Most of the time, entrepreneurs set out to disrupt the existing market without looking at legality of their business. They normally try to get traction before any legal framework is established. It is essential to learn about the laws related to your business before you start as it will help you operate your business smoothly. A good place to start would be to Google your questions on legality as well as asking around for legal advice. It is a good idea to seek the expert guidance of an accountant and attorney to learn about the latest business laws that might affect your startup. Also, check into local activist groups who might want to pull your startup down for power play before you launch into a region. The more you learn about the bureaucracy and laws that govern the kind of business entity you are starting, the more confident you will be.
Entrepreneurs often think that if they have a creative new product or service idea, they will make millions. They imagine the best situation that could happen instead of thinking of the reality of laws. Sometimes, the entrepreneur could get lucky and the product or service is a success. But, all too often, legal and other factors can influence the outcome. Airbnb and Uber are great examples as they became the poster child of legal nightmares. They are some extreme cases of resilience as they faced years of lawsuits and policies specific to their companies.
They were at a point of history where technology can solve many problems such as not having enough hotel rooms during conventions or not having enough taxis in an area. However, both of them end up becoming the poster child of violating local laws and faced years of legal battles.
After the initial success of Airbnb and as hosting was getting more popular, cities across the United States Started regulating what a host could do. Many from the hotel industry started accusing hosts and called their listings illegal. Cities across the nation started regulating on Airbnb hosts. We could all say Airbnb started a new industry so it was hard for anyone to come up with a legal solution as it was a new product, so it is hard to predict if this could have been prevented.
Since Uber was out in the market, many taxi drivers felt threatened by the competition by the new technology. They have stopped everything from airport pickup to banning Uber in cities altogether. As many headlines pointed out, these lawsuits could've been preventable if their legal team had applied for permits. But many entrepreneurs such as Uber's cofounders believe in asking for forgiveness, not for permission, and let their products launch before fully getting licensed.
Not many could be as lucky as Uber and Airbnb to have enough capital and lawyers to face legal battles. For starter, here is a list of things to look out for when starting a business.
Of course, there are examples of companies who have done business with the correct permitting and legality. One of our favorite transportation companies in San Francisco is Chariot. They are always up to date with permits and comply with the city of San Francisco right away whenever they have an issue.
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