518: The Craziest Stories

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0:50Hey guys, welcome to a very special episode of the founder podcast. So I love a crazy story. And if you're building a business, these stories will happen all the time. I've had a few myself and it always makes me personally feel better when I hear from fellow founders who go through a wild experience and end up learning something. And that's why before we record every single podcast, I always ask our guests to share the craziest stories they have from their journey so you guys can learn from them. And today you're going to hear some of those stories. So in this episode, you're going to learn from Guy Kawasaki, who's the chief evangelist at Canva, Daniel Weiner, CEO and co-founder of Hexclad, Holly Thaggard, founder of Supergoop, Sanira Madani, founder and CEO of Stax Payments, Michelle Zatland, co-founder, president and COO of Cloudflare, Jessica Rolfe, co-founder of Love Every and Happy Family Organics, and Cody Ko and Noelle Miller, who are the founders of TMG Studios.

1:54All right, it's time to get crazy. Hear the stories, learn the proven methods and accelerate your growth and future through entrepreneurship. Welcome to the Founder Podcast with Nathan Chan.

2:12So to get started, we're going to have a conversation I had a few months ago with Guy Kawasaki. So he shared a story from his time working at Apple when Steve Jobs tested his resolve. So here's what happened. But one day I'm in my cube and Steve Jobs shows up with this stranger. And he asked me what I thought of this product. And I told him, you know, Steve, it's a mediocre product, mediocre user interface, doesn't really take advantage of the Macintosh graphics and capabilities. And I just basically ripped on the product and the company. And after that, he turns and he says to me, I want you to meet the CEO of the company.

2:53So let's just say Steve completely set me up. But there's a lot to learn from that story. So number one is you better be well-informed when you work for someone like Steve because I guarantee you that he probably thought that that product and company was crap too. And so if you had said it was great, Steve might have fired me on the spot, because it would mean that I was stupid and he did not tolerate stupidity. so you should be thorough and you should be prepared and you should also be honest because if you had tried to hedge that answer you also might have been fired let's just say that when you came to work in the mackintosh division you had to prove yourself every day that's what life was like gordon ramsay is the face and partner of hex clad cookware but daniel weiner wasn't looking for a celebrity partnership with the world's most famous chef.

3:55It all started with an Instagram follow. When I found out, I got a phone call from the guy who was managing our social. And he goes, hey, Danny, it's Sean. He goes, do you know Gordon Ramsay's following us on Insta? I'm like, no, I don't know that. He goes, should I reach out? I'm like, yeah. yeah why not you know so he dms gordon we're hex clad love to send you some pants and um whoever was managing it at the time reached out and said oh gordon has one of your pants and he loves it um but yeah if you want to send some more great we'll give you an address and then my sean goes uh oh by the way does gordon have a cookware deal and gordon's got person goes um i don't know i don't think so but you know i'll let you know cut to like three days later i'm on the phone with uh with gordon's business manager and you know he's calling me from london i was like i had to pull into some parking lot on sunset on the sunset strip and i'm there in my car doing the call and you know he's like gordon likes your pants somebody sent him one during the pandemic right now and he's been home cooking with his family he's been he's been locked up in cornwall with his family for the better part of a year and uh this was about this was probably like late summer of uh of 20 and and he goes well listen you know gordon you know gordon likes the pan so if you want to just if you want to pay him a lot of money to do a commercial he'll probably do it because he likes it but he really likes the product he'd be open to doing something more robust and i go i like the sounds of that talk to me what is what is more robust me and he's like well gordon likes to get very involved if he likes something he is very involved he goes uh and the thing about gordon is uh you know he's time poor i go well i can tell the guy's everywhere You know, he goes, but when Gordon's involved, you will get more than you, more than you paid for or more than you bargained for is what he said.

6:22And I said, more than I bargained for. I'm like, I go, is that a promise or a threat? And he goes, both. I'm like, sounds perfect. You know, and a couple of conversations. And then during the pandemic doing it, we did a zoom call one morning. so it was like 8 30 in the morning in la and it was like 5 30 for gordon in um in cornwall and and i had 20 minutes scheduled for it we spent an hour and a half just like spitballing about what we would do and how we would market it and where we would place it and um um about he's like i love it and it's holding up so well i want to put it in the restaurants and and it was like amazing and it was like we hit it off there and i'm like i'm like this guy fucking rocks you know he and i will tell you since then he is a great partner you know he owns the third biggest chunk of the company and he like he'll call me with like design ideas product ideas you know he'll incorporate us i mean last week he's you know he called me he's like fly with me to miami for the opening to my restaurant and i'm like uh you know is that a real invitation because he owns gordon ramsay and i'm like well i do have some meetings i go well i think i can cancel him and he goes you know what it would mean a lot to me and i'm like i'm there you know and i kind of go like are you fucking kidding me this is the michael jordan cooking and you know and and for us it couldn't be better and because not only is gordon the hardest working person i've ever met and he's a TV host a lot now, somehow he has kept his street cred.

8:06Every chef acts like the Pope walked in. They could have three Michelin stars and Gordon is still the most respected chef. And that's pretty awesome. Holly Thaggard found her dream mentor by accident. While working in a trade show in Vegas, she didn't realize that her booth neighbor was going to be the founder of Burt's Bees. Next up, you're going to hear how this chance meeting became a fruitful partnership. This is the craziest story. I ended up advocating to sit in the natural and organic section of this trade show because I felt like we're so mindful of our ingredient choices. We were the first formula in the world without oxybenzone or parabens or propylene glycol or all of these controversial ingredients.

8:54We were clean before clean was kind of a thing. And, uh, and so I advocated to be in what was called the like organic natural section. Well, I got to this Vegas trade show and the entire floor of organics and was like really granola and very like, everything was vanilla looking. And it was just very like homegrown knitted socks and all kinds of like, and then upstairs at the trade show were all these beautiful, clean white brands that were like crushing it. And everybody wanted to be upstairs. And I was, you know, kind of moving through this trade show for five or six days and thinking about how important it was that I, you know, scale and bring home a bigger account.

9:38And at the end of the trade show, it was really slow, especially on the natural and organics department. But I learned to knit from this lady next to me. And she, you know, it was also a real slow show for her. And so we sat there and knitted when nobody was walking the show. And and on the last day, someone walked up to me as we were like breaking down the booths and everything. And they said, wow, you've gotten really close to Roxanne Quimby. And I knew the name, of course. I was like, wait, what? And I didn't know that she was Roxanne Quimby. And then they were like, well, you know, the she's the founder of Burt's Bees.

10:19And I, you know, immediately marched right over there. And I'm like, how did how did you knit with me for the five days and not tell me that you were the founder of Burt's Bees, who, of course, later sold earlier sold to Clorox. And she was a happy green bee making her little knit socks and and enjoying the conversation from me. And she said, well, Holly, I really just wanted to hear about your vision and your brand without you knowing who I was. But I love what you're doing and I want to help you. How can I help? And, you know, I always say this to founders, too. I'm like, you've got to put yourself out there and be the places if I hadn't been in that natural and organics and realize that instead of beating yourself up for like that was not the right place I should have been.

11:04I should have been upstairs with all the beautiful white brands. You know, I would have never met Roxanne. And she said, how can I help you? And I said, I need a PR firm. I can't get anybody's attention in New York to save my life because I need to launch in Sephora. They're interested. And I, you know, it's just really hard for me in Dallas to to have the interest of a big beauty PR firm when I was still a pretty small brand. I mean, on the way to the airport in Vegas that day, I get a call from Nancy Berman, who was a Berman PR, the biggest beauty PR firm in New York. She said, I just got off the phone with Roxanne Quimby.

11:45I launched Birch Bees. And she said that I really need to spend some time with you. I'd like to come to Texas. Yeah, wow. And then it all ended up working out. Well, I said, actually, I'm going to be in New York next week interviewing PR firms because I didn't want her to think she was the only show in the game. I needed her to understand there was competition, even though there was not. But I felt with that meeting that I had secured, I could I could actually get a few more meetings. And I did. I called her ex-partner, Trachtenberg. I called like every other beauty publicist and said, I'm going to be in New York next week interviewing for a publicist.

12:26and I'd love to set up a meeting. And I ended up getting five or six different meetings over the course of a few days. I grabbed my brother, my sister, my husband, everybody, because it was still just me kind of trying to figure this all out. And just so that we had people to sit in the room and listen and help kind of weigh in on things. It turned out that Nancy Berman just really rolled out the red carpet and, or I should say yellow carpet because she was completely on brand and write for my vision and really excited to take us on like none of the other firms that I interviewed were and willing to take a chance on a brand that really just at the time had, you know, nine or 10 Barney's New York stores, FAO Schwartz and a few kids giggle boutiques.

13:13And so it was a really exciting time because that allowed me then to build my press book, which was I guess like 2009-10 so that I could go back to Sephora. Sanira Madani took a$50 ,000 investment from her friends and family and built Stax Payments into a unicorn startup. But early on, her investors pressured her to take an early exit. Here's what she did instead. We had just raised a pre-seed and then our seed round, I think our value there was, I think it was$7 million. And we had, you know, we were heavily discounted. I mean, we were out of Orlando, there's no venture, there was no venture capital in Orlando.

13:56I mean, less than 1 % of minorities raised capital, less than 3 % of women ever raised capital. And we ended up doing our seed round. And then quickly thereafter, you know, we got strategic payments company reached out and said, Hey, you guys are have this great technology. We'd love to talk about an acquisition opportunity. And so of course, like any, I get so excited. It's like the first time, like, I'm like, Oh my God, like somebody wants us. Like, this is so exciting. I feel so validated, right? You feel so good. And I get a term sheet. I'll never forget the day that I got the term sheet, uh, because it was also St.

14:34Patrick's day. And then we went out that day, Like our office is like in the heart of downtown and we like celebrated as a team. It was like this whole thing. Like we have an actual term sheet in our hands that says$17 million. And I'm doing all the back of the napkin math. And I'm like, oh my God, I'm about to be a millionaire if I accept this offer. So you go through all of these things. Like it's a very exciting time for a founder. The first time you ever received anything tangible in paper. And I get excited. and we had just finished off of this. Like we had just brought non-investors. We have our like only one or two board meetings that we had had.

15:13And so the next morning I, you know, make sure I let our investors know we call a board meeting. They're like, oh, we should pursue this opportunity with a strategic. And we go down the path and long story short, my gut was not clicking. The people on the other side, they just, it just wasn't the right fit value-wise, culture-wise. and I was like, I have to roll. It wasn't this like, you know, and then also you don't know what you don't know, right? It's not actually$17 million in cash also for the company. You have equity, you have stock, you know, the investors get paid and you as a founder, honestly, you're always the last person to get paid.

15:50Like that is like the first thing that I feel like I want to teach every entrepreneur is I did not know enough in the early stages on, you know, I didn't have a lot of resources on how to negotiate term sheets and all of that. But long story short, it didn't feel right. And we go through diligence and every step of our diligence process, like red flags, red flags. And our board kept pushing us to keep going through this process. And until the last phases of diligence, they retraded the offer at$12.5 million. and the reasons why they retraded it were, it was almost like they knew they had us and it was because I was negotiating against myself.

16:38It was probably one of the biggest lessons that I learned in capital raising was that you don't ever, if you're negotiating with one party, you're negotiating with yourself. And so you wanna have multiple parties at the table, which has been one of the biggest lessons that I've learned in my life. So they give us a retraded term sheet and I'm like, there's no way I'm gonna fucking accept this. And so I declined the offer and I say, thanks, but no thanks. And we're out. And so I call the board meeting the next morning and I tell the board that I have declined the offer. And they all, we all meet in our, our office in Orlando.

17:15This is pre, pre pandemic. And it was a shit show of a board meeting. They thought we were, you know, Sal and I were immature and that we should not have like, you know, we should have consulted and that 12 million could have been a fair offer. We could have countered back. And I'm like, you guys just invested in this business, right? What has changed in the last six weeks that you're ready to take this minimal offer, like just incrementally more than what you've invested in. And so we started this relationship extremely rocky with our board, but we declined the offer that we had on the table and we continued to, power through.

17:52And there was a point in the company where we had absolutely no money left in the bank and needed to go out for our next fundraise and ended up getting that next fundraise term sheet for 50 million there shortly right after. And then the following rounds, I'm skipping the year after or the two years after, ended up doing a private equity deal and they ended up buying out are the first initial investors that wanted us to sell for the 12 million. We exited those investors at 18 times their capital. So, and then of course, now the 250, that, that initial, that even the last round has then now quadrupled and the business that, I think it was at like, I don't know, a million in revenue at the time is now over a hundred million in revenue.

18:41We're doing about 120 million in revenue today in ARR and growing at, double digits, triple digits year over year. And so, yeah, it was the right decision.

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19:54This deal closes soon. Start building your business today at founder.com forward slash plus. That's P-L-U-S or click the link in the show notes. All right, now let's jump back in the show. When Michelle Zatland first arrived in Silicon Valley, she was invited to a networking event and met an industry icon. He asked about her startup Cloudflare and she gave him the pitch. His response is actually what helped motivate Michelle to build a billion dollar business. I really believe that one conversation can change everything. It's like one conversation can really have an outsized impact on outcomes for early stage founders.

20:38So we showed up here. I went to a dinner that Goldman Sachs invited me to. and it was awesome they thought they were doing me a favor you know again you're trying to have legitimacy as an early stage founder so they might meet to this dinner they sent me next to a famous founder okay and they think they're doing me a favor which is great and i'm excited i'm like there i'm excited but we're doing a cloud for i'm excited but i'm not gonna say who it was but a very famous founder you would all know him if i said his name and i was telling him up with a cloud flare and he was like grilling me that's fine grill me but he didn't believe anything i said not one thing he didn't believe anything i said and at some point i got like i i did take it personally and i said you're calling me a liar and you can imagine this person did not take that very well when i said that because everything i said he's like that's impossible i'm like it's not we're doing it you got to check your assumptions and it was this really awful thing and so i left that dinner not feeling good but i in the power dynamics of that relationship he had all the power so there was nothing to do about it was fine and again not not that that hurt cluffer but every time we saw each other in an event it was awkward everything and all of a sudden he had someone who wasn't a champion for us and in the end we ended up clearing the air and it's fine but i tell that story because especially early on there's going to be a lot of people who don't believe you who are going to be in disbelief and i took that personally there's a lot of people who I want to hire they're like I'm not gonna come work for you and they would say it like that and you're like this is not like call me when it's real and you're just like okay thanks um and and I think that there's like okay absolutely I'll call you when it's real no problem I'm gonna I'm gonna win you over versus you suck and so I think don't don't don't burn bridges even when you feel like someone else is in the wrong because you might need that person is the other thing that I would say that I have some scar tissue over and I've gotten a lot better at.

22:37And I see that sometimes today. It's like, you don't need the validation. You don't need to win them over. Just everyone comes around at some point and your job is to keep winning on the field, gaining progress, gain ground against your idea. Find the people who do want to believe and be championed and spend your time on that. And you'll be much happier and productive for it. But don't burn all the other bridges because at some point you're going to need them or they're going to come along. When Jessica Rolfe started her first business, Happy Family Organics, things weren't going well. They had only finished their second batch of products when she realized they needed stronger numbers to survive.

23:14Then Rolfe had a crazy idea. Target ran data on us to see if we were going to exist and live to another day. And we got access to that data, that sell-through data. And I remember the first time we had just made, I don't know, maybe our second batch of food at the factory. And Shazi and I were sitting at a Days Inn in Danvers. And we were sitting on the floor and we were like, oh my gosh, in their inbox was the sales data. And we opened it and it was terrible. And so we were like, what can we do to just survive? And so we thought, you know, why don't I'm going to just fly to Minnesota. It's a 24 store test.

23:59I got my dad's station wagon. We started buying up. We went to all the different stores. There were some in Iowa that we weren't able to make, but we went, my dad had a map and it was like my mobile office, you know, this big dashboard in his station wagon with the map of all the stores. And we drove around and we bought the products and then we handed them out to customers as they were shopping, trying to get them to try the product. So my dad was trying to spy pregnant women or people with children or anybody with a stroller. And then we were approaching them cold. I was approaching them cold, handing them the frozen baby food.

24:36And Shazi in New York was doing the same with our other retailer in New York. So we were really hustling the sales in the beginning. And so we started putting little tags on in the jar section. Think outside the jar, look inside the freezer. We tried to do some cross-marketing, but we thought the best way to do this is to have a product in the dry aisle that would then have a coupon for the frozen baby food. So what product do we think we could create in the dry baby food aisle that was differentiated? And at the time, all the baby cereals, all the infant cereals, didn't include nutrients that were really important for brain development, like DHA or for digestion, like probiotics.

25:18And so we blended a cereal with added DHA and probiotics, and it was more of a premium approach to the cereals that were on the market, and we launched those cereals on shelf. The big break, I will say, the true transformation, I would say, for the early stages of the business was, again, for some reason, the main cereal competitor, Earth's Best, which was all the cereal lined up, so many boxes of Earth's Best cereal. They had some supply issue. And so for some reason, for like three or four months, we were the only cereal on shelf. And they just stocked us. I remember a picture of just all of our little cans lined up.

25:59We couldn't believe it. And so that was really the break that we got to be able to scale to the next level. When I asked guests in the hot seat round of our interviews, if you could have dinner with any entrepreneur dead or alive, who would it be and why? I would say half the time or majority of the time, people say Elon Musk. Well, Cody Ko and Noel Miller actually partied with Elon. And here's what happened. it was our first time meeting post malone and um he invited us to meet him at a a bar in hollywood uh it's called the rainbow bar and rainbow room kind of hanging out or oh i've heard it referred to both ways but okay maybe it's all i don't know either way um we go there and uh we meet post we meet some of his friends uh we meet his manager uh dre and some other folks and we're all kind of hanging out and and i think it's like right around two in the morning post looks at us and he goes you want to go to elon's house and we laugh we go sure um and so we go to elon's house i guess one of his houses and at this time he's still he's dating grimes so we we go you know we're in their place um and it's just it's very odd it's just like us posts his folks and then elon like he's literally just right there and we didn't say much to him outside of hey and um at some point we felt it was time for us to go you know it was like five in the morning we were like sitting in the middle i feel like it was like elon's trying to talk to post because that's who we invited over and we were just in the middle just like kind of like yeah totally just like why the fuck are we here and i think we ended up leaving at like 3 a.m or something right i thought it was later but either way it was 4 a.m i don't know it was late but it was like a weekday and we were like our fucking girlfriends are waiting for us yeah it was like four in the morning and then um uh the funniest part is as we were we didn't know how the hell to get out of there so when we were trying to leave cody's like i'm gonna ask where that where the front door is which is that's how crazy this house was you don't know where the front door is and um he cody walks in the kitchen and he just catches elon and grimes like making out with each other and cody's like i think we'll just figure it out i'm just gonna head out

28:36okay thank you for listening to these crazy stories i hope they inspired and encourage you to tackle whatever crazy challenge that comes your way and at founder our goal is to help you through these wild times so please stay connected reach out by messaging us on instagram at founder or even send us a note at support at founder.com and share with us the craziest stories from your journey of entrepreneurship. All right, that's it from me, guys. I'll speak to you soon.