The Exchanges

Q I mean, most people don't know this, but a lot of barbers are independent contractors. You may go to a barbershop, and they may have a chair there, but they actually are their own business, right?

A Yeah, so there's two central models for barbershop business models. Uh, one is what you mentioned, which we call kind of the booth rental model. Where each barber is essentially an independent contractor. Uh, they run their own business, they manage their own schedule, they go and come as they please, and then they pay rent to the owner, usually on a weekly basis. And then the other, uh, model is what we call a commission model, where those barbers are treated a little bit more like employees. Um, they have certain hours that they come, and in that case, they split the percentage of the transaction with the shop. Usually it'll be Sixty-forty or fifty-fifty, and the owner will get a piece of every, of every transaction.

AI assessment note: “Yeah, so there's two central models for barbershop business models.”

Q Um, you co-founded this with your friend Dave Salvant. Tell me how you guys had the idea. I know, I mean, you studied philosophy as an undergraduate, and then you went and got a law degree, and Dave was an old friend, I guess. How did you guys come up with this idea?

A Yeah, so I actually, prior to founding Esquire, I, I was at a corporate law firm, and Dave was actually in business school, And both of us wanted to do something more entrepreneurial, didn't want to go the corporate route, so we would just brainstorm ideas on the weekend, and we eventually stumbled on the idea of barbershops, and the idea came out of our own experience. I haven't gone to barbershops for decades. Like most people, I started going with my dad as a kid, around six or seven, and the experience of going to the barbershop hadn't changed. Very antiquated, low-tech industry, cash-based, Need to call to make an appointment, long wait times. So all of those pain points that, that we had experienced formed the basis of why we came up with the idea of this is something that we wanted to work on.

AI assessment note: “we would just brainstorm ideas on the weekend, and we eventually stumbled on the idea”

Q know you guys did a round that you raised more than thirty million dollars during this crisis, but I have to imagine that you're trying to keep your cash balance sheet relatively strong and probably are cutting costs and Trying to be fairly careful about how you spend cash in case this lasts a long time, right? You need that cash to last to get you through this economic crisis.

A Yes, yes, absolutely. You know, when we started seeing, um, States reopening, it was a positive sign because our revenue started rebounding relatively quickly. In fact, May and June exceeded pre-COVID numbers just because of all the new business that we're bringing on. So that, that kind of showed, okay, things are trending toward best case. And then now we're seeing states closing again, which we didn't, we didn't really expect, uh, like California is reclosed. So it just goes to show you can never really know, but, um, it's always safe to kind of assume the worst case and be prepared for the worst case, which we were prepared to go to, to go to zero revenue, uh, for over 12 months.

AI assessment note: “we were prepared to go to, to go to zero revenue, uh, for over 12 months.”

Q you approach barbershops? I mean, I have to imagine, like, there are a lot of barbershops that are like, I don't want to give up my cash, or I don't want to give up, you know, a percentage of my business, or a percentage of my Income. I mean, it's, presumably you'd get some pushback from potential customers. So how do you make the case for people to sign up?

A Yeah, I mean, we sell to them is that this is going to make their lives easier. This is going to save them time, and this is actually going to enable them to be better business owners and make more money. And, and we can show them, um, that that's what the software, the software actually does. Early on, we, we did get more pushback, uh, from cash-only shops. Uh, so our focus was more on shops that are already taking cards, but that's really the trend just in the world generally. Consumers are used to paying for services with cards. So the shops that are cash only, there will be some segment that just doesn't want to pay taxes, quite frankly. But, you know, we're seeing more and more, particularly, you know, the newer shops that are opening, they understand that if they want to meet their consumers and provide a really, you know, great experience to their clients, that they have to kind of accept cards. And it enables them to charge more. You know, we know that it says people will pay more on card versus cash. And if you want to charge 30 dollars a haircut, 40 dollars a haircut, as is the case in many, you know, many cities, um, it just makes sense.

AI assessment note: “we sell to them is that this is going to make their lives easier.”

Q Um, I'm going to go to another question from our audience. This is from Claire Murashima. Hello, Claire. Um, Claire asks, how have you kept your professional relationships during this time? I mean, with your team, with your co-founder, who's like one of your best friends, who's like across the country in LA. Have you been doing that and making sure that you keep morale up?

A Yeah, that's, that's a great question. It's been a challenge to keep those relationships remotely. I mean, we have had a little bit of an advantage because, um, we were, um, Already somewhat distributed. So, you know, we had an office in, uh, Buffalo, New York City. Our engineering team was, was all spread out. Our sales team was all spread out. So we were already used to collaborating, uh, on, on, on Zoom, uh, you know, and communicating on Slack. Uh, but this took it to a whole new level because it just, there's no physical presence anymore. Um, so, you know, we'll, we'll, we'll do like a virtual happy hour and not even talk about business. Things like that help. It's not, it's never a replacement for the physical, you know, one-to-one interaction, um, but it does, it does help.

AI assessment note: “we'll do like a virtual happy hour and not even talk about business.”

Q 30 years. Also, also entrepreneurship full stop has. I mean, there were more black-owned banks in the eighties and insurance companies in the eighties than there are today. If you were talking to, like, a young college graduate, black Man or woman. And they were like, Hey, should I become an entrepreneur today? Would you say now is a good time to start a business in this uncertain economic environment?

A That's a tough question. Uh, it's a good question. Um, I do think that the tides are changing, especially recently with, with increased attention to the plight of black founders and black people in general. So I think that now is probably a better time than ever to be an entrepreneur, a black entrepreneur. Um, that being said, It's still, you know, gonna be challenging to be an entrepreneur, period, let alone a black entrepreneur. You know, the odds are kind of against you, you know, to be, to be frank. So I would encourage them that if entrepreneurship is their dream, and if that's kind of what they see themselves doing, then they have to pursue it. I always encourage people to take risks, but measure the risks. So if you're at a, if you're at a big company, And you're, um, you know, making a decent salary. Save as much personal runway as you can before making the leap. Understand that you may go six months to 12 months with little to no income, and just know what you're getting yourself into. But I do believe that entrepreneurship, particularly in tech, provides an opportunity for wealth creation that is, in a short period of time, that is really unparalleled most other industries. I mean, I'm, I believe in it. I believe in entrepreneurship, you know, clearly that's, that's what I've committed my life to, so I would never tell somebody to not pursue it, but it is risky, parti…

AI assessment note: “now is probably a better time than ever to be an entrepreneur”

Q of mass demonstrations against racial injustice, which, um, I can't imagine couldn't, was not, you know, was, was, was an incredibly emotional time for you, um, and probably some people on your team. How did you guys navigate that and cope with that? Did you talk about it openly with each other, and Were there days where you just didn't, you just didn't want to get on that Zoom call?

A Yeah, yeah, I mean, uh, One of the things that kind of unfortunately you have to learn to do as an entrepreneur is compartmentalize. If something can be weighing on you that's outside of your business, you kind of have to learn how to put it in one place in your mind and focus on the things you have to focus and then kind of give it attention when the time is right. Aside from everything that's going on in the world, just in life, that's, that's kind of a skill set that many founders and entrepreneurs Have learned that they have to develop. Um, so I, you know, that, that was kind of my, my approach to it. It's like, yeah, if I, unfortunately, if I were to stop working every time a black person was killed by the police, you know, it would just be such a distraction. I would never be able to be successful. That's kind of like personally on a personal level, what, what I've had to do, but as, as far as the company goes, yeah, we, we try to be very sensitive to, um, our employees and what, what they're going through. You know, we communicated to them that, you know, As a company, we, we stand on the side of Black Lives Matter, um, of Black Lives Mattering, uh, shouldn't even be a controversial statement, um, and that, um, we really want to give our employees space to, to process, and we told everyone they could take time off, um, if they needed to, if they wanted to just, you know,…

AI assessment note: “we told everyone they could take time off, um, if they needed to”