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There’s no shortage of things that can go wrong when you’re a founder just starting up. Cashflow issues. Botched patents. That one time you literally ran out of product.
Few people understand this as well as Jessica Davidoff. She’s built a business around expecting these kinds of mistakes and stopping them before they happen.
Sprezzatura, a business and production management company, helps startups at every stage, from pre-launch ideation, to fundraising, financial planning, production pipelines and more.
We talked to Jessica about the strange art of starting up and how 2020 has complicated that alchemy.
“I think a lot more people are considering entrepreneurship right now. Whether that’s because they lost their job or were furloughed, we’ve got more people coming to us saying I want to start a business. With this kind of uncertainty in people’s careers I think they are going to be more inclined to start that side hustle.”
🎙 Highlights Include
- The biggest hurdles for early-stage founders and how to avoid them
- Changing trends in entrepreneurship
- Financial planning considerations for 2020 & 2021 and how to think about runway in uncertain times
This Week’s Guest
Managing Partner & CEO of Name Ninja
Jessica Davidoff is the CEO and Managing Partner of Sprezzatura, a business and production management company in NYC. An experienced founder and a turnaround CEO, Jessica is known by her friends and colleagues as ‘The Wolf.” If you’ve seen Pulp Fiction, you’ll know why.
The Startup Stack’s Host
CEO, Co-Founder of Rocketplace
Rocketplace is a curated marketplace of high quality professional service providers. A 3x founder, investor, and board member, Louis began his tech career as a partner at Andreessen Horowitz. When he’s not working or podcasting, Louis enjoys cooking for his family. His pizza, he’d like you to know, is incredible.
Full Episode Transcript
Louis Beryl 00:00:00 Sprezzatura.
Jessica Davidoff 00:00:01 Yeah. I mean like you want to do it with the Gusto of the Italians.
Louis Beryl & Jessica Davidoff 00:00:05 [Laughing]
Louis Beryl 00:00:07 Hello and welcome to The Startup Stack. I’m your host, Louis Beryl, the founder and CEO of Rocketplace. This week. We’re talking to Jessica Davidoff, Founder and Managing Partner at Sprezzatura. A business production and management company. What is a business production, a management company. I’ll leave it to Jessica to give you the long answer, but basically she’s in the business of growing businesses. Often from scratch. We covered a lot, including the surprising realities of building companies in the middle of the pandemic and why uncertainty can actually be a good thing for entrepreneurship. Here’s Jessica. So I wanted to ask you about Sprezzatura. So you say that Sprezzatura specializes in business production and management, and I was wondering if you could tell me exactly what that means.
Jessica Davidoff 00:00:50 Sure. Uh, so we basically have two sides of our business. Um, the first side is what we call business in a box where we work with founders who are in that idea phase. And we take them from idea to launch, uh, through a five phase program that we created. Um, and then post-launch, we, uh, ideally transition those clients into what we call business management, where we provide, um, a whole series of services for companies, um, that range from accounting to operations, to financial planning, um, and CFO services that fall under the mechanics side, so that founders can focus more on the product, creative, uh, marketing and branding side of, of running their business.
Louis Beryl 00:01:38 Can you tell me a little bit more of, um, the history of, of Sprezzatura? How did you, um, how did you start the business and, and, and how did you figure this out, you know, your specific business production angle to helping companies?
Jessica Davidoff 00:01:53 Yeah, so it was very, um, organic. It wasn’t something that I really set out. I had spent the bulk of my career as an entrepreneur. I started my first company when I was 22 and launched three companies, um, after that and when my last company was acquired and I was thinking about what I wanted to do next, um, I had a noncompete in the education sphere, which is where I had spent the bulk of my entrepreneurial career before that. And so when I was thinking about industries that I wanted to jump into and problems that I wanted to solve, um, the biggest problem that I had had as a founder was always regarding these kinds of finance, operations, accounting, um, components of the business. And just speaking with other founders, it was a very, um, specific problem that lots of founders had. And so I wanted to basically create something that I wish I had had during my first three startups. Um, and that’s how we launched Sprezzatura and it really has, um, kind of molded itself organically. So it first started off with the business management side for post-launch companies. And then while we were doing those, uh, finance and operations services, one of the things that we started doing for our clients was fundraising. So building out financial projections, focusing on investor decks, and that’s how we started to work with pre-launch founders who had ideas, um, who wanted help on the fundraising side. And then as we started to work with these prelaunch founders, it was very apparent that we should have been working with them as soon as they had the idea. So we could advise them on some costly decisions that they had made, um, that turned into mistakes. And so that’s when we introduced the, um, the business in a box service, which has been so much fun. Um, it’s my favorite part of, uh, kind of startup life is like going from idea to launch and kind of figuring out where all the puzzle pieces fit.
Louis Beryl 00:04:00 You mentioned some of the mistakes that are common to, um, starting companies, especially when maybe they come to you a little bit too late. Well, tell us a little bit more, what are some of these common mistakes that founders make?
Jessica Davidoff 00:04:13 Yeah, I mean, there are so many, I mean, we worked with one company who, um, they had gone through business planning, they did a really successful Kickstarter campaign. Um, use that money to go into production, launch their brand, and sell out of their first three runs. And then we’re kind of doubling down and placing an order for the next one. And then, um, got a cease and desist from another company because they picked a name that was already trademarked for that, um, particular type of consumer goods. So they had to go through this whole costly thing of destroying all, a lot of the products. They had to go through an entire rebranding session, even though they had already paid for branding in the first place. Um, and, you know, had we been there, like one of the components in our five phase program is IP. So talking through trademarks, copywriting, um, patents, and, and when you want to do that in the process and why it’s so important and how to do searches. Um, so that’s one, I mean, another company came to us and they were ready to launch, um, we’re we were building out their investor deck and we noticed that they, uh, had, uh, the pricing of their good was, uh, the cost was about $110 and they were going to charge about $142 at retail. And we were like, whoa, this margin is not big enough. You know, how are you building your whole business on this? And she didn’t, she was like, but there’s, I’m making a profit, but we, when we kind of went through the thought process of pricing strategy, um, it was really apparent that that pricing was completely out of whack. And so, you know, just like these fundamentals of finance that a lot of people without finance backgrounds don’t think of. And so, yeah, uh, just lots of things like that, that we’ve now kind of created this program to, um, guide people through the things that they need to be thinking about at the specific points along that, um, that founding journey.
Louis Beryl 00:06:18 I’d love to understand what were, what were some of the toughest challenges as you started your firm?
Jessica Davidoff 00:06:24 I think so. Oh God. I mean, the biggest challenge for me is I am like, by nature, a problem solver. And so when I’m working with founders and clients and they come to me with a problem that doesn’t necessarily fit within the scope of what we had agreed upon, I’m so inclined to just dive in and help. And so I had to do a lot of work in the early days of really focusing on what we do and what we don’t do. Um, and being really mindful of running this like a business instead of kind of running it in the way of just like, I want to solve all the problems. I don’t care what was in the scope of our agreement. I just want to help because you get to be so close with your clients when they’re in those early days and you have this incredible bond. So it was very unnatural for me to say like, okay, well, I can definitely do that. Or my team can help with that, but we would just need to kind of add an additional scope. So I would say it was really defining what we do, what we don’t do, and then also, um, being mindful of not allowing for, you know, scope creep as in, um, you know, consultants speak.
Louis Beryl 00:07:36 Yeah, exactly. And is that still, is that still one of your biggest challenges or have you, have you, do you feel like that’s solved and you have different big challenges today?
Jessica Davidoff 00:07:46 Um, I would say that defining what we do and what we don’t do, we’ve sort of, we’ve solved that, um, we know what we’re really good at. We know what we’re not, we also now have a great network of, um, you know, vendors that other clients have worked with that do things that we don’t do so we don’t get down in the weeds. Um, but yeah, I would say like the whole scope creep thing, like that is something that I’m still dealing with today. Um, just because the nature of what we’re doing and the, the stage of businesses that we’re working with is so young that we form these really close bonds and we’re talking every day. And, um, we, we all just want to see these businesses succeed, but I also have to kind of remember, this is a business and we need to be mindful of that as well.
Louis Beryl 00:08:36 You know, on the other side of things, did you have an aha moment where you finally felt like this is gonna to work? This business is going to be successful. Um, and I, and I really, I know where we’re going and I’m confident in the future.
Jessica Davidoff 00:08:56 Yeah, you know, It was, it’s been interesting. I, um, I had a client called STATE Bags that I, um, ended up taking over as their full time CEO, um, for over a year. And it was an incredible learning experience, but it also definitely took me a little bit away from business development for Sprezzatura because, um, I was really in the weeds with that company and I was going into their office four days a week, um, building out a completely new team from when I had taken over. And, um, when I was able to step back from that, um, engagement and really doubled down and take time to think about what we wanted Sprezzatura to be, it was almost like a rebirth because I had this like year plus hiatus, um, working on STATE Bags. And that was in February of this year. And it was interesting timing because COVID hit. And, um, we really took a lot of time as a team to kind of pause and just really talk through, um, the services that we wanted to focus on and how to remarket ourselves because, um, we had really hit the pause button on, um, business development. And so in March, when we really started to focus on what we wanted to, to, to be and do going forward, um, things just started to fall into place. And we got like nine new clients during the height of COVID, which I thought was really interesting that people were still working on these entrepreneurial ideas. And that was when it really felt great, which is crazy considering everything else in the world and my life everybody’s life felt awful, but I felt this sense of calm and, and purpose of what I was doing every day. Um, and it felt so good to be working on Sprezzatura again, um, and really thinking through how we’re going to grow it and how and where we’re going next.
Louis Beryl 00:10:55 And I have to, I have to ask because I’ve heard they call you “The Wolf”. So how did you get that nickname?
Jessica Davidoff 00:11:01 Um, it’s actually funny. I mean, everyone in my life, whether it’s like people at my companies or my friends, like whenever anyone has any problem, when there is like a medical issue or like a relationship problem, or obviously like business stuff, everybody comes to me and I’m always the person who’s like, okay, I’m going to do all this research. I don’t know anything about medicine. I don’t know anything about this, but I’m going to figure it out. And like, I’m going to give you the list of things that you need to do. And then I’m going to follow up with you and I’m going to make sure you’re doing it. And I’m very calm. So my husband actually gave me the nickname years and years ago. And now my desk is kind of chock full of wolf paraphernalia. I have a wolf mug. I have a wolf like the equivalent of a Barbie doll wolf, um, action figure. I have this like a movie poster. I mean, it’s like I have a sweatshirt, I have the whole thing. It’s like…[Laughing]
Louis Beryl 00:11:57 I love it. I love it. Jessica Patronus is “The Wolf”. It’s great. I’m letting my nerd flag fly.
Jessica Davidoff 00:12:02 Yeah…[Laughing].
Louis Beryl 00:12:09 Okay. This is awesome. You know, so one of the things I’m, I love to ask entrepreneurs like yourself running service businesses is if you could give advice to other entrepreneurs. So for example, you know, like the entrepreneurs you help today that are starting businesses, um, as they’re thinking about working with firms like yourself, you know, all over the country, you know, they’re, they’re looking for people to help them get their startup running. Maybe they’re looking for help fundraising, et cetera. Um, you know, maybe they’re looking for, you know, this kind of business in a box solution. What, what is, what are the questions that they should be asking when, when they meet you to understand, is this a good fit? Is this going to be a good working relationship? What are the types of things that they should be looking for and asking?
Jessica Davidoff 00:12:55 Yeah, I mean, I definitely think that they should be asking of us and of any, um, services business, what types of companies they’ve worked with in the past, um, to see if they fall into a similar category. Um, I would definitely say another thing to ask about is how people work and their communication style. Are they email communicators? Are they great with Slack? Are they comfortable with using a project management tool? Are they comfortable with integrating in with, um, your process or do you have to integrate into their process? Um, so those would be other things I would also say, um, just personality wise and just having, like, obviously now we can’t really have any sort of, um, you know, in person like drinks or like casual conversation, but definitely focusing in on, um, just like a really casual chat and doing, and getting references and understanding if you guys vibe well together. Because I think that especially what we do, which is ongoing work and it’s, it’s, you know, in those early stages, that can be really stressful. You want to understand, you know, how well you’re going to work together. Um, and then the last thing I would say is to talk through a time when one of your clients was going through a really rough time and how you worked through that, because, I mean, you probably know as well, like when you’re interviewing and figuring out who you want to take investment from, they always say, ask them about their worst the company that failed, or the company that went through like a really bad spot and how they dealt with it and how they were there for that company. And I think it’s really similar to your service provider. And then I definitely think it’s really important for founders to talk about the size of the company who they’re going to be working with, whether I’m the person that they start working with is going to be the same person, or whether you kind of get bounced around. Um, I’ve seen that happen with a PR company where you start with someone, you have this great vibe, and then that person gets pulled off your account and a new person comes in and you have to like reengage and to explain your whole backstory to this new person, and then another person. So just understanding the turnover and, um, the account management, um, policies at the company and how that company plans to scale with you.
Louis Beryl 00:15:25 Do you think there are red flags that you would warn entrepreneurs to look out for?
Jessica Davidoff 00:15:32 Um, yeah. I think there are definitely red flags in the way of over-promising. Um, when people say things like, Oh, you know, we’ll get you at the top of Google or, you know, we’re going to hit, you know, a 10x ROAD (return on ad spend), you know, within your first month of working with us. Um, I think those are really red flags because I think for any startup, it’s hard, it’s going to take time and there’s going to be a lot of lessons to be learned. I would say it’s, there’s certain things when you’re interviewing vendors that you just, you don’t necessarily need to be an expert at digital marketing or someone who can run their own Facebook ads well. But you need to know enough to ask the right questions, like understanding, um, you know, attribution, windows and asking about those kinds of nuances are really important. Um, that’s like, that’s a great area where we can add value. Like when we are interviewing, um, vendors with our clients, you know, we’ll give them enough information to sort of vet some of these vendors and kind of check them a little bit to make sure that they are, um, you know, not giving, you know, selling them like a whole story that is never going to come true.
Louis Beryl 00:16:45 If you were going to go back in time and give yourself some advice, you know, maybe, you know, before you started or right about to start Sprezzatura. What would be the pieces of advice you would give yourself as an entrepreneur or other entrepreneurs who are thinking about starting their own consulting firms?
Jessica Davidoff 00:17:01 Yeah, I would say spend, I would say that I, that any person who’s looking to start a services firm, um, spend time focusing on your core customer. Um, we definitely were way too broad as you know, which is a common mistake of a lot of entrepreneurs. They say, you know, our customer is all women between 25 and 60. Um, and unless, and the more specific you are, whether you’re launching a product or a service brand, the more specific you can be with who your customer is, and almost creating an actual persona, um, and constantly like coming back to that person, um, whether it’s real or a hybrid of multiple people and thinking about what that person wants and how you can solve specific problems that that person has. I think it makes your offering much clearer. When we first launched, we launched as more of a general management consulting company. And I think when people think management consulting, they think, you know, the big firms like McKinsey, Boston Consulting Group and Bain, and for startups, people are like, well, what actually do you do? And we were like, well, we can do a lot of things. We can solve this problem. And I think the more specific you can be of like, we solve this problem, and this is how, and these are our pricing and the clearer you can be in terms of what you can do as it relates to problem solving for someone, the easier the sell is going to be, because it doesn’t require the client to do any thinking on their own. And I think when you first start consulting, you just want your first couple of clients because you just want revenue in the door and you want to like it, just start working. And as a result, you like to just say yes to a lot of things that aren’t necessarily the right things. And it kind of puts you down paths that distract you. And then you have this website that does like all these things. So I would say as hard as it is to really refine that at the get, go and say, no at the beginning when you need your first client, like, I want to write myself a note that like the next company, like just say no until you get the right client, because I think it makes it so much easier to scale when you’re just doing that one thing really, really well.
Louis Beryl 00:19:27 Jessica has actually put out a ton of great resources. We link to them on the blog. So go there to check it out when this episode is over. All right, that’s all. And as you’re thinking about, you know, you, you know, you were just saying a few minutes ago that, you know, COVID started, you had tons of inbound, you had these nine new clients come in. What are you looking for when you’re taking on a new client?
Jessica Davidoff 00:19:48 So I think that for us, we want, we have really narrowed our sweet spot into consumer brands. So anything from, you know, apparel and accessories to consumer packaged goods, to food, to alcohol. Um, but we really like physical products. And we think that we’re really, um, excelling and specializing there. So that is something for us that, um, we weren’t doing, uh, when I first started the business and we had SAS clients and we had restaurants and we still do have some, but now, you know, we really say like, we are experts at consumer brands. And then, uh, I would say looking for kind of like growth, potential and understanding what the founder wants. We’re not saying that we only want to work with vendor backable brands, but like, there are a lot of people who want to start businesses and want to just kind of have them as great solo preneur projects, um, or, you know, they’re going to sell like a couple of products on their website and, but don’t really have the bandwidth or the desire to scale it to like that five to 15 million in revenue. And so that for us is we don’t feel like we can add as much value. We really see ourselves as, um, the place to come. And we’ll take you from idea to launch. And then with the business management, we’ll take you from launch to, you know, 15 million in revenue. And then at that point, we usually feel as though companies need to transition to all full time staff instead of outsourced, But that’s kind of our sweet spot.
Louis Beryl 00:21:21 I wanted to transition to the trends you’re seeing out there. You were saying, things got really busy at the beginning of COVID, you know, we’ve had a ton of things going on in the world from, you know, the global pandemic to, um, social unrest plus like doing all our work via Zoom. And so I would, I would love to get your take on, you know, what, what are you seeing right now in your industry? You know, how is COVID affecting things? What other trends are you seeing out there that are affecting your business and, and that you think are either going to persist or, or maybe change.
Jessica Davidoff 00:21:56 So that’s a, that’s a great question. I think a lot more people are considering entrepreneurship, um, right now, whether that’s because they lost their job or were furloughed for a portion of time and had the bandwidth and the space to think about something entrepreneurial, but we’ve gotten just way more people coming to us saying, I want to start a business, you know, and I want to do XYZ. And so I think that that is going to be a trend that continues. Because, you know, with this kind of uncertainty in, um, people’s careers I think they are going to be more inclined to start that side hustle start that entrepreneurial endeavor as a backup in case their current job doesn’t pan out or in case they can’t get a new job. Um, so I do think that we will see more entrepreneurs. Um, I think in terms of just sort of where COVID is, I think the people have definitely been thinking a lot more about the way that they work and their homes. Um, so the ideas that we’re seeing are definitely like very much in line with what people are doing now that they can’t go out. So I think, you know, on the product side and on the industry side, like we’re going to see more things regarding the home, food cooking, um, kids, pets, you know, to kind of make your home beautiful. Um, and then for us kind of one of the things that we, that, that I am in particular, but my team and I have done is, um, you know, the kind of Black Lives Matter movement and, um, George Floyd, that, that really hit home for us and we really took a pause. We completely paused on social media and content, um, for the entire summer to really think through how we want to be part of the solution to help more black founders and more underrepresented founders. And so I’ve been working all summer on writing our business in a box process out into a book which I’m going to launch in 2021 with the goal of being able to donate the book, um, for free to black founders and groups of underrepresented entrepreneurs. So that even if they can’t afford our services, we can still offer the same guidance of what we do and our process so that people can do it themselves, even if they can’t necessarily afford to pay for our services. And that was something that we really did a lot of reflection on. And I think a lot of brands will, you know, have hopefully, you know, continued thinking about, um, diversity and incorporating, you know, a lot of the sentiment from June into their daily practices, but it’s something that we’ve really spent a lot of time focusing on this summer.
Louis Beryl 00:24:43 That’s awesome. And I’m hearing that from a lot of entrepreneurs of all types and today, what do you think the most common, what is the common pain point that you’re getting asked by your clients today as they come to you
Jessica Davidoff 00:24:55 Right now? The biggest pain point is regarding financial planning and kind of knowing how to predict, you know, even six months in advance, um, from everything from like how much inventory do we need to buy for Spring 2021 to what kind of hires can we make next year and what are our revenue projections? And I think that it’s really hard right now because 2020 was such a weird year.
Louis Beryl 00:25:25 Um, even some of the largest companies in the world aren’t, you know, have stopped releasing financial forecasts.
Jessica Davidoff 00:25:31 Yeah. I mean, so I think for a startup that’s really hard because, you know, you can’t really get big loans, you know, if you need to borrow ’em and, you know, every dollar you spend, you need to be really confident in of it because a lot of these people who are founders, you know, they have 18 months runway, 12 months runway and if they make a mistake, you know, there goes your, your runway. And so I think that’s like very hard for us, you know, what, what was usually very methodical in terms of how we would do budgeting and how we would do financial projections. Now, it’s like, we’re constantly revising and revising. And every month when we have actuals, we’re making tweaks that are like huge tweaks because assumptions for 2020 just kind of went out the window. And we’re just kinda like, uh, you know, I don’t know what’s gonna happen to COVID in October. And so I think that’s been really challenging. Obviously it’s hard on us because my team wants to do the best work that they can for our clients, but it’s also hard on the clients because they almost feel like they can’t make great decisions without all of the, um, the data. But I try to show them, you know, this is the entire world. And I, I really focus my clients at least on being super conservative in terms of assumptions, super conservative in terms of spending. Not ramping up, you know, just because we had a great August, you know, not like doubling down in September because who knows what, what the fall and the winter is going to bring during flu season.
Louis Beryl 00:27:01 Yeah. And funny enough, in terms of great August, I’ve been hearing from a lot of companies that, you know, July and August have been some of their best months ever as companies which have been amazing to see, especially given everything that we’re seeing in the world. Well, this was awesome. Thank you, Jessica, for sharing so much about your business and telling us about Sprezzatura. I really enjoyed it today. Thank you.
Jessica Davidoff 00:27:23 Amazing. Thank you so much. And I’m so excited for you!
Louis Beryl 00:27:27 For more on our conversation today visit rocketplace.com/podcast. We upload a new episode every week. So if you haven’t yet make sure to subscribe to The Startup Stack in Apple Podcasts, Spotify, or wherever you listen to them. Thanks again for joining us. See you next week.
Announcer 00:27:45 The Startup Stack. Written and edited by Hannah Levy produced by Leah Jackson.