Rob Grazioli on Co-Founder Chemistry, Billion-Dollar Valuations, and the Power of Staying Small

In Brief: Rob Grazioli (robertgrazioli.com), a Managing Partner at Bread, an agency of founders for hire and a pre-seed venture fund, joins host Dan Freehling (contempusleadership.com). Rob and Dan discuss Rob’s path from college to founding Density, a company that reached a billion-dollar valuation, and how that led to Bread. Rob shares insights on maintaining co-founder relationships, the importance of staying small and nimble, and the challenges of achieving product-market fit. The conversation also touches on organizational culture, the role of curiosity, kindness, and a "say yes" mentality. Rob discusses the strategic advantages of Bread's approach to venture capital and shares advice for founders and leaders on building successful and sustainable businesses.

Recommended reading: “Design Is a Job” by Mike Monteiro and “The River of Consciousness” by Oliver Sacks.

Dan Freehling (00:01):

Welcome to Forward-Looking Leadership, a podcast for visionary leaders building future Ready organizations. I'm your host, Dan Freehling. I'm the founder of the coaching and consulting practice, Contempus Leadership, developing the leaders in teams you want in charge through cutting edge approaches and common sense solutions. I'm honored to be joined today by Rob Grazioli. Rob is a managing partner at Bread, an agency of founders for hire and a pre-seed venture fund comprised of five former founders and investors who've worked together for over 10 years and grew a previous product to a billion dollar valuation. Listeners, you're in for fascinating insights on making great products, common founder mistakes, organizational culture, and much more from a thoughtful designer and builder. Thanks for joining me on Forward Looking Leadership. Rob,

Rob Grazioli (00:47):

I'm super stoked to be here.

Dan Freehling (00:48):

Dan, really excited to talk with you. So first, the story that led to Bread, the original company is really interesting to me. Could you share that story with listeners of how you came up with this idea for Density and how that business grew into Bread?

Rob Grazioli (01:04):

Yeah, of course. So a long time ago or what feels like a long time ago now, I was in college and met my now co-founders really as part of a competition for mlb.com. It was the first time I had really any significant exposure to building a website and ultimately for the first time found myself more excited about anything than I ever felt before and it's this sort of love for building that I think formed that initial bond between me and my co-founders. We met some other people in the area that sort of got us into entrepreneurship, but ultimately we didn't have an idea, but we were around a lot of people with ideas. So we decided to try to get them to pay us to build their ideas. That turned out to be a terrible idea because no one had any money at an early stage and a lot of the people were also students, but ultimately word spread.

(02:04):

We started landing clients in the area and within our first year of running what is essentially a services business, we did a million dollars in revenue and yeah, it's super weird. That was such an important milestone for us. Of course, we didn't spend it well, but that first year was really cool and we were borrowing a model from at the time a popular business called 37 Signals where any additional profits from services went into net new product development. So over the course of two, three years-ish, we built and launched eight different products. Seven of them didn't amount to anything significant cool in their own right, but the eighth wound up being a product we called Density. Basically, one of our founders had the idea to install a wifi based people counter inside businesses, and one business in particular sparked this idea every day at two o'clock, the entire team, all 12 of us would go to a local coffee shop.

(03:11):

If it's already crowded, we're going to be there for a while, so we'd end up having to leave. So we really wanted to get one of these installed in this coffee shop, ultimately got it installed. It didn't work, but it launched this whole concept of really people counting or measuring how people use space. And at the time there was no Google wait times, so it was very small to midsize business focus, but eventually we pivoted into providing Fortune 500 companies with anonymized real estate analytics so they could optimize their portfolio. And eight years passed, we raised over 150 million. You mentioned we sort of eclipsed that billion dollar mark that I have a specific relationship with. Maybe we'll get into that, but ultimately after that eight years, I wanted to get back to day one of just finding that love for building and being part of something early, and that's really how Bread started, started working with other founders. Eventually my other co-founders left Density and we all just started to get the band back together and here we are. It's been two years now of Bread.

Dan Freehling (04:23):

It's an incredible story

Rob Grazioli (04:25):

That is a novel. I was talking forever there.

Dan Freehling (04:29):

Yes, no, it's a really great story and it's kind of crazy how it all played out and led to this. And one interesting part of this is how you maintained these relationships with your co-founders over this whole experience. And I'd love any advice you have on doing that, on how do you maintain and deepen your relationships with co-founders while you're building something like this?

Rob Grazioli (04:56):

Yeah, it's truly probably the best thing about my professional career is having met these people and worked with these people for almost 15 years at this point, advice is hard to give. I think one, we're extremely lucky to have met each other and to have personalities that compliment each other, but also interests that align, but approaches that also challenge each other. So ultimately the way I would describe our relationship is one really built on candor. We're very direct with each other. There's no conflation between a professional discussion and a personal discussion. Although of course, professional and personal life are intertwined. It's always clear when we're getting to work and it's really supported by care and respect for one another. I'd also say play and just joy of building things and joy of working together is a big part of what keeps us together. But ultimately it comes down to just being very direct and being willing to have hard discussions, which sort of builds this trust. It relaxes the mood whenever there's something challenging because you just know everyone's going in with the best intentions. There's nothing going on around the conversation, you're just in there to solve problems together. I dunno if that makes any sense, but that's the way I think of it.

Dan Freehling (06:25):

It makes a ton of sense and I think it's real psychological safety. I think that's such a concept that gets banded around and people think of me all kinds of different things. But I think that that really is at the heart of it of that.

Rob Grazioli (06:38):

And a lot of the founders we work with that are solo founders, I feel for them to an extreme extent, I can't really imagine how lonely those times can be where you're doubting yourself, you're doubting your company, you have people looking to you for answers. To be able to share that with people I trust has been really an incredible gift. I'll also add five founders was hard to convince investors of, it's usually raises eyebrows. Most founding teams, even of two or three have a hard time agreeing on things and we were double that. So that was always something we were up against. But ultimately it's our superpower. When you have five people basically willing to work for less money than they probably should able to pick each other up and fill in the gaps wearing multiple hats, it really becomes a cheat code into getting to market faster, finding fit and building something awesome. So the more the merrier, that's my advice.

Dan Freehling (07:55):

It's fantastic and it's genuinely impressive that you're able to maintain these relationships over that course of time and they actually were a source of strength for you all. So you mentioned some feelings around the billion dollar valuation. What do you mean by that?

Rob Grazioli (08:11):

Yeah, I think we definitely were part of a big uptick in venture investment that I think everyone realizes has been dialed back quite a bit over the past couple of years. And I think ultimately the market allowed founders to demand really generous terms and demand those terms really without some fundamental proof points. Granted, I think density is a big business and has that kind of potential, but it's still an incredibly big number to live up to for any founder. And I think there was just this mentality as a founder to try to hit those sort of benchmarks basically how do you boost your valuation versus how do you build a really strong foundation? And that's something I saw everywhere and frankly even I was sort of guilty of is really optimizing for the raise versus optimizing for foundational business. And that's one thing I am particularly excited about now. There's definitely a change in sentiment in the market that I think leads more towards show some early revenue show your ability to show some real proof points that your product fits and is solving a real problem. And those kinds of questions just weren't as present eight years ago, 10 years ago. So that's sort of the deal. It's just a big number and I think people should really be ready when they raise that kind of money to grow and not to continue to figure out or what to build, if that makes sense.

Dan Freehling (09:58):

Yeah, that focus on the foundation and now that you're on the investor side of things, I know you advise staying small and that can sound counterintuitive to people who are used to this traditional venture model. What do you mean by staying small and what are the strategic advantages of that?

Rob Grazioli (10:16):

Yeah, it is tied directly to that where when you're working with venture capitalists and rightfully so, they're trying to push you to grow and to grow fast and when you haven't quite settled on what you're doing, the easiest way to try to solve that problem is to throw people at the problem. What ends up happening is you build momentum. It's not always good momentum. This is something I try to educate every founder I talk to about is the idea that not all momentum is good. There's maybe signs that you're moving in the right direction and you're building a team and you're building product into it, but perhaps you haven't really explored all your avenues and the more momentum you build in that direction, the scarier it becomes to pivot, especially when people are involved. So staying small is very much about trying to stay nimble, trying to have your momentum be super intentional and ultimately just be more conscious about the resources that you're allocating and when you're allocating them and what you're allocating them to,

Dan Freehling (11:27):

It's keeping it so that you can pivot and be agile and go into what's actually working, what's actually getting traction and making sense.

Rob Grazioli (11:35):

Exactly. It's not just a tactical constraint of okay, you have to pivot, you have to let people go, you have to reform your go-to-market strategy, but it's a psychological thing. It's that sunk cost sort of fallacy where you feel like you're almost there, but the idea of pivoting just becomes so stressful that you delay it and you see this all the time where the writing's on the wall for a while, but founders fail to act fast enough and it's genuinely that anxiety around change that creates that, even though you know it in your gut that change needs to happen, it's just hard to make happen, especially when your team is large

Dan Freehling (12:19):

From the investor side. How do you think about helping the businesses you're working with understand this and take those risks and make those pivots and all of that kind of stuff?

Rob Grazioli (12:31):

I'll give you a classic example where non-technical founders, when they need to build an application, they frequently rush to hire a quote unquote CTO. And this is something that I've just seen so many times where you bring in someone senior who demands sort of a high salary, who's used to running a team and whose playbook involves building a team before you've even built a prototype basically, and all of a sudden you're burn triples, you likely overbuild and create too much structure in your organization before you've really found fit. And next thing you know you're staring at a fundraise with no customers, lots of money spent and again, everything, it's not that anyone's doing anything wrong, it's just sort of this tendency to overcommit in areas you don't understand. Whereas it's counterintuitive to try to take baby steps into that problem and try to fit a solution, which in this case is usually finding a technical co-founder, not someone who's trying to have a have CTO in their title or just finding a really good engineer to help make your vision a reality. That's usually the best early option for a non-technical founder and obviously educating yourself and trying to be as fluent as possible. But anyway, that's sort of an example that I can think of and the kind of advice we try to give and also help people avoid

Dan Freehling (14:10):

It makes so much sense. So being really cautious about letting people bring in a whole department as a managerial hire, it's like no, you got to be really careful that you have the fundamentals of the business down before you would start building out in that kind of a way.

Rob Grazioli (14:26):

And it's going to suck early on. You're not going to build the perfect thing, you're not going to have the perfect process, but you need to just spend as the goal as always spend as little money as possible trying to build the right thing, not do it the right way. There's no such thing as the right way and anyone sort of telling you that there's a right way to go about something is almost guaranteed to be wrong and a lot of those hires are people trying to do that. I think.

Dan Freehling (14:55):

What are some signs that you look for in terms of when a business is found fit

Rob Grazioli (15:03):

Revenue? Yeah, I mean because here's the deal, there's a difference between building something that has utility and building a business, building something that people use and is just simply not a market fit. It might be that you've built something worthwhile or interesting, but you need to have validation that it's something people will pay for or else you don't really have a business, you have a tool that's interesting, but you're still figuring out how to have your business. Of course there are examples that are counter to that where a product goes gangbusters and the sentiment is there's enough users, it's valuable enough, we'll figure out how to be profitable or monetized later. But that is a small percentage of businesses. You need to validate whether or not your business model works as quickly as possible. And the only way to do that is to put payment in front of somebody and tell them to vote with their dollars. In my opinion, that's what we look for, but at our stage it's often premature. So we really try to make sure one founders have that mindset and two, try as best we can to validate that there's real potential there. And also give founders the structure to experiment with pricing and actually capturing revenue early.

Dan Freehling (16:44):

It all makes so much sense, and I think you're right, it's actually having people pull the trigger in terms of buying something is the way that you're figuring out if this is actually valuable for them in a business sense more than just a Oh, that's kind of neat or that's interesting, but it's not really a business.

Rob Grazioli (17:02):

People are typically generous I find when you're showing them a product or you're giving them feedback or they're using something where their generosity starts to end is when you ask them to pay for things and ultimately that's where you get real feedback about what you're building, in my opinion.

Dan Freehling (17:21):

Fast forwarding past the kind of politeness and right to that. Yeah, that's a great piece of advice for people and I think even for non VC backed businesses, I think that just makes tremendous sense across the board for almost any kind of business person,

Rob Grazioli (17:38):

Some of the best advice I ever heard. So pricing's weird. It's hard to know what to charge for your product or how valuable your product is, especially if there's no direct comparison. It's a little easier if there are other products in the market and you're just trying to build something faster, cheaper, better. If there's nothing directly comparable that is hard to do. You become really self-conscious about what the value of your product really is. Some of the best advice I heard was just pick a number you want to make in the next year and charge that, start there and let basically just your livelihood sort of be the starting point for pricing. If that becomes too easy to sell, you're probably too cheap and if it becomes too hard to sell, you're probably too expensive and then you can sort of build from there. So I know pricing's challenging a lot of times for that reason, but when I build stuff now or launch stuff, that's genuinely where I start is what do I just want this thing to make me in a year and how many people do I think I can get to use it?

(18:56):

I'll just pick a number and start there and then deal with the consequences later.

Dan Freehling (19:01):

And it gets people past that analysis paralysis where you're trying to think about your price so much and it's like, no, just focus on having something. You'll see if it's too high or if it's too low when you have it out in the market and you can adjust from there. And that seems right on

Rob Grazioli (19:17):

And be ambitious, start high, it's easy to come

Dan Freehling (19:20):

Down. I love it. Exactly, exactly. See what people will actually pay for and then adjust from there or increase the value of the service from there or the product from there.

Rob Grazioli (19:28):

Exactly.

Dan Freehling (19:30):

You emphasize a lot of learning from mistakes you've made as a founder and helping others to learn from these. What are some of the mistakes you made as a founder and how are these valuable in helping advise others now?

Rob Grazioli (19:43):

Yeah, I mean mistakes I've made and continue to make, I think that's always important to recognize is if this is something I'm still doing, I'm still building a business, I'm still learning all the time and I'm still making mistakes, I'd say one that I'm continually battling is rushing to the next idea. Basically balancing ambition and follow through can be a real challenge. And I think this is super common for a lot of founders. You have big dreams, you have a big vision. It's difficult to be patient enough to watch your bets play out as long as is required for you to actually verify if what you just did actually worked before you move on to the next thing you otherwise sort of collect this island of misfit toys, so to speak, of ideas and projects and go to markets. So I would say that's one thing that's so hard to do because trying to move quickly, but just take a day or two every month and just check in on what are all the bets you're actively making, which ones should you continue to make and removing the ones that you shouldn't before you start or embark on something new.

(21:08):

So I don't know if you have a similar challenge and maybe you have some advice for me or anyone else. It's a great

Dan Freehling (21:16):

Piece of advice. I've actually heard, I don't know what the origin of this, but I've heard someone refer to it as the half built bridges theory of it doesn't do you any good to have seven or eight half-built bridges, you should finish a whole line of business, get it through so it can at least be a marketable product or service in some early form before you have 10 ideas that are kind of half complete and aren't able to be put into the market. And that's something I've tried to apply myself to and I found that kind of thinking to be helpful, get it over the finish line and then see

Rob Grazioli (21:57):

Yeah, just finish it. Right. I totally agree and it's hard. Finishing things is always the hardest part, but one you could be surprised or two, you can make a decision confidently. Yeah. Anyway, I agree with that. That's definitely I think something I'm always battling,

Dan Freehling (22:20):

Putting out a good enough product I think is another thing or good enough service to start before you're dealing with perfectionism and that kind of, it's not as good as it can be.

(22:34):

And I think about that a lot with any sort of materials I'll put out or something and it's like I can definitely spend more time and make this better and I will down the road, but it's really important to get things out when they're ready to get out so you can get the feedback on them early. And I like to think of it like any of your favorite bands, they're going to have early albums and they're usually not great, but there's some little bit of brilliance in there, but they don't know what that is at that point and you can't know what that is for yourself at that point. You just have to get it out there and see and then build on that.

Rob Grazioli (23:08):

Absolutely. And so I'm a designer primarily by trait and there's one of my founders, one of my co-founders is notorious for just always nailing what good enough means and it drives me nuts. I simply don't have as good of a muscle because very, it is bias. My purchasing patterns, the thing I invest in are very specific to me and the kind of person I am. So I'm always trying to build something to my standards, which I'm not saying my standards are super high, but they're usually higher than the average, especially for the visual polish of a given product. Whereas he is able to make those kinds of compromises. It results in getting product out faster, learning faster, and ultimately viability. While I might otherwise still be trying to refine my thing, it's truly the secret if you're a founder listening to this, this is the secret to really being successful is knowing when to move on. And I don't think, to your point, the band analogy is such a good one. I don't think it's knowing. I think it's just a muscle you build that's some kind of combination of naivety and focus on the right thing. Yeah, I don't know how to do it. Do you,

Dan Freehling (24:46):

You know the comedian Mike Birbiglia by chance?

Rob Grazioli (24:49):

Yeah,

Dan Freehling (24:50):

So he has a podcast that he had Ira Glass on and I guess they've worked together on his movies and shows and things and Ira ias is quite the creative genius. To have backing IRA's advice was really interesting. It's something I think about a lot, but it was at the early stages of being a creator, your taste is always, I've heard this clip, I love it. It's always going to outrun what you can do and you just have to keep going and get it to the point where what you can do eventually matches your taste, but

Rob Grazioli (25:27):

Early

Dan Freehling (25:28):

On it's inherently going to be disappointing to you.

Rob Grazioli (25:33):

Yeah, it's such a good soundbite for anyone trying to build something and it's so true. Everything I look at that I did even a couple months ago is always crap, basically. That's what I tell myself, but even though it's fine, it was fine, then it's probably fine now there's more value in me finishing it and showing it to people than not. So yeah, love that.

Dan Freehling (26:02):

This is right on. It's awesome advice for anyone trying to build anything out there and thanks for sharing it. Any other kind of mistakes that come to mind that you've made that are particularly valuable?

Rob Grazioli (26:15):

I think one that always comes to mind for me is I'm a designer and it's sort of in the same vein of maybe overbuilding or sort of doing something the right way, but design is a researched back craft and I think research is probably the wrong word to use, but you're designing something when you're pulling information and trying to make intentional decisions. And there was a product we were bringing to market, it had an existing user base and I tried to incorporate this user base into a new design, into a new product launch, trying to bring this product into the 21st century. It was archaic, it needed to be redesigned, but I'd gone out to the existing users and really treated them as really took their word verbatim on what they expected and what they needed. But I realized ultimately the way I got those users had some bias in it.

(27:19):

And so I wound up designing a product for a very niche set of people. And I've done this a couple of times. That was one example where there was a user base that was large enough where maybe I could have done a better job, but there was another instance where the user base was small and I was still trying to use users as the primary mode of iteration, which is the advice everyone gives you is be user-centric. The issue is when your user base is so small or when you don't have customers, that advice is kind of garbage. You kind of need to trust your gut a bit more and really do something that you feel is valuable based on your understanding of the problem space and not use a small sample size or early adopters as the best case or the exclusive opinion you should use to design your product. So that's a mistake I made twice in two different ways, not realizing it and wound up in some go-to-market flops basically where I thought I was designing the perfect thing, but turns out a larger portion of the user base simply had trouble using what I had built.

Dan Freehling (28:37):

I think you have to trust your own taste and judgment when you're designing something, especially early on. And it can be tempting to just follow these design thinking, human-centered design guide of principles to a T, and it's okay to have judgment and taste. And I think that's counter, I think we're getting away from that being the orthodoxy. I think it was 2010s kind of a thing where that was really the orthodoxy. But no, that's what I think of too and I think that's still taught a lot too, which is a problem. And yeah, I think it's being willing to break from that. And just in general of any of these kind of models, use them to your advantage, not kind of subsuming your intelligence and wisdom and everything to them using them as a tool but not the only thing you'll do.

Rob Grazioli (29:44):

Yeah, exactly. They are tools, they are not law essentially. And yeah, I still meet designers every day that I think emphasize these things a bit more than they probably should, especially at an early stage where you really don't even have a lot of the resources that people teach you you can use to execute on a given product.

Dan Freehling (30:10):

So you kind of self-identify as a designer by training and I know you wear many hats as a co-founder, how have you felt your professional identity either staying the same or changing over time as you've taken on all these different parts of the co-founder role?

Rob Grazioli (30:30):

It's always changing day to day, especially as a founder, but I've had a lot of, I would say hesitation and still do when talking about what I do every day. I default to calling myself a designer because I have a set of hard skills where I can essentially push pixels around and I can write code. And so that's what I am, but really I'm a business owner and coming into all this, I wasn't big into entrepreneurship. I didn't know who Steve Jobs was, I didn't know what Silicon Valley was, I didn't know what being a founder was. I just started making things and started getting people to pay me to make things for them.

(31:28):

And I was surrounded by a lot of other entrepreneurs or founders who from my opinion is probably a bit harsh, didn't have the same skillset sets I had and I didn't want to be lumped into that group of people that were kind of doing it just to say they're founders versus doing it because there's a problem they really wanted to solve. And it's this deep kind of thing for me, I still call myself a designer when really more than anything I'm a business owner and I dunno. So that that's one thing which is kind of a big topic, but then there's the actual roles. So I don't know, is that something you struggle with at all, is saying to people what you do ever or this, am I alone in the world?

Dan Freehling (32:23):

You're definitely not alone in that. And it's tricky in my space too where there's coaching similar to coach, similar to entrepreneur I think comes with a lot of baggage. It can be a really superficial Instagram influencer kind of a thing that's kind of dumb and kind of not grounded in anything and kind of scammy and has some really bad connotations. I think some of the times, some of the people who are entrepreneurs but aren't really entrepreneurs, there's a lot of people who are like coaches but aren't really coaches and consultant less, but that's more of that carries some seriousness and hef to has a kind of tactical element to it that I think is there, but I think some coaches run away from actually calling ourselves that. And I think it's kind of a reclaiming that term for people who treat it seriously as a profession and have invest in their training and development and ethics and all of this stuff around it. And yeah, it really resonates a lot with me in that sense too of what do we call what we do and what is the kind of reputation of that and then what is an honest appraisal of what it is.

Rob Grazioli (33:51):

Yeah, one I'm glad to hear I'm not alone, but two, I'm sure this is some form of imposter syndrome or something along those lines, which I know I've heard before. It always felt different than imposter syndrome to me. It just felt like a weird shame in what I did. And I mean I like the people I respect in my life and that I look up to. None of them are designers, none of them are programmers or business owners. They're mostly scientists and artists. So I think there's an element of that as well where I'm almost embarrassed sometimes. But anyway, we don't have to go down this track.

Dan Freehling (34:41):

It's funny looking from the outside in though. It's funny what different people categorize as successful and yeah, it's a tricky thing. It's like what's traditional success look like? What you do look like and what you look up to look like. And it's some really deep stuff.

Rob Grazioli (35:06):

But on a day-to-day I definitely wear a lot of hats. Some days I'm holding a bag and I'm trying to close a deal. Some days I'm putting together a marketing plan, writing copy. Some days I'm designing a product, some days I'm building a product and there is the only advice I've ever really gotten in my career on this amazing coworker of mine read this article or there's this concept of giving away your Legos and I think the article is still out there, but it really hit home as a founder where you should get really used to not finding your groove and odds are the second you've found a groove is the second you need to step out of it and put someone else in it. And so this concept of sort of giving away your Legos I think is really apt in that as a founder you should be jumping into the places that are the biggest unknowns, where your team lacks maybe direct expertise and trying to understand if it's something your team can solve or if you need to go out and get help.

(36:27):

That's really what you're going to end up doing a lot as a founder. Once you get past the early stages where everyone's literally doing everything, you're going to have to start specializing and avoid of having someone who's been there before. You're going to have to figure some of that stuff out yourself. So early days in Density, I was flying around the country with a sensor that was the size of a freaking personal pan pizza from Pizza Hut and trying to convince them to buy it from us. So I was a sales person responsible for marketing even though we didn't have a product, but certainly play that sales role and build some of the early foundations for a sales motion that eventually we had a senior salesperson come in and take over, which was totally the right thing to do for the business. But that definitely leads me a designer, a programmer who just spent the last couple months learning how to be a sales operator, not just a sales person, but how do you build a sales org with seemingly nothing to do.

(37:43):

So I think getting used to jumping into the unknown is just something as a founder you have to love. You have to really, really love not doing the thing that you love doing basically, and find a new passion for finding gaps. Identifying who the best person to fill that gap is if it's not you and growing your business is really what I've now learned to love and what I love most. So early on it was what can I build and how do I make it the best thing in the world Now it's mostly about people finding gaps and then finding the right people to fill them.

Dan Freehling (38:29):

You articulated something that I think a lot of leaders face in general, the founders, but also leaders in organizations, managers, even kind of the chief of staff, kind of operational fixer level of a lot of times it's something where you don't get to be exceptionally good at any one thing. Your skillset becomes that finding and filling the gaps and working through people to achieve goals. And it can be really, I think challenging for a lot of people, particularly people I've worked with where there's not a clear metric for success in each of these different areas and you're going to be bad at a lot of them, but you're going to be good enough at a lot of them to figure out what's going on and really clicking into that being your primary job and that being what you should be measuring your success against is key. And I think you said that so well.

Rob Grazioli (39:29):

Yeah. How do you feel about this whole founder mode thing?

Dan Freehling (39:34):

It's an interesting one. I kind of mixed thoughts on it. I like the crux of the concept and I think it was articulated in a condescending way, if that makes sense.

Rob Grazioli (39:47):

Okay, I appreciate that take. I think that's actually accurate. I think

Dan Freehling (39:53):

It off, what do you think?

Rob Grazioli (39:54):

I had a negative reaction. I think it comes off as founders are the most capable people and they're what makes a business successful and I just don't buy that at all. I think very few. I know of zero hyper successful businesses that comprise of one founder. They're usually a team and I think a founder superpower generally is what we're talking about. You have this irrational attachment to your business, so you're willing to do everything. You're not thinking about career, you're not thinking about anything other than your business. So you'll simply do things that other people won't because your incentives are aligned. You also tend to have the most to gain from a positive outcome for the business and you're usually at the least, you're at zero risk of being fired for taking a risk. So I don't like the rhetoric because I think if you gave employees the same amount of equity and the same amount of freedom and incentive, I think you would probably start to have similar outcomes. So I do think founders and VCs need to be checked on that and it came off as employees are not going to be the answer or are not going to be able to elevate your product or solve critical problems. I think if you incentivize people to do good work, they can totally help you do that.

Dan Freehling (41:28):

This whole think an owner kind of a thing is frustrating for people, but you're not retaining the earnings as an employee, right? It's absurd like an owner, but you're not one like an owner. But yeah, but we'll pay you a paycheck and anything you make above that I get to keep is kind of a tricky thing. It's the whole work. Being a family thing is also

Rob Grazioli (41:52):

Off

Dan Freehling (41:52):

Putting in a lot of

Rob Grazioli (41:53):

Ways. I don't people look, I love the people I work with and I care about them very much and I think we build teams that have an element of that, but I don't get it twisted. I don't expect them to work the way I work because I'm not giving them enough money to do that period. And it's an unfair ask otherwise to be insanely passionate about something, especially at an early stage where compensation is not aligned with your personal investment. So this can easily digress into how to properly compensate people and all that. But if you're an employee out there, be excited about what you're doing, but be realistic and make sure you're getting paid for extra effort. And if you're a founder, treat people with respect and if you want them to go the extra mile, pay them for the extra mile. I'll leave it at that.

Dan Freehling (42:55):

I think that's so well said. And I think even the compensation I think is key. And I also think clear swim lanes for what people are as a founder, as an owner, as a senior leader, as an executive, giving people clear runway on what they're allowed to do without red tape and without bureaucracy is the part of the founder mode thing that I actually liked is helping people understand where they can make decisions that don't have to check 75 organizational boxes to make a pretty obvious decision that lets them kind of adapt and go in it. But that requires leadership buy-in and leadership cover to let people do that, to your point. And I think that's a big part of it. So I guess where we're aligning on this in a lot of ways is like, yeah, if you want to do this, then put your money where your mouth is and have people's backs when they work within these parameters too. In terms of organizational culture, how do you think about creating and sustaining culture in your organization?

Rob Grazioli (44:15):

One, actually having an understanding what the culture is you want to build is important, but ultimately not required, but you need champions of it. So that's another reason why having five founders is a superpower because you have people who are embodying the kind of mentality and approach you want to have to work every single day. Managing people involved in projects early on for the first 20 to 50 employees, it's rare. One of those employees isn't interacting with a founder at least once a week. So that was amazing to have. So it wasn't as hard until really around that 50 mark when all of a sudden we're hiring people and then until the day I left, I never met that person, in which case you do need to document what it is you're trying to do for bread. There are two super important things. I would say three super important things. One is curiosity. I think this needs to be demonstrated through action, but you need to find people who are curious. And curiosity typically leads to unpredictable things, but is such an important thing. If you want to have an environment that's playful, that is open and that's not so sort of regimented. If you want a fluid work environment, one that can pivot, you need curious people. The other is just kindness. And kindness is not to be confused with being soft or being

Dan Freehling (46:13):

Pushover kind of a thing.

Rob Grazioli (46:15):

Yeah, kindness is just saying what you think and feel and doing it in a way that is not disrespectful. But for us, kindness is like if someone is doing something wrong, it's kind to tell them that they're doing something wrong. That's being kind to a person. You're not letting them fumble, you're offering a hand, which leads to the third thing, which is a Say yes culture. And that's probably the most important thing to us at the end of the day. So much advice in this world is learn how to say no, learn how to manage your time. I think it's the worst advice in the world for anyone just starting out. You're going to get absolutely nowhere if your primary goal is to say no to things, I would not have met my founders. I would not have started density. I genuinely, I wouldn't know how to program, I wouldn't even be a designer.

(47:24):

I found these things because I said my founders are similar. And that's ultimately if someone asks for help, the answer's yes. If someone asks for anything, the answer's yes, and then we figure out how. But if people need help, the answer should be yes, let's figure out how to help you. Not yes, help you right away, but yes, how can we help? So anyway, those are three. I know that's very kind of preachy, but I've been saying these things for years, so I just know what I care about. But yeah, anyway, sorry, I told you I could ramble.

Dan Freehling (48:03):

No, this is great. There's a real clarity around the cultural pillars and it sounds like these are deeply felt and deeply enacted by you and your co-founders, which I think is the key thing on culture when it's not just something that, I think the worst thing, it's almost worse to have cultural values that are not enacted than to have no cultural values at all because people can smell that hypocrisy.

Rob Grazioli (48:29):

Yeah, totally.

Dan Freehling (48:31):

So in terms of, it doesn't necessarily have to be books, but books or any other resources of any kind that have been influential on you as a leader, I would love to hear about any of those

Rob Grazioli (48:44):

As a leader. So one that always comes to mind is a book called Design is a job. And I dunno if there are great leadership examples in it, but I do think it formed a perspective in me that the idea of a job and work and how to set up some kind of baseline understanding that we live in this weird capitalistic world and this is a job and it's a job to a lot of people. You should treat it as a job. It's not your playground. So that was a book that I think was impactful in that sense. And Mike Monteiro is the author and he's super crass and very mad over fact. And that really resonated with me at the time. So I always recommend that even to people who aren't designers, I think maybe especially that's a great book.

Dan Freehling (49:42):

Yeah. What makes you say that for people who aren't designers?

Rob Grazioli (49:46):

Oh one. I think design is a misunderstood discipline. So I think people reading that will just gain some insight into how designers actually think about their job and also how you can use design more effectively more than to just make something look good, but to run a better business. So that's primarily the reason. But also just for that, I think design is a great thing to understand because ultimately it's open about being a craft. It's open about refinements and there's this, it's all about improvement. Design is its sole purpose for existence is things. And so I think the more exposure anyone has to the design discipline, there's just so much to borrow from.

Dan Freehling (50:36):

It's a great recommendation. And one I'll definitely be checking out. And it sounds like that is universally applicable to anyone who is interested in craft and improving things in any way. That's great.

Rob Grazioli (50:48):

I think the best book though, probably most impactful is a book called Why am I Butcher It? It's called River of Consciousness. I think it's by Oliver Sachs. And I don't think you have to read that one. You probably could just read anything by Oliver Sachs. But I think I gained a new appreciation for what empathy meant. And I think being a leader, being a good leader is mostly about empathy. Sometimes maybe the lack of it, but I think often the more you're able to understand how you yourself are perceived, and the more you're able to see the world through the eyes of people who are looking up to you, I think the more intentional you can be about your leadership decisions. And in that same vein, being a leader should be a job. It's not something to just play with. It's a privilege. And thinking about it like a craft is important. And I think one of the most important tools you have as a leader is empathy. And Oliver Sachs is I think a Hallmark person or the embodiment of empathy, and I always get sad thinking about him. He died not too long ago, although a while now. But yeah, he's amazing and I would recommend that book. It's fun, funny, insightful, but yeah, kind of maybe I don't have how to be a Leader 1 0 1 kind of books, if that's what you're looking for.

Dan Freehling (52:36):

No, that's not at all what I'm looking for. That's exactly it. And that's what I found with a lot of guests are these lateral books that have lessons on leadership in a beautiful way, like you just said about empathy, being core to leadership are much more valuable than the seven habits. And I think that's a real thing. And I like hearing what kind of stuff actually inspires people. I think leadership is a fundamentally human discipline, and it's not going to be a check the box, and it's not going to be something that's, it's just so easy to do and you just follow the system and you're done. It's a really deeply human relational way of being, and I think you're so right. It's a job to take seriously. It's a craft to take seriously and it impacts real people's livelihoods and lives, and I think it's really important.

Rob Grazioli (53:34):

Yeah, yeah. Isn't everything that really, it all comes down to relationships, I think at the end of the day. It's

Dan Freehling (53:46):

So true. It's so

Rob Grazioli (53:47):

True.

Dan Freehling (53:48):

Yeah. No, that's beautifully said. So in terms of Bread, what are you most excited about in terms of the future of the company and any of the ventures you're supporting?

Rob Grazioli (53:59):

Yeah, I think one, a lot of the things we've talked about today, it's been kind of interesting to go through all these things, but I do have opinions on how to build a business and what a good business is. And I think I'm just really excited about exercising that in a really direct way to date. It's always been helping people tactically, but I think actually giving them the means to do it themselves is just genuinely exciting to me. I think one thing we haven't really touched on too is just the kinds of businesses that I care about and get excited about businesses like Density that the average consumer doesn't necessarily think about every day, but are really foundational to our world. Ultimately, density is operating in a commercial real estate space where 40% of the space in this country is empty all day every day.

(54:58):

That's an unfathomable, unfathomable amount of space that's just wasted. Yet here we are with housing crises, here we are with overcrowded neighborhoods and cities and new buildings going up every day, but yet there's space that's just waiting for people. So I love those kinds of problems. My founders love those kinds of problems, and it's going to be exciting to be part of more than one at any point in time. If we were building a solution directly, we just get to work on that one thing. Whereas if you're on the capital side of things, you can have your hands in a couple different problems at a time. So I think that's really what I'm excited about is employing a lot of the things I've learned over the past eight years and being able to have a broader impact on things I care about.

Dan Freehling (55:58):

It's really cool to hear, and I just love the way you think about this kind of stuff and put it into practice, and it's been such a pleasure talking Grow. How can listeners learn more about Bread and Follow along with you and your journey?

Rob Grazioli (56:10):

Yeah, I guess the old fashioned way, you can go to our website made by bread.com. We have some writing on there that speaks to some of what we talked about today, but you can also reach out to me directly, my website's, robertgrazioli.com, and I'm always happy to meet new people and talk shop.

Dan Freehling (56:31):

I really appreciate that and just, it's a really generous offer and thanks for going in depth with everything today. I think people will get a lot from this episode and hearing a very different perspective than I think a lot of people might assume from venture capital space or from the design space in particular. So thanks for illuminating us on that.

Rob Grazioli (56:50):

Yeah, hope so. And it's really been awesome. Thanks, Dan.

Dan Freehling (56:53):

Awesome. Thanks again, Rob. Appreciate it. Hey everyone, I hope you got a ton out of that episode, and if you did, if you could please share it with someone who might find it valuable and take a second to leave a quick review on whatever podcast app you're using. Even just the stars is great. It goes a long way in helping others to discover the show. And if you liked this episode, check out our previous episode with John Whitfield on the future of Sustainability Success Drivers for Impactful Executives and Leadership Lessons from the Netherlands. Here's a clip from it.

John Whitfield (57:21):

I'm very surprised as I look at job descriptions and job profiles for people who are leading sustainability functions, how rarely I see the term change management or OCM organizational change management. I feel like that's the skillset that every, I think every leader is going to be improved by learning good change management, but I think particularly in the sustainability space, because you are driving such dramatic change within an organization and people have a really intense reaction to change, it's the same cycle. Response to change is the same cycle as the grief cycle. It's a Kubler-Ross change curve is denial, bargaining, depression, acceptance. It's the same. People experience that whether they're grieving the loss of a loved one or they're grieving the loss of an old way of doing things. It's the exact same psychological experience. And so anybody who wants to be an effective leader in the sustainability space or in I would argue in any space, is learn as much organizational change management. As you can read, John Kotter connect with the organization Prosci. When we don't have the OCM frameworks, the human response to change can be so overwhelming, so frustrating, so demoralizing, and leaders are supposed to be driving change agendas. And so the frameworks you can learn from good OCM helps us to realize how humans relate to change and help shepherd them through that with empathy.