I need you to suspend your disbelief
just for a sec
an imagine I am Mick Jagger
and I’m on a US tour
going across small venues across the
u.s. I’ve just arrived in Wilmington
Delaware at the Queen theater and we’re
playing a concert and while they’re
serving cold beverages in the back
they’re also serving hot coffee and
someone orders a hot coffee walks
through the crowd bumps his elbow and
drops the cup of coffee on people and
this people have minor burns so what
happens next you know we’re in America
you get sued so what happens is they sue
to sweep the street they try to sue
everyone they can they try to basically
name the artists they try to name the
touring company they name the venue and
the wonderful thing in this world we
take for granted a lot of times is
limited liability so the artists even
though they own the touring company
haven’t done anything wrong directly and
they’re protected from liability so they
can get out of the lawsuit the touring
company though that’s actually running
the show if they’re not adequately
insured may be responsible if they’re
ultimately held liable and so it’s all
those deep pockets it’s the deep pocket
from all the money that came from their
whole tour not just the venue that was
the Queen Theatre in Wilmington it was
all across the United States that it’s
basically a big pool of assets that that
creditor now has access to and what I’m
here to share with you is there’s
another way to do it and there’s a
conventional way that most you are
familiar with not to set up separate
companies so you set up an LLC let’s say
for every venue and so the Queen Theatre
would be in its own particular you know
container and that way the assets
associate with this you know are only
basically going to that credit or not
any of the other assets from the tour so
that’s exciting but it’s really
cumbersome and not many people go out
and set up hundreds of LLC’s for the US
tour but there’s there’s an easier way –
there may be an easier way and what if
there was an easier way well I’m here to
tell you there is and it’s called the
series LLC it’s a particular type of LLC
that Delaware invented in 1996 and it’s
a way to take one LLC and break it down
in its component parts so give a problem
with one aspect of the company that that
company that that particular protected
series isn’t necessarily responsible for
everything else that happens against the
company so if you have a problem and one
let’s say at the Queen venue it can’t go
against the assets elsewhere this tour
revenues
and this is surprisingly common even
Bruce Springsteen in 1977 had a tour and
it was just after a dispute with his
business manager and he decided to call
it the lawsuit tour and so this this is
very common to get sued in the United
States and so what people do with like I
say is separate out these liabilities
but the exciting thing about this series
LLC is that it’s really not limited to
just Delaware Delaware was the first
state to have it thirteen states have
adopted it since then and then the
uniform law commission which is an
organization that gets together and
creates laws across the u.s. just
enacted an act that’s trying to unify
the way these laws are created so before
I tell you about you know a little bit
more about the series LLC I want to give
you a little bit of an explanation on
limited liability in the United States
because we take it for granted two
hundred years ago if you were to invest
in shipping in a sailboat going across
the ocean the owners were personally
responsible not only for the cargo and
the ship but everything that went wrong
we ran into a dock or if it ran into
another ship the owners are responsible
so they’re afraid to take risks and the
nice thing about this limited liability
system to bargain with the government
where the government was to encourage
commerce they let you basically limit
your risk and there was a case in about
two hundred years ago called the Rebecca
was the first time the courts
established the principle of limited
liability where if there was a problem
the ship they said the owners weren’t
responsible for anything beyond their
investments and that was really
revolutionary
the next major revolutionary thing that
happened in the incorporation system was
the 14th amendment to the Constitution
so you may be familiar with you know
after the Civil War there were three
amendments the 14th amendment what it
did is it took people and made them into
citizens and you may think well those
are human beings well guess what
according to the US Supreme Court in a
case about 20 years after that which was
Santa Clara County versus Southern
Pacific Railroad they actually the
justices got together before the oral
argument and they said as soon as the
oral argument started we don’t hear any
arguments about whether this railroad is
a person because we all agree this
railroad is a person and so it’s
happened as a result of that is the 14th
amendment has allowed States to innovate
their corporate laws so there is no
federal corporation law it’s all
state-by-state and the advantage is
you’re titled the equal protection under
the law
so if you incorporate in Delaware you’re
allowed to use that business in
California you’re allowed to use that
business in Arizona you can go to any
state you want and do business there and
and the exciting thing is the Internal
Affairs our governor under the state
works or it’s set up so it’s governed
under the state of Delaware
so these states can start up innovate
it’s like the laboratories of democracy
all 50 states can kind of innovate and
determine what they think is the best
law and Delaware has been way on the
forefront so you’re all familiar with
big companies why they’re incorporating
Delaware and partly it’s because they
had great corporate laws when
corporations were first getting started
and so they’ve developed this whole
trend of case law through the Court of
Chancery which is a special business
court without judges with judges without
juries and so it’s an exciting time to
basically to incorporate in Delaware and
do business elsewhere but corporations
became a little old-fashioned they
became a little staid you had
stockholders he had directors he had
officers you have always Duroc recei of
meetings and so in 1977 the state of
Wyoming invented something called the
LLC the limited liability company and it
was slow to take off very slow in fact
in fact Delaware which is known for
being first wasn’t quite last but they
waited till 1991 to have their own law
now we’re no longer this world where
corporations are controlling you know
that all the new entities now LLC’s are
being formed three or four to one
compared to corporations so it’s not
uncommon to have corporation corporate
law basically shift to a new form of
entity and what I’m here to talk about
is why are using a boring old
corporation or a boring old LLC when you
could be using a series LLC to protect
multiple assets where you can set up one
LLC and have these internal chambers
within that it’s like a safe deposit box
right so you go to the bank if you go
into volt and know everything’s lined up
on the walls it’s available to everyone
but you can have little boxes with keys
within this one company where if you
have it if you have a judgment against
the company you have to get a judgment
against that particular protected series
in order to get the assets and so it’s a
way to segregate out these assets and
real estate investors are using it so
that they can set up let’s say ten
properties instead of having ten
CAES they may set up series LLC with
protected series one protected series
two protected series three and they can
internally it’s really exciting they can
establish these series without having to
go back to the secretary of state so it
empowers you to literally create people
without even the further government
authority so you are allowed to
basically create as many people as you
like and you may say well John 10 LLC is
okay I understand ten but their series
LLC’s out there with a hundred thousand
series in them they’re not limited to
you know a handful of series and so this
world we’re moving into with entities
this is a new type of entity that’s
gonna be really exciting that’s already
being used as about a hundred thousand
series that are already filed of those
we don’t know how many protected series
are out there but this is gonna be an
exciting world because regular
businesses whether it’s an entrepreneur
that’s a serial entrepreneur and they
want to incubate different businesses or
whether it’s a real estate investor or
maybe even big businesses let’s say you
had autonomous vehicles you have every
vehicle in its own series or you have
Getty Images and they’ve got different
copyrights and every copyright goes into
its own series it’s a way to
revolutionize the way we think of
entities where entities aren’t static
entities are constantly evolving and the
organization is actually becoming a new
organization as it acquires assets and
it may not even be people that establish
these new organizational assets it could
be the companies themselves automating
this process with artificial
intelligence to establish rules to say
that you know as it acquires an asset
we’re gonna create a new series fund the
series keep track of the records in that
series and we may even use further
technology to bulletproof that just so
people don’t accuse us of mischief we’re
gonna use this thing called the
blockchain where you can just you can
basically put things on a public ledger
or a private ledger where you could you
can’t change it over time so anyone goes
back and questions what assets were
owned when when someone you know someone
dropped the coffee you can prove
definitively and this is this is a
really innovation in risk it’s a real
innovation and basically trying to
mitigate the risks associated with deep
pockets it turns those deep pockets into
little pockets and it isolates
liabilities to only those assets which
really should be at risk and allows
businesses to really do things that are
beyond the scope of what they’ve ever
been able to do before and like I say
it’s only 1% of new LLC’s now we
got 13 states that have it we got a
uniform law that just came online teller
was the first state to have it and it’s
just really exciting that you can
basically anyone can use these but you
haven’t heard about it because they
don’t teach it in law schools they don’t
teach it in business schools you don’t
read about in entrepreneurship books
this is something that’s not well
publicized that’s why I’m here to
basically share with you and invite you
to look into the series LLC to determine
well that’s something you would think
about using or maybe someone you know
because the limit is your imagination
the number of series limit is your
imagination and your ability to keep
track of the records so I’m gonna ask
you not to think big about business but
to think small
[Applause]
you
just for a sec
an imagine I am Mick Jagger
and I’m on a US tour
going across small venues across the
u.s. I’ve just arrived in Wilmington
Delaware at the Queen theater and we’re
playing a concert and while they’re
serving cold beverages in the back
they’re also serving hot coffee and
someone orders a hot coffee walks
through the crowd bumps his elbow and
drops the cup of coffee on people and
this people have minor burns so what
happens next you know we’re in America
you get sued so what happens is they sue
to sweep the street they try to sue
everyone they can they try to basically
name the artists they try to name the
touring company they name the venue and
the wonderful thing in this world we
take for granted a lot of times is
limited liability so the artists even
though they own the touring company
haven’t done anything wrong directly and
they’re protected from liability so they
can get out of the lawsuit the touring
company though that’s actually running
the show if they’re not adequately
insured may be responsible if they’re
ultimately held liable and so it’s all
those deep pockets it’s the deep pocket
from all the money that came from their
whole tour not just the venue that was
the Queen Theatre in Wilmington it was
all across the United States that it’s
basically a big pool of assets that that
creditor now has access to and what I’m
here to share with you is there’s
another way to do it and there’s a
conventional way that most you are
familiar with not to set up separate
companies so you set up an LLC let’s say
for every venue and so the Queen Theatre
would be in its own particular you know
container and that way the assets
associate with this you know are only
basically going to that credit or not
any of the other assets from the tour so
that’s exciting but it’s really
cumbersome and not many people go out
and set up hundreds of LLC’s for the US
tour but there’s there’s an easier way –
there may be an easier way and what if
there was an easier way well I’m here to
tell you there is and it’s called the
series LLC it’s a particular type of LLC
that Delaware invented in 1996 and it’s
a way to take one LLC and break it down
in its component parts so give a problem
with one aspect of the company that that
company that that particular protected
series isn’t necessarily responsible for
everything else that happens against the
company so if you have a problem and one
let’s say at the Queen venue it can’t go
against the assets elsewhere this tour
revenues
and this is surprisingly common even
Bruce Springsteen in 1977 had a tour and
it was just after a dispute with his
business manager and he decided to call
it the lawsuit tour and so this this is
very common to get sued in the United
States and so what people do with like I
say is separate out these liabilities
but the exciting thing about this series
LLC is that it’s really not limited to
just Delaware Delaware was the first
state to have it thirteen states have
adopted it since then and then the
uniform law commission which is an
organization that gets together and
creates laws across the u.s. just
enacted an act that’s trying to unify
the way these laws are created so before
I tell you about you know a little bit
more about the series LLC I want to give
you a little bit of an explanation on
limited liability in the United States
because we take it for granted two
hundred years ago if you were to invest
in shipping in a sailboat going across
the ocean the owners were personally
responsible not only for the cargo and
the ship but everything that went wrong
we ran into a dock or if it ran into
another ship the owners are responsible
so they’re afraid to take risks and the
nice thing about this limited liability
system to bargain with the government
where the government was to encourage
commerce they let you basically limit
your risk and there was a case in about
two hundred years ago called the Rebecca
was the first time the courts
established the principle of limited
liability where if there was a problem
the ship they said the owners weren’t
responsible for anything beyond their
investments and that was really
revolutionary
the next major revolutionary thing that
happened in the incorporation system was
the 14th amendment to the Constitution
so you may be familiar with you know
after the Civil War there were three
amendments the 14th amendment what it
did is it took people and made them into
citizens and you may think well those
are human beings well guess what
according to the US Supreme Court in a
case about 20 years after that which was
Santa Clara County versus Southern
Pacific Railroad they actually the
justices got together before the oral
argument and they said as soon as the
oral argument started we don’t hear any
arguments about whether this railroad is
a person because we all agree this
railroad is a person and so it’s
happened as a result of that is the 14th
amendment has allowed States to innovate
their corporate laws so there is no
federal corporation law it’s all
state-by-state and the advantage is
you’re titled the equal protection under
the law
so if you incorporate in Delaware you’re
allowed to use that business in
California you’re allowed to use that
business in Arizona you can go to any
state you want and do business there and
and the exciting thing is the Internal
Affairs our governor under the state
works or it’s set up so it’s governed
under the state of Delaware
so these states can start up innovate
it’s like the laboratories of democracy
all 50 states can kind of innovate and
determine what they think is the best
law and Delaware has been way on the
forefront so you’re all familiar with
big companies why they’re incorporating
Delaware and partly it’s because they
had great corporate laws when
corporations were first getting started
and so they’ve developed this whole
trend of case law through the Court of
Chancery which is a special business
court without judges with judges without
juries and so it’s an exciting time to
basically to incorporate in Delaware and
do business elsewhere but corporations
became a little old-fashioned they
became a little staid you had
stockholders he had directors he had
officers you have always Duroc recei of
meetings and so in 1977 the state of
Wyoming invented something called the
LLC the limited liability company and it
was slow to take off very slow in fact
in fact Delaware which is known for
being first wasn’t quite last but they
waited till 1991 to have their own law
now we’re no longer this world where
corporations are controlling you know
that all the new entities now LLC’s are
being formed three or four to one
compared to corporations so it’s not
uncommon to have corporation corporate
law basically shift to a new form of
entity and what I’m here to talk about
is why are using a boring old
corporation or a boring old LLC when you
could be using a series LLC to protect
multiple assets where you can set up one
LLC and have these internal chambers
within that it’s like a safe deposit box
right so you go to the bank if you go
into volt and know everything’s lined up
on the walls it’s available to everyone
but you can have little boxes with keys
within this one company where if you
have it if you have a judgment against
the company you have to get a judgment
against that particular protected series
in order to get the assets and so it’s a
way to segregate out these assets and
real estate investors are using it so
that they can set up let’s say ten
properties instead of having ten
CAES they may set up series LLC with
protected series one protected series
two protected series three and they can
internally it’s really exciting they can
establish these series without having to
go back to the secretary of state so it
empowers you to literally create people
without even the further government
authority so you are allowed to
basically create as many people as you
like and you may say well John 10 LLC is
okay I understand ten but their series
LLC’s out there with a hundred thousand
series in them they’re not limited to
you know a handful of series and so this
world we’re moving into with entities
this is a new type of entity that’s
gonna be really exciting that’s already
being used as about a hundred thousand
series that are already filed of those
we don’t know how many protected series
are out there but this is gonna be an
exciting world because regular
businesses whether it’s an entrepreneur
that’s a serial entrepreneur and they
want to incubate different businesses or
whether it’s a real estate investor or
maybe even big businesses let’s say you
had autonomous vehicles you have every
vehicle in its own series or you have
Getty Images and they’ve got different
copyrights and every copyright goes into
its own series it’s a way to
revolutionize the way we think of
entities where entities aren’t static
entities are constantly evolving and the
organization is actually becoming a new
organization as it acquires assets and
it may not even be people that establish
these new organizational assets it could
be the companies themselves automating
this process with artificial
intelligence to establish rules to say
that you know as it acquires an asset
we’re gonna create a new series fund the
series keep track of the records in that
series and we may even use further
technology to bulletproof that just so
people don’t accuse us of mischief we’re
gonna use this thing called the
blockchain where you can just you can
basically put things on a public ledger
or a private ledger where you could you
can’t change it over time so anyone goes
back and questions what assets were
owned when when someone you know someone
dropped the coffee you can prove
definitively and this is this is a
really innovation in risk it’s a real
innovation and basically trying to
mitigate the risks associated with deep
pockets it turns those deep pockets into
little pockets and it isolates
liabilities to only those assets which
really should be at risk and allows
businesses to really do things that are
beyond the scope of what they’ve ever
been able to do before and like I say
it’s only 1% of new LLC’s now we
got 13 states that have it we got a
uniform law that just came online teller
was the first state to have it and it’s
just really exciting that you can
basically anyone can use these but you
haven’t heard about it because they
don’t teach it in law schools they don’t
teach it in business schools you don’t
read about in entrepreneurship books
this is something that’s not well
publicized that’s why I’m here to
basically share with you and invite you
to look into the series LLC to determine
well that’s something you would think
about using or maybe someone you know
because the limit is your imagination
the number of series limit is your
imagination and your ability to keep
track of the records so I’m gonna ask
you not to think big about business but
to think small
[Applause]
you
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