You learn a lot when someone sues your business.
The story of entrepreneurship goes like this: Find a problem, create a solution, work hard, and succeed.
Eleven days after the pinnacle of our achievements – being featured on ABC’s hit series Shark Tank; securing an investment from Mark Cuban, Lori Greiner and Robert Herjavec; and watching our sales skyrocket – we received a letter that was not in the script. We were being sued.
As seasoned corporate professionals, we knew the legal world of business could be treacherous. Even still, no one plans on a lawsuit threatening to take away everything they have worked for and rightfully earned. So, how does this fit into the narrative of the entrepreneur?
The truth is that there is no set script or path for successful entrepreneurship.
True entrepreneurs are people who take a business through market changes, financial troubles, internal turmoil and, in our case, legal battles. We made the decision not to give up without a fight and tested our limits as business owners.
After 676 days of daunting legal entanglement and $750,000 in legal fees, we retained the right to our trademark. While we can’t discuss the terms of the settlement, we can share the impact this lawsuit had and help others find the courage to stand up to litigation bullies. Here are the key things we learned the hard way.
1. It's not you; anyone can sue anyone.
The Wall Street Journal recently reported on the trend of companies once featured on Shark Tank being subjected to seemingly frivolous lawsuits and copycats. Lori Cheek of Cheek’d Inc. was quoted saying, “I have a patent. I have trademarks. I did everything right in the beginning,” but the plaintiff in her case still cost her $60,000 by claiming it was his idea to facilitate “online dating in reverse.”
As long as someone has money, they can sue you. This is especially true in our home state, California. We started our business making bold, fearless and creative decisions. Once we received that letter, we were nervous to make things worse, and it really muted our efforts. It affected our approach to social media, trade shows and even ordering inventory, all because they took away our confidence as entrepreneurs. It took time and legal advice to get that back, but what we learned is that this had little to do with our actions.
Bringing litigation against another company can be used as a tactic just as much as enforcing the rule of law. Sometimes, all it takes is the threat of litigation for a company to roll over, or the expense of defending itself to put it out of business. The plaintiff doesn't necessarily have to have a judge rule in their favor to gain a competitive edge.
2. Immediately send a letter to your insurance providers.
We lived in a day-to-day schedule consisting of family and entrepreneurship, far away from predatory lawsuits. The threat of legal action was disorienting; it was a foreign land where we did not know what to expect or how to anticipate what was coming next.
One of the first questions you need to ask when threatened by a litigation bully is financial: "How much will this cost us?" Along the way we learned that some general liability insurance policies provide coverage for certain lawsuits. We sent a simple letter to our current insurance provider. They promptly denied coverage. We then sent the same letter to every insurance company we had used in the past. Once we began receiving letters back from our insurance providers, we learned that we were entitled to insurance defense coverage. That information helped us orient to our new situation and put together an action plan.
3. Find the source of your courage – you'll need it.
The lawsuit against us appeared frivolous on its face. We were profiled as just two moms with a hobby and targeted for the sake of exploiting our success. This sentiment became a condescending theme throughout the litigation. It was clear they expected us to pack up and go home. We knew this wasn't who we were, who we are, or who we wanted to be, so we decided no one was going to take away the business that we had worked so hard to build without a fight.
You may be fighting to show your kids that you stand up to bullies. It may be just simple indignation: How dare someone try to spend you out of business by burying you in a lawsuit! Or you may be fighting the blatant sexism in your industry. In our case, we knew we had to fight this for all three of those reasons. From start to finish, this deeply personal drive pushed us to not give up at the times when it would have been much easier to throw in the towel.
4. Find and hire the best attorneys.
Ultimately, it will be your lawyer who wins the case for you. Our search for legal representation was extensive and well worth it. We looked online, put the call out on social media, rang up all of our business contacts, and asked friends, family and whoever could give us a lead. Of course, the best attorneys can be expensive, but it doesn't hurt to ask if they can discount their hourly rates.
Putting our trust in a strong defense team gave us the confidence to keep our business running and a dose of optimism to not give up. A good lawyer will take the emotion out of the case, helping you to rely on the facts and build a solid plan of action.
5. You will probably miss opportunities for your business.
When we put together our monthly, quarterly and yearly plans, we did not foresee spending half of every workweek consumed with litigation. Even setting aside the time away from productive work, time spent with our friends, family and selves were all compromised too. Before you can really commit to fighting litigation, you do need to consider how you can manage the rest of your commitments.
Putting so much time, energy and resources into litigation cost us a lot. We missed out on opportunities left and right. We lost large product orders. We were denied a line of credit until the case settled. We had talented people pass on working with us. What hurts the most is the time we lost that we could have spent being creative and innovative.
In any entrepreneurship journey, you are going to find failure. Andy Dunn, the co-founder and CEO of Bonobos, said, "Companies don't die because the company fails; they die because the entrepreneur gives up." In the early days of our company, we tried to raise funds on Kickstarter and totally missed the bar. But that didn't stop us. Then we were sued and that didn't stop us. During that litigation, we experienced loss and loss. Still, we didn't give up, and we are here today because of it.
Through it all, we learned just how much strength, focus and resolve we really have. With litigation off our plate, we know we have incredible power to build the best brand we can – and we have the people who sued us to thank for that.
6. Focus on survival; you can do it.
Large corporations may be able to diffuse the burden of a lawsuit, but as a startup, you should know the burden will affect more than your business. It felt like a punch in the gut when the opposite side decided to subpoena, depose and sue our family members too. Two years of litigation was hard on our families. We have a sign in our workspace that reads, "First they ignore you. Then they laugh at you. Then they fight you. Then you win." Our dream of entrepreneurship did not include spending half of our time and money speaking to lawyers and going to court. Unfortunately, if we wanted to see our business grow, let alone exist, we had to defend ourselves against a case that was founded on an insult to our competency.
Survival became the first priority and the core of our ethos. When faced with tough decisions, we made the decision to survive. Of course, part of survival is the ability to handle the stress. We're lucky to have incredibly supportive husbands and children, and we made time when possible to decompress with exercise and, naturally, a little wine. When it was time to pick ourselves back up again, we looked for inspiration from the many other founders who faced difficult times in their business to help us remember that it was possible to get through it.
The script of our entrepreneurship started with an outdoor concert and our kids knocking over a plastic cup of wine. We developed a product, failed on Kickstarter, won on Shark Tank, kept our trademark, beat breast cancer for the second time, built a brand for unapologetic women and so much more. The point is, when faced with a litigation bully or any other challenge in your business, know that this is just one more way you will defy the odds in your success story.