Unravel the complex world of ecommerce regulations with Paul Rafelson, a seasoned lawyer who's on a mission to help online businesses navigate through the labyrinth of sales tax issues and intellectual property disputes.

Here's a summary of the great stuff we cover in this show:

• Paul shares his views on the importance of understanding tax obligations and legalities for e-commerce businesses. He emphasizes the importance of legal protection for online businesses through legal entities like LLCs or corporations.
• Conversation about the legal complexities of selling on Amazon and the importance of understanding Amazon's Terms of Service.
• Paul discusses the pitfalls of Amazon's suspension system for sellers and the importance of legal representation.
• He explains the common mistakes sellers make when selling their e-commerce businesses, like not understanding what they are selling and the implications of warranties and indemnities.
• Paul offers tips on how to navigate the sale of an e-commerce business, stressing the need for good legal counsel.
• Matt asks Paul about the common traits of businesses that sell well. Paul emphasizes that it's more about the value of the product than the specific niche. Paul mentions the categories that are riskier to get into, such as kids' toys, supplements, and gun accessories, due to their regulations. He talks about the changing trends in the e-commerce market, such as the COVID-19 impact and the subsequent market adjustment.

About Paul

Paul Rafelson, a seasoned attorney, has spent over a decade and a half untangling complex Corporate, Tax Intellectual Property, and M&A matters. A recognized authority in the e-commerce sphere, he's often featured in the news sharing insights on Amazon and e-commerce issues. Moreover, his expertise shone when he became the most frequently cited source during the US government's probe into Amazon's business practices related to third-party merchants.

For complete show notes, transcript and links to our guest, check out our website: www.ecommerce-podcast.com.

I used to be a corporate lawyer.

I worked for Microsoft.

I worked for Walmart.

I worked for General Electric.

Part of my job was being political.

I had to be of a lobbyist, right?

There was a part of my job where I had to interact with government,

schmooze with government, leverage government, and play this game.

And it's in games like that you learn, like, companies aren't...

scary and you learn how to like Where the pain points and the

pressure points are with Amazon.

If you look at it or Amazon is, you know, we're, we're, you know,

we represent a lot of Amazon.

So there's actually a whole nonprofit too, that I created to do Amazon for

e commerce, I should say advocacy, but a lot of it's focused around Amazon,

especially with the big dog in the room.

And.

It's just about knowing kind of where the Achilles heel is right and with

big companies like Amazon, you know, when you're under antitrust scrutiny,

that's that's a great opportunity for us as sellers and to basically kind

of, you know, you want to restore the balance of power between, you know, the

individual seller and Amazon leveraging government is a way to do that.

Welcome to the eCommerce podcast with me, your host, Matt Edmundson.

Now the eCommerce podcast is all about helping you deliver eCommerce.

Wow.

And to help us do just that today, I'm chatting with Paul Rafelson

from Seller basics about mastering regulations for e commerce success.

Oh, yes.

But before Paul and I dive into our conversation, let me share with you a

podcast pick a previous podcast episode that I think you're going to enjoy.

Check out.

Should you sell on multiple online marketplaces with Jesse Rag.

And if that's not wedded, you whistling enough.

Try how to make the most of your EU expansion strategy with Andy Hooper.

Both great guys, actually both great conversations, both jampacked

full of top tips, uh, and you can access our podcast picks and our

entire podcast archive for free on our website, eCommerce podcast.net.

Plus, if you're there, Why not sign up to the newsletter if you haven't

done so already and we'll send you our links to the podcast pick, uh, from

today's show straight to your inbox.

I can see Paul, if you're watching on screen, he's pointing to the

screen, absolutely, totally.

Uh, so make sure you do that.

sign up

Ha

for the newsletter.

I was giving the point,

Yeah, absolutely.

You are.

That's awesome.

you know.

Now, are you struggling to grow your e commerce business?

Do you feel like you're constantly spinning your wheels, trying to

figure out what to focus on next?

Well, we've been there and I know how frustrating that can be.

can be.

And that's why I love being a part of eCommerce Cohort.

eCommerce Cohort helps eCommerce businesses like yours deliver

an exceptional customer experience that drives results.

And to help you get started, let me tell you about a free

resource called eCommerce Cycles.

It's a mini course, which walks you through my proven framework for

building a successful online business.

I'm going to show you the Steps that I personally take in my own e commerce

companies, uh, and so you can see exactly how to put these concepts

into practice in your own business.

And the good news, this whole mini course is totally free.

You don't even need an email.

So check it out.

I know, right?

EcommerceCycles.

Okay.

com.

Paul, I'm going to get you back.

You should come help me do these intros more

You shouldn't have told me that they're gonna see me when I, when you

do I was, I I just, I can't help it.

Absolutely.

So head over to ecommercecycles.

com to access our free training and get started.

So, if you're watching the video, you have undoubtedly seen Paul point

fingers, make faces, uh, and join, and if you're on the audio version, you've

heard him in the background, no doubt.

Uh, Paul is a seasoned attorney, uh, has spent over half a decade,

oh no, over a decade and a half, uh, untangling complex corporate tax, uh,

intellectual property and M& A matters.

I mean, that just sounds like a fun life.

Just drill a hole in my head, right?

I mean, it's just, like, Paul has spent 15 years of his life being sad.

You know?

No,

No, I'm sure not, not at all.

Uh, he's a recognized authority in the e commerce sphere is often

featured in the new showing insights in Amazon and e commerce issues.

And moreover, his expertise shines.

through when he has become the most frequently cited source during the U.

S.

Government's probe into Amazon business practices related

to third party merchants.

The most cited source.

That's a heck of an accolade.

Uh, Paul, it's great to have you on the show, man.

yeah.

What was that all about?

I was like doing my like, yeah.

It was like, you know, it was like, uh, a ninja.

It was like a ninja dance or

Yeah, yeah, yeah, yeah.

How did you become the most cited source?

What was what?

What went on there?

Well, I was the second most sighted source and I said, guys, we got on the draft.

I said, we, I'm guys.

I'm like, I'm too away.

Come on.

So I, no, I mean, You know, I, I, I, I play e commerce, you know, I came into

this game, there's a whole backstory which we can get into if you want later, but

like, I used to be a corporate lawyer.

I worked for Microsoft.

I worked for Walmart.

I worked for General Electric.

Part of my job was being political.

I had to be of a lobbyist, right?

There was a part of my job where I had to interact with government,

schmooze with government, leverage government, and play this game.

And it's in games like that you learn, like, companies aren't...

scary and you learn how to like Where the pain points and the

pressure points are with Amazon.

If you look at it or Amazon is, you know, we're, we're, you know,

we represent a lot of Amazon.

So there's actually a whole nonprofit too, that I created to do Amazon for

e commerce, I should say advocacy, but a lot of it's focused around Amazon,

especially with the big dog in the room.

And.

It's just about knowing kind of where the Achilles heel is right and with

big companies like Amazon, you know, when you're under antitrust scrutiny,

that's that's a great opportunity for us as sellers and to basically kind

of, you know, you want to restore the balance of power between, you know, the

individual seller and Amazon leveraging government is a way to do that.

So we, um, You know, basically through this nonprofit that I created called the

online merchant skill, which is sort of a trade association for Amazon sellers.

This is something I do with my volunteer time when I have it.

Um, we just basically wrote a really, we took all the kind of the stories we had

heard over the years from our clients and members and basically compiled it.

to a submission, which you can go and read.

If you go to the subcommittee website, you can read online

merchant school submission.

And they really liked what we had to say.

They really appreciated the candid detail.

And then, so they cited it quite a lot.

And then, um, when they were even passing antitrust legislate, they're trying

to pass this antitrust legislation a couple of years ago, they were even

reading our emails on, it was weird.

I was watching TV and I'm, we're seeing, you know, Congresswoman

Jayapal reading our emails on TV.

It's So it's, um, You know, it's part of what I do, though.

It's just, it's just kind of how we have always gone about Dealing with Amazon

and dealing with e commerce, you know, you know, just it's this new body of

law And so you've got a lot of confusion You've got one power player that's

kind And we've just kind of taken this opportunity to sort of try to bring the

balance of power back a little bit and, and, show people the way to do that.

Cause there, there is a way,

I was going say, has it worked?

I mean, how do you, cause it's, it's always been, I've always sort of Amazon.

I, the analogy is always for me has been David and Goliath, right?

I mean, you've got this monster of a thing.

Um, so what sort of things have you done that's brought the power back?

I'm kind of curious about that.

Well, we could do so much more.

So in a way, like answer is, I'm still like disappointed that we

haven't figured out a way to like come together as an e commerce.

Community in a, in a single form and fashion really just own

the space as we were, we were kind of going down that road.

But no, I mean, we, we leverage government to get the balance of power.

I mean, we look at Amazon.

I don't look at it as David Goliath.

I don't look at it as more like it's, it's sort of a combination of like, um.

It's like the Achilles analogy.

Like you've just got to know where it hurts big companies, big matrix

organizations like Amazon, they're not, you know, they don't run it secret.

Everything is, is, is out in the open.

Um, you, you know what their pain points are, you know, where they,

you know, they don't want, you know, Congress calling them every day,

members of Congress saying, you know, what did you do to my constituents?

So what we've done a lot of times, like what I've done with, um, like

in my suspension practice, my, you know, for my, for my clients who can

get their accounts shut down in many cases, what I do is I would call their

Congress people up if I couldn't get through, like it was a good case.

And we've tried everything.

We've tried every possible mode of appeal, and we're not getting anywhere

because system is just stupid.

Which you know it is, right?

The appeal system is sometimes, it's just, it's just chaotic.

It's like you're talking to a brick wall, or actually worse, because at least

brick walls just don't say anything.

These things, these things regurgitate.

It's like, uh, um, We've been able to sort of say, hey, look, Congressman so

and so I I'm representing your constituent who is building a multimillion dollar

business, hiring X number of people and everything was going great until

they suddenly got shut down by Amazon.

Right.

And we've tried to explain Amazon what the problem is and why it should be fixed.

And, and, you know, but we just can't get through to reasonable people.

Perhaps you can.

Now, when Amazon gets a call from Congress or congressional staff.

That's a whole different, it goes to a whole different department, right?

And you do that enough times, you start to develop a relationship with

Amazon on your own, that's kind of like, okay, you know, maybe they'd

just rather hear from us, because they're tired of hearing from Congress.

Other things we've done, like the 72 hour suspension rule, I know it's not a

huge win, but one of the things I wanted to do during anti drug scrutiny was

I wanted to push for Legislation that would have been a seller Bill of Rights.

But again, we just don't have that unity of the seller

community to really build that.

But the reason I want to do this because we actually did something

like that in California when we lobby to change the tax law.

Like, I don't know if you remember, but like Amazon years ago, they

told you it was your responsibility to open sales taxes in the U.

S.

basically your V.

A.

T.

Transaction tax.

We changed that.

I mean, we actually don't think it was ever anyone's responsibility but Amazon's,

but just to, just to remove the doubt, we went and lobbied to change those laws.

Um, and then through that, we actually changed the laws in California to mirror,

um, some laws that Europe had been, uh, basically working on to protect sellers

and provide sellers with reasons for, you know, why their account was shut down.

And that led to the 72 hour suspension notice.

So, yeah, I mean, we, we, we cracked the, we cracked through now and again.

I mean, we have our ways and

Yeah.

Yeah.

there's always a way we'll fight.

I mean, it's, it's just, it's, it's, you know, there's, there's no limit on

our imagination in terms of how we'll, we'll, we'll get through somehow.

and I think that's what we've done differently is we just think, you

know, there's, there's a right way to go about these things, you know, you

don't want to be like bribing people or doing anything shady,, like, but

there is a way to get, there is a way to get known influence within Amazon

and just have to not play that game.

And I think it's, I had the benefit of growing up in that corporate

environment where that's what we do, you know, it was a part of my

really cool.

of my job, but it was a part of it.

Yeah, that sounds really good.

I mean, it sounds, I mean, it sounds interesting, you know, taking, uh,

taking this, these sort of big things on.

For those that don't know, listening to the show, explain what the

72 hour suspension rule was, or

it was basically, you know, there'd be back in the day, like, you know,

you were selling Amazon, you know, one day you go to sleep at night.

I've been doing great next morning, wake up your whole account and shut down.

You're locked out of your account.

You don't know what the hell happened.

All right.

Nothing.

Well, now Amazon has to, except for, I guess, extreme circumstances, they

have to give you a 72 hour warning.

And what it's actually led to, too, is less suspension of accounts

and now more suspension of ASINs.

So, in some ways, like, what it's done is it's just changed the nature of

the suspensions, and now we see more, like, product level suspensions as

opposed full on account suspensions.

But, in a way, that's good, because, like, you know, it's hard to appeal when

you're locked out of your account because Amazon has you on a fraud block, for what?

You know, and it's like...

You know, for now and today, that same issue would be just a mirror, like,

you know, check the box type of appeal.

But I mean, the system was kind of brutal back then.

So it's made the system a little bit better for I think.

But, uh, I mean, we still got a ways to go.

Um, it's still a mess.

But, um, yeah, that's why we have a whole business around the Amazon account health

and suspension, which I don't love.

But I mean, we have to do it.

but somebody has don't Yeah,

and a lot of people do, but we built one that's sort of legal driven.

It's got a little bit of a legal thing because we feel like a lot of these

account suspensions do have some, a lot of times have legal implications.

And so you need that, but yeah, I mean, like, I can't wait for somebody

to put me out of business on that one.

Like, I'm not loving, I don't love that industry.

It's not my favorite part of what we do.

It's important that we do it.

But it's not my favorite thing.

to tell you my favorite thing is so I don't sound like a hypocrite

too So i'm happy to tell you what I do love but but that

with that.

What, what,

exits I love as a law firm So so we have seller basics is our

account health plan sellerbasics.

com And then we also have my law firm, which is a regular law firm um, and

one of the many law firms that supports sellerbasics members, but through

my law firm, I you know, we provide um, Legal services and I love exits.

We did, uh, you know, we had a big, big, big bubble and valuation

for Amazon sellers in 2020 2021.

We did quarter billion dollars and exits for clients just in 2021 alone.

We're probably approaching half a billion overall in total, you know, total tally.

Uh, in terms of dollars, you know, I'm, I'm only counting dollars in pocket.

I'm not counting, you know, the, the, the imaginary money that was never

going to be, because we knew that from the start, you know, these are

Hmm,

unrealistic earnouts and things like that.

Um, but we, we've done a great job and that's, that's my favorite

thing to do because one, it's like the only time it's really when your

client's the happiest too, right?

Like your clients can pay a lot of money.

So they're usually very happy.

easiest time to build, it's easiest time to build be honest Right.

to get your money out of them.

Yeah, yeah,

It's finally, yeah, it's untrue to that.

I mean, being facetious, but it's, you know, it is like, you know, like,

know, that's the only do is like, you know, this awful thing happens to me.

Like, yeah, well now I have to pay us thousands of dollars

to help fix that's never fun.

That's not a fun thing to tell somebody, but it's like, it's our job.

I mean, we have to do it.

It's our, you know, we all make a living, right?

Nobody gives their product for free.

It's our service, but it definitely is more fun.

To say the reason you're paying me is so that I can help you safely

extract millions and millions of dollars from your business.

Like that's a much more fun, fun way

sounds more exciting.

so you've obviously been involved then in a lot of these sort of exits, Paul.

And I'm, I'm kind of curious, based on your experience, what

are some of the common things that people sort of fall foul of when?

Uh, when they're sort of exiting their business, that you as a lawyer kind

of go, man, you should have sorted it.

Why?

This is something you could have sorted out easily ages ago,

but it's now a bit of a mess.

Yeah, I mean, legal and compliance is always right.

Like, it's just legal and compliance, like just getting somebody to look

at your product and saying, you know, people, I mean, I've had cases

where people have found out midway through their due diligence that

their product is FDA regulated, like they didn't know, and that's sad.

And that's sad, right?

Because if, depending FDA regulation they come under, right, if they're

class one, class two, like it may take a year for them to get that.

Certification that they need.

And now you're out for the count or, um, you know, so it is,

it's like just taking inventory.

Like at some point, I mean, I get like, as a lawyer, people are

don't want to work with lawyers.

They think we're expensive.

They think, you know, hourly rates are really high and you just want to kind

of like, you know, Google and chat GPT probably have the answers, but.

They really don't have them yet and yeah, maybe you got to this point in

your life where okay, you did your own trademark, good for you, but

you know, if you're trying to build something of, you know, you're trying

to build real enterprise value, right?

You know, something you can sell and create generational wealth for yourself.

I mean, start, start doing the due diligence early.

Do it long you want to sell, you know, take inventory.

Even simple things like pictures, you'd be surprised how many

people screw up their pictures.

I mean, it is, it is bad.

Right.

by up?

like, just, they just can't prove title.

So one of the things you have to promise.

So when you sign a contract to sell your business, you make promises

about the condition of your business.

You make these warranties, right?

You're like, I promise I own all the intellectual

property I use in my business.

Well, do you?

I mean, sometimes the pictures, like you're like, well, who

did, who made the picture?

Um, somebody I hired on Fiverr.

Oh, where did they get that?

Where did they get all those background, uh, stock images?

I don't know.

Right.

And that image is on your packaging.

Yeah.

Okay.

Right.

So you can see how, like, Images alone can be a pain.

Now, images, in my opinion, the good news about images, if it's, as long

as it's not on your packaging, if it's like your, your listing photos, I mean,

downside, the downside is limited.

You can say, fine, alright, I really screwed up my images, I'm sorry, Mr.

Buyer, here's 10, 000, go take all new photos.

Or whatever it

Yeah.

Yeah.

But, you know, Go do that, right?

Here's a concession, right?

So that way you don't have to take the risk of copyright infringement.

You can get new photos.

You can be happy.

That's an easy one.

But other things like trademarks, people understand like people get one trademark.

Most Amazon sellers have one registered trademark and that's oftentimes incorrect.

Yes, you need one registered trademark to turn your brand registry on.

But like if you have variations of products and you give them cute

little names, those cute little names represent trademark, right?

you're establishing trademark.

Right, under the common law, and you need to register that trademark, you need to

know it's valid because your, because your buyer is going to assume that it

is valid, that that name will, right, that some companies will come around

and say, hey, you're infringing on our, right, like you can't call it, you can't

call your chocolate flavored lipstick Count Chocula because we have a cereal

Chocula, you know what I mean, like, like, You know, like just because it's

not your main trademark, it's still a sub, I mean, those, those, those sort of

second tier trademarks are so important.

People don't even look at them and they just, so I mean, just

the basics of stuff like that.

And then, yeah, just the compliance, you know, like I said, FDA, consumer product

safety, um, California's proposition 65.

I mean, there's all these.

You know, you have to promise to your buyer you're

complying with the law, right?

So if you don't know or it turns out you're not I mean that

can that can affect your deal

yeah,

And it could affect it big time Same with like, you know engaging in review

manipulation Although we surprisingly have gotten through a lot a lot of

buyers just you know, don't seem to care about that Um, there was a time

when there was a little bit of paranoia.

Um, but, um, it doesn't mean you should do it though, but you know, it raises issues,

you know, it raises what ends up happening is you end up taking all the risks that

so if you're, there is substantial like review manipulation or breach of Amazon's

terms of service type issues, like what ends up oftentimes what the buyer will

want is they'll want some sort of like term that says like they can basically go

after your house and your first born kid.

Uh, if anything ever becomes of it, right?

Like if it turns into something, like we'll accept the risk now and we'll pay

you, but if this whole thing blows up because of that, then we want the right to

not only get our money back, but go after you personally and go after your house,

you know, it's, it's like a whole thing.

So we don't recommend, you know.

Straying too far from the Amazon terms of service or actually stray it all.

So, but it's, it's interesting, you know, this process of going through the

exit, it's, um, people are surprised.

They don't really know what, you know, what it is we do as lawyers

and how it brokers and that, you know, I kinda say we're kind

like your risk negotiator, right?

We're helping you risk manage this deal because, you know, a lot of buyers when

they come into, uh, buying a company, especially an aggregator, private equity

backed aggregator, You know, they really want you to give them a sure thing.

Like the contracts are really written by default to say basically like, you're

giving us a sure thing and if anything wrong, we're going to go after your health

and your kids, you know, it's like, I'm kidding, you know, but it's just that,

that is the language, like we're going

want to go after you and

scary,

Yeah, well, it is.

I mean, I sold, uh, an ecom business and not an Amazon

business, but an ecom business.

Uh, two years ago, and it was a fairly innocuous deal, but the contracts, I

mean, I was, I was very grateful that, um, a really good friend of mine just

happens to be a contracts barrister.

So, here in the UK, um, and he was saying, he was asking me all kinds

of questions, like you've talked about, like, well, Matt, this image

on your website, who owns that?

I'm like, what are you talking about?

Who owns that?

And it, it was.

It was stuff like you've talked about that I'd never thought of that actually

became an issue when I wanted to sell the business because I had to warrant,

you know, I had to make certain warranties about what they were buying.

And, um, and, and to do that was was quite tricky and this was, I was selling the

business to somebody in the same space, to one of our competitors in the same space.

Um, and so he knew the industry, he knew a lot of what we were doing.

Um, even so the contract negotiations were a lot more complex than I

thought they were going to be and they were a lot more, um, protracted.

Then I thought they were going to be, um, but I'm very grateful for, and I'm

not just saying this because you're a lawyer on the phone, but I was very,

very grateful to have a very good lawyer to help me, uh, understand what was

actually being put in this contract.

And when you took a stood back, you

you're definitely not saying because I'm here because he's a good lawyer.

But, yeah.

yeah, but generally

So kudos, kudos, kudos to that, to that guy, you

Kudos that guy.

Yeah, but it's, it's one of those when you, when, when I took a step back and I

looked at it, it made sense why my, why the guy buying the business wanted me

to sign the contract that he did because he wanted as much surety about what he

was buying as he could possibly get.

Um, and so it was just really fascinating that that whole contract

going backwards and forwards, um,

it is, it really, it really surprises people.

I get a lot of my favorite is like, come on, isn't it just boilerplate?

Can't you just do it for like 500 bucks?

And like, it's just boilerplate.

Right.

And you're like, next time you get on a plane, right?

And you get on a plane, I want you to look to your left when you walk in

the front door and you see the cockpit there and all the switches and buttons.

Is that boilerplate?

Probably.

Can you fly the fucking plane though?

No.

So, pardon my language.

Um, sorry.

Um, you see what I'm saying?

Like, those contracts are, I like the cockpit analogy because, one, I'm an

aviation dork, and I can actually...

Like my neighbors, when I worked at Microsoft for the flight simulator guys

and actually taught me how to do the cat three auto land, which is really cool.

So I feel like I feel like I could land the plane if both pilots actually

had the fish and it was a problem.

Ha ha ha ha.

if the plane was otherwise fully functional.

But the other reason I like the strategy is the scenarios because it's it's if

you look at the complexity of a You know typical airplane cockpit with

all those like little switches, right?

There's tiny little switches all over the place just floor

to ceiling switches, right?

That's kind of like what a purchase agreement is.

It's like every word, every comma, in a way, is like a switch, right?

And it's not that this is something profound and like that this purchase

agreement is so different than any other one that's why you need a lawyer.

It's that you need a lawyer to sort of be the interpreter and say, Okay, well.

Here's the risk profile that buyer wants.

Here's the risk profile you want in order to get that risk profile.

We need to do this, this, this, and you know, use, you know, define

knowledge as your actual knowledge, not your constructive knowledge.

And then disclose this on that, you know, apply this indemnity cap.

Apply, you know, so like you're, you're, you're building this configuration,

if you will, within this, you know, 30 to 75 page document, depending on,

you know, what you're working with.

When you're building that configuration, you're configuring it for a specific

purpose and a certain risk profile.

So that's why I like the, you know, and one flip of one switch can

just undo the entire thing, right?

One missing comma, one, you know, knowledge qualifier

that you should have had.

How you define the word fraud, I mean, can just completely change the entire.

Risk profile, the deal as, as, as, one switch on a topic, it

could probably very much change the directory of your flight path.

So, um, you know, I don't know, maybe that's not a great analogy.

I like it, but I still stand by it.

I think it's a pretty decent analogy.

That works.

I get it, having flown planes myself.

I get it.

It's um, I'm the guy that maybe, I think I could probably try and land

the plane but I think I'd probably still spend the first 30 minutes

trying to save the life of pilots.

Ha ha ha ha.

And back up full

I got it.

It's if an airbus, airbus or Boeing, like I got this.

Yeah, no

it.

they got the whole, computer, the FMCs, it's all programs.

I'm fine.

I'm good.

I'm not, I'm not, I'm not hand flying this thing.

I'm just

yeah, yeah.

do it, you know.

So if you're, um, if I'm, I'm fascinated talking to you, Paul,

because again, it's just reminding me of that whole journey that I went

through in selling our business.

We were pretty well established 12 years old.

We've been doing it a while.

I've been around the block a few times.

I've got a few gray hairs on the chin sort of thing.

Um, but I'm aware that, you know, people listening to the show are

going to be at different stages of their e commerce journey.

So if people are just starting out in e commerce, uh, and they're listening to you

talk about lawyers and trademarks and, and all that sort of thing, is this something

that you, you think you would say, if you're starting to think about this?

From the start, or is this, um, should I just get up and running first?

I'm just kind of, you know, curious, what advice would you give to a startup?

So I'm a big believer and, and, and, and sort of, this is why I created the seller

basis program that I created because it's sort of for this very point, it's like,

I'm a big believer in a couple of things.

One, we do kind of invest in our clients, right?

Like we understand that like.

Like, like, let's take a subject like asset protection, right?

You can have a limited liability company in America and that

may protect your assets.

It'll give you some protection, right?

There's, there's always ways to make it better.

You can also do a full on trust in a state, you know, blowout, right?

With multiple entities and offshore entities and go, you know.

So the question is like, what's appropriate, right?

If you're just starting out on Amazon, maybe just, or e commerce, maybe you're

doing some arbitrage, not even selling your own product, just reselling, you

know, stuff you buy at the Nike store.

You need for that, you know, for that big done up structure is probably minimal,

but let's say, um, you're selling hoverboards and you're worth 10 million.

Right.

And you might need that, right?

Then you may need of that structure.

So I'm a big believer in like.

What's appropriate for the person at the time and can always go back to visit.

So, like, I've met, I've gone to Amazon, you know, meetups.

The New York Amazon meetup is fantastic.

It's run by my friend, Brandon Furman.

It's, it's, it's one of the best for, for a free meetup.

It's phenomenal.

Um, I mean, the quality of, of, of speakers they get just to show up for

a free meetup, it's, it's really great.

It's run at Payoneer's office and, and, and it's, and the reason

I bring that up is because it's always an interesting mix of people.

You get some really heavy hitters in the New York area who show up, um, some, you

know, medium sized Amazon sellers as well.

And then you get some noobs who just have no idea what they're doing.

And they oftentimes, when they hear I'm a lawyer, will come up to me and say like,

you know, do I need to set up an LLC?

And I'll be like, well.

Not necessarily.

Like, maybe not.

Maybe you need to figure out if this is what you want to do first.

Maybe you need to sell a few things, right?

Now, if you're going straight into brand creation, trademark, and you already

have a product in mind, then yeah, you probably do want to set up an LSD.

Like, if you're just like, hey, I think I want to sell on the

internet, what's that like?

You know, maybe try reselling a few things that you buy at C.

J.

Maxx.

For that, you don't even need an LLC to get started.

But make a note, you know, if you hit six figures, go back

and talk to me about an LLC.

And the reason I, I, I mention this is because our program is

kind of designed, we created this thing called Seller Basics, right?

And 100 dollars a month.

And I'm not trying to promote it, but it's, it kind of just fits

the spirit of what you're saying.

It's like, So basically this is a way you pay 100 dollars a month and you can

actually speak to lawyers like me or other lawyers who are trained in e com, who

know your business, and you can ask them questions and you can get answers rather

than wasting your time getting the wrong answer from Google, you can go straight

to the lawyer and get those answers.

And, and, and, and we did that for a reason because When I first started out

in private practice, which was totally an accident, like my whole law practice

was, was based on a blog post that I wrote and went kind of viral didn't intend to.

It was about taxes and sales tax, but, um, you know, my whole point of view

is like when you, um, when a lot of my clients get in trouble, you know,

a lot of times it's in that early stage when they were just starting

out, there's something they missed.

They forgot dot an I across the T.

And it's one of those I's and T's that if they just, if I had known that

person and was able to, to, to go back in time and meet that person and have

a 15 minute conversation with them, we could have prevented the whole thing.

It's like this commercial in America, the Geico commercial where you say,

well, you know, 15 you 15, you know, can save you hundreds on your insurance.

It's sort of like 15 minutes with a lawyer.

Can sometimes save your entire business.

So that's why we created the program is partially because not just to protect

your account health with Amazon and your, or your e commerce providers, but

so that I actually liked the program because it encourages you in a sort of

safe way where you're not going to get a surprise bill because there is billing.

Right?

You can ask that question now.

You can say, Hey, I'm starting a business.

I want to sell bicycle helmets on Amazon.

Anything I need to know, right?

You can ask that question and get some, and get some good feedback

and get some good answers.

Or I want to file a trademark.

What do I need to know?

And I love that I'm a big believer in investing in my clients.

And I'm very, and what I mean by that is I like to be, we don't want to be

the most expensive one on the block, especially for the startups, right?

We want to be a little bit easy, but because we're, we're in it, you know,

you know, some of my biggest clients.

Who sold their business in 2021, you know, for, for tens of millions of

dollars, they, they were clients of mine when they weren't even doing a

million, you know, four years prior.

You know, and it was my availability, my going easy on them that led them

to coming to me when they were ready to sell and say, okay, now I'm ready

to sell my business to 10 million.

Okay.

You know, so there's sort of a, I call that the sort of investment

we make in our, in our new clients.

We, we, we want people to build successful businesses.

We hate the idea of them just kind of, you know, missing out on something

and having that totally derail the enterprise value they're trying to create.

And so that's why we built this program that we built to encourage

people to get that kind of help and to make it easy on the front end.

uh, and ask a question is always super helpful unless, uh, and I mean this with

all due respect, unless, you know, you're from, from some of the younger generations

and they don't really know what the phone is, but maybe they can text in.

Yeah, they can.

Yeah, it's definitely gonna be a phone call, but they can go, they can go on

their portal and schedule, you schedule the call and we do it usually a lot of

times via zoom because you know, we, we started getting a lot people from

different parts of the world and it's hard to dial Kazakhstan for some reason.

And so, or, you know.

I I can

it's just after, after we're switching to zoom, but you know,

we're very popular Romania.

I think I should be Romanian lawyer of the year.

I really do.

I should be Bucharest lawyer of the year.

Uh, of Romanian.

I said, something's going on in Romania.

There's something in the water that

Something's Something's growing.

something.

is a lot of brand activity.

you've seen, um, you've obviously seen him work with a lot of clients

and get them through the gate.

So do you predominantly work with the seller or do you work with the

buyer or do you work with both?

It's a good question, uh, so when it came to these big private equity

backed aggregators, we work with one of the big ones very early

on, and it was at that moment.

I decided I never want to work with anyone again, and it's not because

I had anything negative about them.

I actually like them quite a lot.

I'm still very close to them, but I just think from our perspective,

when you're that funded, I And oftentimes they do like you're gonna

hire any law firm you want, they can hire some of the biggest law firms.

That's what they want to do.

And they have, like, we've, I have literally been in deals and I've

been in deals where, you know, the other law firm is like the same

law firm I work with at Microsoft.

I'm like, what are you doing here?

like, your legal bills more than this deal,

Yeah.

When you have 38 lawyers on every phone call, your bill is going to be

more than the seller is going to get.

Um, but it's about the buyer wanting to be protected and feeling protected and using

a name brand law firm and paying for that.

And, and so I get that.

Um, so, so there's that perspective, but from my perspective, I don't actually

like being like, I think we're a seller advocacy law firm, which we really are

advocates for the e commerce community.

Like we, we, we, we, and it's provable.

Like we've, we've won court cases on behalf of e commerce.

As a class, right?

We've won, uh, we, we spoke to the antitrust subcommittee

and we, we take action.

Um, and so I don't like the idea of being sort of like

the bad guy to a small seller.

I don't particularly love that position, especially when, so like

what I like to say is like, we don't, we don't support big Agra.

We don't, we don't represent big Agra as a big aggregator.

Um, so, but, but at the same time, if my client is a, just a regular person

who's looking to buy a business, I will represent them on the buy side.

That's not a but I just don't, I don't feel like the big aggregators

need me as much as I feel like the seller community, there's not a lot of

confident e commerce lawyers out there.

I mean, it's not, and it's not any negative.

It's just.

I mean, the idea that e commerce is its own body of law is still,

I think, a foreign concept to many lawyers who don't live in this world,

like who aren't from this world, they just, it's just business law.

Like, no, it's very different e commerce law.

It's very different, you know, opening up a, a team, a tea shop in the middle

of on high street in, in, in, you know, any town UK is very different

than starting a small business out of your kitchen table that reaches.

The entire country or halfway across the globe and you're

importing from another country.

Like, like, do you see what I mean?

Like e commerce created, what I call the global small business, right?

This is a concept that, right.

And that's who we serve.

We serve the global small business.

And I always say.

And that phrase global small business is it's an oxymoron, right?

Like if you were prior to e commerce, right?

In the 1980s, I have a global small business.

What the heck does that even mean?

How is that even possible?

But with FBA, especially, um, giving you the power of Amazon's logistics.

Um, and now with all the various different, uh, logistics companies

and 3PLs out there that you can use, whether it's with Amazon or Shopify.

Yeah.

I mean, yeah, the global small business is a real thing.

And so part of what attracted me to being, being in this body of law is

the fact that I had multinational commerce experience as a lawyer.

And for the first time in the history of the world, somebody who's not a

billion dollar company needed my help.

In fact, somebody who was not even a million dollar company needed my help.

To me, that was profoundly fascinating.

And I wanted to see what that was all about.

And so that's kind of what motivated me to check it out.

Fantastic.

Fantastic.

So you've, you've obviously seen, um, a lot of companies sold for a lot of money.

What are some of the, um, The common traits, I guess I'm, I'm just trying

to, if someone's listening to the show, um, who's thinking of getting involved

in e commerce to build a business, to sell it, um, you know, obviously you've

talked about getting the regulations right and making sure your T's are crossed

and I's are dotted, but what sort of things sell well in your experience?

What sort of things should I be thinking about, um, from maybe an

industry or a niche or a country?

I'm just curious to learn from that side of things.

And that's the weird thing is that there wasn't There wasn't much to, to it, right?

I mean, it was really about what made the product valuable, especially in

the Amazon space, because most of the Amazon aggregators were focused

on Amazon dominant companies.

Like they wanted 70 plus percent Amazon because they didn't really know if

their formula would work with Shopify.

It was almost like the listing proved itself.

So if you ran the sale, the sales kind of proved what was desirable

is not so much the product.

That being said, there were certain product categories that were a

little scarier than others, such as anything toys, kids, right?

Baby products, a little bit scarier, right?

Supplements, oddly, a lot of companies were afraid of supplements.

I think now a lot of companies are starting to warm up to supplements.

Um, but getting into supplements, tough, tough business to get into at

this mean, people do it all the time.

It's so fricking competitive, right?

I mean, it's, it's in some categories I've heard you've had to spend

millions of PPC pet products.

Um, you know, I think good ingenuity products where you can take the lead

where your target market isn't, you know, Children and babies, um, better.

Um, you know, not too dangerous, not the kind of thing that's gonna, you know,

but really, I mean, the world's, I mean, there's, there's no one specific category.

Um, that that's to avoid versus the other side of like, you know, like I

said, a lot of people who sell products in the gun space have a harder time,

even not even if it's not guns, but like, on accessories, there's a whole,

like, a lot of buyers have clauses that say they can't buy what they call.

We call them to a company.

2nd amendment as in the Constitution.

2nd amendment, um, Bill, right?

Uh, you know, the famous Karen gun law, Okay.

You know, so a lot of, a lot of buyers apparently have like these clauses

that say that they can't, you know, a lot of lenders, excuse me, have

these clauses that say that they're, you know, borrowers can't use the

money to buy products that are into sort of the gun space, if you will.

So there's like weird restrictions like that.

Um, stay away from things that are controversial, you know, things

that make kind of questionable claims, like if they're like, You're

selling like, you know, magic beads or something like that, you know?

Um, but you know, if you can make headway, just kind of selling relatively.

Routine stuff or just kind of a cool take on a product that's relatively benign.

I think, I think, you know, it's hard to say there's any one category or specific

categories that are better than others.

And things trend differently.

Like, for example, uh, last example, I'll get on this point.

Kitchen products always usually do really well.

Like if you can make in kitchen, it's like, it's a popular category.

People are always looking for quirky little quick, you know, on

the latest avocado peeler, right?

They're always looking for something.

Um, it was interesting to see, like, and so in 2020, we had this huge COVID

bubble, like a lot of people, if you were in, um, anything outdoorsy, anything like

kitchen, uh, home goods type stuff, you were doing great, because people were

stuck at home, they were looking for things to do, you could only do outdoorsy

stuff, obviously if you were in travel, that was a bad time, so they had this huge

bump, we call the COVID bump, And then come 2021, the market was still on fire

in 2021 in terms of like Amazon salaries, but there was sort of a bubble bursting

that happened in about April of 2021.

If you were in home goods, because all of a sudden you had, you know, people

were, you know, COVID restrictions were relaxed in 21, people were suddenly

allowed to go outside again to travel.

And what you saw was, I guess, just a steep decline in

interest in anything kitchen.

So, all of a sudden having like a kitchen product in 2021 was like a curse.

It was like, it forget about it.

You know, so, sometimes things trend funny,

Yeah.

But I would always say stick with stuff that's less regulated, like,

you know, things that, you know, stay away from foods and perishables, um,

stay away from clothing, you know, unless that's your passion, but you

know, clothing's always tough because you've got returns, you've got sizes.

So it's just, it's, it's always a harder product category to get

into unless that's your passion.

Um, But yeah, it's, it's, it's kind of, you know, a lot of these buyers and

private equity, especially, they don't really care what you're selling is, I

mean, you're proving it via your sales, your sales of make it speak for itself.

The one thing I tell people, you know, with patents and things like that, you

know, I've had people say to me, well, I've got this patent and that's going

to be great once I launch this product under this patent, it's like, do realize

that you won't get any value out of that.

If you, you, the only way to get value out of a patent product.

In a sort of a private equity deal is to show that it actually makes money Right.

Like nobody's going to pay you on the speculative future earnings.

You've got to prove, Hey, this company, I'm consistently selling this product

and making a million dollars a year.

This product is covered by this patent.

And then you have the ability to not only sell it at a multiple of a million, but a

higher multiple because there's a patent.

So that's sort of how the patent, but if you, if you haven't proven that patent,

then it may not do anything for you.

Like you're not, not

printed on.

Yeah.

it's, it's probably not worth much, you know, in terms of your deal.

Maybe in the next, you know, maybe when the buyer takes it over, they might get

something out of it if they prove it's worth something, but just kind of keep

that in mind when you're considering timing of, you patents are great, but

execution is so much more important too.

No, super, super helpful.

What's been the most surprising thing you've seen sell well, uh, as a company?

Well, I think that it was just, what was surprising was the lack of, during

the sort of the bubble of it all.

Right.

When.

When deals would close and fast, you know, 30 days time was just go back to my point

of the avocado peelers like it seemed odd that some of these buyers were spending

like five, you know, top top multiples.

For like the most generic, probably like the Alibaba specials where

you just literally wipe the label off, but you're not, know, and

you, know, it just didn't matter.

And it was like the lack of due diligence that blew my mind.

Like they were so eager to spend the money that was committed to them by their

lenders or investors that they would just literally bypass the diligence.

And they would, they would basically just want you to go back to the contract.

Like we were talking about earlier.

Where you're making all these warranties about your company.

They were just basically saying, Hey, we're just going

to rely on your warranties.

We're not going to actually do the due diligence and investigate.

So I would see things sell that were like, you know, totally in violation

of law and we would disclose it.

Like this is not compliant with like these laws or, and it just didn't matter.

Like they didn't care.

Like they were so, and, and so it was surprised me just like, and that's kind

of where I was clued into this feels like a bubble because it's just like.

If they're that stupid with their money and then what investors are that stupid

with their money to let them do that, I mean, that feels like a bubble to

me, you know, and then we saw a lot of aggregators fail and, and, and for a

number of reasons, some of it, I think being the quality of the assets that

they bought, um, came back to haunt them.

Uh, in other cases, we think they underestimated the value of the,

the, the, the seller's contribution to the, to the, to the sales process

and, and thinking they could do it better than everybody else.

But, um, so I think it's always just those cases where it was like, you

know, if I was the buyer in any given scenario, knowing what I know, I run away.

It's like the first product, like, no, it's still going to sell for

millions and millions of dollars.

Like the, the, yeah, it only blows up 10% of the time.

know, it's only dismembered.

It's only dismembered 20 people,

wow.

you know, you

people would buy it.

It's funny, isn't Because they, they, people do get in these buying frenzies

every now and again, don't they?

And then it sort of, then it becomes a bit more sensible again after a little while.

Um, until the next time.

Exactly, and it has it's the market's suddenly cool The multiples

have come down and it's not just the multiples that come down.

It's transaction complexity has gone up So we're seeing more and more Deals

are taking deals like to take 30 days to close and now taking sometimes six

seven eight months to close going back and forth on terms forever Arguing over

terms, the lawyers, like the cost of transactional costs has only gone up.

Like, I mean, in some ways, like the volume of transactions that we did in

2021 was not the volume we're doing now is much lower, but the transaction

costs much higher because the buyers are not just doing this fly by night,

buying anymore that they're getting real lawyers and doing, they're

actually doing the diligence, on it.

And so it's a much different transaction today than it was a couple of years ago.

Yeah.

No, fair enough.

Fair enough.

Paul, listen, uh, I'm, I'm, uh, I'm fascinated by the conversation.

Um, if people want to reach out, if they want to connect, if they want

to find out more about seller basics, what's the best way to do that?

Sure.

So they should go to sellerbasics.

com and sign up.

It's a hundred dollars a month.

There's no contract.

It's ridiculously cheap way to have access to legal and anything

goes wrong with your account.

We are there to help you try to get it back online.

We'll go to work for you.

Um, if you just want to email me and say, hi, my law firm

email address is paul@ecom.Law.

That's paul at ecom, E C O M dot L A W, email me.

And say hi and say how, how much you really enjoyed having

seen me on this podcast.

Or you can tell me how much you hated having me on this podcast.

I shouldn't argue on it.

Either way, just start the

Yeah.

Just, just, just get, yeah, guy.

mean, I prefer my mum always said, if you don't have anything

nice to say, don't say it all.

So I appreciate that if

Yeah, yeah, yeah,

I am very sensitive and I'm

good rule life.

Yeah, yeah,

Yeah, but I mean, if you feel like you have to, you know, this is

something you I respect that too, so,

yeah, no fair play.

Fair

that's how

So is Seller Basics predominantly for Amazon sellers or is it

e com businesses as well?

I think there's, I think it's for, I think it's for both.

I think that there's a definite benefit that Amazon sellers get because we're

so good at the account suspension stuff with Amazon that's not really a thing

that happens on, you know, Shopify.

I say Shopify, you know what I mean, website.

yeah.

Um, we're so good with the marketplaces like Amazon, Walmart, that it's certainly

a benefit, but we, it's so cheap at 100 a month to have access to legal.

Um, when you're a member to not only is your, our, our legal services

are cheaper, oftentimes flat rated, like filing a trademark, um, things

like that, um, are substantially cheaper when you're a member.

So I think it's, it's for both.

I mean, I think no matter what you're selling, I've had cases.

I mean, I had a case once where, or a guy was filling shower heads

on a Shopify site and, Yeah.

Got fined by California for, you know, six figures, um, because the, the

shower heads they were selling were good for 49 States, but not California.

So, I mean, I don't see why this wouldn't be a good program for in the e commerce

Um, you know, it's a great way to just kind of get a relationship

with a lawyer and because it's a hundred bucks a month, like you're

controlling the call, like you're not gonna, we don't do surprise billing.

We're not gonna get a surprise bill in the mail.

We don't do that.

Um, you know,

And are you, um, are you for U.

S.

clients or U.

S.

law?

Uh,

it's, we're predominantly US law.

We can dabble a little bit in other states countries depending on what we do,

but predominantly US law, meaning, but because most of our clients are selling

in the us even if they're UK based or U Europe based or you know, Romanian based.

Like, because our clients, because the U.

S.

usually represents the biggest market, we, we do have clients from all over

the world, like, but, you know, yeah, we may have, but we, you know, look,

I have a network of lawyers, like, I have, I have lawyers in the U.

K.

that I'm very good friends with, I have lawyers, you know, who do this stuff,

I have lawyers in Australia who do this stuff, so, I mean, if, if a client comes

to me and they're a member and they answer this really quirky question,

more likely than not, I'll be able to go out and source that answer for

them, source some, some semblance, you know, some guidance on that and where

they want to go from Um, so, so, you know, we try to serve, Uh, as much as

we can our clients as much as we can.

So do our very best to support to support all clients from all marketplaces or e

commerce platforms and from all countries.

Fantastic.

Well, that's great.

So sellerbasics.

com.

We will of course link to that in the show notes as well.

Paul, listen, uh, been great.

There you go.

Show the business card.

Uh, it's been great.

Um, it's been great chatting to you.

I've enjoyed the conversation and I've enjoyed the fact you've

actually brought humor to something which could have been quite dry.

Um, so, uh, great to join you today and thanks for your, your advice and input.

It's been an absolute pleasure, my friend.

It's been absolute blast, man.

Anytime you need to come back and drop some knowledge, I think.

No, just so cheesy.

I'm sorry.

Um, yeah, I'm always happy.

I'm always happy to do that.

So

Always happy to do cheesy.

Yeah, yeah, yeah.

Yeah, it ain't easy being cheesy, right?

It ain't easy being cheesy.

That's a good cheese, uh, t shirt slogan, isn't it?

That was brilliant, brilliant.

Paul, thank you so much, man.

And also, Big shout out to today's show sponsor, e commerce cohort.

Do check out the free training that I mentioned at ecommercecycles.

com.

Also, be sure to follow e commerce podcasts wherever you get your

podcasts from, because we've got yet more great conversations lined up.

And I don't want you to miss any of them.

And in case no one has told you yet today, dear listener, let me

be the first person to tell you, you are awesome, created awesome.

It's just a burden you have to bear.

Paul has to bear it.

I have to bear it

Okay.

every day.

We've just got to bear this problem, but it is what it is.

Uh, so the e commerce podcast is produced by Aurion Media.

You can find our entire archive of episodes on your favorite podcast app.

The team that makes this show possible is Sadaf Beynon, Tanya

Hutsuliak, uh, and a whole bunch of other people, uh, in, in the team.

We've got the music by Josh Edmundson.

As I mentioned, if you'd like the show notes or transcript, head over

to the website ecommercepodcast.

com.

You'll find everything there.

So that's it from me.

That's it from Paul.

Thank you so much for joining us.

Have a fantastic week, wherever you are in the world.

I'll see you next time.