Y'all, success in business seems inevitable when you're looking through the rearview mirror, but it is not.

We're screwed before we even got started.

Are we going to be on the street?

What am I doing? What is this

place? Somewhere in year one, most founders find themselves just one bad week from oblivion.

This doesn't exist. I'm going to create

underwear. We are not at.The summit, we are at base camp. Fear is

your biggest problem. Cash does not grow

on trees. All ideas are a bad idea until all of a sudden they're a good idea. Do I

want to build a rocket ship or a really, really great airplane? Both are valuable, but they are built differently.

And if you survive year one, you can rest easy knowing far bigger challenges are ahead. Now, that wasn't even nice, was it? But since our show survived year one, thanks to all of you, we are geared up to launch season 2. This is The Big Idea, The Best of season 1, Volume 1, presented by Block Advisors, built by H&R Block.Over 12 years ago, my friend Carolyn Rods and I began the conversations that would lead to Hello Wallace. I mean, Hello Wallace was your idea. What was the big idea? But before, there was a FinTech serving 1.6 million entrepreneurs, all of you, there were two women figuring it out. We each had two babies. We were working for free. We were splitting a babysitter, and we moved in together. It was

nuts. The same entrepreneur can haveReally different experiences based on access to resources.

That belief came from her own first company. And when I first met you, you had this TED Talk that was trending on failure, and I was so taken by it.

It wasthe failure of my first company, and I put everything into that business. I always call it my official MBA because I spent as much money as asIvy League MBA. I think I've learned as much as I would have had I gone to get my MBA, but I learned that the power of a network is really important and critical. I learned that it is OK. Failure is very common and there's a future beyond the failure if you take those lessons and learn them and apply them. And I think the idea, frankly, for Hello Alice would have never happened were it not for that failure.

Every guest on this show has a mistake they'd rather forget, but the successful ones are the ones who don't.Failure is weird for me. I like when we fail. We learn and we grow. Wendy Kunkel bought the Western wear brand and store Kemosabe in 2020. Kemosabe, it's simple. It means trusted friend or faithful scout. Then COVID shut everything down. Fear is your biggest problem in retail. Don't be afraid. Get your ass into work and grind. Wendy used the shutdown to rebuild inventory and retrain her stock. You seem to train.People to pull people through their own personal story. We have so many skews, it's insane. We train, train, train. That's one of the ways you, you get good at your, at your retail space is to train your people, make sure they know everything about everything in there. When the store reopened, she was fully stocked, staffed, and ready for success to cowboy up. We blew it out of the water. Once we opened the doors, we had all the product ready. My staff was ready. We're ready to go. As soon as those doors opened, we went gangbusters.Hella Mohammedan, founder of Slick Chicks, watched her sister recover from a C-section and found her big idea and the question nobody else was asking. Turning a disadvantage into an advantage is one thing when it's your own business on the line. It is something entirely different when it starts with someone you love.

The recovery for her was like very debilitating. Like she was in bed, like anything like bending over was challenging.Um, something as intimate and simple as putting on her underwear, um, was, it made her feel like not very dignified and not great in her own skin. And I was just thinking like, why don't they just make underwear that's easy to put on and not the mesh underwear you go home in. She needed something. That was kind of like the moment where I decided, OK, well, this doesn't exist. I'm gonna create underwear.

But year one was far from picture perfect.

I found this cut and sew factory in Dominican Republic that I actually shipped product to my apartment, then shipped that, that fabric to the manufacturer in DR and I flew down to see the manufacturer, and just to see the facilities, and there was a man at the security.gate before you go in with like a rifle. Oh boy. And I was like, what am I doing? What is this place? And it was just, yeah, that was my first experience here toget my underwear.

Hell you made it home, continue to build. And these days you can find slick chicks in Target and CVS. It makes me so happy when I'm walking down the aisles and I see her products.

One of the things that I would repeat to myself was, you normally don't want to take the jump because you're scared. There's like a fear, there's a risk element, right?

Emily Hosey started Revel, love the name. Now North America's largest re-commerce platform in a Toronto basement.

But like what's the worst case scenario? Like if you believe in your abilities and your skill set, then if it doesn't work out, then you'll just go back and get another job. Like, there's no risk in that, right?

For Rebel, the hardest part of building the business was convincing retailers that there is a better way.

No one was admitting that the returns were going into the garbage, so that like, also, you know, you're trying to explain something, but they, they, there's no if they were to call a mass retailer and say, I'm, I'm looking at this company, like they're, they're trying to tell me returns are going to a garbage. Are you putting your returns in the garbage like they were saying no and hanging up the phone, but they were, so that was like one challenge, um, educating the retailers that there's a better way.And that the solution that they had been working with for decades was a solution, but it wasn't an environmentally or acceptable solution in today's day and age. So there was a lot of moving puzzle pieces. We're still educating, and every time we launch my mind isblown.I'm like,

wow,

when you're building a new idea or creating a category that has never existed, all ideas are a bad idea until all of a sudden they're a goodidea.

Los Angeles-based actor and crazy friend Adam Shapiro founded Chappy's Pretzel to bring a taste of his hometown Philly to the West Coast.

So it's the pandemic, everybody's making sourdough. I just make a slight right turn and start making Philly pretzels. You know, during the pandemic, I was really homesick and I was really, you know, jonesing for nostalgia and the kind of food that I grew up eating, and in Philly, soft pretzels are sort of woven into the fabric of Philadelphia.

But Chappy's was no Hollywood overnight success story.

I had a 2 year old at the time, who's now 7, that's insane, and uh Katie was pregnant with our second, and it's lockdown, and I'm trying to figure out things to do with him during the day, and he really was really getting excited about all of our cooking. And I was like, man, let's not waste time cooking anything but a Philadelphia style pretzel. Let's figure this thing out.

Eventually he got the not right. And on a faithful Sunday in February, a few years later, Adam walked into a doozy of a dirty unicorn.

Eagles are in the Super Bowl. This is the, a couple of Super Bowls ago when we lost to Kansas City, not the one where we just beat them by like 1000 points. We win the NFC championship. I go on Instagram and I, and I, I had had a few Yinglings, and I say, if you want pretzels for the Super Bowl, I am gonna deliver them to you. Go to the website right now, order your Super Bowl pretzels before we sell out, and we're gonna deliver them. And in my haste,To feed as many people as I could during the Super Bowl, I put no sort of geo parameters on the, uh, so we get about 120 delivery orders.Everywhere from like San Diego up to Santa Barbara. Whoops, but he wants them right before the game, and there's no way I can make all these deliveries. I'm gonna have to hire 20 delivery drivers and give each of them a route, and that everything will have to go perfect at the bakery for all of those routes to successfully drop off those pretzels on time. And do you thinkEverything went right at the bakery. No, no, because we were making 6000 pretzels that day and it was complete chaos. But I will say a really amazing thing came out of this mistake, right? And this is, you know, a lot of the mistakes at Chappy Pretzel, I've, I learned so much, you know, it's like these mistakes are, are like really like data sets that I can use, you know.

Now Chappy's has an industrial bakery cranking out thousands of pretzels a day. Gosh, that makes me hungry. But Adam learned a valuable lesson. Don't write a check your operation cannot cash. Scaling fast means nothing if you can't deliver on what you've sold.

But there's so many different great ideas out there, some of which are reinventions of existing things that we already know, but to find something that really organically I needed, that actually wasn't in the market at all, that was the sign I was like, oh, I've got to do this.

Cason Crane is a cold brew coffee connoisseur that found something missing in the market.My witching hour is 40 p.m. and you're like low caffeinated cold brew is

to die for. I searched for decaf cold brew and it didn't exist. And that was one of those like there's so many, it's so crazy.

How is that possible, right?The well-caffeinated crane had its cold brew to market just 6 months later, but it turned out that was just the first sip. The real grind was still brewing.

Our launch was kind of underwhelming from a sales perspective, but I was just so committed to, to this, the passion of bringing this product and this brand, uh, to the people who needed it. We just got 500 new subscribers, and then it turns out it had like blown up and gone viral on like a freebie site and everybody canceled. I think of funding is like.The rat race of you're in it, you've started the business, like the business needs money and if you're running a business that is so profitable that you're not worried about funding, that is amazing, but that's not the case for the vast majority of small business owners and entrepreneurs out there. I think of funding strategy as that critical initial part of the business plan that if you cannot achieve it.Don't start the business.

Don't do it. But Cason seeped through year one and came out stronger on the other side.Tyler Fish and Adam Pfizer met in tech sales and spent a decade closing deals before trying anything on their own.

Well, this was one of many insane ideas that we've had together, and we always knew that we wanted to found a company together and really marry like our passions and talents for e-commerce, which is what we did for 10 years at our last job.

Their first attempt, a drop shift phone mount business made about $3 in profit over its first.And only month of sales.

We, we had like 11 order and we're like, right, this isn't like sustainable or scalable, so we're gonna call it quits. Cash does not go ontrees.

But with Sun Home Saunas, they took an industry stuck in sales calls and lead forms and built the frictionless digital experience it never had.Well, interestingly though, your entire model now with home sauna is, is direct to consumer. I mean, it's, it's incredible what you built. Tell me about the model

itself. Yeah, well, historically and previous to Sunhome, the most common method to purchase a sauna, um, was really you, youhad to call like a sales line or submit a lead and go through this rigorous, tedious process. Um, there was no really easy e-commerce environment to someone that to really easily view the sauna and multiple, um, angles, look at the specs, look at a 3D rendering in your room, and then just be able to click purchase and have it show up in your door.And so we really wanted to remove that friction because the space was still in the 90s, dominated by just a few players that haven't really innovated. And so, our thought was, what if we could introduce, um, you know, a better designed, uh, you know, better performance product, but remove that friction and bring a more modern experience to somewhat of an antiquated, you know, buying journey.

Today, Sun Home Saunas is an Inc. 5000 company pushing $25 million in first-year revenue. It's a long way from those $3 but none of them was guaranteed. It took everything Tyler and Adam had.

I like sold my car, and we put our life savings into helping like buy this business. Having your hands in every part of the business means that you really learn every part of the business, right? I think that's the benefit of having to get your hands dirty cause you're not like a company that starts and you, and you hire from day one, you know, you hire someone for finance, for marketing, for sales, for CES. We did it ourselves.

One thing is for sure, entrepreneurs that survive year one earn a master's degree in what it takes to thrive. I have been there many times.Every founder on this show learned that lesson the hard way. Some just learned it faster than others. Doctor Deanne Laszlo Baker knows a thing or two about first-year lessons. She had no business experience when she founded DB's Organics.

Oh mygosh, I remember sending out product to Whole Foods that was frozen and calling a buyer once, and the answer was, What do you want? It actually wasn't, hello. He had no idea who it was. And I, I was like, Oh, I just want to hang up now, but is that, is my, did you receive my product? And he said, it was melted, too bad for you. Um, you know.And so it was, it was hard, that cold chain from when you buy the product or you buy the ingredients from the farm, and it's got to get, you know, all along the way and kept frozen and in meticulous condition. It was very hard and it's expensive. I remember when we were in the frozen novelties, when I first started, and we had tea, popsicles sweetened with coconut sugar. And I thought, OK, people want really healthy.And uh what I discovered when a big retailer in the US called me and said, your product's not moving. This frozen novelty tea popsicle, not selling. Bring your trucks, pick it up and get it out. And I remember thinking, oh my God.We're, this is the end of the business. This is it. We're done. Like this is in the hundreds of thousands of dollars. I can't even afford to send you a truck, let alone multiple trucks to all your DCs. There were days I went home and, and my husband would fall asleep and I'd put my head in my pillow and I'd cry quietly, you know, um, because it was, I was thinking, what am I doing to my family?I'm working nonstop. Um, I'm eating, sleeping, breathing, everything, DB's, um, and are we gonna make it through financially? And my husband said, are we going to be on the street? Like how are we going to get through this? Our velocity wasn't great.And it was tough, really, really tough. We were self-funded. Um, and then in 2016, when we came up with the idea to make the first organic all-fruit freezy.You know, and we launched it in 2017 and it went gangbusters. We kind of went, ah, this is how you do it. One skew.With high velocity, um, creating a category, and the business reallytook off.

DB's has a licensing deal with Disney. Perseverance allowed the company to not just survive your one, but earn a seat at the table at one of the biggest brands on the planet.Even the people whose job it is to spot the next big idea can talk themselves out of one. Caitlin Holloway's Dirty Unicorn almost cost 776 a deal before it ever got a meaning.On our show we love to talk about the dirty unicorns. So the biggest mistakes that we've done in business we can all learn from. So what, what is some of them, or one from 776?

Thereare several, and we all make a lot. One of them is something that's really challenging as an early stage investor is making assumptions about a product, a founder, or a market going into a pitch. And so having kind of this preconceived idea of whatIt is that the founder is, is actually trying to achieve because of your own lived experiences or because of something that you have read, you know, a thought piece that you've read. You know, we took a pitch the other day, um, actually, no, I'll, I'll go back further. We didn't take a pitch the other day. Uh, we had an inbound, um,Uh, request, and the assumption was made across my team kind of broadly, um, that this particular business had, had low margins. And so because of that, the pitch was not initially taken.Um, it came to me a few different ways, and it was one of those things where I was, I slept on it, and I woke up the next day, and I was still thinking about it, and that kind of went on a few times, and I was like, I have to listen to this. Like, I need to understand like what it is that, like, why does this keep coming up for me? Typically, we take pitches collectively, collaboratively, but I was like, I'm just gonna hear this one out. And so it was a really small room, and uh this founder absolutely demonstrated something very, very different that at first blush, uh,The team at large was not picking up. I wasn't, but there was just a little like je ne sais boi. Like I was like, I don't know what that is, but I need to know. After we took the pitch, we, we were very compelled and we were very moved. And so we brought the whole team together and after that pitch, we did wind up actually making that investment. But had we just left it alone and I think we know what that market is, we think we understand what that product is, and here's why we believe it won't work, we were moved, right? We, we were, we were emotionally moved to say, I think we were thinking about this wrong andUm, so the feedback to that founder then became you gotta lead with X, Y, and Z because otherwise you're gonna get lumped in this other bucket and the lesson internally wasdon't make assumptions.

Which brings her back to the question she says every founder needs to answer honestly before taking a single dollar of venture money.

Venture comes with an expectation of speed and scale. And so that is the question that I would implore the listeners and, and young, you know, new founders to really ask themselves, which is, do I want to build a rocket ship or a really, really great airplane? Because both are valuable, but they are built differently.

One gut check saved the deal. Not every founder gets an investor willing to sleep on a no and wake up and change their mind.Noah Glass, founder and CEO of Olo, didn't get a second chance from an investor. He got one from the deal itself. It fell apart at the last minute and ended up saving him from his own biggest mistake.

I think the biggest mistake that I've ever made in business was being ready to sell my company way, way, way too early. It was the end of 2012 and we've been approached by a big company.Uh, a public company at that point to acquire what was still a 12-person company at Olo, and we were really excited. It was going to be a $65 million exit. We're all kind of thinking about, you know, what would our role be in this big company.And I, I resisted this at first, because I thought there's another opportunity to stay independent and grow this thing from here, and we've been working so hard at this point. It's been 7.5 years of, of toil, but I got comfortable this is a good return for our investors and everybody needed a little bit of liquidity and this was a great outcome. And at the last minute, that deal fell through.And I had to go in that morning when the full team thought they were going to hear about what their new role was and how much money they made on the transaction and say, hey, actually it's not happening. They had that

apartment they were thinking about

to buy or something, and I, I was very careful to say, please don't spend any money that you don't yet have in the run up to this because things can happen. It was soul crushing at the moment. We, the only thing we could do was to drag ourselves to a local bar, um, down on the South Street Seaport where our office was at the time.Um, that was opening up and sing karaoke and drink, uh, pretty stale gross beer, but that really forged this powerhouse of a team that that crucible moment and, uh, the anthem for the company became Don't Stop Believing by Journey because that was the song that we, I think sounded best on that morning.But it's amazing to reflect back on that now. We just sold our company to a private equity firm, Toma Bravo, for $2 billion. It's effectively $30. We

pause for a second. Congratulations. Thank you. I mean, I just, I just have to, as

a

founder that so hard and you built something so beautiful.

Like I'm not done either.

No, I know,

I'm verymuch still in the sea.

22 seconds to say hell yeah dude. OK,

keep going. But I think about that. I reflect back on 2012, end of the year, 65 million to 2 billion and stale beer and stale beer. Yeah, I got the stale beer out of it and a much bigger outcome. But truly, I, I'm, I'm not done. We are not at the summit. We are at base camp.

Welcome back to The Big Idea presented by Block Advisors built by H&R Block. Quick tax break, y'all. If you filed a business extension this year, here's what you need to know before the extended deadline hits. First, an extension buys you more time.To file. It's not more time to forget. Your deadline depends on what your business is taxed, not what you call it. Partnerships in S Corp September 15th, and you'll also owe every owner their Schedule K-1 before they can file their own tax return.Sole proprietors, C Corps, October 15th. LLCs trip people up, and an LLC is a legal structure, y'all, not a tax status. A multi-member LLC tax as a partnership follows the September 15th deadline. Elected S Corp status, same date.A single member LLC taxed as a sole proprietorship follows October 15th. Y'all keeping up with this? Don't look at the letters LLC. Look at how you're actually taxed. And if you still owe money, once the numbers are final, pay as fast as you can. Do not sit on that. Penalties and interest build the longer it sits, but the IRS does offer payment plans, so do not skip filing just because you can't pay in full. It will compound.Bottom line, know your date, gather your documents, and loop in your tax pro, then take a nap. Now, an extension is an extra time to file, never, never an extra time to forget. So get on it, y'all.Every founder on this season survived a year one. They got bucked off and they got right back on and kept riding.They own the mistake that almost took them down and found out the hard way that scaling doesn't end the struggle, it just raises the stakes, y'all. But that is the through line, perseverance, integrity, strategy, maybe a cocktail, sometimes some luck, but we're just getting started. The big idea y'all is heading west. New founders, new stories. My dog, Gus might be joining us, new mistakes worth learning from. So stay tuned, Cowboy Up. Season 2 starts now.This is the Big Idea.