How to Overcome Failure: 3 CEOs, Their Darkest Moments & the Lessons

Welcome to the Operators Podcast. This week we are going to celebrate a big event in Curtis's life, and you are going to hear each of us share one of the hardest moments we went through in our business careers and what we learned from it, how it changed us and transformed our future. We're so glad that you're with us today, guys. How are we doing?

Well, my birthday's coming up in, in, uh, tomorrow. You're—

wait, no way. No freaking way. Your birthday is tomorrow?

Yeah, I'm taking, uh, 24 people.

Curtis, we share a birthday. We share a birthday. This is, it's like, it's like seeing a double rainbow.

I don't know.

Like I am ecstatic.

Wow.

I know.

To share a birthday with you.

Do you know how many times people have said you're like Mike from Simple Modern? Not fricking once in my life has that ever been.

I was gonna say. the sobriety or sanity of anybody that would say that, but I'll take the comparison for sure.

All righty. Yeah, no, uh, we got an equity partner with our company. Uh, it took us, uh, a long time to do all the account— I think I talked to over 120 accountants, finance people, consultants, bankers, different idiots, losers, people who ask me stupid questions.

Why are you talking about your new equity partners in that way?

But we did an equity partnership. I'm still the CEO. I'm still— there's a board and I'm the head of the board, but I sold a huge chunk of the company to the equity partnership to be more steady, to get that next run to half a billion and a billion. And it seemed like a big thing. I'm going to— if you've never— if you've done it, you know that the final moment is all done online. And it's just bankers saying, do you approve? Do you approve? Do you approve? The money's transferred. It's so weird, dude.

That call is so weird.

It's like, I just, it's like 40 people you've never met. You agree to it and it's done in 35 seconds.

And all of a sudden many zeros appear.

That's what they say. I just, not a single thing changed. Everyone says, did you buy anything? And I'm like, no, no, nothing. I came back. I, you know, I said what I wanted to do most. I wanted to do an oh shit podcast with Mike and Matt. That's what I wanted to do.

Well, Curtis, then you're in luck because that is the topic today. You guys are too good. Curtis, what is one thing you want to give some money to? You have the money to give now. What is one thing you want to give towards?

Mike, that's a great question. In the final couple months, Uh, before this was done, I was still, I always said, what is the chances this goes through? And they're like, it's 50/50 because we think you might change your mind. And I almost did. We're growing so fast. I almost said, go kiss my ass. Like, and more lawyers and more finance people. I just was like ready to tell them. And the only way I could stay positive was thinking, who can I help by doing this? And I'll tell you one that I just did. Uh, I am 14 and a half years sober. And the person who saved my life was a guy who was 4 and his brother was 3 when he was found in a hotel room where his mother abandoned him. Spent life in jail, fighting, drug addiction, the most kind, amazing, brilliant man I've ever met. And I called him up a couple days ago and said, hey, how are you doing? And he's like, he called me Governor. He's like, Governor. Like, I spent a year with this man who saved my life, like literally. And I said, I would like to send you this chunk of money. And he's like, his wife was there and says, is this real? Like, is this possibly true? And he said, this is the governor. This is Curtis. Like, this is, if he says it, it's real. That's hard for a guy who spent his first year of sobriety with me. And I said, David, could you use this money? And he said, there are people on my roof right now because I have holes in my roof and no one, and I can't pay for it. He said, this is a gift I could not even dream of. That to me is like, okay, I did this deal so I have money to help people whose lives helped me and now I'm helping them. And literally that, you know, I've got, there's 20, 30 people that I'm helping because I got everything I got. I still have my company. I still live a great life. I still, and it's great, but buying, I didn't buy a single thing.

Choice in coffee didn't change. Do you, do you Your life is going to change in any way other than like maybe sleeping better?

I hope it does, but I think that that's an evolution, right? I think that's a, you don't just, oh, I wanted this. That's not who I am. What I want to do, I need to move into this next year of my life. And that next year of my life is an adventure. It's a little scary right now. If there's something I need to work on, I can say, I don't have time to work on myself or my life. I've got to work on my company. And that's a, Freaking excuse that you use. And, uh, I think it's a biggie. I'm gonna open this up and get out there. Everything's gonna stay the same at Portland Leather Goods. Uh, I think a lot of it in my life. I think the people around me will feel a little jolt at first and it will make them happy. And then long-term, hey, we're us. We're all on the same journey. We're talking about moments. And I built this company up over 10 years and I got a few.

This is why it's so appropriate to start with this because It's such a high point and we're about to go to the depths of despair.

But—

Oh, I don't know about that.

But like, it really is that there are highs and lows in the journey. And one of the things I talk about a lot on the pod is that you can't really solve any problem unless you know where you're trying to get, what you're trying to solve for. And I think, Curtis, you just gave a really beautiful picture of why, why do you grind? Why do you build a company? Why do you hope for an exit? And if the answer is just so you can get, you know, more stuff for yourself, I, I think you'll find it to be very unsatisfying, uh, from my point But when you have motivation that's bigger than yourself, and this isn't me saying this, the Harvard Happiness Study, I don't know, all of human history basically says that that actually is not going to bring the type of contentment and enjoyment that you're looking for. But when you have a reason bigger than yourself, and I think you just verbalized one pretty beautifully, Curtis, appreciate you doing that, man. And congratulations. It's well-deserved, well-earned. We're all cheering for you. We're all proud of you.

Congrats, man. It's awesome, dude. I love that. I love Mike. It's such a great question too.

Every—

I want to say the majority of the people I know, the most successful people, almost all of them have a give-back motive. Like once they hit a certain level of success, it's like, then it just becomes purely like, okay, what am I doing this for? And it's like, there needs to be a better reason.

Even if your idea of how you give back is economically. So Jeff Bezos has, uh, I think it was with Friedman that Friedman was interviewing him and saying like, what do you wanna do with your wealth? And more or less he made the point of, I feel like I have a moral responsibility to take the winnings from Amazon and invest them in the infrastructure of the future where other people can build cool things. And that's the way that he views space is that he's helped building the infrastructure for the future that he probably won't get to see the benefit of, but that other people will be able to build really cool things on top of. And the idea, I think the most toxic idea in capitalism, and if America ever goes socialist, this will be the reason why, is that when I make a bunch of money, I have no responsibility to anybody. It's my money. And I'm basically on an island in society and who cares about everybody else? And it's like, I do think there's something too. You made money as a result of a bunch of other people, and you are a part of society, and you do have some level of responsibility. And like what you give towards and where you think you want to express that responsibility, I think is totally up to the individual. But the idea that you don't have any responsibility to other people or to pay it forward or to give back or to mentor the next generation, like that's super toxic. And fortunately, I don't see a lot of that. in the, in the e-commerce space, but we should all be intentional to not be that guy.

I'm gonna bring this around to the bad stuff here and, and the, and the bad moments. There's a great—

You're a sadist, Curtis. I'm just trying to gas us up before we go.

There is a, a, a, a movie that I don't even know the name of, and the, the basic thing, it's a boiler, I think it's called Boiler Room, where they're selling bad stocks and these young people are just making money.

Ben Affleck has, um, Awesome speech. Go pull it up on YouTube if you're listening to this. No, not until after the episode, but listen to the Ben Affleck speech.

And young people just like, I need the money, I need the money. And they start making millions of dollars. And he goes to one of the young kids' house and it's just this huge empty house, got a big stupid leather couch and they're playing video games. He's like, oh, did you just buy this house? He's like, no, I've had it for 3 years. That's young people making money for the point of money with no life, no experience, no relationships, no building an actual life around that, right? So, you do that by hitting problems in your life and overcoming those. You know, the thing about entrepreneurship is it's a game. Money is just one of the things that you keep track of as your score. The other ones are the relationships, the fun, the personal growth, the growth of those beings around you. What an amazing, fun game rather than just having a job. Hey, if you're working for somebody and you're watching this podcast, well done, you. But if you're an entrepreneur and you're in the guts of this thing, the goal is to hit problems that freak you out and scare the hell outta you. So when you overcome them next year and the year after, you're a better person and the world is better because you're a better person. So let's get to some of those.

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I think Travis did that recently too on a podcast.

Yeah, Travis was talking about it. You know, it's, Basically, like, just like suffering and the capacity to deal with the pain that comes with really hard problems is what entrepreneurship is all about. And that's what we're gonna talk about today. So here's what we're gonna do. We're each gonna share a story about some pretty intense pain we experienced in our entrepreneurial journey and what came from that. And then maybe we'll, we'll talk about each person's story for a little bit. So to kick us off, Matt, I want you to share one, like one of your most painful stories that you went through, uh, that you're willing to share with everybody listening.

I've got so many. I, I think the ones that come up for me are the ones where I discovered the value of a 13-week cash flow.

Okay. What's the most painful of those?

The most painful would the, like the most painful was first company. Probably 2 years before we sold, we, it was like, I think it was Christmas. It was like right around Christmas. It was just before, just after. This is why I wish I documented more. Uh, my brother called me because my brother was my CFO and told me that we were, uh, not going to make payroll next week. So we were out of money. Uh, and I had to, I had to put on like a million and change back in the business, like right at Christmas, which at that time for me, that's a lot of money.

Yeah. What year is this when this is happening, Matt?

I want to say this is 2016. So this is like 10 years ago.

And if you don't mind sharing, like how much do you think you had liquid at this point? Like what percentage of your liquid net worth are you putting back in?

Dude, that was probably a third, maybe even closer to a half. Like, yeah. And so, you know, I worked my ass off to pull all this cash out of this business for years and now I'm having to sink it back in. Now the, it was a, the, I think it obviously it worked out. We ended up selling the company and it was just in hindsight, like, so at the moment I just remember looking at my wife, I'm like, I'm about to take this much cash out of our accounts. It has to go back in the company if we want the company to survive. I think it's the right move. We did it, obviously we ended up selling the company, but at that time, That probably was the worst feeling in business I'd ever had. Like at that moment in time, I, I laugh about it now. My brother and I, he lives 5 minutes from me. He comes over, we have a glass of wine and we, we joke about it. We're like, holy shit, did we screw that up pretty good?

Why, why did it feel so bad? Do you think, Matt?

Dude, I think at that, like I'm 45 now, you know, go back 10 years ago, I'm 35 years old. I, I would say at that point, much more money motivated. And more of my identity tied up in being successful and having this company. So when you take away one of the, like the measurement, right? Like Curtis is talking about this, like when you, if one of your main measures, if not for me at that time, was probably the measure of success was how much money do I have and how much am I making and how successful am I? And this is my outward-facing perception, you know. when all of a sudden you take some of that away or take a meaningful chunk of that away, you feel like a failure in that moment. And that's a terrible feeling. And I don't like that feeling. I don't actually seek it out. I actually, I am definitely a masochist. I love the suffering and the struggle of building. I absolutely do. I'm with Curtis there, but I don't seek out feeling like a failure. That is not a goal of mine. So at that moment, that felt like that was probably the most I've felt like a failure in my entire entrepreneurial career of, of like 20 years now.

Do you think that going through that experience changed your relationship with money?

Uh, 100%. It was probably like, there's been a few in my life and the exit being one of them, right? Like getting to the exit, getting a pile of cash and having nothing change was another one of those moments, a positive one, but still kind of like, That's it. I would say that one was the most— that really jumpstarted me looking inward and seeking outside help, mentorship, coaching around this relationship I have with not just with money, but like, what does it mean to be successful? Like, what is my definition? What am I building for? Like, why the hell am I going through all this pain? You know, like, why not just go Go get another job at a big-ass tech company and get some options and invest. Um, I think that was probably the big one, Mike.

So what, what caused it? Kind of going back, like, how did you find yourself in that situation? What was the series of events that led to not even having the money for payroll?

Well, uh, hubris. If I had to like boil it down to one thing, straight up hubris. We were so profitable, like we had cash. Like that business was a great, it's a service business. We had scaled it up. It was very good at generating cash. And we had never hit a moment economically where our clients, right? So it's, it's like the opposite of a consumer business. Like we had maybe 50 customers that paid us every month. Well, at that moment, I think this was 2016, 2017. So it was like 2016, the economy, like something had happened and a lot of our clients started late paying us. Like we just, all of our receivables started getting pushed out by 2 weeks, 30 days. And we had just never seen that as a business before.

We were like, wait, what do you mean people don't always pay on time?

Like at that point we were like, holy shit. Like there's like these cash cycles just extended out. And I got a hard lesson in cash conversion cycle and 13-week cash flow. And we had just never had to do it before. So we kind of, it was hubris, man. Like end of the day, we weren't operating paranoid. Now I always operate paranoid. I call it productive paranoia. I'm a, I'm a big fan of that term. Uh, and at that time I just, I felt, you know, young and stupid and I think I just felt like nothing could go wrong. I'd spent 7 years just winning. Like if I had to put it plainly, like I just was winning. So when you finally get a real punch, it turns out that it's like it was a real punch.

Uh, so Matt, how did this impact your relationship with your wife?

[Sponsor Content] Dude, that's when I found out that I had a really good wife. She didn't seem to care at all. You know, it's not like we weren't going to lose our house. We, it wasn't going to be like an existential punch personally, but it was definitely like, oh, if I don't do this, like this business is cooked. And then what does that do to my ego and identity? And I think that's a good question. I think that that's like a whole other topic. It's like picking your partners, right? Business partners and life partners and friends. These are really important. I got lucky in that my wife and I started the company together. So she spent the first 6 years with me building that business. So she kind of really understood the business. So when it was time to put cash back in, it wasn't like she was blind to what is this thing, right? Like she had a lot of familiarity, a lot of confidence in me, confidence in my brother. Like she knew we knew what we were doing. So I think that part was actually pretty good. Where I think I got extra lucky is I had a a handful of really good friends at the time who were at just a little ahead of me in the journey, right? Like just a little further along the path of building companies, had also taken some punches. Uh, that was very helpful. I, I can't actually, I, I don't, I think people shouldn't discount this. Like your friend group, your peer group matters more than you think it does if you're gonna be an entrepreneur. Because when these moments hit, it's probably those people that are gonna be most helpful for you. Most AI tools and software don't give you direct ROI every month, but Postscript does. I run 2 Postscript AI products at Ridge. Both show up on our P&L. Infinity Testing runs continuous A/B tests on our SMS automations completely in the background. It's driven $446,000 in incremental revenue. Not just attributed, incremental. That's a 32x incremental ROAS with click-through rates up 43%. Then there's Shopper, an AI sales agent that answers every inbound text in under 40 seconds. We're running 23x ROI on messaging costs alone. If you want SMS software that gives a proven ROI, go to postscript.io and book a free demo.

Matt, your brother's the CFO. Obviously this is a very stressful situation. He's the bearer of bad news. How did it impact your working relationship, your personal relationship with your brother?

I think that that moment my brother and I were in a really good spot. Like, I think it actually was harder for him to make that phone call than it was for me to receive it.

Right?

Like, it's not like he did anything. It was, it's, you know, like it's, I'm the CEO, I'm the majority shareholder of this company, the original founder. You know, I invited my brother along for the ride. I'm super grateful he did that. That was actually not that difficult. for me. I'm, I am having, like, I remember talking to him about it. He felt like my brother has this like default mode of like, he just feels guilty, like he's done something wrong. He operates from this place, which makes him like, he's an insane like operator, operator. Like, I don't know a better project manager or finance person. Like, he's just weirdly talented there. There's another story. I won't tell it, but I think the exit was harder our relationship than that moment was.

Go ahead and tell that story. We can always cut it out, but tell the story.

Yeah, I'll give you the really quick version. So when you, at least this is my experience, when you get to a large liquidity event, uh, like you sell a company, like you do a majority minority deal, whatever it is, when there's lots of people that participate in it. So like in our case, we had myself, I had another business partner, we have my brother, all of us being shareholders. So we all participated in the event, but I had the overwhelming majority of the equity and my upside in the process was much larger, right? Like what I ended up taking home. We all did well, but like what I got, much larger. And there was definitely like some weirdness around that. And I think with my brother, like being the CFO, He ate the most during diligence. Like if you go through the diligence process, like it's the finance guy or that team does a weird amount of work. Uh, anybody in the process can tell you that. Curtis, you're nodding your head. You probably just went through this. Like it's crazy at how little you do as the CEO in that process.

I'm the CEO. I know everything. What can I help with? And they're like, shut up. It's just, Finance, finance, finance, finance, consultants, consultants. And I'm like, they're like, stay out of it.

I just want to make the observation. Curtis just said finance 5 different ways in one sentence. I don't even think I've never even heard that before. That's amazing, Curtis. Okay. Back, back to what you were saying, Matt.

Yeah. So, uh, that was harder, I think, on our relationship because it, like, I think for the amount of effort and work that he had to put into that process, to the size of his outcome versus the size of mine. That was definitely some weirdness in the whole thing. We're great now. We've actually talked a lot about that moment and like the moment afterwards, because for him it was like he just went through 3 to 4 months of eating real amounts of shit to get the deal done. And for me, it was like the end of a 10-year journey of just getting punched constantly. So we both had very different, I think, perspectives on like who, it's like a who suffered more kind of weird thing. And then there's like the outcome. So I think that was actually harder than the moment we almost killed the company or the moment I almost killed the company. There's no, there's no we there. That's just all on me.

I say sometimes that capitalism makes intellectual sense, but it never makes emotional sense. It's always very difficult.

That's so good.

try and wrap your mind around it. And I also want to apologize to anybody eating while you're listening to this. I just probably would not advise that when Matt's talking.

But dude, Mike, did I ever, did I ever tell you one of the things that my grandpa, I remember this, it's like, was it life's sandwich? Don't nibble.

Yeah. When you, when you, yeah, the quote is, and you can cut this out, Aaron, is that when you have to eat Don't nibble, which I think is very true. Sometimes there's just really hard things and trying to do them a little bit at a time is worse than just, you know, kind of ripping off the bandaid.

That is actually like the lesson. That is such a great lesson in this. And I'm sure you both would agree with this. I don't know what your default mode is, but like when things, when I know I have to do something hard, I typically build it up. in my own head ahead of dealing with it, and it's never quite as bad as I built it up to be. And I've— I don't know why I have to relearn this lesson as a founder all the time, which is like, I know intellectually that I should just, just go do the thing. Emotionally though, I build it up. I make it into this like, oh God, like this is the end of days. And I don't know if that's just a, I don't know if you guys do the same thing, but my gosh, is that not productive?

Everybody does it. Everybody, you have to tell when your employees have to fire somebody, you have to say, stop worrying about it for weeks. Just go do it. It's not gonna be as bad as you think. After 3 days, you'll never think about it again, or rarely. Like just, it takes 3 days to get over the emotion. So yeah, everyone does. Yeah.

You know, Curtis, uh, it's, I think we do this with just problems. Like what we're talking about today is like, there are problems in business.

You're just gonna have those every day.

And then there are like problems, like capital P, like, oh, this could actually nuke us.

So this is exciting for me because I am someone who started this company in a garage. So when you hire in a garage, you're hiring people who will go and work in a garage, right? These are people off of Craigslist saying, give me $10 an hour cash and I'll be fine, right? Then when you move up, you're hiring off of Craigslist at $12 and $14 an hour, right? These are people who just moved to the city, trying to pay their rent. They don't have a car. Like, these are people struggling, right? And you're on the whole time, you're saying as the optimist, don't worry, trust me, we are going to make it work. We are going to grow this. And when you, they say, uh-oh, be careful. We don't wanna do that. I'm like, don't worry. I got you. If you do this with me, we'll all get— and next year you're more successful and you're like, see, I told you so. Trust me. The next year you build and you're like, see, I told you so. Trust me. See, I told you so. We just had a problem that could kill the company. And I've got 6 years of telling you, don't worry, just trust me. I'm the big thinker. I gotcha. And now they're all like, we could lose the company. But Curtis, you have built this completely on, I got it. I got it. Don't worry. We can overcome this. Can we overcome this? And you say to them, of course we can. And then you go home and you start getting the emails and the calls and the bankers and the finance and the this and the notices. And everyone just sticks you and you're like, oh, did I— my hubris, my pride, my self-identity of the person who can get it done has now just been challenged. What in the heck am I going to do?

Curtis, have you, uh, have you adjusted your approach to building over time to have yourself as less the rainmaker and less like the guy in the company? I think this is a trap that we all fall into.

No, no, I should. I really should.

It's, it's why we all do this, right? It's like, wait, I know I should learn this lesson, but I haven't.

What I do is I've been able to set more structure. Like, here's marketing, here's this, and here's this, and here's this. And then they're like, we need to set a process. We need to set this. I'm like, great, great, great, great. But then I go through and I'm like, wait a second, we can maximize that by this. And let's look at that problem. If we do this and we hook that up with this, and you see it in a different way than they can, and you have the ability to act on that. So no, the biggest fear I have with this deal is that someday 1 year, 2 years, 5 years, I won't be there. And all of these structures do not feel as sound as I want them to be because I think there's money dripping out that if I catch it, I can save. Now, we're still going to make our goals. That doesn't matter. I want to make our goals plus every single time. But we're talking about bad moments. And I told you, I built this up. I put— said, everyone get on my back. I got this. I got it. I would come in every day. I would be optimistic. I would come in every day when there's a problem. I'm like, we got that. When we have to fire somebody, we say, That is for the right thing. We will find somebody better. I did all of these things and most of the times it worked out. And I love to celebrate small victories, right? Like really small. Every day I am jumping and dancing and running around saying, good job. Every day I celebrate that. I also have the ability to forget the bad and only celebrate the good ones. I kind of, that's how I look at life.

Like every entrepreneur is, it's, it's like, uh, it's like the, woman who has a baby, there's like a chemical thing or something, like their memory of the actual pain of the pregnancy goes away. So that's why they, that's why they're able to have multiple. 'Cause like if they knew just how bad it was, they wouldn't do it again. There's some, like I've read, there's some science on this, but what you're saying, Curtis, is like entrepreneurs all have this ability to like delete the trauma.

Well, it's, well, it's as people, you should be able to say, I don't want to remember the bad shit. I want to remember the good things. I do that with high school friends who say stupid shit. on Facebook. I, I don't watch them or read what they say because I wanna remember that I liked them before they became shit.

I let them, I let them go. I let them go. I was not gonna interrupt, but I'm, I will redirect.

Right, right up back in.

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Yeah, there's 3 things that go into that, and it did come about. Number one of 'em is when you're growing and you're doubling every year, I didn't pay enough attention to the finances. I'm a salesman, right? I'm like, don't worry, we need it. I'll make us more money. Oh, we're having trouble. I'll bring in more money. That's not working. Rather than understanding the finance and making all the— I did not pay enough. That's number one. You gotta get somebody good. They gotta be paying attention. You gotta read that. I know that now. I didn't know it. That was, that was number one. Number 2 was way back in the 2020 era, like that, when they're like, hey, you're getting big enough. You need to pay sales tax. And so we're like, okay, we'll do it on January 1st. Don't worry. We got all the software. And on January 1st, 2nd, and 3rd, sales tanked. And I'm like, that's because of that stupid sales tax thing. Screw that. Take it down. Let's see what happens. And sales jumped up. Now, it wasn't the case. It was something else. It had nothing to do with adding sales tax. But I grew up in Montana, no sales tax. I lived in Oregon, no sales tax. So I'm like, you want to add extra when I get to checkout? That's going to kill us. So I said, let's not worry about that for a couple of years. So, uh-oh, I'm not paying attention to finances. Uh-oh. I got this sales tax liability. Number 3, I decide that we're going to go into footwear and we need footwear to work. And that is a lot of POs that I don't make. I put a lot of money to a lot of people out there, and then I'm hoping to get the product and sell it on a new company that's not gonna be efficient yet. Don't worry, I can always make us more money. All 3 of those things are hitting when the bank, Wells Fargo, comes in and says, hey, We just had Silicon Valley Bank go outta business. We promised you $20 million. We're not gonna give it to you. In fact, the $2 million that we loan you, we want that back right now. And they started taking money out. And so I have $12 million in POs, partially paid out there on a footwear company, and we have no money. I have to tell everybody that always trusted me. I go to someone, I say, you wanna know something about Portland Leather Goods? We pay our bills. You want to know? We're growing. You want to know? We're skyrocketing. Oh, you want your money? We can't give it to you this week. We can't give it to you next week. We can't do that. No, you got like, and all of a sudden, we have our finance people doing nothing but saying, we can't pay our bills. And that is emotionally, as a leader, I have failed. As a fi— I should have saw the finance coming. I shouldn't have made that decision on sales tax. I shouldn't have made that one. I shouldn't have made that one. And then I didn't have to do that. I had people answering those phones, fighting people off, but I felt their worry and my worry. And it was heartbreaking. It really was. And what I'd made a decision for that one, Mike, was this: I will never let someone else take— have control on a decision. Wells Fargo could say, I don't want to give you the money, and we're screwed. I need to bring this in. So I got together our finance people and I'm like, I have never been a finance hawk. I am now gonna be a finance hawk. Where are we? Where's that dollar? No, no, cut that. Do that, do that, do that. And when this company came back to buy us and to give us an equity deal, they said that was the moment. The fact that you said, I went from $0 to $30 million in shoes, and then you cut the whole division. No one would've done that. You got lean, you got profitable, You built. If that never happened, Matt, I would be the same guy. I'm winning everything. Don't worry, there's more money where it's coming from. Then I had to say, no, no, no. Where's the finance? Where's the payroll? How long debt? Where's our working capital? How much do we have in inventory? Where's our aged inventory? How much are we paying our 3PL? How much are we paying this person? Do we need this new hire? All those decisions that you think of as individual decisions. They're all part of the ecosystem and you have to focus down on it. I told people, I didn't know, I didn't believe it, but I told them, I said, this moment we will look back on in 2 years and say, this saved the company. This was the best thing that ever could have happened to 'em. And I don't know if I was lying or not. I remember saying it to everybody. I don't know if I thought it was true or not.

Do you both, Mike, I'd be curious to get your take on this. Do you both tell yourselves that lie in the, that lie or truth in the moment? Is that something— my business partner Impala, he's like one of the most wise people I know. And he's constantly, you know, it's not happening to you, it's happening for you. That's his mentality on things. He can somehow get there really quickly. And in the moment, I just feel like, no, this sucks. I don't like this. You know, like, but some people can just do it. They're like, nope, this is going to make me better. Mike, do you, are you, where do you fall there?

Curtis, where do Where do you fall there? But it's not binary. Like, because you have 24 hours in a day, right?

Yeah.

So 16 hours of the day you can say, I believe that. And the hour before you go to bed and the 2 hours when you're laying in bed, not sleeping, you don't believe it. So it's not like I believe it or I don't. It's like, do I sincerely in my heart hold that 24 hours a day? No, there's still that doubt. And you have to be able to get up and say, what am I gonna do today? Next step, next step, next step. Other people will break. Other people will break when this happens. That's how they go outta business. We will not break.

Mike, what's your view here? Like, how, how do you deal with the, the moment that you get the bad news?

I think that Curtis does a good job of, uh, uh, summarizing that, like, you're always of multiple minds on any issue when something hard happens, something unexpected happens. Like, you're, you've got a lot of different, immediate reactions and emotions going through you. I think that the thing that I've observed about myself and I've observed about other people that I would consider to be really successful at life is that as they mature, there's just shorter and shorter time windows between when it happens and taking the constructive mindset. And so like, I've seen people have a really hard thing happen and they were stuck for a year or for multiple years in that. And then I've known other people where they'll give it a minute to be frustrated and then they're like, okay, I'm just choosing to take the constructive mindset here. And so I actually think it's a skill, it's really, it's a self-discipline skill. It feels good to be self-indulgent. I think ironically, like it's kind of counterintuitive that like thinking about how bad things are would feel good, but there is some kind of a weird chemical thing where sometimes like kind of wallowing feels more enjoyable than like having a constructive mindset. But I think we can train ourselves. And one of the ways we train ourselves is just by being around other people who do this. Like certainly if you go through something really hard and you have a spouse or you have a best friend or you have a community that's like, Let's talk about how sad your life is. Like, you're more likely to be that way. And if you choose to surround yourself with high-agency people that are like, hey, let's figure it out. Like, it'll be okay. We're going to find a solution that can help pull you out. We've already mentioned the role that community has. And I think clearly when you go through like the really difficult times, it's when you need community the most. So the advice I would give based on my own personal experience is like, how do you reduce the amount of time it takes you to get to the constructive mindset as you get more mature and as you, as you grow as a, as a leader.

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It's freaking amazing. Richpanel even guarantees 50% of your support volume will be automated by AI within 30 days or your money back. I call that a no-brainer offer. The pricing is also kind of wild, about 20 cents per conversation instead of most other vendors being like $1 to $3, which is a little nuts. If you are interested, go to richpanel.com/demo, not for some generic demo, but to actually book a call and watch them build your Either of you write stuff down every day? Like, I'm a big, I got to get out of my head. Like, my process for getting very quickly past things is just export it. So like, hence the daily writing practice I have, which I've talked about before, is like a lot of the time that's just like brain barf, you know? Like, it's like, what's in my mind right now? It's like, I got to get it out because if it's, if I get it out, it's sort of like clearing the pipes and I can just keep moving on and I can be more stoic about How I react to things. Um, do, do either of you guys have a, like, Curtis, do you have a, a process or a way that you do this where like you go quickly from ba da da?

I, I do it, I do it quickly and I do it not by writing it. I do it because I surround myself with so many people. Like I am around people all day, every day. And so I don't drive to work. I have somebody pick me up and that's that poor Mariana that if you know me, you know Mariana, right? And you know that we'll get in the car and she says, how are you doing? What are you thinking about? And I'm like, you know what I'm thinking about? And I'll unload for 20 minutes and we'll pull up to work and I'll hop out. And I'm like, I feel better. Like I just went there. I was able to get it out and say, well, that wasn't that productive. And walk in and sit down in a meeting and calm— more calmly, not calmly, more calmly do that meeting because I've been able to say it and move that out of the system. When we drive home, I say, hey, she, she says, what did we learn today? What did we do? And I go through the good or the bad, but before we get home, I turn it into a good. And she says, what are we doing tomorrow? I say something positive. I get out of the car. I'm like, guess what? I've just cleared this out. So it's not writing. It's actually somebody talking. And if I asked her, what the hell did I just say? She'd say, dude, I'm not actually listening to you. This is your fricking therapy.

I'm here.

for you to get it out so you can be a better person.

Ironically, question asking is one of the best ways to help people process through things. And it's one of the best ways to lead people for this reason, because often what they need is not actually the piece of information. They need to come to the own individual realization of that course of action. And so there's a great line in The Matrix that Someday you're going to learn the difference between knowing the path and walking the path. It really is just so true that often we don't need to be told the right answer, but we need to get to a place where emotionally we're ready to embrace the right answer. And Curtis, that was your story. Your story was you needed to hug the cactus and learn the numbers of your business. It wasn't sexy. It wasn't what you wanted to do, but you came to the point where it was obvious that that's what you had to do. And by doing that, like you took this really difficult event and it sounds like it probably is a big part of the reason why today you're sitting there as somebody who's had a partial exit because it forced you to grow as a leader and grow your capabilities in a way where your company could become a much bigger, much better version of itself.

I want to hear from Mike. I want Mike's like, uh-oh. I don't know if we get through this. Give me, I want to hear that moment because Curtis and I are telling ours.

I will give you, uh, one that has nothing to do with, oh, we're growing really fast, or, you know, cash flow problems. I'm going to give you just a total fail moment.

Love it.

[Sponsor Content] You know how it's like, it's always, you know, it's always darkest right before dawn. Sometimes it's always darkest right before it goes pitch black. So to give some of my backstory, I was in full-time ministry, even though I'd had a business degree and I had always kind of thought I would go over to the business world eventually. And then I got to 30 and it looked like, well, maybe that's just never going to happen. But my brother had been kind of a solopreneur and he was in the very first wave of affiliate marketers on the internet, I would say, and had done really well. He had an idea for a company, asked me if I would help him on it on the side. I said yes. That company turned into a company called Quibids, which the way I would describe Quibids is kind of like Whatnot before social selling was a thing. And I really think Whatnot's kind of like almost like the spiritual successor to like what we did in some ways. And we did that business for a few years. And at one point my brother was like, you should come work with us full-time. I was still doing ministry even though I was working on the business. And I wasn't particularly motivated to come over and work on that business full-time, even though I'd done a lot on it. But we had another idea for a business that I was very excited about. I wanted to like build something from the ground, you know, with him. And the idea of this company was a combination of gamification and e-commerce where you shop, you buy your stuff, and then there's some kind of a gamification play game element at the end of the checkout process. You get some kind of a discount on your order. And so we thought this seems to be where things are going. And we were like 70, 80% right. So I moved full-time from the ministry world to the business world, which was a pretty disruptive change. And we started building this company. My younger brother's my boss, so there's challenges to that for sure. But we're building this company and we are making so much money on the Quibid side that we are just funding millions of dollars to this thing. And I would say we did many things wrong in retrospect in the way that we built the company. We didn't do a lot of validation. We invested way too much before we determined exactly what customers wanted. We made some really unfortunate architectural decisions to give like a picture of this time period. App Store's pretty new. Like, it's like we built a bunch of stuff in HTML5, which like, uh, because we thought, you know, the, the web was the future and, and we, we really built around desktop still. I mean, this is where things were in 2011, 2012. It just wasn't clear where everything was gonna shake out. Interestingly, one of the companies we were looking at, um, at the time was King who had Candy Crush. And so like we, we were kind of 90%, 70%, some kind of large percent of the way there towards where things would get. But we weren't at 100. So we build all of this stuff. We get real excited after 2 years. We launch this, we launch on like a Thursday night or something. We go to a steakhouse right after we hit launch. I ate 2 20-ounce steaks. This is like my way of celebrating. I ate 2 20-ounce steaks. And then, you know, we go home and over the coming, like, I would say, 3, 4, 5 weeks. We're running marketing, we're testing, and it looked kind of promising at first, and then it looks less promising and less promising and less promising. And, you know, one of the things I'll tell people is like, people were so confused by the concept that they were hitting our landing page like it was a trampoline. It was just like the bounce, the rapidness of the bouncing off of that page was amazing. And so there's this moment in time when you go from thinking this isn't trending in a good direction to like, this isn't going to work. Like, this is just straight up, there is not a pivot. Like, this is the end. And I think it was a Wednesday and I'm looking at numbers all day. I'm playing with some different things and it's just kind of like almost like a fog that's rolling in. It's kind of like this realization is kind of like surrounding me that this thing that you left one career track to do business and you put like 2 years and millions of dollars into this thing, this is going to fail. And Which is an incredibly depressing feeling. And, you know, we were out of pivots, we were out of ideas. It was just not going to work. And so I go home and I'm very down and my wife can tell that I'm very down. I'm not really wanting to talk about it. I ate dinner and I'm like, you know what? I'm just going to go upstairs. I'm just going to watch an episode of the show I've been watching. I just need some space. And she's like, okay. So I go upstairs and I had been watching Game of Thrones and such an upbeat, uplifting show. As fortune would have it, the episode, if you've ever watched Game of Thrones, there's an episode that they refer to as the Red Wedding, which is like one of the most shocking, disturbing things you'll ever watch in your life. And it turns out that without me knowing it, that was the episode that I was queued up on that night. And so I'm watching this episode and it's just like, again, horrifying, shocking, very sad. And so I get done with the episode, it's like 11:30, and I'm like, I think I just want to go sit in the garage with the car running for a while is kind of how I feel right now. You know, like, and I tried to go to bed. And, you know, there's like several hours of just not being able to sleep and wrestling with it. And it was probably like, I think you said this, Matt, but it was probably the first time in my life that I really had to grapple with failure. That like, certainly we all face setbacks, but My wife's opinion is that I've had very little adversity, that I've had a great family, that generally like things have gone the way that I wanted them to go. And I think this was probably the first time that I came really face to face with something that just really was going to go badly. And there was no, like, there was really nowhere to point the finger but at myself. And I think it was a transformative moment in my entire career. I think it was simultaneously the worst day I ever had in business and probably the best day I ever had in business. I don't think Simple Modern happens. I don't think, uh, the person that I've become, I, I really, there's so many things that probably never happen if that day doesn't happen. Fulfill is the ERP built specifically for D2C and e-commerce brands. Inventory, purchasing, warehousing, financials, all in one system built for the way your operation actually runs. There is not an ERP on this planet, not one that has more direct 3PL integrations than Fulfill. They integrate with over 400 3PL locations globally, and most of you listening to this right now are either running your own 3PL relationship or you're about to. And the second your 3PL and your ERP aren't talking to each other in real time, you're flying blind. You don't know your true landed costs. You don't know your real margin. You're reconciling spreadsheets at 11:00 PM trying to figure out where $40,000 went. I know because I am on Fulfill. The visibility we have now versus what we had before, it's not a marginal improvement, it's a different game. Fulfill is the only ERP I've seen that was actually built from the ground up for D2C, and it's not some live-coded piece of crap. Believe me, those exist. Fulfill isn't one of 'em. Go check out Fulfill, tell 'em Sean sent you. So my big takeaway from this experience was My entire life, if you kind of took persistence as a character quality, I would kind of max out on that character quality. I've always been described as extremely persistent, which as we know, like in entrepreneurship, we get told over and over again that grit, persistence, like this is the quality. And what that experience taught me was for the very first time, I realized that there was a dark side to my persistence that I had never seen before. I had always thought that persistence is always the right course of action. But if you just think about it from like a first principles perspective, you realize that that's a silly idea. There are so many things like you're in a bad relationship. Persistence is the worst perspective. If you're in an addiction, if you're doing destructive things, if you're headed down the wrong path, like one of my favorite quotes Is that if you find yourself on the wrong train, the quickest way to get where you want to go is to get off at the next stop and get on the right train. Right. And, but persistence is kind of like the opposite of that. Persistence is like, you know, the evidence be damned, I'm going to keep going and nobody is going to stop me from doing this thing. And so what I realized is there is kind of this like destructive persistence and kind of more of a redemptive or, you know, positive persistence. And it's all about like, how are you choosing the things that you persist in? And up until that point in my life, the answer had always been, whatever I'm focused on, I'm going to keep doing this until I win. And it was the first time I realized that like, hey, you know what? Successful people actually allow themselves to quit at things. They allow themselves to pivot. They allow themselves to say, this isn't working. And I don't know, maybe I didn't have the character or the self-confidence, or I was insecure enough that I had not seen that before and that it was okay for me to quit on things. It was okay for me to say, hey, this didn't work. And it probably set up the rest of my career, but really low point. I mean, as low as it gets because it made me question if I was any good at business. It made me question if I should have even switched careers in the business. It made me question what was gonna happen next. And, but it was a gift. And I think I started to see that pretty quickly after it, but I really clearly see it now that it was the worst day in business and the best day in business I ever had.

That was a great one. I want to tell all of those people who happen to be in a business right now and it ends up failing, I had a bunch of those. I don't even go back to all the businesses. I started this business at 50, for God's sakes. Like all these young kids, like, I don't know, I created a business, I'm 28, what is my next move? I'm like, hey, go fail a couple more times. I have a bunch of failures before this in entrepreneurship that I don't even go into because everyone wants to know about this. And when I made this one work, my My best friend and cousin Dan said, hey, you made this work because remember all the failures? You learned a bunch, dude. And I'm like, oh, I forgot. I learned that I've had these lessons, that I got better. So if you made it this far, if you're using Fulfill, if you're using Northbeam and you've made it this far and your business is failing, congratulations. That is part of life. I am a recovering alcoholic. I should have died. And you hear in your first year of sobriety, it is a blessing that you went down so low that now you get to reconstruct yourself and be the person you can. It is a blessing. And you're like, a blessing to be an alcoholic? Screw you, dude. It is a blessing to have your business go out when you're young. It is a blessing for what you learn so that that next one can be 100 times bigger, not 0.2% bigger, not double. You can create things, Mike, not just 1 or 2 or 3. You can create people, networks, companies, entire structures that, that taught you about.

So this is the, this is the important point, Curtis. I actually think that one of the great places to get to as an entrepreneur is realizing that as long as you're still in the game, you've never actually failed, right? The point of the game is to keep it going. for as long as you can. You know, that, that, that's how I look at things now. So like now I'm just willing to, I'm willing to fail very publicly because to me it's like, that's not failure. It's, I'm still in the game. I'm like the, what is the, the, the Chamath thing? Like the man in the arena when he went off on that? Like, yeah, yeah.

Roosevelt.

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Mike, that was a great story, but did you want to hit another one real quick?

I mean, I can, but I think what we're saying, I think is, is really good to emphasize that like in the, in the kind of Twittersphere, sometimes like the, hey, I'm going to be authentic and share things looks like I'm going to humble brag. You know, it's like, we're growing so fast. Cash is such a problem. What am I gonna do? And, and I'm not saying that those things aren't difficult also. I just think there's a lot of people that don't feel seen because it's like, that's not actually my situation. My situation is I'm actually bleeding out because the, you know, I bought some inventory and nobody's buying it. And that, I, I think it is kind of emotionally calloused when all the stories we tell about struggle Are, you know, this thing happened, but then happy ending, you know, but then, you know, 10x growth because sometimes they're just not. And so the way that I would think about it, what you were saying about failure, Matt, is that, you know, we define what failure is and that I don't think that, I think the relationship you have with how you think about failure is really important. And there are some chapters that just end with defeat or end with frustration, and that's okay. You just don't want the book to end that way. And that's kind of like my story is that I have certain chapters I'm really proud of, and I have certain chapters that they were hard, but they set up the next chapter. And that's probably the most redemptive view that we can have towards our careers and towards entrepreneurship because there just are going to be highs and lows. Like, you probably will get fired once in your career if you work for other people. You probably will have at least one startup that just outright fails. And like, that's the way that this stuff works. So anyway, thanks for listening. I mean, I really enjoy sharing this stuff because I feel like it transformed me. And if anybody else can learn from it, I want them to be able to benefit from it.

Something I told my co-founder in Pela, Brad, Early on, because Brad is like definitely, you know, 10 years ahead of me. I love that all of his failures are my best lessons. Like, that's the great thing with this. It's like, if you're smart about this, it's like learn from everybody else's. That's also a way to go about it. You don't need to go get near bankrupt if you like, don't seek that out just for the lesson. Take mics.

Yeah, it's fun. That's right.

That's right.

Well, it's actually a good point that wisdom is being able to learn from other people's experiences that I can learn that the stove is hot because Matt told me the stove is hot and I can see his hand is melted. But, you know, as entrepreneurs, often we have to find it out for ourselves. And so I think that that's the point of the pod is being able to share our experiences so that hopefully Everybody listening, like that, that this is helpful for you and that you can avoid, maybe sidestep some of the challenges that we faced. But we know that these are really common, like to everybody listening to this, I know that you personally have a story of this and we would love to hear it. We love the feedback from the community and it's really helped, I think, shape Build and it's helping shape how we're doing episodes and how we're creating content. So we are really grateful for the entire community. Thanks for listening all this way to the pod. We want to thank all the sponsors. We get to do this many times a week at this point, and as a result of all these great companies that are backing operators. And so hit subscribe, drop in the comments wherever you listen to this, your example, hit us on Twitter, whatever else. We'd love to hear some of your stories of adversity that you've gone through, and then like, hey, what was the good that came out of it? How did that transform you as a business person, we would love to hear those stories. I want to end it by saying this, Curtis, sometimes as entrepreneurs, we do not do a good enough job of celebrating the wins. Your life is different today, not because there's more zeros in your bank account, but because you built something of real value that's transformed a lot of people's lives. You went from a point of total adversity in your life where, like you said, Alcoholism could have killed you, but it didn't. You changed your mindset. And literally there are thousands, tens of thousands, hundreds of thousands of people's lives, millions probably if you include all your customers whose lives are different because of the choices you made as an individual. We always like blow past these things. It's always onto the next one. It's always like, what's the next hill? Like, be proud, be honored of everything you built.

I'm going to end it here. And when we did our deal and we signed and everyone's like, congratulations and everything, the next 3 hours I was depressed. I was really depressed. And because I surround myself with the right people, I got a box and it was a present. And I opened up this box and it was a letter from 60 of our employees saying, thank you. You, like some of them, 5, 10 pages long. Thank you. You believed in me. I remember when you interviewed me, I didn't believe how my life would change. This has completely changed my life. And Mariana had letters from so many people that she had put together as, and I sat there at my table and said, look at this. Okay. Now go to work, smile and be happy because these people are amazing.

Yeah. Proud of you, man. All right. That's the pod. Thank you for joining us. We will see you next time.