How to Respond to a Crippling Error in Your Business [e153]

February 18, 2015

The guys talk about the costly mistake made by one business owner and discuss the legalresponsibilities of handling major errors.

Full Podcast Transcript

NASIR: All right. Welcome to our business podcast where we cover business in the news and add our legal twist for the benefit of you, the listener. My name is Nasir Pasha. Thank you for joining us.

MATT: And I’m Matt Staub.

NASIR: And Matthew Staub is here again, joining us for the 153rd time, I believe.

MATT: Correct.

NASIR: I think that’s a new record, right? I mean, I think last week you were at 152. So, I think you just broke the record, man. 153 in a row. Congratulations.

MATT: I’m pretty proud of that.

NASIR: I wouldn’t get too confident there, you know. You don’t know what’s going to happen next week.

MATT: Yeah, it’s true. Well, it’s bad because we’ve had the other three people that have been here the whole time. And so, they haven’t really said anything, or they haven’t said anything, but it still counts because they’re here.

NASIR: Yeah.

MATT: So, if I screw up and don’t show up, they can just step in and say something and then they’re going to have the record.

NASIR: Correct.

MATT: Yeah.

NASIR: The record committee just requires presence. You don’t have to actually say anything.

MATT: So, I hope I don’t make a mistake like the mistake we’re going to be talking about today.

NASIR: Classic transition.

MATT: Yeah. So, there’s this guy who’s an artist, Cameron Moll, M-O-L-L.

NASIR: Moll? Moll?

MATT: Moll. Moll. Okay. Spend the rest of the episode just trying to guess his name. So, he’s an artist. He’s started a Kickstarter campaign and he was looking to raise $10,000 and, actually, as of recording here, oh, I guess it’s already over. So, he raised just under $65,000 – well above what he was expecting to raise. Nearly 600 people backed the project and he was essentially doing this really cool letterpress printed version of the Brooklyn Bridge – really, really cool thing. People funded it. He gave them a copy of what he created and, after the $65,000, after he spent all the time and money sending out these prints to everyone, he had about $15,000 left. And then, he realized he made a big mistake.
When I first saw this story, I assumed he, like, screwed something up with the numbers or something. His mistake was it was a typo. He misspelled the word “Brooklyn.”

NASIR: Whoops! That’s a big one.

MATT: Yeah. So, B-R-O-O-K-Y-L-N. So, he switched the Y and the L there. So, what he had to do obviously was go back and reprint and reship. Essentially, he cut his profit in half. At the end of the day, he still made money because it was free money that he got so I don’t feel too bad.

NASIR: But did he have to resend it all? I mean, yeah, okay, you misspelled it, but, you know, it’s a piece of artwork. Maybe that’s part of the art – misspelled words. I mean, if you think about it, basically, you guys, it’s hard to picture it, but the Brooklyn Bridge image is made up of different letters which has different words in it, and he displayed that on the Kickstarter, but I don’t think he actually showed the word because, basically, when the final product had “Brooklyn Bridge” kind of in big letters and so it wasn’t on there. But, if some of the words were misspelled on the original poster and people bought it, well, apparently, they can’t spell either so he didn’t have to send it, I guess. I don’t know. What do you think?

MATT: I don’t know if that’s technically a contract. Is he obligated?
How Kickstarter works is people back your project and you can give different incentives. So, he had any pledge of $80 or more, he would send an early bird signer posted – you know, a copy of this Brooklyn Bridge poster. Is he obligated to even send that in the first place? Because people are just sending him money. I think that agreement might be with Kickstarter. I’m not sure.

NASIR: I don’t know how that works but let’s say he was just selling it on his website and, if it was displayed incorrectly on the website, then I suppose he would not have had to return it.

MATT: Yeah, he wouldn’t have to.

NASIR: Obviously, you should, I’m just playing devil’s advocate here. it’s like, okay, well…

MATT: Yeah.

NASIR: It did cost him quite a bit. I mean, it cost him another $7,000 so he lost half his profit. He was at, like, probably around a 14 or 15 percent profit margin and cut that in half.

MATT: Is it a profit marginal? Like, I said, it’s just free money that he got. I guess you can look at that as income.

NASIR: No, it’s a profit margin because his marketing budget was basically zero and, even though these Kickstarters are backers, at the end of the day, it’s just people buying the product itself in general, right? I mean, there’s some, like, if you pledge a dollar or more, you get nothing, basically – you get updates. And then, let’s see, $10 or more, a thank-you card – wow. But then, $80, it jumps up to an early bird signed poster. Basically, you’re buying a poster for $80. That’s how I see it, at least.

MATT: You didn’t mention that the thank-you card was printed on Crane Lettra Pearl, and signed by him, so let’s not forget that.

NASIR: Oh, wow. Yeah, I totally missed that. Well, what’s interesting, this is estimated delivery in 2013. When did this occur? I mean, this seems like a recent article. It looks like he was a little late in delivering, though – February 2015.

MATT: You know, that’s kind of the thing that we were talking about possibly discussing this before, but the downside of some of these Kickstarters is, you know, they set their goals and they have no idea what kind of backing they’re going to get. I don’t know. Can you cut it off at a certain point, too? I’m not sure. But sometimes, if it’s really popular, especially if it goes viral, then you get this huge – I guess this is what happened to the glitter guy that we discussed, even though that was a plan. You get this huge feedback and then you have to fulfill all these orders or the backers that you said you were going to send these things to and then you’re like, “Well, now I have to spend all this time and money fulfilling all these orders,” so it can kind of backfire in a sense even though you’re still getting money at the end of the day, presumably profiting off of it.

NASIR: This stuff happens though in real life, right? Because you may have a product or even a service that all of a sudden takes off, goes viral in its own way, and you have maybe purchase order to fulfill. At that point, your profit margins may be such that, you know, maybe you’re doing it yourself or whatever but you can’t handle that but, at the same time, how do you expand quickly to make sure you fulfill your orders? These are real world problems that occur all the time. So, I guess this guy just had to deal with it, just like everyone else.

MATT: Yeah, and you’ll see that. I watch Shark Tank sometimes and you’ll see that on there.

NASIR: Yeah.

MATT: They’ll say that it got really popular and they just don’t have the money to keep producing or they can only produce in small batches because they have to wait until more money comes in and that money gets allocated so that’s why they ask sometimes for hundreds of thousands of dollars. So, small businesses do need to be prepared for this sort of situation. I mean, more times than not, it’s not going to be an issue. But, for the ones that do take off, you have to have things in place as precautions just to make sure that you can handle huge influx of orders or whatever ends up happening.

NASIR: Absolutely. Obviously, I was kind of joking around of not resending the posters to your customers. But this is a really good example of, okay, on one hand, he may not have a legal obligation to fulfill those orders once again yet he did it anyway. Even though I think most people in business understand that and do it anyway – you know, just like I would, even though I was joking otherwise – but, even if he took a loss in it, right? I mean, people don’t want a poster with a misspelled word. My point is that this is also part of legal risk management in the sense that, sometimes, it’s not just about doing what you have to do, but it’s about protecting yourself by going above and beyond because I’m not even talking about the non-legal aspects because, obviously, if you have a lot of upset customers, then that might be a problem. What about the legal aspects of misrepresentation? They’ll sue you for little small stuff? Even for one simple poster, one person can cause havoc if they are passionate enough to go against you. Ask anyone that’s been through a lawsuit, no defendant believes they should have been sued – well, that’s not exactly true, but many defendants don’t believe that and it’s so easy nowadays and so many attorneys that are willing to take on the most silly of cases and, nowadays, with the internet, you can do it on your own sometimes and really cause havoc to people.

MATT: I agree with you in saying that, even if you’re not obligated legally, it still makes better sense to sometimes take certain actions or inactions because it’ll be beneficial for you legally down the road. I’m trying to summarize what you were saying.

NASIR: Yeah. I mean, basically, you know, you want to be legally sound and be smart in your business, in my humble opinion.

MATT: That’s a good way of putting it as well. You know what I think guy could have done is just said it’s just art and he intentionally misspelled it.

NASIR: That’s the best policy.

MATT: Yeah, there’s no rules for art, unless he said it was going to be spelled correctly. I would have just gone in the Kickstarter and switched the L and the Y. It’s like, “Well, this is what it was the whole time.”

NASIR: Yeah, actually, that’s the first thing I checked. I wanted to see if he misspelled “Brooklyn” anywhere else on the Kickstarter page and, apparently, he did not that I could find.

MATT: I haven’t seen the actual print so I don’t know where it was. Did you see it to see where it actually was on the print? Or was it just, like, on the bottom or something?

NASIR: Gosh. I saw it somewhere.

MATT: Not a huge deal.

NASIR: No, no, this is a huge deal. Let’s find it. Oh, I guess I just clicked on the remaining posters link and there’s a link there. I think at the bottom it just says “Brooklyn Bridge.” Well, anyway, that’s the Brooklyn Bridge for you – always misspelled.

MATT: I don’t know if I’ve been on that or not.

NASIR: I’ve seen it before in person. That’s it. Anyway, all right, well, thank you for joining us, everyone. This is our nice Wednesday, middle-of-the-week podcast. Thank you for joining us.

MATT: Yeah, keep it sound and keep it smart.

How to Keep Your Business From Being Sued


The Podcast Where Nasir Pasha and Matt Staub cover business in the news with their legal twist and answer business legal questions that you the listener can send it to

Get Business Legal Updates

Please provide your full name.
Please provide a valid email address.
We respect your privacy, and we will never share your information. Unsubscribe at any time.
Legally Sound Smart Business cover art

Legally Sound Smart Business

A business podcast with a legal twist

Legally Sound Smart Business is a podcast by Pasha Law PC covering different topics in business advice and news with a legal twist with attorneys Nasir Pasha and Matt Staub.
Apple Podcast badge
Google Podcast badge
Spotify Podcast badge

Latest Episodes

November 21, 2023

In this episode, Nasir Pasha and Matt Staub explore the legal implications of Artificial Intelligence in the business world. They delve into the most talked-about issue of 2023: AI and its impact on the legal landscape. Although AI isn’t necessarily a new topic, it has many unanswered questions in the legal world. Nasir and Matt…

July 12, 2023

In this episode, Attorney Nasir Pasha and Attorney Matt Staub delve deep into the complexities of mass layoffs and offer valuable insights, real-life examples, and practical advice to employers grappling with the aftermath of such challenging situations. Nasir and Matt emphasize the critical importance of effective communication when executing mass layoffs. They stress the need…

January 9, 2023

As the COVID-19 pandemic swept across the globe, businesses scrambled to adapt to the new reality it presented. In this blog post, we dive into the case of Goldman Sachs, a financial services giant, to examine their response to the crisis and the lessons other businesses can learn from their return-to-office strategy. From prioritizing employee…

October 28, 2022

Full Podcast Transcript NASIR: Finally, my two favorite worlds have collided – both the law and the chess – right here at Memorial Park in Houston, Texas. Windy day. We have some background noise – ambient noise. What are the two worlds that collided? Well, Hans Neimann has sued Magnus Carlsen for defamation in one…

September 26, 2022

Through a five-round championship bout, Matt travels to Texas from California to determine which state is better for business. Will it be a knockout with a clear winner or will it go to the scorecards?

July 7, 2022

Whether you are buying or selling a business, the transaction goes through the same steps. However, they are viewed from different perspectives. Sellers may not want to fully disclose all the blind spots while Buyers will want otherwise. Nasir and Matt battle it out in this Buyer vs. Seller to determine who has the advantage!…

May 12, 2022

When it comes to Restrictive Covenants, employers are fighting to keep their company safe while employees may use them to their advantage. Keep listening to find out if the Employer or the Employee wins this battle. Round 1: Trade Secrets A company’s trade secrets encompass a whole range of information and are one of the…

February 14, 2022

The Supreme Court rejected the nation’s vaccine mandate. Businesses with 100 or more employees are NOT required to have their employees vaccinated or go through weekly testings. However, this policy remains in effect for health care facilities. In this episode of Legally Sound | Smart Business, the team sat down to discuss their thoughts on this ruling.

December 1, 2021

In this episode of Legally Sound | Smart Business by Pasha Law PC, Nasir and Matt cover the Business of Healthcare. There is more to the healthcare industry than just doctors and nurses. Many Americans have health insurance to cover their yearly needs, but most Americans are not aware of what really goes on behind…

October 12, 2021

In our latest episode, Nasir and Matt are covering the legal issues on Social Media. The average person spends most of their day on social media, whether they are scrolling for hours or publishing their own content. However, just because you publish your own content on Instagram does not equate to you owning that image….

September 28, 2021

What is a Non-Disclosure Agreement, and when do I need one? In this episode, Nasir and Matt shares why you need to use Non-Disclosure Agreements, basic facts about NDA’s, and discuss about the infamous Jenner-Woods story. Having the right Non-Disclosure Agreement in place not only protects you and your business, but it also makes the…

June 16, 2021

Covered in this episode of Legally Sound Smart Business are some typical business mistakes blunders small businesses often make and how to avoid them. Blunder #1: Copying and pasting agreements It may sound like a good idea at the time, but this blunder comes with hidden pitfalls. Having an attorney draft terms that are specific…

February 4, 2021

How you terminate an employee can make the difference between a graceful transition to avoidable negative outcomes like a dramatic exit or even a lawsuit. We gathered a panel of experts and asked them – is there a “right way” to fire an employee? We would like to thank our guests for this episode: Amr…

December 2, 2020

The COVID-19 pandemic has turned nearly every aspect of life on its head, and that certainly holds true for the business world. In this episode, Matt and Nasir explain how the early days of the pandemic felt like the Wild West and how the shifting legal playing field left a lot open to interpretation and…

November 16, 2020

After plenty of ups and downs, our buyer has finally closed on the purchase of their business. While we’re marking this down in the ‘wins’ column, it never hurts to review the game tape. In this final episode, our hosts, Matt Staub and Nasir Pasha, return to the deal almost a year later to reflect…

September 15, 2020

The ink is drying on the signature line and things are looking great for our buyer. After so much hard work, the finish line is in sight and the cheering within ear shot.   Though the landlord is still serving friction, things seem safe to move forward and for now, our buyer will be keeping…

July 31, 2020

Though things are coming along well, the journey would not be interesting if it was purely smooth sailing. After our buyer opens escrow, they are forced to push the closing date back when suddenly a letter from an attorney was received claiming the business, we are buying has a trade mark on the name!  Now…

June 12, 2020

With frustration at an all-time high and professionalism at an all-time low, our friend the Buyer has “had it” with the Seller and quite frankly their lack of knowledge. At present our Buyer is rightfully concerned that the latest misstep from our loose-lipped Seller will threaten not only the entire operation of the businesses but…

May 11, 2020

As we go deeper into the buying process, we start to uncover more challenges from our seller and encounter some of the wrenches they are tossing our way. When we last left off in episode three our team was knee deep in due diligence for our buyer, had already penned and signed the Letter of…

April 4, 2020

One word–interloper! When a new mysterious broker enters the transaction and starts to kick up dust, Nasir and Matt take the reins. The seller signed off on the letter of intent (see episode 2), yet this “business broker” serves only friction and challenges by refusing to send financials, whilst demanding more of a firm commitment…

April 4, 2020

Just as most stories and deals start out, everyone is optimistic, idealistic and full of hope for clear skies. It’s a perfect outlook with a perfect setup for the ups and downs yet to come. Peek further behind the curtain and into the first steps of buying a business: the letter of intent. After the…

April 4, 2020

When a savvy buyer hears opportunity knocking to purchase a prime positioned business, she decides not to go it alone and taps in the professionals to help navigate what could potentially be a fruitful acquisition. “Behind the Buy” is a truly rare and exclusive peak into the actual process, dangers, pitfalls and achievements, that can…

August 7, 2019

GrubHub is subject to two “matters of controversy” that have likely become common knowledge to business owners: “fake” orders and unfriendly microsites.

May 28, 2019

In this podcast episode, Matt and Nasir breakdown the legal issues of the subscription industry’s business on the internet. Resources A good 50-state survey for data breach notifications as of July 2018. California Auto-Renewal Law (July 2018) Privacy Policies Law by State Why Users of Ashley Madison May Not Sue for Data Breach [e210] Ultimate…

March 12, 2019

In recording this episode’s topic on the business buying process, Matt’s metaphor, in comparing the process to getting married probably went too far, but they do resemble one another. Listen to the episode for legal advice on buying a business.

December 3, 2018

Nasir and Matt return to discuss the different options available to companies looking to raise funds through general solicitation and crowdfunding. They discuss the rules associated with the various offerings under SEC regulations and state laws, as well as more informal arrangements. The two also discuss the intriguing story about a couple who raised over…

July 24, 2018

Flight Sim Labs, a software add-on creator for flight simulators, stepped into a PR disaster and possibly some substantial legal issues when it allegedly included a Trojan horse of sorts as malware to combat pirating of its $100 Airbus A320 software. The hidden test.exe file triggered anti-virus software for good reason as it was actually…

April 17, 2018

Attorneys Matt Staub and Nasir Pasha examine Mark Zuckerberg’s congressional hearings about the state of Facebook. The two also discuss Cambridge Analytica and the series of events that led to the congressional hearings, the former and current versions of Facebook’s Terms of Service, and how businesses should be handling data privacy. Full Podcast Transcript NASIR:…

March 10, 2018

The Trump presidency has led to a major increase in ICE immigration enforcement. It’s critical for business owners to both comply with and know their rights when it comes to an ICE audit or raid. Nasir, Matt, and Pasha Law attorney Karen McConville discuss how businesses can prepare for potential ICE action and how to…

February 5, 2018

New years always bring new laws. Effective January 1, 2018, California has made general contractors jointly liable for the unpaid wages, fringe benefits, and other benefit payments of a subcontractor. Nasir and Matt discuss who the new law applies to and how this affects all tiers in the general contractor-subcontractor relationship. Click here to learn…

January 2, 2018

With a seemingly endless amount of new mattress options becoming available, it is unsurprising that the market has become increasingly aggressive. As companies invest in more innovative solutions to get in front of customers, review sites, blogs and YouTube videos have moved to the forefront of how customers are deciding on their mattresses and how…

December 7, 2017

In recent months explosive amounts of high profile allegations of sexual harassment, assault, and varying acts of inappropriate behavior have transcended every sector of our professional world. With a deluge from Hollywood and politics, and the private workforce, accusations have inundated our feeds and mass media. This harassment watershed has not only been felt within…

November 16, 2017

If you are not familiar with the EB-5 program started in 1990 to give green cards to certain qualified investors in the United States, then you may not have been alone a few years ago. Currently, the EB-5 program has since exploded since its inception and now hits its quotas consistently each year. The program…

October 10, 2017

Government requests come in multiple forms. They can come in as requests for client information or even in the form of investigating your company or your employees. Requests for Client Information General Rule to Follow Without understanding the nuances of criminal and constitutional law and having to cite Supreme Court cases, any government requests for…

August 24, 2017

Nasir and Matt suit up to talk about everything pertaining to employee dress codes. They discuss the Federal laws that govern many rules for employers, as well as state specific nuances in California and other states. The two also emphasize the difficulty in identifyingreligious expression in dress and appearance, how gender-related dress codes have evolved…

June 28, 2017

Nasir and Matt discuss the life cycle of a negative online review. They talk about how businesses should properly respond, how to determine if the review is defamatory, the options available to seek removal of the review, how to identify anonymous reviewers, whether businesses can require clients to agree not to write negative reviews, and…

June 7, 2017

On this episode of the Ultimate Legal Breakdown, Nasir and Mattbreak down social media marketing withguests Tyler Sickmeyer and Kyle Weberof Fidelitas Development. They first discuss contests and promotionsand talk about where social media promotions can go wrong,when businesses are actually running an illegal lottery, and the importance of a soundterms and conditions. Next, they…

April 3, 2017

On this episode of the Ultimate Legal Breakdown, Nasir and Matt go in depth with the subscription box business. They discuss where subscription box companies have gone wrong(4:30), the importance of a specifically tailored terms and conditions(6:30), how to structure return policies (11:45), product liability concerns (14:45),the offensive and defensive side of intellectual property (19:00),…

February 1, 2017

Nasir and Matt discuss the suit against Apple that resultedfrom a car crashed caused by the use of FaceTime while driving. They also discuss howforeseeable use of apps can increase liability for companies. Full Podcast Transcript NASIR: Hi and welcome to Legally Sound Smart Business! I’m Nasir Pasha. MATT: And I’m Matt Staub. Two attorneys…

January 5, 2017

The guys kick in the new year by first discussing Cinnabon’s portrayal of Carrie Fisher as Princess Leia soon after her death, as well as other gaffes involving Prince and David Bowie. They alsotalk about right of publicity claims companies could be held liable for based on using someone’s name or likeness for commercial gain.

December 22, 2016

Nasir and Matt discuss the recent incidentat a Victoria’s Secret store where the store manager kicked out all black women after one black woman was caught shoplifting. They then each present dueling steps businesses should take when employees are accused of harassment.

December 8, 2016

Nasir and Matt return to talk about the different types of clients that may have outstanding invoices and how businesses can convert unpaid bills to getting paid.

November 10, 2016

After a long break, Nasir and Matt are back to discuss a Milwaukee frozen custard stand that is now revising it’s English only policy for employees. The guys also discuss how similar policies could be grounds for discrimination and what employers can do to revise their policies.

October 6, 2016

The guys discuss the new California law that allows actors to request the removal of their date of birth and birthdays on their IMDB page and why they think the law won’t last. They also discuss how age discrimination claims arise for business owner.

September 29, 2016

Nasir and Matt discuss the racial discrimination claims surroundingAirbnb and how it’s handled the situation. They also discuss some practical tips for businesses experiencing similar issues.

September 8, 2016

Nasir and Matt discuss whyAmazon seller accounts are getting suspended and banned without notice and how business owners can rectify this situation through a Corrective Action Plan.

August 25, 2016

Nasir and Matt talk about the accusations surroundingfashion giant Zararipping off the designs of independent artists like Tuesday Bassen and howsmaller companies can battle the industry giants.

August 18, 2016

Nasir and Matt discuss Brave Software’s ad replacing technology that has caught the eye of almost every national newspaper and has a potential copyright infringement claim looming. They also welcome digital marketing expert Matt Michaelree to speak on the specifics of what Brave is attempting to do and whether it has the answers moving forward.

July 28, 2016

Nasir and Matt discuss the sexual harassment lawsuit filed by Gretchen Carlson against Fox CEO Roger Ailes. They also talk aboutthe importance of sexual harassment training and properly handling such allegations in the office.

July 15, 2016

Nasir and Matt talk about the changes at Starbucks that have led to many disgruntled employees and customers.

We represent businesses.
That’s all we do.

Oh, and we love it.

We love our work. We love reviewing that lease for your new location. We thrive on closing that acquisition that nearly fell through. We’re fulfilled when we structure a business to grow, raise capital, and be legally protected.

We focus on developing close relationships with our clients by being like business partners. A partner who provides essential, personalized, proactive legal support.

We do all of this without utilizing the traditional billable hour model. You pay for the value we bring, not the time spent on calls, emails, and meetings.

Our team is made up of attorneys and staff that share these values and we are retained by clients who want the same.

Pasha Law PC operates in the states of California, Illinois, New York, and Texas.

Meet Our Team

Fractional General Counsel Services

Pasha Law Select offers the expertise of a high-end general counsel legal team for every aspect of your business at a fixed monthly rate. Pasha Law Select is deliberately designed to allow our legal team to be proactive, to anticipate, and to be comprehensive in serving our clients. To be great lawyers, we need to know our clients. We can’t know our clients unless we represent a select number of clients in the long-term. This is Pasha Law Select.

Learn More