A Failed Business. A Newborn. And a $500 Bet That Changed Everything

We’ve all had setbacks. Unexpected setbacks. Bets that didn’t pay off. That’s the nature of the entrepreneurial gig we signed up for. Tonight’s entrepreneur had an unexpected lesson in how to turn come back from that, bigger and better.

Kendra didn't start out wanting to build a jewelry business. Why? Because she had already failed as an entrepreneur once.

Her first business, a hat business, had failed spectacularly and Kendra had sworn off retail forever. Done. Finished. Never again.

But here's the thing about failure: Its a great teacher, is it not?

The Accidental Pivot

After her hat business collapsed, Kendra needed to do something. She was a young mom and money was tight. So in 2002, she started making jewelry in her spare bedroom in Austin, Texas, not as a business per se, but as a side hustle. Just something to do.

She had $500 and a baby to deal with. But she wanted to see if the jewelry would sell, so she started to go door-to-door, walking into local boutiques (baby strapped to her chest), setting her jewelry on the counter, and asking if they'd be interested in selling it on consignment.

Most said no. Some said maybe. A few said yes.

But here's what surprised her: Customers started calling, wanted to buy directly from her. They wanted more colors. They wanted custom pieces.

The market was speaking. And Kendra started listening.

(Important aside: I once had a SCORE counselor tell me, “Ask them what they want, then give them what they want.” Surprisingly simple, but oh-so-effective, and I still use that lesson to this day. Indeed, that’s one reason why my poll, below, is always asking, well, what do you want? 😇)

The Thing She Swore She'd Never Do

So Kendra grew her nascent jewelry business quietly, without investors and no big marketing budget. Just word of mouth and her own hustle. Revenue slowly climbed and she even hired a few people.

She even moved out of the bedroom, but continued to stay away from retail. She'd learned that lesson the hard way.

Except...

In 2010, eight years in, Kendra made a decision that contradicted everything she thought she knew: She opened her first real retail jewelry store.

Not because she wanted to. But because her customers kept asking for it.

Give them what they want!

And when that first Austin store opened, something magical happened. Customers could finally see the jewelry in person. They could touch it. Try it on. Customize it right there. And they showed up in lines around the block.

Three years later, revenue had exploded from $1.7 million to $24 million.

Breaking Her Rules

But here’s the thing - the breakthrough wasn't the product. That had always been good. The breakthrough was finally giving customers what they asked for, what they actually wanted.

Even if it meant eating crow on her own rules.

Today, Kendra Scott operates hundreds of stores across the US and beyond. The company is valued in the billions. Kendra is one of the most successful female entrepreneurs in America and is a guest shark on Shark Tank.

But she got there by failing first, listening hard, and being willing to change her mind when the evidence demanded it.

The Takeaway

Your first business idea doesn't have to be your last one, and your business failure doesn't have to be your last story.

Sometimes the real entrepreneurial skill isn't knowing what to build, it's knowing when to pivot and when to listen to your customers. Because sometimes "never again" is just what you needed to say until you were ready.

Crash Expert: “This Looks Like 1929” → 70,000 Hedging Here

Mark Spitznagel, who made $1B in a single day during the 2015 flash crash, warns markets are mimicking 1929. Yeah, just another oracle spouting gloom and doom, right?

Vanguard and Goldman Sachs forecast just 5% and 3% annual S&P returns respectively for the next decade (2024-2034).

Bonds? Not much better.

Enough warning signals—what’s something investors can actually do to diversify this week?

Almost no one knows this, but postwar and contemporary art appreciated 11.2% annually with near-zero correlation to equities from 1995–2024, according to Masterworks Data.

And sure… billionaires like Bezos and Gates can make headlines at auction, but what about the rest of us?

Masterworks makes it possible to invest in legendary artworks by Banksy, Basquiat, Picasso, and more – without spending millions.

23 exits. Net annualized returns like 17.6%, 17.8%, and 21.5%. $1.2 billion invested.

Shares in new offerings can sell quickly but…

👉 [My subscribers skip the waitlist].*

_{*Past performance is not indicative of future returns. Important Reg A disclosures: masterworks.com/cd.}

Steal This Strategy!

📖 Book — Pivot: The Only Move That Matters Is Your Next One by Jenny Blake
A practical playbook for recognizing when to change direction—exactly what Kendra did in 2010.

🎥 Podcast — How I Built This with Guy Raz - Kendra Scott Episode
The deep dive into her $500 startup, the consignment walks, and why she finally opened retail stores.

🌐 Website — Kendra Scott Official
See how she built a billion-dollar company and the Kendra Gives Back initiative that donates to local causes.

📖 Book — Born to Shine: Do Good, Find Your Joy, and Build a Life You Love by Kendra Scott - Her full memoir about the failed hat business, listening to customers, and building with purpose.

🎙️ Podcast — Shark Tank Season 12 (Kendra Scott as Guest Shark)
Watch her evaluate other founders and share what she looks for in businesses.

About Steve

Steve Strauss is the best-selling author of The Small Business Bible (and 17 other books), Inc.’s small business columnist, a lawyer (non-practicing), and an entrepreneur. He sold his last venture, TheSelfEmployed.com to Mark Cuban & Zen Business. Need a ghostwriter or a newsletter for your business? Contact Steve!