Imagine heading into the office, knowing what awaits you is 5,000 active lawsuits from angry Brazilians claiming they’d received bad haircuts. It may sound far-fetched, but it was David Schellhase’s reality when he was the GC of Groupon.
“They did not get a bad haircut. They just didn't want to pay for their haircut, which is a completely different thing,” said David. “But yes, we had to settle all of those.”
David has spent 35 years as a lawyer in Silicon Valley. His resume includes serving as General Counsel at Salesforce, Groupon, and Slack, three of the most consequential technology companies of the past three decades. Today, he’s an Entrepreneur in Residence at Ballistic Ventures, sits on the board of Okta, and co-teaches a class at Stanford on ethical issues in global technology product design.
He has seen the fax machine, the Blackberry, the smartphone, and now AI arrive at the GC’s desk in the years he’s been in tech, and yet David believes technology has made lawyers more stressed with each iteration. Most GCs haven’t yet figured out how to ride the waves of tech innovation, especially when the law isn’t clear.
In this conversation with GC AI cofounder Cecilia Ziniti, David covers the GDPR call from Dublin, why most innovation is legally grey, what three founders taught him about law, and the philosophy that guides David’s practice: always be calibrating.
Always Be Calibrating: An In-House Lawyer's Most Important Skill
For David, calibration is about understanding, at any given moment, what your company's risk appetite is. It also means recognizing that risk appetite changes constantly as the company grows, matures, and moves toward a public offering.
For example, a small private company at the beginning of its life needs to take enormous risks just to survive, while a public company with high regulatory scrutiny and a stock price that reacts to headlines needs to minimize risk. The GC who does not move with the company as it makes that arc is giving advice calibrated for a company that no longer exists, which often shows up as a slow erosion of trust.
"Always be calibrating means really understanding your client's risk profile and risk appetite as deeply as possible,” said David. “Every company has a slightly different way of looking at risk and a slightly different appetite for risk. And that changes over time."
The only way to stay calibrated with the company is to constantly be talking to stakeholders across the business. This means sitting with executives, partners, clients, and individual employees to build a current picture of where the company is and what it needs at any given time.
"If you're at the beginning of your company's life with almost no revenue and you're up against massive competitors, if you don't take a ton of risk at that stage, you're never going to get anywhere,” David warns. “That's when you're at your most risk-taking."
The ability to make a wise judgement call with limited information is critical for a GC, but the most important decisions rarely have a clear answer. If they did, the company would not need a lawyer. The gray zone is the GC’s job. And making good decisions in the gray zone requires knowing exactly where the company is, what it is trying to accomplish, and how much risk it is prepared to absorb in service of that. That is calibration, and it requires sustained effort.
Why Saying “I Don’t Know” is Sometimes the Right Answer
A year before GDPR was set to take effect, Slack CEO Stewart Butterfield called David from a hotel in Dublin in the middle of the night. He had been reading the regulation, and he wanted to talk about it. David had not yet read it, and he said so directly.
The law wouldn’t go into effect for another year. It might change, and the EU was likely to revise it before then. There were dozens of immediate, time-sensitive things sitting on David's desk that needed his attention, and a new regulation a year in the future wasn’t on his list.
"I said, Stewart, this law doesn't even take effect for a year. I haven't read it, to be totally honest. The EU may change it. The EU may break apart. I'm fighting sharks at my feet,” he laughed.
“You've got to trust me enough to prioritize what's important for the company."
The two men laughed and agreed it wasn’t a current priority, and it was an instructive lesson for them both. A CEO's job is to worry about everything, including new regulations coming in a year, a lawsuit filed this morning, the customer complaining to a reporter, the manager who just quit, and the competitor who just poached their biggest contract. The GC's job is to be the person who tells the CEO which of those things require attention right now and which do not, which is a fundamentally different skill from knowing the law.
"One of the skill sets you've got to have as a general counsel is the ability to convince your boss that you are right and he is right, but you're righter," David jokes.
Note from CZ: I had almost exactly the same GDPR conversation at a former employer. The EU is going to be busy with Facebook for a couple of years. If we take three extra weeks to finalize our register of processing activities, we are fine. That kind of honesty with a CEO is a skill that takes years to build and is worth more than any legal analysis you will ever produce.
Most Innovation is Crime: Groupon and the Overton Window
David has another book idea he hasn’t gotten around to: most innovation is actually crime. Many of the biggest technological innovations of the past decade came from a deep legal grey zone, and some were outright illegal.
For example, Uber was illegal in most of the cities it launched in. Using housing as a short-term rental Airbnb is still technically illegal in Manhattan. Prediction markets are pushing hard against gambling laws in multiple states, like the recent Kalshi lawsuit in Utah. And Groupon, operating across 80 countries almost overnight, ran straight into laws that Groupon certainly did not know existed until they were already in violation.
Here’s another example: in New York, it is illegal to vary the price of liquor intraday, therefore Happy Hours are criminal. A Groupon for a bar, by definition, is a discounted drink ticket. It took a trip to Albany and a hearing before the New York State Liquor Board to settle the matter.
"A Groupon for discounted liquor was illegal. I had to fly to Albany and appear before the New York State Liquor Board,” remembers David. “We wound up settling and making Groupon only applicable to food. There is no such thing as a bar in New York City. There are restaurants that serve liquor."
What resolves most of these legal disputes over time is the Overton window shifting. Something may be completely taboo until society decides it wants what the innovation provides. The Overton window on ride-sharing moved essentially overnight. It moved on marijuana over two decades. It is moving now on prediction markets and sports betting and AI-generated content.
"Technology pushes the Overton window so rapidly and without regard to state boundaries, country boundaries, religion, ethics, or anything,” David said. “It makes things available cheaply, easily, and ubiquitously. And so that's why technology, especially right now, will be for the next 25 years a super exciting place to be."
What Three Founders Taught Their GC About Practicing Law
David has worked closely with three founders who shaped how he thinks about the practice of law:
From Marc Benioff at Salesforce: the importance of repetition, marketing, and the stamina to return every email and take every call.
From Andrew Mason at Groupon: the importance of humor, play, and giving human beings a genuine sense of accomplishment.
From Stewart Butterfield at Slack: craft, or caring enough about what you do to make every important thing genuinely good, even at hypergrowth pace.
Together, all three influences have created what David likes to call “productive narcissism.”
"In order to make something out of nothing, you have to be a bit of a narcissist,” jokes David. “You have to really believe in yourself because so many people are going to tell you no every step of the way. But you have to balance that with high, high amounts of productivity."
His advice to in-house lawyers looking for the right company to join is simple: find your flavor of the productive narcissist and go work for them.
The Value of Strong Opinions, Loosely Held
Two oft-repeated phrases in Silicon Valley that David comes back to are “strong opinions, loosely held,” and “disagree and commit.” For him, they mean the same thing. Take a clear position. Hold it loosely enough to abandon it when the evidence says you are wrong. Commit to the company's direction even when you disagree with the call.
"Almost all of us in technology companies are neither curing cancer nor saving souls,” he said. “The damages you cause are mostly healable or repairable with dollars. With that knowledge, coupled with calibrating the risk appetite of your company, you're just better able to provide good advice because you see the big picture."
That perspective: proportionate, calibrated, committed, is what makes an in-house lawyer genuinely useful rather than just technically correct. GC AI is built for lawyers who want to spend more time on those judgment calls and less time on the grunt work. Try the AI built for in-house lawyers for free.
