Squire– A $750M Software Company for Barbershops
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Good morning! It's Tuesday, August 15th - Today we are breaking down how Squire was able to reach a $750M valuation by providing software to barbershops!
Squire— A $750M Software Company for Barbershops
When Squire founders Songe LaRon and Dave Salvant met at a party in Harlem, the two were immediately drawn to one another for their shared entrepreneurial spirit.
Today, LaRon and Salvant have recently raised $60M in a funding round led by Tiger Global at a whopping $750M valuation for their software company that services barber shops.
So, What’s Squire?
During a brainstorming session, LaRon and Salvant realized that the male grooming industry is already huge with American men spending over $40B annually on grooming products and services. Plus, barbershops, which sit at the core of this industry, are traditional businesses that haven’t seen any real innovations in the last fifty years.
The initial business model for Squire was simple: they’d provide a booking platform for barber shops akin to what OpenTable has done for restaurants. To get started, they deployed a risky guerilla marketing strategy in which they paid a graffiti artist to spray “Download Squire” on buildings located near the top barbershops in Manhattan.
At first, this marketing strategy worked as LaRon and Salvant were able to sign on 50 barbers. However, few customers downloaded the app, and even worse, barbers complained that the Squire app didn’t help them run their stores.
This is when LaRon and Salvant realized that what barbershops really wanted was a vertical software product that could organize and optimize all their day-to-day operations– not just booking.
With their new collection of software products, Squire has signed ~3K barbershops across the United States, Canada, and the UK. With just 3,000 barbershops, Squire has processed over $1B in total payments.
Squire has two primary revenue streams. One is its SaaS subscription that’s priced at $30/month for independent barbers and $100 to $250/month per barbershop location. The second revenue stream comes from its 2.9% take rate and 30 cents per transaction for the use of its booking and payment systems.
Here are the five products Squire offers to barbershops
Booking Management: Squire’s booking system can manage appointments across multiple channels like Google, Instagram, and their own website. This is essential for barbers who often receive appointment requests from Instagram DMs and other informal mediums.
Workforce Management: Barbershops can either operate with their own barbers or make money by renting chairs to independent barbers. Squire’s workforce management system works with both of these business models and can automate booth rental payments, payroll, and scheduling.
Customer Relationship Management & Marketing: Squire’s software stores and analyzes customer information to enable barbershops to precisely target consumers with emails, client chat, loyalty programs, and other offers.
Inventory Management: The inventory management system allows barbershops to add and remove grooming products from their inventory. Squire also has a marketplace feature for barbers to buy common supplies.
Financial Services: Barbers have historically been underserved by traditional financial institutions, and Squire is working to fix that. Squire already offers payment processing systems to barbers, but they’re planning to launch banking products to supply loans.
How They Won: Understanding Barber Needs
When LaRon and Salvant’s initial product launch didn’t work, they took a gamble on themselves. They spend $20K of the $60k they had to buy out the lease of a failing barbershop in Manhattan’s Chelsea Market.
While the duo didn’t cut hair, they did everything else from running the front desk, sweeping hair, ordering supplies, and customer service. This provided them with an in-depth understanding of what exactly barbershops need to run properly and served as the basis for their vertical software product development.
Why It Matters
The digital tools available to small businesses have grown rapidly, but many industries have still not integrated them. This is what drove Squire’s $750M valuation as it revolutionized barbershop operations from phone, pen, and paper to a vertically integrated system.
So, entrepreneurs looking for success should ask themselves, “What other business sectors could use similar innovations?”
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