Robert Grazioli On Taking A Company to $1.1 Billion Valuation And Managing A VC Firm Providing Holistic Support To Aspiring Entrepreneurs

In the fast-paced world of startups, few founders successfully navigate the tumultuous transition from building a company to becoming a venture capitalist. Robert Grazioli is one such individual.

Robert moved from founding and scaling Density—a company valued at $1.1B—to now investing in the next generation of entrepreneurs through his venture firm, Bread. His story is one of trial, error, and resilience, and provides valuable insights to founders and investors alike.

Bread has attracted funding from top-tier investors including Trevor Thomas-Uribe who is also one of the founding partners.

In this episode, you will learn:

• Trial and error is vital in the entrepreneurial journey, leading to unexpected successes.
• Blending software and hardware in a startup requires a deep understanding of both models and careful planning.
• Building the right team involves hiring adaptable talent that can thrive in a startup environment.
• Raising capital brings both opportunities and significant pressures, especially with high valuations.
• Founders must balance ambition with patience to navigate the long, challenging road of building a successful business.
• A successful investor adds value by being hands-on, helping to shape and execute a startup’s vision.
• Focusing on solving foundational, often overlooked problems (“boring magic”) can lead to impactful, sustainable businesses.

 

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About Robert Grazioli:

Robert Grazioli, based in New York, United States, is currently a Managing Partner at Bread. He brings experience from previous roles at Density, Density Inc., and Rounded.

Robert holds a BS in Information Management from Syracuse University. With a robust skill set that includes Design, Graphic Design, User Interface Design, HTML, Web Design, and more.

Connect with Robert Grazioli:

• LinkedIn
• Zoominfo
• Crunchbase
• RocketReach

Read the Full Transcription of the Interview:

Alejandro Cremades: alrighty Hello, everyone, and welcome to the Dealmaker show. so Today, we have a very exciting founder, you know a founder now turned investor you know with his last company. you know They did quite a lot of good stuff. you know They raised over $200 million. We’re going to be talking about that blend of software and hardware, you know and some of the other stuff that they’re doing now, like how they go about evaluating companies, um what to look at you know when investing into products, how to think about team structure, you know whether that is the engineering team or the product development team, and then also thinking about go-to-market, especially when you’re at an early stage. So, again, brace yourself for a very inspiring conversation, and without further ado, let’s welcome our guest today, Robert Gracioli. Welcome to the show.

Robert Grazioli: What’s up? Stoked to be here.

Alejandro Cremades: So, born in Brooklyn, but you travel quite a bit, so give us a walk through memory lane. How was your life growing up?

Robert Grazioli: Yeah, life life was ah life was fun, life was different. um Born in Brooklyn when I was five, my parents ah took us off to Italy. um My dad got a job there as a CTO for a bank. ah So spent some time there. Obviously, my dad being a CTO was around technology a lot, which just like super integral in my life. moved back to the States, to Virginia, went to high school there, and then eventually off to Syracuse, which is really where my think entrepreneurial journey began, um so to speak. So it was part of a networking major there, basically how to configure routers and switches, but more importantly, left ah met my my now co-founders there. There are five of us, um and started our first company my my junior year of college.

Robert Grazioli: so

Alejandro Cremades: But that was kind of like a trial and error. You know you guys were kind of like a testing stuff and and and figuring things out. So how do you land on the idea of density and what kind of like got you guys to think, hey, you know maybe maybe this one, you know this idea has some legs.

Robert Grazioli: Yeah, so I think trial and error is an important theme and in my life and in my co-founder’s journeys. Like we tend to say yes more more than no. And i know I know the advice is always to the contrary, but saying yes to things is sort of how we wound up. where we are. um So we we started a services business out of college. ah We were just in a small small city and we were technical, people needed stuff built. um We did pretty well in our first in our first year and that led us to try to chase a model where any profits from our business we would kind of spend in like an R and&D fashion and try to launch products into market. We built

Robert Grazioli: ah to do application, which didn’t work very well. We built like a hotel maintenance product that we really tried to bring the market we thought had legs and didn’t. And then we were, we were a bit jaded after like eighth try of bringing a a product to market thinking maybe we should just focus on building an agency. um But one of my co-founders had the idea of counting people in a city ah with ah with a wifi router essentially. So we would count MAC addresses and we entered a competition called the launch conference. It’s with jk Jason Calacanis and we won our category and all of a sudden had access to to venture capital um and made the tough decision to actually shut down our our agency business and go go all in on what became density.

Robert Grazioli: um So trial and error for sure that’s that’s a great. I think underlying theme in my life in general

Alejandro Cremades: And what what ended up being the business model of density? You know, how are you guys making money there?

Robert Grazioli: Yeah, so the business models changed quite a bit. um we We were really infatuated with this idea of like hardware as a service. So you pay a subscription, you get leased. We were building sensors ah that counted people in rooms. So you would lease these sensors and really pay for the software. um So we were super excited about that. But you know when you go into market, especially in the enterprise world, you learn very quickly that you tend to need to operate on on these businesses’ terms. And the people we were selling to ah were really stuck on CapEx models and OpEx models. And when they were purchasing hardware, like they wanted that to be part of their CapEx budget. um So in the end, we decided to really be selling the hardware um and then having having software almost sold separately.

Robert Grazioli: uh, accompanying that hardware. And that, that was, that was tough. Like that created a lot of friction for us. Um, we were software people, software minded. So learning how to actually run, run a hardware business and how to focus on optimizing margins, um, across really two different products was, was a definite challenge. But I think like the biggest challenge was just making that hardware real. Um, as, as a group of software people, that was kind of an insane journey and in and of itself.

Alejandro Cremades: So why are why are startups that are blending in software and hardware so complicated? What’s what’s so complicated about it?

Robert Grazioli: Yeah, I think one is is the business model. like I think a lot of people getting into um building a company these days are thinking about it like a software product and don’t think about the operations involved in building hardware, which is basically like you have all these fixed costs ah that you end up accruing. And so it’s very capital intensive upfront. And if you, if you’re not used to like planning, which the software world is kind of not, it’s very much throw it against the wall. See if it sticks, then you could end up really wasting a lot of time and money and ultimately killing your business. So I think like that idea is one very hard, but also.

Robert Grazioli: um Hardware is challenging to build and test, and you really have to make sure the product works before you’re in market. And that’s also kind of the antithesis too to to a lot of software development. um And that’s something that I think ah a lot of people struggle with when you had this big IoT wave, when we launched this company, it was kind of 2013-ish. um You had a big emergence in IoT-based products, and I think that’s where a lot of companies faltered. They they had these great ideas, but They just didn’t really know how to execute or have the patience to execute well.

Robert Grazioli: And we were kind of one of those companies, honestly.

Alejandro Cremades: and how ah I was thinking too, you know while you were speaking here, you know when when you build a company like this, the way that you think about the team, especially at ah at an early stage, how you develop that infrastructure in which you’re starting to hire engineers or or product people, you know how how did you go about that and what were some of the biggest lessons that you got?

Robert Grazioli: like

Robert Grazioli: Yeah.

Robert Grazioli: Yeah. um I mean, we we messed up a lot. I think we we invested in a lot of like amazing talent, but they’re maybe used to operating at a scale that we were not operating at. So there may be X Apple. And so they’re used to millions of units and and planning a business based on that, whereas we were really trying to go to market in like a small niche enterprise space. And um we don’t get the same kind of cost ah reductions because we’re not shipping the same level of volumes, but also on the engineering side, it’s the same thing. They don’t have the typical time and testing ability that they otherwise would, because we simply don’t have the capital to afford that kind of time. So you need people

Robert Grazioli: who are more holistic, more systems engineers, more product-minded people who are really going to help you focus on building the simplest possible thing so you’re not over-engineering a hardware product, and even considering more off-the-shelf options versus constantly going going custom with um your your hardware selection. um we We were delayed ah months, like six month delay on our production product. um In order to get to market, what I wound up doing was taking our prototype and basically ah extending the the number of prototypes we built to to the hundreds and using these early tests test products to install in customer ah locations and actually get the kind of product feedback we needed.

Robert Grazioli: to make the right decisions both on the software and hardware side. um And there were so many learnings from that, like getting on an enterprise network as an IoT product was ah became a product in itself. And that’s just not something we really would have learned had we actually built this production product. like we We would have really messed up had we gone to market at scale if we didn’t have those learnings. So finding ways to to be lateral, but always be moving forward, I think is where a lot of other hardware companies falter. They stay so narrow-minded on that hardware track and don’t think about creative ways to at least get their product in the market in small volumes, take those learnings into a bigger run later on. I don’t know if that makes a ton of sense.

Alejandro Cremades: and and And I was thinking, too, you know on the software meets hardware, one of the things there that I see is that it’s extremely challenging, raising money from investors. So you guys raised quite a bit.

Robert Grazioli: Yeah.

Alejandro Cremades: So how was what was the total amount raised? And then also, what were the cycles? How was how was it like going through those cycles, too?

Robert Grazioli: Yeah, um we had some ups and downs. I think early early on, and there again, there was definitely an excitement around IoT-based products. So I think we initially, we were kind of part of that category of people. And we were building something that just made sense. like Our pitch was, how many people are in a space before you get there? This was before Google had Google wait times. essentially. So that pitch was really intuitive for people. The story was really intuitive and my co-founder is also an amazing storyteller and ah he’s now the CEO of Density and he was fantastic at just creating a compelling narrative around how obvious this problem was. um But as time went on and it

Robert Grazioli: it became more of an enterprise product. We were in this this real estate world now. It definitely start started to get a little more challenging. We were mostly buoyed by our ability to get into big name businesses and land early deals and be effective and build solid relationships with those businesses as we were trying to bring product to market. So that kind of carried us. But we are also really lucky to have great investors that I think took um took big risks, ah helped us with with a bridge round early on that kind of got us really into the pandemic era, which completely changed how people thought about their spaces. People stopped showing up to the office. So as you can imagine, all of a sudden this became like a tier, let’s call it like a tier three problem to like a tier one problem. We need to figure out what to do with our office space. And we became pivotable pivotal in helping people

Robert Grazioli: ah make those decisions. And that’s where we kind of, we’ve raised off of that momentum for our latest round where, uh, we hit that $1.1 billion dollars valuation. Um, and that’s kind of carried us to today.

Alejandro Cremades: And hey, 1.1 billion people will think, hey, that’s unbelievable. They probably read like all the articles that were covering that. And they think that it’s like, the oh my god, 1.1 billion, like the holy grail.

Robert Grazioli: Yeah.

Alejandro Cremades: There’s probably like other stuff that comes with it, too, that people don’t talk about it much. you know what What could those things be?

Robert Grazioli: Yeah. ah Well, of course. Well, one, you have now the pressure to of living up to that valuation, um which at the time, like valuations were high. So you were able to get those kinds of numbers we’re raising at the top of a bubble, ah which we learned. So now you have to kind of go after and prove to the world that you’re you’re actually worth that amount. That’s an incredible amount of pressure um and creates like way more emphasis on your go to market execution um in ways that I think, yeah, As a naive founder, like you you don’t always expect and you’re not always prepared for. um So you need people in the room who’ve been there before. And you we had we hired some great, um I think senior people have kind of seen that. And again, our investors are also really helpful.

Robert Grazioli: um The other is like your strategy changes too. When you sort of end up with that much cash in the bank, you start to think about your market position differently, um especially when you have a downturn in the market. So I think at times like you, you Something that’s always really beneficial as a founder is having a survival mindset. So you kind of shift from, okay, how like do we have a corner of the market? And how do we make sure like we use this cash really wisely and extend our life for as long as possible until we can get our next pop and our next ah find our next frontier in the market? um So those are some things that were that were unexpected. And I think too, it’s just like,

Robert Grazioli: just reminding yourself that that’s not the end all be all to building a business. Ultimately, the how much you raise doesn’t matter. At some point, you want to stop raising capital and you want to be a highly profitable business. and um I think we’ve always had our our heads on our head screwed on right in that sense. Um, but, uh, you know, I, see I definitely see other founders kind of get caught up in, in that magic and all of a sudden expenses go through the roof. They’re buying, you know, way too much swag essentially. And, um, it’s, it it turns into a party and not what it really is, which is like, you really need to execute now because there’s a lot of money on the line.

Alejandro Cremades: Well, you were for eight years here executing and you know really pushing through from from nothing to, I mean, being able to see this this incredible you know amount of value that you guys had they created. But then eventually, you know it comes the idea of potentially going to the other side of the table. So how was that transition like?

Robert Grazioli: Yeah.

Alejandro Cremades: And at what point you were like, you know what, maybe becoming an investor, becoming you know more of a VC is my next chapter.

Robert Grazioli: Yeah. So I think for me, it was deeply personal. I mean, eight years was a long time. And also I was working with my very close friends and founders. So stepping away was a very difficult decision for me, but I was, I was just kind of waking up every day and Um, starting to feel a little unsure of myself, um, in terms of what I wanted to focus on. And it just felt like there was something missing. I mean, at that point I was, I was functioning as a head of product in a sense we were, it was still pretty scrappy. So I was still very much tactical in a sense, but.

Robert Grazioli: ah The next step was to be less tactical, was to be more of a an executive in the room. um and i don’t I didn’t think I was ready for that. um I don’t know what it was, but like I wanted to make things again, or at least be part of that early journey where it was it was so much more about making a thing than kind of optimizing a business model. or optimizing an operation. And yeah, so I stepped away. I started doing some consulting, um really focused purely on early founders. And so I’m a designer and and and a front end developer by trade. And so really, like design can be pivotal and pivotal in the early stages of the business. It can really set set you apart from other other companies, but also just help you think through things in a way that a lot of people aren’t. um

Robert Grazioli: And so being part of those early journeys again just excited me in a way and lit that spark that I think was missing. But obviously just doing services, you kind of lack that upside, you lack that buy-in the outcomes of these founders. And a lot of the people that we work with would go on to raise really awesome rounds after working with us. And why not be a part of that success? Uh, and I think I was super resistant to be perfectly honest. I wasn’t stoked about the venture journey in general. I think like watching the bubble happen, some of the valuations that were being thrown around. I don’t want that to happen again.

Robert Grazioli: um i I want businesses to be better earlier and I want ah like capital to be spent on on people that are focused on on the right things. um And so I started just getting excited about being part of maybe be a better way of investing. And um yeah, I haven’t really been this excited in a while now.

Robert Grazioli: Oh, Alejandro, I can’t hear you.

Alejandro Cremades: So what’s the investment thesis for Brett? How do you guys think about the deploying capital?

Robert Grazioli: Yeah, so we’re obviously influenced by, I think, our ah previous experience. And ah we have this general thesis we call boring magic. Essentially, one analogy I’d like to use, I don’t know how how how well this connects with people, but I think about bridges a lot. Like I live in New York, I’m walking along the the promenade in Brooklyn Heights, and you see all these bridges just streaming across the the the East River. And like what a lot of people don’t think about in a bridge, you’re looking at this beautiful thing, but there’s this little piece of equipment that sits between the road and the supports of a bridge called a bridge bearing.

Robert Grazioli: And like, I love bridge bearings. These are the most exciting aspects of a bridge, but the average person doesn’t think about them. And, uh, we at bread call those types of products, those types of things, boring magic, the everyday things that no one thinks about that really are the foundation of our world and our society. And those are the kinds of things we like to invest in. So think thinking about really fundamental problems. And like you think about real estate, like density was basically a corporate real estate business. And like it’s it’s really ah an important fabric of our society, like where people spend their time. um So these kinds of problems really, really excite us. um And think about all the burning boring things like InsureTech, what we call DeathTech. Essentially, we met this amazing founder who’s trying to improve the experience after you have someone close to you pass away. um Like right now, it’s super scattered. You’re stressed out.

Robert Grazioli: it’s It’s a very challenging thing to manage. Let’s improve that aspect of our lives. So these types of problems, these types of people who kind of care about the boring things um are are really what would excite us quite a bit.

Alejandro Cremades: So between the partners, you guys have invested in about 10 to 12 companies. How do you guys go about evaluating businesses?

Robert Grazioli: Yeah, I think um this is where, one, it’s awesome to have multiple partners who are really well-versed in different areas of of business, where I’m um more focused on the product and their their general go-to-market strategy, how they’re thinking about the future of their product. um We have deeply technical partners who are really interested in their foundational engineering practices and how they’re thinking about engineering. We have a partner who is a lawyer by education, ah but has been a chief of staff and and helped run ah HR teams.

Robert Grazioli: ah One, we’re super holistic with our evaluation and we’re brutally honest on where people need help. so Every founder that walks through the door, we give them a report card almost immediately on where where we think they’re not excelling, um but also where they are excelling. and so so Being able to be really holistic, but also evaluate their product in a way that I think a lot of ah investors can’t and really really focusing on the tactical nature of how they work. So the fact that we’re still also kind of um in the trenches with them, we get a sense for how they’re working as a team, not just how well they can pitch a story. So getting in the room with them, ah brainstorming ideas, actually getting a sense for how they’re thinking about the problem, what their team dynamic is, really to us is is pivot pivotal in that sometimes our initial evaluations are wrong.

Robert Grazioli: like Great pitch, really compelling founder, but you get in a room with them and their team, you try to solve a problem and you just see the dysfunction all of a sudden. But the inverse is true. Maybe the founder is not so compelling. Their story is not great, but you get in the room and you realize, oh wait, there’s kind of a gem here. They have a core, they have a good core user base. This problem is interesting. And this team loves this problem. This team loves these founders. It can really flip the switch on your investment. Whereas I think a lot of investments often got based, um, because founders or investors aren’t really in the trenches or kind of getting the, getting to the nitty gritty with, with founders.

Alejandro Cremades: Now, one thing that you just remind me there is that most VCs, they say that they are that they add value. right In fact, 90% of them don’t.

Robert Grazioli: Yeah.

Alejandro Cremades: So you’ve been able to experience what it looks like you know when you’re an investor that adds value versus not because you’ve been a founder before because you guys have raised a bunch of money for the last company. so What does it mean to have an investor that adds value? And what can the people that are listening now that are thinking about either raising money from the right people that could add that value or from putting their current investors to work, how does that look like when an investor is providing value?

Robert Grazioli: Yeah, I mean, for us, it’s it’s very literal. So you come to us and… ah maybe like your brand’s a little lackluster, um I will literally sit in a room with you ah for for two weeks and help reshape ah your visual identity, ah help reshape your go-to-market language, um like spin up a refined marketing site, um and essentially help you relaunch your product if that’s what you need. um And we can only do that because we have five founders, uh, five former founders essentially. And we make our model work. Like it’s just, it’s just not, kind of it’s not the time a lot of other VCs can spend at a seed stage or pre-seed stage. Um, and it’s time we can, but it’s literally doing work for people. We are in code with, with our, our founders. We are ah like helping them hire. We are deploying our hiring playbook that we used, uh, for our previous companies to help them interview and bring on top tier talent. Um,

Robert Grazioli: Yeah, it’s it’s it’s actual work output. It’s time real time spent helping build their product if that’s what’s needed. It’s not always what’s needed. So sometimes it’s it’s more it’s more traditional where we’re really just just doing advisory, helping make introductions to other investors for the next round, or introducing them to former customers or hours of hours or or people um who might help help them land some business. but um Yeah. i mean And we have direct examples of of of this too. One of our companies is building, um one of the companies we’ve worked with is building authentication and in on the blockchain. And we were able to work with them. And this is we didn’t invest in them, but this is a company we definitely would have invested in. um ah we’re We’re kind of in the middle of our of closing our our our fund.

Robert Grazioli: um And we really helped them gain market share just by building a better demo of their product. So like a small, discrete project that we saw ah could lead to market opportunity. We designed and built, um took to market and really helped them kind of complete their demo journey and and close ah close some big deals. So um yeah, does that answer your question?

Alejandro Cremades: Absolutely. So imagine you were to go to sleep tonight, and you wake up in a world where the vision of bread is fully realized. What does that world look like?

Robert Grazioli: Yeah. And I think I mentioned this before, but it’s it’s really a world with a a little less hype. So like we call ourselves bread because again, it’s like an unassuming thing in our world, but it’s also foundational. I mean, very few people in the world, in unless you have like a gluten intolerance, don’t eat bread. And it literally keeps societies going when times are tough. Um, so while like people don’t go around praising bread every day, maybe if you’re super into making bread, you do. Um, like we think that’s a a better world where people are less excited about the next big future thing and more interested in how to make the the current things we have better. Um, and I, I’d love, I’d love a startup world to be more focused on those kinds of things, those kinds of problems. And I’d love a, uh, a venture environment that.

Robert Grazioli: um that incentivizes those kinds of products in our world. um So I think that’s maybe a little ambiguous, but that’s definitely the kind of world I want to live in um and contribute to, if if at all, if I can.

Alejandro Cremades: So imagine you were to go into a time machine, and you were able to go back in time to that moment where you guys were like you know just testing things out and figuring things out you know with density.

Robert Grazioli: Mm-hmm.

Alejandro Cremades: you know Let’s say back in 2013 or 2014, and you had the opportunity of having a chat with your younger self and with your co-founders, and you were able to give them one piece of advice for like going at it with the business.

Robert Grazioli: Mm-hmm.

Alejandro Cremades: What would that be and why do you know what you know now?

Robert Grazioli: um Honestly, it’d probably be don’t don’t build a product with lasers in it. um ah That’s probably my number one and that would be my number one piece of advice for us at the time. Avoid lasers at all costs. um No, but I think in all seriousness, the main thing is it’s gonna take longer than you think. ah Every single thing I’ve done has taken way longer than I’ve wanted it to, of course. but learning how to maintain your ambition while having the patience to to do something the right way, um I think is what I would tell myself back when we were starting. like that My journey being eight years long and and still going, I mean, density is still not um not at its end. I would not have expected that. And I think just,

Robert Grazioli: Yeah, like be more patient, um but still be excited ah is is kind of what I would tell myself.

Alejandro Cremades: I love it. So, Rob, for the people that are listening that would love to reach out and say hi, what is the best way for them to do so?

Robert Grazioli: Yeah, I mean, you can go to our site. It’s spread.works um and just reach out. Our email address is on there. um You could also find me on LinkedIn, Robert Grazioli. My dad is also Robert Grazioli, so you may see him as well. But um that’s a good way to get in touch with me as well and really just love meeting founders or other investors and hearing what they’re up to. um It’s kind of the best parts of my days when I get to meet new people, um or designers. I’m a designer. It still consumes a lot of my time. So if you’re a designer out there, hit me up.

Alejandro Cremades: Amazing. Well, hey, Rob. Well, thank you so much for being on The Dealmaker Show. It has been an absolute honor to have you with us.

Robert Grazioli: Alejandro has been super fun. Thank you.

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