We were finishing up our second ski travel season when a letter arrived in the mail from an attorney in Fairfax, Virginia. Our main competitor was trying to stop us from conducting business. The travel competitor was a mature travel company that had been around for over 10 years. We were the new kid on the block, taking market share, offering a better product and service.
The competitor filed an injunction claiming our advertising was infringing upon the competitors advertisements and brand and they were trying to stop us from operating.
My wife and I were 22, 23 years old and we had just bought a historic Federal style home in Boiling Springs, Pennsylvania on a lake that we were renovating into a Bed & Breakfast/Fly Fishing Lodge that we were opening that spring. Our ski travel company did not have insurance as we were just starting and we didn’t have much cash as we were starting two companies at the same time, one to operate in the winter and one to operate in the summer.
I remember being really scared and thinking this is it, we are going to be out of business before we really even start. The first thing I did was call my uncle. He was an attorney. He said the competitor was going to try to put us out of business and that this was going to be a war. He said their strategy is to try to make us go broke in legal fees. He said I was going to need representation and quick. We had to first stop the injunction.
This escalated the stress level for my wife and I.
So I did what all entrepreneurs do I dug in and started to think out a solution to my problem.
I started calling attorneys in Fairfax, Virginia, as I needed an attorney to go to the Fairfax courthouse, attend a hearing and stop the injunction. One lady called me back. I told her I was 23 was an entrepreneur and didn’t have much money but would be willing to barter her bill for bed and breakfast gift certificates she could use herself or give as gifts to her friends, family and clients.
Boiling Springs, Pennsylvania was a 2-hour drive from Fairfax, Virginia so it was the perfect weekend getaway for the Washington, DC and Northern Virginian city folks.
She went for my barter deal and she successfully stopped the injunction. This bought us time to find an attorney to represent us.
I started working my contacts. I thought if one attorney would trade their time for a weekend getaway so would another. Attorneys work hard, make a lot of money and love to travel.
A few months earlier my wife and I had made a presentation down in Richmond, Virginia to a group of fly-fisherman from a local trout unlimited organization. We talked about the trout streams of Pennsylvania while promoting the opening of our new lodge and our guided fishing trips. I recalled meeting a guy at the presentation and dinner that was a lawyer in a small town in Virginia nearby Richmond that loved to Fly-fish. His name was Wick, a real southern gentleman.
I finally got his number after making several calls and his secretary patched me through.
Wick, hi, my name is Matt Zito.
We met briefly I believe at the Trout Unlimited dinner a few months ago.
My wife and I gave a presentation about the Yellow Breeches and LeTort trout streams.
We are opening up a fly-fishing lodge this spring.
Well, I have a problem.
We own another startup, a ski travel company.
My main competitor is suing me and he tried to win an injunction, which we recently were able to stop.
My wife and I are 23 years old just starting out and we feel this company is going to try to put us out of business with legal tactics trying to get us to spend all our money on attorney fees. We feel they have no claims.
I’d be willing to drive down there tomorrow to meet with you (a 5 hour drive) and I’d be willing to let you come to the fly-fishing lodge whenever you wanted if you could help us.
“Matt, can you be here tomorrow at 3PM?”
Yes, sir, I said.
“Ok we will see you tomorrow.”
My wife and I walked into his office. His office was decorated with books and of course fly-fishing stuff. I got a nice little smile on my face.
He read over the paper work and then said. “Sandy, let’s get the opposing counsel on the line.” Sandy, his secretary patched him through.
The conversation went something like this.
“This is Wick, I want you to know that I formally represent Matt Zito and Ski & Sand Travel, Inc. I don’t know what you boys think you are running up there but we surely accept your challenge. If you want to go the distance I am ready. I’ve always wanted to come up there to Fairfax and show you boys a few things.”
He handed it hard to the opposing counsel calling their bluff. He got of the phone and said, “Matt I don’t think you have anything to worry about. Most likely they will go away. They now know I represent you.”
It was true. The competitor didn’t have much on us. Their entire strategy was a scare tactic with the hopes we would burn through cash.
Later on I found out that Wick was a legend in the Virginia legal community even though he worked in a small town. Once the opposing counsel found out who our attorney was that was it, it was over.
After being sued we realized that if we were going to really build a travel company we needed insurance to protect us from things like competitors suing us or customers getting hurt on ski trips. We went with the Berkley Group and insured the company for $1,000,000 in Professional Liability and Errors and Omissions. It cost our little startup $4,000 in premium the first year of coverage. We carried PLEO insurance with the Berkley Group every year we operated the ski travel company.
Part of the insurance includes what is called first dollar defense. First dollar defense provides you with attorney representation if you get sued. The insurance company starts shelling out money to represent you instead of the cash coming out of your company’s pocket.
In the travel business if you are selling direct to consumer the statistics show that your company will get sued every 10 years. Someone will get hurt on one of your trips or someone will be unhappy about what you company did. This is the nature of the beast. It’s just part of doing business in the travel industry. Somehow over our 15 years of being in the ski travel business a customer never sued us. I think we were just lucky.
Professional Liability and Errors and Omission insurance is a must have asset you need to acquire for your travel company. I call it an asset even though it’s really an expense that you pay annually. It’s an asset because it is protecting your company, your staff and your self individually as the CEO or founder of the company.
Whether you are a $100M company or a $1M company when the lawyers start circling around your company they love to go after the CEO and founder as well so the PLEO will cover you as an individual as well. This will give you peace of mind and when the time comes that your company gets sued you’ll be ready.
I would advise you as a travel startup to get insured as soon as you can. If you want to build a long-term sustainable travel business your company will need the coverage.
Can you help me connect or make an introduction? I am looking for the following for my clients.
1. 4 and 5 Star Hotels in the USA, East Coast.
My client Secret Escapes is looking for upscale, boutique hotel partners on the East Coast. Offering 14-day sales, marketing to 4MM+ Europeans traveling to the USA.
2. Travel Publishers or Online Booking Travel Sites that want to sell Adventure travel, tours and activities.
My client AdventureLink has direct contracts with 14,000 tour and activity operators and can provide you a full API, a Java script widget or WordPress plugin.
3. Music bands that have a Facebook Fan Page and sell seats through SeatGeek.
My client Fantrotter has an amazing new app that will increase fan ticket purchases and travel to a bands shows and performances.
4. Travel Technology Companies
My client TEAM Travel is looking for a developer to help them build out phase two of an online travel planning and booking engine. TEAM Travel sells events to college students.
5. USA Adventure Travel Resellers
My client 1,000 Mile Journeys is looking for USA distribution of it’s unique adventure travel treks and expeditions.
6. Boutique Hotels in New Orleans and the Gulf Coast.
My client Visionary Traveler is looking for hotel and boutique lodging partners in New Orleans.
7. Luxury Travel Agency’s and Agents, Tour Operators, Travel Resellers
My client Royal Epic is looking for luxury agencies and agents to represent its Kenya African Safaris. Royal Epic is licensed operator with the Kenya Ministry of Tourism.
8. E-commerce travel companies that want to increase sales to business travelers.
My client Apruve has a payment button (like PayPal) that increases business traveler retention rates and helps small businesses manage their employees travel purchases. I am looking for two travel companies to partner with.