Danielle Cohen-Shohet, Founder and CEO, GlossGenius 
Leah Cohen-Shohet, Chief Business Officer, GlossGenius
Moderator: Alexandra Sternlicht, FORTUNE

MPW Next Gen 2022 - Beauty Business-In-A-Box

Conferences

now on to another corner of the intersection of tech and retail. If you run a spa studio or Salon Gloss genius wants to be your business in a box, a vertical software stack to help you streamline and organize your operations. Small business owners are listening and the numbers are adding up. Gloss Genius has 40,000 customers and transactions worth $2 billion dollars each year. We'll ask the identical twin sisters who run the firm about their plans for expansion and how Gloss genius encourages economic mobility for women and underserved communities, please welcome glass geniuses. Founder and Ceo Daniel Cohen show it and and their chief business officer, Leah Cohen show it for a conversation with Fortune tech reporter, Alexandra Stern like thank you, Hello again. Well, so this is a first for me, um, to be on the stage with identical twin co founders. Um, and as fun as that is, you guys have a very serious business. So you've raised $44 million at 100 and $16 million valuation for glass genius making you some of the highest funded female founders alive. Can you talk about the implications of this? Defin. And the updated number is actually higher than 160 360. So I guess that I know it's exciting. Yeah. Um, you know, I think they say with, with a lot of responsibility, um, comes the opportunity to have a lot of impact and that's been one of the most rewarding parts of the journey so far and I'm excited to unpack a lot of that. I would agree. Um, we're on a big mission, I think we're off to a really exciting start, but we have plans for a lot more. So the beauty salon space is a really interesting one because it's one of just, it's just a finger in the handful of industries that have not been disrupted by a major player, like an amazon or like it's really run by small business for, by women and um, who are independent operators. Do you think that there's going to be a future where we're gonna see tech disruption and more, um, you know, franchises in the space? It's a good question. Uh, if you look at the data currently, it's actually moving the other way where there's so much more fragmentation happening in the space, the non employer um, area of the market is growing two times faster as the payroll focused area of the market. And so if you look to where, you know, kind of that data points to, I really believe there's going to be even more fragmentation. What I think we're also going to see is as there's more fragmentation, what opportunities do we have to give more power to any of these business owners um, collectively, together through software and, and that's what I'm really excited about being able to enable and continue to be a part of. Yeah, I think the other thing I would add that is franchises you go for for the brand and I think what's special about what we're building is we're enabling all of these non employers individuals, independent businesses to be the brand, clients have relationships directly with them. So part of the software stack is giving them back power so they build the brand and they attract and retain their own set of clients as opposed to relying on the franchises. So speaking of, you know, this is a space where there are a lot of immigrants, there are a lot of women, um and for them about investment can be deadly. It can force them to close their doors. So how do you convince them to implement gloss genius and maybe perhaps an overview of what exactly gloss genius does for the unfamiliar. Yeah, So let me start with the overview and then um we'll get into specifics about how we can help business owners implement it and how we make that as easy as possible for them. Um basically what we do, you know, when we were introduced is a vertical software payments company. If you're familiar with the company like toast service, titan pro core, we do that. But for salons and studios and we're focused on helping a very quickly fragmenting area of the market be independently owned and operated side of the market. Um, basically manage their whole entire back office through software and these business owners have critical pain points across scheduling, booking payments, client relationship management, inventory management expenses and the list goes on. Um because running a small business is really hard. They have very little help um and yet they have a dream and a passion and they very altruistic, you know, kind of inclination to just continue to focus on the client experience and that's where we come in. How do we help all of them succeed and abstract so much of their back office so they can keep focusing on what they love doing and ultimately succeeding. And I think if you, you know, look at how we're helping business owners implement, um that's part of that's part of what's very special. Um and it comes back to something we really believe in, which is how do we break down barriers and and enable more and more access to technology for small business owners that traditionally have been underserved by technology. Um they've had a lot of bad experiences with technology and the business side of things, The good news is on the consumer side, they're getting more and more experience and excited about technology, you know, whether it's with social media or um different types of chats and and things they can do. And so if you combine the experience we've had with the business, the experience they have as consumers, you're starting from a backdrop of their curiosity being there to adopt more technology and given that now what we have to do is make it as easy as possible um for them and we do a whole bunch of things with concierge and on boarding and helping them transfer data and getting set up and um ultimately helping them succeed with the software that is um the secret part of of getting them to love technology. Yeah, the only thing I would add to that is we have a lot of different paths to being a really entrepreneurial business owner, so some come, they graduate and they want to start their business glass geniuses there, we help them start run grow their business, some have been developing relationships with clients for five years and they're ready to go out on their own, some have been out on their own and they're ready to expand and glass genius has a variety of those business owners and services those use cases and I think point it's all about how do we help them succeed for where they are in their journey on achieving their entrepreneurial dreams? Okay, so I have to ask you guys how have twinning helped or hurt you, they say twinning is winning. Um so I think it's been a true gift and especially when I think about the company growing quickly and the extreme amount of trust you need and other executives that you work with, it's been great to work you know alongside leah and that helps us go to new heights and I think the fact that her and I both are able to challenge each other and complement each other in certain areas um has been something that I value significantly. Yeah. Finding complementarity with who you work with is really key. So in my case Daniel is a creative visionary. She's always thinking about what we should be doing 234 years out and I have a very different skill set. So that's something where we're able to bring those two together. Um so that's definitely a winning use cases. Uh we have disagreements as you'd expect with other of your colleagues, so just because we're twins doesn't mean we have, you know, exact same opinion. I think more than anything, we have different opinions, but there's definitely a long term alignment between us. Um and you know, perhaps it helps you win business over a lot of really big players. I mean you're in the enterprise space that is very crowded. It's very well funded. How do you think that you've beat out big players to win business? Yeah, So let me, let me jump in. I think first is focused on our customer. These are independent businesses. They have desires dreams to start run and grow their business and be incredibly successful in this space. And glass genius has uniquely focused on this class of entrepreneur. Um you know, I think diving in what's different about us and how we've grown so quickly grab market share. So a couple of things first is a lot of the approaches to software in this space have been about commoditize ng small businesses and that every small business has the same brand, Every small business gets, you know, to compete with each other against the vector that matters the least for them on these marketplaces. We've been really focused on, how do we provide them a suite of tools that help them be successful, help them scale their time run better operations so that ultimately they can do what they love. And I think that's been key to a lot of new customers coming on board as well as breeding more entrepreneurs in this space that are ready to start and grow their own business. I think I'll take that a little bit further when it comes to being really customer centric. I think it's just really about understanding them. And if you look at some of the solutions that we've gotten out there, we're the only company that's put out these really quirky, colorful, cool card readers. Um but why, because I say in the beauty industry, beauty matters and when you're dealing with highly creative professionals that are, you know, helping their own clients reach, you know, kind of their ideal identity, we as a software company need to show up and help our own customers reach their identity to for their business. Um, and so that's an example, but I think it just basically speaks to like understanding customers and what I'm always surprised about in this industry, there's so few female run businesses. And yet on the software side and yet most of the business owners, small business owners in the space are, you know, kind of females actually, and I think it's no surprise that there is a female run founded company like glass genius that's been able to understand customers so well here and get solutions out for them that they love to. Um you know, in kind of the backdrop we're in, you've had a lot of success so far. Are you worried about layoffs and the current economic economic condition fluctuating stock market, um demise of crypto? Has it affected lost genius? Are you putting us, you know, a moat to try and protect yourself? So I think you always have to think about the macro and as a ceo it's really important to be aware of the world around you because that's the context you're growing your business in. I have a few thoughts here. The first is um, our industry is really resilient historically. If you look across time, the beauty wellness sector has been resilient, there's um, you know, clients that have a lot of demand to spend on some of these smaller things such as beauty wellness experiences and services that do drive a lot of value in their everyday lives. Um you know, I think the second is if you think about the space we're in and the products we have there is it's very clear to see value that we drive to businesses. And so my view has always been let's focus on the fundamentals and drive a lot of value to businesses and in some way creating a software company that's easy to understand. You know, it's not hard to believe that there's business owners out there that want to focus on the creative side of things and yet have trouble running the business side and how software can help. And um I think that's a strong card now and you know, kind of this era were in. Um and then the third thing I would say is just capital efficiency. The company has mattered so much in the beginning of the company's journey. We were primarily bootstrapped and revenue finance. And I think having that experience from the beginning has made us ultra focused on efficiency and some of the fundamentals that really matter and that D. N. A. I think has helped us think very creatively about navigating different environments, whether it was covid 19 or even this macro backdrop we're in right now that I believe will help us create an even stronger, better business. And we always have to be focused on delivering value to customers and making sure every single person at the company is doing, um whatever it takes to be driving the most value, because it also goes back to our mission, we have a mission of empowering entrepreneurship and um if we're not taking and seizing the opportunity, then we're not fulfilling our mission as as much as we could be. Yeah, I would add, we get the benefit of looking at what's happening on the business side and also at the consumer side. So Danielle mentioned what happens typically in a recession. I'm sure we've probably heard about this, but it's a, the concept of the lipstick effect were more likely to spend on lower cost luxury goods, um, than something higher priced and it could be a little bit, you know, more discretionary. So beauty and wellness continues to be really resilient I think will continue to see probably a plethora of new services that get to be adapted for this economy. Um, we already see a bunch of add ons and you know, smaller kind of trims, things that are happening in our industry that are probably reflective, but overall we're really excited about how consumer side continues to invest in beauty and wellness routines. Self care is a big investment. Um, and we're expecting that to continue pace. Does anyone in the audience have a question that they'd like to ask these wonderful panelists? Yeah. Hi, I'm Caroline, I'm the president of Color Health. Um, I'm really curious what your go to market motion looks like when you're selling to tens of thousands of small businesses that already have some technology reservations. I'm curious how do you reach them? How are you financing that? Yeah, that's a great question. So first of all our industry Daniel mentioned all the fragmentation in our industry and that's probably a pretty unique challenge for us, You know, choosing the software that's going to run their business is no easy decision. So, um, you know, first and foremost Danielle has always been about investing in the product and I think it's really important that no matter what we do, we come to market with a really good prop, we get that out to a single customer, a group of customers, and that spreads a lot of word of mouth and goodwill. Um we've grown a lot in the early days, so word of mouth referrals that continues to be a key channel for us to acquire. Um, partners and affiliates are a really important part of the way we grow as well. And of course every company is invested in a traditional marketing stack. And we're also doing that as well. Social media has been really important for us. And if you look at the business owners in our space, a lot of them are in social media, they discover things on social media for their business. And that's been interesting for us to be a part of the conversation. And, and when you think about our business owners, what we've done uniquely is tailored our go to market to the way these business owners also are. And think, and so what do I mean by that one example is our go to market is very visual and that's why we do a lot of things on social media, If you think about the industry, we're in, we're working with, um, businesses and business owners that are highly visual people. And so the challenge is how do you align your go to market motion and some of the collateral in a way that also reflects the way business owners operate. And I think that's what we've been able to do really well. And it starts in social media. And then, as we mentioned, it carries in a lot of other places outside of the product. And you know, it's been great to see that there's business owners that talk about the company, but you also need to make sure about other things outside of go to market to are really working. And so like what is that customer service and success? Um, we've invested a lot in customer service and success because we know that the experience doesn't just stop with discovering our product. It also basically continues on through the customer journey with our product and um, different points in time that business owners have with our company have been a very important channel for us to continue word of mouth and continue referral growth with our existing base. We're almost out of time here. So, glass genius has had a lot of practice so far. You've got a lot of great momentum. What can we expect to see from glass genius in the next five years, 10 years there's this quote I really like and it's um, what you aim at determines what you see and when I think about glossy nous into the future, we're building something really big. We're tackling a very big industry um made up of a lot of small businesses were helping small businesses think really big Ron really big operations. And um, I think the change we've seen in the market structure in this industry is really just the beginning of um what software can start to enable and further even more. What I'm really excited to do more of with the company is, in some way, something similar to what our customers have been able to do is like, um, you know, they've worked very closely with the valued relationships they have, and that's the basis of monetization. And as a software company, I think you have the same opportunity with your own customers. Every customer is a relationship. And if you approach it that way, you, you know, kind of take a step back and you can think, well, what else can we do to further the relationship And the most successful relationships are symbiotic. Um and so what are we gonna do to help business owners more successful? And I think software, particularly the vertical software space is going to become even more powerful, even more nuanced. Um, and even more creative for business owners to do bigger and bigger and bigger things. And um, I think we'll play a very important role in that. Yeah, we've just scratched the surface of vertical software. So when I think about things we can do, you know, time is their limiting factor. How can we help them scale with the same amount of time? How can we help them build greater businesses? And again, as I mentioned, we use this expression helping small businesses run big operations. So in five years I'd love for each of these small businesses to feel like a big fortune 500 company, you know, I'll share one customer anecdote, which which always gets me going. But there was there was a customer that posted on social and she was remarking about the success she's had running her own business and she said, I now feel like I'm the ceo of a fortune 500 company. So I think when when we look at success in five years it would be that all of these entrepreneurs in this, in this sort of industry category of entrepreneurship, um really feels like they're the Ceo and empowered to run their own business no matter how small it is, awesome. Thank you so much, guys, thank you