Joe Grover: [0:00] So tell me about when it became clear that you may not be able to pull out of this.

Isaac Childs: [0:04] Even till the day we closed the website down. I mean, I actually remember writing the email and the social media that we were going to put on the next morning. That night, at like three in the morning, I was still looking for ways to get through it.

Joe Grover: [00:21] You’re listening to The Real F Word, a podcast that dives deep into the realities of entrepreneurial failure, and each episode features raw, unfiltered stories from founders who’ve navigated both the highs and lows of startup life. We’ll discover the lessons learned and the strength found in facing setbacks head on. Welcome to The Real F Word. 

Joe Grover: [00:41] Isaac Childs is here today. And you were the founder of Rustico Leather. And we had a breakfast maybe two weeks ago. And it was profound as you and I talked about entrepreneurship, and you shared your story with me. I thought this experience and some of the wisdom and the learnings from your experience, I wanted you to share that with more people. And so we’re going to go deep today. You ready?

Isaac Childs: [01:06] Yeah, yeah, and thanks for having me. I heard about your podcast, and I love the title: The Real F Word. And excited to talk about that. Because I think there’s a lot that needs to be said. And so hopefully we can share something that resonates with people.

Joe Grover: [01:24] So yeah, let’s talk about the F word for a minute before we dive into your story. Why do you think the word failure is something that carries so much weight for entrepreneurs?

Isaac Childs: [01:41] Hmm, that’s a great question. I think, as an entrepreneur, we want to succeed, and we see the way to grow. I think that’s what’s unique about entrepreneurs is we tend to see how to make things happen, right? We see a need, fill a need. (I think there’s a Pixar animation film about that somewhere.) So for us, the measure of success is that progress that happens, that occurs, as we fill that need, right? And so we can easily—I think there’s just a—I wouldn’t say a fear. But we don’t feel like we’re making progress if we’re not succeeding. And by succeeding, failure is not really the way we succeed. We just don’t tie failure into—that’s actually part of the process. And so it becomes that hush-hush word. It’s like the yips. We just don’t talk about it.

Joe Grover: [02:46] We just don’t talk about it. Unless you’re on The Real F Word podcast, then I’m forcing entrepreneurs to get real about it, right? Yeah, I think we give the word too much weight.

Isaac Childs: [02:53] Yeah, we do.

Joe Grover: [02:55] I mean, even the podcast sometimes I think about, listen, “Am I glorifying failure?” Because we also don’t want to glorify it. We just want to destigmatize it and normalize it a little bit. But the reality is that it does carry a lot of weight. And I think it was fascinating. We talked about the very first time you failed a test as a grade schooler, right? The very first time you saw an F on a homework assignment. That might’ve been a traumatic experience for your third-grade mind, where you couldn’t process that, and you couldn’t decouple your failure on a test or a homework assignment to you as a person. And that’s what entrepreneurs struggle with. And we’re going to talk about that, because for 22 years, a big part of your identity was tied into Rustico Leather. Tell me the origin story. Why did you start Rustico? It was 2001, right? 

Isaac Childs: [03:51] Yep. Yeah, 2001. Back in school, at the time in college, with a couple of buddies—this is the dot-com era, right, and brand-new websites going up like crazy. Marketing class assignment—we were taking a third-level marketing class, which was brand new about the internet, and it was all about building websites. And right at the bottom of the syllabus was this caveat: Build a website and sell $20,000 worth of product or whatever services through the site, instant A in the class. Right? Of course, this is back when Nike struggled to sell shoes online. Who can think of that? Right? But no one put credit cards in. It was still just at its infancy. And so we were like, “Sure, we’re gonna sell these journals that I’d been making and building.” And me and my two partners, Jefferson Moss and Court Griffin, we built this website. And a couple weeks into posting that site online, Disney called us and ended up placing a pretty large order for a press release for a new miniseries coming out called Storm Stories on the Discovery Channel—which, at the time, I had no idea it was owned by Disney. Regardless, we sold the $20,000 and more of what we needed and got the A in the class and literally launched into the next five years of just growing, growing, growing this business that became Rustico from this initial marketing class project.

Joe Grover: [05:21] Wow. And tell me about the product. I mean—in fact, I think probably two or three years after you launched, I was at a conference at BYU, and I had for years a Rustico Leather journal—not a binder—a Rustico Leather journal and used it for note-taking, probably for two or three years. It was super high-quality, genuine leather. Tell me a little bit about the product and what made it special.

Isaac Childs: [05:46] Yeah, so the products which we put on the site, which is the origin story for Rustico. The product, though, was creation. Really, it started with leather-bound journals and notebooks, and that was because I like to write. There’s two things that I’m very passionate about: It’s travel, and it’s journaling. Really, writing? Different story. I’ve gone the gamut back and forth with true writers and journalers, and there is a difference. But a journaling—closet journaler. I have written in journals and notebooks since I was six, seven, as little as I can remember, and I have them, most of them. 

Joe Grover: [06:20] And so how many journals do you think you have? 

Isaac Childs: [06:23] Ooh, hundreds, yeah. It’s in the hundreds at this point. Yeah, I don’t know. I can almost visually see all of them, but I don’t know if I could get them all. But yeah. So I was writing in notebooks and journals and traveling quite a bit in my early 20s—really, through Europe and through South America, and through the US, a lot of road trips as, really, a poor college kid. It’s a backpack, and you’re really—what’s the right word? I don’t know. Dirtbagging it? A little bohemian. Well, these journals and notebooks just kept getting beat up. I remember specifically on the way to Flathead Lake, Montana, with a bunch of buddies, and we got our car just broke down. So we’re on the side of the road, it’s a little bit windy out in the middle of nowhere. I pull out my journal to write, and all my pages just went flying everywhere because the spine had busted. I was just so frustrated. And I remember, over in Europe, I was in Italy at, I think, in Florence somewhere, and there’s these beautiful hand-sewn leather journals that cost way too much money for me to buy at the time.

[07:33] And so, after seeing and having that experience in Montana, I was like, “That’s it: I’m going to figure out how to make a leather journal that won’t fall apart.” And so I took a couple of classes at BYU, actually audited some bookbinding courses, and then bought some leather, brought some paper over from France, and created these leather-bound journals. And that’s what I was using when we launched Rustico at the marketing class assignment. And that’s because for the last—for a few years before that, I had just been building these leather journals for family and friends, and it all comes from my passion around journaling and why it was so impactful for me and just wanted to keep doing it.

Joe Grover: [08:09] So this really was a mission-driven business from day one, something you care deeply about. You’re providing this higher-quality product where someone could really keep their deepest—

Isaac Childs: [08:19] And yeah, for most people, it’s interesting as we engaged with so many customers over the years. People want to have a place where they can put those deepest and darkest and rawest is—what I will say, we say darkest, right? Comes back to the F word. It’s this taboo thing: We don’t want to be dark. Well, the reality of it is we have both in us, and so journaling is a huge way for us to actually release a lot of that. And so we can talk about it more.

Joe Grover: [08:45] But it’s maybe the only place where we put those deep, deep thoughts and concerns and fears and failures is on the paper, with pen and paper, in our journals.

Isaac Childs: [08:56] Yeah, we do. Or we completely neglect it, which is where most of us sit, where it’s like, “Hey, I’m not a journaler. I don’t need to be.” But yeah, that is one place where we absolutely can and hopefully are allowed to, right?

Joe Grover: [09:12] So, the company. You launched the company, you get an A on your project. Congratulations.

Isaac Childs: [09:18] Yeah. We did, yeah. We got the A. 

Joe Grover: [09:20] And then how did the company grow the first five years?

Isaac Childs: [09:23] Yeah, so interesting. Me and my two partners decided, “Hey, we’ll create a little two-year operating agreement, just a commitment that we’re going to take this and run with it for two years and then hopefully sell it off.” And those two years quickly went to five years, and then we actually burnt out completely. We had grown it fairly decently. I mean, the internet was still in its infancy, so we got lucky there. But then it really didn’t see much growth on the internet. We ended up pivoting over to trade shows and wholesale accounts and B2B, really doing customization. And building at the time was a manufacturing facility in the US, and still, up until we closed the doors last year, we were producing 90 percent of everything of our products in our facilities in Lindon, Utah. And so that’s what we went through the first five years. Then we decided to sell it. We actually sold the business. At the time—this was 2006—that deal rescinded. So a little bit of a success and a failure and a lot of learning in that process.

Joe Grover: [10:32] What does that mean, “It rescinded”? They bought the company, and then they gave it back?

Isaac Childs: [10:35] Well, they bought the company. We actually had three offers at the time—different offers to buy the company. We went with the one that offered the most money but wanted to finance a portion of the business and use the business as the collateral for that. Unfortunately, we didn’t really think through that process. Could they actually run the business? That business is actually—they almost tanked it completely. And then, of course, when they defaulted, that came back to us as a business that needed a lot of help. And at that time, my two partners—Jefferson Moss was on his way to MBA school, and Court Griffin was literally packing up the truck for a move to Alaska. And so we worked through an arrangement, bought them out, brought on another silent partner, which was one of them, a great partner of mine for the next 14 years: Jim Loveland. And then I started running it from there. 

Joe Grover: [11:30] So it went from a growth business to a turnaround really quickly because the buyer couldn’t operate the business, right? You guys foreclosed, you took the business back, and then you started running it. And for 14 years, you’re building, manufacturing. So for the next 14 years, tell me about that journey. Did the business grow? Did it contract?

Isaac Childs: [11:52] So, when we got the business back it had largely depleted pretty rapidly in the tenure of that buyer, so it was like starting from scratch. We did have, obviously, some notoriety. We had some accounts. And I spent the first couple years just really growing—which, we grew pretty decently, pretty quickly. The difference for me, though, was having two invested full-time partners in the first five years and then just all me for the next 14 years, really, having a really good outside partner but not one on the day to day. And so it took a shift in my mindset from having great companions and friends and guys in the trenches with me to go through those struggles, right? We got it back in 2007. Then, of course, you had the 2008 housing crisis, going through a recession then, and figuring out how to grow. In that standpoint.

[12:53] Also, for me, what was interesting was, like you said earlier, “Hey, you had a passion from the beginning and a purpose behind the business.” And, to be quite honest with you, I didn’t. I loved journaling, I loved writing, and I loved what we were doing in marketing and product development, but I hadn’t really tied the two together to, “This is actually how I can fulfill my purpose.” And it wasn’t until I’d jumped back into the business on my own that I had to discover that a little bit more and say, “Oh, this actually does help me fulfill what I feel like is my dharma and my purpose and, at the same time, provide income and provide value to other people.”

Joe Grover: [13:27] How did understanding your purpose and your why help fuel you in that 14-year period when you were pretty much running the whole business without a lot of support from partners?

Isaac Childs: [13:36] Yeah, yeah. Well, a few ways. For the first little bit, it was my attitude towards the business that we were just a private label manufacturer, and we were creating products and services for people. And then, when I really sat down and dived into it and realized that the products that we were providing for people that created this tremendous value—whether it was through writing, recording deep thoughts and reflections, or capturing memories like photo albums and whatever else—then I realized, “Holy crap, that’s the impact that’s actually being provided by the products and services that we provide.”

[14:14] And so, understanding that and tying, “What’s the end result of this product?” and, “How does it make the customer feel?” and, “What is it they love about it?” It took me a good, I would say eight or 10 years and a few different website reveals to really get our messaging right and our branding corrected. And tie that back to where it was, “Hey, Rustico is all about how you leave your mark and how you, as an individual, get to leave your mark,” whether it was on the product itself, whether it was in the product, whether it was the way that you delivered it to someone else as a gift, or the memories that went in it. It was this whole dynamic and ecosystem that was around it. As we understood that, it became easier and easier for us to build product and also talk about our product and sell it.

[15:03] Yeah it was a huge part. I think that was some of the successes. But it took time. That was a lot of failures over and over. Many failures, I guess you should say there were. Trying something and it didn’t work and trying something didn’t work.

Joe Grover: [15:16] So you’re on this extended entrepreneurial journey, and you’re not venture backed. You don’t have a lot of capital. So really you’re using cashflow, right? The business is profitable and able to pay for a manufacturing facility here in the US and your employees and your sales and marketing. What happened?

Isaac Childs: [15:33] Yeah, yeah, thanks. Yeah, what happened? 

Joe Grover: [15:35] “Yeah, thanks, thanks a lot.”

Isaac Childs: [15:38] Yeah, let’s get to the meat of it. No, for a long time it was much cashflow business. It was not going to generate billions of dollars, but it was definitely, very much a lifestyle business, and it was running well. We were having profitability. No debt. And this is up until about 2018. And the end of 2018 and 2019, I had some opportunities to actually sell the business. People came to me, and I looked at those offers and talked to a few key personnel and friends, family, and other outside investment groups as well, and just people that I admired and trust. And the feedback I got from a lot of them, and I think the consensus—not everyone—was like, “Hey, this is successful. But if you really want to see life-changing money, what can you do in the next five years, right? You’ve got this 14-year track history of pretty good success up until the right growth, right? If you can just continue to do that for five more years and then sell, it’s—” What was the term that I remember that caught me and that was really what I think changed my mind more than anything was like, “Then it’s life-changing money.” And at this point in time, the interesting thing is I was actually feeling like it was time. And then for me it was time to transition into more of what I wanted to do, which was getting back more to the core of how do I really connect with others and help them find who they are authentically.

Joe Grover: [17:12] You were at a point in your own journey where you’re like, “I’m going to give it a hard run for the next five years, but that’ll also hopefully free me up to do my other life purpose.”

Isaac Childs: [17:22] Yeah. Well, there was two parts to that. Whereas I infused so much of my life’s purpose into—and what I felt was my dharma into—the business Rustico. And we can talk a little bit. My identity had tied to it so much as well. Well, the business itself had grown to a level of where we were now in ecommerce goods and retail, manufacturing, and creation company right, which is—I love that part. But there was some aspects of it that were not tied to my dharma anymore. So it had started on its own path, really. But I was still so tied to it in a lot of ways that it was very hard for me to recognize that and say, “That can be its own thing, and that can still be a way to serve the world, and I can do my own thing and be disattached from it.”

Joe Grover: [18:04] It’s interesting that I’ve had this conversation with so many entrepreneurs about life-changing money. And because we often measure our success in a startup or a company by the eventual outcome—financial outcome—for the entrepreneur or the founder or the management team, the life-changing money question is such an interesting one. And the timing of when we sell that business depends how life-changing that is. We rarely talk about life-changing losses. And you and I maybe will unpack that, but I’ve always been swinging for the fences and looking for that life-changing outcome, but the reality is it doesn’t always come. That life-changing money sometimes is a mirage and motivates us to make some decisions—we’re going to talk about those—that may or may not lead to the outcome that we were hoping. Talk to me about 2018. You brought on some additional capital.

Isaac Childs: [18:58] Yeah, so I made the decision to give it the five-year run. 2019, I brought in—really, we grew. I moved to a new, twice-as-big facility. I picked up quite a few levels of management over the top that I normally didn’t have, which was good, as we decided, “Hey, I want to take it to this next level.” Brought on some capital to do that. And then, of course, 2020 hit, and COVID, and that shifted gears.

Joe Grover: [19:25] Was it debt or equity?

Isaac Childs: [19:25] It was debt. All of it was debt, actually, for the first part. Yeah, in ’19, it was definitely debt. 

Joe Grover: [19:35] And why did you choose debt? Did it seem less expensive than equity at the moment?

Isaac Childs: [19:40] Yes, absolutely. At the time it was less expensive. I didn’t really want to bring in another partner at the time. Well, I had one existing partner, and I think it was just actually just more convenient and fairly inexpensive to get the debt than it was to give out the equity.

Joe Grover: [20:01] So some term debt, right? Business is profitable, so you can service some debt, and you bring in these partners and some debt providers, put on some fixed costs, a management team, seasoned management team, double the size of your warehouse. You start ramping up manufacturing and maybe inventory. What were some of those other bets when you’re like, “Hey, we’re going to double or triple the size of this business”?

Isaac Childs: [20:27] Well, those were the tangible bets. I think the intangible bets were, “We’re going to continue to sell the way we sold.” Right? And at the time, we were heavily—like I talked about, we started as an internet company, right? But we pivoted pretty quickly from that because it’s 2001.

Joe Grover: [20:43] Yeah.

Isaac Childs: [20:44] Took another 10 years before, really, online sales even started going. And so, at that time, online internet sales were less than 10 percent of our total revenue, and we were focused heavily into the B2B space, promotional space, and wholesale retail in stores. But based on my history, it was like, “Hey, we’ve seen this trajectory and growth year over year, consistently. I should be able to hit this.” So those are my bets. 

Joe Grover: [21:09] There really was a lot of growth over the years. Probably—

Isaac Childs: [21:12] It wasn’t 100 percent and to the right all the time, but there was enough consistency where I could average out any five years at a given time and it was 20–25 percent growth consistently across the board. 

Joe Grover: [21:22] That’s great. 

Isaac Childs: [21:23] So it was just what felt like very steady future.

Joe Grover: [21:27] Predictable. 

Isaac Childs: [21:28] Predictable. Yeah. So I think that was probably the biggest bet was, “Hey, we’re going to continue to grow at this rate, and so therefore I can make these other investments and turn them around in this timeframe.”

Joe Grover: [21:40] And then a pandemic came: a worldwide pandemic which none of us could anticipate. What was the impact of COVID on the business?

Isaac Childs: [21:49] Interesting dynamic for us. I mean, the first three months, four months, it was like no one was selling anything. So I pivoted immediately to selling masks, and for the first five, six months, all of my machinery got switched over to selling cloth masks and so on as the world caught up to supply the shortages there. And then we transitioned back to our traditional lines of sales or our sales channels, but everything had pivoted. From there, it was definitely all focused on more ecommerce, which was awesome. We saw massive growth there. But our other two main channels really suffered. Wholesale retail, we had, oh, 2,500–3,000 retail locations that carried our products across USA and Canada, and I think by the end of COVID, there was less than 300. It just decimated that industry completely. And then B2B space, quite a bit different. It took quite a while for the businesses to really adapt to looking at a product outside of PPE for quite a while. So yeah.

Joe Grover: [22:57] Interesting. So that did—I mean, it was a mixed bag. It sounds like there was a little bit of a tailwind on the ecomm, but some pretty big headwinds on your wholesale and B2B businesses.

Isaac Childs: [23:08] Yeah, so, for us, it was a wash across the board in terms of revenue. We actually about flatlined. But some of the real issues really stemmed more from costs. Our costs started to go up quite a bit. Supply chain issues started to change. Our costing structures and bill of materials all shifted pretty drastically from where they were.

Joe Grover: [23:30] Yeah. What was the increase in cost of goods sold? Because at that time, the supply chain was a mess, right? I mean, what was the impact on your margin?

Isaac Childs: [23:40] Yeah, impact on our margin was pretty big. I mean, it probably took a hit of almost 50 percent or more.

Joe Grover: [23:47] While you increased fixed costs because you have more space, more people, so you made these huge investments. Cost of goods gets upside down, and now you’re facing a different reality. How long did it take to realize that things were pretty hairy?

Isaac Childs: [24:05] Unfortunately, for me, it took a little while. I had built a really solid, strong team and loved the people I worked with, and trying to hang on to them, especially through the pandemic and after post-pandemic, was really more my MO.

Joe Grover: [24:23] You mean just retaining the people?

Isaac Childs: [24:25] Just trying to retain people as long as possible and still thinking, “Hey, we’ll weather the storm. We’ll come through this. And just probably about two years, I think.” And then, finally, it was just like, “Hey, the writing is on the wall that there’s pretty drastic changes that need to happen.”

Joe Grover: [24:45] I’ve made this. I’ve been in this same position where I look at these people who have rallied around the business and around me as a leader, and I feel this loyalty and responsibility and stewardship for the livelihood of this whole team. And I have procrastinated the decision to rightsize the organization, to make the tough choices to have, just because it was so painful for me to look these people in the eye and say, “Hey, sorry, I got to let you go.” You still got—you still had to do it.

Isaac Childs: [25:17] Yeah.

Joe Grover: [25:19] Would you have made a different decision?

Isaac Childs: [25:23] No, I—yeah, wow. It’s weird how it’s hit me pretty emotionally today. That comes and goes. But, some of those employees for me were 15-, 18-year employees, and so that’s really tough to make the decision to even need to let them go. Right? And the reality of it is I probably hung on longer than I should have for the business’s sake. Some of that was because of the loyalty and because of the tenure and my commitment to see these employees through, and these people really just stay connected and have a job and so on.

[26:15] But in hindsight, no, I feel actually pretty confident that I made the right move. Was it the—especially given the information I had at the time. But there’s absolutely an argument where I could have let people go earlier, made changes and cuts sooner and quicker that may have saved the business. But there’s a part of me that actually says, “I don’t know about that. I don’t know if that would have actually changed the actual outcome.” But the decision I made to, at least when it came to my people, was, I feel, the right ones to make at the time I made them.

Joe Grover: [27:03] What’s up, fail fans? As we’ve listened to so many guests on this podcast, that the road to success is often paved with failure, with a lot of challenges, and even full-on face-plants. But there’s a thing that you could do to help skip some of those bumps and bruises, and that’s really where the consultants at Amplēo come in. See, Amplēo offers fractional executives in finance, marketing, and HR. And these are people who’ve experienced a lot. They’ve been in the trenches. They’ve built businesses. They’ve failed. But here’s the kicker: They’ve learned from those failures, and now they’re applying all that wisdom to your business to support you so you don’t have to learn the hard way. I mean, think about it: Instead of stumbling around in the dark and hoping you don’t hit the wall, you could bring someone in who’s already mapped out that room, right? Amplēo consultants and experts have worked with and for numerous companies of all sizes, and they’ve gathered insights on what works and where to focus and how to actually grow your business efficiently.

[28:03] So while we embrace failure on this podcast, there is no rule that says you have to fail at everything yourself. So check out Amplēo and see how their fractional executives can help your business move forward and avoid those painful learning curves. Sometimes the smartest move is learning from someone else’s failure. Visit Amplēo.com to learn more.

Joe Grover: [28:25] The toughest days, right? So finally you’re into this two years, and now you’re like, “Drastic changes need to happen.” Was that your decision? Was it with the investors? How active were the investors? Were you getting pressure from—you probably had some vendors, some payables that you’re responsible for. You have employees you’re responsible for. You have investors you’re responsible for. I’m sure you’re trying to solve this puzzle and doing everything that you can possibly imagine to save the business at this point 

Isaac Childs: [28:53] Yeah. I brought on a couple other partners sometime after 2020, I think, ’21, which was right as we needed more capital and more financing to help us weather the storm. And they came in, brought in a debt vehicle in order to help us do that. 

Joe Grover: [29:11] So this is the second debt?

Isaac Childs: [29:12] This is the second debt round, basically. And as we had to just start letting people go and downsize in order to help us right that ship, it just didn’t feel like there was enough. We just weren’t cutting enough at the right time. And there was a little bit of a delicate balance there where we had this noose around our neck of debt that we needed to service. And it was at a certain level. Channels of revenue that were coming in that were not as profitable that we really probably needed to cut and reduce revenue but focus on the right kind of revenue. But that wouldn’t allow us to do that with the debt that we had to service—

Joe Grover: [29:51] To service the debt.

Isaac Childs: [29:54] So this is this chicken and egg. And we were working with a lot of our debtors to help us with that. But there is this dynamic where I don’t think, from the debt side, I think there’s just an attitude more of like, “Well, you’re signed on the dotted line, and you’re going to make it happen, whether you want to or not,” instead of really thinking, “Well, how do I actually help these guys fulfill on what we’ve agreed to,” versus just— 

Joe Grover: [30:22] What’s the learning about how to capitalize your business at that stage? When you think back on the equity versus debt decision and the timing of the debt and the terms of that debt and the partners you chose, what wisdom can you share with entrepreneurs who may be running a business that can go raise 10 million, 5 million of term debt, and that might seem more attractive and less expensive than equity? But what’s the learning that you can share with us?

Isaac Childs: [30:48] Yeah, I think that, well, I—absolutely there’s pros and cons to both. For sure. Debt can be a very great way to run that while still holding equity in the business. It can also be a little bit of a downfall if things go south. That was the issue that we had in ’19 as we picked up some debt from some banks and lines of credit and so on, and as those lines—literally, I had one line of credit come due in March of 2020 right as everything happened. Right? It was just up for renewal. Not due, excuse me. It’s up for renewal. And our ratios and everything looked in line for it to be renewed. But because of the pandemic, they’re like, “We just cut your line.” It was $750,000. Gave us 30 days to figure it out.

Joe Grover: [31:32] To pay it back. 

Isaac Childs: [31:32] Yeah. 

Joe Grover: [31:33] So then you had to find a different—

Isaac Childs: [31:34] Yeah. So then we had to go to find either subprime lending or a different debtor, right? So there’s a debt situation there. It’s like you don’t have that partnership right? They’re not vested in your full interest when it’s like, “Hey, there’s a pandemic, and we’re just pulling the line.” Okay, right? Whereas partners or investment groups, I think if you are aligned—and that would be the other side is making sure you really are aligned—in how you want to move that business forward, they can be absolutely valuable and helpful in that regard. But also, at the same time, if you’re not aligned—like that turned out with me and in this group of equity partners I brought in there we were completely misaligned, although it felt like we were at the beginning. As things started to get harder and harder, it really became clear that there was a difference in how we wanted to move forward.

Joe Grover: [32:27] Are you comfortable talking about the amount of money you raised between all the debt and all the equity?

Isaac Childs: [32:31] Sure, yeah. Rustico, I think in 2019, I raised, oh, in terms of debt, we had close to 2 million. And then, I brought on another 1.5 million in another debt vehicle with equity partners. So we had roughly 3.5, almost 4 million by the time.

Joe Grover: [32:57] Yeah, so tell me about the last three months of Rustico, when it became clear that you may not be able to pull out of this. What were the secrets of events that happened that really helped you to realize that this was the end of the road for something you had put your heart and soul and energy into for so many years?

Isaac Childs: [33:21] Yeah, yeah. That’s interesting, because even until the day we closed the website down, I mean, I actually remember writing the email and the social media that we were going to put on the next morning. That night, at three in the morning, I was still looking for ways to get through it, right? And that was knowing, still knowing, probably five, six months before then, that things were probably not going to make it happen. I think if you would have sat me down and put me into like a truth serum, I would have been very clear like, “Hey, this isn’t gonna happen.” But the entrepreneur in me and, of course, the visionary, was like, “No, we’ll see through.”

Joe Grover: [34:12] “You’ll figure out a way.” 

Isaac Childs: [34:12] Yeah, yeah. But at the same time, I could see—I look back now and I was super optimistic and always looking for the opportunity. But at the same time, I was tactfully making sure the employees I had to let go had found jobs and people had landed safely, knowing in the back of my mind that it was going to be inevitable. So that was a really, really weird—I wouldn’t say weird. It was just such a hard, impactful day where there was a part of me that was super relieved to just finally be able to say, “Okay, I can close this down, and now we can move in a direction that feels like we can go somewhere,” and then another part of me that was just devastated.

Joe Grover: [35:01] I shared my journal entry with you that I had shared on this podcast, and those final days and weeks and months before shutting something down that you’ve built are just really painful. What was the hardest decision you had to make?

Isaac Childs: [35:24] Wow. I don’t know if there was just one. I think there was a lot of hard decisions. I’d go all the way back to—if I look at the series of events those two or three years, and this is actually probably why there was a relief the day that it shut down—and for a lot of people that found out and are still finding out. I still get emails from people that are like, “Holy crap, you shut Rustico down.” And that’s shocking: 22 years into a business.

[35:55] But two years before that, I had to let go my COO that had been with me for eight years. We had a great work relationship, built a great friendship. But I had to say, “Let me let you go, and let’s move on all the way to the different decisions of needing to tell these partners that I brought in with the intent to make something happen, make something big, that we’re not aligned. And I need you guys to step out of the way, if I can even turn this around.” And having that hard conversation to finally fully just saying, “It’s time to shut the doors.” And, “What does that look like?” 

[36:40] Yeah, a lot of hard decisions there that were tough to make. And that’s why, when I said, when we finally pulled the trigger on shutting those doors where it was also a relief, it felt a little bit like someone—or like here’s my child that’s been on life support for two or three years, and while you want them with you, you can’t move on. And so letting that go was needed, even though you don’t want to see that. So, yeah.

Joe Grover: [37:31] This was last fall. This isn’t that many months ago right. Less than a year ago. First of all, thank you. These are personal stories and emotions and experiences that I hope bring some wisdom and insight and some direction to entrepreneurs who may be facing the same reality with their child or their business, right? So thank you for being so open and vulnerable. I think that this is what I felt when we had breakfast is the genuine love that you have, not just for a business, but for the people that helped create that business and that product. For me, it’s that element of failure that is so hard when you feel like you failed someone else, because those are human relationships, those are people that you care about deeply. And so the worst days of my career were not the days I had to shut a business down. It was, before I had to shut the business down, having conversations with employees and partners about the fact that this was the end of the road, not just for a company, but for their contribution and their sacrifice and hard work. And so I can feel your deep and genuine love for all those people that you worked with.

Isaac Childs: [38:54] Yeah. It sucks when you do have tenured employees that have been with you for a long time, that have created and contributed massively to the vision that you have to say, “This is the end of the road.” And there’s definitely a lot of your own personal identity tied into being the person that provides and supports those families. And me learning how to unpack that was massive as well. And I needed to do that. But I think there’s still a huge part of me that is a genuine part of me that really wants to help others succeed.

Joe Grover: [39:36] I can also relate to that moment of relief, as devastating as it is. You’ve also been carrying this weight around for months and years, really. And now the finality, while difficult, also allows you to start a new chapter. What was the impact to you and your family financially when you had to shut down Rustico?

Isaac Childs: [39:59] Yeah, it was pretty devastating. We basically started over, went through a full bankruptcy. My wife at the time and I had both signed on quite a bit of the debt personally, guaranteeing that. That’s very common, I think, probably more.

Joe Grover: [40:17] Is that a red—I mean, should entrepreneurs be careful before they sign up for a personal guarantee?

Isaac Childs: [40:23] A hundred percent, as much as possible, and I would—and we talked about this a little bit—I actually don’t know a lot of investment groups or banks or whatever will want that personal guarantee.

[40:34] But there’s a part of me that says, I don’t know if that’s even in their best interests. There’s too much that becomes attached to a business owner that has tied his personal home and his family’s future into the business that may actually be detrimental when the business is in distress. Right? And I, for me, for instance, I’ll be just very clear. Not only was this a 22-year business and my identity was tied into it, but once I’m financially committed on a personal level to see it succeed and it is struggling to succeed and the hard decisions have to be made, it’s harder and harder to actually make some of those decisions unclouded, without—because, I guess, of the attachment, the ties that you have personally—

Joe Grover: [41:22] Your house.

Isaac Childs: [41:23] If my house is on the line—my kids eating and food and providing for them—will create a tint in the way that you view how you make decisions in business. It’s really hard to keep that separate.

Joe Grover: [41:40] It’s really an interesting aspect of a personal guarantee that you’re going to make, yes, you’re going to be in it to the very end, and that’s what they want. But you may make decisions that put even more capital risk and more things at risk. And maybe the banks at that point don’t care. They want you to do whatever it takes to return their capital. But, yeah, you probably prolong some decisions and make some decisions differently. I’m so sorry to hear that, Isaac, but it is a reality. The reason I bring it up is because it is a reality of some of these outcomes. Failure is really a stepping stone to success, and we talk about that, but we don’t ignore the real financial costs associated with a failure. And I’ve felt some of that sting as well. Tell me how you’re doing. It’s been less than a year.

Isaac Childs: [42:30] Yeah.

Joe Grover: [42:31] And how are you feeling now about the whole experience?

Isaac Childs: [42:35] Yeah, well, you go through moments, right? Even today, there’s some grief that’s associated with a loss, right? And it takes time for that loss to not feel as dramatic, I guess, or as intense. There’s still a loss, right? But overall, I actually feel really good. There’s been a lot of really solid things. I can look back at the 22 years, and while I feel like the ending was not the ending I wanted—it wasn’t the life-changing money goal, or even the successful right out, off in the sunset, and put a little bow on this—I feel like there was some massive learning lessons for me. That was necessary, as it launches me into what I want to do next and what I am doing. And it also has provided opportunity for me, for my family, and for everyone else to now move into that next space.

Joe Grover: [43:37] Tell me about that. How did you cope with some of this grief? Cause this is what I was really—I mean, we connected, and I was just like, “Wow.” I loved some of the insights you shared with me, some of the things that you’ve done to just move past this and find your purpose and and move on.

Isaac Childs: [43:53] Well, this comes back to square one. I started Rustico because of the journals that I created, because I love to write, I love what I do in that. And so I really got back to the basics and said, “Okay, what is it about me? Right? If I’m not Mr. Rustico anymore, what is me? What created Rustico?” And that is really where it got back to, which is something I’ve always done. I’ve always had a journaling practice. I always reflect daily. I have a process and a system I put in place for me that helps me get clear around how I’m supposed to move forward and what it is internally that I really want. And I’m not going to lie: Unpacking or, not destroying, but tearing down the house, if you will, that I had built over so many years has been—it’s like a demolition. It takes time, but the foundation for me has always been this journaling practice. And meditation is massive for me. Over the years, I’ve really developed a strong connection through meditation and journaling. 

[43:04] Well, what I’m doing now—and so, for me, I really took a lot of those concepts, and I teach in journaling courses, and mentored plenty of my employees as well as other people around how to use a journaling practice to help you really focus in and stay clear on your priorities and stay connected and find fulfillment. And I’ve been building that, really, into what my business is now going forward, which is Mindfulness Matrix, and that is all about helping people discover their true, authentic self through a journaling practice, through a daily, what I call the MAAP methodology. And I’m really excited about where it’s going. I feel like that’s exactly what’s next.

Joe Grover: [45:55] In fact, you’ve also launched a podcast recently.

Isaac Childs: [45:57] Yeah.

Joe Grover: [45:57] So we’re on a podcast journey together.

Isaac Childs: [46:00] Yes.

Joe Grover: [46:02] And talking about the MAAP method. And just share with us a high-level view of what that method is. And then let’s encourage people to listen to your podcast too.

Isaac Childs: [46:12] Yeah, absolutely. So, Mindfulness Matrix podcast and Mindfulness Matrix comes from this idea that—really, what we call the MAAP methodology, and it’s mindfulness, awareness, authenticity, and purpose. You tie those three together and then plug them into what I call our journaling method, which is a daily journaling practice that is built around this idea of how do you stay in a being state versus a doing state. And it all stems from understanding who you are, right? That mindfulness and awareness that comes with actually getting deep and deeply connected to intrinsically how you want to show up or who you want to be in the world. That’s where your authenticity comes from. And then how do you want to show up in the world? And you blend those three together through alignment and connection and then apply it on a daily simple journey and practice.

Joe Grover: [47:05] I love that. And so mindfulness, awareness, authenticity, and purpose. It is beautiful, and maybe ironic, that this whole business, Rustico, was originally built around this idea of a journal and that, full circle, it is the journaling that has helped you deal with the loss and the transition between running this product business to this new purpose for you. I think that that’s incredibly powerful. What are the other lessons that you learned through this process that you would share with your children—I know you’re a father—or other entrepreneurs who are either starting or at the end of the road and winding down a business?

Isaac Childs: [47:51] There’s a lot in there, I think, to unpack. What comes to mind when you said that, more than anything, was be careful with words like needs and should and could. I think, as entrepreneurs, if we get too wrapped up into what others think we need or do, that’s when we know we’re not on our path, right? So doing what it is that you feel intrinsically is important is always the key in entrepreneurship. And having a purpose and a passion towards that is massively important. Making sure, though, that you are not tying your identity to that—and what I mean, and here’s my story around that: 

[48:28] After Rustico closed down, and I had a coach that I was seeing to really help me through this transition, and I just was devastated. And I remember this conversation. I was like, “I have no skills—” that was having to my coach. I literally was like, “I don’t even know if I can get a job. I’ve been leading this company for a while, but I don’t know how to do digital marketing. I don’t know how to operationally put the product together. All of these little hard skills or whatever.” I was like, “I haven’t written a resume or a CV in 22 years. How am I supposed to find work?” No one would hire me, right? I’m just in this feeling of total devastation. And I think it was because my entire identity had been tied into this persona that I had at my business, and it wasn’t.

[49:23] Obviously, she coached me through that very well with like, “Is that really true?” But it really took—a few days later, I actually got a phone call from a group—another leather company—that had found out about Rustico and the process that we’re going through. It followed us for a while. And they called me up and were like, “Hey, we’re a five-year-old leather company, and we need someone that has your experience to come on board and just consult with us for X while.” And it was just a huge shift for me to recognize, “Oh, yeah, wait, I actually have value.” But still, I had tied so much of my identity into this entity that was dead that I’d somehow figured out like I did. And so my advice is we are not the things we do, right? Even though, as entrepreneurs, we do so much things, and we tie ourselves to them, but that is not who we are. And making sure we stay clear on that is super important.

Joe Grover: [50:32] It is the most profound insight that we are not what we do. We are not the title that we hold. We are not the business that we started or are running or work in. And I think, for the last five or six episodes, this has been the key thread and learning, which is we cannot tie our identity, our feelings of worth and confidence and value, to a business which outcome we don’t fully control—as much influence and control as we have as entrepreneurs, we don’t fully control—and is also fleeting. It’s not forever. And no business is. And so I think that’s so insightful. 

[51:17] How do you do it, though? How do you, in this moment—and you’re still working through it—is journaling part of that—but how do you really decouple it and just say, “I am not Mr. Rustico anymore. I am Isaac Childs, and I care about people, and I have purpose, and I have value, and I have skills?” How do you do that?

Isaac Childs: [51:35] Yeah, right now, for me, man, the way I do that is I’ll just start by saying I think that’s probably my biggest blessing, if that’s what I want to call it, that’s coming out of this whole failure, right, and the lesson that I’m learning is getting to discover who I am on a daily basis and keep myself detached from the things that I get to do or be or accomplish. And the biggest way I do that is—and this is a process for me; it’s a daily process right now—and it starts with, really, a morning meditation. It’s a reading and a morning meditation that is then tied to some short journaling that I do, which is tied around gratitude and affirmations. And then in the evening I’ll do what I call my WALK methodology, which is I’ll write basically a page in my journal, and out of that will come the wonder of the day. That’s the W. So WALK is an acronym. It means wonder, actions, lives across paths, and then knowledge gained. And I’ll just write, “What was the wonder? What did I experience today?” Wonder is important. And then actions are “What brought me energy and what took my energy away?” And really getting clear on “What was I really truly excited to do today?” versus “What did I have to do or should do?” Right? And “What was really draining and why?” and just getting clear on that. And then lives across paths with like, “Who did I get to meet? How did I get to engage, and how did I choose to engage, and what did that take me?” And then, of course, knowledge gained, right, or aha moments, anything else that’s usually downloaded. And that process on a daily basis right now has really helped me get back to staying focused on, “I am me, and these are the things I do,” and not tying myself so much into how the things I do are me anymore.

Joe Grover: [53:47] I love that. What great methodologies that you’ve developed through your own journey that you’ve been able to apply as you’ve gone through this. I think there’s so many entrepreneurs who are probably listening to this podcast writing down quickly, trying to write all these things down and so that they can adopt some of these similar practices. I love gratitude as a principle. Sometimes, when we take a step back—and even in the face of failure—we say, “What are we grateful for? What do we learn from this? How has this set me up for the next 22 years?” And so my final question is tell me where Isaac Childs is in 22 years?

Isaac Childs: [54:25] In 22 more years? Wow.

Joe Grover: [54:28] Because you’ll still be relatively young. 

Isaac Childs: [54:30] Yeah, yeah, oh yeah, totally.

Joe Grover: [54:30] You and I will be skiing still.

Isaac Childs: [54:31] Yeah, I was going to say we’ll still be skiing. I will absolutely still be traveling. And, to be quite honest with you, I’ll still be doing what I’m doing. I have a mantra. What that looks like? Like I would really, really love to see Mindfulness Matrix provides tremendous value to a lot of people around the world. I think there’s something there. And so I would love to be spending my time full time having the opportunity to guide and help others and inspire others to live more authentically to themselves. But what I can tell you—and what that looks like, obviously that would be awesome—but what I can tell you is this—and is my personal mantra—but I always want an athlete’s body and entrepreneur’s mind and an artist’s soul or spirit. And so it will involve those three things, whatever it is I’m doing. So skiing, or surfing, or snowboarding, or fly fishing. 

Joe Grover: [55:32] An athlete’s body, an entrepreneur’s mind, and an artist’s soul. That’s beautiful. Well, I can tell you one thing: I feel that from you. I feel the keen entrepreneurial spirit and the ability to build and create. I won’t comment on your athletic build, because that would be weird. And I feel an artist’s soul: someone who cares deeply, who’s deeply empathetic, who wants to give back, who wants to share in ways that are really open and vulnerable and personal. And you have done that today. You have impacted the lives of everyone that will listen to this podcast. And you’ve impacted my life. I went home after we talked the first time, and that night, I journaled for the first time in many, many months. 

Isaac Childs: [56:15] Awesome. 

Joe Grover: [56:16] And so you’re making an impact, Isaac. Thank you so much for sharing. 

Isaac Childs: [56:21] Thanks for having me. 

Isaac Childs: [56:22] Hey, I’m Isaac Childs, Mr. Rustico, and I failed, and that’s okay. 

Joe Grover: [56:29] Thanks for tuning in to The Real F Word. The real F word is failure, and remember that failure is a stepping stone; it’s not just a stumbling block. Join us next time as we continue to explore the journey of resilience and growth, without ignoring the true costs personally, professionally, and financially that comes with failure. Keep learning, keep growing, and keep embracing the real stories of entrepreneurship. See you next time.