About this episode

This week's featured founder is Michael Coles, founder of The Great American Cookie Company. Michael will share his journey through family hardship and financial ruin, his bankruptcy, and a motorcycle crash that almost destroyed his life. He then takes us through how he started a cookie business, one which would go on to be one of the most successful cookie brands in the country.

Due to the Coronavirus, Michael and I recorded this episode remotely, but I felt like I was sitting right there with him as he walked me through all the various challenges he had to overcome to get to where he is today. We are all fortunate to learn from someone that has (for decades) continued to step up to adversity and push against it. This is Michael Coles’ startup story.

In this episode, you'll hear

  • How at the age of 10, his family lost their home and watched his dad recover from bankruptcy.
  • His first venture was raking leaves. He shared how this experience taught him about monopolies and franchising.
  • He shared fondly about his first mentor, Irving Settler, who owned a department store where Michael worked.
  • Why and how, in his Senior year, he moved to Massachusetts to live with his brother and focus on school.
  • After high school, Michael got a job as a sales representative for a clothing company instead of going the traditional route of college.
  • Grappling with the desire to start his own business, he decided to start a retail company that eventually went bankrupt. He went back to work as a sales rep for a clothing manufacturer. And ultimately, he would go on to launch a clothing company of his own.
  • A trip to the mall to buy snacks for clients introduced Michael to the concept of 'single-food' stores. He immediately bought ingredients to make cookies, and a scale, so he could try to figure out the cost ratio.
  • How a call to a friend to buy out his share of the clothing company would lead to the start of the Great American Cookie Company.
  • Due to lack of oven mitts, their opening day ended with a fire and no cookies to hand out to customers.
  • Six weeks after starting the cookie company, a motorcycle accident nearly took Michael's life. Michael shared his journey openly and how his rehabilitation led him to set three world records for coast-to-coast bike rides.
  • Michael credits his experience with manufacturing and sales to his success. He leaves listeners and entrepreneurs with some sound advice.

Resources from this episode

Time to Get Tough! How Cookies, Coffee, and a Crash Led to Success in Business and Life

Michael Coles on LinkedIn

Great American Cookie Company

The Startup Story Inner Circle: https://www.thestartupstory.co/vip
The Startup Story on LinkedIn: https://www.linkedin.com/company/thestartupstory
The Startup Story is now on YouTube: https://www.youtube.com/jamesmckinney
The Startup Story on Instagram: https://www.instagram.com/thestartupstory

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Episode transcript

The Startup Story - Michael Coles

Michael Coles: Hi. I'm Michael Coles and I'm the founder of the Great American Cookie Company, and this is MY startup story.

Every wildfire began with a spark. Every superhero has an origin story. And every single startup has a moment that they point to as their beginning. And every founder has a purpose that drove them in the midst of all obstacles. THAT is The Startup Story.

James McKinney: Welcome to another episode of The Startup Story. Just last week, we held our first ever Startup Story Live presented by Entrepreneur. It was a two day livestream event that absolutely exceeded ever expectation that I could have had for this event. From the moment I released episode one of The Startup Story podcast in January of 2019, I decided that the core of everything that we do with The Startup Story brand is going to be centered on the idea that entrepreneurs support other entrepreneurs, and wow did Startup Story Live accomplish that. Next week's episode will be an episode where I will share with you some of the incredible lessons and tactics that our founder lineup shared with us during this epic two day livestream event. It really was amazing so make sure you subscribe to The Startup Story podcast wherever you listen to the show so that you do not miss next week's episode.

In fact, make sure you connect with The Startup Story on every social platform you utilize. You can find us just by searching for The Startup Story. The Startup Story brand is much more than just the podcast. We want to bring you opportunities to get face to face with some incredible founders to provide impromptu mentor moments, so make sure to look for The Startup Story on Facebook, Instagram, Twitter, and LinkedIn. If you enjoy YouTube, then search for me, James McKinney. Over that next few weeks we'll be posting some great content on all those platforms. All right, now let's jump into this week's episode.

Our guest this week is Michael Coles, founder of the Great American Cookie Company. You are in for a real treat this episode, and I'm not just playing with words because you get it, cookie, treat, well anyways. Non no, sitting with Michael and hearing about his journey through family hardship and financial ruin, to his own personal bankruptcy, as well as a motorcycle crash that almost destroyed his life, and then to hear how he started a cookie business that would go on to be one of the most successful cookie brands in the entire country. It's a truly unbelievable story.

Michael Coles: When I was 13 and woke up in that less than 300 square foot apartment and had to make a big change, a decision in my own life, I remember looking back and thinking about a story about overcoming adversity, and the first one I could think of was the story of David and Goliath. And so the story I would share is this. For many people, the story of David and Goliath is about this small man who walks into the valley against this enormous giant who has armor and weapons, and not only wins the battle against the giant with nothing more than a slingshot and a few stones, but kills the giant.

And I remember at 13 years old thinking about that story and that was never my takeaway. My takeaway was that David, without knowing what the outcome would be, had the courage to step into the valley. What I would say to people today is this: we are all faced with goliath challenges. Whether it's learning, for me how to walk again, or today dealing with the kind of severity of this total change in our lives around this virus. Whether before that it was changing careers or going back to school. All of us face these goliath challenges every single day, and the question we have to ask ourselves do we have the courage to take that first step and walk into the valley.

James McKinney: I told you this episode was something special. Due to the coronavirus, Michael and I recorded this episode remotely but I felt like I was sitting right there with him as he walked me through all the various challenges he had to overcome to get to where he is today. We are all so fortunate to be able to learn from someone that has, for decades, continued to step up to adversity and push against it. So with that said, let me get out of the way so you can hear directly from Michael himself.

Michael Coles: When I was 10 years old I came home from school. We lives in a suburb of Buffalo, New York called Kenmore. There was a panel truck sitting in front of our house, and I was informed that my dad had gone bankrupt. Which of course at 10 I had no idea what bankruptcy was, but here's what I did know. I knew that we lost our house and that we were having to move, and that my parents had my dog Lucky, he was a black cocker spaniel, sitting in my red American Flyer wagon with her food and bowl, and they told me that they had arranged to give my dog away-

James McKinney: Oh man.

Michael Coles: … because the place we were moving did not allow pets. So I was not heroic about this at all. I was very upset and I gave my dog away. So to me bankruptcy at the time what it meant was that you lose your house and you lose your dog. That's what bankruptcy was. And so we moved to an apartment near the University of Buffalo, and it was actually a very nice apartment. We had all of our furniture, we had our dishes, we had all our stuff. And so truthfully it didn't feel that abnormal. It kind of felt the same. My dad was convince that he would recover from his bankruptcy and continued spending more than he should have.

By the time I was 13 his wages were being so garnished that he was barely bringing home a paycheck. I had, during that course of 10 to 13, had started some small ventures to earn some money for things that I wanted. So like I started in the fall, I started a raking business in my neighborhood which was very successful. Had about 10 or 12 homes that I would rake leaves for.

James McKinney: That's awesome.

Michael Coles: Then the winter came and I figured well this is perfect. In the winter, I'm going to transition from raking to snow shoveling. And so I learned a very quick lesson in the first major snowfall in Buffalo. It was not like leaf raker. One is that leaf raking, no one necessarily has to have it done that moment because it can just wait.

James McKinney: There you go, yeah.

Michael Coles: So I could take 10 days to do the leaves. But when it snows, every one of those 12 houses expected the snow to be shoveled that day. I was very little and learned very quickly that manual labor was not going to be my way to success. And so my friends in the neighborhood could not get jobs because I had basically tied up all the homes in our neighborhood. So they were coming to me complaining, so I hired them to do the work with me and I took a cut of what we got paid. I probably, if my family had would up moving later I probably would still be in the snow shoveling business in Buffalo, probably with big commercial trucks and who knows what else. So that was kind of my first ventures in being an entrepreneur and learning about franchising actually in a similar way.

James McKinney: You know it's interesting, even in that season from 10 to 13, bankruptcy a hard lesson to learn obviously. You're still processing all that meant, but you experienced the loss that comes with bankruptcy. You started your own venture, you learned about what it was to have a monopoly because you got the whole street and your friends couldn't get there. And you learned what it was about consumer behavior, the idea that you can't wait 10 days because there's an expectation.

Michael Coles: Exactly, exactly.

James McKinney: Incredible lessons there, but I have to ask the question and maybe it was a time and place, but today I don't know if the culture has the mindset of just trying to again these rake the lawn type jobs, these small childhood hustles. Did you have people in your life that you saw starting businesses that you thought I'm going to try to create my own income? Where did that idea come from or was it just a time and era?

Michael Coles: No, I think my dad was definitely an entrepreneur. He was a first generation American. He came up from nothing. His father had tuberculosis, his mother basically had to stay home to take care of his father and at 11 my dad had to quit school and basically went around with a pushcart collecting metal and rags and stuff to resell.

James McKinney: Oh wow.

Michael Coles: And supporting his family. When he became somewhat successful he was able to get a horse and a cart to be able to pick up more things. From that, he finally at one point was able to open his own business which was back then what they used to call the junk business. It was recycled rags and metal, and then he lost all that. The truth is until I was an adult I never really fully understood what my dad must have been going through because to go from being extraordinarily poor to eventually getting to the point where he could buy a home in the suburbs, and then buy my brother a car for instance when he was 16, and losing all of that I can't even imagine mentally what my dad must have gone through until I was much older and went through a similar experience myself. Then I could finally open my eyes and say wow, what my poor dad must have gone through mentally at that time.

So when I was 13, as I said my dad's wages were being so garnished that he basically was not bringing home a paycheck. Literally in the middle of the night before my 13th birthday we moved to Florida, which was a debtors state, and my dad once again believed that this was going to give him an opportunity to start over and come back, and be successful. But things were very different this time because before we moved to Florida my parents sold everything we had. Sold all of our furniture, all of our dishes, everything. So when we got to Miami Beach, which is where we moved, we now went to a disgusting one bedroom apartment. My parents slept on an unscreened porch. I had to share a room with my sister. I remember waking up that morning after we got there, realizing now I get what bankruptcy is, now I understand it. Because all of the security that we had living in Buffalo it was all gone. So when I woke up that morning, I remember thinking to myself I had two choices. I could either believe that my dad was going to bounce back and eventually things would get normal, or I could take on the responsibility of helping my family and go to work at 13 basically.

James McKinney: Wow. That's incredible.

Michael Coles: And so that was my decision. My decision was that if things got back to normal that would be great, but if they don't now I had earned money to help my family.

James McKinney: So as we continue on in the journey of your life, what an amazing childhood, at 13 you take on the burden of going to work and providing for the family. Did you finish high school? Was that a thing or you don't have a high school diploma? Where is school in this? I like to work in chapters a bit, so normally it would be like hey at the end of high school what was your next step, what were you thinking of? What was that season for you? Was there high school?

Michael Coles: Oh yeah, and I did graduate, and that's a whole other story. I had been a very good student so I moved to Florida when I was in the seventh grade, and so I had been a really good student up through my sixth grade. Seventh grade with having to take on fulltime work, when I say fulltime work I was getting up at 5 in the morning before school. I went to a hotel and set out the mats for the day for all the tourists living in the hotel. Then I would go back after school and clean up. I would have to vacuum the pool and do all those things.

Then on weekends I was very fortunate to get a job as an apprentice plumber, electrician, and carpenter from a guy that was kind of a handyman but basically had licenses in all three trades. He taught me all that stuff and I worked for him. He was a horrible boss, paid me very little money. Learned a lot but was the cheapest human being I've really ever met in my life. Never provided any food. It was just slave labor basically. Then I became a very horrible student because I had no time to do homework.

But I got lucky in the year of my 13th birthday. Whenever I could save up a little bit of money to go buy some clothes there was a store called Dorwins. Then it was Dorwins King of Slacks. I had gotten friendly with the owner, a guy named Irving Settler. He and I developed a relationship but I had a friend of mine that was working in the store, a guy named Steve, and one day on a Saturday in between my shifts at the hotel and working for this other guy I went to the store, and as I walked in Steve and Irving were in this giant yelling match. Steve was not doing much talking , Irving was doing all of it.

As I walked in the door and heard all this I almost started to walk back out because it was really bad. Irving turned to me, and he knew my name, but he looked over at me and yelled, "Kid! You want a job?" So in that moment, I want you to think what went through my mind. This was an air conditioned store where I had been working basically outside in 100 degree heat. Air conditioned store, 50%discount on my clothes, and a chance to learn from this guy. And so without hesitation, without thinking about my friend Steve, I went, "Yes." And he looked over at Steve and said, "You're fired. You're hired. When can you start?" and so I started that day.

I actually went home, got some clothes on, came back to the store. I still kept my job, both of those other jobs, and went to work for Irving after school because he was such a volatile kind of guy. I didn't know how long this would last. I was 13 and wound up working for him until I was 19 years old, and he was an incredible mentor. I talk about him a lot in my book because he basically taught me everything I know today about business. I learned and broadened some of that education as I went along, but the fundamental basics of business and entrepreneurship were there. As an example, I'll give you one great story about this. So the store was called Dorwins. It was all block letters and it was called King of Slacks, which eventually became Dorwins Ivy Shop. One day after I had been working there maybe a few weeks, I looked at Irving and I said, "Is Dorwins a family name? Where did the name come from?" He said, "Well when I bought the store from the owner it was called the Windsor King of Slacks. I knew I didn't want to be under that name, so I just rearranged all the letters."

James McKinney: That's awesome.

Michael Coles: That was an incredible lesson about building a business, bootstrapping it, and not wanting to spend any money on things that were really not that important, so that's where the name Dorwins came from. I have to tell you, that's been one of the great lessons I have ever learned in my life, was thinking about how to do something different. How to think about it in a different way.

James McKinney: I love it, I love it. So knowing that you finished school, again to your comment you became a horrible student but you did finish. So at the end of your high school years, what did you think next steps were? Did you think I'm going to work at Dorwins the rest of my life, I've made it, this is the dream. Where did life bring you come the end of high school? What was that next step for you?

Michael Coles: In my senior year of high school, which again I was basically flunking out of school. Honestly, I had like a D- average. And so in my senior year of high school Irving and I were having some issues working together as you would expect, you know you work for someone that long. By the time I was 18 I thought I knew way more than Irving did.

James McKinney: Oh, of course.

Michael Coles: We were having those kinds of issues. My brother and I had been very close. My brother was living in Rockport, Massachusetts and my brother said, "You know what, if you ever think about going to college you really got to get your senior year together," and he said, "Why don't you come live with me and my wife?" and so I did. I moved to Rockport for my senior year of high school and I went from a D- student to basically an honor roll student.

James McKinney: That's incredible.

Michael Coles: It was amazing because my brother insisted that I take… you could go on what would be a trade school option in your senior year, taking courses that would prepare you for trade school, or you could take courses that would prepare you for college. My brother insisted, because he was a teacher, that I take the college courses. And so I remember registering for school, and English is English, science is science, history was history or civics at the time, and then I remember looking at math in my senior year and it looked like this. It was like Solid Geometry, Trigonometry, Calculus, and then there was this little gem sitting at the bottom called Basic Math. And I'm thinking to myself this is for me. So I took Basic Math as that choice. Then went next door to this little room, got all my books, and went back home and was going to start school the next day.

When I got home, I didn't bother to look through the other science, English, because you know what that is. But I decided to open up Basic Math, and what Basic Math was it was an introduction to Calculus, Trigonometry, Solid Geometry… all of that. And so I told my brother, "I've got to go back on the trade school thing." And my brother said, "No, no, no, you can do this." We went to the library and I got all these basic books on all of these different maths, and had a phenomenal teacher, a guy named Mr. Roarke, he was great, and I wound up acing that course. Turned out I was actually pretty good at math, but never had a chance really to do it before. I graduated with honors and prepared myself to go to college.

The summer right after my senior year, Irving called me and a guy that had worked in the store, an older guy named Bob, had died and Irving called me up and he said, "Look, I need you to come back. You can go to school here, but I really need your help." So I flew back from Miami and I figured I could save a lot of money. He paid me really well, by the way. I was earning more money in high school than my dad was. Really, it was a very good job. And I was of course way expanded. I was doing all the buying for the store. I was managing the store. So I came back, started saving up money to go to college and then through a set of events Irving and I… and Irving's wife at that point in their marriage hated me. And that was part of our problem before, but it had gotten a lot worse. I couldn't work with him anymore. It was impossible because all she would do was badmouth me.

So I wound up moving to Chicago and went to work for a clothing store there very similar to Dorwins. Started saving up money and I was about to go to college in January of 19… God, this is horrible, 1964. I was going to college, going to Arizona State University, and in the month of November before that January I got offered a job with a very big company. I was going to be their first trainee. I told the guy that got me the interview that no, I'm going to go to college, and he said, "Look, you can go to college. I would never discourage you from doing that. But the thing is when you get out of college, this is going to be the kind of job you're going to try to get." So he said, "Why don't you do this for a year and see if it works out for you. And if it doesn't you can go to college, but if it does this could be a great career path." So I called Arizona State University and got a postponement from my enrollment, and I went to work as a trainee and was very successful. College just never appeared.

James McKinney: What an amazing early life story. In your book, which I believe the title is Time to Get Tough: How Cookies, Coffee, and Crash Led to Success in Business and Life. We're going to have a link in our show notes for that book so you can get more of these life stories. But let's advance things a bit. So from this decision where you decide to be a trainee, if my time is correct there's about a 13 year gap before Great American Cookie Company ever comes onto the scene.

Michael Coles: Right.

James McKinney: How do we get from that season to the idea. Let me stop the founding of it, of the Great American Cookie Company, how do we get to the idea that I want to start my own business, and I want to be in the cookie business of all things? How do we get there?

James McKinney: Before we continue with our episode, I wanted to let you know that all the great content from our most recent two day livestream event, Startup Story Live, is available to you in an on demand format, basically a Netflix for entrepreneurship. After two full days of groundbreaking content at Startup Story Live my head was spinning. Every time I thought, "That's going to be the biggest takeaway," I was floored by another mic drop moment. And that's why I created a new membership program for entrepreneurs who want to leverage The Startup Story Live experience as much as possible.

So I'm introducing to you The Startup Story Inner Circle. When you become a member in this exclusive group, you secure an unlimited VIP pass to The Startup Story Live content and bonuses, designed to help your business succeed no matter what the environment. Your Startup Story Inner Circle membership includes on demand access to every founder session from the event. We're talking real practical, tactical advice from real entrepreneurs and business owners. Full transcripts for each session with crucial talking points highlighted, which allows you to focus only on the information you need right now. Exclusive livestream events each month with top founders from companies like Mail Chimp, Meet Up, and Sticker Mule. These are founders that wanted to be a part of Startup Story Live but couldn't, but they want to do a livestream event with just these Inner Circle members.

Access to our private Facebook group where entrepreneurs support other entrepreneurs, to make valuable connections and even find some new clients and customers. Plus, members will receive special offers and giveaways from Startup Story brand partners like Express VPN, Trainual, Design Pickle, Foundermade, and even Entrepreneur Magazine, and so much more. And right now you can claim a three month, all access membership for just $99. That's probably less than you're going to spend on streaming services for the next three months, except this content can radically change your business.

The next three months might be the toughest challenge you'll face as an entrepreneur, and the hard truth is many businesses fold in times of crisis. They just aren't able to adapt so they collapse under the pressure of rapid change. But other businesses emerge stronger than ever before. If you want to be in the group that emerges stronger, then you need practical strategies to survive and the support of entrepreneurs who want to see you thrive. You'll find both and more when you become a member of The Startup Story Inner Circle. Let's fight for your business together. Secure your three month membership for the flat rate of $99. Just visit startupstory.co/VIP today. Again, just visit startupstory.co/VIP to start your Inner Circle membership today. All right, now let's get back to our episode.

Michael Coles: Let me just give you a little bit of background to that, because when I went to work as a trainee again I was 20. I turned 21 that February. I was told I would not get a territory until I was at least 24 years old, so I was going to be a trainee for four years. I went to work with a guy that was one of their top salesmen who had gotten himself into a little bit of trouble. I helped him work his way out of that with the president of the company and this national sales manager. They took real notice of me in that position, and in July of that same year they offered me my own territory to move to western Michigan.

So I moved to western Michigan. We had about 65 territories in the country. This was number 65. It was the worst. Now I knew why they offered it to me because only a 21 year old kid full of piss and vinegar would be willing to think they could turn this thing around. And so I went for western Michigan and in three years I took it from number 65 or whatever it was to number 3 in the country, and I won a big sales contest. My company, I went to New York for that sales contest and I won this sales contest. And so on the way back my company flew me back first class. I was on a flight with this guy, flying from New York to Detroit. The guy was wearing a Rolex. I was sitting next to him. It was the first time I'd ever seen one up close. We talked about a lot of stuff. He was more interested in me, because I looked 12 years old when I was 21. And so he was wondering what I was doing sitting up there in first class. I told him about the contest and all that.

So as we were landing I turned to him and I asked him, "What advice would you give a young guy like me that's entering into the business world?" and without hesitation he said, "Take risks as young as you possibly can be, because the older you get the more complicated your life's going to get, and the more difficult it's going to be to take those risks." And I remember getting off the plane, and then flying where I was in Grand Rapids. So fast forward, salesman in Detroit who actually was doing less revenue in Detroit than I was doing in western Michigan, he opened up a big account and it was going to be like over a $1 million account. And so the company gave him that one account so he could focus on it, now the whole thumb of Michigan, this is back in the heyday of Michigan. Michigan was like the place to have a territory. So I called my sales manager and I said, "Look, I want to move to Detroit and take over that territory, but here's the deal. I want to keep the whole state and I'll hire someone to work my old territory, and train them and work with them, and I'll take a little override over what they do. But I want Detroit."

I'll never forget as long as I live, my boss said, "Kid, slow down. You just won this big contest. You're just starting to make a lot of money. You're not ready for Detroit. Those accounts there, you're fine in western Michigan but in Detroit that's the big city. They're going to laugh you out of their stores." I remember saying, and I don't know where it came from, maybe it was the advice that guy had given me, I said, "Bob, if you don't give me the whole state I'm telling you now in January I'm leaving." And he just laughed. And so I didn't get the territory. I did get another job. And in December I called Bob up and said, because they had shipped me the new summer line and I said, "Bob, what do you want me to do with the summer line?" And he said, "I want you to go out and sell it." I said, "Bob, I'm leaving in January." He said, "What do you mean you're leaving?" I said, "Well, I told you if you didn't give me the territory I was going to leave." And he said, "Don't go anywhere. I'm flying there."

So the next day he came. To make a long story short obviously I took the other job. Bob and I wound up becoming, stayed great friends all the way to the time he passed away. He eventually became president of that company, but I became extraordinarily successful in Detroit. I had stores running full page ads in the newspaper for our merchandise, and I would always send those ads to Bob with a little note like, "Yeah, you were right. I would never make it in Detroit," you know just to rub it into him.

So then eventually I moved to Atlanta with that company. I became national merchandise manager and then eventually opened up and I took a big cut in pay to move to Atlanta because I had always been on the outside of business, and I knew one day I was going to want to open my own business and I had to learn the inside. So I took this big cut, moved to Atlanta to learn the inside of the manufacturing business and how you go about running that. So I moved there and I stayed with the company maybe two more years, and then I eventually stepped out.

This is probably the best part of my whole career. I started my own retail business, discounted branded merchandise, probably one of the first companies in America. There were several like us that were doing it, but this is back in the day when you did not discount brands. This was like the precursor of it. So I started a company called Pantomime, called Five Dollar Pants. There's a whole big story about it in the book, but to make a long story short, I didn't pay enough attention to the business and that was my first venture out, and I went bankrupt.

James McKinney: Wow. So there's a couple things I want to unpack here and I know we're on the cusp of getting to The Great American Cookie Company, but one of the things you said as you were moving to Atlanta you said that you took that pay cut because you wanted to be on the inside of business because, to use your words, "I knew I wanted to own my own business." Up until this point, we haven't heard that language from you before. What was it that sparked the idea that I want to run my own business?

Michael Coles: Honestly, I had always thought about running my own business. When I worked for Irving I remember asking Irving. Because he's a guy that bootstrapped his whole life. I mean went to New York, was in the hat business back then. And I remember asking Irving one day, I said, "Why did you not just continue working for the guy that owned Windsor King of Slacks? Why didn't you just keep working for him?" And he said, "Well, because the guy only wanted to pay me what I was worth and I didn't want to work for that little." And so he said, "I knew that the only way that I would ever really make the kind of money and have the kind of life I wanted was to own my own business."

You know, I have to tell you the world was a lot different. Corporate jobs back in those days did not pay very well. I mean even if you were running big companies back in those days, you were just basically a hired hand. It's not like it is today where people are making millions of dollars running companies. And so the only way you could ever have a successful life if you wanted to be in business was to be in business on your own, and set your own destiny. And so I always knew I wanted to be in my own business. I have to say without knowing it the fear of my dad's bankruptcy and waking up in that horrible apartment left me somewhat insecure about taking that first big step out, but I also had the guy on the airplane telling me if I wanted to take a risk I had to do it while I was young.

James McKinney: You know I want to say something real quick. I don't mean to cut you off, but we've done 70 episodes of some incredibly successful founders like yourself, and one of the things that just continues to… it doesn't surprise me anymore, but delights me that the audience gets to listen to it is just that truth you said right there, that the fear of your dad's bankruptcy played a role in how you navigated your entrepreneurial journey. Because we can't… we try to pretend that our history doesn't play a role in our future. While it shouldn't be the fuel that drives us, it's naive to not think that it plays a factor. So I love when people like yourself are bringing that truth to my listeners because I know that there are people listening right now that have some sort of baggage as to why they don't move forward on building their business, and maybe it's because they have family members that failed at some point, and then therefore there's a level of fear for themselves, so thank you for bringing that.

Now, when we talk about the discount brand store you mentioned, just from a current day context, I immediately thought of like a Ross and a Marshall's and a TJ Maxx. Is that what you were talking about? Kind of like that discount store? Or are we talking like Dollar Store?

Michael Coles: No, no, no. Fashion. This was fashion discount, and we had to actually cut the labels out back in those days. You couldn't leave the labels in. as a matter of fact one of the ads we ran was how much people were paying for the label.

James McKinney: Got it.

Michael Coles: That was kind of the promotion.

James McKinney: Awesome.

Michael Coles: I'd like to add a little bit to what you were talking about if you don't mind.

James McKinney: Please.

Michael Coles: There was a terrific movie, a Ron Howard movie, called Cinderella Man and it was the story of James Braddock and how he came back to win the heavy weight championship of the world. By the way, that movie never got the kind of acclaim it should have.

James McKinney: Agreed.

Michael Coles: But there was a great moment in that movie where he's about to fight for the heavyweight championship of the world and a reporter says to him, "Jimmy, I don't understand how you've gotten to this point." He said, "You couldn't fight your way out of a paper bag, and now you're just winning all these fights." And Braddock starts off, and this is a true moment by the way because I went and looked it up. Braddock looked at the guy and he said, "Well, you know I was fighting a lot of times injured, I had broken…" And right after he says that, he stops and says, "No. Now I know what I'm fighting for." And the reporter said, "What is that, Jimmy?" And he said, "Milk." And because he had gone through the Depression and there were moments where he'd gone from being very successful to not even being able to afford milk. When I've been asked that same kind of question, you know you've gone through all this adversity, you've managed to keep going, what is it that kept you going? How are you able to keep going? And I remember telling people, "It was waking up that morning on Miami Beach in that 300 square foot apartment and thinking to myself I never, ever want to be that poor ever again."

James McKinney: Oh, listeners, I hope you caught all of that. And if you're driving or running, rewind this back a few minutes because that was just so incredibly rich. But now as an entrepreneur who has lost everything, you know in 2008, 2009 I lost everything for our family. It was devastating. The wounds have healed so I now get to just show scars, right. There's no blood to be shown at this point. But I have to ask, knowing your history, knowing that you remember that 300 square foot apartment and that screened in porch, and you didn't want that, you just said in Atlanta your first business drove you to bankruptcy. What went through your mind as that truth came to be, reflecting on where you didn't want to go?

Michael Coles: Well, here's what happened. I started my business about six months after I had a first marriage fail, and I met a woman about six months after my divorce, and I fell head over heels in love with this person. I was a great marketer, I was a great sales person, but Irving who had heeded this advice which was you don't have to be an expert in every part of your business, make sure you understand every part of your business. And I just ignored the financial end of the business. And by the way, I'm still married to that woman 48 years later.

I just didn't pay any attention to the finance of the business. I thought revenue would correct everything. We were doing huge volumes and I finally hired a CFO and within the first week, this is really a true story, within the first week he was there he called me into his office and he said, "We're bankrupt." What do you mean we're bankrupt? I said, "We're doing great." He said, "No. Our current liabilities are 2:1 against our current assets. We don't have any operating cash." So I scrambled, I tried to do everything I could once I recognized what had happened, but at the end of the day we were so far in debt there was no way to pull us out.

The other thing that happened CNS Bank back in the day, and that was the biggest bank in Atlanta, they got into financial trouble and it was all real estate driven, and they pulled our line of credit without even telling us. We literally came in one morning and we had the money in the bank, and they took the money out of our bank account without any notification because they deemed themselves insecure which was a line in the loan agreement. Basically, it wasn't us that they were trying… we were not the problem, but the problem was real estate, and then all these developers had no money whatsoever. So between that and the financial trouble we were already in, I wound up having to just file bankruptcy Chapter 11.

James McKinney: Oh my goodness. One of the things you said there you thought revenue could solve everything. It reminds me of a full episodes that we've recorded with startup founders now where their phrase was that they thought investment capital can solve everything. It's interesting to see across the timeline of entrepreneurship either way, if we take our eye off the ball of what the business is and the fundamentals of the business, catastrophe's going to follow. It's just the way is. It's just things change, we have to keep our eye on different balls if you wall. So you find yourself filing bankrupt. I don't know what year the Great American Cookie Company comes to be, but so far I see no baking in your timeline. I see no food industry in your timeline. How do we get there?

Michael Coles: okay. So my bankruptcy, when that went down, that's actually when I connected really with my dad. And when I say connected with my dad, my dad and I had a very bad relationship from the time… he felt horrible. It's like you look back at this now and you understand it. He felt so guilty about taking away my childhood and my teenage years, giving money into the house basically every week until I was 19 years old. We had a very tough relationship. And so when that happened, it was like my dad and I reconnected. That was like the best thing that came out of my bankruptcies. I could really understand what he went through.

To make matters worse, I had to get a job. My wife was about to have our child and I didn't have any savings. I had to go back to work and I had to go back to work for the company I had resigned from. You know, and I had resigned as this big hero in this company. I was the golden boy in the company, and here I was, I was less than the golden boy coming back. So I went back to work there. I stayed there a couple, well maybe a year and a half, and I basically decided it was time for me to go out on my own.

I had built a lot of relationships nationally and I started with a friend of mine a company, you ready for this, the Great American Clothing Company. And so… yeah. It was right before the centennial, it was 1976 so American spirit was really high, and so we called it the Great American Clothing Company. I had a big falling out with my partner about a year in. the clothing industry was really changing, it was moving overseas. I was travelling three days a week. Now I was going to have to start travelling three weeks a month and I had three young kids, and I didn't want to do that. So I had decided that I was going to do something else.

I went to California for a clothing show, and we used to get a hotel room and your clients would come in to see your merchandise, and you'd always entertain them. You'd get snacks and stuff to serve and so I went into a mall to buy snacks and I saw this long line of people at a store, I had no idea what it was but I'd never seen a line like this before, and it turned out it was a cookie store in San Diego. I got in line, I figured I'd get some cookies for my clients. I got in line. The store manager was behind the counter, because he was wearing a little badge that said "store manager," and I started questioning him about the business because it was fascinating.

You've got to remember, this is back in a time there were no single concept food ideas at any mall in the United States. None. There were no yogurt stores, no pretzel stores, you know no Cinnabon, none of that existed. So the idea of a single concept idea just at a mall was so unique. Anyway, so I bought some cookies, I started talking to the manager, we realized the line was as long as it had been when I got there and I said to him, "I'm really sorry, I hate to hold you up but I've got so many questions." And he said, "Well, I'll come out." So he literally came out from behind the counter, went and sat at a table, and I started drilling this guy about the business, and I was fascinated by it.

So I left the mall and I went to a grocery store and I bought all the ingredients to make my mother's chocolate chip cookie recipe which I had made for years. Then I went to a drug store and bought a postage scale so I could weigh out the ingredients to see if I could figure out what the food cost was. I had a kitchen in my hotel room and so I made the cookies, baked them, measured out the food cost, I was blown away at how low the food cost was. This is also the true part of the story, I got back on an airplane to fly back in Atlanta. This is back in the days when the airlines used to give you magazines to read. I picked up a People magazine and on the cover were these two young kids that started a company called the Chip Yard to earn money for college, which was a chocolate chip cookie company. I'm like what is with this chocolate chip cookie thing, you know?

James McKinney: interesting.

Michael Coles: So I got back to Atlanta and I said to my wife, "You know what, i don't know what I'm going to do for the rest of my life but I don't want to be away from you this much. While we're figuring out what we're going to do, let's open up a cookie store so we can have some income while we're figuring out what real business I'm going to be in." so it turned out that a friend of mine, his wife made unbelievable chocolate chip cookies. She had always served them, he was in the clothing business, when they were making their presentations. It turned out he and his wife started working on that same idea. I had called them up once I figured out I was going to sell my interest in Great American Clothing to my partner to see if he wanted to take over. He had a sales company, to see if he wanted to take over sales and marketing, and that's when he asked me what I was going to do.

Anyway, long story short we decided we'd do it together. But we were going to open up one cookie store. It wasn't going to be like this big chain. Maybe a couple of stores but that was it, and I was just going to work on my next venture. We decided to do it together. Our very first day of business, we showed up at the mall to get started. We had no money. We only had $8000 to invest. We borrowed $25,000 from CNS Bank again and-

James McKinney: You borrowed your money is what you're saying.

Michael Coles: Yeah. We borrowed $25,000. They made us sign a personal guarantee, and not only did they make us sign a personal guarantee, they were so convinced we were going to fail that they sent the forensic accountant to both of our homes to inventory all of our personal assets because here's what they said. "When you fail, we don't want to have to chase you for the money. We're just going to come and take everything. We're going to take your house, we're going to take all your personal assets. We don't want you to go in this business." Basically that was it.

James McKinney: Oh my goodness.

Michael Coles: And a mall in Atlanta, perimeter mall in Atlanta, we signed a 10 year lease. We had to personally guarantee it. It was $25,000 a year, quarter of a million dollar obligation. Guy took a huge chance on us because we had no food experience. We had no money. We had nothing.

James McKinney: This is crazy. This is crazy.

Michael Coles: I know and this guy took this big, and of course at the time we were so convinced how successful we were going to be, couldn't imagine why nobody would give us a lease. Again, you've got to remember there's no single food concepts at this time. There were already three big chains. One had almost 100 stores, two had almost 50 stores, so he had no confidence in the business. He would have leased to them, not to us. We got the store ready to open. We did sign the lease, we did sign the person guarantee. There's a long story about it in the book, I'm not going to go into it now.

And on our very first day of business, we went around the neighborhoods, we handed out… we had no money for marketing. We handed out flyers around the neighborhood, around the mall and we gave it to all the mall employees and we said from 9 o'clock in the morning which is an hour before the mall opened until 12 noon we'd give away free cookies. We figured, because the cookies were outrageous. They were really good. And we had a completely different concept of how to be in the cookie business than anybody else that was in the business. We said that from 9 o'clock to 12 noon we'd give away free cookies. We figured people would come taste the product and come back and buy it.

We got our first batch of cookies at about 8:30 in the morning. 15 minutes after they went into the oven, they were this beautiful golden brown color. All the employees of the store, which consisted of me, my wife Donna, my partner Arthur, his wife Susan, their son Billy, my mother Lee, we had no paid employees because we couldn't afford them. we opened up this oven door, we decided in the way a sports team would put their hands together before, cheered themselves on, we would all put our hand on the oven door, open it together to start our business which is exactly what we did. We opened up the oven door and there are these magnificent, 300 golden brown chocolate chip cookies sitting on their trays at 350 degrees, and it was exactly at that moment we realized we had no oven mitts.

James McKinney: Oh no!

Michael Coles: We had no rags in the store, we had no napkins, we had no way to get the cookies out of the oven. People out in the mall are just watching these cookies on a big revolving Ferris wheel. They're watching these cookies go round and round, going from golden brown to much darker shade of brown. They eventually caught fire on their trays. We were in a combined air conditioner system with Park Lane Hosiery. Smoke was pouring out of the oven into their store. They were running out screaming. They thought the mall was on fire. The fire department was called out. And I remember looking through this big cloud of smoke and Jeff While, who was the mall manager that took this big chance on us, could have cancelled our lease that day, walked up.

We had the gate down fortunately and he just looked inside and asked one simple question. "Is this what it's going to be like every day, guys?" And so he, again, he could have broken our lease but he took a chance on us one more time. We didn't get open that day. We had to go back out into the neighborhood. I remember the flyer as clear as today as it as back then. It was on a yellow piece of paper with a big thing on the top that said, "Oops. Same deal, come tomorrow and we'll give you free cookies from 9 to 12." Well, we opened. We got ready the next day. That first day there were probably 80, maybe 90 people out in the concourse of the mall waiting to get free cookies, but the next day after that we had about 500 people standing out there. They weren't there for free cookies. They were there to see what these two idiots were going to do today. Maybe today they're going to finish the job and just burn the mall down.

But at any rate, we did open that day. We were very successful opening. We needed to do $12,000 worth of business to break even in those first 30 days. In fact, we did over $30,000 worth of business. In a month's time we became the highest revenue cookie store in America. We had malls from all over the country offering us locations. We had people applying for franchises. But about six weeks after we started that company with all these great things in place, I woke up in a hospital in Atlanta with two doctors standing over my bed, telling me that I would live but that involved a near fatal motorcycle accident, and I would probably never walk normally again. I would always need some type of aid, either canes or crutches. But considering the alternative of not waking up at all, I thought that was okay.

But about nine months after my accident, I had an incident with my daughter Karen, who was three years old at the time, that virtually changed my physicial life and my business life forever. We had a steep driveway at our house. She asked me if I would race her up to the mailbox and I thought even on two canes I could beat this little kid up the driveway. And when I took off to run, the pain was just excruciating, and it was the first time since my accident that I realized I was disabled. When she saw the look on my face even at three years old, she looked up at me and just said, "You know daddy, I'm really too tired to run today." And so I was devastated.

But as I said, it was the first time since my accident that I realized that I was disabled. But not so much disabled in my legs, disabled in my mind. It was the very first time in my life that someone had told me what my limits were, and I believed them, because I was living in a safety zone the doctors had given me. Because I can sit here today and tell you that at 33, learning how to walk again really hurts. So I had given up. And so I came back into the house, I said to Donna, "There's no way I can spend the rest of my life like this." I had to try something different from a rehab standpoint. And so I started a self-styled rehabilitation program that eventually took me from a stationary bike to a regular bike, and at the same time we took that $8,000 investment and turned it into a $100 million revenue company with hundreds of stores nationwide.

I not only learned to walk again, but set three world records riding coast to coast on a bicycle, from Savannah, Georgia to San Diego, California in 1982 across the country in 15 days, a little over 15 days. And then in 1984 I broke my record by over four days cross the country in 11 days, 8 hours, 15 minutes. And then in 1989 I joined the four man team to do the race across America which went from LA to New York. It was some 3,000 miles. We won the race across America. We crossed the country in 5 days, 1 hour, 8 minutes. It's the fastest crossing of America ever by a four man team, and the fasted 3,000 miles ever covered under human power, and I'm proud to sit here today and tell you that both records still stand.

James McKinney: That is amazing. And all those stories in greater detail are in the book Time to Get Tough: How Cookies, Coffee, and a Crash Lead to Success in Business Life. Again, we're going to have a link in the show notes. What an amazing journey. But as our time unfortunately is coming to an end, one thing I want to capture. You mention briefly that the Great American Cookie Company grew to $100 million in revenue. What ended up, because I don't think any of my listeners now know of the Great American Cookie Company. So what was the story arch to Great American Cookie Company briefly? And then when you look back on that season, what are some key lessons that still you carry today and you would give to entrepreneurs listening?

Michael Coles: Okay. So first of all, Cookie Company is still around, bigger than it was when we sold it. It's 42 years old so it's still around.

James McKinney: in malls?

Michael Coles: Oh yeah. Well, malls and outside of malls now, non-traditional locations, yeah. We had about close to 400 stores. Probably about 500 or 600 stores now. They're international as well, so they've grown the company. Still very proud of that. So I guess two key lessons would be this. One is that we had this personal guarantee we could have lost everything. I had studied the cookie business for almost a year before we opened our first store, and a $3 set of oven mitts virtually could have put us out of business, we would have lost everything. So the first lesson I would say to entrepreneurs that are listening, whether it's business or life, is that the difference between success and failure is never what you plan for, it's how you deal with the unexpected. And there's no greater lesson to me than those oven mitts. There were plenty of other oven mitt stories during the 20 some odd years we ran the company before we sold it. So my advice to entrepreneurs is prepare and learn as much as you possibly can about everything about your business. But when the unexpected comes, that's when you're going to be tested, and that's going to be your real test.

James McKinney: That's awesome.

Michael Coles: And the other thing I would say is this. I originally started going into the cookie business to wait to see what my next real business was going to be. We had about 25 stores when I woke up one morning realizing the company was doing really well and thinking to myself well maybe this is what I'm supposed to be. But the thing of it is even though I thought it would be a transitional business, what I learned about business was the fundamentals of how you run a retail or any kind of business they're all the same. When I talked about the fact that I went back to Atlanta to learn about manufacturing, I had to set up a batter facility. I had to set up a mixing facility to produce product. It was no different than setting up a plant to manufacture clothing. You start with raw ingredients. In clothing, you put it together with sewing machines and zippers and buttons. All of it worked the same way.

And so the reason we were able to be successful is because we had a lot of background knowledge, and the company, because I think in some ways we didn't know anything about the food business, we just did it differently. We were just a retail store selling cookies. We could have been selling shirts and pants and anything else. We had lots of merchandise, lots of promotions, just very different. The three companies that were around when we started were all gone by the time we hit 100 stores.

James McKinney: Oh wow. That is incredible. You know I have to ask with your incredible experience with the many people you've had a chance to meet, obviously the experience of writing a book, do you believe, and this is a question my wife came to me with when she interviewed me for episode 50 and I've carried it on since, but do you believe anybody can be an entrepreneur or is there a genetic makeup for it?

Michael Coles: Yeah, I think anybody can be an entrepreneur. I think it's a question of your ability to want to take risk. There's nothing wrong, as I said today corporate jobs pay well. A lot of people are just comfortable being in that role. Let's face it, the difference between success and failure is a very thin line and I think the thing that drove me, I mean people would always laugh about this but you know when I was running the cookie company every week I would try to figure out how long it would take for us to go out of business. If some disaster happened, how long would we last, and I ran the business that way. I always had a plan two.

It's always great to have plan number one, but what's plan two if things don't go exactly the way you want? What if this is really just a fad and look what's happened. What if malls all of the sudden don't get as much traffic? And the cookie company today I think should be a different kind of company than it is, even though they're doing very well. But I don't think they've made the kind of transition they need to make for being not so much traffic based in malls. I think there's other things they could be doing.

James McKinney: incredible, incredible. So the last two questions are questions I ask every founder of every episode, and if I had to trim the episode down to just a 30 minute episode I would still not remove these questions, this is how important they are. So the first one is about gratitude, and the reason I ask this question is because I believe that I don't care who you are, you are where you are because you stood on the shoulders of someone before you. And so when you look back into your entire life journey, who are the people that you point to with such immense gratitude for their contribution to your story and to where you are today?

Michael Coles: Well in my book I talk about four people who saved my life. First one was a woman named Elaine Silverman who literally saved my life when I was drowning in a quarry when I was five years old. She jumped in and saved my life, so I wouldn't even be here today if it wasn't for her, so I owe her a lot. Irving Statler who stepped in and was the first person outside of my family that made me feel that I had some worth. Because when I was gong through that horrible time in my life where my school… I wasn't getting a lot of people patting me on the back. My family, I don't even know if there was even a thank you for my basically working those jobs and giving money in because it was just something you do. My dad had done it was his family, so there's no thank you, I just did it.

My brother who got me through high school and then my wife Donna who stepped in probably at the most critical time of my life, who gave me a sense of security that I frankly had never had, and probably allowed me more than anybody else to take risks because I know even if I failed I would have her and our family to fall back on.

James McKinney: That is incredible. Unbelievable. I love that question so very much. It just frames an entire life into perspective, and so thank you for sharing that. And the last question before we go, we've been talking to tens of thousands of entrepreneurs and want-repreneurs everywhere. And I believe The Startup Story is a digital mentor to many, many people. And so my gift to my audience is always a one on one conversation. So as we take the conversation from the tens of thousands down to the one, my audience is made up of entrepreneurs that have their own business but right now in the midst of the coronavirus it's a crazy time for many people. And many people are trying to evaluate what are next steps, and so they're just a frustrated and probably scared entrepreneurial base right now.

There's the want-repreneur, the one who has a 9 to 5 job but maybe this coronavirus is shaking things up there, but they have some narrative as to why they can't move forward with their dream. Or maybe it's the entrepreneur that's just been punched in the gut time and time again, and they just don't think they have what it takes to do it anymore. Whatever of those resonates with you the most, I would like to ask you to speak directly to that person, and what do you say to that person as your parting words on The Startup Story?

Michael Coles: Well, you know when I was 13 and woke up in that less than 300 square foot apartment and had to make a big change, a decision in my own life, I remember looking back and thinking about a story about overcoming adversity, and the first one I could think of was the story of David and Goliath. And so the story I would share is this. For many people, the story of David and Goliath is about this small man who walks into the valley against this enormous giant who has armor and weapons, and not only wins the battle against the giant with nothing more than a slingshot and a few stones, but kills the giant.

And I remember at 13 years old thinking about that story and that was never my takeaway. My takeaway was that David, without knowing what the outcome would be, had the courage to step into the valley. What I would say to people today is this: we are all faced with goliath challenges. Whether it's learning, for me how to walk again, or today dealing with the kind of severity of this total change in our lives around this virus. Whether before that it was changing careers or going back to school. All of us face these goliath challenges every single day, and the question we have to ask ourselves do we have the courage to take that first step and walk into the valley.

James McKinney: Once you've had a few moments to process all the value Michael brought us in this week's episode, please hit me up on LinkedIn, Facebook, Instagram or Twitter and share with me your thoughts on the episode. Lastly, if you've been around The Startup Story for any length of time then you know how much emphasis I put on the idea that entrepreneurs support other entrepreneurs. As you heard during the episode, Michael's written a book. His book Time to Get Tough: How Cookies, Coffee, and a Crash Lead to Success in Business and Life. And as a way to show our appreciation for all the value Michael brought us in this episode, I want to ask you to get his book. And for easy access, we'll include a link in our show notes for that book. Within this book, he goes into greater details on all the many stories he shared with us today and some practical takeaways for us to bring into our business. I say it every week because I truly believe it, entrepreneurs support other entrepreneurs, so let's show up for Michael Coles in a huge way and pick up his book today. All links are available in our show notes. And now, for my personal ask.

The Startup Story community has been so incredible about sharing our podcast with others, but we have more stories to tell and more people to reach. We too are a startup and word of mouth is everything, so please follow us on Facebook and Instagram @TheStartupStory or on Twitter @StartupStory_. If you're on LinkedIn, please search for The Startup Story and follow our company page. LinkedIn is a really powerful way to raise awareness of the show. But the most impactful way you can help us grow our audience is to leave a review on Apple Podcast. Or if you listen to the show via Spotify, then please simply share the podcast directly from your Spotify app or wherever you listen to the show.

These simple actions can make a huge impact in getting these amazing founder stories out to the masses. And please make sure to tag or mention The Startup Story when you do share so that we can connect with you and say thank you directly. I'm so incredibly appreciative of the fact that you listen to the show each and every week, and I look forward to sharing these amazing stories with you every Tuesday with hopes of encouraging and inspiring you to start your story.

If you like this podcast and are thinking of creating your own, consider talking to my producer Danny Ozment. He helps thought leaders, influencers, executives, and authors create, launch, and produce podcasts that grow their business and make a real impact in this world. You can contact him today at emeraldcitypro.com/startupstory.

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May 19 2020
Michael Coles, founder of Great American Cookie Company

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