seminar was followed by a Q&A session hosted by Michael that sought to iron out any practical issues regarding their businesses, ensuring they don’t fall foul of the law in any area.

For full event coverage of Law for Startups – Companies and Shares visit inspiresme.co.uk today.