By Elizabeth W. Milnikel
IJ Clinic on Entrepreneurship client Shawn Smith specializes in transforming mundane or unappealing things into whimsical, plush toys. The characters are called Shawnimals, of course.
Chicago entrepreneur Shawn Smith received free legal help at the IJ Clinic on Entrepreneur-ship at the University of Chicago Law School to develop and organize his business.
There is the clove of garlic, whose tag explains that he has a chip on his shoulder because the other Shawnimals think he stinks. There is the pot sticker, which unblinkingly supervises the work that takes place in my office. There is the smirking Poof, which comes along whenever something else disappears, i.e., “goes poof.” And there is the enormously popular Wee Ninja, a rounded little felt doll with only a strip of his face peeking out of his black suit. The Wee Ninja is known as the “master of the stealth hug.”
Shawnimals started as a fun pastime, grew into a hobby and is now a serious business. In 2006, the small company run by Smith and his wife, Jen Brody, sold more than 5,000 hand-made Shawnimals, far more than doubling the sales of the previous year. The Shawnimals website regularly receives 2,000 visitors per day. In December, as the holidays approached, the growing company was featured in The New York Times and the Chicago Sun-Times. Mentions on blogs and websites further propelled Shawnimal’s popularity.
The business’ speedy growth has been thrilling, but at times overwhelming. Smith and Brody maxed out on the space they had set aside for assembling Shawnimals in their apartment, and they were calling in friends to help snap on their trademark beady eyes during the holiday rush. Smith is quick to point out that he has learned the importance of seeking assistance: “When you’re dealing with running a small business, whether you’re an entrepreneur or not, you can’t do it all yourself.” Legal assistance from the IJ Clinic has been a saving grace. “What could be better than to get help from professionals such as [the IJ Clinic attorneys] and students who are interested in helping and learning? The students are not only teaching us but also learning themselves, and I love that atmosphere,” he says.
But some of the legal issues sneaked up on the start-up, and they were not bearing stealth hugs. For example, students’ research revealed that, in Chicago, a home-based business could not manufacture products that were being sold in retail outlets elsewhere. The rule did not make much sense, since we thought the residential character of the neighborhood would be better preserved if the products were being shipped out instead of sold on the premises. Nonetheless, Smith changed his plans and rented studio space (yet another learning experience, given the differences between commercial leasing and residential leasing). Shawnimals suffered another surprise attack when a competitor baselessly accused it of copying a toy design. With the guidance of the IJ Clinic, Smith learned to handle the threat as a business matter and not as a personal attack on his artistic integrity. These are the sort of legal issues that can stop fledgling entrepreneurs dead in their tracks.
Smith credits the IJ Clinic with helping him see his erstwhile hobby as a legitimate business endeavor. As University of Chicago law students began to ask questions about how the company would structure its management, handle its payroll, and protect its vital intellectual property, Smith and Brody started to understand the business at a much deeper level, and they started asking their own questions about how decisions they make today will affect the business in one year, and five and ten years down the line. In Smith’s words, the IJ Clinic helped guide Shawnimals through the transition from “playing business to running a business.”
We’re happy to help guide Shawn on important legal matters, so all the characters in Shawnimaland can keep playing. Even Stinky Clove.u
Elizabeth W. Milnikel directs the Institute for Justice Clinic on Entrepreneurship at the University of Chicago Law School.