Amy Arrett’s company, Madison Reid, sells hair dye products in women’s homes. It may not look like a glamorous business but, as soon as it turns out to be very durable, done right. Not only is the seven-year-old organization slowly disappearing from the dominant personal care companies like L’Oreal, which has long managed to reach the 30 30 billion market, but also the most dramatic economic downturn of the last century. Meanwhile, it is attracting new customers.
In fact, Arit – who was previously vice-chancellor with Mauron Ventures and has a sharp hesitation as a venture partner with Touch Ventures – says the 300-person company sees revenue of more than $ 100 million a year. Is coming and it will be profitable in the second half of this year, that is, in the distant future becomes a candidate for IPO.
We asked Aret for a business update earlier this week, which has raised 125 125 million from investors to date, including True Ventures, Norwest Venture Partners and Comcast Ventures. Our conversation has been modified for length and clarity.
TC: Like many consumer-direct brands, you’ve recently started opening real-world stores – color bars. How many people did you prepare and run before COVID-19 was held?
AE: We had 12. We are now reopening them with 20 [because we had] Eight that never opened in March, April and May. We will end the year with 25.
TC: Are they just scattered around the United States?
AE: They are in detention, which we have selected based on the population of women who live in detention and what we know from our online business. So they are in Northern California, where we have our headquarters. They are in the New York, Dallas, Houston, and Washington DC areas. And we’re reopening in Atlanta, adding more to Dallas and Houston, and by the end of the year, we’ll be in Miami and Denver.
TC: Can you comment on the company’s financial performance? At one point, we read that the company is making about 50 50 million a year with a gross margin of 78%.
AE: The product margin of the business is more than 80%, ie the original product. The gross margin of the business, meaning fully paid, is 60%. The progress has been amazing. We now have 300,000 subscribers, and we are 2x financially ahead [you stated]. We are a private company, so I do not disclose [specifics] But we will be profitable in the second half of this year.
TC: Obviously, you have caught some new customers who could not go to the salon during this national lockdown. What percentage is represented in your total business?
AE: It moves day by day. That’s why 52% of American women live exclusively at home. 48% go to the salon, some to our color boxes. Then 25% is called dualist. They are too gray, or they want to enhance salon appointments, so they do their hair at home. [in between bookings].
In general, 60% of the people who visit us are salon goers, and 50% are home users. During the add-on, the number of people who came to our salon came to Smith because there was no other place for them to go. The good news is that we have a lot of money in them. Average [subscriber] Orders from us every six weeks, then we have people who buy the same box but there are serial timers that work like consumers, so this is surprisingly durable compared to the normal D2C business. There is harmony.
TC: So you didn’t rescue anyone until you were closing those colored bars.
AE: I think seven employees have decided that they have children at work and they can’t work even on the basis of divided work, but we didn’t do any work. We closed all our color bars around March 15th. . And we moved all of our store clusters to our call center. We had to buy and send headsets to everyone at home, to teach them all about the technology support in customer service, which is very different from the skills you use to work in the store. And we left.
[Everyone at our call center] Already a certified licensed colorist because our sales are a very technical sale. Every woman in the world has at least five bad stories, so we revolve around this advice called the belt because the most important thing for a user on Madison Red is to get the color right. You get a shot.
TC: States are reopening. Since colorful people come back to your stores, what precautions are you taking, and how similar are your processes in different states?
ER: We’re reopening stores, with retail only [where] We’ll bring the bag out, and [over time] With sensible scheduling. We do not know when we will return to each chair.
And we are taking the strictest instructions of any state and putting it in the whole system. So even if a state says that a client does not need to wear a mask, we are wearing a mask and our client is wearing a niqab. Some people don’t want to do that. it’s fine. Then we are not the right place for people to come if that is true [because] The safety of our clients and our team members comes first.
TC: Last year, you announced plans to roll out 600 stores, 100 of which would be run by companies and 500 that were to be franchised. Is it fair to say that these plans have to be stopped and, if so, are they permanently blocked?
ER: We were only starting to sell franchises in February. We actually had our first meetings with the franchisees and we were about to file the documents that someone needed to file for the franchise disclosure. Then it happened. And we’ve just made a decision that, for the rest of the year, we’re moving that decision forward. We have not decided whether it is final or not.
I think one of the things I’ve learned is that making big, broad decisions right now is not the smart thing a CEO can do. The world is just flowing. I can’t tell you for sure on what date we can take people to our headquarters. I can’t tell you for sure if I am [will be a] Vaccine or drug protocol or if it is spreading again or there will be hot spots. I can’t tell you, and I don’t think anyone can.
TC: Given your discovery, is there any reason why your next fundraising event may not have a public offering?
ER: This is a large category that has been largely ignored. And when you look at the size of the prize – 15 15 billion in the United States alone with repeated purchase patterns – it has all the hallmarks of success.
I am an investor [too]. I was a GP and opened and ran Mauroon’s office in the Bay Area. Connie, you and I probably met for the first time when I was a vice chancellor, living a more comfortable life. I’m really a partner, so I invest with the investment team. And that’s why I’m actually commenting with this hat. Thus, 80p plus of our revenue is coming back in this company. In our color bars, we are the only ones who have the ability to use our own products.
The stylist never gives the product to most women who go to the salon. They will never say, ‘Oh, are you going on vacation? Take this house with you. “I use Madison Red and I can go to the Madison Red color bar and get the same consistency. The exact same color I could take home, someone will apply for me. It is a game changer in the industry.
We are the only ones who are agnostic about whether you want us to dye our hair [in a store] Or you do it at home. If you look at L’Oreal, 85% of its business is selling color tubes to stylists in salons. This is not a direct relationship with a user. The direct relationship with consumers is sitting in Walgreens, which is a very small percentage of their business and not a percentage of it. [focused on] Because the margin is too thin. Remember, they are receiving $ 10. I am receiving $ 25.
The secret here is that Laurel and Unilever have a professional channel [creates] Their controversy, directly to innovation, technology-based or otherwise, directly to consumers.
TC: Do you see them moving in your direction?
They are smart and they can decide that they will follow us in different ways, and that’s fine. I will take customer service, client relationship, product innovation, the way we lead with mobile technology any day before.
TC: Speaking of these giants, how many products does Madison Red currently sell, and what can you do to surprise consumers?
AE: We have about 15 products, all in category [ammonia-free] Hair color that’s best for you, whether it’s a permanent hair color, a semi-permanent hair color, a prominent cut with gels, toner, non-ammonia bleach. . We are also developing color masks [that you apply in the shower] They are not permanent.
And then I’ll just give you a hint: right now our business is really focused on women, so you can imagine that there is a different gender that can color their hair. They Is there a market that’s really great, right? Only for men? Are you kidding me? We are knocking on the door of this market.