Discover how a passion for technology turns into a groundbreaking solution that helps businesses thrive. Fred Helou, Founder and CEO of Vagaro, shares his journey to becoming a successful entrepreneur in the US. With a background in engineering and a love for tech, Fred discusses the challenges and successes he faced while building Vagaro, a platform that provides scheduling and business management solutions for the beauty, wellness and fitness industries.
Key Takeaways
- Fred’s journey from Lebanon to the US and his early tech interests.
- The tough start of Vagaro and why persistence matters.
- How Vagaro helps businesses run smoothly.
- Embedded finance products and their impact.
- The effects of COVID-19 on the beauty and wellness industry.
- Adapting to change and staying innovative.
- The role of AI in customer communication.
- Payroll integration and its benefits.
- The evolution of customer needs and platform expansion.
- Fred’s vision for Vagaro’s future.
Listen to the podcast or find out more by reading on.
The Inspiration Behind Vagaro: Addressing a Global Need
Fred Helou was inspired to create Vagaro by a personal need he encountered while on a business trip to Korea in the late 90s. Struggling to book a haircut online, Fred recognized a significant gap in the market for convenient online booking services. This realization led him to envision a platform to make booking salon services easier and more accessible to consumers. In 2009, Fred turned this vision into reality by launching Vagaro, initially focusing on the salon industry but with the broader goal of serving a wide range of service-oriented businesses.
Fred’s background in software engineering, combined with his sister-in-law’s experience as a booth renter in a salon, played a crucial role in shaping Vagaro. From the beginning, Vagaro emphasized mobile-first solutions, capitalizing on the rise of smartphones and cloud technology to meet the evolving needs of service providers and consumers. This early focus on mobility and convenience set the foundation for Vagaro’s growth and success in the competitive landscape of service-oriented platforms.
Vagaro’s Vision: How Embedded Finance Transforms SMB Platforms
One of Vagaro’s key differentiators is its focus on mobile technology. From day one, the company prioritized creating an iPhone and Android app that allows salon owners and professionals to manage their schedules from their phones. The platform also integrates with front-desk operations, ensuring everything stays connected across devices.
Why Vagaro Stands Out
- Mobile Integration: Vagaro was among the first in the salon industry to offer mobile apps for scheduling, payments, and customer management.
- Cloud-Based Syncing: The platform allows booth renters and front-desk staff to access real-time data, keeping operations streamlined and organized.
- Marketplace Feature: Vagaro’s marketplace enables customers to book services based on availability and reviews, offering flexibility and convenience for both customers and businesses.
Staying Close to Customer Needs: The Vagaro Approach
Fred emphasizes that one key factor in Vagaro’s success has been its commitment to listening to customer feedback. In the early years, Fred handled customer support, which allowed him to stay deeply connected to the users and their needs. This customer-centric approach has continued to shape Vagaro’s development, as the company prioritizes features that solve real-world problems for service professionals.
How Vagaro Stays Connected to Users
- Customer Support as a Core Value: Fred handled customer support for the first four years, establishing a direct line to users’ needs and pain points.
- Feature Requests: Vagaro tracks customer feature requests and prioritizes the most popular ones, ensuring the platform evolves based on real feedback.
- Balancing Innovation and Requests: While customer requests are critical, Vagaro also anticipates needs and introduces new features that users may not have asked for but ultimately find valuable.
Expanding into New Industries: Fitness, Spas, and More
As Vagaro grew, the company expanded its reach beyond salons to include spas, fitness studios, and other service-oriented industries. This expansion was not just a strategic move but primarily driven by customer demand. Spa and fitness professionals who had observed Vagaro’s success in salons expressed interest in using the platform for their businesses, and their feedback was integral to our expansion. In response, Vagaro adapted its existing features to cater to the unique needs of these industries while maintaining its core focus on flexibility and usability, ensuring that the platform could serve a broader range of service providers.
Vagaro introduced several key features tailored to these new industries to support this expansion. The platform was enhanced for spas with service menus, intake forms, and other spa-specific tools. As fitness businesses began using the platform, Vagaro added features like class scheduling, membership management, and other fitness-oriented functionalities. Additionally, many features initially developed for specific industries, such as memberships and service menus, proved versatile and were later adopted by businesses across different sectors, highlighting the adaptability of the Vagaro platform.
Vagaro’s Future in Embedded Finance for SMB Platforms
One of the more recent innovations in Vagaro’s evolution has been the introduction of embedded finance products. Features like “pay later” options and capital advances were developed in response to customer demand. Many service-based businesses, such as spas and fitness studios, require flexible payment options for high-ticket services. Vagaro’s embedded finance features help SMBs offer more payment flexibility while ensuring they can access capital when needed.
Embedded Finance Features in Vagaro
- Pay Later Options: Customers can finance large purchases, such as memberships or expensive services, without upfront payments.
- Capital Advances: Vagaro helps businesses access capital based on their credit card transactions, providing financial flexibility during growth periods.
- Customer-Led Innovation: While features like “pay later” were implemented based on customer requests, Vagaro introduced anticipated emerging trends.
Embedding Payroll with Gusto: Simplifying Complex Processes
Vagaro had been offering payroll features for years, allowing businesses to manage commissions, hourly pay, and other payment methods. However, when Gusto introduced embedded payroll, it provided a seamless solution that eliminated the need for separate logins and systems. With Gusto’s embedded payroll integration, Vagaro users now have a fully integrated system that handles everything from employee time tracking to automated payroll.
Key Benefits of Vagaro’s Embedded Payroll
- Seamless Integration: Payroll, scheduling, and employee management are now handled within a single system.
- Custom Payroll Solutions: Vagaro’s payroll features are flexible enough to accommodate the unique needs of service industries, such as commission-based pay and service-specific bonuses.
- Increased Adoption: The embedded payroll integration has made it easier for businesses to manage payroll, resulting in higher adoption rates among Vagaro users.
Driving Feature Adoption: Best Practices for SMB Platforms
Fred shares Vagaro’s approach to driving feature adoption across its platform, noting that product-led growth has been a critical strategy. By integrating prompts within the software that encourage users to try new features, Vagaro has successfully increased the uptake of its embedded finance and payroll features. Additionally, Fred emphasizes the importance of using data to suggest relevant features to businesses based on their size, industry, and usage patterns.
Best Practices for Driving Feature Adoption
- Product-Led Prompts: Vagaro prompts users with feature suggestions during relevant moments in their workflow, encouraging adoption without being overly salesy.
- Data-Driven Suggestions: By analyzing user data, Vagaro identifies which features most likely benefit specific businesses and targets them accordingly.
- Focus on Usability: Vagaro’s features are intuitive and easy to set up, reducing friction and increasing users’ likelihood of adopting them.
Delivering a Unified System: The Power of Vertical SaaS
Vagaro serves as the “source of truth” for businesses by ensuring that every aspect of the platform—from payroll processing to customer communications—operates seamlessly within a single, unified system. This deep integration is one of Vagaro’s core strengths, as it allows small and medium-sized businesses (SMBs) to manage critical functions like pricing, commissions, and website updates without relying on multiple, disconnected systems. By centralizing these operations, Vagaro not only simplifies business management but also enhances the overall efficiency of its users.
Why Vertical SaaS Works for Vagaro
The unified operations offered by Vagaro allow businesses to connect all aspects of management, from front-office to back-office tasks and customer interactions, within one cohesive platform. This integration ensures data flows accurately across the system, leading to smoother operations and fewer errors. Additionally, this setup guarantees a consistent and intuitive user experience, whether businesses update their website, process payroll, or engage with customers, making Vagaro an indispensable tool for managing all facets of business operations.
What’s Next for Vagaro: Exciting New Features
Fred shared some of Vagaro’s latest innovations, including a new app called Connect, which enables hairstylists and other professionals to communicate with one another and their clients without using personal devices. This app further simplifies customer interactions by allowing businesses to send messages directly to clients about appointments, special events, or updates—all from within the Vagaro system.
Fred also teased the upcoming integration of AI-powered chat features into the app. Conversational AI will assist businesses by handling routine customer inquiries, such as appointment rescheduling, while freeing up staff to focus on in-person service. This technology reflects Vagaro’s commitment to reducing the burden on business owners and staff while enhancing customer service.
Key Features in Development
- Connect App: Allows internal communication among staff and external communication with customers, all from within the Vagaro system.
- Conversational AI: Automates customer service tasks, such as appointment scheduling and answering common questions, helping businesses operate more efficiently.
- Integrated Messaging: Clients can communicate with businesses directly via Vagaro’s marketplace, website widgets, or the business’s site, ensuring consistent communication across platforms.
Embedding AI for Better Customer Communication
Vagaro’s integration of AI for customer communication demonstrates its forward-thinking approach to improving SMB platforms. Fred discussed how conversational AI will handle common customer queries, such as appointment scheduling or asking about business hours. This tool helps automate tasks that often fall to front-desk staff, enabling employees to focus on higher-value interactions while AI handles the routine.
Benefits of AI in Vagaro
- Customer Convenience: AI can respond quickly to customer inquiries, offering a high level of service even when staff are unavailable.
- Operational Efficiency: Businesses can reduce the workload on front-desk staff by automating routine tasks through AI.
- Seamless Integration: The AI is fully integrated with the Vagaro system, ensuring that conversations are consistent across all customer touchpoints, whether from a website chat or an app.
The Vagaro Journey of Innovation
Looking back, Fred shares a humorous yet insightful reflection on his early days with Vagaro. After completing the email marketing feature, Fred thought they had finally created the “last feature everyone wants.” However, after the feature was released, customers immediately began requesting new tools, proving that innovation never stops.
Fred’s story illustrates the relentless pace of customer demand and the need to evolve constantly. As a result, Vagaro has embraced continuous innovation as part of its DNA. The company has evolved from simply offering scheduling and booking tools to becoming an all-encompassing SMB platform that handles everything from embedded finance to AI-driven customer service.
Lessons Learned from Vagaro’s Journey
- Customer Demand is Endless: No matter how complete a product may seem, there is always room for improvement and new features.
- Continuous Innovation: The key to long-term success is staying focused on what’s next, always looking for ways to improve the platform and keep pace with customer needs.
- Iterative Growth: Fred believes the company must always be forward-looking and excited about what’s coming rather than resting on past successes.
Scaling with Embedded Finance
Vagaro’s journey also includes successfully integrating embedded finance solutions, such as capital advances and pay-later options. These tools have proven crucial for helping businesses offer more flexible payment options, improving customer satisfaction, and boosting sales.
Fred approached embedded finance cautiously. By watching how other companies like Affirm succeeded in this space, Vagaro ensured that when they launched their finance tools, the timing was right, and the products truly benefited their customers. For example, the “pay later” feature has benefited businesses offering high-ticket services, such as spas or fitness studios, where customers often prefer to spread payments over time.
Embedded Finance Features:
- Capital Advances: Offer businesses quick access to cash based on their credit card transactions, helping them manage cash flow during periods of growth.
- Pay Later Options: Allow customers to finance expensive services, increasing sales and customer satisfaction.
- Thoughtful Rollout: Vagaro waits for market validation before introducing new financial tools, ensuring that they meet the needs of their customers while minimizing risk.
How Vagaro Drives Adoption of New Features
Fred discussed how Vagaro encourages customers to adopt new features, highlighting the company’s focus on product-led growth. By building prompts directly into the software, Vagaro gently guides users toward exploring and adopting new tools to benefit their business. These prompts appear at relevant moments in the workflow, making the experience natural rather than forced.
Vagaro also uses data-driven insights to suggest features that might be particularly useful to specific businesses. For instance, if a salon already uses a few Vagaro features but isn’t using the website builder, the software may suggest that customers explore it to help grow their business online.
Feature Adoption Tactics
- Product-Led Prompts: Vagaro introduces new features to users within the workflow, ensuring that adoption feels organic and relevant.
- Data-Driven Recommendations: Vagaro suggests features based on customer data, helping businesses discover tools that fit their needs.
- Onboarding Upsell: When users set up new services or employees, Vagaro prompts them to explore related features, such as payroll integration.
Helping SMBs Grow with Marketing Tools
Vagaro doesn’t stop at business management—the platform also helps SMBs grow through marketing tools like the website builder. Fred explained that many businesses struggle with maintaining an up-to-date website, which is crucial for attracting new customers. Vagaro’s website builder integrates seamlessly with the rest of the platform, ensuring that a business’s online presence is always up to date with the latest information, services, and promotions.
Vagaro’s website builder is SEO-friendly, making it easier for businesses to appear in search results. It automatically updates with changes made in the Vagaro system, such as new business hours or pricing. This feature helps SMBs maintain their online presence and grow their customer base by appearing higher in search results.
Marketing Features for SMBs
- SEO-Friendly Website Builder: Vagaro’s website builder allows businesses to create and maintain an optimized online presence with minimal effort.
- Booking Widgets: Businesses can embed booking widgets on their websites, allowing customers to schedule appointments directly.
- Automated Updates: Changes made in the Vagaro system automatically sync with the website, ensuring that all information is always current.
Vagaro’s Journey and Future
Fred’s journey from software engineer to founder of Vagaro highlights the importance of staying close to customer needs and continually evolving to meet market demands. Vagaro’s success lies in its ability, mobile-first approach, and commitment to innovation, particularly in areas like embedded finance and payroll. As Vagaro grows, Fred remains focused on helping service businesses run their operations more efficiently and grow through effective marketing and customer engagement tools.
By listening to its customers and anticipating their needs, Vagaro has become a leader in SMB platforms, helping service professionals worldwide easily manage and grow their businesses. As the platform continues to evolve with AI-powered communication tools, embedded finance options, and marketing solutions, Vagaro remains focused on helping SMBs run smoothly and grow.
Listen to Tech innovation in beauty, wellness and fitness with Fred Helou. Learn more about Vagaro and connect with Fred on LinkedIn.
