By coinnews 
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How to y’all. I’m Elizabeth Core. Welcome to the Big Idea from Yahoo Finance, the show that navigates the world of small business and entrepreneurship. All businesses start with one light bulb moment, and each week, I’m going to take you on a journey with America’s entrepreneurs. We’re going to get between theSpreadsheets with these operators to flow from their smallest failures to their biggest successes. As the co-founder of the small business funding platform, Hello Wallace, it has always been my mission to ensure that entrepreneurs have the tools they need to live the American dream. So let’s cowboy up.All right, before we get into things, I feel it’s important to introduce myself. I am a cowgirl turned humanitarian turned entrepreneur. Throughout my journey, I’ve been surrounded by small businesses and have watched how critical the companies on Main Street are to every facet of life. I first fell in love with small business farmers and ranchers where I grew up in Texas. I then was the first woman to graduate from college in my family, which afforded me the opportunity to join the Peace Corps.And then I got to have a full career as a humanitarian for over a decade supporting the United Nations. Globally, I saw how microbusinesses in every country I served were critical to the health and economic security of emerging societies. I then took that big leap to the private sector, moved to California and started working for the great Michael Dell at Dell Technologies, ensuring that all small businesses had the hardware they needed to succeed. Now.It was there that I was super inspired to start Hello Alice, a funding platform for small business owners. Now, years later, Hello Alice serves 1.5 million entrepreneurs, and I’m so inspired by them every single day. So me personally, I’m a mom of two tweens. I love them so much, um, almost as much as I love to fish. I call both Texas and California home and I am still actually a cowgirl at heart.Now, let’s be honest, I am not a finance expert. I did not get a business degree from Harvard. I actually studied cattle at Texas A&M.But I’ve had my share of business mistakes, maybe just like you. So you can be damn sure that I am obsessed with small business. I have learned so much in my own business, but from the 1.5 million we’ve supported over the decade. Each week, I will spit out a business statistic and ensure that there is a human experience based on ground truth behind them.I think small business is the fabric of America with entrepreneurs sowing innovation through every seam of our country. So here on the Big Idea, we’re going to tell small business owner stories. We’re going to learn from their mistakes and celebrate their triumphs. So let’s get it done.Each week on the Big Idea, I’m going to answer a question for small business owners and entrepreneurs to help them on their journey. For my first episode, let’s kick it off from the very beginning. Today’s big idea question is, how do I get started? Today’s focus is all of you, the small business industry.It is only fitting that my first guest be the number one small business expert in the country and probably globally, My Hello Oz co-founder Carolyn Rods. Carolyn is a serial entrepreneur from Bolivia in South America and grew up in Texas, where she successfully shifted from Aquarian investment banking to launching and exiting multiple companies. Entrepreneurship is in her DNA as her grandmother was an entrepreneur with the largest cookie and bread factory in Bolivia.There is no one better to answer this big idea question. How do I start my business? Welcome Hello Ella co-founder Carolyn Rods.Can you believe we’re sitting here together?
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How fun is it?
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I think we’ve done 5000 interviews together, but I’ve never gotten to interview you.
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I know. I hope you’re a good interviewer.
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Well, and you’re the, the, I think, premier expert.On small business, not just because you’re my co-founder, but you’re eat up with it. You read like 7 books a week, I swear to God on small business. It’s,
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it’s a fun topic. What can
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I say?Super
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interesting.
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So our big idea question today, and I think you’re the best person to answer it, is, is how do I even start with a small business. So how did you start Hello Wallace? What was your big idea?
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Listen, there are 33.2 million small businesses in this country. They’re creating 2/3 of net new jobs. They’re99% of all the businesses in our in our country and so it’s a massive market, but it’s also so hard to run a business to connect to resources. And that was always my that
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why we have gray gray hairs now that we have to dye. He
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was like, um.But that that was really the, the launch of the idea of Hello Os is how do we help more effectively all of these businesses start and grow and build sustainable companies? I mean,
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hellowas your idea. Like, what was the big idea? What just made you snap into it?
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You know, it started little by little. I’ve had 3 companies prior to Hello Alice, and the first one failed, the second one succeeded, and I realized the same entrepreneur can have really different experiences based on access to resources. And so the idea that if we could bring these resources effectively and efficiently to companies, what a difference that would make. It’s a difference between, you know, success and failure. We know, you know.25% of small businesses fail in their first year, 48% after 5 years, over 65% of small businesses after 10 years. Imagine the difference for our economy, for our communities, for the lives of these business owners, if we can help success.
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Well, let’s just get real honest though. I mean, you and I when we started, almost 10 years ago, we each had two infants, right? This is the reality of the situation. I kept a full-time job for a while.You were quote unemployed, and I mean, people really shouldn’t do what we did, max out credit cards. We moved in together. That was fun. Yeah,
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we took a great risk, but it was a calculated risk at the end of the day, right? We, we had these signs along the way that that there was a need, there was an opportunity. Yes, we moved in together.We tightened up, we reduced our expenses as much as we could, shared a nanny together. You’re the best babysitter of all time. Yes, I have some great, great memories of those early days. Um, but there are lots of paths to starting a company. Backing up
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just a minute. So on our show, we love to talk through the dirty unicorns. So it is your biggest business failure. And when I first met you, you had this TED Talk that was trending on a failure, and I was so taken by it.Um, so as a serial entrepreneur, I, I’m, I’m joining you in your third company, but tell me about your, your dirty unicorn.
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It was the failure of my first company, and I put everything into that business. It was in the retail space and cash flow was a major issue. I actually grew that company quite quickly and that was really the demise of that business was that there wasn’t enough cash to support the excess inventory that was needed to support the growth, and I think that was probably the greatest lesson that I learned in entrepreneurship wasYou have to manage your cash flow. You have to be thinking 6 months, 12 months ahead all the time, and you have to build those healthy business fundamentals or even with growth and even when things are sort of when you have the wind in your sails, things can fall apart. And it’s part of the reason that we’re so focused on business health at Hello Alice is because if you have those fundamentals in place, if you have good financial performance, if you have good financial management, if you have solid credit history.You’re able to access capital, you’re able to have, you know, resources behind you to support that growth.
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You told me once that you learned more from that first business failing than your successful exit from your second business. But hindsight, right? I mean, in that moment, you know, when people are listening right now, maybe their business is failing. I mean, we had hundreds of thousands of businesses had to close during COVID.How do you emotionally get through as an entrepreneur, a tough moment likethat?
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Oh my gosh, it was the hardest point of my life. I think you pour everything into this dream and this vision.And to have to shut those doors and to have to close that down, it’s one I to say it’s a huge blow to your, your ego, but it’s a very public blow, right? You’re in a position here I was, you know, with friends growing their careers and getting promotions and doing all of these things, and I was at rock bottom trying to figure out how am I going to pay my mortgage, how am I going to shut these things down? What, where do I go from here? What do I, you know, what’s next? Um.And it’s a difficult call to make because I think you always think there’s an opportunity to turn around and an opportunity to turn it around. At some point you just have to say this isn’t working. And you know, I learned in that experience. I always call it my official NBA because I spent as much money as as an Ivy League NBA. I think I learned as much as I would have had I gone to get my MBA.But I learned that the power of a network is really important and critical. I learned that it is OK. Failure is very common and there is a future beyond the failure if you take those lessons and learn them and apply them. And I think the idea, frankly for Hello Alice would have never happened were it not for that failure. You know,
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it’sdawning on me that you were so damn frugal when we started.
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Yeah, I think for me it was really important to grow that company, you know.Under the budget of that business, and I think it’s, you know, we talk a lot about separating business expenses and personal expenses and to build a business that is sustainable on its own meant in those early days, but it helped us, I think, focus on the fundamentals of the business and grow that company really organically, you know, bootstrap and look for grants and find all these things that we could do to make it work.
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All right, hold that thought. We have to take a quick break and we’ll be right back.Welcome back to The Big Idea. I’m Elizabeth Gore and here with Hella Walla’s co-founder, Carolyn Rod. So, you know, today we’re talking about just getting started and you know, our flow was kind of interesting because we did the credit card route, then we bootstrapped, then we did grants, then we moved into venture capital. I mean, can you, can you break that down for folks that are looking at those options?
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Yeah, I always tell people I think the longer you can wait to raise capital, the better. You want to have a lot of points of traction and a lot of proof.
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Is that both loans and equity? Is that,
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I wouldsay the less risk you can take and the less, you know.Investment in your business, you can give up in the early days the better because there’s more to distribute later on when you need it. You also have a much more clarity around where that capital needs to go. I think one of the, you know, most fortuitous things was it was really hard to raise capital in the early days. And so we had to put it off by necessity, not because you remember our
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no spreadsheet. We had 280 no.
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Oh my gosh, you remember
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that.
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But I think back to how we would have spent that capital that had been put on our hands in those days versus how we would spend it today. It’s it’s very different. Um, so I think bootstrapping as long as you can until you know there’s there’s proof of a market, you have enough signals that you’re on the right path is really important. When you have a little bit more validation behind that idea.Look at loans, look at grants. We applied for so many grants. Do you remember sitting there and going through those grant applications that were sometimes 40 pages long. The reason we made our grant applications so simple and efficient because we went through so many hard and complicated. Well,
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and reallyquickly we just had such a prideful milestone. We hit 50 million we’ve done in small business grants, which I mean, I don’t think we ever imagined.I mean, our first grant was $50,000 from the SBA
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and we were over the moon. that was a game changer for our business,000 dollars to deploy.
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maybe break down grants just for a second because there’s so many different types and it’s a very underutilized small businessresource.
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Yeah, you know, I see grants as this launch pad into other forms of capital, whether that’s loans, whether that’s, you know, equity investments.Grants help you get over those initial hurdles. When we look particularly at a lot of our underserved entrepreneurial communities, we’re starting with half the capital of, of, you know, others.You think many entrepreneurs are serving $5000 in their pocket or $10,000 in their pocket to deploy towards a company. That means delaying hiring. That means not being able to, you know, access, you know, conferences and events and networking opportunities or to get in front of those clients that cost money to fly over to and visit.It’s really difficult. And so a grant of even $10,000 our data shows, makes a massive difference in the success rates of entrepreneurs. So to be able to deploy, when we say $50 million you think about how many entrepreneurs that can impact in the trajectory. When we talked about those fail rates, it can literally double the success rates of entrepreneurs. And
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there’s private grants from philanthropy, there’s government grants, there’s city and state.
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Yeah, so we work a lot with corporations that are deploying grant funding, but there are grants at the local, you know.City level, there are grants at the federal level, there are industry grants that are being deployed. There are ecosystem builder grants or pitch competitions. There are lots of different paths, and that’s one of the things that we really focus on is how do we make sure every entrepreneur is aware of what’s out there. It’s not everyone’s going to get a yes, but even the process of applying can help entrepreneurs start to hone in on where is their attraction, where isThe interest, who’s invested in their success so that they can start to find those advocates behind their business.
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And then Ithink, you know, what we did is we waited as long as we could and then we did go the route of venture capital. We were growing really fast. I don’t think we ever expected that. And as a technology company, it’s very expensive. So, you know, and I remember you and I were like, what’s a term sheet? We had no idea. I mean, we had no idea. AndSo, you know, I think going the venture route for us, then that’s when you need to raise tens of millions of dollars, right? I mean, that’s a totally, that’s on the path, but a different path. Will you break that down in just a second? Yeah,
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I think thisis something that’s really important for those running a business to understand is that look, everyone can benefit from additional capital, but understanding the cost of that capital and so you have to be able to generate a return is ultimately10x what you’re raising in order for it to make sense, right? It’s additional capital of your company? Of course it will. But if you’re going to spend it and be essentially on the same growth path that you would have without that capital, it doesn’t make sense. You’re giving up, you know, with most rounds of capital, you’re giving up 25% of your company, roughly, and that’s a lot of your future business interests that you’re that you’re deploying. So when you start to calculate what that actually means year after year, it’s also a loss of control.You, you’re answering and you’re getting married at that point to investors, and I think
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that’s you and I have had amazing investors and we’ve had terrible investors, but you’re with them for life, right? So it’s it’s a big decision to do that route. Yeah,
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and Ithink what helped us tremendously was flipping the script a bit and realized we’re bringing an incredible opportunity to these investors. We’re actually allowing them to have a piece of our business and oftentimes entrepreneurs go into these meetings. I think about our early ones, how intimidating it was toYou know, walk up and down Sandhill Road and walking into those offices of venture capitalists, we had
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no idea what we were doing.
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And Ithink about how we approach investors today and realizing that it’s a win-win situation, right? If we’re bringing something of value to them, they’re extracting value out of our business. It’s a great opportunity for them also a great opportunity for us. Yeah.
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All right, let’s get between the spreadsheets for a second here. I, um, I never thought we’d hit 1.5 million small businesses on the platform. It’s insane.And I wanted to talk a minute about, we, a lot of our small business owners on the Big Idea ask about their first hire, or should they get a business partner, and it’s a hard decision, right? And you and I’ve been together through thick and thin for a decade, and we’re super different. I mean, you’re a night owl, I’m an early bird, you’retech
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pink hair. I have brown. It’s very different.
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You’re, you’re an amazing Latina who grew up in Bolivia. I’m the South Texas cowgirl, right? So what, you know, but I think it’s worked all these years because we have, we shared values. Do you remember that time, by the way, we had, we had 62 values and we stacked them exactly the same. It was like a crazy they’re like,
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pick out your top 3 cards and our top three match in the
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bottom three, the,
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the bottom 3.
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But anyways, so I think one of the reasons this has worked is if we consider each other our first hire, even though we didn’t pay each other for a long time, um.You know, what is it that someone should look for in that first hire no matter what their business is? Yeah,
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Iwill say, I mean, I think you changed all of the rules for me in terms of what I would, how I would have answered this question 10 years ago and in a good way. I mean, I think we look, we had certainly differences in our skill sets, but there was a lot of overlap in our skill sets in terms of where both of us were strong, and I think typically, you know, you look for these extremes and skill sets. I would say today I think exactly what you said is that alignment and value.We’ve, we’ve never wavered from the core mission and purpose of our company. Every time we make hard decisions, and there are a lot of hard decisions, some that are not necessarily the best business decisions, but the best for the long term value of the business and for our families, by the way, and for our families. I mean, I think we’ve always made decisions that are aligned with with our values. We’ve hired a team that’s aligned around those values, and I think that’s probably the most critical piece of the puzzle. I mean, we’ve certainly been through through thick and thin.And it is like a marriage. I mean, you’re together and it’s, it’s something that you have to make sure it’s there’s a risk to it, certainly, but.I think when you know what’s right, you know what’s right, and we, you know, kind of crawled, walked, and ran in our business relationship, but at the end of the day, I think it boils down to
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I think we moved in together that was running. I’m just going to be real honest.
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That’s
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running. You mentioned the values thing and I’ll just, I’ll just say this publicly. Most people don’t know it, but our internal motto at our company is everyone takes out the trash, and we’ve kept it for 10 years. We said it in the early days because literally you and I had to say.But, um, you know, why, why is that a central value that’s been really important to you all theseyears?
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I think the willingness to roll up your sleeves and dig into something is so important and like you said, I mean, it was originally literally we had to take out the trash in our in our office space and make sure the place was clean and functioning.But, but it’s remained in the sense of everybody jumps in and it’s part of our values and somebody has to, you know, jump out of the office because, you know, something happened in their personal lives or they’re ill or they needed to get away. We have a team that jumps in and, and, you know, picks up the pieces behind them so that there’s never a question asked and it’s the favor is returned every time, you know, one of us needs to do that or others on the team.It’s real teamwork at the end of the day. We’re all working towards the same mission. We’re working towards the same goals, and, and that means, you know, working extra hours sometimes to pick up the slack for someone else or jumping in to clean up an emergency that happened in another, you know, part of the team, um.It’s, it’s tough running a company. It’s unexpected and you never know what’s going to happen around the corner. But if you’re lying in your mission, you have a team that’s willing to take out the trash. I think anything is possible.
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I want to go back to our big idea question today. Um, you are, you are eat up with small business owners. One of the things I love watching is every time we go into a coffee shop, anywhere we go, you’re like, so how do you run your business and da da da, all these years later, you love it.And so what is your advice? Someone’s sitting here, they’re in their corporate job or they’ve been a mom or they are a US veteran and they’re coming home, they’re like, I want to start this business. I mean, what give me the three steps of just how do I start?
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I would say the first is get really clear on your why. Why are you, why are you providing the solution that you’re providing and why does it matter? Why do your customers actually care that that’s out in the world?2 is to run that value proposition across as many people as you can and ask people to poke holes in that. Go to prospective investors, even if they’re not going to invest today, just talk to them. Go to, you know, your prospects and customers and talk to them. Ask them to poke holes, ask them what’s terrible about it. Go to your friends and family. They’re going to be really honest with you.Take all that information. A lot of it’s going to be terrible advice. A lot of it’s going to be great advice, and it’s your job to extract the gems out of that and say, OK, here’s how I’m going to pivot and adjust this this plan. And then 3 is dig into the financials, understand how are you going to capitalize this business, know that it will take 10 times longer than you think it’s going to take. Everything in that
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10 times more money.
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be much more expensive and much slower than you think. So provide yourself a really healthy buffer and draw a line in the sand. These are the milestones I need to hit to continue forward with this business so that it’s easy to make that jump, that when it’s, when it’s not working, you’re really clear with yourself that it’s not working, it’s time to move on or make a significant pivot, or that’s a green light to move forward.
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Carolyn Rods’s famous quote, I’ll do this in 2 minutes. I’ll get it done in 2 minutes. I’ll get it done in
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2 minutes. The team wanted to make me a shirt that said 2 minutes.
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I can’t believe we’re out of time we can talk about this forever, but I deeply love you. And the love you share for small business owners is, I think why this company is so successful.And so I think you’re the best to share all these ideas with all of us, and thank you for being on the Big Idea.
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Thank you. I’ll say I come up with some crazy ideas and you have this amazing ability to bring them to life. So I don’t think it would happen without a without a great co-founder. Well, let’s do this. All right.
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At the end of each episode, I like to give a shout out to a small business doing amazing work. Today, we’re giving love to Carolyn Rods’s favorite small business in Houston, Texas, Silvana’s Catering.It is run by Silvana Torres, who is from Uruguay and has skyrocketed from cooking in her mother’s kitchen as a child to catering an array of businesses and events. Oh, I love her cooking. So find her at Silvanacatering.com. Thank you, Carolyn, for coming on the show and thanks to all of you for joining us on our first episode. I hope you learned a lot.This has been the big idea from Yahoo Finance. Watch us every week on your favorite streaming service and find videos at yahoofinance.com and listen wherever you get your podcasts. I’m Elizabeth Gore, and as my grandma always said, hold your head up high and give them hell. See you next time.
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This content was not intended to be financial advice and should not be used as a substitute for professional financial services.