By now, you've heard of the mythical creature that is Permit Patty, but her tale has gotten even worse. It's one fraught with hubris and lessons for all of us.

In case you're new to all this, Permit Patty is the nickname for cannabis entrepreneur Alison Ettel, who was filmed apparently calling police on a little girl who was selling bottles of water without a permit. The fact that Patty is a white woman and the little girl is African American exacerbated the situation.

In a video posted to Instagram on June 23, Ettel can be seen on her phone as the woman recording the video follows her around and accuses her of calling the police because the recorder's eight year old daughter was selling bottles of water for $2 outside of Ettel's South of Market apartment building.

The video went viral with plenty of backlash -- with many people labeling Ettel a racist -- but things got even worse with the San Francisco Chronicle reporting that local cannabis dispensaries have decided to stop carrying product's from Ettel's company TreatWell Health, which sells cannabis tinctures for people and animals.

Many of the companies that have decided to stop working with TreatWell Health say they will sell what stock they have left and donate the funds to charities that help children of color. The backlash has caused Ettel to step down as CEO of TreatWell. 

Let's look at three lessons Permit Patty's plight can teach us as entrepreneurs.

1. You're always representing your company.

Whether you are in a suit sitting in front of investors or you are in your t-shirt and shorts at the beach or even when you're sitting on the couch in your pajamas, you are always representing your company.

If an employee does something bad, you can always disown that person, but founders are the faces of their companies and if they get busted behaving badly, it reflects poorly on the company. You owe it to all the stakeholders in your company to always be thinking about how your actions will reflect on it, especially when your private breakdown moments can turn into viral PR disasters in a matter of hours.

2. Rules require common sense.

Ettel, who says she only pretended to call the police on the girl, according to the Chronicle, isn't the first person to insist that a child's drink stand be held to the same standard as an adult selling wares in public. In fact, these stories are starting to show up with alarming frequency.

According to CNN, two Denver brothers and two Texas sisters had their lemonade stands shut down earlier this month. It's not just in the United States, either, as the news outlet has noted that a girl in East London was fined 150 pounds for her lemonade stand.

What Permit Patty and anyone else insisting these kids be denied their right to set up a tiny, temporary "business" don't seem to understand is that they're stamping out entrepreneurial spirit right when they should be doing the exact opposite.

Of course you need rules to govern things like food carts and professionally run businesses, but you need to enforce them with some common sense. These kids aren't going to be filing taxes and hiring employees. Leave them alone and let them have fun and learn. As a serial entrepreneur who wants my two sons to have that same entrepreneurial spirit, I find this rash of lemonade stand closures appalling.

3. Not all publicity is good publicity.

You've heard it before that all publicity is good publicity because it gets your name out there, but in the real world that's simply not true. It might turn out that TreatWell Health comes out of this ahead, as more people will know about it and certain people might even go out of their way to do business with the company. The more likely scenario is that the company will suffer a slight blip and then bounce back as the cascade of news moves onto the next outrageous viral video.

When you're in a brand new industry that operates in a gray area (especially since TreatWell Health caters to animals), you probably want to stay away from the negative publicity as much as possible.

I've had my own run in with questionable publicity. Years ago, when my company was just a young drug test retailer and drug testing was still quite a new concept for businesses, our products were featured on the radio show of a certain famous shock jock and then later in an adult magazine. Much to our chagrin, this led to us being inundated with calls from people wanting to know how they could cheat their drug tests.

While we take in these three lessons taught to us by the saga of Permit Patty, the one person who I really hopes learns something valuable in all of this is Ettel herself. Karma, as they say, is a bit moody, sometimes.

Published on: Jun 28, 2018
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.