3. We started out with on-demand hair
removal at home for individuals ...
4. Demand Side:
● Increased convenience
● Reduced embarrassment
● Clueless hairy men would love this
Concerns around cleanliness; did not
necessarily reduce embarrassment if
people have roommates.
Conclusion: Not a painkiller!
On-demand waxing at home for
individuals
Supply Side:
● More customers
● Extra income opportunity
Concerns around safety, risk of liability;
did not seem worth their time and effort.
What we learned
“Waxing at home might be
awkward..what about spills
and messes in my bedroom?”
“I wouldn’t want to drive
around and I’m worried
about safety”
What we thought
“who wouldn’t
want this?”
6. Demand Side:
● They might like at-home waxing
after trying it for the first time
● Men are not interested
● Group dynamics encourage
comfort around new behavior
● Introducing the “host” character
in our business model
● There is demand for more than
waxing
Wax & wine party
“Wax & wine is like a
substitute for brunch with
girls, but two birds with one
stone”
What we thought
Supply Side:
● Group dynamic makes the economics
worth it for the waxer
● Alleviates some of the safety concerns
● Group dynamics makes the extra effort
more worth it, safe
● Supply willing to give discounts for
groups
● Some estheticians are willing to go into
the home..but which ones?
“customers
might change
their mind after
they try it”
What we learned
“my challenge is finding
customers in different
locations around the Bay and
dealing with cancellations”
PIVOT
7. We realized that the group thing works, but
customers wanted more than waxing…
Spa party!!
8. Demand Side:
● There is interest in the group
spa party
● Significant interest in attending
a party
● Less interest in hosting - so we
needed to figure out how to
incentivize hosts
Spa party!!
What we thought
Supply Side:
● Estheticians and spa owners would be
interested in servicing spa parties at
home
● Many spa owners and workers were
willing to work with us on spa parties
● Learning about commission structures
at different spas
● How to coordinate different services at
one party
What we learned
PIVOT
10. Suburban SalonCity Salon
We learned about the supply side
archetypes
The Entrepreneur
Independent
esthetician open to
anything (in-home
services)
The Newbie
Recent beauty school
grads
The Spa Worker
Work at salon;
commission or hourly
wage
The Spa Owner
Single location spa
owner
San Francisco Mountain View
11. We tried recruiting estheticians
● Craigslist
● Yelp postings
● Thumbtack
● Calling salons
● Walk-in salons
How would we scale esthetician
recruitment?
12. Commission:
Up to 35% (~$30 / hr)
Hourly:
“$70 / hour”
We learned about supply side economics
● Uber and Lyft charge 20% commission to suppliers. We should, too!
● Need group size to be at least 5 people for the esthetician to find party
worthwhile
What we thought
What we learned
Minimum:
“$200 minimum”
● Estheticians make $15-20 / hour (including tip) in salons (including DryBar)
We should be able to charge up to 35% commission and still give
estheticians opportunity to earn more profit than they would in salons;
need to have minimum TOV when booking (tilt model)
14. We learned about Customer Archetypes
Individual
Picky Girl (Dating):
Picky girl who waxes every few
weeks (bikini area) to feel sexy
- Prefers comfortable, professional,
specialized waxing experiences
Heavy User
(Female and potentially
some male)
- Heavy user who needs frequent
hair removal across many body
parts in order to maintain
appearance
- Tends to be more sensitive to pain
Embarrassed Males
Wants to groom but is scared of
running into female friends at
waxing salons
- Currently uses at-home solutions
that may not be ideal
Group
Young Professionals
Busy individuals that are
social and spend
Social Groups
Groups that already meet,
seek new fun ways to
interact
Housewives / moms
Moms with older kids (not
young moms). Has space
and spend
Wealthy Students
Has the spend but limited
space (dorms)
15. Get a Free Service
● Most
compelling
incentive-
based on Host
Insight
(interviews &
landing page
test)
We learned about host incentives
What we thought
Get Paid to Host
● Facebook test
show less
interest vs.
Free Service
● Interviews
support -
“Feels wrong
to have
financial
benefit from
friends”
Get party supplies
(wine, snacks etc.)
● Interviews of
potential hosts
suggest a
strong interest
in an all-in-
one solution
“Party” Messaging
works best
● Facebook test
showed “Rent
the Spa” and “
Book Club. Try
spa Cub” is
better
language to
encourage
discovery
● Landing page
change
What we learned
16. Multi-level Marketing - Getting Customers to Sell
How it Works
● Independent non-salary participants authorized to
distribute company’s products
● Rewarded with immediate retail profit and
commission based on volume sold
● Additionally compensated not only for sales they
generate, but also for sales of recruits
Notable companies with similar model
Also known as pyramid selling, network marketing and referral marketing
17. We tried recruiting hosts
Getting people to sign up if interested in hosting -- EASY
Getting them to host an actual party --NOT SO EASY
22. LEARNING THIS WEEK & FUTURE
OUTLOOKS
THIS WEEK:
● MADE MONEY !! (10%)
● Meet up hosts are interested (7%)
● ⅓ parties executed
TAKE AWAYS:
● Hard to maintain contact without being managed through technology
● Hard to manage hours when competing with “in-salon” businesses
● Hard to count on demand without “flake fee”
THE GOOD THE BAD THE UNKNOWN
Significant supply side incentives Host recruitment Is it “Nice to Have” or a “Need”
on Demand side ?
Huge product opty Demand side scalability Suburban Moms / Housewives ?
Low operating costs Customer acquisition Can our technology / app solve
for scalability ?
High margins Repeatability Can we run 150 K parties = in 3
cities = 140 parties per day after
3 years ?
Interested Demand Safety & Quality CAC (need to test other options
targeting moms / housewives).
23. NEXT STEPS - Technology + Housewives
Housewives
+
Suburban Mommies
WHY ?
(Hypothesis)
● Less price sensitive
● Live in suburbia
● Cheaper CAC
● Available for non-peak
salon hours
(symmetry)
● Live in a good space
● Reputation sensitive
● Hosting expertise to
be leveraged
1. Build MVP out to manage: negotiations; load suppliers; deploy invites
& manage payments.
27. ESTHETICIAN SALARIES
DryBar GlamSquad Independent
Salons
Skincerity
4 hours per party
30 min. commute
2 estheticians
$335*65% = $218 service
commission
$335*20% = $67 tip
$80*20% = $16 product
sales commission
Gas = $10
Cost of Products = $3 per
service*6 = $18
$273 / 4.5 hours = $61
Hourly Salary $15 - 17 $20 - 25 $15 - 20 $61 / 2 estheticians = $30
28. Assumptions:
● 1 Host (+ 5 guests) = 6
people
○ Average Spend = $60
in services
○ Free service for host
= $25 value
○ 65% service
commission
● Product upsell = $80
○ 20% Commission
● CAC = $25
○ Customer LTV = 2
parties
DIAGRAM OF COSTS
Esthetician
acquisition $25
Service Commission
65%*$335 = $218
Payment Processing
3%*$415 = $12
Customer acquisition
$25
Unit Costs
$311
Gross Margin
$104
Revenue
6 x $60 = $360
+ products $80
- free service $25
$415
Other Costs:
Unit Economics - One Party
Product Commission
and COGS
(20% + 50%)*$80 =
$56
Gross Margin (2nd
Party) $129
Rent Server Costs Corporate Employee
Salaries
29. ASSUMPTIONS FOR SCALABILITY
GP ASSUMPTIONS
● 2 estheticians per party
● $415 gross revenue per party ($80
product sales)
○ $104 - $129 gross margin per
party
● 4 parties per week
(2 parties per esthetician per week)
● 5 new estheticians per week per city
Q3 2015 SAMPLE CALCULATION
● 180 estheticians on platform
● 180 x $129 x 2 estheticians x 12 weeks =
$556K Gross Profit
● CAC: $75K ($25 CAC / $600 LTV)
● Esthetician: $1.5K ($25 EAC*60 new estheticians)
● Employees: 5*$80K/4 = $100K
● Rent: 3*$5K = $15K
● Server Costs: $150
● $191K Total Opex
OPEX / EBITDA ASSUMPTIONS
● $25 CAC for estheticians and hosts
● 5 employees at average $80K salary
per employee
● $5,000 / month office rent
● $50 / month server costs
EBITDA:
$365K
34. Google Analytics
34
93 unique page views last week, 16 this week
approx. 13 potential signups*
0 clicks on “I want to host” / “I’m an esthetician”
35. WHAT WE ARE GOING TO NEXT WEEK
1. Convert party attendees into hosts
○ Mass email / offer for past & future party attendees & hosts
2. Run parties to test margin scenario pricing
○ 3 parties scheduled for next week with outside hosts
■ party type: cross vertical / hair first time / sugar first time
■ pay model: hourly, high Skincerity cut
■ host incentive: getting free service
3. Test up-selling products in MVP
4. Update MVP
● Incorporate new messaging (SPA Party) into landing page
● Incorporate “planning package” as add on / up-sell
5. Get more hosts in the pipeline
○ Done (backlog)