"Raising money even though we call it equity, it's debt on your business. It's money that you have to pay back." - Daniella Yacobovsky, Baublebar

Checkout this week's new episode of the #NoLimitsPodcast featuring the Co-Founders of Baublebar, Amy Jain and Daniella Yacobovsky:

On today’s episode, two women without backgrounds in fashion. They started out in finance and went to business school. They both had jobs lined up post-graduation but they saw a white space in the fashion industry. They started a class project, it changed everything and instead of taking of those jobs… They quit to start Baublebar. Amy Jain and Daniella Yacobovsky are the best friends behind the jewelry brand that started out as an online direct to consumer company and has since transformed into multiple brands. They’re in retailers like Nordstrom, Bloomingdale's and Anthropolgie and here’s the story of Baublebar.

R: Amy Jain and Daniella Yacobovsky welcome to No Limits!

D: Thanks for having us.

R: I'm so glad to have you with us today. Co-founders of Baublebar, so I thought it could be fun because the company you founded in what is it, 2011?

D: Yeah.

R: I thought it could be fun to hear the elevator pitch that you gave back in 2011 vs. the 30 second what is it today. So what was it then? What is it now?

D: Which one do you want to do then or now?

A: I'll do the now.

D: Okay, so back then the elevator pitch was that there was a ton of white space in the fashion jewelry market. It's a product that women love to experiment with trends, to change their outfit, to change what they're wearing. But that everything in the market is either way too expensive or really cheap and not great quality and we are filling that void.

A: The elevator pitch today is we’re Baublebar: we’re a fashion, jewelry, and accessories brand. It's amazing now that so many people have heard of the brand and we don't have to explain what was missing in the market. Why women want fashion jewelry, why they love it, and it's great that we've come so far from that. I remember the early days we would have to explain to people like we don't sell jewelry off of a cart in the mall, and we’re not working out of our apartments...

D: Yeah we're not like, using wire cutters to like hand make these little artisan pieces. Yeah but I think it's an interesting point because when we first started so much of what we were doing was explaining the ‘why.’ And I think now we get to explain the ‘what’ which is exciting.

R: So you guys met in investment banking I read at UBS. I did investment banking at the start of my career. Did you hate it?

A: You know what. We have the best stories we both had very different experiences. I mean the best thing that happened is we met, we met our first day.

R: I met my husband. I always say the best thing that came out of investment banking.

A: That’s really sweet. And you know what. I think for us like we it gave us a ton of grit and it's been like the best thing you know going into starting your own business, and we know finance really well. We always joke in a meeting that like we said when you tell us something and we can literally do the math in our head which is not a bad skill to have.

R: It’s a good foundation. But it can be a painful one.

D: I mean it can definitely be a painful one. God knows we have those stories. But it does really teach you to just run through walls and figure stuff out. So you know we always say that when we're hiring, there are some roles we're really looking for functional expertise. And there are some roles where we need people who will just be a ninja and figure things out. And we love hiring people who come out of that background because it really does train you to just figure stuff out.

R: Absolutely. When you made the call to go to business school, did you decide you wanted to go together? Or was it…

A: Totally a coincidence, totally. It was like such a lucky happy accident. That like best friends we ended up at business school together.

R: Do you think it's important for people who are thinking about doing a career pivot? Is that why you went to business school that you wanted to build a company or you weren't sure?

A: Both of us had no intention of starting a business. We had jobs after business school. This was a class project in school that we had actually just started doing because we wanted to figure out how to have less school hours and more time away from campus.

R: So when did it become real?

D: So it's so funny we had the idea between our first and second year of business school, and we decided to basically spend our second year at business school doing nothing but pursuing you know what is today Baublebar and in your second year you can do things like field study and things where you get to sort of chart your own path of what the class is going to be. So we basically figured out how to take as many classes as possible and basically get as much school credit as possible for just pursuing Baublebar and pursuing the idea. And it was such a great place to be experimenting with our ideas because we were surrounded by a class of a thousand of our peers who were able to give us advice, help us, connect us to people in their networks, and we were surrounded by hundreds of women who were our target market and could give us feedback on ‘oh like that.’ ‘I'd love to shop that way.’ Or ‘oh my god that product's amazing.’ As Amy said we actually had jobs coming out of school and we launched our beta site about a month after we physically graduated from business school. And we just started seeing a ton of traction. We started seeing all of these women that we didn't know shopping the site, buying the product, coming back and repeating. So you know obviously the first order was Amy's mom and the second order was my mom which was expected but then we started to see these orders come in. We were like I don't know who that is. I don't know who that is. And it started to feel like it actually was going to be something. And that's when we realized that we had something really exciting on our hands. And we were like hey wait a minute we could we could really do this for real.

R: So did you. Were you working at a job at this point or were you just straight out of school or business school and waiting to start other jobs.

A: We were straight out of school we were supposed to start our jobs at the end of summer and we both ended up calling our bosses and quitting two weeks before we were supposed to start.

R: What was the conversation did you, I want to understand. Prior to that what you guys had agreed on.

A: It was a tough one. I think for us you know we looked at it and we said we have no responsibilities right now we have a lot of friends from business school that really are going to be a great support network for us and we're going to give ourselves a time limit. If this doesn't work out worst scenario you know we'll pick up the phone and we'll ask for our jobs back and maybe they'll give it or we'll find someone else. And you know I think the calls to our bosses in hindsight you know I probably could have handled mine a little bit better. But you know.

R: Uh oh.

A: You know you forget you know people hold a spot for you in at work. They held that spot for me for two years.

R: Did they yell at you.

A: They were very understanding. They ended up investing in our business.

R: Well that's great.

A: I remember what I told my boss I said. I told him like this is your fault. He started his business and he brought me over from UBS to a company called Centerview Partners and I said listen I saw it and you told me it was put our heads down, and let's just focus on doing what we want to do and you know we're gonna look up and people are going to know who we are. And it was kind of in the weeds of that, that I wanted to one day be able to do that myself. When Daniella and I were working on the school project I mean every layer we’d peel back in this industry. There was something, where we’re like ‘why is it working like that?’ and it kind of felt like this was our moment to give it a shot and then our parents were just so supportive. You know I think they I think absent that, and them saying you know what we didn't expect you guys to call us and say you were going to quit your jobs to sell jewelry but just knowing that they believed in us I think was a really nice moment of encouragement.

D: I think that was a big push for the both of us because I think a big piece is also that we both have parents who are first generation American who are entrepreneurs who built something from scratch. And I think we both came from parents who really said hey listen like you're young you have this exciting opportunity. If you don't do it now you're gonna regret it. So you should take the leap and you should do it. And I think we're both really lucky that we you know we have people in our lives who would who would give you that encouragement.

R: So the jobs are in the rear view, you've turned them down. What is your first oh great moment what have we done?

D: You know in the beginning. You're doing literally everything yourself. I've actually heard this phrase which I will censor myself but when you are a startup founder the s-h-i-t rolls uphill. And that is 100 percent correct. I mean you know if the janitor doesn’t come you're taking out the trash yourself you do everything yourselves and in the beginning when it was really the two of us figuring out if we had proof of concept and if we had something to raise money against, I mean we were literally filling you know we were packaging orders ourselves and then we would stuff them into large trash bags. And like Santa Claus like walk our little sacks over our shoulders to the Post Office and then it got to the point where it was just way too many sacks. And we were spending like half the day doing runs to the Post Office. We were like we've got to figure out another way. So it's you know you have all of those moments. But I think that they really help teach you how to build a better business. I think every single thing that we do at Baublebar today Amy and I have done ourselves and really understood how to build the business. It's tough in the moment but I think it's a really really great learning experience.

R: I hear that a lot from entrepreneurs that appreciation that you have for all the different functions of the job because you started it and because you played every single role early on, you're more respectful and more responsible to your employees and your stakeholders. You started all of this with your own savings right.

D: Yeah.

R: When did you decide to raise money?

A: We decided pretty quickly to raise money. I think part of it when we knew that we were onto something it was going to require more than our $25,000 to get it off the ground. And we had one of our best friends in business school. Her name's Alexa von Tobel she had started a business called Learnvest and she was a couple of years ahead of us and she invited us into her office which to kind of be and work out of her space. And to through her we met one of her investors, Theresa Gao and she was a woman who loved jewelry and she heard what we were talking about and I think we ended up raising a little bit sooner than we had anticipated. But finding those early finding people early on who can see your vision even when you can't completely articulate it yourself was really lucky for us. And she's been by our side since and but raising money was a really interesting. It was really interesting for our business.

R: What's the number one thing you learned from that first fundraise, that you wish you knew prior?

D: I think one of the first things that we thankfully realized early on is that we were pitching to a lot of people who are not necessarily our target audience and it was tough for them to put themselves in the shoes of a buyer and understand the need. So you know you have these meetings, you have exactly one hour with these folks they have really really busy days and you've got this deck, you go in you know you want to spend 10 minutes you know going through the first two slides and explaining the market opportunity, then you want to spend the last 50 minutes really talking about what you're building and why it's important why you are excited about it. And we had one or two meetings where we spent an hour validating what the jewelry market is, how women shop it. Are we telling you the truth about this target consumer? Is this actually how women shop it? And I think we have this light bulb early on that we had to help them see and experience how the target consumer is shopping this category before we even walked into the room. So after that we actually started sending thank you packages to the administrative assistants who were setting up the meetings for us as a thank you for all of the back and forth and for helping us, and what it did was it allowed a lot of the investors to watch the women in their office who were definitely our target market open the package, touch and feel the product, and they would watch this moment of like excitement spread across their office. So when we came in, instead of having to explain how women you know react to the product they had just watched it for themselves. And it allowed us to really fast forward the conversation because they immediately understood what the opportunity was and then we got to spend the bulk of the meeting explaining you know what we were doing to address it.

R: That is so smart because I know and I hear this all the time here. There are so many women who are pitching predominantly to male investors. And oftentimes a lot of women here will say that they'll hear from the VCs. Oh I want to ask my wife what she thinks about this. And there are definitely women who have sat here who have said I hate that because the fact that I'm coming here I'm pitching you and I have to rely on what somebody who's not in this meeting says to you far away from this whole thing. So I think that's so smart that you figured out a way to really make it understandable and relatable to them before they even before you had to face that issue in the conversation.

D: Thanks!

R: How do you know how much money you want to raise in the beginning? How did you come to that?

A: I have no idea. I think someone said ‘this is how much you raise when you raise a seed round.’

R: Which is how much?

A: I think we raised a little over a million. I'm sure those numbers have changed over the years. Looking back on it so many people have built amazing consumer brands without following the path that we did. And they've done it with $25,000. And I think we look back on it sometimes and we say I wonder what it would have looked like if we had done that we might have been a little bit more disciplined we might have been a little more cash constrained but maybe we would have gotten to where we are today faster which is you know we worked really hard the past few years getting the business to a place where it's really healthy. And when you have a lot of capital in front of you you know we always joke it’s like shiny penny syndrome. But I don't know I don't know if you feel the same way.

D: Yeah I mean I think in general when you when you start to fundraise there tends to be a bit of a rule of thumb depending on what series or round that you're raising like roughly how much you should be looking for. Because obviously if you're raising your seed round while you would love to have 10 million dollars, I don't know how many people are going to see you with 10 million dollars.

R: That might take a while to close that seed round.

D: It would take you a really long time and I don't know that you're going to love the valuation and how that works out for you. So I think there you know the benefit is there is a market. So you tend to have an idea of where other deals in the space are closing and you can get an idea of a general range of how much money people are you know feeling comfortable kind of backing for a seed stage company that's in this kind of space. And obviously anytime you're talking about valuation and fundraising whether it's you know a private company all the way up to a public company. Obviously, most people look at market comps because that's usually what your investors are looking at as well. So I think that that does tend to be where you start. But then again to Amy's point you know obviously you know investors are definitely encouraging people to kind of raise as much money as they as they can and I think one of the things that we've really learned and I think we've been really disciplined about as founders is that's not always great for the founder. And I think as careful as you can be about raising capital, and as scrappy as you can be about growing in really smart capital efficient way, it really benefits you and it benefits your team. So that's something we spent a lot of time thinking about.

R: Explain why raising too much money isn't always great for the founder.

D: Sure. You know raising money even though we call it equity it's debt on your business. It's money that you have to pay back. And a lot of people especially folks who don't have the benefit of coming from a finance background don't think about that. It's not just money free and clear, it is something that you have to pay back before you get to split up the equity pie. If you have a difficulty if you have a difficult time raising money sometimes that payback which is referred to as liquidation preference sometimes it's not as plain vanilla as one time it can be two times or three times and then I think the other thing a lot of people don't talk about enough is that you know when you raise money at an extremely high valuation that can really limit the exit opportunities for you know for the company at the end of the day.

R: You have to get bought, or you have to go public. And you have to achieve a value that either someone will absolutely be willing to pay for or that the public markets will be willing to pay for.

D: Exactly. And it just limits what you can what you can do at the end of the day. You know the bigger price tag that you put on that company, the more limiting options you leave for yourself at the end of the day. You can build a really successful in credible company and really focus on having the biggest outcome as possible at the end of the day, and still leave yourself a lot of room for flexibility in getting to call the shots on what that outcome should be.

R: Where along the way did the two of you decide between each other this is my role, this is your role and this is how it's going to work?

A: We always joke that the things I love to do Daniella runs away from me and vice versa. We have very complimentary skill sets. So it was really obvious from day one.

R: What are the things you love to do and what of the things you love to do.

A: Daniella is very she's very creative in coming up with marketing concepts, and thinking about our brand. I love kind of the operations side of our business and you know the development of our product and thinking about where we're going to sell it. And it's been really nice you know over the years you know I've learned a lot from Daniella and vice versa and we’ve found ways that we can both flex into each other's roles. But it's also been really great as we built our team because we've found people that really compliment the two of us in a really nice way. But we feel really lucky. I mean there's a lot of best friends they can't do what we do.

R: Yeah.

A: You know we and I just love it. I mean it's just it's really lucky to have someone sitting next to you all day for the journey of this and then also to do just talk about life it’s nice to have your best friend sitting there constantly

R: I could tell the listeners. It seems like a legit relationship behind the scenes. They walked in perfectly friendly. This isn't just for the just for the recorded session.

D: No definitely not. I mean to Amy's point I think what's really nice is at the end of the day, you know we started this together. This is our baby. And when we're going you know when each of us is going through a tough moment whether it's in our personal lives or professionally at the end of the day what we want to do most is just grab the other person sit down in a room and hash it out together and we really do have that kind of supportive relationship and friendship it’s really comforting to know that you have that other person literally sitting two feet away from you that you can just sit down and brainstorm with and kind of figure things out. And again to Amy's point like on the car ride up here we actually weren't even I mean we talked about work for like the first five minutes and then we were just catching up on our weekends and talking about like you know what we did and our families are close and it is a really genuine relationship and it's it's nice when you have that 20 minute ride up to be able to just like take a minute and take a pause and just talk about life.

R: I think you're lucky because not everybody can find that.

A: We're extremely lucky.

R: What do you do when you disagree? What's like a really big fundamental disagreement that you've had over the years and how did you get through it.

A: The first thing we do is we don't talk about anything over e-mail or text or anything like that. That is like one of those rules that we've had since the early days with so much gets lost especially tone and I don't know we're just like that's one of our philosophies. We just sit and talk it through. And I don't know it's really funny. Even if we… I don't think we've really fundamentally disagreed with a lot of things that are core to the business. But if there are things that we don't see that we think that we maybe take a different path to, we are really able to talk it out because we really do see things from different perspectives and often there's goods in both of those perspectives and it ends up in a not what I want to do. What do you want to do, but in a different place that's actually a bit better.

D: I think one of the things that has really helped us is kind of twofold. One, is we are both extremely extremely logical people. I don't think either of us would ever hang onto a personal opinion if there was data or information to support something else. So I think the fact that we both have a similar approach really helps us talk things out in a productive way. And then I think the other thing that that's really helpful is we both really respect the other's opinion genuinely. So if there's something that we genuinely disagree on, my first thought isn't to be like why doesn't Amy just see it my way. My first thought is huh I wonder what Amy’s seeing that I'm not seeing and I want to sit down and have her explain it to me so that I can make a better and more informed recommendation on how we could potentially move forward. And I think that both of those things combined have helped us to sit down and kind of hash things out in a really productive way. So to Amy's point. We usually land on an answer that isn't either of the first two suggestions but as some sort of combination of the two. And that's usually how we move forward.

R: What's the toughest lesson you've had to learn along the way?

A: I think not to doubt ourselves. You know we really have no reason to be where we are today. We worked in finance, I think my skills set was Excel, no background in retail and certainly no background in fashion, no and e-commerce business and we've really taught ourselves everything. We're fast learners and we're going to be really we're always been really honest about what we don't know. But there have been many moments as we say do we really know what we're doing? And the truth is often no. But we're going to figure it out. And I think that's whenever one of us are having those moments. We always remind ourselves of that we have figured out so much and we're very capable, we're very hard working we do not shy away from a long day, we're going to read up anything that we need to read to figure out how to solve this problem. And you know what we're really equipped to do it. And I think that that's been a really good thing for us.

D: I agree 100% except I would not downplay the joy that Microsoft Excel brings to my life every day. Even in our current roles because I'm that nerdy and I'm proud of it.

R: I respect that. I'm a big fan myself. What's the worst advice you received along the way?

D: Worst advice. You know I think in the first few years when we were really kind of starting from scratch, we got the same advice from a lot of different people but packaged a little bit differently. But the core message was the same which was fake it till you make it, use smoke and mirrors, make it seem so much bigger than it is. And I mean Amy and I heard this advice a couple of different times and it just felt so not like us to be honest that's just not how we operate. That's not who we are. And we chose not to follow that advice.

R: How did you respond when you got it?

D: You know, I think we just kind of smiled and took it in and just you know we thanked people for the advice. But we didn't we didn't you don't necessarily take that advice.

R: Amy’s laughing right now.

A: We’d always joke sometimes when we’d get that advice during fundraising meetings. You know those meetings are also a two way interview. And sometimes we would get that we say you know what this is. This isn't this doesn’t seem like the type of people we want in our family.  Cause it’s not the two of us.

D: Not a good fit.

R: So you smiled and nodded and then you decided.

D: To disregard.

R: Disregard.

D: Disregard. You know I think as founders it's really important to kind of find that right balance between you know we don't want to have blinders on, we don't want to not you know take in really good feedback and really good advice, so we do really listen to everything that people tell us. But we also want to have enough conviction and confidence in what we're doing to filter through some of that advice and say you know what. Either we don't think that's right for the business, or that's just not the right advice for us as people. I don't think we'd ever really want to follow that. So we do take it all in, we do listen to everything and then you know we get in our taxi on the way home and we hash it out between the two of us.

R: Oh I thought you were going to say we bash them.

D: I would never share such a thing on this podcast Rebecca.

R: Amy and Daniella thank you so much for joining us.

A: Thank you.

D: Thanks for having us!

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