OM DETTA AVSNITT
Alli Truttman just celebrated a HUGE milestone for any business: the 10-year anniversary of her company, Wicked Sheets. According to data from the Bureau of Labor Statistics, about 20% of businesses fail in their 1st year, about 50% of small businesses fail by their 5th year, and only 30% survive over 10. And things are really starting to heat up now with her upcoming appearance in front of an audience of 96 million on QVC!
Alli has been interviewed for a lot of Louisville area publications, but as she mentioned during our talk, she’s never been interviewed about how she got her funding to get started, what it takes to be an entrepreneur, and what she would have done differently.
Since our mission at Metro Startup Launcher is increasing the number of local “micro-angel” investors and helping more startup companies get their early funding, we really enjoy learning how our amazing local entrepreneurs made it happen and getting to know them a little better.
So, enjoy our podcast interview with Alli Truttman.
Transcript (machine transcribed, so please forgive the typos!)
Alan: 00:03 Hi everybody, welcome to the Metro Startup Launcher podcast. I’m Alan Grosheider, and today I’m talking to my friend Allie Truttman. She’s the founder and ceo of Wicked Sheets. Hey Alli. How’s it going?
Alli: 00:19 Great. Thanks so much for having me on today.
Alan: 00:22 Yeah, we finally got on after a month of you blow me off so I know you, but
Alli: 00:29 when we delve into what the, the things I’ve been through the past couple of months, I think you’ll understand why it’s been hard to get me on the phone.
Alan: 00:36 I know you’ve had a lot of stuff going on. I’m totally kidding and I will. We’ll definitely get into talking about all the stuff with in China and it’s. I know you’ve been super busy so I’m totally kidding. So what I would try to accomplish on the podcast, just you, you know, a little bit about metro startup launcher and our primary focus has sort of morphed into really being focused on trying to figure out how to get more angel investors in our area, investing in startups and then helping startups utilize that and hopefully crowd funding to, to get a lot more startups started. So in talking to you and other successful entrepreneurs, I just really want to get a lot more information about how you became an entrepreneur, how you got started, what triggered you to want to be an entrepreneur and uh, you know, advice that you would have for other entrepreneurs and maybe mistakes you made that you could help somebody else avoid.
Alli: 01:34 They’re absolutely. If you, if you don’t mind, I’ll go ahead and take that one question and say, how did you become an entrepreneur and getting into the business world? I actually, if you ask my parents, I actually was designing what I didn’t realize were small businesses when I was really young. So, um, I, I fashioned myself and inventor of sorts, not in the very technical science realm, but, you know, there were always things that when I was younger I would notice and I would say it would be so much better if, you know, for instance, OK, before the radio would tell you what the song was or who sang it, I, I, my mom said I was like six or seven years old. And I was like, if only your radio would tell me who sings a song or what the words are that I’d be a better singer.
Alli: 02:20 And then everybody laughed and then we sold painted rocks in our neighborhood. And um, my favorite was like a double toasted tostito that we took chips and we, um, we basically flame broil them over scented candles and sold them to people as flavored to Tostito. And I mean, I know it was a great idea really. And uh, you know, and thankfully my first co-founder was my next door neighbor and he and I, he was, he actually grew up to be an actuary and he was always the numbers guy. And I was always a salesperson, so I didn’t realize from even that early on that I was becoming, or a expressing myself and not as an entrepreneur. So, you know, I came from a really small town in southern Illinois and I wasn’t exposed or hadn’t heard this word, this entrepreneur word before. And, um, my family was in business and nursing.
Alli: 03:15 And so what I came up with was a psychology degree. I thought, I want to help people. I love people. I love talking to people on getting their stories. And everyone kept giving me down the path of psychology. So after about 10 years of becoming a child psychologist trained in child psychology, I abandoned my career in psychology and started pursuing this dream of becoming an entrepreneur. And that was after I tore my acl and I was bedridden for a couple of weeks and I had had night sweats my entire life. And, uh, the, the tough part about nightlife was when I was here playing soccer in college. And when I was younger, it made sense that I was sweating a lot. I just blamed it on high metabolism or training regimen. Uh, but what was really happening was I was actually diagnosed with hyperhidrosis shortly after my acl injury and my doctor informed me that I was never going to outgrow night sweats.
Alli: 04:13 There’s unfortunately not a treatment for hyperhidrosis right now unless you do a botox or things that are invasive, but none of those are guaranteed. So we could choose was basically born out of a joke that I suggested it to my cousin who also has nice, but while she was pregnant and we were sitting around April 2008 and an Easter brunch and commiserating about this disposition. And uh, her husband walked past wearing a nike dri-fit golf shirt and I just jokingly said, Hey Jason, one day you’re going to come home and we’re going to cut up all your golf shirts and shown him in bed sheets. Everyone in my family erupts into laughter and my parents look at each other and you’re like, oh, there’s another one of those zany ideas like you had when you were little. And my dad kind of pulled me aside and he’s like, pretty good idea. Let’s see if there’s anything else there on the market and there wasn’t, so I didn’t know, you know, that’s one of those questions you’re like, is that a bad thing or is that an opportunity? And I have never seen it as a negative by only saw it as an opportunity from that moment on a wicked sheath was born
Alan: 05:22 competitor out there or what’s the run across some overtime?
Alli: 05:27 We have actually we have, um, probably I would say three to four main competitors in our space right now. Uh, one of them is actually larger than us. They have branched into not just focusing on the moisture wicking or cooling aspects like we do with that. Um, they have truly tried to become, I compare them to like a competitor of Martha Stewart and like a whole line, but a lot of other bedding companies have popped up since then as since, uh, since 2008 we came up with it and, you know, I also see that as an advantage. And um, I see that it is market validation. So I’m happy that we have more people in this space and that we can find, you know, say that there is a need for this way of thinking about sleep in a functional way so we can help people sleep better by staying cooler and drier. So again, I usually only see these as opportunities instead of like stumbling points
Alan: 06:23 really changed my competition when I started the company. My first company I was 24 and I was really paranoid about competition and making everybody sign non-disclosures before I would say anything about my idea because everybody’s going to steal it and it’s kind of the reality is people are going to do with or they’re going to do. It’s really hard to keep people from stealing your idea. It’s better just to focus on executing and doing a great job and, and keeping your customers happy. And so I think I’m remember I think gets, you were talking about it at venture connectors. You were up on stage talking about customer service and how you love that part of the business so much and actually talking to customers that have had a great experience with the product and that’s where, that’s where you really make a business. I think these, these days, my whole impression has changed from drive out the competition and in, you know, worry about all that stuff to just have a good connection with your customers and do a great job and everything is OK
Alli: 07:29 honestly, uh, you know, keeping your customers happy is one thing. But the way in which you do that is so I think it’s so crucial, ms that stage, that day, asking the tough questions. You know, when we have someone that is unhappy for some reason, Yoga, we know that maybe our fabric isn’t for everyone. We hope it is because everyone sleeps. Maybe someone has, you know, I hate to say it really, really scratchy, dry feet and it doesn’t feel good to get their feet. Well, I’m probably not going to make that person happy, but I certainly want to ask why and I want to see is that an opportunity for product development? You know, the, the fun part for me is because I love hearing people’s stories. I could get on the phone with a customer and talk to them about their night sweats and you know, someone’s suffering from menopause and all the other issues that come along with it.
Alli: 08:23 And then, you know, an hour has gone past and I’m like, whoa. It was so great. You know, good luck with your new granddaughter. I’m so excited. Keep in touch. I wish I could have that connection with everyone there. Just there’s just not enough time in the day. It truly is my favorite part of the business because I love learning about our customers. And then if you know, hopefully if it is a successful event that they purchased cheap and it makes a difference in their sleeping pattern or their lives, that’s the best. That’s the icing on the cake. That’s the best part of the business in my opinion. So I’m glad. Hear that you’ve shifted your
Alan: 08:56 model as well. Have you seen the movie the intern right when you were talking about talking to the customer? I imagined her at the beginning talking to the customer. I’m going to give away the movie, but you know that she was talking to the customer and making things right when something went wrong and I was imagining you doing the same thing with the custom.
Alli: 09:21 I’m sure my team so in the weeds all the time on that it is important to focus on the higher, more strategic plays as a CEO. But yeah, still the passion that keeps me going is when you get to connect with one on one and I love Ann hathaway’s character sheet, you know, customer service and I’m an entrepreneur and I know oil alert when she gets here. Frustrated in when she’s like, no, I’m not great at everything because it would make her a superhuman and although we all want to be that one day, it takes a, I think special person to also admit when they it, I don’t know. Or when they have flaws and they need help from people.
Alan: 10:02 That’s a great point for entrepreneurs that you see entrepreneurs like Elon musk that just seem like they’re super human, but even Elan Musk, if you, if you dig a little bit, you’ll find interviews where he just talks about having nervous breakdowns and I think Tim Ferriss, I’m a big fan of Tim Ferriss podcast and talks. Yeah. You know, he’s, he goes into, you know, the fact that people really thought he was just this superhuman guy and turns out he’s had depression and he’s got all these. He has days where he just feels like he’s a complete loser. He’s not doing anything right. Um, it, it’s kind of comforting to know that everybody does that and it’s. But it’s the people that just sort of keep going and, and really keep their eyes on what they are trying to accomplish that actually accomplished it.
Alli: 10:52 Those two actually are. I’m glad to use that example, Ilan, I read their books anytime they write a book I am, or I guess they wrote an autobiography about, but I read that I just find so much inspiration from hearing about their wins and their drive and passionate, but also hearing about their shortcomings when they admitted. So it is pretty cool and they do teach me to stay the course, that’s for sure. And give some pointers on how to do that. So,
Alan: 11:20 so you mentioned that a little bit, that you had some entrepreneurial background when you were a kid and I, it’s most of the people that I’ve talked to in most of the entrepreneurs, I now have had some background like that. I cut grass and I did all kinds of different entrepreneurial things when I was a kid and there’s been like I think Ben Reno ever told me he didn’t do anything entrepreneurial when he was a kid.
Alli: 11:49 We have an entrepreneur,
Alan: 11:50 right? But he was kind of the exception to the rule because most people I’ve talked to you and said, Oh yeah, I was 12 years old and I started my first business and I was making some goofy product and sell it on the street, whatever, you know. But I’ve never heard anybody that made flame roasted to or
Alli: 12:12 go in the hall of fame thing ever created.
Alan: 12:21 I worked for frito-lay early in my career, so I made potato chips. So now we made Fritos, cheetos, Tostitos, Doritos, and uh, what else? Yeah, it was, it was an interesting experience.
Alli: 12:36 We knew each other because now you’re going to make me an introduction to the Frito lay people and I’m going to tell them my idea.
Alan: 12:41 Yeah, I’m sure they could figure out how to do that. It’s pretty fast. It was the automation in a place like that and that’s how it was a project engineer. But that’s,
Alli: 12:55 I would be mesmerized just to see they’re a quality control in terms of like how many chips go into the bag, how did that get field, how they move the bags and how crushing the chips. I mean, I think about this stuff, every time I pick up a bag of chips on the shelf, I’m like, how did it get to me? Change cans 20 different times in every one of these chips. Still intact.
Alan: 13:15 Maybe I won’t get into it on the podcast, but when we, when we turn off the recorder, I’m going to. I’m going to tell you some stories about Frito lay, the, the amazing stuff that they do, the automation and, and that was 30 years ago or 25 years ago. Long time ago. Perfect. Perfect. We’ll talk about that. But. So you’re A. I do you think that entrepreneurs have that drive for most entrepreneurs except for ben had that drive in a real early age and it’s just something that you’re born with? Because for me, you know, I found that I, I was just one of those guys that couldn’t work for other people. I didn’t like working for the people that I wanted to do everything my way and always felt like I could do anything. And I also had that same experience that you had where you said that you were listening to the radio and coming up with ideas of products that would make a singing to the radio better. I was always that I wanted to be an inventor from an early age and just always thought of ideas of things, you know, like I remember an easier car alarm. I thought of that when I was probably 15 and an easy way to install a car alarm. And so I guess that’s something that people are born with that drive.
Alli: 14:40 Yeah, I think so. And I think it actually, everything in this world starts with early intervention, right? Or early exposure. And this is a little bit of my psychologists coming out. But um, you know, if I would have grown up in, it’s a different setting, you know, I don’t know what my educational experience might have been a, I really love my educational experience growing up in a classroom of 11 kids in high school. I had 89 kids in college. I went to bellarmine 17 to one student to teacher ratio. So it was very small. But I wonder if I was, um, not necessarily cheated but not exposed to that business world. And so it sent me down another path and then the entrepreneurism always just lived within me and it wasn’t until I got to Google where I found other like-minded individuals where they were all expressing themselves as entrepreneurs.
Alli: 15:36 And I’m like, that’s where I’ve been my whole life. There’s a name for it, you know, it’s almost like a personality characteristic. Oh, I’m either an extrovert or an introvert. I’m a this or that. Um, I guess it was kind of like emerging entrepreneur, uh, when you find other people that are like-minded and then you finally fit in with this class. So I agree. I think you’re probably born with it, but it’s probably like exposure and finding others that, that continue to bring it out of you that really builds a true entrepreneur. And then, and then of course you get a bunch of entrepreneurs in a room together and you’re like, oh, you can do nothing wrong with the waste money and we’ll run through brick walls and we’ll start all these companies. OK. Kinda like a bunch of addicts sitting together and each other on at least I have a little group of, of E-commerce, of folks. We meet six of us, we meet once a month and we just kind of powwow and, you know, at the end of the meeting it’s always the best, most refreshing thing because you get cheered on or get told really fast. But that was a stupid idea. And then you move on from it. Um, you know, I think we’ll will had been a great way to foster that growth and development of my emerging entrepreneur, if you will.
Alan: 16:53 I read a book a long time ago called, I think it was called the Davinci gene where this guy had studied the, uh, I guess had isolated some gene and it and said that the reason why there is a lot of entrepreneurs in the United States was because the people that came over here with a big risk takers, um, and that some of that sort of has diluted. And that’s why they’re, you know, there’s a lot of people that aren’t entrepreneurs these days. But a lot of the early, if you got some of those genes from your, uh, relatives in the past that were the real super risk-takers, that, that probably is what makes you an entrepreneur.
Alli: 17:32 Wow. I love that. I’m writing this book down the Davinci.
Alan: 17:37 I think that’s what it was called. It’s been awhile since I read it.
Alli: 17:41 Sounds awesome. It makes sense.
Alan: 17:43 So one of the things that, that metro startup launch or sort of, you know, I started out with metro startup, you’re trying to be a little bit all things to all people and way to, you know, trying to do too many things, train entrepreneurs in and get investors that same time and it’s sort of, it’s morphed into more of a mission of trying to get a lot more angel investors involved and make it easier for entrepreneurs to raise capital. But one of the things that we’re doing, one of the things I’m trying to figure out is how do we screen companies. And um, I had, I, I’ll send this to you, but I wrote a little mini book based on studies of Angel Investing and how to, how to invest in startups and actually make money and one of the things they say is the most important thing to look for is an entrepreneur that has the grit to make it happen because it’s not necessarily the idea, it’s, it’s the entrepreneur, the founder that is never going to give up. That’s the one that makes it so in your experience, you came here and found a group of people that you could talk to. And clearly when you go to meetings on prayer meetings in town, which, you know, we’ve got a fantastic start up community. Lots of people that are involved, but there’s a boatload of people that are never going to do anything.
Alli: 19:05 Right.
Alan: 19:06 How do you figure out, and that’s I’m, I’m at, I want to get your opinion. Since you have, you’ve seen a lot of other people who have made it or not made and you’ve done it yourself. What do you think? How would you spot somebody if you were going to try to say, OK, that guy’s gonna continue or you know, she’s gonna, she’s gonna make it or she’s not going to make it. Is there
Alli: 19:34 to use the overused cliché you bet on the horse or you bet on the jockey, not the horse. OK. In my experience, every angel investor, and we’ve probably had, I’ve dealt with maybe eight to 10 angel investors in my fundraising experience. Every one of them wanted to know me personally before they even wanted to look at my financials now. That was actually a way that I like a strategy I use. Do you know if I wanted to get in bed with an investor as well? Because if they walked up to me and this happened at a couple of venture meeting, if they walked up to me and they said, hey, cool, I’m so and so, let me see your financials and then maybe we can talk this interested because they didn’t even know what the business was and those people are probably the people that are gonna come in.
Alli: 20:22 They’re going to give you a small amount of money, like $10,000 and they’re going to say, I want 25 percent of your day company and I also want a guaranteed board seat. And you as a young entrepreneur with very little experience. Yeah, somebody could be totally had I not had good counsel and other friends that say, hey, that’s a bad deal. I might have been at some of those challenges. So I think the. The idea that the investor, the good investor or the right investor, they’re going to ask questions of the person because they have to get behind the founder’s mission or the, the leader of the ship to mission before they’re behind anything financial aid. And if it just doesn’t make sense, the savvy investors are going to absolutely walk away and they’re going to say, you know, it just didn’t, just didn’t feel right.
Alli: 21:10 And that has happened to me once or twice before where someone didn’t understand soft, good manufacturing and they couldn’t for the life of them. Like understand. There is a lot of upfront capital involved in inventory management and building inventory and they, you know, their, their message to me was it just doesn’t feel right because I don’t understand the profit and if I maybe would’ve sent an extra time letting them get to know me, we probably could have been in a different situation. So I think, I think it is crucial that these angel investors get to know the, either the inventor, the founder, the co-founder or the person that’s going to be driving the ship. Now that being said, you, I don’t know what the percentage of successful exits are or what someone might consider success for us. My investors are pleased because I’m to going to UBC and our revenues are going to increase, which in turn means we can probably go out and fundraise better with higher revenues.
Alli: 22:16 Other people might say, I don’t consider this a success unless you’re at $10,000,000 in revenue a year. And I think that’s where I’m getting to know your investor and what they are looking for from you is really, really crucial. You know, when I first started meeting with people that might or entertaining the idea of being an angel investor or investing in wicked, I want to know how much do you want to hear from me? How involved do you want to be and do you, do you want a quarterly report or do you want me to call you and ask you, you know, certain things within the realm of operating and obviously I want to know how involved they want to be too involved and they’re going to limit my decision making. It might not be the best decision, but most of the time good angel investors, they know, hey, we gotta, we gotTa Trust Your judgment. Now that I know you and we have this basic relationship build, I trust your judgment. OK? Yeah. Out of your way. So you can start turning, turning the investment into revenue or ip or technology or whatever it is that you’re building.
Alan: 23:20 Yeah,
Alli: 23:22 I answer your question.
Alan: 23:25 There are perfect for entrepreneurs. I have had the experience of being in bed with a bad investor. It was, it was horrible. I mean, it was like the worst two years of my life with this person grilling me like a, it felt like I was working for the mafia and there really was bad.
Alli: 23:47 Yeah. And it just limits your ability to grow or make decisions. And that’s not good for anybody
Alan: 23:54 now. And it’s in, in exactly you there. I think this is something that entrepreneurs should write down that if you meet an ambassador in, the first thing that investors does is start asking you questions that they think sound like it makes them know what they’re talking about. Like, what’s your traction? What’s your, you know, uh, um, what’s your run rate? What’s your, you know, they start asking all these questions that are, that don’t have anything to do with you personally and your, your vision and your mission. You need to run away from that person because the, the probably the first thing they’re going to do, they’re just going to try to make themselves look smart and then talk themselves out of investing. And that’s what I’ve found in that case, in that situation. It’s, they, they love, they like to play the game. They love to try to make you squirm and turn the screws on you and they’re probably never going to invest.
Alli: 24:51 Wait, they’re going to make you work so hard and then they’re going to be like, no, that’s not for me. I hate to say this about Louisville because I do think we have a great crop of what I call the underground investors are the ones that pass in the fashion themselves as, oh, I’m a great angel investor. I, you want me to be on your team or do you want me to say are really probably not the ones you want to be surrounded.
Alan: 25:17 I’m picturing faces as you say that.
Alli: 25:20 Exactly. I mean, it’s really like dating. I mean, sure there. Uh, I think, I think that when from Chrysalis kind of had this idea when he was, we’ll move on. I want to match up entrepreneurs with investors that are going to benefit both parties. Right? And so there’s some mix of personality traits. Yeah. Capital needs and things like that. And it, it might have been, it might even exist. I think that there is a lot to be said for doing, like kind of like a dating situation, uh, the honeymoon period if your investors, you are going to be working with them and answering to them and sending them reports and they’re not always going to like what you do and you’re not always going to like what they do. You’ve got to figure out how you need to figure out conflict resolution real quick,
Alan: 26:06 you know, just from the start, it’s just you finding somebody that you click with and if you get a bad vibe. Here’s what I, where I was guilty of getting into that bad relationship with the investor was I had a bad vibe from this person, from the start, but he was the, you know, the company was going to ask $3,000,000. So I’m like, ah, I can put, I can deal with that, you know, for, for a bunch of money. And it wasn’t worth it. It really wasn’t worth. It was very stressful. You know, I wish, I wish I had just done it with less money. But um, you know, I think you’re the entrepreneur entrepreneurs neither look at it like dating and it needs to be know step one, do I feel this, this person feel comfortable, do I feel you, I get a bad vibe from this person and are they really listening to me and are they excited about my vision for what I want to do? And then you start moving forward and if you don’t have those kind of just like, you know, OK, this was a bad first date. I’m done
Alli: 27:14 optimistic when I say there’s always more money somewhere else, but like a really young, hungry entrepreneur. And I don’t mean young and like by age, chronological age, I mean like if this is like the beginning of your venture, you’re going to be hungry enough and wide enough to go and find the right fit and you will find the money you were finding that used to be resourceful. I look at Don Williamson, rpm brain and when he started rpm brain, he got so excited about that. And this was his second big startup and he got, he was young in his company and hungry. And he found the money, so I mean it’s just, he’s a great case and point there.
Alan: 27:58 There is always money, but so, you know, you never, when it’s, you know, again, it’s the dating analogy. When you meet with somebody, you can’t. If the, even if that person is telling you, oh, nobody else is going to invest in your idea, you know, I’m the best investor around and you need to stick with me. That’s probably the person you want to run from. And it’s, there’s always other opportunities out there. There’s always more money. There’s these days, there’s more money to, for entrepreneurs in there are the, I mean for best investing this more money for companies to get their hands on than there is opportunities for investors, you know. Um, they, they say they’re always talking about dry powder. There’s all this money out there. Um, you know, of course you gotta start with the angel investors really early on and, and there’s money, there’s, there is money out there. So
Alli: 28:51 the only point, I totally agree.
Alan: 28:53 So how did you step one, how did you get the company started and get funding to, to just get out of the gate?
Alli: 29:02 So I have, I always tell people I have done every fundraising, I’m probably humanly possible with the exception of no private equity money yet and no vc money yet. We did the old good step model so I was going to buy a house and I took my $10,000 down payment and decided to put it into buying rolls of fabric from Portland, Oregon when I finally, when I was like, well this is gonna run out really fast because the fabric by the yard and I just had no idea going in how much yardage I was going to need and how many prototypes, et cetera. So you run out of it cash pretty. Um, so then I did the uh, friends and family, so you know, probably raised about 10, another 10 there. And I’m at that point I was like, well, you know, I have already done th have already done customer discovery.
Alli: 29:57 I’ve found some sowers on craigslist. I was like, I know I can at least get some revenue, start building some revenue, and um, I was out there selling, you know, doing my pitch antebellum and event and ended up lucking into a conversation with a woman who had gone into early menopause, you know, bless her heart because she had breast cancer and had to have a hysterectomy. And she said, you know, if very tearfully, this is a really sad, sad conversation, but she was like, I really wish I would’ve had your product when I was going through this. Yeah. My rehabilitation could’ve been so much different. It could have been better. It could have been faster. I would have been more comfortable. And I was like, this is why I’m doing it. So I was just getting pumped up from her at the same time, her husband walked over and he was like, I don’t know what you’re selling, but I’m buying it.
Alli: 30:45 Are you taking on events? Do you know what your situation? And I was such a novice. I was very fortunate that, you know, we had to bellarmine community that supported us and I did my research on him. He did his research on me and after about six years, Monday we decided that he would make an investment in the company and he said, but, but Allie, the no though way that this is going to work is you can’t be working in your company when we’re working on your company because I was still rolling the fabric in my one bedroom apartment in St Matthews. I was cutting it myself. I had another full time job as a therapist and as a personal trainer for kids with autism and I was just working, working, working, and he’s like, this company is never going to grow if you’re still cutting this average at 4:00 in the morning and driving it to Okalona to yourself.
Alli: 31:29 He’s like, you know, you’re, you know, you need to be blogging. You need to be talking about this, this new term called search engine it, you need to be doing that. I’m like, Whoa, OK. And, and, um, so took it down to North Carolina after about six weeks of finding custom sewing in the United States. It was already on the decline, but it, we were able to find someplace. And um, at that point we kind of regrew very fast and outgrew that. A fulfillment, sewing and fulfillment center. It really quickly. I’ve never been more thankful in my life. This particular investor looked at me and he’s like, this thing’s going to go. It’s not going to go with me helping you. I don’t know anything about retail. I don’t know anything about e-commerce. I built you a good financial model. We know that there’s margin here. Let’s see if you can’t find somebody else to help you because I just don’t know how.
Alli: 32:23 I don’t know what else to do next. This is like totally foreign to me. I’m a mortgage that I. OK. So it was then that I enrolled in the Kauffman fast-track, which is now married to post launch program. And uh, in that group, I, I sought counsel from folks at. It helped me arrange a buyout of that investor, started an actual angel investment round. Um, did you know, taught me how to do a pitch and presentation, helped me put together my financial packet, things like that. And then I really went out and started raising and then since then I’ve had two angel rounds, um, and actually we just closed our third angel round and uh, I’ve been very fortunate because my, my old rule, some of you need to know who you’re getting in bed with has always played in and I’ve been excited ordinarily fortunate to have good investment who trusts me and who are very communicative and if they need [inaudible] out, if I need to preserve equity, have always been willing to work with me. So, um, so I have done everything in terms of angel investing, investing group strapping and friends and family. You could possibly imagine
Alan: 33:35 looking back on it, you would have done differently in terms of the capital raising.
Alli: 33:44 Yes, I would, I would have gone back and raise more money because they’ll, if they were gonna give me a, you know, [inaudible] and a line of credit for 20, I would have said I want 50 cash or we need 50 cash and I’ll go get a line of credit from a bank. There are just things that in, in my business in particular, and I know everybody says cash is king, but when you’re buying inventory, like we are my buying cycles or you know, sometimes 60 to 90 days and I have to every single penny of it up until the time [inaudible] bye it, you know, a hundred and $50 back on it. So I, uh, I should have raised more money in those times. Probably if, if we had to, investors, I should have maybe said, well find a third or if for were signed on, I should’ve maybe asked if we could do more. Um, inventory has always cost more than I expected and that’s a good problem to have, is a really good problem to have. But, um, it has made me feel really nervous or uncomfortable in certain instances when we’ve got big inventory buys or artists, big sales season is happening at Christmas time and I look at this cashflow and I’m like, oh gosh, if we only would have raised an extra hundred k in that last round, that would’ve been great. That’s what I think about when. Yeah,
Alan: 35:09 these days is to raise about three times more than I think I’m going to need because I’ve done it a few times. And it’s always, you don’t always need more than you think you’re going to, but it’s always a lot more comfortable to have that there then then, uh, then. And if you don’t. And the other thing is when you set up your cap table early on, it’s a lot better to set up your cap table with three times the amount of investors coming in that you think you may need rather than set up a cap table where you’re going to get diluted a whole lot more if you have to add those investors.
Alli: 35:49 Absolutely. That’s a great rule of thumb. I’m going to practice that from now on,
Alan: 35:53 why
Alli: 35:57 it’s not. It’s not like I’m taking my money so I can get a pay increase. I didn’t myself for five years. I want an extra cushion so that I’m not at the finish line and going, oh my God, we need to go get a loan and it needs to happen in the next 15 days and a bank is never going to move that fast. Your back’s up against the wall and you make some bad deals, so if you can make it make sense in your use of funds and your cap table, then it’s always a good decision.
Alan: 36:30 I don’t know what you’ve done with banks, but I don’t even think about banks early on with the company anymore because there’s capital out there. If you have an idea that you’re passionate about and it’s a cool, cool enough vision that other people can understand it, there’s always investors out there that would be willing to jump onboard and it’s a matter of believing that you can do. You can get those investors and to me it’s not even worth. You know, why bother going to the bank because it’s often younger, you know, you don’t have any collateral, you’re, you’re not going to get a bank loan.
Alli: 37:09 And everybody told me that I was 19 when I applied for like our first, like one and two loans, a customer for so long. And then everyone’s like, Allie, what do you all? And I’m like, well, I own my car. And they’re like, yeah, that’s not gonna be good for the one you want
Alan: 37:28 chuck. And, and, uh, uh, Tommy and the guys at PNC it, all, all of my friends had banking out there. So
Alli: 37:35 yeah, I know. Yes. We love you. All of our banking friends when we’re really, really well off. But that’s the problem, right you, I even, I even had to Arpio from [inaudible] and um, I didn’t have enough inventory as leverage at the time and I’m like, look, I’ve got a Po in my hand and it’s still, it still didn’t make financial sense for the bank to give me alone on it because I didn’t have enough inventory or leverage. I’ve, you know, I, I’m very newly married so I don’t have a ton of equity in my home and again, I still own only your car and so it just was a big risk for them and I don’t fault them for that, but there is a point where you have to say, OK, well somebody’s got to bite. Right? And that’s where angel investors are a fantastic avenue for us.
Alan: 38:26 Try to figure out how to make that process easier. That is a big part of what I’m trying to launch and maybe I need to get involved with launch in some of the organizations that are, that are being people up and preparing them. But I, it’s, I’d like to make it easier for an entrepreneur when they get started to realize, you know, I don’t need to waste time doing these sayings. I need to just create a cap table, create a business plan. Don’t look at the business plan is something that has to be perfect. It’s a sales, it’s just a sales pitch for entrepreneurs. You know, in a general plan for my business. I mean a sales pitch for investors and a general plan from that business and, and then just psych yourself up into really believing in what you’re doing and go out there and excited to tell people what you’re doing and then you get the money and that’s what she like. You and John and Ben, um, that have that excitement about you and your business and belief in your business. That’s when, you know, people, people are going to invest in that. And that’s, that’s what works is the excitement and the vision.
Alli: 39:33 Like, you know, we were, we were um, doing the venture competition the other day. There are plenty of people have fantastic ideas and they, and they maybe are the founder, co-founder for one to be the CEO, but they might not have the great sales pitch. That is totally fine to hire someone to pitch your company for you. If you’re an inventor and you speak science, speak all day long, it might be a little bit more difficult to get people hyped up about it. I think it is totally fine to hire a pitch man and have a co-founder or like someone that can help you be the best you you can in your business and I think that’s something that we don’t tell people often enough. They just think, oh well I just have to do it myself and Oh, I don’t like public speaking and I’m really uncomfortable with numbers and we throw them into the, the lion’s den and then they come out and you’re like, well, it could have been really good, but if you were, if you were smart to get someone else that’s also excited about the company and they can help you,
Alan: 40:38 that can really give a good speech. You.
Alli: 40:42 Yeah. Oh, I want to enroll in toastmasters. I’m like Boo Improv for businesses.
Alan: 40:46 Great. So that’s where I met John Initially, toastmasters group that we both went to and now we’re working on being better speakers and it was really good experience and I would highly recommend it.
Alli: 41:04 Alan, what’s your referral code for toastmasters? You get a discount.
Alan: 41:10 It’s like 40 bucks a year. It’s, it’s really, uh, it’s such a worthwhile expenditure, especially for an entrepreneur if unit one, learn how to be, you know, going to a one time class I think is, you know, can help, but if you really want to be a smooth speaker like John Williamson, you know, you go to toastmasters regularly and you can really learn from people that know what they’re doing. So yeah, I’ve talked to about that. So on several podcasts now, so hopefully they’re, they’re getting some, some people showing up because of it. So I don’t want to think of a whole day. So let’s kind of talk. We’ve, we sort of hit how you got started and groveling for money and all that can just talk a little bit about the cool stuff that’s going on in, in. I’m with QTC and your trip to China and all that.
Alli: 42:04 So, um, after I finish my day, I, uh, I got a wild hair and I said this isn’t going to grow, um, nationally or internationally if I don’t think are bigger than the city that I’m in. Um, I found out about this pitch competition, a silicone valley, Palo Alto and I applied and I went out and I took my little charm with me and I went and pitched my butt off basically. And I found out that I had one thought on the home shopping network, um, uh, with the American dreams series. So, um, it was kind of like there’s an onboarding process, like a standard onboarding process. This was like the onboarding process where they show you that this side stage entrance. They’re like, oh, but you don’t have it. Yeah, through all the regular hoops, you just hang with us and we’ll make it happen, which I should have, you know, maybe had some questions about early on, but everyone was kind of silent and I was unsure of what was going on.
Alli: 43:08 Communication with the people I work with. They would be working with me one week and then next week you find out they’re fired. I’m like, what is going on? So basically I called and come to find out the air date that we had been given was, um, it was actually last May and then they moved in another two weeks and, and so I’m like, there’s gotta be something going on. What am I missing? Come to find out they, I called and announced that [inaudible] son was being bought by [inaudible] and that my deal was probably not going to go through. Um, so that’s just TV world is what they told me. Best of luck. And I’m like, OK, well I just built all this inventory. I know our product is great. I know it is perfect for the customer that is watching either [inaudible] or [inaudible]. Uh, so with some quick wit and um, some, some connections.
Alli: 43:59 I got hooked up with another lady that represented some qtc products and I said, here’s my situation. And she’s like, well, unfortunately, I know one of the buyers in, um, in home textiles, they all get switched around, you know, maybe she was, she was previously jewelry and handbags. Now she’s a home textiles, let’s give her a call. So we gave her a call. She was like, I love it, when can you fly out? I flew out like I think like three days later to Philadelphia did my pitch and thankfully for me they loved it and said, I think it’s a good product. We negotiated pricing and it has been about a year. They sent me my po, but it’s been about a year and we will be going on the air on June 20th during their whitetail week in front of 96,000,000 homes.
Alan: 44:48 Yeah.
Alli: 44:50 So then a crazy learning experience. Uh, you know, this, this quote unquote child psychologists turned manufacturing gurus. I’ve had to spend more time with it, a tape measure and counting ditches and doing tests. And I mean, I think the greatest thing about [inaudible] is that they look out for their target customer so much though that it makes my life really hard because I have submitted so many tests to make sure that my fabric is hypoallergenic, which it is, and to make sure that it’s easy to wash and care for it because they want to make sure they take care of their customer. And again, it goes back to our earlier point of they’re asking their customer exactly what they want so they can provide the best products and therefore they vet us like crazy before they even put it on the air. So it’s, it’s been a, a, an exciting and an awesome learning experience. I just can’t wait to go back to what I’m really good at and that’s connecting with customers. So I’m really excited about June because it’s going to be, it’s fun, but it just makes me feel good knowing that our product is going to help so many other people sleep better that I might not have otherwise reached if I just stayed to this, you know, one e-commerce channel. So I’m really pumped down.
Alan: 46:08 The last thing you said there I think is a good thing for people to hear that you’re excited. The bottom line is you’re excited about helping people and it sounds kind of cliché, but it’s, it’s, it’s, it’s really is true that if you have that intention behind your business that you know, you’re, it’s not all about you putting a bunch of money in your pocket, you know, which, which would be nice if you make a lot of money in business, but if you really want to be good at a business, it needs to kind of start from something that’s going to help people and you’re excited about it and you enjoy doing it and working with people and then the money’s gonna show up later. You know, but if you start out going, I’m gonna, make a, I’m going to be a billionaire and I’m going to start this company. Probably not going to make it.
Alli: 46:58 You’re probably in the wrong.
Alan: 47:01 In the same boat with him yesterday. That shows up asking you for your attraction reports. You know,
Alli: 47:08 I always laugh. Everyone’s like, oh, you must be doing well. And I’m like, if you only knew that I will get paid on every part ever do the deal that I’m hoping to do, I will make money and I will repayed last. And everyone’s like, why didn’t do it? Because I love it, love it. It’s just, it’s drives me every day.
Alan: 47:30 I’ve said this a couple times in the podcast too that I’ve started, uh, you know, I had started a company years ago and sold it and was being paid very well to work for the company that purchased my company and didn’t have to work very hard and you know, and, and I was miserable, had like more money than ever and um, you know, it was being paid very well and really didn’t have to work that hard and I couldn’t stand it. And since in a, you know, and then I got started with blue 22 and started, you know, have not made any money for awhile and you know, it’s just a complete one 80 as far as income goes. And then. But I love it. It’s like I can’t not be an entrepreneur. I think once you bug it’s, it’s like getting addicted to adrenaline sport or something. It’s really hard to, you know, once you get a taste of that and you enjoy it, it’s, it’s really hard to go back.
Alli: 48:35 I love that. I didn’t know that about your, your story, Allen. We need to do a reverse podcast interview where I interviewed you.
Alan: 48:43 That’d be fun. Let’s do it. Let’s. Yeah, let’s, let’s start. Let’s schedule that. That’d be kind of fun.
Alli: 48:50 Well, you might have, you might have to say that you have so or something like that because I always want to do this on Saturday night. Live a late night talk show compassion. Confessions of a wicked sleeper. I like something like that. It’s like buying music in the beginning and then all of a sudden.
Alan: 49:08 Yeah.
Alli: 49:08 Hello. I’m Allen and I have no just a little bit if you don’t have him.
Alan: 49:19 So is there anything else you want to throw out there about in our start-up community and while while we’re on here and I’m going to cut it off and not take up your whole morning.
Alli: 49:34 Um, folks like you, Alan and the girls at Enterprise Corp and guides enterprise, you know, venture connectors. I think that we need to be so thankful and I know our entrepreneurs are very, very grateful, but like folks like you that are really trying to make a difference in this community, I just hope you feel appreciated every day because, um, you guys do a lot of this stuff and try and help and better natural, real community and it’s oftentimes for no pay and sometimes you get a shout out here or there, but I just, I just want to thank you and everybody else like you in the community that has helped pave the way for entrepreneurs and helps make it a little bit easier to raise money or to develop a business plan. So thank you ellen.
Alan: 50:21 Uh, you know, that’s another with metro startup launch. So that’s just been out of my pocket much just trying to, but it’s sub my totally believe is needed in our area, in, in my, my hope is five years from now it will be a lot easier for an entrepreneur to you raise money or maybe even they’re just first 25,000 or their first hundred thousand really quickly and connect with that right angel investor and maybe do some crowdfunding and just um, you know, get it, get it done a lot faster and accelerate the whole community. It’s, I just, I believe that can be done and it’s a, it’s a long, hard slog but it’s, you know, it’s making progress slowly but surely. But I appreciate hearing that. So. All right, well I’ll stop, stop recording and then I’ll, I’ll see if you want to hang on for a second. I’m gonna I’ll tell you a quick frito-lay story and then I’ve got another call coming up, but I really appreciate you being on. Has totally kidding about to taking us forever to get to get on the call and now you got so much going on and I’m, I’m, I’m really. T I think our, our start-up community is really lucky to have somebody like you doing something interesting and, and, you know, putting more passion behind our start-up community.
Alan: 51:43 All right. Thanks Alli.
