Listen to original podcast HERE
Dr. Tye Caldwell is the Co-founder and CEO of ShearShare. Tye holds a Doctorate of Professional Barbering and is a #1 best-selling author on how to achieve long-term success in the beauty and style industry. He is a recognized beauty expert with more than 20 years of experience in salon and barbershop operations, company culture, customer retention, and team building, he is often called upon to speak at cosmetology and barber schools nationwide.
Courtney Caldwell is the Cofounder & COO of ShearShare. Prior to cofounding ShearShare, Courtney managed a boutique consulting firm where she fast-tracked international sales & marketing success for brands such as Zendesk, Zenefits, and Qualtrics. Courtney is a winner of two 2016 Killer Content Awards, named a 2015 Direct Marketing News “40 Under 40” Honoree, a “Top #Nifty50 Women in Tech on Twitter,” and Distinguished Young Alumna of the Year by Texas Military Institute.
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ShearShare connects salon and barbershop owners to licensed stylists to fill unused suites and stations on demand. Salon and barbershop owners make money on their empty chairs while licensed cosmetologists and barbers find professional space to work by the day.
Founded in 2015, ShearShare is based in Dallas, Texas, and a 500 Startups alum.
Interview Transcript
Tye Caldwell: I have had clients that been with me for 23, 24 years and I’ve cut their kids their kids have gone to college and had kids…that’s a testament to the person and so we forget sometimes that we don’t control the professional and the salon itself isn’t now the staple to the client.
Jay Clouse: The startup investment landscape is changing and world-class companies are being built outside of Silicon Valley. We find them talk with them and discuss the upside of investing in them. Welcome to upside. Whoo.
Eric Hornung: Hello, hello, hello, and welcome the upside podcast first podcast finding upside outside of Silicon Valley. I’m Eric Hornung and I’m accompanied by my co-host. Mr. Coffee delays himself, Jay Clouse. How’s it going, man?
Jay Clouse: I don’t know if that’s a nickname specifically for me or if that’s a nickname for us.
Eric Hornung: I think it’s a nickname for our process.
Jay Clouse: Our process. Yeah, let’s just let’s just formalize it and make it a formal part of our process here of recording these intros.
Eric Hornung: For the listeners if we scheduled interview like this morning at 5:45 a.m. Or anytime really it really doesn’t matter what time one of the two of us will almost always write exactly at that start time, “Hey, I need five minutes making coffee. Making a pot of coffee. Grabbing a coffee.”
Jay Clouse: Never five minutes earlier. Never never like, actual warning to the other, just hey, I know I’m supposed to be on the microphone right now, but no coffee.
Eric Hornung: And I think I will take full blame for that because I probably do it like 75 plus percent of the time.
Jay Clouse: And this morning I said Eric an article from Ink couldn’t find the article that I had originally read, but I remembered reading a piece that seemed like some pseudo science that didn’t quite have all the questions answered for me, but explain the best times of day for you to drink coffee. But the first article I read to not address things like your time zone or your natural circadian rhythm. It just said basically like you should drink coffee at 10 a.m. And 3 p.m. In any case seemed earlier than Eric should be drinking coffee and it seems that if you drink coffee right out of bed, your cortisol levels are rising and it’s not the best time. It can cause you some unnecessary stress.
Eric Hornung: That’s why I always sound so stressed out on the podcast you sound stressed out.
Jay Clouse: No, but you do sound like you got a little bit of a cold there, bud.
Eric Hornung: I do. It was very bad earlier this week and I’m getting over it. So I apologize if I sound a little congested on the podcast. I apologize to the listeners, but we’re going to push through it. We’re going to fight through it because we have an awesome guest on today.
Jay Clouse: We do. We have our first first company in Texas first company in Texas?
Eric Hornung: First company in Texas.
Jay Clouse: We have ShearShare today. ShearShare connects salon and Barbershop owners to licensed stylists to fill unused sweets and stations on demand. Salon and Barbershop owners make money on their empty chairs and licensed cosmetologist and Barbers find professional space to work during the day. Think of it like Airbnb for salons and barbershops.
And our guests today are the co-founders of ShearShare, Doctor Tye and Courtney Caldwell. Dr. Tye is the CEO of ShearShare. He holds a doctorate of professional barbering and is a number one best-selling author on how to achieve long-term success in the beauty and style industry Courtney, the COO of ShearShare had previously managed a boutique consulting firm where she fast-tracked International sales and marketing success for Brands such as zendesk, zenefits, and qualtrics.
ShearShare was founded in 2015 with the beta of their app released in 2016. To this point, they’ve already raised 1.1 million dollars than what they called a pre-seed round, which is led by precursor Ventures and included backstage Capital 500 startups Y combinator and Capital Factory.
Eric Hornung: It’s going to be an interesting interview because it’s our first time having two co-founders on.
Jay Clouse: Yeah. Yeah, it’ll be interesting and it sounds like ShearShare has an interesting founding story. And what we have here is a couple who co-founded this company. So I’m thinking that it should be a very interesting dynamic in a fun story to dig into. And Eric as you’ve noted to me here offline, we often talk about the other Founders or try to talk about the other Founders in a business and to have them both on today will give us a different experience.
Eric Hornung: Absolutely. I’m excited to kind of check out that dynamic in our interview. Four voices on the podcast, so it’ll be interesting to kind of play with the different personalities.
Jay Clouse: Eric. ShearShare’s been on your radar for a while. How did you first become aware of the.
Eric Hornung: You know, I think I just I think I’m just on Twitter too much. That’s that’s what it really comes down to it.
Jay Clouse: No. No, I think I think you should be on Twitter more. Your Twitter game is much better than mine. And you’ve got the upside Twitter handle dialed in much better than I do.
Eric Hornung: So, I think I first heard about your share via Twitter. So Jay and I are always looking for new cities new areas of the country new areas of the world to tap into and find companies outside of Silicon Valley.
One of those is Dallas and I remember seeing a tweet either from or about Steve cases Business Insider ignition conference. And I want to say that that’s the first that’s when I wouldn’t really clicked for me. But I’ve seen the name around a bunch on Twitter. They have a ton of awards for a very early company. I think they’re the taco startup of the year. I believe that Courtney one L’Oreal’s women in digital and they also won Google demo day, maybe?
Jay Clouse: Google demo Day 2018 2016 Tech cocktail company of the year. They’re a 500 startups Batch 19 Alum. I did see a whole list of awards that both the Caldwells have won at this point. But what I’m really interested in is what seems like some pretty quick tractions this point their website says there in 350 cities, 11 countries, and it mentions that they connect salon owners to over 1 million stylists to fill empty salon chairs. And I didn’t know if that was a number of the market size or how many users they’re actually serving so far, but that’d be a big number if they’re serving 1 million stylist already.
Eric Hornung: Yeah, absolutely with only taking on 1.1 million in capital to date that would be crazy. It would be crazy but it wouldn’t be unreasonable for Founder’s outside of Silicon Valley to be that kind of capital efficient.
Jay Clouse: Yeah, so excited to talk to the Caldwells here. Before we jump in the interview guys want to remind you that as we go through the interview. Feel free to tweet at us at upside FM. We’d love to hear your thoughts and real-time as you’re listening to the Caldwells tell their story if we miss anything tweet at us add upside FM or if it’s Spurs any thoughts or ideas for you. We’d love to hear from you and we’ll get to that interview with the caldwells right after this.
Eric Hornung: Hey guys. Wanted to cut in here real quick and let you know about something Jay and I have been getting ready behind the scenes in 2019. When we started this podcast Jay and I said that you, The Listener, would have an opportunity to learn in real time to think like Venture investors with us as we meet a wide variety of personalities examine a wide range of Industries. Well now we’re going to share something new and it’s a little different this new idea is called the update. It’s a carefully curated quarterly publication of editorials, trends, and stories happening outside of Silicon Valley. Jay and I will be writing stories about what we’re learning about on the podcast, have guest editorials on interesting topics, and share news and updates from our podcos. In some cases. we may even share some exclusive content or first looks our goal is to stay at The Cutting Edge and of course bring you along with us. We’re super excited about it and know you’re going to love it. If you want to be the first to hear about our q1 launch and subsequent letters, go to upside.fm/update to get on the mailing list.
Jay Clouse: Tye and Courtney, welcome to show
Courtney Caldwell: thanks for having us guys.
Tye Caldwell: Thank you so much.
Eric Hornung: Yeah, we are excited to have you guys on so on upside. We like to start with the history of the founder in the background of the founder, but we have two Founders on today. So I think you guys have a little bit of an interesting founder story. Can you tell us about the history of Tye and. Courtney?
Tye Caldwell: You start first.
Courtney Caldwell: Okay, great. So I was a military brat growing up. I think that’s important because as a military brat, my dad was an Army doctor. You have to become pretty resilient about moving around like up starting your life every couple of years, right?
We moved quite a bit every 18 to 24 months. We were in a different location. But I was born in Santa Cruz, California believe it or not. I’ve although people ask me where I’m from. I always say San Antonio, Texas because that’s where I graduated high school. So my dad was a military doc. My mother was a social worker now works for several military bases back home in San Antonio. I am the oldest of two kids so pretty small family, but everyone is pretty much like a chameleon love that. You know, we although we were very small tight-knit unit. He’s always first and I learned at a very early age to never leave a man behind. Decided that, well, I thought actually that was going to end up doing military full-time. Did not do that, even though my mother tried as she might to put every single great decision in front of me where I would always choose military and went to the military High School. All my friends were, you know kids of military men and women but I got to SMU in Dallas, Texas on an army ROTC scholarship and a leadership scholarship and said this doesn’t feel like I want to do this forever. You know, I’ve known this all my life. I think I’m going to do something different. So because I chose differently, I think I felt like the black sheep of the family for a while because the only one who wasn’t serving in the military, but decided that marketing was my thing. And so went to SMU fell in love with marketing did that I graduated early from the honors program rolled right into getting my master’s degree from UT Dallas and then started working in Corporate America was for software Enterprises and did that for 20 years before I decided to take a jump and do something completely different and that’s where ShearShare started.
Tye Caldwell: That’s great. My background I come from a very close-knit family. Grew up in Arkansas Lex Arkansas small town south of Memphis, Tennessee, and it was 13 of us in a three-bedroom one-bathroom house and
Jay Clouse: wow.
Tye Caldwell: So from great-grandmother all the way to nephew. Very close-knit. I learned early on what it feels like to take care of family the be a team player ended up moving to Dallas Texas at the age of 15 finish the Hillcrest High School before I left there. I was also before I went to school in Texas. I was All-Star three Sports in Letterman track football and basketball. Went to Texas on my own living with my sister and realize that the world’s different and ended up graduating and deciding to go to school for sports medicine and psychology. And for the second semester, I decided you know what this is it for me. I’m entrepreneur by heart and decided to go back to my first love which was barbering and cosmetology went to school finished was the student teacher decided after five years to start my own business ended up finishing out my doctorate in Professional Barbering and Cosmetology at Miracle University. The only University in the nation that has those degrees. Been an entrepreneur since I was 19. And married this beautiful woman named Courtney, and realize that there’s more to this industry than just being behind the chair. So I wrote a best-selling book called “Mentor by Failure.” I’m an instructor, I’m a teacher, I’m a speaker, and man — life has been a journey and one point once you realize that there’s more to life you start to see things differently and you get exposed to things because the gravitational pull comes your way. So I’ve learned that life is a journey and I’ve been exposed in so many ways and I’m proud to be a partner now as a co-founder and CEO of ShearShare.
Courtney Caldwell: I think something interesting too that most people don’t know is that we met at Tye’s salon over two decades ago and never would I have thought that we’d be coming full circle to doing what we do now at ShearShare.
Eric Hornung: So tell me a little bit more about that because you kind of took me down each of your individual paths, but tell me about how the paths kind of intertwine.
Courtney Caldwell: So I think I was working at Oracle at the time. So I was leading oracle’s digital strategy and demand gen group had piano across five continents was traveling quite a bit at the same time Tye was going back to school for his Doctorate. He was finishing up this number one best-selling book and he was touring around a different cosmetology schools and Barbara colleges talking about the book and we had we completely during this time. We have our own Salon, right, our 20 year old award-winning salon, and we decided to expand it because it business was so good. So we did that. And did not receive phone calls, typical phone calls, from style of those looking to rent space. So what’s usual course of action in our industry is that stylus will call you he’ll do an interview process and if they’re looking to rent long-term booth rent, then they end up paying you a weekly Booth rent or a monthly Booth rent and finding a long-term contract. That’s just how it’s always been. Or they choose to work on commission. And so there are full-time employee and they may take home, you know, 60% and you keep 40% or whatever the percentages that you negotiate but always based on a long-term contract.
And so we started to get these phone calls from a couple of stylist who said hey, I just need space like on a Friday, Saturday. I just relocated like an hour away. I’m really afraid of losing my clients. They make up the majority of my book of business. And so I heard about you guys. Would you even do something like that?
And I remember that I came home and he was telling about this phone call and I kind of you know, kind of laughed it off and I was like, oh my gosh, like who would ever do that? Like no one ever does that in the industry. You don’t barter space you don’t, you know come in for a day or two at a time. I think that’s you know hilarious and he’s like, yeah, I think so too. But you know what that those suites are lying dormant right now. I may as well give it a whirl. And so he did.
Tye Caldwell: And you know, one of the things you got to realize about this industry with this is an archaic industry. It’s been the same for years. We’re going to go over a hundred years. And so the mindset hasn’t changed any time you’re doing something different, you know, people are little skeptical. And once we did that and realize it was a great experience and you’re looking at it like man, this is just a day. They’re going to be here a day there not going to be a part of the team and I’m going to be a part of the culture. How is it going to affect the people that are working here? And believe it or not when they came in they felt like they were part of the team. I mean just that one day and you know to see such an experience happen, right before your eyes and then after you finish, your kind of like doing all these things that you do on these apps today, you’re rating and reviewing, your going through all this conversation piece that you would normally do in the flow of a app. If you’re doing it. We just like man she came back to me about two three days later, and she said Dr. Tye, I need to go to five other salons. Are you able to get me in these salons? Because I want to be closer to my clients. And you know, I don’t want to lose anyone. So the old adage would be if your client moved away or if you moved away you lost those clients. So with ShearShare, well, it wasn’t that that back then you couldn’t retain those clients. We now can help you get into a salon closer to your clientele.
So. I said, why do you choose to ask me to do it? She said, well, the interesting thing about you, Dr. Tye’s that you play both sides of the coin. You’re not only a licensed professional your salon owner. So you speak the language, you know the lingo you able to vet me and talk about me to the other salon owner and let them know that I’m not a threat to their Salon. I say, you know, you’re absolutely correct and I’m thinking so what I’m thinking about what’s in it for me? So Courtney and I three years now in, we’re playing this concierge service because then her friend started coming to us and their friends started coming to us asking us to do the same thing for them that we did for their friends.
Courtney Caldwell: Yeah, people had our personal phone numbers believe it or not and some of them still do and they say, Hey, you know such and such told me about you guys. I have to you know, go home this weekend and I need a salon space. This is kind of what I’m looking for. Can you find something for me? And that’s literally what we did for three three years right?
Tye Caldwell: Three years and. It felt really really shorter than that because we will totally moving around. I’m traveling. She’s traveling. We were traveling together with working together and I always told her you know what I said. I wish I could hire you you’re so efficient you super fast I said, but I just can’t afford you right now.
Jay Clouse: You mentioned interesting point, Dr. Tye, about the culture and being part of the team.
I often talk to my barber about how my haircut and my loyalty to him is one of the last standing pieces of loyalty I have to like a service in my life, right and a huge part of that experience of going to Santarelli’s, my Barbershop, is the experience of the barbershop that people there that are familiar and it’s just an enjoyable experience.
So I’d like to hear from you when you have that first experience of somebody coming into the suite that wasn’t quote-unquote “part of the team.” And it worked how did you know that that was a testament to the possibility versus that person being a good culture fit or the environment that you created being a good environment.
Tye Caldwell: Well, you know, that’s a great question. You got to look at it like this. These are licensed professionals, and for so many years the barbershop the salon of the spot treated them as if they weren’t the business. They are a business amongst themselves. And The testament today is social media all the things that are wrapped around the individual when it comes to an influencer. That’s what makes it a genuine partnership. And so when these when this licensed professional came to me, the stylist, it was easy for me to know what she wanted because what we need is the professional space. We are working with the client. So we are a business within yourself working under the roof of another business. So what do we want to give? You want to get professionalism, we want to give aesthetics, we want to give the culture of what they need, and everything really works around the client. And so I knew exactly what she wanted and I was appreciative that she came to me with the compliment that I can help her. But just going back to what you’re saying, those are probably the only longest standing relationships now that you can have and that’s what your stylist with your Barber with whatever whoever touches you when it comes to Beauty because Beauty touches everyone from the President all the way down to the Pauper and you have to realize that anytime you’re you’re you build that relationship.
It goes a long ways. I have had clients that been with me for 23-24 years and I’ve cut their kids, their kids have gone to college and had kids that’s a testament to the person and so we forget sometimes that we don’t control the professional and the salon itself isn’t now the staple to the client. The Stylist, the Beauty professional, is the staple now to the client and if that’s that client wants to go to that license professional whether they are commission based salon their going to go there. You just don’t walk in and say go to such and such know they’re going to say I want to go to Courtney or I want to go to Tye. That’s the person that they want to be comfortable with. They know they’re comfortable with and so the salons are struggling trying to reel trying to figure out how can they keep things the same things would never be the same again. It’s totally different now.
Jay Clouse: From a pure like blocking and tackling standpoint as the salon owner, or as The Stylist coming in, are there any aspects to kind of parachuting in to a an open booth and setting things up and being familiar with the setup or is that pretty much I’m a stylist, I have my equipment I come in, I need some outlets and to know you know where X Y and Z is and I’m good to go?
Tye Caldwell: Well, we work with eight different types of professional. So a bar would need something different from a cosmetologist and colorist and a makeup artist would need something different from someone who was a massage therapist. So it’s really not always about the plug is really about the Space is really about the equipment and all the equipment doesn’t require electricity some equipment requires a lot of space for a longer table for massage therapist. Some places may require a chair that leans back so someone can do your eyebrows or your makeup and then you may need a swivel chair for a barber who needs a lot of plugs a lot of outlets. So it really depends and that’s the Aesthetics of, of really having a full-service Barbershop Salon or Spa, and how many licensed professionals that you can take in at one time. So it just really depends and one of the things that make it so different is that you can separate those people. Now if you have a Salon Suite if you have a barber shop that has a room where they can get that privacy because now you have weaves now you have people making full-on wigs. You have people just getting all these different things. So when they go in and going one way and they come out looking like a from the back door come straight out the front door because he looks so different. So it just really depends on the license professional specialty.
Eric Hornung: And how does that fit into ShearShare? How do you customize for those eight different types of professionals?
Courtney Caldwell: So, you know, we first started off with just allowing a hairstylist and Barbara’s to rent on the app, right? And now if you’re a hairstylist a barber makeup artist as petition massage therapist microbe leading artists. No person does the eyebrow generally and hair braider you can find Space to work on ShearShare. 40% actually of Salon space goes unused every day. So already you have these owners who are very sensitive to allowing someone to come into their space. They’re looking to feel that additional overhead. In many of the cases, you know, the beautiful thing about them having that open space right now is that they have all the accoutrements that a barber, individual Barber, or individual cosmetologist would need. So we work with these owners to build out their listing on the app. So they’re they’re very particular about you know, what it is that they offer what things they don’t offer in addition to that the license professional the visiting stylist, If you will, have the opportunity to ask questions of the owner. Say, oh I see that you have a private Suite it’s you know, 10 by 10 there’s already a table in there. But is there also a b and c? And so all of that kind of gets worked out prior to and then we also take that as learnings, right? So if we see that the same 10 questions get asked every day then that better informs us on what additional information we need to ask for the host while we’re betting that individual to put onto the app.
Jay Clouse: Before I get too excited about product specific questions, I’d love to hear more about the the transition between you guys meeting you guys having this insight and then building the app. There are a lot of steps involved here, right? So early on Courtney you had mentioned that you guys met in Tye’s salon, and then I’ll send it seemed that that the story kind of went to you guys are operating the solano’s working. Well now you’re expanding it. So tell me more about the moment of you met Tye and you guys decided either that you’re going to go into business together or you start a relationship help me close the gap there.
Courtney Caldwell: Oh sure. Sure. Yeah 20 years is a long time, isn’t it? So tired I met in his blond that was looking for a service at the time. So that’s when our relationship our friendship started. We didn’t start thinking about ShearShare until gosh, so 2012-2015. Yeah, we started doing this thing called ShearShare manually back in 2012. And we always like to say that we’re fast learners but Gosh guys, it took us three years before we looked up and said, okay, wait a minute this this whole matching thing is starting to feel like a full-time job. Let’s go out there and look for something that does what we’re doing because right now there seems to be an app for everything. You know, and Paul Graham says that software is eating the world, we definitely felt that. And so we went to Google we were searching for you know, what it is that we do like what app can match independent stylist to empty Salon space On Demand? Where is that thing?
I searched I searched I couldn’t find it. Tye searched and searched he couldn’t find it and that was the aha moment for us. We looked at each other and said, oh my gosh, this doesn’t even exist. Like what would our lives look like if we started to build out ShearShare? And that’s where we started.
Eric Hornung: What had changed so much in 2012 that matching was growing so much?
Tye Caldwell: Well, we knew that I knew that in the industry was changing because I saw a lot of salons and barbershops and the sheriff came when I would go into different salons and barbershops. So I would add two different stylist who were who were inquiring about my space. I was like, you know, My thing was is to get to know them always asking, “Are you looking at other places?” And she said yes, she said there’s a lot of empty spaces out there, but I don’t like the location and she said you have prime location and so I will go into looking at mails. So we always got papermaill from different Salon Suite popping up different salons that were advertising that they had empty space that they were looking for The Stylist to come and rent that space or get a get a chair Great Clips with sending stuff out, Sport Clips…you have different salons that always send out this male looking for. Stylists were graduating from school because you constantly got stylus Barbers licensed professionals graduating monthly. I’m talking about tons monthly and so. Once I started realizing that my friends, and my friends friends were having an issue filling their space is not that they were over over building in their salons and adding more chairs, It’s just that there was just enough not enough people to rent their space because people were starting now because the old adage the old mindset working at home working in hotels, traveling to different cities, Texas has four the biggest cities in the world in the nation. I mean in Houston Dallas San Antonio and Austin so they weren’t just go to Austin and just do hair in hotels or meet at their parents home or me that their home turning their turning these places into businesses that don’t have the accoutrements of a salon or Barbershop…The swivel chair, the the lighting, the mirror, anything that will allow them to create and give the best service that they can so we just realize now where are these stylists? And we knew that they weren’t in the salon. So we started realizing this is an issue not just for the stylus and the licensed professionals but for the salons because they want allowing people to come in and work by the day and because they were looking for this quote-unquote person to come in and fit the culture and you got to understand if you go to school from anywhere from nine months to two years to get your degree, you’re ready to work in a salon. But if you’re not offering them the opportunity where they want to work a week and I have to sign these long-term contracts, then you’re not you’re not making just do to help these people get into this industry the right way because most of the time commission-based salons want to offer an apprenticeship before you can even get on the floor. So you have to even though you go to school, It’s just like conventional college, even though you go to school you still have to come in and learn that business style. You have to learn their trainings before they can actually let you out there. So you’re going through a course training of figuring out how this salon works what tools they use what products they use so you can fit in and if you’re independent contractor, you just go on in here first because you don’t want to have to worry about going through training your your own business within yourself. And so you’re signing a long-term lease contract.
Eric Hornung: So I want to kind of clarify. What you just said in my own head for the what is like the traditional route. So that’s you go to school for nine months to 2 years. Then you graduate and you would find some sort of apprenticeship role at a salon. You mentioned commission-based, I’m not really familiar with that, and then also this independent contractor route. Can you just kind of break that down if I’m a new stylist? I just graduated Beauty School. What is getting a chair look like? What is what are my options leaving Beauty School?
Tye Caldwell: You graduate you get your license you go to ABC Salon after you pass your license – you go to ABC salon, and they’re working on commission only. So you’re only getting a percentage of the service and you’re getting a percentage of the products that you sell. So this is just their platform. This is how they work. And so a lot of times this is easier for people who are afraid to Branch out on their own as an independent contractor. So now independent contractor doesn’t work for this salon as an employee. They are just on a 1099. They’re a part of the salon. They are part of the culture. But they don’t have to deal with all the commission-based experiences because they know that they are licensed professional to do one thing most of the time when you go into a commission-based salon, we’ll just use Great Clips or Sports Clips as one, you only can cut there you only can cut and you have to cut in a timely fashion. So they don’t you can’t do color. You can’t do weaving you can’t do makeup. You can’t do any of those things. It’s just an experience for cutting in a happy and a timely fashion. So if you leave beauty school, you’re gonna have to go there get your training learn there. One two, three steps of how to cut the necessary cuts to get those clients out. But if you are independent contractor now you working more than a specialty you can do those things you went to school for and do it at a salon that works for you.
Jay Clouse: And is that independent contractor or they typically renting a booth or they still operating Under the umbrella of the business that they’re contracting?
Tye Caldwell: It’s a two-part series. They’re renting a booth and they’re operating Under the Umbrella of the salon the culture and the rules.
Jay Clouse: So they have a certain overhead. They’re paying to the salon to operate in that salon. And the money is going to the business and then contracted out to the individual as opposed to the individual?
Courtney Caldwell: So the average chair rental across the u.s. Is $200 a week. So not only am I paying that $200 on a weekly basis, but I’ve already signed a long-term contract right because that’s how the salon owner is trying to plan ahead quarter over quarter year over year. So I may be signing a six-month lease a nine month lease with 12 monthly in addition to me signing on to be committed to working out of that particular chair out of that particular Salon. I’m paying this weekly booth rent.
Jay Clouse: You kind of spoke to what seemed to be a Marketplace in efficiency of matching its two together. And that is what seems to be the Crux of sheer share is making this Market more efficient this Marketplace more efficient. Can you talk to me about the pure supply and demand side of this market and how big they are?
Courtney Caldwell: So the last 15 years that I kind of mentioned the ship but over the last 15 years or so. We noticed that an increasing number of stylist or moving towards becoming independent, right? So they don’t want to work out of a commission based on they didn’t want to be a full-time team member. They wanted to build their own book of business. And so we call them solopreneurs. At the same time. We started to see a huge decrease in the number of traditional sanding salon. So these are where you would work as a full-time employee or on commission basis and instead we call it the Salon Suite tsunami. It kind of came and hit the market full force where now there’s a large building like maybe a soulless leads or salons by JC building where they’re all these mini suites in there, right you walk in and you can get your eyebrows done and sweet one and makeup and suite two etcetera Etc, and they’re all run by independent business owners and contractors and that was…Putting those two things together made us really pay attention when we started to get this own our own experience back in 2012. And so the market is is huge like to mention their stylist who are graduating on a weekly basis being license on a monthly basis. And this is not just happening in Texas it’s happening everywhere. On the grand scheme of things, there are over a million license stylist. And that doesn’t even include people who are out there doing hair without the license. They may have gone to Beauty School graduated, right? So they got all the training, but they didn’t end up getting. They can still do the work, they just don’t have the piece of paper. So over a million license stylist in the us alone 70% of those are independent and then you have on the flip side the same number of salons and barbershops right now over million of those and 70% 80% of those rather what we call in the industry non-employer based establishment, which means that these folks are used to having people come in as independent contractors to rent out a Salon Suite or a booth at a time.
Jay Clouse: How are people getting matched to that system previously was it Craigslist?
Courtney Caldwell: That was the cool kids way of finding space. Oh my gosh, you guys going to laugh but believe it or not you walk into beauty schools and barber colleges today, and we do on a regular basis because we sit on the boards of beauty schools and baber colleges all over the US and they still have we still have in the industry a physical job board. That’s right next to the computer terminals going into the neck right next to the vending machines and you’ll see tons of salon owners who have like tacked up their cards or Barber Shop owners who have put their cards up there saying. Hey when you when you guys graduate and get license, give me a holler. So that’s the standard way to do it. Then also, its peer to peer recommendation, you know, our industry really works word-of-mouth, right just like you know, when you go to your Barber and someone compliments you on your stylish haircut, they’re going to ask you. Wow, who cuts your hair? And you’re going to tell them so that that happens exactly the same in our Industries. They were where are you working now? Oh, I love this Salon my clients love it. So that’s how people heard or they literally pick up the phone and start cold calling. They go to Google and type in, salons near me and they start calling and saying hey Tye my name is such-and-such. Do you have an open suite? Okay. No. Thanks. Hang up next Salon Hey Joe, this is Courtney. Do you have an open sweet?
Tye Caldwell: Okay know how untrustworthy does that sound somebody calling you can’t see wanted to rent your space. And you know in this industry, you know, it’s about looks and so people want to see your face. They want to feel your energy. They want to know a little thing two things about you and just cold calling people is a definite no.
Eric Hornung: I really wish I really should have done my hair this morning.
Courtney Caldwell: You do not look bad for one and two it’s hilarious and every time we talk to people they always start critiquing themselves like, oh wait my hair’s this. My makeup is its own I should have done this and my husband is like that like the way I am in marketing where I’ll look at a piece paper and I can easily spot like the typos and punctuation errors. He’s looking at hair like how he would have cut the hair now, he would have done the eyebrows. I think it’s hilarious.
Eric Hornung: Yeah. This is a very bad time to spend two months without getting a haircut. So
Courtney Caldwell: You’re fine.
Jay Clouse: I often say that you can kind of tell Eric’s like mood or how things are going by how active the front of his hair is here. He seems like he’s in good spirits this morning.
Eric Hornung: I am in good spirits. I. Yeah enough about my hair. So we’ve kind of danced around the question. I’m about to ask but we talked about the problem we’ve talked about or we hinted at the solution. I’m curious if we can jump into what ShearShare is and your guys own words.
Courtney Caldwell: Going back to 2012, right? And then we decided we’re going to bootstrap this thing because time and I did not know about the startup world. We didn’t know about Silicon Valley that seems to be a far-off continent if you will. And then we started to ask questions and do research and find people who were tied back to the startup world. And so we ended up going through a couple of programs, YC Fellowship, 500 startups, to get us to the point where we officially launched our Beta app in September 2016. So ShearShare is actually the first B2B mobile app that allows stylists to rent salon space by the day. The beautiful thing is that it’s a win-win for the industry because that salon owner that Barbershop owner that Spa owner. As the excess capacity who has the open sweet the empty station and now rent it and fill it with abetted licensed professional on a day-to-day basis.
Jay Clouse: What is the current efficiency before ShearShare if the salon is not using ShearShare what is their unused capacity or what is their opportunity cost?
Tye Caldwell: Forty percent the overhead the space is like 40% unused so the overhead costs are a killer. So you’re thinking about electricity you you have electricity on all day long you using your water. You have your Wi-Fi your cable. And you’re also using products and if you don’t have people using those products and spending and spending time with clients that can utilize those products. You just your overhead costs are killing you and we’re talking about monthly and if your commission based salon to say just throwing ABC product use out there or school like an Aveda who actually Farms their students into their salons, and if you’re not selling certain amount of product that Salon has to close down because you have to buy certain amount of products every month in order to really be a concept salon. So what is the concept Salon? A concept Salon is a Paul Mitchell that has a parliamentary school. They farm their students and trains them the Paul Mitchell way and form them into the Paul Mitchell salon. And so you have a lot of salons out there like that that have schools that form the students into the salons.
So they have a certain way that they actually sell their products and their in the concept of how they sell their product. It’s also teaching those students to become licensed professionals who work in that concept salon. So just think about the overhead and not only that the leasing contract and how long the lease is. So this right now can kill your industry. So we travel all the time. So from Beverly Hills all the way to the Brooklyn, New York. I mean salons have anywhere from three chairs to 17 chairs, depending on the size, empty. And so you can see no one in a salon all day long. They’re just waiting. So why is that it cause people don’t have the opportunity to have that on demand experience to have that that experience where they can take care of the client. So what are they doing? They’re going outside of the salon. The accoutrements they would classically trained and going to people’s homes. Hence why you have so many b2c apps that allow people to go to people’s homes. That is not really an efficient way. But when you have to adapt and when you have to survive you make it work.
Courtney Caldwell: And if you have to actually number any number of Silas, they’ll tell you that the salon is where they do their best work because as I said, that’s where they were classically trained and so we give them the opportunity now to have access to that professional space at a budget price that is convenient to them. I think one thing that has come up that we did not expect was that these stylists are choosing ShearShare host or ShearShare locations based completely on their clientele. Let me clarify. So let’s say that I’m going to cut ties here on Monday. And I know he’s more of a sporty guy. Right? So I’m going to go on this year sure app and I’m going to choose a location that fits his personality. And then maybe I’m doing Courtney on Wednesday. And I know she likes, you know squiggly brows and neon hair color. And so I’m going to choose like a more Punk rockish Salon space and so the stylists are hyper focused, as we should be, on the clientele and meeting their needs and providing an A+ customer experience because that is their reaction. Butter that’s their book of business. That’s my clients not happy. I’m not going to be able to feed my family tomorrow. And so it’s so it’s been really interesting to see how people choose locations on the app and we know it’s because they’re doing it based on what their clients like.
Tye Caldwell: And if the client is not happy, they’re going to look for a stylist or Barber or licensed professional that can give them what they need.
Eric Hornung: So, can you talk to me a little bit about the business model? How does she share make money?
Courtney Caldwell: So right now our hosts are able to join the platform free of charge one of the. Big things about Tye myself is that we got tired of seeing our friends our fellow salon owners and barber shop owners have to shut their businesses down because of not being able to pay overhead and get people in their doors and we can see on the other side of the fence that they were Silas and Barbers who needed space to work.
And so we’re trying to make it a super super easy for people to join the platform. We go through and vet them and stylist will come on look for the type in a city look for location start to filter and search and then they make a booking decision. We get 25 percent commission on each of those so works very much like an Airbnb model.
Jay Clouse: And what does that booking look like? The host is saying you can come in here. I this booth open for $50 a day or what does that transaction look like to the user?
Courtney Caldwell: Yep. So the user will again choose the location on the app. They will type in their credit card information and Reserve that space and then the host will get a notification that someone has booked their location and they can go in and review the person so now I can see Tye’s headshot. I can see his five shears rating. So we have a rating system on the App instead of five stars. It’s five shears. And so if he has booked that a sheer sheer host in the past. I’ll see what that other host has rated him or her I’ll see how many years he’s been a licensed professional. I’ll see what his license specialty is so I know okay. Yes. I can host the barber. Yes. I can host a microbe leading artists. I’m down for that. I’ll see a little bio that he provides to me and usually what the host sees is a reason why that person is coming to their Salon I go I have 5 clients in your area or you know, I need to be here for you know before Christmas etcetera Etc. And then the host either accepts or declines the reservation and then once they accept the credit card is automatically charged and the two are connected and that’s where the magic happens.
Jay Clouse: How far in advance is somebody trying to book? A booth in how much time does the host have to accept it?
Courtney Caldwell: So if you want to book tomorrow, you can do that. So you have to give at least 24 hours so that way the hose has an opportunity to alert the staff to make sure the station is, you know spotless make sure the receptionist know knows how to welcome. Plus they go back and forth on you know. Hey, so where’s the parking and. What do I need to do as soon as I get there they make sure they schedule a time they can come in and tore the location so that the stylus can get set up so 24 hours in advance, but we see people booking all the way up for to 60 days in advance.
You can choose dates on the ShearShare app up to six months out. But we typically see a couple of days in advance all the way up to two months in advance.
Eric Hornung: I’m curious in your business what the kind of quantitative numbers are that you look at to determine success. So what are your key performance indicators that you kind of focus on?
Courtney Caldwell: Yes. So, you know, you ask any startup founder, right and majority of people would say Revenue that’s not where we fall. No, we’re Marketplace and it’s always interesting to try to figure out how to build up both sides. Like do you focus on the chicken the focus on the egg, we by default focus on the supply side. So there was a lot of Education that we have to do that we continue to do, right. So salon owners who have been doing the same exact thing since 1916. So we figured let’s get the hosts on board. Let’s get them to start talking about ShearShare and then we’ll be able to bring the stylist to then right because there’s no loss to the salon owner. They’re able to list their space for free. We don’t get paid till they get paid mean. It’s really a pretty good deal right now. So yeah instead of Revenue we look at two things that hinge on the success of the supply-side. We look at number of bookings. And then we look at the utilization rate or activation rate of the host. Again, if 40% of Salon space is going unused every day, It’s a win if the city of Dallas for example, we’re filling space at a rate of 60 to 70 to 80 percent a month. So again, it’s number of bookings. So we know that that salon owner now has been given overhead to pay their bills, to keep their businesses open, that’s a that’s a huge heartstring focus area for us. And then making sure that these salons citywide, we look at them to the on a city-by-city basis, or actually being activated. Not just sitting on the platform not being used.
Eric Hornung: Can you give us some of those numbers?
Courtney Caldwell: Yeah, so let’s see. So top three cities for sheer share today Dallas and that makes sense. Right? That’s home base for us. So Dallas Los Angeles and New York interesting thing about Dallas. Right? Is that many people don’t think about us as being like the big Tech Hub and we’re not know yet. So people are not as readily looking for ways to use an app for something as they would be over in New York and LA. But because we sit in Dallas and Dallas has almost 30% of licensed cosmetologist in the us alone. It just makes sense and again time mention that know the four of the top 10 biggest cities in the u.s. All sit in the great Lone Star State and so stylist who are looking to be more transient you already have the flavor for becoming independent who are looking to build their clientele and San Antonio and Austin and Dallas Etc that it’s a win-win for them. So Dallas La New York in those cities, you know our utilization rate or activation rates for the hosts in Dallas 60% and Los Angeles 50% and the New York it varies and go up to 70% and down to 63 percent. That’s because we’re bringing on more and more host every week.
Eric Hornung: And just so I understand how you’re calculating activation rate that’s number of days or number of bookings number of days bookings divided by number of total days in a month for open chairs?
Courtney Caldwell: No, so actually bookings is separate from our activation rate. So bookings is just pure number right? How many bookings did the city of Dallas get how many bookings at this particular salon owner get? Activation rate look at on a host by host basis and so it and then roll that up to a city by City basis. And it is number of ShearShare host added that month that have also received a booking in that same month.
Jay Clouse: Is there some level of stickiness that you see when somebody is added in a month in books that month?
Courtney Caldwell: You know, it really does vary by the stylist. We see some stylist who we call them, you know super stylist and they are booking share, you know, four to five times a week, right? The average stylist, most people don’t know this, actually works three to four days a week. So seeing anything above your north of that three and a half for day number is always going to be a positive for us. And so we see some stylists who are using it more than 4 days a week. Like they have very inclined tell that may be doing here on a Monday and eyebrows on Thursday and then there are some that are booking it, you know, two times a week because they are building up their book of business right? They just graduate out of beauty school. They don’t have the money or a long-term contract. They’re not interested in being tied down to one particular chair and one particular location. And so they’re using ShearShare to kind of build up their book of business as they go and so instead of spacing their clients out. They pull everybody to Friday Saturday as an example.
Jay Clouse: If I’m The Stylist am I typically using Sheerhare style starting out my using ShearShare to go into a salon that I think is popular and is going to have walk-ins that are going to come to me and now that’s going to be selling that can be my client.
I give them my card and if I travel elsewhere, they know they can find me personally?
Tye Caldwell: No, you actually using share share coming out of school because you have clientele that you’re bringing from the school to wherever you look going to be located at and she sure is definitely only for license professions and have some clients already. So you’re not able to go into a salon and then take walk-ins. That’s just not how it operates. And then you become more of an employee then so there’s this case going in and a new law in California called the Dynamex Law where the employees were turned into independent contractors. And but they will still wanted to be they were still being treated like employees so that case was won by the by the independent contractors at that time who didn’t want to be independent contractors. And so that the employee didn’t want to be employees and they call it the Dynamex Law.
Courtney Caldwell: So that’s affected the beauty industry as well. And so we are very sensitive to that making sure that you know, the stylists who are looking to you know, make a living in this industry have a passion for beauty and barbering that we give them the tools at the B2B tools that they need in order to be successful and in the end of the day they get to keep more of their hard-earned money using ShearShare.
Jay Clouse: So do I typically then if I have clientele and I know where they’re spaced am I getting them on a schedule to say? Okay. I know I cut you every two weeks. So I’m going to just use share share to book a booth at Santarell’s every two weeks. Like do you see that type of repetitive?
Courtney Caldwell: Yeah, I know that that’s that that’s a typical use case for one of our of our Shear stylist. And so is your responsibility you as the you know male grooming Barber to schedule your clients, right and many of the majority of people in our industry still use pen and paper. There’s a lot of different reasons for that and while a lot of different reasons why that will never a hundred percent go over to On Demand booking online, but we can get into that later. But yes that that that is how style is visiting stylist who would use the ShearShare platform operate today.
Jay Clouse: And I have a question on that, but maybe it’s back to the numbers but what percentage of stylists are coming onto the platform?Making a booking and then making a second booking at some point.
Courtney Caldwell: Yeah. So within the same month that number is 55 percent when we look at 90 days. That number is 78 percent.
Eric Hornung: Okay, and another big number that I want to ask about is total number of hosts on the platform. Is there any metric you can give around that?
Courtney Caldwell: We’ll say is that giving exact numbers will say we’re just in 2000.
Jay Clouse: When you were talking earlier, Dr. Tye about the overhead, I can certainly imagine the it electricity water all the things that go into just having the space and having unused chairs huge overhead. Do you have a figure on that for average?
Tye Caldwell: Man, there’s no certain average because all salons are different sizes and location definitely vary in their cost in that so you thinking about locations regions from LA to New York and then you have the central locations so you can look at least amounts being anywhere from 2,500 to 10,000 a month and you can look at electricity being anywhere from 250 to 550 a month, then you got product cost that can vary in from 500 to 10,000 depending on how big your salon is, how many people are using it, what you have to pay for per month. You also got to look at the water usage the chem charges along with that lease. And then you got to think about all the other things that the customer wants. They want free coffee. They want water they want Wi-Fi. So all these things are built into that. So A lot of times the counting up the cost it can be difficult to imagine and then to think about it futuristically so you sign these long-term contracts and leases for anyone from anywhere from five years to 20 years. It can be it can be daunting. Those numbers vary its scary to even think about it now when you think about independent contractors because I think sometimes a corporate companies. I remember about eight months back Smart Styles that are located in Walmart’s they closed down 600 or they’re smart styles and this is a corporate company, and those individuals were was scammering just to find a place to go and SheaShare was the platform they came to on either.
Courtney Caldwell: We see a huge disparity right in the price per day or like the average your share state of booking for that day. So California and New York typically goes for you know, 125 up to you know upwards of $250 per day on the ShearShare app. Middle America seems to be between the fifty sixty five dollar range, but the average price for a ShearShare booking is $98 across the board.
Eric Hornung: You just mentioned a couple. Are you mentioned a bunch of stores closing down and maybe this is survivorship bias on my end. But in Middle America, I can think about all the barber shops that are in my town in my city Cleveland from growing up and they’re all still here, which makes me feel like there are a lot of costs that go in but these businesses have to be at least breaking even or being able to pay salaries to their owners and employees and they’ve been around for a long time. I guess what I’m trying to say and I don’t generally see barbershops kind of shutting down at the same rates maybe you see a restaurant shutting down or a retail store shutting down and maybe that’s anecdotal. But if it’s not, I’m curious as to how much pain are barbershops feeling about this problem of open chairs?
Tye Caldwell: Barbershops, the Dynamics of Barbers and stylist are totally different. You know, we’re all in the beauty Beauty space but the survival, you know, they know they’re taking care of the customer. And they know that that business has to be in place in order to operate. You can’t be a barber or stylist and and being business wanting to be in business for 15 years doing work at your home. So you almost have to have this this business. And so we go through the hardships we go through the through the through the tough times. A testament to that is the financial crisis back in 2008. All the the service businesses were still open. And so the small business is what kept America really just really pumping and so we used to survival. We’re used to adaptation and we used to taking care of the customer because we know this customer is going to continually come to us. So, you know we go through the struggles we may be struggling and you don’t know it when it’s really really tough. But at the end of the day the customers are taking care of them and they’re taking care of the customer. So the money is constantly flowing. Now, it’s all about how you are measuring your lifestyle is also what you’re able to do for your clients. So yeah. Businesses stay open is the one that that really really overdo it. And really don’t count the cost when they have to really decide to close down.
Courtney Caldwell: Yeah, some people don’t see too is that you may be looking at a traditional mom and pop barbershop right or traditional mom-and-pop salon, and maybe that owner, you know didn’t like as Tye mentioned, count the cost right of ownership.
And so you may see that saying shop still open 5 10 20 years from now the same Marquee name, but that owner which we don’t know in the background is that the owner has sold the least to someone else still works out of that same chair, you know for Optics sake but because of you know overhead costs and not being able to manage well, there’s a lot of shifting that actually goes on behind the chair. I think too that you know salons are just more expensive in general. Now, we have been in some barber shops that were the chairs like, you know thousands and thousands and thousands of dollars, but you know in general, you know Salon it takes more to operate than a standard Barbershop.
Tye Caldwell: And then times have changed, you know, Aesthetics mean a lot, you know, and here’s why you have so many Salon Suites that are about to give that generate aestetic so that they can look at attractive. So you want to make sure you’re doing your due diligence and what the customers want. And so sometimes you have to put the money in and and understand that for the next three to five years you’re going to break even.
Eric Hornung: Besides your own, what’s the coolest Barbershop or Salon you’ve ever been in?
Courtney Caldwell: Oh, that’s easy. That was Tokyo.
Tye Caldwell: It was a chair. That was it was one that had to it was two chairs in this salon and they were million-dollar stations. So what does a million-dollar station look like you walk in the salon? You get in the chair and you don’t have to do nothing the arms move for you the legs move for you. The chair moves to the to the shampoo bowl the shampoo bowl move sideways it comes to you and all you have to do is just sit there and wait for them just to touch her head and do everything else. You don’t have to do anything. It’s almost like it’s a robot. I’ve never seen anything like it was the coolest thing I’ve ever seen. This so ahead of the time.
Courtney Caldwell: And only two people were working out of that the on your mom and the phone and the son.
Tye Caldwell: And I asked him I said, could you please tell me I try to use the best language I could to just kind of break the numbers and they gave it a numbers on the chair and the station in equals out to be a million dollars.
Courtney Caldwell: Yeah, it’s beautiful beautiful.
Jay Clouse: That’s wild something. I was trying to back into and I don’t want to get too far away from it. I was trying to get into with the opportunity cost question. It’s pretty clear. It’s a pretty easy selling proposition to the salon owner. You have 40% of your space unused you know, you have overhead I can help you fill that. How do you guys as ShearShare of the business quantify the opportunity ahead of your company?
Courtney Caldwell: Yes, and when we look at new cities the launch and to be honest, we thought we were going to launch in like three new city right when you said we’re going to do Dallas. We’re going to do LA. We’re going to do New York had no idea that that was what actually become our top three today. We just saw a huge opportunity areas therefore because they are transient stylists that at the adoption of tech with easier on either Coast so they totally get it and then just made sense for us to you know, to land here in Dallas being that, you know majority of stylist actually out of the Lone Star state. So when we look at the opportunity cost and where we’re going to launch next we look at a few things. We look at number of beauty schools and Barber colleges that are in the area. We look at our relationship with those existing schools unit. I’ve been in the industry 25 years and so he can make a couple of phone calls and get into you know, the the head of the school or the the GM of the area. We look at the number of salons and barbershops that have opened in the past five years and I have closed in the past five years. And then we look at just the general macro trends in that area right. So we’ve seen this trend and beauty kind of shift from you know, I want to be out of working out of this salon and this year, you know for 20 plus years get my gold watch and whatever and that is that is shifted right? So if we see that the typical environment and the particular city is also changing where people are working out of places out of businesses corporations for you know, 18 months two years at a time instead of making a long longer go at it. We know that that’s a really good place for us to set up shop. On the flip side of that we just look at it also. Later on rather the list of requested cities that we have and we still have a list of over 250 cities that people have requested. Where does it make sense for us right now to focus? The laser like focus in those cities, but they are coming on board eventually.
Jay Clouse: So, how big is that? How many if you’re in I mean how many cities are available and is ShearShare a 10 billion dollar business is it you know, I’m trying to quantify the market itself. I’m asking if everything goes right and share share just like hits it and is the number one place for people to match as a stylist to and open Booth. What does that mean for you guys as a business.
Tye Caldwell: I mean what we’re doing right now is The Game Changer in itself, you know, no one has 12 into what we do how we can quantify that number is so many different ways. One of the things that I feel like right now is that people just don’t understand. This is a this is a six billion dollar sixteen billion dollar industry. And so what we’re trying to get you to understand is that you don’t have to do any of the old school stuff. Hi. No you put in your salon on a Craigslist. That’s a writing people actually don’t want to have to call, you know, everything isn’t. But now you touching and you’re able to go to the phone number you’re touching able to go to the address you’re touching able to Google Map yourself to this to this salon. So we want to give people an understanding that this this new trend of, you know apps this new trend of social media has changed the game. So before when there were b2c apps there were booking apps, people were doing things that were traditional in their mind. They weren’t thinking about the change that you have to see things before. You have to look very far ahead. And this is one of the things that I’ve learned to do in this industry. It’s just kind of meeting people where they are and also giving people what they want next. And so what we’re doing right now by giving people what they want next is offering them the opportunity not only to see where we’re talking about but to educate them because people will listen if you giving them something better and and so you know, how can we quantify that? It’s big it’s really big.
Jay Clouse: How big is your guys’s team?
Courtney Caldwell: Yes, so we have 10 employees today and we’re so proud of that being able to create 10 job that didn’t exist before.
Tye Caldwell: That means a lot with some too because it tastes something when you’re two people doing everything you. To get scatterbrained and you don’t know where to start and where the beginning where the end. So you’re 24 hours really needs to be more than 24 hours because you’re up you’re sleeping here. You sleeping there. You don’t you don’t know where yet sometimes.
Courtney Caldwell: Let me go back to your original question about Market sighs. I know it’s at I spelled it out with the 16 billion dollar opportunity costs.
And again, this is the first time that this Market has ever existed. Right? So we’re creating something but the way we kind of backed into it was looking at those number of non employer-based establishments what that average Shear Shear rate is which is a $90. The day, you know, once we cover off ten to twenty percent of the market that puts our revenues north of 800 million dollars over the next three years.
Eric Hornung: So you mentioned you have 10 employees. Can you kind of break down what those employees are doing?
Courtney Caldwell: So out of the 10 team members on sheer share almost half of us are Engineers. That’s important. We are tech company, right? It just happened to be in Beauty. Then we have Biz Dev. We have one dedicated Biz Dev person who is tackling the state of Texas and we’re just using that to try to figure out what that particular play book needs to be like how different cities operate had a different regions of the universe kind of operate. Then we have Ops and customer support. I learned very early on that if your product is not, you know, where it should be a what that could mean to the expectation of the user as long as you have exceptional service and provide a phenomenal customer experience. People are very forgiving. And so our Ops Team and our customer support team that’s a three woman strong team and then marketing as well.
Eric Hornung: So if you could hire one person right now that would take your business to the next level. What type of role would that be for?
Courtney Caldwell: Yeah, we have two different ones that were looking at today actually that are open recc. So if anybody’s listening you’re interested in Beauty and Tech, we’re looking for additional back-end engineer and then also a head of growth. I’m the marketing person today, but that is not where I need to be in the future and so need somebody who can additionally help out with execution.
Eric Hornung: So before we get to Dallas, we’ve talked a lot about growth growth strategy expanding cities. I understand that you guys have raised about 1.1 million dollars to date. You have a team of 10. I’m curious what fundraising looks like going forward and if that is the way that you’re planning to grow and grow fast or if they’re if you’re profitable and you’re going to operationally leverage for growth.
Courtney Caldwell: Yes, so we first started, remember, we didn’t know what startups were back in the day. And so we just bootstrap this thing. Right? We just depleted our savings, you know paid off everything from Cars to mortgages to credit cards whatever so we didn’t have any excuse when the bill came in the mail to say, oh well, maybe we should put money towards that versus the dream of ours called ShearShare. And so we did the hard stuff, you know in the very beginning and the hard stuff also includes fundraising like even coming out and YC fellowship and 500 startups. It is not easy to look across the table at someone who is not your end user right and try to help them understand and sell them on the bigger vision of ShearShare, but we did thankfully. So yeah, we raised a precede round of 1.1 million. We will continue because we want fast growth and we’re seeing it on the supply side. So now we want to focus and double down on the demand side. So we will be going out to raise a proper seed in 2019.
Jay Clouse: Guys, you guys are the first company from Texas on our show and you know, our our ethos of the show is startups and ecosystems outside of Silicon Valley. So would love to hear about Dallas as a startup ecosystem. But also, something you keep thrown out is that 30% of licensed cosmetologist are in the Lone Star State which you know, I know Texas is big but 30% that seems huge. Can you talk to me how that is?
Courtney Caldwell: Yeah, well because we’re big state! And because you know, people are getting their hair done, you know everywhere people are getting there. I mean, I’m getting my roots colored. I’m getting my nails done and got massage therapy and he Beauty literally touches, you know, everyone in the entire world and there have been so many reports and studies actually on the benefits of having your stylist or your Barber physically with their fingers or own two-hands touch your head and how healing that is and that also a tribute to the Loyalty that you mentioned prior to the conversation and how you know how that person makes you feel not just when you get up out of that chair and look like a million bucks, but how that individual makes you feel while you’re being serviced, that also tributes to the loyalty and why you keep coming back and back for more. It’s not like a drug but it’s very similar to that.
Tye Caldwell: And one of the things I will add to that is that Texas and California pretty much control the industry in the laws when it comes to the regulation. So hence why there’s so many schools here while there’s so many salons here about four of the biggest cities are here. So those are the numbers don’t lie.
Courtney Caldwell: And when the numbers don’t lie people listen, you know, we’re also one of our investors is Steve case JD Vans out of Rise of the rest fun. And as you guys know, I probably know their investment. Thesis is very similar, right it is that not every great idea sits in New York or silicon valley. And so they look really hard for hustle makers like ourselves changing many makers who are really trending up and where you know where we see the industry going and how we’re looking to impact it. And so yeah, so Dallas is great for us because yes, it has the majority of a large number of stylists that we can do a lot of testing we can get to different cities to do different testing. But then also, you know bid from a business standpoint which Texas in Dallas especially is really really strong in you know, it’s easier to find Talent here. And we do have a bit sort of kind of a beehive effect If you will that when people come to Dallas or think about even transitioning to Dallas or relocating to Dallas, you know, there are other opportunities if that opportunity with that particular startup or company doesn’t work out right? So it’s not like they move here and then that one opportunity goes and then they’re left kind of, you know hanging in the wind. So lots of opportunity for business having sales in Dallas. We’re not the hot bed yet. That honestly has been a little difficult to find and none of our Engineers are actually out of Texas. They’re on either coast. And but the biz Dev operation support executive staff and marketing all sit in in Texas.
Jay Clouse: This may be kind of goes back to team question, but which one of you I’ve seen I’ve seen the app, you mentioned that half your team are Engineers, who designed who did the product design of the product and who manages the product development?
Courtney Caldwell: Tye manages the product side funny thing here. The app was actually built on a Chipotle napkin.
Tye Caldwell: We like to see faces when we say that.
Courtney Caldwell: Yeah, it makes sense the right because again, we had three years of doing this manually, so by the time it. Okay, this needs to be an app that we should create we had all of that directional data to go on we knew what questions the salon owner was going to ask. We knew what this style is expected to see and we’re still learning that but at least we had something to go off of and so we were eating rice and beans right because we’re bootstrapping this thing and we just happen to be at Chipotle. We’re sitting there talking about something, you know, the booking that happened a couple of days prior and so Tye pulled out a napkin and a pencil because like this is what the app needs to look like and he literally started drawing it.
Jay Clouse: You guys had mentioned being a y combinator fellow and. Out of 500 startups Batch 19 rise of the rest fund is been involved in supporting you, Is there any investment from the local ecosystem? Or what is the investment ecosystem in the Dallas area look like.
Courtney Caldwell: Yeah, so we’re still gung-ho about it. We being the Texas Dallas Community really big on like oil and gas and real estate if you will. Intact intact. Yes medical, yeah and medical devices and and so startups there is definitely the I feel like something’s happening. Like they’re starting to put more attention towards startups. We’re getting some great press in general not just for ShearShare, but other startup Founders in the area and all that helps right could become like on. This rounds well, but only 10% of our cap table today our people for our investors from Texas. The rest are out from the valley.
Tye Caldwell: You know, it makes a lot of sense because you know Silicon Valley with investors. They just believe they believe in the next anomaly the next Dream Maker the next company that’s going to really do well so they give money freely. There are not a whole lot of stipulations to what the money that they’re giving besides just go out there and grow it. They have the extra money that that they know that if it hits is going to do well for them. G generally in Dallas. When you looking at oil and gas fintech medical real estate, you know, there’s always a return of a fairly High return really quickly. So that’s the mindset. So, you know, that’s the disparity between California and, Texas. Texas doesn’t want to be California California doesn’t want to be Texas. But at the end of the day, you know that that you can’t you have some great business Minds in Texas. It’s not the ultimate entrepreneurial State be since we have so many corporations sitting in Texas, but the mindset of small businesses is here.
Courtney Caldwell: Yeah.
Tye Caldwell: And so that’s where the disparity comes from and the mindset of really dwell Van Into Tech and how it can happen. So you have people now that really understand the tech space. And so they’re building the capital factories here. They Austin is kind of like the Silicon Valley of Texas. So they understand yeah University support and all that. Yeah. So the alums that she were a from is SMU and UT Dallas so major major support from those guys. We love Bryan Chambers. We just with him the other night. And so one of the things we try to tell people is that if here the mindset is very very different, but it’s here and it’s going to get bigger.
Courtney Caldwell: And even when I when I look at our list of investors, right, like they they don’t believe that you have to sit in the valley in order to have a rockin, you know, Marketplace Tech startup. And so they really believe and are betting on the jockey rather than the horse in this case.
Jay Clouse: Future casting feature casting here one of the reasons I love Santarelli’s Barbershop is because I can book with Sean through an online scheduling platform. Click click. Dr. Chow. You mentioned this click click click do the users of sheer share as a stylist. Do they have a separate booking system. Is there an opportunity for you guys to also become that Hub to say you can book your stall and also you can send this link to your book of business and have them book through the app?
Tye Caldwell: I’m gonna let Courtney answer this is well, but I must say something first. That’s a possibility but we know that right now that there are apps that do just that what we’re trying to do is solve the problem the first step of the problem that people have and that’s looking for space when they get out of school then I thinking about booking app. They’re not thinking about anything but I have two clients. How can I get to 20 in six months and how can I get to 40 by the end of the year? And so building that clientele base is more important to us. So giving them that space is where the ecosystem starts with ShearShare. We want to make sure they’re satisfied in the area according to you want to yeah.
Courtney Caldwell: No, that’s a great point. So, you know space to work sits at the beginning of the stylus life cycle, and I said not that no one has ever attempted to crack before so why not us in addition today, you know SheareShare is a mobile app where you as an individual style is confined space to work on demand and pay by the day, but it being tied down to a long-term commitment or long-term contract. But in the future to your share will be this B2B ecosystem that provides any type of tool that you need in order to be successful. Your business and to maximize your earning potential. That includes space to work, that includes products on demand, that includes weekly pay stuff which we actually provide today. That includes Finance and Accounting and quarterly tax filings, etc. etc, etc. And these are things that people haven’t thought about in the past because probably what we feel is that you really have to be in the industry in order to understand the day-to-day challenges. And because we give in sweat Blood and Tears and this industry has fed our family for the last 25 plus years, we totally get the hurdles that you’re going to go through because we’ve lived through them all. So we just want to make it easier for people that they’re choosing to be a solopreneur in the best industry in the world, we consider to be, then we want to give them the tools that they need I know that they’re going to need.
Eric Hornung: Here on upside we call that starting on second base and we love when founders are starting on second base, but for this interview, it looks like we’re rounding third and heading home because we have taken this. Overtime. Yeah, you like that metaphor J. You like that?
Jay Clouse: Wow.
Eric Hornung: Where can people find out more about you and ShearShare?
Yes. Oh, it’s your share. We’re just sheer share everywhere on Instagram. Be sure to follow us on Instagram. They’re on Twitter for Ty he has his own channel at dr. Tighe Caldwell Dr. T y e Caldwell and then if they have any questions for us, they can actually email us directly. His email is Tye at ShearSheare.com.
You might want to email me first because I think to respond faster. Mine’s just Courtney at sheer.com. Awesome. Thank you guys. Thank you.
Jay Clouse: All right Eric. We just spoke with Ty and Courtney Caldwell of sheer share.
Eric Hornung: We did and in that interview, you mentioned your Barber quite a few times.
Jay Clouse: Well, I do get my haircut about once a month and the man who cuts my hair, Shawn, owns a couple of barber shops here in Columbus, Ohio. And so I thought it would be good for us to actually call him and get his insight about running a shop and anything that comes to mind good or bad related to the service ShearShare is offering. So I gave Shawn a call and we talked for a few minutes and we’re going to share that here.
So before we get into that deal memo, please enjoy this short interview with Shawn Mensi of Santarell’s Barbershop.
Jay Clouse: All right, Sean. So you’ve owned Santarelli’s you have how many shops now?
Shawn Mensi: Two.
Jay Clouse: Two shops. And you started when?
Shawn Mensi: I opened my first one in 2013, but it was it wasn’t Santarelli’s. I’ve got the first Santorelli is enough 2014.
Jay Clouse: How many chairs or stalls do you have in each shop typically?
Shawn Mensi: I’ve got in the Clintonville location. I’ve got four barber chairs in the Flytown on location of with room to put more. I want to invite.
Jay Clouse: Oh, yeah, so when you open those, how did you decide how many chairs to start with all the space initially
Shawn Mensi: Clintonville small? So you know for was used to be a to chair shop basically base it off the square footage. I know if it’s I can do one chair for 100 square foot of space.
Jay Clouse: Okay, and obviously like if you have somebody working out of each chair in all of the amount of space that you can that’s like the best situation for you how difficult is it to keep a barber or somebody renting? You do a rental base agreement there, right? So how hard is it to keep those chairs full from like the provider side?
Shawn Mensi: I mean, I don’t know in the beginning. It was rough my first location. It was a bad location. So not a lot of walk in a lot of traffic. So I kind of learned that learned that the hard way, you know, once you get started getting walk-ins, it’s long as The Barbers are making money. It’s. Pretty easy to keep him around. Well I don’t know about easy, but it’s easier. No as long as everybody’s making money every but everyone’s happy. Yeah.
Jay Clouse: So when you have somebody new come in do they typically bring in their own like book of clients, or are you helping them fill that at the beginning?
Shawn Mensi: Yeah. Most people don’t come in with their own book. I think I’ve got 11 Barbers between both shops now and I’ve got one person who came in with his own book and has been in the shop for 10 years and it closed down. So that’s why you had his own. Yeah outside of that. It’s my job to get them walk ins and it’s their job to keep them. Once they got somebody.
Jay Clouse: How much do you think about like when you have an open chair? How actively are you trying to fill any opening that you have any time?
Shawn Mensi: Depends on no Clinton those busy enough to wear 5 and open chair. I don’t have any open chairs, but say there were there was a day where I didn’t have someone working I would try to feel that chair that day just because they’re busy enough. I tell you know, you don’t want to add too many chairs at once her to many Barbara’s at once because you have to have the business to sustain the barber actually making money.
Jay Clouse: Because if they don’t they’ll leave essentially it’s not that it like cost you more money to have somebody manning an open chair. It actually is probably better for you to have all the chairs full all the time. If the person is sticking around? Okay, so the company that we interviewed just for context, they have this mobile app that basically salon owners can allow people who do have a book of business to come and rent a chair in a location for the day or for a week things kind of up to whatever the agreement is, and just use the space and then the salon or Barbershop owner keeps a cut of what they do. What’s your reaction to like that business model?
Shawn Mensi: You know, Salon Lofts does the same thing but they’re your more toward cosmetologist. Obviously. It’s a great business model. You know, it worked for Salon Lofts. So, a lot of Barbers actually want that the independence they want to be able to come and go as they please and when you get into a barber shop, they are independent contractors, but you know what you have to explain to them as we have a certain standard here and we’re going to keep that if they do want to come and go as they please and call off a lot or come in late leave early they probably won’t be working here too long. So that business model is a great concept. Obviously, it’s the barber would actually have to have a clientele. I could go there and cut out of right and I’ll be fine. Most of my barber’s wouldn’t.
Jay Clouse: So you as like the owner of the shop. What concerns would you have about somebody just coming in and using the space for a day if they did have like their own clientele?
Shawn Mensi: I’d be all about it.
Jay Clouse: Cool.
Shawn Mensi: That’s the hardest part if I could I could put an ad out there to find Barbers that have a full book and give them a space to cut I would come in.
Jay Clouse: Well, thanks again for jumping on here. I’m sure I’ll be back in for a cat here in a week or two and I’ll give you a bigger. Thank you tips for coming on the show.
Shawn Mensi: Not a good you don’t owe me anything. I meant Artisan nicer Happy New Year.
Jay Clouse: Alright, so we just spoke with Shawn of Santarelli’s Barbershop. Gave us a little bit more background time to get into our favorite part of the show here Eric the deal memo.
Eric Hornung: Let’s do it. Let’s evaluate this opportunity. But first, let’s start where we like to start an upside with the founders. And yeah, so it’s going to be the first time on upside looking at both founders. And kind of trying to evaluate that whole story. So what do you what do you think about Ty and Courtney dr. Tie and Courtney?
Jay Clouse: I really like their Dynamic. I wish we would have spent a little bit more time on the personal backgrounds. We got we all little overeager. I’ll put that on me got a little overeager and getting into some ShearShare specific questions. Because really really interesting teaser into both of their backgrounds. You know, what I was talking about growing up in a 13 child household. There’s a lot we could have talked about there to see what did that mean for his development and becoming an entrepreneur. He also told us he has a doctorate in professional barbering that right barbering professional barbering. Yes, a doctor and professional barbering which I had a lot of questions about I just don’t even know. What that type of program looks like or what that means but it’s apparent that he clearly has a lot of experience in the industry. He’s a speaker. He wrote a book literally wrote a book on the industry. So as far as Tye goes really strong background and you bring in Courtney seems like they personally obviously have a strong dynamic as there as they’re in a relationship and Courtney really had a lot of the business model number questions we are asking as we went through the interview.
Eric Hornung: Yeah. So one thing that we like to say on upside is that we like Founders that start on second base and I think like to hear your thoughts on this that Courtney and Tye are definitely starting on second base when it comes to this industry.
Jay Clouse: Yeah, I think so at least from the industry perspective. Yes, the other thing that was really impressive to me about them as Founders. I’ll tell you. We’ve seen a little bit of the app from the App Store and from the screens online and it’s not entirely novel to have, you know, a Marketplace in a nap. So I’m sure there’s a lot to go off of but the product management of developing the app. Neither of them are quote technical co-founders, you know, they’re not developing the app themselves and for tie to have led the. Product development and product management of the product I think speaks well to him as a leader and as a product Visionary. It wasn’t just that he saw the problem you understood how we could actually solve the problem through technology got it built and they’re operating that that technology now.
Eric Hornung: Yeah, I think that there’s a lot of inputs that probably went into that with their concierge service that they had for three years beforehand that really helped and it’s why they could build the outline for the product on a Chipotle napkin.
Jay Clouse: There was another question we asked about expansion and then I got all excited about product expansion and it’s a horizontal or vertical integration. If you were to do that Source or a zonal horizontal integration. I got excited talking about that and I think that’s vertical.
Eric Hornung: Well, how come we never know what horizontal and vertical integration are it seems like those are basic concepts.
Jay Clouse: I’m pretty sure vertical integration is like going through the supply chain, right?
Eric Hornung: So if you’re gonna or if you’re going to offer. More services isn’t that vertical?
Jay Clouse: Is horizontal? I think vertical would be if there are aspects that go into your current service you are taking over the development of those aspects, you know, it’s like if you are McDonald’s or no, it’s let’s take an example of like homage t-shirts here in Columbus when they started developing their own line of t-shirts. I think that is vertical integration as I was just bring it in.
Eric Hornung: As opposed to making but they’re offering you’re saying other services. So like if I’m just started making pants, that’s that’s horizontal right? Great.
Jay Clouse: Please tweet it as if we’re screwing this up at a side FM. Anyway, when I was asking that question, they gave us a very focused response. That was not you know, I’m sensitive to shiny object syndrome with Founders. And that was not what I got from Courtney or Tye. They did they did allude to some future possibilities, but they’re very much focused on doing what they’re doing now expanding City to city which they also seem to have a plan for.
Eric Hornung: Yeah. One thing that on that note of focus that I guess I’d call a shadow Is in concert with something that Shawn brought up on your guys chat. And ShearShare has eight different types of professionals on their platform. And that’s a lot of different customizability. It’s also feels kind of broad to me. I know that I misspoke a few times on the interview calling at when I meant to ask generally about their customer base, and I said a barbershop and. They answered a question specifically geared towards barbershops because they have that domain expertise and they understand the differences between the two. So then I took that understanding from the interview of my misunderstanding and I merge that into something that’s Shawn said with a company called Salon Lofts. I believe that was the name.
Jay Clouse: Yeah.
Eric Hornung: And it seemed like from my quick research on them that they are just focused on salons. So my question is my shadow is would be better to just focus on one type of customer on the supply side or is that is it great because there is such flexibility.
Jay Clouse: Yeah. Good question Salon Lofts to my understanding is this salon itself? Like I’d say it’s somewhere I could go right now to go get my hair cut. It’s a it’s a establishment. But I think their model is they allow independent stylist to come in and work out of that space in the booths. I think that’s the tie he was making. I hear what you’re saying and that’s a good question. My hope and assumption through the interview was basically these different shops have essentially the same needs which are an open space and the accoutrements which is a word that kept using that I absolutely love.
Eric Hornung: Accoutrements
Jay Clouse: accoutrements is a word I’ve only heard before in Winnebago Man the the video on YouTube. Anyway, my assumption was these different establishments have the accoutrements to handle that breadth of eight different types of users. So as more of the service through the app is the same why not allow them to use it. I don’t I didn’t get the feeling that they are strongly marketing towards all of those different use cases, but I don’t know. I don’t know they talked about massage therapists.
Eric Hornung: They talked about make up. They talked about Barbers. They talked about salons. So yeah, there was just to me there was just kind of. A lot and maybe it was just a verbiage thing that if I would have had like a better understanding up front of okay. These are the eight types of professionals and these are the three types of what I’ll call Studios what you just called shops? See we still don’t have a good word for it. I could probably fit that better together in my head, but it’s something that I lost out on during the interview.
Jay Clouse: Yeah, my assumption is you wouldn’t have like a massage therapist go in and work at Santarelli’s with Shawn. Like I don’t think he would open a space a bit must it’s probably a domain-specific space that chooses some sort of radio button or whatever for like, we support these types of professionals.
Eric Hornung: So, I don’t know we do a lot of Market places here on upside. But this is like a marketplace with a an additional layer of the matching problem because if I’m a massage therapist on the demand side and ShearShare takes off for the barbershop crowd. So there’s a ton of Barbers on it. And there’s a ton of barbershops. ShearShare doesn’t have much utility to me if there aren’t a lot of different what I’m now calling Studios, which is probably the wrong word if there’s not a lot of. Studio spaces that are salons that have private rooms for massages or Spas. Maybe Spas is the right word. So you not only do you need to create a Marketplace that has a big depth of Spas Barbershop Studios salons, but also it needs to have a breadth.
Jay Clouse: I see you’re saying that this Marketplace has several marketplaces within it. So each one of those marketplaces needs to have its own supply and demand ratio that works out.
Eric Hornung: Right. And that’s a little unique compared to the other marketplaces we’ve started with.
Jay Clouse: It’s a good point.
Eric Hornung: One thing that I’m excited about is this 40 percent number that Ty was kind of tossing around and I believe it was like there’s 40 percent occupancy across the entire space. So there’s kind of like this 40%. Fill that could be done with these with this ShearShare model.
Jay Clouse: Yeah 40 percent vacancy. Yeah, and that’s something that I was trying to pull and understand the pain that Shawn felt around that which is where I tried to focus the bulk of what is admittedly a pretty short interview. I was trying to ask him. You know, how are you trying to fill those chairs and for him his mindset is my barber’s are representing Santarelli’s and they need to for them to be happy here. They need to be busy. So he’s not trying to fill chairs. Like if he can’t fill the capacity with demand from customers, he’s leaving those chairs empty. It seemed like the idea of bringing in a barber who already has a book of business just to cut in the space isn’t something he had considered strongly before because at the end of that interview when I asked him well, if you could do this, what would you think? He’s like, I do it all day. So my shadow then is the users of ShearShare are exactly the type of person that it seems Shawn did not expect he could pull in to do this type of thing is somebody that has a book. I wonder how big that market is of stylists who have a clientele but not space so they can reliably keep using this. And Courtney gave us some numbers that helped out a little bit with that. But before I try to do some some math and hurt my head. I wanted to get your take on that shadow.
Eric Hornung: Yeah, I agree with that. I think my only additional point on that would be a question as to location. So when I think about. You you’re going to Santarelli’s all the time, right? You’re getting a haircut by Shawn.
Jay Clouse: You’re thinking about me?
Eric Hornung: I’m always thinking about you Jay. But you’re going to Santarelli’s is you’re
getting hair your hair cut by Shawn. Let’s say that you move to The Burbs you go. You seem like a Gahanna kind of guy. So you go to Gahanna
Jay Clouse: kind of offended but keep going.
Eric Hornung: It’s all our Gahanna listeners, you know, which co-host of lichen which one not is. She’s so you move to go to Gahanna and Shawn realizes that he has 20 x clients that moved to Gahanna. Well, he could go out there and do cuts for a couple days and just like kind of set up with you. If he has like down days in his Columbus location, so I think it does provide a level of flexibility where you can kind of work with your clients to maintain these relationships because as you said, this is the last real relationship I have from a Services perspective as things get digitized and kind of move away from relationships. So I think that to get back to your Shadow, that’s not exactly maybe a bad thing that it’s more of a. It can be more of a part-time flexible thing and not everyone’s going to be a super sheer user or whatever they call them.
Jay Clouse: Yeah, and that is maybe good for me the customer and for Shawn the barber. Is that good for ShearShare of the business, you know, that’s and that’s kind of what I’m asking here. But yet the the Loyalty here in the opportunity on an anecdotal level seems high to me because even even since this interview my girlfriend had her stylist texture and say hey, I’m not doing hair for a while and it spun out her whole day trying to find okay who’s gonna do this again? And you know, she does she gets her hair dyed platinum blond and that takes a lot and is expensive and so to find someone new and trust them to do it and to try to get the same price. It was a big stress. I could I could see it.
Eric Hornung: Let’s dive into some numbers because it sounds like you’re excited to do some math. I’m excited to watch you do some math.
Jay Clouse: We’re gonna try. Okay. So here’s what I tried to piece together and we’re trying to pull out numbers to the interview so we could do some sort of math here. On the supply side there seemed to be well on both sides the marketplace that gives a number of about roughly 1 million 1 million stylists 1 million spaces. Right now they estimated that they have just north of 1,000 hosts on the platform and host can join for free. So we have no idea of how many of those hosts are active and generating bookings. That’s the hole in my math here. But that’s about a one percent penetration for the total Market of hosts that are available if they’re averaging about 98 dollars per day for a booking Across the Nation. They said the coast were. Some number of money and the middle of the country was smaller, but on average about 98 dollars a day across the country and the average stylus works three to four days a week with a super stylist working up to 5. Here are the numbers I took. Four days a week times ninety eight dollars per day times 1,000 hosts if all of those hosts on ShearShare right now, we’re active and they were. Working at an average of four days per week that could be four hundred thousand dollars in Revenue through the platform in a week, which is $100,000 to ShearShare at a 25% commission. What we don’t know is how many of those hosts are booking and how many days per week but with that little bit of insight, you know, you extrapolate one percent times a hundred thousand dollars per week. That could be a hundred million dollars per week
Eric Hornung: 100 million.
Jay Clouse: Oh man. This is why I failed the case interviews, but I’m doing all the fly. So, you know, I see the revenue potential see the revenue potential. I need a little bit more insight into how frequently people are booking. She said that 55% will rebook within the first month. So a host will rebook within the first month that they use it by still don’t know how many hosts are using it. She did say they have a goal of 800 million dollars in Revenue in the next few years. So I do think from an opportunity standpoint. It holds some water that there’s real opportunity here. What do you think was that math right? Did you see any holes?
Eric Hornung: Just the ones that you pointed out yourself. I think that I mean obviously you didn’t make an assumption on what percentage are active. You just went with a hundred percent. So the number is admittedly going to be high. But it puts you on a 5.2 billion dollar kind of opportunity here using the numbers that you laid out. And even if it’s something closer to 50% you’re still at 2.5 2.6 billion dollars for an opportunity which look niche market places that’s a pretty sizable like chunk of change.
Jay Clouse: I agree and you know, we talked to a friend of ours who knows the space a little bit and we said hey, here’s a company that we think might be interesting to you and he brought up to what he thought were competitors which were Style Seat and Squire saying it’s kind of a busy space but both of those companies focus on helping the customer book time with the stylist, which is you know, the the horizontal integration I was alluding to but I still think there is some opportunity. That’s the busier space. I did not find any direct competitors of helping people sort of Airbnb style rent out their unused space in their shops to stylists.
Eric Hornung: Let’s talk about moats for one second. Is there a significant cause we’re talking about competitors here we’re talking about how the space is kind of evolving. Is there a significant moat for ShearShare?
Jay Clouse: I would say yes, I mean think about I’m going to Indianapolis today and to book a space. I looked at Airbnb exclusively, right? Because I’ve used it before it’s worked for me before, and my perception is is going to have the most options for me for location price flexibility, the things I care about. There are a couple of other major players VRBO excetera. I’m sure there’s a ton of smaller players I don’t know about but when I’m trying to do this specific thing which is not super frequently, I’m going to go to the place that has aggregated the most Supply options for me and that’s Airbnb, and I would think that as they grow host if they continue to grow hosts they can be that style of aggregator for this activity this Marketplace.
Eric Hornung: So you’re saying that the moat here is their ability to grow and grow fast, which means they have to become the biggest the fastest.
Jay Clouse: Maybe I misunderstood your question. I don’t know that they have a moat now. I see where their moat would be if they grow and grow fast and have the largest supply side on the marketplace for this type of activity, that would be a strong moat.
Eric Hornung: Awesome because that is exactly what I want to see in the next 6 to 18 months. I want to see growth on the supply side that one percent number of penetration. I want to understand how that has expanded. Hopefully, it’s expanded drastically in 6 to 18 months and I wanna understand what the game plan is for expansion going forward. What do you want to see in the next 6 to 18 months?
Jay Clouse: I’m with you. I like the idea of some sort of check on the health of the marketplace are both sides growing are both sides actively engaged and re engaging, you know, if their turn is super-high if they’re growing both sides, but nobody is sticking around, It’s not really aggregating and building that moat. So I don’t have a kpi for that. It would probably just be like weekly active users or monthly active users. Their kpis that they gave us they’re focused on supply side the number of bookings and utilization rate. So I’m checking on the health of the market place aside from the pure numbers. They had a pretty sizable pre-seed round as they call it 1.1 million dollars and the investors in them y combinator 500 startups backstage precursor. Pretty legitimate investors. So it seems like there’s some strong indicators here, but I really want to talk about though was Texas our first foray into Texas here and what Texas means for this company. Do you have any hot takes?
Eric Hornung: I guess I don’t have any hot takes but one of the things that I’m really excited about on this podcast is getting into Texas because I think well, it’s clear by now that you and I have an affinity for, Ohio. I think that Ohio and Texas actually have a lot in common in as far as States go Texas is just a much bigger. It’s just much bigger.
Jay Clouse: It’s just much bigger.
Eric Hornung: It’s so big. Why is it so big? I don’t
Jay Clouse: and remember the Alamo.
Eric Hornung: Oh don’t. No, but I am excited to get into Texas. I understand that I like the 30% number that they threw out of 30% of stylists or beauty professionals are in Texas. So it seems like there’s competitive advantage to being there and it’s not as cost-prohibitive of being on the coast which is where I’m guessing there’s probably 30 percent in California and 30% New York and 30% Texas and 10% everywhere else.
Jay Clouse: Yeah. That was the number stuck out to me to 30% of stylists are in Texas. So it seems like a good place for that business from an industry perspective. They seem like good Founders to be going after this business. What then stood out to me was that only 10% of their investors on the cap table are in Texas and not to say that they should all be in Texas, you know, we’re in the camp that your cap table should not be limited by geography. But as we look at ecosystems here, you want to see investment activity growing in the number of investors available in different ecosystems to be higher. So, I don’t know. We don’t know much about the McKinney or Dallas startup ecosystem yet. But I would assume if we dropped in and we are talking to people and said hey what if startups here who’s doing? Well SearShare would probably be one of the first ones that comes comes up.
Eric Hornung: Absolutely. I love when you see companies and they have investors from all over the place. I think it’s a trend that is in its infancy.
Jay Clouse: I also wanted to say saying the word ShearShare is kind of fun.
Eric Hornung: It is kind of fun and I kind of messed it up a few times. I had a practice I think in front of the mirror.
Jay Clouse: Do you do you still have rapchat on your phone?
Eric Hornung: I do have rap chat on my phone.
Jay Clouse: Do you get their push notifications with sound on sometimes.
Eric Hornung: I don’t I don’t do push notifications.
Jay Clouse: So RapChat’s push notifications have very unique sounds that are like clips from rap songs. It scares me sometimes but they had one for a while. That was just shoo shoo. And every time I say share I think shoo shoo.
I’m like Ivan. I’ve been in education for a chat.
Eric Hornung: That’s great. Well, Let’s shoot right on out of here. If people want to find out more about us. Where can they go?
Jay Clouse: Hey guys. Thanks for listening. If you have any thoughts on this episode if we screwed up horizontal versus vertical integration please tweet at us at upside FM or send us an e-mail. Hello at upside dot f m if you’re listening on Breaker, you can comment directly on this episode. Let us know what you’re thinking as you’re going through. If you’re listening to this, you’ve already made it all the way through. So go ahead and just like the episode share it with your friends. And if you like what we’re doing here, please leave a review on iTunes. It helps us a lot. But otherwise we’ll be back here next week.
Jay Clouse: That’s all for this week. Thanks for listening. We’d love to hear your thoughts on today’s guests. So shoot us an email at hello at upside dot f m. Or find us on Twitter at upside FM will be back here next week at the same time talking to another founder and our quest to find upside outside of Silicon Valley. If you or someone, you know would make a good guest for our show, please email us or find us on Twitter and let us know and if you love our show, please leave us a review on iTunes. It goes a long way in helping us spread the word and continue to help bring high-quality guests to the show Eric and I decided there are a couple things we wanted to share with you at the end of the podcast and so here we go Eric Cornell.
A class or the founding parties of The Upside podcast at the time of this recording. We do not own Equity or other financial interest in the company’s which appear on this show all opinions expressed by podcast participants are solely their own opinion and do not reflect the opinions of Duff and Phelps LLC and its Affiliates Unreal Collective LLC and its Affiliates or any entity which employ us this podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.We have not considered your specific financial situation nor provided. Investment advice on this show. Thanks for listening and we’ll talk to you next week.
