David Kravetz – Fairytale Brownies

June 13, 2007
Posted in interviews
June 13, 2007 brett

At 25, with a degree in mechanical engineering, David Kravetz decided he wanted to sell brownies. David, along with his lifelong friend and business partner Eileen Spitalny, moved to Phoenix, found day jobs, and spent many nights in a friend’s catering kitchen armed only with his mother’s brownie recipe and a disturbing lack of experience. Sixteen years later, David and Eileen’s mail order venture Fairytale Brownies can claim a single day’s sales record of $450,000.

“I just think it’s great to sell brownies,” David says, “It’s a fun product that puts a smile on people’s faces.”

Five years into a ten-year business plan, Fairytale recently moved into a beautiful new facility from which the entire operation is controlled. The Phoenix facility includes a walk-in retail area that contains a viewing window of the actual baking floor, an order processing and shipping center, and plenty of customer service work stations.

Conspicuously lacking, however, are executive private offices. David does his work from the same area as his employees. This, along with full financial disclosure to all employees, maintains the cooperative work atmosphere that makes Fairytale so successful. The $100 Empowerment Policy allows all customer service representatives a budget of $100 to fix a customer’s problem immediately, and it works.

David’s advice for young entrepreneurs is all about patience. “It takes a long time to gain a foothold. We worked for 3 years without a salary, and eight years until the company had a positive net worth.”

That patience has paid off, thanks to calculated risk, trust, and a mother’s fabulous recipe.

Interview

Started Fairytale without any baking experience.  When you started, did people think you were a little bit nuts?

Yeah, definitely the parents (laughs).   I had a corporate job at Proctor & Gamble in Cincinnati.  So I had a really good job.  My business partner Eileen was selling advertising for the local Spanish television station.  She was like, the top sales person there.  She was there for 4 or 5 years, and I was at Proctor & Gamble for four.  So yeah, when we told our parents that we were going to give up that and go start a brownie business, they were very skeptical and very concerned.  You know.  Having a good college education from Stanford…but you know, they’re happy.  It worked out alright. 

So I quit Proctor & Gamble, I came back to Phoenix and worked at CompUSA during the day, Eileen was still at the TV station during the day, and we would do the catering kitchen at night.  We did that for a year and then made the big jump.  We got a bank loan, got our own space, and went full time.

What’s the most important lesson you’ve learned in your fifteen year entrepreneurial run?

The biggest lesson is…it’s all about the people.  It doesn’t matter what the business is, or how good your idea is, or how hard you want to work…if you don’t end up finding and hiring really good people, you’ll never be successful. 

The biggest mistake most entrepreneurs make is they try to do everything themselves.  There’s a lot of control issues of not thinking other people can do it as good as you.  We learned that lesson many times over, either by hiring the wrong person or not firing the person soon enough if they were causing problems.  Or not paying extra to get a quality person.  It’s hard when you’re starting out because you have to be frugal, but we were hiring day laborers to pack brownie gifts.  We learned pretty quickly that there were all sorts of errors, people would come back from lunch with liquor on their breath- everything you could think of.  So our hiring is a lot more meticulous now. 

I really think it’s great to sell brownies (laughs).  Of all the things in the world I could be selling…it’s a fun product, it brings smiles to people’s faces, makes people happy, people love chocolate.  I love the mail order business because we have a lot of quality control.  It goes from our dock to your door in three days without anyone in the middle.  I like that customers pay by credit cards so that we don’t have huge receivables. 

I always figure it could be worse.  I could be selling Christmas Trees.  Or pumpkins.  Or some wireless plan. 

Where do you want to go with this?

Our plan is to continue to grow. 

What’s the one piece of advice?

That’s a good question.  Be patient.  At that age I think I felt you could get rich quick.  I had visions of retiring by age 40.  I think that was a little unrealistic. 

A lot of entrepreneurs that come to us for advice are a little unrealistic in how long it takes to really get a foothold.  For us, when we quit our corporate jobs, we didn’t have any wage.  And that was for three years.  We were full time brownies, no salary for three years.  Just living off of savings and family support.  Then it took five years for us to be able to pay ourselves back with the same salary we left in the corporate job.  It was eight years before the company had a positive net worth.  And then it got a little easier and easier after that.

But it was really like, five years.  And that’s what I tell most entrepreneurs is that it’s usually five years until you’re comfortable to actually pay yourself and not work a million hours a week. 

So yeah, patience. 

Failing was never an option.  But we definitely thought things were going to happen a little faster than they did. 

I worked at Proctor and Gamble until I was 25, then two years at CompUSA, and started this business at 27.  Right when I got married.  It was tough.  We had a two and half year old, a newborn, a dog, a cat, a fishtank when we were living in a condo. The business was only three years old.  Not fond memories of those hours.