My Favourite Failure: The Great Underwear Fiasco - Joel Primus

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1:04I noticed in the process of this business failing that I was so much shorter with my children. You know, so much quicker to anger. I even noticed that I was quicker to anger with my dog and my cat. And I remember I talk to my wife one night in bed and I'm like, I don't know why I hate this cat so much. You know, it's like it's the cat hasn't done anything wrong, right? But it was all just a byproduct of how I was coping with what was happening. And I let it crush me. And I had to let it crush me. I had to be on the floor. That's Joel Primas, a successful entrepreneur, talking about a crushing failure a few years ago.

1:52He'd exited his previous company to great success, but was struck by misfortune after betting the farm on a flailing business. What happened and what did he learn from it?

2:10Joel actually only became an entrepreneur after an athletic failure. In 2008, he was a long-distance runner, but he got injured, so he lost his scholarship down in the US and his place on Canada's world team. At a loss for where he wanted to go in life, he decided to go travelling. Whilst in Peru, he desperately needed some new underwear, which didn't perform very well when scaling Machu Picchu. He thought he could make something much better and found someone to design a first version. And then he got a place on Dragon's Den. I have this pair of underwear. I reach out to CBC and I'm getting an invite to go on this show.

2:46So the producers of the show tell me, hey, if you want this episode to air, you need to do the pitch in your underwear. So I stripped down on national television and ask for some ridiculous amount of money for some ridiculous valuation with absolutely no understanding whatsoever about how to raise money or what an investor might look for. You know, this is very, very early days in being an entrepreneur founder. And so I get told I'm delusional on national television. And I still remember feeling like my whole body was beat red standing there in my underwear. Anyway, the show actually was a success despite not getting a deal done.

3:33And we ended up leveraging the experience and the exposure from the show to go onto national television. And it got us into all these stores. And so I remember this very, very tough lesson that I learned. The same hubris that can drive an entrepreneur to success and help them show up when nobody else will and do the things that other people would deem too risky are the same things that can sometimes trap them in their own ego and their own mistake. And this was a very early lesson for me. So we had just landed a place in one of Canada's top department stores. and they gave us this projection of how many units of underwear we should order and i thought oh that's that sounds realistic and and and whatever and it was something like 20 000 pairs and my business partner at the time is like no you know we are untested just because we've got this order doesn't mean you know we're we're tried and true you know it doesn't mean that we we know what the customer is going to think you know when they buy it etc etc and so So I was like, no, no, no, no, no.

4:48Of course this is going to be huge. What are you talking about? Like, look, look at what's happening. Like we're ordering 20 ,000 pairs. I'm the CEO and, you know, that's it, right? Just a very sort of terrible, defiant thing for me to say to my partner. And we make all the product. It takes almost all the money that we've raised at this point to do so. And we launched the product in this great department store. And a few weeks later, maybe it's a month, I get a phone call from an investor customer. And he says, now I know why you call the underwear naked. I said, what do you mean? What are you talking about?

5:27And he goes, because they don't stay on when you wear them. And I remember the feeling like you were going on a roller coaster ride and you're going on one of those fastest scents. My stomach was in my throat. and sure enough um you know i i i was a new designer and i'd made this underwear that kind of fit a very idyllic body type but someone who didn't have that body type it kind of shot right off and i hadn't properly tested it on those people and and i had 20 000 pairs i'd spent all the company's money on a product that I had to literally dump half of. I had to dump all the larges and extra larges.

6:14So that was a tough failure to come back from because, you know, that moment in time, the company was effectively insolvent and I had a choice to make. You know, am I going to go the long road of trying to fix this problem or am I going to throw in the towel? So that one still sticks with me pretty hard all these years later. So what did he choose? I got on the phone with every single store that we were in, including this main store, and I let them know the problem. And I told them to take the product off the shelves. And I worked very, very quickly with my factory and some designers to try and fix the problem.

7:01and then I took the new product that we had made, the few samples that I had, and I got in my very, very crappy Chevrolet, I can't even remember what, Cobalt, I think it was a Chevy Cobalt, and I drove across the country and I visited every single one of our stores and I visited every single one of those department stores that we had been in every one of their locations. and I personally showed all the staff the fixed product sort of confessed my sincere apologies for the mistake that I had made and told them that in a handful of months you know we would have the new product ready if they would so take it and the hardest part of that ask was I had to ask many of them to essentially prepay for the new product in advance in order so I could afford to produce it.

7:56Because like I said, I'd spent all the money. It was a very humbling experience, but one of my investors had said to me early on, if you are honest with people and you show up and you just keep showing up, people will give you a second chance in this business. And that proved out to be true this time around. We were able to get enough advanced orders from people who just unfortunately been screwed over from their first order. And that enabled us to make the product and reship it out. And things went really well from there on. We ended up selling every major department store, We're uplisting onto the NASDAQ, raising$20 million.

8:47And we eventually divested the company to a large company out of Australia. And none of that would have happened if those stores hadn't stuck with us in that first moment, that very bad false start out the gates. After the exit, he set his sights on a new business. Kosan Travel was a travel clothing business I started in 2018 following the sale of naked underwear. And it was a moment in time in which millennials were traveling at a rate in which had never been seen before in human history. They were the digital nomads. And they were realizing that they didn't have to sit in front of a desk to be successful even in their business pursuits.

9:30So thinking about what they needed and usually the market kind of dials itself towards what are the new opportunities, right? And what categories are being created? And at that time, there was no one who owned travel clothing for millennials. I thought, oh, that's a great opportunity to tackle. And so we did a Kickstarter. And the Kickstarter did, we did two Kickstarters. We did one Kickstarter that did about$100 ,000 in sales in 30 days, which was top 5%. And that was enough to show us that, you know, beta test, okay, there is a bit of a pulse on this market here. the next kickstarter we did was for a travel dress and we did a million dollars in 30 days it was one of the top 10 apparel kickstarters of all time at that time i was okay wow you know we've hit the nail on the head here like that is product market fit if i've ever seen it right so we were obviously very very excited about that well we made the product we shipped the product and then shortly thereafter the pandemic hit and travel shut down all our factories shut down stopped working you know we'd order fabric and it was stuck at the factories and all of these different things that all these different components that go into making a product were all essentially halted in their tracks and we were stuck in a very very hard decision of what do we do now?

11:08Do we pause the business? Do we pivot the business to PPE? Do we just double down and assume that travel is going to come back? And what was really interesting about that situation is there was three partners and every partner had a different viewpoint on what to do in this moment in time. So we ended up rolling the dice and going into the PPE business with some of the funds that we had left in the bank account. But it was really quite devastating because essentially we had a million dollars in investment lined up and all of it went away. And I don't blame any one of those people. They see a once in a lifetime pandemic and And they're going to protect their money a little bit than they might otherwise in a frothy market, right?

12:01And so we were left with this kind of roll the dice on this PPE thing to try and generate some revenue with making some masks. And that didn't work because by the time we got the masks that we ordered, the market had fallen through, right? There was already millions and millions of masks and there was nothing left to be taken there. So now we had nothing. And my partners both decided they were going to leave the business, that this wasn't worth it. And I decided I was going to bet the farm, almost literally, because I do live on a farm. And essentially put every penny I have into keeping this business alive.

12:43And that became very, very challenging personally on, obviously, my family and myself to be cash flowing this business. Trying to keep it alive in a time of great turmoil and unpredictability. And the thing that was staring me in the face was bankruptcy. And it was an interesting and personal journey because I had always thought of bankruptcy as really such a failure that one could not recover from it. That it was a humiliation. That it was a show of your character. And your prowess as an entrepreneur. And no, that could never happen to me, my God. And so I put it in this category of not going to happen, can't happen, shouldn't happen.

13:36And there's this story that I've shared before. It's from a popular children's book, which has to do essentially with this boy who has this pet dragon, a pet dragon or a dragon that just is there in his bedroom in the morning. and he tells his parents about this dragon and the parents don't believe him. And the dragon gets bigger and bigger and bigger until it's the size of the whole house and it gets up and walks the house down the street before the parents believe him, right? And it has to do with kind of ignoring something and then when the parents finally believe him, the dragon comes back to like kitten size, right?

14:18So this awareness of this dragon changes the perception of which we have. And so that was the same thing with bankruptcy for me. I'd kind of turned this idea of bankruptcy into this big giant dragon that was, you know, I didn't believe it and the idea of it got bigger and bigger. It consumed more and more of me. And at which point I had to face it, well, it finally went down to kitten size again, right? and so in the end of that story i ended up having to put the company into insolvency um because i'd run out of runway to to keep it alive and that one that failure i mean it stung obviously like all failures do and like all failures you know it asks you the question do you want to keep going in this case do you want to keep being an entrepreneur despite what happened But it also taught me a lesson not to make things so big, make things so scary that you can't operate properly and you can't make clear decisions and instead turn things into these little more kitten-sized problems.

15:34He learned something big about failure from the underwear debacle too. you? When I started Naked Underwear, it was like guns blazing, right? You're young, you're full of energy, and you just want the thing now. You want to blow the thing up now. And over the last 15 years, what I've learned is that businesses really succeed over the long tail. And it's not the start that matters so much as how you execute throughout this. And one of the things that investors look for is what is referred to as the onion of risk, right? So as you're growing this company, you're peeling back layers of risk. It's not so much how am I succeeding, how am I advancing the business with material success?

16:24Of course, that's part of it, but how am I de-risking the business over time and putting the business in a place through execution, continuous execution, where it has the opportunity to take advantage of moments in time where it can have what are called Snow White events, right? So Snow White event refers to this idea back from Disney where Disney was a fledging company and then they had Snow White, the movie, and it blew them up, right? And when we look at Apple and we look at Amazon and we look at all of these companies, It's not the thing that they necessarily started with that gave them the unbelievable success that they have today.

17:09It's being in business long enough, overcoming the little failures so that you can be successful and have the ability to take advantage of opportunities over the long tail, right? And so I had to really expand my mindset from what am I accomplishing in the short term to how am I setting up this business to be successful over the long term. And that means de-risking the business little by little, right? But also being okay with the failures and being able to adjust to the failures as things go as opposed to thinking they're apocalyptic. And one of the mindset tricks that I had been taught was a stoic practice of, Tim Ferriss refers to it as fear setting, but essentially it's just sort of understanding the worst case scenario and then saying, okay, I'm okay with that.

18:04I'm okay with the worst case scenario. So I'm going to go after this fearless, knowing that I'm okay with whatever happens. And the other thing is, you know, it's another Jeff Bezos lesson that I have applied, which is essentially open and closed doors, right? Where as you're iterating your business and you're going through these things, you have to look at, okay, can I rebound from this decision I'm going to make? We look at the 20 ,000 pairs. If all those 20 ,000 failed, could I recover from that? Is it an open door or is it a closed door? Is that it? If this thing fails, we're done, right? So really understanding the key decisions that you're making, not just from the standpoint of what the opportunity is, but what the risk is, right?

18:55Is this an open door? Can we recover from this or is it a closed door? and honestly the 20 ,000 pairs could have been a closed door if some of the underwear hadn't worked right so you know those are just some of the things that I've pulled from failure and thinking about how to operate a business over time. Those were lessons from Joel Primus. Thanks for listening to this episode I've been your host Dan Murray-Surter we'll see you next time.

19:27if you enjoyed this episode and found it useful please write us a review and subscribe wherever you listen to your podcast it makes a real difference and we genuinely love reading what you think we read every single review i've been your host dan murray surter and we'll be back next week with more lessons for entrepreneurs and leaders see you next time Thank you.