Editor’s note: Following news of Lifestyle Lift (a national chain of cosmetic surgery centers known primarily for aggressively advertising a cosmetic surgery procedure) shuttering its operations, RealSelf Founder and CEO Tom Seery reflects on lessons learned from a federal lawsuit Lifestyle Lift filed against his company in 2008. RealSelf prevailed and continued to host unbiased conversations about Lifestyle Lift.
There was a loud knock on the door to the tiny office housing my startup.
I answered the door to find a man holding an envelope. He asked my name, and with my response he jammed the paperwork into my hands and announced: “You’ve been served.”
My stomach flipped. We were being sued by a company a hundred times larger than us with a reputation for litigation.
Little did I know, I had been handed a gift.
It was reported last year that that somewhere between over a third of small businesses are involved in at least one litigation. Most new business owners assume that lawsuits are expensive, scary and bad for morale, but there are a number of ways a lawsuit designed to slow your progress can turn into a catalyst to growth.
1. Getting sued signals you have significance
Most startups inhabit a world of irrelevance; they haven’t found product-market fit, reporters rarely cover the company, and target customers haven’t even heard of the brand. I’ve faced this strategic dilemma, operating a startup that wallowed in a zone of indifference. Specifically, we struggled to get customers–board-certified plastic surgeons and dermatologists–to sign-up because they didn’t see how we made a difference to their practices.
Being sued was pivotal to our company breaking out of obscurity and garnering customer interest.
In brief, the company suing us was unhappy with consumers posting negative reviews on our website about their branded surgical procedure. The lawsuit brought unprecedented attention to these postings and, thanks to social media, the matter quickly propagated across the medical community. Soon afterwards we saw a surge of inbound interest from doctors who saw us as being “on their side” when it came to bringing transparency to their industry.
To be fair, a lawsuit could simultaneously endorse your significance and deliver a death blow like the Supreme Court did to end the brief life of Aereo. However, the reality is that businesses that don’t matter, don’t get sued.
2. Getting sued rallies strangers around your cause
When you get sued, you may discover that you have supporters from unexpected quarters. We were alleged to be infringing on a trademark, which was actually a thinly veiled attempt to stop speech. First amendment activists reacted, which drove unprecedented media coverage for our website from high profile bloggers.
This cascaded into driving-up our presence on Google (Google factors authoritative links into its ranking algorithm).
Even if a legal case isn’t related to Internet freedoms, social media power brokers like to support the underdog in David vs. Goliath matters.
What’s more, a lawsuit borne out of a big company trying to bully a smaller one into submission can paint a quick picture of who is actually in the wrong. In the end, our matter shined the spotlight on the fact that Lifestyle Lift was, in fact, falsifying patient reviews.
3. Getting sued helps a founder grow up, fast
When talking with prospective entrepreneurs I tell them they should expect to get served up big slices of humble pie. Most assumptions are wrong.
There are few shortcuts to sudden success. And often you are deep in the weeds of building the product, losing sight of your role as the leader of the organization.
The litigation against my company matured me as the CEO. It taught me to focus on the customer and our team, which should naturally be the center of attention. And when it comes to the customer, a lawsuit can test how much you’re willing to go to bat for them. Do you compromise away their interests in order to preserve your own?
Lawsuits also carry the risk of being hugely distracting to small teams. A CEO has to buffer the team, internalize the stress, and keep the team focused on growing the business.
Great startups challenge the World Order of an industry. As Jeff Bezos told an interviewer, “If you’re inventing and pioneering, you have to be willing to be misunderstood for long periods of time.” Being misunderstood and disruptive may trigger a lawsuit.
Take solace that this could indeed be a blessing in disguise.
Editor’s note: RealSelf is a GeekWire annual sponsor.