Ever been involved in a lawsuit or gotten real close to it? Here's some war stories that Carl and Gene have been through so you can feel better about yourselves.
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Gene: Hmm, there we go.
Carl: We're recording?
Gene: Yeah.
Carl: Are we going to do this episode? The off the rails? Are we going to-
Gene: Off the rails.
Carl: We're going to talk about real shit?
Gene: Let's get real.
Carl: I didn't prepare.
Gene: Me neither.
Carl: But I do have one question.
Gene: Okay.
Carl: Are we going to protect the names of the innocent or was anybody innocent?
Gene: We'll see, man.
Carl: Gene, I know you're going through stuff you can't talk about right now. I know it. I understand.
Gene: Aren't we all? Aren't we all?
Carl: We are. We are, but not like you. I think you're in a world of shit. We shouldn't talk about it.
Gene: It's not that bad.
Carl: All right. Maybe you didn't open your email recently.
Gene: [crosstalk 00:01:04].
Carl: Because it got a little worse. But I want to talk in this episode about when shit just went off the rails. And I mean like lawsuit shit. I remember going to Hashrocket, which I think still exists, and having a conversation with somebody over there.
Gene: [inaudible 00:01:26].
Carl: I'm already naming things because they were going to protect the innocent. Not innocent.
Gene: No.
Carl: But I had a call from somebody that wanted to talk. We were working with them. We were doing some branding stuff, some other things. And they asked me the question, how do you deal with it when people sue you? We're having lunch. That's the question. How do you deal with it when people sue you? And I said...
Gene: Well?
Carl: "We don't get sued." We didn't have contracts. We don't have any of that stuff. Right?
Gene: Mm-hmm (affirmative).
Carl: I mean, it's that whole, are you a grownup company or not? I guess we weren't, but we kept our word. We did what we said. Also, most of our projects were small. They were like $10,000 or whatever or less. So I don't think there was really enough in it for people, but this company was building much bigger stuff.
Gene: You can kind of work your way out of a $10,000 problem.
Carl: Yeah. You can give the money back... So I just remember getting that question and then maybe a year later, or even more than that, I'm at the first Bureau event, the first Owner Camp. And I remember Gabe Levine, who's one of my best friends today, who's a lawyer for the web, for the whole web. He's the lawyer for the web.
Gene: Kind of.
Carl: At Matchstick. He kind of is. And he just said, "We need to talk, because you're going to get..." For those of you listening at home, I mouthed a word that starts with an F and ends with an -ed.
Gene: Okay.
Carl: You got it?
Gene: Yeah, I got it. I follow.
Carl: You've been, you've been through it. I remember one of the first times we ever got into a serious situation, you and me.
Gene: Together.
Carl: Together. And we were on opposite sides of it. And you told me when we were going through all that, that you had been sued as a sub of a sub of a sub or something?
Gene: Yeah, yeah, yeah, yeah. Yeah. We had been engaged in a company in Dallas, Texas. It was a grocery store chain. We were engaged by the CEO of the chain, and he got sued personally as the CEO of this company for making some errors. And what happened was the ownership group sued him and every single contractor he'd ever worked with.
Carl: On that project or just all of them?
Gene: In the history of the grocery store chain.
Carl: Oh my god.
Gene: It was like 110 different companies got sued. And so what they did is they subpoenaed everyone and went through everything, in any case that they found something that was potentially something they proceeded to act on it and chase it in court, which they thought we were up to something, it was like, man, we did what we were contracted to do. It was done.
Carl: They thought you were up to something? What does that mean?
Gene: They claimed we got paid more than the market determined in that he had made mistakes or whatever, and they wanted their money back. And it was like, dude, we've made a website for a grocery store chain. It's like the size of... Most people might know in the Southeast, whatever, Publix, I mean, it's pretty big. It was like the entire state of Texas.
Carl: And no offense, but knowing you, you did not charge more than going rate.
Gene: That's right. Yeah. It's like, what? So anyway, we were stupid and we defended it, went to court. I spent about $80,000, which was all the money that we made from the project to fight it, because we were young and scrappy and stupid and just were like, "Screw these guys. They're fighting us. So we're going to prove we're right."
Carl: First of all, good for you, because that's about four times more than I thought you charged them.
Gene: Well, it should have probably been four times more than that, but the judge threw it out and we were like, "Yay, we kind of won." [crosstalk 00:05:28]
Carl: But you had to spend all that money. What alternative did you have to defending it though? Because you said we were stupid and we defended it.
Gene: Well, I mean, it's the lawsuit, right? So you could always capitulate.
Carl: Don't make me look up words.
Gene: Give them their money back or go out of business, liquidate your business, whatever, whatever they want, but we were not having any of that. We wanted to prove that we didn't do anything wrong. We wanted to prove it in court. In between, I'm in South Carolina. So between flying constantly from South Carolina to Dallas, hiring a firm in Dallas. The ownership group was like... I mean, they're millionaires. Right? So they had lawyers on staff and everything. And we had to compete on their level.
Carl: Were they bored?
Gene: They were suing about a hundred different companies.
Carl: I guess it was just easier to throw you in the mix with the company they give a few million to?
Gene: They sued the Dallas Cowboys.
Carl: Well, okay. Now you're making me like them.
Gene: We were like, "What?"
Carl: Why did they see the Dallas Cowboys?
Gene: I don't know the exact reasoning. I think it was the company had a season ticket box or two or whatever. And they would use it to get deals in their grocery stores. I mean, it's like, salesman shit. I don't know.
Carl: We used to get invited to go, like if we had a legal firm or financial firm or whoever we were working with, they would invite us to go up there and then hope that we would charge them less.
Gene: They're claiming the CEO misused it or something. I don't know. Whatever... It was like-
Carl: How do you become privy to this?
Gene: I was in the deposition. We actually got invited to go.
Carl: So all of the companies that got sued were in the same deposition?
Gene: Well, sorry. I misstated that. So we were deposed.
Carl: Play back the tape.
Gene: Yeah. One of the trips I made to Dallas, they invited us to go that evening to dinner, and to a Dallas football game. And we went.
Carl: Oh, got you.
Gene: We were like, "I don't know, maybe this is what we do." And we just went. I mean, it wasn't like we were getting... fuck, I don't know. It's what you do. If you got hired by a client. They're like, "Come to a Dallas Cowboys football game."
Carl: You don't say, "No, I don't want to go to jail."
Gene: You go. You go. Yeah.
Carl: I don't want to get sued for you taking me out to dinner or taking me to a football game or taking me to Paris for a little whatever.
Gene: We were like, "Cool. They're treating us right." Little did we know eight months later, they're like, "Why'd you go to that?" We're like, "Whoa. I thought that's what you did."
Carl: "It's because we were invited and it sounded like fun."
Gene: Yeah.
Carl: Why did you marry your wife? Actually, that's a question we all have. Not for you, Gene, for the judge. I was talking to the judge. We know why you married your lovely wife.
Gene: Just dumb shit like that. That's what made us mad. And we defended it, so we spent... The thing is no one won, right? It got thrown out. They lost, I spent $80,000. I definitely lost.
Carl: What if you had just done nothing? See, this is the question I always have. It's like, what if we just do nothing? Well, they go away.
Gene: I don't think so.
Carl: I don't know. No, never take legal advice from me. Never. Oh my God. And I don't know if you saw this. This was in the Slack channels where somebody put IANAL, I am not a lawyer, but it's I ANAL, which to me just cracks me up now.
Gene: I think that was Eric Regan.
Carl: The next time I talk to my legal friends, I'm going to be like, "Well, you ANAL."
Gene: "You ANAL."
Carl: Well, no, you are NAL.
Gene: Are NAL.
Carl: Because they are.
Gene: You are an L.
Carl: So did you have a contract?
Gene: Yes.
Carl: Was it a good one?
Gene: I guess not.
Carl: Well that's it, right. You don't know. And that was the thing. We never had a contract for the longest time, because I was convinced that if you did good work and you were personable and you did all those things, which actually we did great work. We weren't always personable. We were kind of real snooty sometimes, but we never, for like 10 years, ever had any problem. And it was just one of those things.
Carl: We had times where we could have. There was this thing we call Black Monday where one of the developers deleted an entire donation site and the donations were just pledged. So they were then going to be followed up on. We lost all record of what had to have been over $100,000. The thing had been running for a few days. And I just remember calling going, "Sorry." And they were just like...
Gene: "We're not liable."
Carl: Well, no. I mean, they never really... It was a great program too. It was a really well-done anti-hate program in schools. Actually, whatever, that one sucked, but we just owned it and everybody seemed cool. And I mean, there were other times where things just totally went off the rails and we were at fault and nobody ever did anything.
Gene: Spin us a yarn.
Carl: Well, I mean the one that happened was totally unseen. We did not see this coming. We had turned down projects because once we did get a contract and people would fight on it, Gabe would be like, "Turn that down unless you really want it and really need it but the liability is there." And so this was a client we'd been working with before we met with Gabe, and he looked over our stuff. So it was kind of like, he gave a little bit of a blessing to the way things work, but they were already agreements that have been signed, so going back and redoing them was going to be a nightmare.
Carl: But we had basically made some money and I told the team, they could create their own product. I said, "Y'all want your own product? Let's do it." And so they created a product, it was marginally successful. It didn't make a ton of money, but there were a few thousand people wanted to use it and this kind of stuff. And then one day I get an email from this client saying that we created it using intelligence that we had acquired from working on their product, and that they felt that what we launched was actually what they should have launched and all these things.
Carl: And here's the thing. They were night and day. They were totally different. I actually didn't even want the damn thing because we launched it and we got some marketing push and people started to realize they can build products. And so, we were getting that, but I remember calling Gabe and he was just like, "I'm looking at it. I don't see anything here." And he wasn't looking at the product. He was looking at the contract and he said, "I think you're fine." I remember. I was like, well, you get nervous. Right. It doesn't matter.
Carl: I mean, it doesn't matter how ironclad your contract is. It doesn't matter how much, not at fault you are. Like, if you're totally in the clear. Unless you just have some sort of a different level of being a human than I've ever met, you still question, did we do something wrong? You still worry that you're going to lose everything. And so I remember, I called the guy and he wouldn't take my call. I just started going, "I don't know what's going on with this." And I remember reaching out via email saying, "Look, none of what you think happened happened, but I will gladly give you the product. You can have it. I'll give it to you right now if you think it's so great and you think it's what you need, we'll rebrand it we'll do whatever it is. You can have the exact thing, no cost, if that's what you think."
Carl: And the team had probably, I mean, if I were to look at it from salaries and all that, it was a hundred grand in that thing. I mean, they'd put stuff in there, and it was a lot of time. And I was told that wasn't the point. So then you start to realize there's definitely something else going on here. I remember the other thing was we had legal insurance, right? So you have errors and omissions insurance.
Gene: Oh right, oh. You see, I had that too.
Carl: That type of stuff.
Gene: That's pissed me off. We had errors and omissions. And so ultimately they declined supporting our case. They didn't pay for it because they said it wasn't a result of anything we did. I was like, "But we have errors and omissions. Doesn't that cover all the shit that we didn't do?" And they were like, "No."
Carl: And that's it. Right.
Gene: "What the fuck?"
Carl: I remember again, talking to Gabe and I was like, "Hey, should I contact The Hartford?" Because that was the company. Right.
Gene: Ours too. That's who we use.
Carl: I think that's the only company you can get.
Gene: I think so.
Carl: If you're a web shop. I mean, I'm sure it's different now, but when you go back to whatever it was, 2010.
Gene: This is like 10 years ago.
Carl: Oh my God. Right. It was like, that was the shit. It was even after that, it was after 2012. And I just remember, Gabe said, "If you invoke The Hartford, they're going to release four or five lawyers. And I just want to make sure that I still get to be involved because I understand nuances and they don't." They don't get digital. They don't understand it's going to involve a third party this. It's going to be user flows, or whatever it might be.
Carl: And so I remember I contacted the Hartford and I said, "I don't know if I need you, but I might." And even doing that felt like I'd made a mistake because now my rates were going up. Because I just said I might. You know, you could just feel it. And then before all of that, and this was the biggest lesson I think I ever learned and I really owe this to Gabe, was that you have to respond in an appropriate timeframe, not right away. You know what, 24 to 48 hours.
Gene: It's too soon.
Carl: It can be appropriate. Right? Right away is too soon.
Gene: I got you.
Carl: Five days later, maybe too late. I mean, it depends on the intensity or whatever, but eventually it just disappeared. I think this guy was just having a really bad day. He didn't like decisions he'd made. I don't know. And he wanted to hurt somebody. I will say this. He said some nasty shit. Like, your family type stuff, you know?
Gene: What?
Carl: I know. Right? And so the whole time I'm only sitting there trying to be cool. And also I wanted to help him. I think that's been the biggest probably... I was going to say downfall in my career, but I legitimately wanted to know what I could do to help that individual so that they wouldn't be freaked out. But yeah, that's the yarn. It was one of those crazy things. I still don't really understand, except that sometimes ideas realized don't do what somebody who's invested in them think, and they want to blame somebody.
Gene: Yeah. Definitely. So the second time we got in trouble, we definitely fucked up. We didn't do a great job on the project, but, but, this was just recently in the Slack channel. And I responded, someone asked a question about, they were getting involved with a company that wanted to hire them to do a code quality check or something on the third party. And I was like, "Don't fucking do it."
Carl: Run for the hills.
Gene: "Because I will tell you that that's probably a pattern, and then before you know it, somebody else is going to be doing a code check on your quality," because that's what happened to us. We got hired by this company, this lady. And she was by herself. She's like a very wealthy individual, owns the company. She wanted to build this web application.
Gene: And it started by her asking us to review the work of someone else. And I was very careful not to just be like, "Well, they suck." We were like, "We would not do the things they did because one, we're a different company, but also things are done little differently," et cetera, et cetera. We didn't throw them under the bus. But anyway, she was like, "Cool." And then we had heard that she was fighting with them to get some money back or whatever. And we went ahead and worked with her and sure enough, about six months later, we found ourselves in the same situation, somebody was doing this code audit on us. She had hired this forensic Github person, which I don't know if you ever heard of forensic Github research, but it's a thing.
Carl: Okay. I believe you,
Gene: This dude looked at the hours that we claimed that we had submitted that we worked and compared it to our GitHub commits and was like, "They don't match up." And we were like, "Well, that's not how it works, but whatever." I mean, yeah, it was ridiculously crazy, but there were extenuating circumstances. They were not the easiest client to work with, kept changing their mind. It was like, we're finally like, "We can't keep up with you changing your mind so much. You started off with-"
Carl: They're trying to throw you for a curve. Right?
Gene: I think so. We could never get done because they kept changing stuff, but they kept wanting the same deadline. And we were like, "You've changed it nine times. You have to also change the deadline." But whatever, we didn't do the greatest job at first, but whatever. And we were threatened with a lawsuit. Now what we did was we dealt with it. I had gone through some stuff with you on a different story. But one of the things that Gabe taught me through that was, just ask them what they want and not try to guess. Right? If you're playing the game of... You're trying to be strategic military genius and figuring out what their motivation... Just ask them. And so that's what we did.
Carl: "What will it take to make this go away? What are you looking for as the end result here?"
Gene: Yeah. They were like, "Well, we just want this much." And we're like, "Well, we can't give you that, but we'll do... You have these four projects? We'll just finish those." We just did that and never heard from them again. They signed off on the easier things and we just did the work. I mean, it was probably 300 hours worth of work, but we just did it in the beginning, because I knew that I had had experience before, in that even if you go to court and even if it gets thrown out, you still lose money.
Carl: Yeah.
Gene: Right? No one wins but the lawyer, sorry Gabe. No one wins in a lawsuit with the lawyers.
Carl: Hey, my dad was a psychologist and every time somebody did something ridiculous that ended up on TV, he'd be like, "That's job security, kids."
Gene: I mean...
Carl: It's real. It sucks that we, again, sorry Gabe, need lawyers, but... Sorry Josh. But we do. Sorry, Matchstick.
Gene: We still love you.
Carl: But we do. And we need good ones. Right? And that's the thing. You know about this, I went through a situation where I was looking to sell [Engine 00:22:24] and got connected up with somebody, and we were going through the process and doing all these types of things. And then I find out later they've been making promises to clients, they have been taking deposits, not doing the work, the team hasn't been able to do the work, all these types of things, so that when I finally get to the point where we're getting that person out, I had four clients that wanted their money back. The money was gone.
Gene: Yeah. You spent that on payroll.
Carl: Yeah. The money was gone. And I had to use the line of credit. I used the line of credit to make payroll, which is the thing you never do. You never use line of credit for payroll. That is the chasm that you do not cross.
Gene: That's a big one.
Carl: And I definitely Evel Knievel'ed halfway across the snake, baby. I don't even know if he made that jump, but you know what I'm saying. And so it was this thing where I remember I had been painted to be this horrible human that had stolen this money, that had been the one that told all the lies. And I remember talking with them saying, "Look, I want to help you out. I'm trying not to get into a legal situation here. You know what? I can take the code that we have. I can look at fixing that up."
Carl: And they were all like, "No, we don't want anything." And that person was trying to keep these different clients as clients and basically throw me and Engine under the bus. The money that we would have gotten would have ended up going back to this person. And so it was one of these things where you're just like, oh my God. But I still remember what Gabe said, the advice. This should be the Gabe episode. But he basically said to me, "Do you want to just get through this and get out as unscathed as you can, or is there some level of retribution that you're looking for and all of this?" And I said, "What's the difference?" And the real difference was going to be that if it was retribution, it was going to cost me a ton.
Carl: And if it was just try to be the good person that I think I am in business, for the most part, get out that it was going to be, "Okay. Well, we've just got to really be a little tougher on the negotiating." It's funny because there are even some people in the community now, the Bureau community, who were part of that whole thing. The way that everything went, I wouldn't have trusted me. But eventually, over time, I think when you're a good person and other people realize, "He didn't do anything."
Carl: You come back around. But that's a crazy one when it's not just that you're getting potentially sued, but you realize that the person who's upset is not in the wrong. they've had something else that's been kind of given to them as the lay of the land. "This is what happened." And then you have to figure it out. Holy shit, man.
Gene: It's a mess.
Carl: That was a frustrating time, but we got through it. I still remember being so upside down, financially. Well you know, I was super depressed during that time. You talked me off the ledge more than once. Thank you for that if I never told you.
Gene: You're welcome.
Carl: You're a good friend.
Gene: You've helped me over the years, too. Many times.
Carl: I've helped you more, so much more than you helped me. But I was just trying to make you feel good. But then we do have, I know we're kind of coming up on our normal time frame for what we do here, but we do have that time that you and I had to stare each other down.
Gene: You want to talk about that?
Carl: I don't want to go into extreme detail because again, I don't want to hurt anybody.
Gene: I don't either.
Carl: You know, people change and people have come through it, but I will say this. We were really good humans to each other, considering the amount of pain that was coming at each of us. You had this entire conference that you had built that was so popular, and I would hope profitable. You never know with events.
Gene: It wasn't.
Carl: You have all that kind of stuff. And suddenly it's all kind of at risk.
Gene: Oh yeah.
Carl: Me, I've got my company and my company was or wasn't involved. It was like, there was this whole gray area.
Gene: How does that work?
Carl: Because, well, right, because yeah. And again, without getting into detail, I think the thing that allowed me to-
Gene: It was an employee and then one of the conference's sponsors.
Carl: Yeah, and a speaker.
Gene: If anybody listens like, "What the fuck are these guys talking about?" And a speaker.
Carl: So you had hired them.
Gene: It was all...
Carl: You hired them, but they worked for me.
Gene: And the sponsor was there and there was a person from the sponsor company.
Carl: Yeah.
Gene: What the fuck?
Carl: All intertwined. But the thing that I'll say is that we disagreed on some points and we did it respectfully. And I'll tell you what? I fell in love with you then, man, because it was one of those things where it's like, okay, it felt like a zero sum game. One of us was going to win and one of us was going to lose. But in the end of it, it was nothing really. There was some residual, but just again... I don't want to drudge up anybody's bad stuff, but there was something great that came out of that, where we handled it. We worked together to get through it. And you know what? I think you don't see much of that anymore.
Gene: You really don't.
Carl: You see people just... It's funny because we've talked about this in a lot of different ways where people just see something as a win/lose situation. And the reality was, I thought we all seemed to come through that as best as we could.
Gene: Well, I'll tell you. It's partly-
Carl: Anybody listening right now is going, "Fuck these guys. I'm out."
Gene: You have high integrity. I'll tell you that.
Carl: Thanks, man.
Gene: I've known you for a long time. Then the other part was that, out of anything, I didn't want our friendship to end. Right? That was like, I put that ahead of the conference. I put that ahead of dealing with anybody. I mean, it was our friendship that I didn't want to be impacted. So with that in mind, it was like, now how do we make these decisions? We disagreed on some things, but like whatever, at the end of the day, it was like, whatever comes out of it, I don't want our friendship to go away. So, if that changes the scope of things then so be it. I was ready to do that.
Carl: And knowing that, I had so much leverage over you that I was able to get everything I wanted. And we're still friends today.
Gene: Yeah. That's good.
Carl: I think that was a case study in keeping your cool.
Gene: I think so. That's really what it comes down to. I think a lot of people just lose their shit, and they let emotion overtake things and you'll go home at night and just spin over this stuff and just anxiety and have... I mean, it's business, right? You want to make sure your business is set up properly, so it is only the business that gets [crosstalk 00:28:15]
Carl: So it's just a shell company and all the money... Is that what you mean?
Gene: You'd be surprised how many people I talk to that are not set up properly.
Carl: Oh no. I'm not surprised.
Gene: They're doing design work, paying for their groceries out of the same bank account.
Carl: Oh God. The co-mingling of personal and company funds?
Gene: It's like-
Carl: And that's because, you know what? Nobody told them.
Gene: Yeah. I've had lots of conversations with people where I'm like, "Get that shit out of your personal bank account. You need to stand this shit up. You need a different number, man. You got to have all that stuff."
Carl: These are basics. Yeah.
Gene: It's basics for a reason, man. A lot of people skip it because it's real easy to just, "Hey, I've got a computer and this guy needs something and I'll just do it." And then before you know it you're like, "Shit, I have an employee. How do I pay him?" Too late.
Carl: Yeah. And have I been paying them incorrectly already? We had that. We can talk later about the IRS coming to this, to knock on the door at Engine. Pilar Sanchez, Agent Pilar Sanchez. I'll never forget. She sounds like she should be an Agent of S.H.I.E.L.D, but she was not. She was an agent of the IRS. Oh man. Gene, I've got a hot take.
Gene: [crosstalk 00:29:29].
Carl: I don't know that we... Do we still do those?
Gene: Mm-hmm (affirmative).
Carl: Okay. Well here's my hot take. And it comes out of all this crap that we were just talking about when stuff goes off the rails, slow down. Slow down, because I think that's what got us through everything, that don't respond now. Take the time. And you know what? It does two things when you slow down. First, whoever it is that you're working with or negotiating with or dealing with, it lets them know that you're not going to be reactive.
Carl: You're not going to be crazy and just say, "Blah, blah, blah, blah, blah." And then open yourself up. Because if you don't slow down, you're going to try to fix a mistake with a mistake. And that becomes the worst thing that you could do. You fix one problem and create two and all that nonsense. And honestly, I did it so many times, but yeah, just slow down.
Gene: That is the hottest of hot takes.
Carl: Yes.
Gene: Slow it.
Carl: Gene, I will see you next week.
Gene: Man, I'm looking forward to it.
Carl: And everybody else, become a member.
Gene: [inaudible 00:30:41] nice outro.
Carl: We're doing this for a reason.
Gene: Let the boy wash your car. All right.
Carl: Car wash.
