Been trying to increase my company size lately and get more serious about my company, Rocket Boards.
Most of my hurdles right now have nothing to do with e-skate itself, but legalities. A friend of mine whose been very successful in the start up business world tells me that I’m going to get sued, and to be ready for it.
I was just wondering how have small e-skate companies like Enertion (@onloop) and Ollin Board Co (@chaka) avoid getting sued out of business?
It seems to me like everyone at this point is just one lawsuit away from losing their company. Whether a faulty product or a stupid rider who wants to cash out on their mistakes, I can’t imagine the legal costs, whether they win or not, and if they win, the payout also.
Have you guys just been lucky not to get sued? Do you guys have any strategies or recommendations?
My philosophy is to only sell the highest quality stuff, that I personally have tested thoroughly, and know will not just fail. But to some degree, this isn’t enough, especially as we move to higher end boards that are easier for riders to make mistakes with (due to the amount of power in the system).
I think a release form would work. Make them sign to buy a board. Cable companies do it all the time and they seem to get away with fucking everyone over. So if they can fuck good people over, I’m pretty sure that stops bad people from fucking you over when you sell them something.
company structure, have multiple companies with different roles and assets.
example (lets take for granted the product is sound): distribution company gets sued, you lose the assets in the distribution company but not your IP or right to do business and can form another distribution company
Make sure your business is being run out of separate entity and you’re complying with all the corporate formalities. I would register in DE.
Make sure you register as a foreign corporation in states where you plan on doing business.
Don’t commingle your personal and business funds
Think about eventually getting liability insurance. It’s not that expensive.
Over-disclose on the risks involved. Have good written material accompanying your product clearly pointing the risks involved.
Once you start getting a lot of revenue in there’s a lot of strategies to mitigate this risk, such as spinning off subsidiaries or creating a retirement plan that is immune to creditors.
One thing to think about is that it’s not likely you’ll be sued if you don’t have a lot of $. Most plaintiffs attorneys will tell their client it isn’t worth pursuing a defendant that doesn’t have the $ to make them whole again. Point is, while your starting up you should focus on sales, production and ultimately healthy cash flow – once you have cash or healthy revenue it’s time to start thinking about risk mitigation.
I know boosted has face lawsuits and I’m sure evolve has also. I haven’t heard of any though with small eskate companies or these direct from china companies. There’s a lot of garbage on the market, the vast majority of it TBH.
@Jreamer I’ve been told that it doesn’t matter if you make them sign a waiver or not, since these things are inherently dangerous. Would love to know more about this though.
@Cobber Business insurance is a good idea, but us small guys will get put out of business by the costs, lol. Company structure, is a good idea though… hmm…
@guyguy My friend has been all over. but especially in the mobile phone industry. He’s worked with many companies that supply software to companies like verzion, at&t, and sprint to name a few. And he’s working for a company right now that’s bringing the state (currently in 28 states) and powerball lottery to your phone (a legal nightmare as you can imagine).
Thanks for the advice. Really good info.
Really, I’m just trying to get a better idea of this stuff, since I’m more an engineer than a businessman, I’m learning the business aspect on the go.
If you have a solid description of the risks involved, a signed (digital or pen & ink) waiver mitigating your responsibility you should be good. Doesn’t mean you wont get sued, just that you won’t loose. That only protects you if someone falls off the board you built and breaks a leg. If a battery blows up and they can reasonably demonstrate it was a defect in the construction or consumables then your screwed.
A lot of the legal process is who knows who, what lawyer represents which side and the relationships they have with the judge (who has a lot of juice when it comes to influencing juries) and how many favors you can pull…unfortunately.
Liability insurance is really the only way you can protect yourself, but its pricey to the point that you d need to sell hundreds of boards/kits/etc. to show a profit.
Do some reading into shell companies. They have a little more application than being some kinda money laundering Hollywood red herring. Essentially a shell company exists as a front, in which product is being sold/used. In the worst case scenario, the company loses all of ITS assets. Everything else that was ‘leased’ from the parent company is not considered an asset of the shell company and thus not lost. Quite common for trucking companies…
Ultimately you still want insurance before doing any of that. Insurance and perhaps some legal waivers and proper documentation that describes the danger and nature of using your product.
Selling diy and parts is also very different to selling a complete. The assembler is essentially manufacturing the eSk8 so they shoulder a lot of risk.
The trick to getting cheap insurance is being able to describe your business to the insurance agent as narrowly as possible while still covering your needs. For example if you re-sell lots of stuff, lead with that. It is cheap to get insured to sell someone else’s product even if they put your name on it.
You might not market your product to the consumer like this, but that doesn’t matter.
Probably because most skaters in general push/esk8ers not really the Suing type of people lol
Every single Esk8ers I’ve met all walks of life, so Chill hella laidback
And everybody knows skateboards ESK8s are dangerous lol and if I ever got injured while riding ~~ not telling anyone ~~~ haha~~
And everybody knows skateboards ESK8s are dangerous lol