Theresa

Chin

Wendy

Wen

Jim

Zheng

Rachel

DeLaurentis

Deborah

Donaldson

Total interviews: 101

BUSINESS MODEL & VALUE PROP EVOLUTION

We started out with on-demand hair

removal at home for individuals ...

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?”

Then we tested it out...wax & wine party!

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

We realized that the group thing works, but customers wanted more than waxing…

Spa party!!

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

SUPPLY SIDE LEARNINGS

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

We tried recruiting estheticians

● Craigslist

● Yelp postings

● Thumbtack

● Calling salons

● Walk-in salons

How would we scale esthetician

recruitment?

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)

DEMAND SIDE LEARNINGS

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 MalesWants 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 ProfessionalsBusy individuals that are

social and spend

Social GroupsGroups that already meet,

seek new fun ways to

interact

Housewives / moms Moms with older kids (not

young moms). Has space

and spend

Wealthy StudentsHas the spend but limited

space (dorms)

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

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

We tried recruiting hosts

Getting people to sign up if interested in hosting -- EASY

Getting them to host an actual party --NOT SO EASY

MVP EVOLUTION

Evolution of our MVP

Evolution of our MVP

NEW UPDATES & FUTURE OUTLOOK

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).

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.

BUSINESS MODEL CANVAS

Host Incentives and

repeatable business

APPENDIX

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

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

ASSUMPTIONS FOR SCALABILITYGP 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

3-YEAR INCOME STATEMENT - Quarterly

3 YEAR INCOME STATEMENT - Annual

Finance / Operations / Fundraising Timeline

MVP - New Landing Page

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”

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)