One Part Factory, Two Parts Dotcom: A Tech Startup’s Winning Formula

One Part Factory, Two Parts Dotcom: A Tech Startup’s Winning Formula
3 minute read
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It seems no industry is safe from disruption. Startup companies have leveraged technology and the power of the Internet to transform the way business is done in sectors from hotels to transportation, furniture sales to pharmacies.

Francisco Gimenez is to blame if hair salons are next. He’s a cofounder of eSalon, a Los Angeles dotcom that is giving professional hair colorists a run for their money.

Gimenez made his fortune in the early days of e-commerce as a PriceGrabber.com executive. He says he “benefited from the transaction” when Experian bought the comparison-shopping network for nearly $500 million in 2005. Three years later, looking for a new venture, Gimenez set his sights on developing a subscription-based business model that would guarantee recurring revenue. He wanted to sell something consumable that people would need to continually replenish. And he was looking to enter a large industry that hadn’t seen much innovation, where technology could change the way a service worked.

“We stumbled upon the concept of hair color,” he says, “and the more we learned, we realized we could do something different.” Gimenez and his partners formed eSalon in early 2008, and, after nearly 3 years of research and development, began shipping hair color kits in December 2010.

In 2014, the Los Angeles startup shipped its one-millionth hair color formulation and became the first independent company to win an Allure Best of Beauty award for its in-home single process hair color. And publications from Women’s World Daily to the Wall Street Journal have sung its praises. Gimenez says the company has been entirely self-funded by the founders, their friends, and family with $11 million. Now break even, eSalon is signing up new customers at the rate of 8,000 a week. He credits the operation’s success to a combination of a professional-quality product with DIY pricing, ultra-personal customer service, and a savvy “content marketing” strategy.

On the product side, Gimenez’s team developed an algorithm for custom-mixing hair color formulas, built a sophisticated manufacturing and packaging process, and created a polished brand that includes personalized labeling for each customer.

Live customer service agents take personalization even further. After submitting a lengthy questionnaire answering questions about skin tone, eye color, ethnicity, and hair color, style, and length, a customer can submit a selfie and chat on the phone with an agent to determine exactly the right formulation—zeroing in on one of 90,000 unique color combinations.

As for content marketing, if you’ve seen headlines peppered in your news feed that scream, ‘Hair dressers hate us’ then you’ve seen eSalon. Gimenez says the advertising strategy is designed to educate consumers about how eSalon’s service improves upon not just boxed at-home haircolor, but upon expensive salon color.

The “hair dressers hate us” line? It’s true, Gimenez says: “As soon as we started the business, we got a lot of hate mail from hairdressers.” Professional colorists in salons, he says, mix the chemicals for clients’ color each time they visit the salon. Formulas are kept secret to prevent clients from straying, but colorists rarely replicate them precisely. Argues Gimenez, “We are more precise than the salon. They may just be eyeballing a formula they used in the past, or trying to come up with a new one each time. We’re very scientific about it.”

In fact, the color-blending and dispensing-station system was engineered from scratch, integrated with the website where orders are taken, and quality-controlled by a system of checks and balances that prevents color mishaps from going out the door. “If the system notices there is something not right, it won’t print a shipping label,” he says.

No more “not-quite-what-I-wanted” dye jobs? As much as I adore my long-time professional hair colorist, I’d say that’s a transformational business model.