0:00 spk_0
Sometimes the things that make us less perfect are the things that tell our story and make us far more interesting.
0:06 spk_1
Yousold for, I know we can’t confirm, but 300 million-ish to L’Oreal.
0:10 spk_0
You know, I didn’t take home that whole amount, obviously, not even close, and I literally like brick by brick by brick builtthe network.
0:19 spk_1
I mean, the evolution, your story is so insane
0:21 spk_0
if you don’thave enough inventory.And you do that digital marketing thing right and you go viral and you run out, your virality just collapses. OK,
0:32 spk_1
so what’s the balance?
0:33 spk_0
That’s the work. That’s tough. People call it work for a reason. That’s the work. Literally hit me in that moment like the next frontier in beauty isn’t more democratizing beauty. Everybody’s on that bandwagon. The next frontier is.
0:51 spk_1
Howdy y’all. I’m Elizabeth Gore. I’m the co-founder and president of Hello Wallace, and this is The Big Idea, presented by Block Advisors, built by H&R Block. So what is between the spreadsheets this week and small business? Are you getting your money back?In February, the US Supreme Court ruled IEPA did not give the president the authority to impose tariffs. So if you are one of the over 300,000 people who paid tariffs that added up to billions of dollars, you need to check to see if you qualify for a refund.Jerry Maguire, y’all, show me the money. You need to go to CBP.gov and search IEA IEEPA duty refunds and see if you qualify. Don’t let the biscuits keep sitting in the oven. Go get that money.30 years ago, Wendy Zelmner broke every rule in the beauty industry with a brand called Urban Decay, one of my favorites. No rulebook and a nine-figure exit to prove it worked. Then she did something almost no founder with a successful exit ever does. She went back to zero in the exact same industry, now completely saturated with the people copying her own playbook. This is what it actually takes to disrupt.Twice. Welcome to the big idea.
2:06 spk_0
Thank you. I’m so excited to be here withyou.
2:09 spk_1
I brought one of my palettes. This shows you how much I use it. Look how you.
2:13 spk_0
Oh my gosh,this is a Game.
2:14 spk_1
I think it’s the game. Yeah, it’s the Game of Thrones one. It’s my favorite. And now, da da da da, founder of Kelly Rae. Kelly Ray, I’m so, I mean, the evolution, your story is so insane. I know you as an incredible mom.And wife and somebody who loves to surf and the ocean and it was so funny because we’ve known each other so long. I, I was digging into your story and all these things I did not know, right? Like, somehow you landed the founder of Cisco to be your co-founder.
2:44 spk_0
This is crazy because this will really, if anyone’s thinking about like how these little interactions don’t matter, they totally do. So I’mWorking in advertising in Chicago, my first job out of college, making no money. So I have a side hustle. All these kids today complain about having to have a side hustle. Well, we all had to have a side hustle. So I’m teaching aerobics to make extra money, and this beautiful girl comes up to me after and she said, Oh my God, I loved your class. And then she and I got to be really good friends, and she introduced me to her friend, who is still my good friend to this day.And that friend happened to have an ex-fiance who was the financial manager for Sandy Lerner, the founder of Cisco, and actually jumping into makeup was Sandy’s idea. Her whole philosophy was, well, I broke tech. Why can’t we break beauty? And if you think back, and I always wanted to be an entrepreneur, but I didn’t really have a mentor or anyone to help me go about doing it.And I, it just all kind of coalesced in the backyard of her house in Los Altos, and we decided we were gonna um take on all the big beauty companies. And if you don’t remember the late 90s, beauty back then was not the technicolor dream that you know it as today, right? You know, we wanted to change beauty to, it should be about being a tool for self-expression.So that’s really what we were trying to do. We were trying to democratize beauty. And now I think if you look at the beauty industry, that is table stakes. If you were going to start a beauty brand. You would not be able to start a beauty brand and say, we’re gonna exclude all of you, and if you buy our products, you may be able to look like her.Right now it’s gotta be like, hey, there’s all different kinds of beauty, this is all kinds of ways for you to express yourself.
4:33 spk_1
So, OK, wait, another infamous story is that you landed Nordstrom’s cause you stalked some dude, and he had um a call sheet, and you went and took his call sheet.
4:45 spk_0
This is a little, it’s a little different, it’s a little worse actually, a little worse.
4:49 spk_1
I love that it’s
4:50 spk_0
a little worse. So the guy I was dating at the time, his best friend was a swimsuit rep and wrapped swimsuits and sold them at Nordstrom for different brands, and he was down in SoCal making us calls on buyers, and he called me and said, Hey, I stopped on the way to my, my appointments to surf because the surf was so good.Can I stop by your place and jump in the shower because I was on his way and I was like, sure, no problem.So he’s in the shower. He’s my boyfriend’s friend. I’ve met him a bunch of times, but I was like, I bet Fred has a buyer list in his bag. And so while he was in the shower, I literally like pull, I opened it. There it was. I pulled out his bag. I wrote down all the names and their numbers, put it back in the bag, and he took his shower and left.And then I started calling swimsuit buyers before he could get there and said, Hey, I just saw Fred Riley. You gave me your name and said you gave me the name of the makeup buyer. And he, they did. They all dished. They gave me the name of all the makeup buyers for all of Nordstrom’s Systemwide.
5:55 spk_1
You are so bad. I love it.
5:57 spk_0
I’m bad, but sometimes I call it resourceful. Absolutely.
6:00 spk_1
I don’t know if you.Sometimes you have to be resourceful. OK, I want to, I want to, I want to talk about Urban Decay and then evolving over to Callie Ray. And the way I think about it was Urban Decay was me in my 20s, where I was smoking cigarettes and real vodka and fast food. And now in my late 40s, I am Callie Ray and I’m green juice and clean tequila and sunshine.
6:28 spk_0
So that you’re not at all.
6:31 spk_1
OK,
6:32 spk_0
tell me, you’re so dead on. So, and then I I was living when I was in Chicago working in advertising, I was living in an illegal loft building, crumbling bricks, rusting fire escapes. What’s beautiful about that, what’s beautiful about that is that there’s depth there and there’s a story there, and we’re all like that too. Sometimes the things that make us less perfect are the things that tell our story and make us far more interesting.And so I think the same thing with um Callie Ray is I just moved out to California. Wellness had always been important to me, but as I had children, it became more and more important to me what I was feeding them.And so when I built the Urban Decay offices, people don’t know this, but I offered yoga classes for the employees. I had a biodynamic garden. I built all of the spaces, the workspaces, um, workstations with non-off gassing materials, which costs a ton more money, you know, than regular materials would have. And I just really tried to build, like we took the parabens out of products 18 years ago before anyone cared.And so, you know, I was definitely on this wellness journey even at Urban Decay. So Callie Ray isn’t this huge like line departure. It was percolating inside Urban Decay, but, but that wasn’t part of the Urban Decay brand DNA. We didn’t talk about that, but it made Urban Decay a better place to work. And then I tried to roll that whole like wellness ethos, body, soul, all of it.In Cali Ray.
8:07 spk_1
It’s, it’s amazing. By the way, quick question, why didn’t, when you, so you sold, um, for, I mean, I know we can’t confirm, but 300 million-ish to L’Oreal, Urban Decay. Why didn’t you stick around?
8:21 spk_0
Because I love the brand and I love the people, it was my Urban Decay fam, and I did love working. I think it’s, it was a good example for my kids. I was able to admittedly, I did have to travel a lot for them, but I had a lot of day to day flexibility.
8:38 spk_1
I, I heard you describe that building urban decay was, you know, early days like building the 405, you’re breaking ground. And then now in Kelly Ray, it’s so crowded that you can’t even merge onto the 405.
8:51 spk_0
I have saidthat, yes.
8:53 spk_1
Why is this time harder and more crowded?
8:56 spk_0
Well, I think it’s not necessarily harder, it’s just different. The barriers to entry when I started Urban Decay were you couldn’t just Google, I want to build an indie beauty brand, where should I make my lipstick, and a list of vendors pops up. The way I found the vendors for Urban Decay was, I was like, I wanna make nail polish. What’s the most like nail polish? Car paint. I went down to theThe body shop in Laguna Canyon, and I asked those guys like, where do you buy your car paint, and they told me. And then I called them in New Jersey and they’re like, oh yeah, we also make nail polish. And I was like, yeah, this is how it happened. And then I called them and said, Do you know where I could make a lipstick? And they were like, Yeah, we know where you can make a lipstick. And then I asked the lipstick people like, Do you know where I could buy a nail polish bottle? And then I’d ask the nail polish bottle people, Do you know where I can buy a lipstick case? And I literally, like, brick by brick by brick built.Network. Kelly Rae is really different. I mean, I don’t have these barriers to entry about how to make product. I know how to make product better than almost anybody else. Um, but the barriers to entry are now, it’s crowded. It’s a digital space. I’m not a digital native. I’m a Gen Xer. So, you know, I need help on that side figuring out how to navigate, how to break through.Those kinds of media barriers. I understood media before. Media is a little bit of a mystery to me now, but that’s part of the joy of doing this the second time around, is staying up on what’s going on, learning from these younger people around you that can help educate you.About how thatworld works.
10:28 spk_1
Hey, we love talking about mistakes on this show, um, because, um, I made 10 before breakfast this morning,
10:34 spk_0
right?
10:35 spk_1
So many we call them dirty unicorns, and I, I wanna know what one of your biggest dirty unicorns was that we can all learn from.
10:43 spk_0
Uh, it’s always an inventory mistake. It’s always an overbuy in a react being overreactive. It’s the thing you do in your personal life that doesn’t work, and it’s the thing that you do in your business life that doesn’t work. So I would say at Cali Ray we got stuck with some inventory of shades that we’re not gonna sell as a reaction to all of the COVID backlog of getting merchandise, you know, overbuying, over placing orders before I really saw.What was happening?But on the flip side of that, and totally counter to the advice I just gave, so get ready to just have your head spin, is that if you don’t have enough inventory and you do that digital marketing thing right and you go viral and you run out, the world is such an instant gratification place. There’s no more of this like, oh, put me on the waitlist and I’ll wait patiently. It’s like, OK, put me on the waitlist, but I’m gonna buy another one.And your virality just collapses.
11:46 spk_1
OK, so what’s the balance? That’stough.
11:49 spk_0
It’s tough. That’s the work. People call it work for a reason. That’s the work.
11:53 spk_1
I want to talk ocean because I’m, you know, like you, I live on the ocean. I live and breathe. The ocean is my absolute passion, and I, I’m so proud of the sustainability plan, um, you know, what you’re doing around removing plastics. Tell me a little more of what you’re doing there.
12:11 spk_0
The impetus to start Cali Ray really started when I was on a surf trip with my family. We were out in the Indian Ocean. We were surfing on a break that was in front of an uninhabited island. And as I mentioned earlier, I have two boys. They can surf much longer than I can. So I was like, I’m tired, gonna take a break. I’m gonna paddle into shore and just hang out.And this beautiful uninhabited island, and I get there and the beach is filled with plastic trash. Oh, it kills me. It kills me. It was like, how did this all get here? And I realized like the next, it was literally hit me in that moment, like the next frontier and beauty isn’t more democracy.Advertising beauty. Everybody’s on that bandwagon. The next frontier is sustainability, because makeup is very hard to make sustainable.
12:58 spk_1
Wendy, you’ve become a beauty nerd. You’re a nerd. I’m kind of a, I’m kind
13:01 spk_0
of
13:01 spk_1
a
13:01 spk_0
beauty nerd.
13:02 spk_1
I love it. I love that you’re a beauty nerd. We need that though. This gets me so excited. We like talking about artifacts on the show, things that, um, really emulate.Your entrepreneurship, do you have one?
13:16 spk_0
I do.
13:18 spk_1
I have. I’m, I’ve been so curious. I
13:20 spk_0
have
13:20 spk_1
a
13:20 spk_0
few. I have a few naked palettes here. Yes, Naked Heat, the one that broke the internet, um, I have, I couldn’t find an original. They’re buried in an archive. This is Naked Wild West. This is one that broke my heart because it was the first time thatThis wasn’t my choice. The, the new team that bought the company decided to put color into naked, which I think is all wrong. So that’s an artifact. But I have some really other goodartifacts.
13:50 spk_1
It’s for you because you have a positive artifact and a negative artifact, which is entrepreneurship.
13:55 spk_0
Thisis another, this is Naked Reloaded. This is the.First time we reimagined naked in a fabric case, right, that’s fun, really pretty, easy to take with you, but I wanted to show you this. I’ve never before shown this, OK, because every awesome product.As a fail before you get to the awesome product, I brought you a fail, and I have never shown this. So this
14:23 spk_1
is the, I love this is, this is your dirty unicorn product. This is
14:26 spk_0
my dirty unicorn. So this is, we made, this is an orchid pattern, right, printed on fabric, beautiful, right? But we thought we were gonna start with like a brown rose. That was the.Original idea and this doesn’t have the foil on it like this is a pre so and what we do is we repeat the pattern on the back and the whole thing is a whole package, right? OK, so we, I, I don’t know, are there children watching this podcast?
14:51 spk_1
No, no,I know, and I’m, I’m dying. I can’t wait. I don’t know what’s about tohappen.
14:54 spk_0
This is what happened when we repeated the pattern on the back.
15:00 spk_1
Wait, show it again. Show it again. Show it again, show it again. Oh.I love it.
15:09 spk_0
it. We got it and we were like, we can’t launch this. We can’t
15:14 spk_1
launch this. Would it, I mean, it might have sold out.
15:17 spk_0
It might have sold out to the wrong customer.
15:20 spk_1
Yeah. Oh, that makes, OK, thank you. That made me so happy. I’m
15:23 spk_0
amazing. I’m glad that made your day. I literally talked like I have this in my office because the woman that helped me create all of these products still works with me today on Callie Ray. It’s the joy of my life that she’s with me. She’s been in my children’s births. Like we have been through. We’ve been to.Country in the world together like it, it, and we got this together and died laughing.
15:45 spk_1
OK, that, that, I don’t know how anyone’s gonna top that. That, that was the best thing I’ve ever seen. All right, at the end of each episode, we love to give a shout out to a small business owner that is doing amazing work, and we’d love to hear what yoursis.
15:59 spk_0
So mine is Daydream Coffee and Surf Shop. It is a coffee and surf shop down the street. They are launching their own.Um, coffee line, but it is one of the most magical places it, it.A lot of things inspired the aesthetic for Callie Ray, but I would say that coffee shop was part of that inspiration, and, um, it’s just a really beautiful space, community gathering space. They have their own merch. They carry beautiful, cool, other just amazing things. They carry surfboards and they serve great coffee. So I’m so excited to support them, Becca and Kyle, and, um, yeah, Daydream Surf Shop.
16:42 spk_1
Well, Wendy, um, I love you. Thank you for continuing to make us all feel beautiful and great about ourselves, um, and I, I’m just so grateful to you and thanks to all of you for coming and watching Wendy and I just giggle and talk about life and come say howdy to me anytime on my socials at Elizabeth4 USA and thank you on behalf of Big Idea. OK, thanks for having me.How do y’all. Welcome back to The Big Idea presented by Block Advisors built by H&R Block. Let’s get to our tax break segment. Carr Breedlove, welcome to The Big Idea. How are you?
17:21 spk_2
Good. How are you? Glad to be here.
17:22 spk_1
I love it, man, have there been some changes this year. So thank you for coming on to educate us. What should business owners know right now before they walk into any appointment?With any of their tax advisors,
17:37 spk_2
there’s, you know, a few document changes that you’ll want to be aware of. Um, you might be thinking, you know, we’re at extension season and you might be wondering, man, I, I usually get a 1099. You know, last year I got a 1099K. Why am I not getting one this year? And, um, you know, a lot of that has to do with the new tax bill that passed in July of
18:00 spk_1
2020 beautiful bill.
18:03 spk_2
And the Form 1099K, which if you know, folks aren’t aware of it, it’s a reporting document that um online payment platforms use to report transactions andLast year in 2024, it had a really low reporting threshold, um, which meant a lot of folks got one that may have never gotten one in the past because the threshold used to be really, really high. But the new bill, it changed that and brought us back to the old threshold which was, you know, you had to have over $20,000 in transactions and you had to have over 200 transactions with any one platform to get the form. So,Think about if you were um taking in, uh, uh, Venmo as your main uh credit card app or something like that, um, you had to have a lot of activity before you got that form this year, so you may not get one. butYou gotta make sure you have your records of all your transactions because even if you didn’t get the form, that income is stilltaxable.
19:00 spk_1
It’s like my kids when they say, I didn’t get that text. I didn’t read it. I’m like, you knew what you were supposed to do. Hey, you mentioned Venmo and Square. Um, is it easy to pull information from them?
19:13 spk_2
It is, um, you know.A lot in the, in the AI boom that we’re in, there’s a lot of integration between platforms. Um, so that’s the first place to start. A lot of tax preparation companies and, and banks and all of these things have, uh, you know, contracts where they can share information. So that’s one place you start to see if there’s a way.For it to automatically pull.
19:36 spk_1
Well, but there, there’s a couple of changes also. I mean, 1099 DA. Tell us about that.
19:44 spk_2
A lot ofcompanies are either accepting things, uh, payment for services and digital assets, or maybe even they’re actively using their extra cash to make business investments in it.Um, in the past, it’s been kind of difficult for taxpayers because there wasn’t a consistent reporting document for those transactions, but beginning in 2025, uh, which is the year we just wrapped up or the extension season we’re finishing up here, um, there was the new form 1099 DA and that form was going to report any transactions that you had. There’s no minimum threshold for that form, so even if you had one.It would, uh, be so if it was
20:27 spk_1
$1 you have to do it.
20:30 spk_2
OK, exactly.
20:31 spk_1
And I’m worried, Carl, I just to interrupt you for one second, that most, some people might not understand digital transaction. Would you mind explaining that? Yeah,
20:39 spk_2
so think about, uh, Bitcoin, Ethereum, you know, any of those things that you use.A blockchain to effectuate a transfer of some sort of, um, you know, coin or uh could be an NFT, so a non-fungible token. Um, there’s a whole number of these things out there that, that, you know, you, you don’t need to.Know all of them, but just know if it’s one of those things that falls in those categories, it’s gonna use this document, uh, as a reporting form.
21:10 spk_1
Uh, we talked about threshold increases before, but the 1099 NEC has changed. I think 600 to 2000, and I think for the creator economy, especially, they need to pay attention to this. Can you explain this change?
21:25 spk_2
Yeah, so inthe past, uh, we’ve always had a $600 threshold for anyone acting as an independent contractor, freelancer, anything like that. Um, but under the new bill, beginning in 2026, they’ve increased that threshold to $2000. And again, just like we talked about with the 10,990.You still got to report the income, even though you don’t get that document.
21:50 spk_1
Well, I, I appreciate that flag, Carl, because I do think we have a lot of, uh, viewers who have side hustles or they have an Etsy store, and, and that’s, it’s an important thing to, to pay attention to.
22:03 spk_2
Yeah, and, um, one other thing that is a benefit though, um, the qualified business income deduction, which is for simplicity, you could deduct uh up to 20% of your business income if you’re not a corporate, uh, business. Uh, so think sole proprietors, partnerships, things like that.Um, you know, traditionally in the past, these folks haven’t been able to really take advantage of it very, very well because it’s, it’s such a low number and there’s a lot of factors involved. Um, but they did create, they call microbusiness, um,Carve out essentially where they’re gonna offer a $400 deduction if you fall within that microbusiness designation. So, if you are one of those people that maybe you, you got $1000 worth of uh freelance income.And that’s all you had in the past. Your, your qualified business income deduction probably was almost nothing, um, but now it’s probably gonna be enough to, to really help put it in in any tax that you would have to pay by reporting that, um,
23:11 spk_1
very helpful.
23:12 spk_2
Yeah, keep that in mind when you talk to your tax pro to make sure they’re aware that, hey, there’s this new thing, can you tell me about it, and they can kind of walk you through whether you qualify.
23:21 spk_1
Awesome. Well, I want to close this out with something I worry about all the time for our small business owners, and it seems silly, and, but really having complete records and being very focused on your documentation.And then the last thing I’ll say is, as entrepreneurs, we love to do everything ourselves. But when it comes to taxes and accounting, I feel like you have to have experts by your side. So, what is your advice on complete records and utilizing your tax experts effectively?
23:56 spk_2
Yeah, so for records, don’t be one of those people that waits until the end of the year to do it.
24:01 spk_1
Do it.
24:02 spk_2
Um, realize that that 2 hours you spend at the end of the year, you could spread that out, you know, if you take 10 minutes every week or 5 minutes every week, you know, you could really knock this out and make it a pretty painless process.
24:16 spk_1
Carl Breedlove, thank you so much for coming on The Big Idea.
24:19 spk_2
Thanksfor having me.