Map the Red Tape First
Before launching a product, find where it can go most expensively wrong.
- Difficulty
- Moderate
- Time to result
- ~weeks to results
- Steps
- 4
- Confidence
- 77%
Lori learned the hard way that alcohol was one of the most red-tape-heavy categories, and legal fees plus formulation costs burned through her capital before she could reach market. Her advice for physical products: first find someone who's done it, map where you could lose your rear ends, and plan for it. Unlike a service or digital business where a tech failure is recoverable, a product has co-packers, shippers, packaging vendors, and warehouses that can each fail outside your control. She stresses checking insurance and paperwork on who eats the cost when hundreds of thousands of dollars of product goes wrong.
Origin
Lori's alcohol brand ran through enormous legal fees because alcohol carries heavy regulatory red tape, teaching her to research the most expensive failure points before launching any physical product.
Core principles
- 01Physical products have many touch points outside your control, each a failure mode.
- 02The most regulated categories carry the most expensive red tape.
- 03You need high risk tolerance, grace, and a backbone to hold vendors accountable.
How to run it
- 1
Find someone who's launched it before
Talk to an operator who has shipped a similar product and can map the real pricing and pitfalls with you.
Pro tip Lori regretted not talking to her experienced friend sooner — do it before you commit capital.
- 2
Check the category's red tape
Assess how regulated your category is; the more red tape, the more expensive the legal and compliance burden.
Watch out Highly regulated categories like alcohol can drain your runway on legal fees before you ever ship.
- 3
Map every out-of-control touch point
List co-packers, shippers, packaging vendors, and warehouses — each can fail independently and none is fully in your control.
- 4
Nail down insurance and liability paperwork
Confirm who pays if product is damaged or lost, and make sure you haven't signed paperwork putting that cost on you with no way to recover.
Watch out Signing the wrong paperwork can leave you liable for hundreds of thousands in ruined product you can't replace or sell.
In the wild
Lori's non-alcoholic wine brand ran through capital on legal fees and formulation because alcohol is one of the most heavily regulated categories, on top of COVID stalling co-packers.
→ The venture stalled and never reached market, teaching Lori to research a category's most expensive failure points before launching.
Common mistakes
Skipping the experienced advisor
Not talking to someone who has launched the product first means learning every expensive failure mode the hard way, with your own money.
Ignoring liability paperwork
Failing to check who pays when product is lost or damaged can leave you holding a six-figure loss you can neither recover nor sell.
Is it for you?
Best for
First-time direct-to-consumer or physical-product founders moving from a service or digital business.
Not ideal for
Service or digital businesses where failure modes are mostly recoverable tech issues.
From the transcript
“If you're going to start a business I would highly recommend looking at what has the most red tape cuz that's going to be the…”
“You have to have a very high tolerance for risk and you also have to have a lot of grace and you also have to…”
From the episode
Lori Harder: The Art of Pivoting, How to Reinvent Yourself in Business and Life
Lori Harder