Welcome to the SMB Tech Innovators podcast powered by Gusto, where we explore the intersection of embedded fintech features, vertical SaaS, and how software combats the rising complexity of running a business. We aim to share stories, advice, and best practices from the leaders and investors behind today’s cutting-edge platforms.
In this episode, we’re speaking with Aram Muradyan, Head of Product at Squire, the all-in-one business management and payments platform for barbers and barbershops. Brian Busch, Head of Marketing for Gusto Embedded, dives into Squire’s role in bringing cutting-edge technology to thousands of technologically underserved barber shops across the United States. Through an innovative approach to embedded fintech, Aram discusses product market fit, the difference between financed-focused and operational product development, and maximizing profitability with an all-in-one platform.
(The following excerpts were transcribed and edited for clarity)
Tell us a little bit about the early days of Squire. As I understand it, the team operated a real barbershop in New York City as a test kitchen for the app. Tell me a little bit more about that experience in those early days.
That was quite a time. I still have nightmares about running a barbershop. But the short of it is the first version of the platform was really customer-centric. By customer, I mean the person getting a haircut. The idea was customers will book appointments and show up at the barbershop. Barber Shops will be very happy to see them. The rest is history. Very quickly, we learned that barbershops actually make people wait even if they book appointments if the barbershops are not aware of those appointments. Building out an appointment system was the very first pivot that we made as a company.
Our very first client was a barbershop in Chelsea Market, New York, a pretty cool, nice barbershop in a pretty cool area in New York City. We were lucky to get them. They started using our beta version of the platform. They were the first customer. We figured out early on that the barbershop owner would not be in the business for very long. Obviously, that was a tremendous risk for us because if he decided to close the barbershop, our first client would churn not because of the software but because they were no longer in business.
So, we negotiated and convinced them to give us the reigns. We took over that barbershop. We rented collectively for, I think, about four to five months. It was an invaluable experience. I think it absolutely catapulted us to where we are today. I think the biggest lesson is that, in hindsight, it all makes sense. You have this test kitchen. Everybody should do it. But when it was happening, it was really a testament to how quickly we could make decisions as a company, even critical decisions that were quite risky. Because to take over the barbershop, we had to put up some cash. This was long ago, way before we had funding to be able to afford it. This was a very risky proposition. But we came together. We made the decision. We now know it was the right decision. But again, I think it’s a testament to understanding the environment, making the decision, and sticking to it. I think it’s why we are where we are today.
Let’s talk about when you knew you found product-market fit with Squire. Was there a particular customer, learning, story, or maybe an experience that made you think, “Yes, we’ve got something here?”
I think it was around the time we were operating the barbershop. We were building a marketplace. We were building a tool that would allow customers to book appointments. The barbershops and barbers would be able to manage their business or accept payment, et cetera. The question in any marketplace is, what side do you build first? Do you build both simultaneously? I think when we started to operate the barbershop, we realized that, in our case, it became very clear what we needed to build first. That is, we need to build a tool for the barbershop that the barbershop finds useful. Then, you get all of the barbershop’s clients.
Another thing that we had working in our favor is that customers tend to be very loyal to their barbers. The retention rates at barbershops are very high. Even further, the main goal or the main product that is being sold at a barbershop is not the booking platform but the haircut. People will use whatever their barbers or barbershops tell them to use to book appointments with them because you never want to piss off your barber. It doesn’t make any sense for you to do that because you’re trusting this person with your hair.
If your barber tells you, “Hey, I’m using this new system called Squire. Now, you can’t call me to make an appointment anymore. You have to log on and make your appointment this way,” the person could object all they want. But then, they will still go and make that appointment. When we made that conclusion, that is when, I think, the product-market fit basically just happened. Since then, we have never neglected the customer side of things. If you look at our booking apps, probably the best looking from UI/UX perspective apps that are out there for the customer. But the core is the tool for the SMBs, the tool for the barbershop and the barber to run their business to be more efficient to be able to analyze reporting and trends, et cetera.
Squire is both a business management and a payment platform. In terms of product-market fit, do you think there’s a difference between the operational products and embedded fintech features like payments?
In some ways, yes. I think that payments or the ease of accepting payments are not something that existed for decades. In a lot of ways, some of the older SaaS platforms in our space, and also I’m sure in other spaces, had their product long before it became easy to accept payments. I think for those businesses, for those companies, the operational side absolutely came before the fintech side/the payment side.
For us, it was actually never a question because when we built the first version of the software, we said “I hate coming to the barbershop. I hate sitting and waiting for three hours. I hate the fact that I have to bring cash. None of this makes sense when I could just grab an Uber and never have to worry about paying my cab driver.”
The payments aspect of things was built into the platform from the very beginning. It was a card-not-present payment because it was made when the customer was booking an appointment, but it was always part of Squire from the very beginning. I think, in some ways, that was our differentiator for a very long time because most of the booking platforms did not actually have a payments arm to them. They may use Square or some other embedded solution. I wouldn’t even call it embedded. It wasn’t embedded most of the time. All the communication of the systems happened behind the scenes. The look and feel of the all-in-one platform wasn’t there. When we started building the business management tool, the payments aspect of it was worked into it right away.
Fortunately for us, we used Stripe to make or accept payments. Stripe entered the card-present world as well. We were automatically able to start to compete against the Squares of the world, which had and still have a pretty significant presence in the barbershops/salon space because we were now also able to offer a card-present solution. Now, the all-in-one concept really became that much more real because you literally had your appointment book, and you could click on an appointment and see what credit card was used for that appointment. Something that, interestingly, even Square did not have because Square had two separate apps, one for appointments and one for the register. Even when we competed against Square, that gave us a significant advantage as well because a customer would not have to go and look into different places to reconcile the numbers.
Barbers used to walk out at the end of the day with cash in their pockets. Now, you’ve digitized payments and that mode of operation has changed for them a little bit. What did you do to get over the hump of helping drive adoption for the app?
I think the number one thing you have to do is to really embrace the profession and understand the profession and make the argument for why… “Yes, this is not the way you used to do things, but it is the way of the future. You are better off by it.” I think a lot of what we build into our platform and the vision that we have for ourselves is really to make barbering a true profession that operates just like any other profession, just like product management and marketing.
At first, these were hard conversations, but we thought how can we use technology to actually simulate what used to happen but just with technology? For example, barbers get paid on a commission basis and are also paid by tips. What that means is that by the time the haircut is over, a barber knows exactly how much money he or she made. But the barber has to wait until the end of the week to get paid. The thought is “why am I not getting my tips right away? I used to. Now, I have to wait until the end of the week to do so.” I think the ability to, for example, get barbers their tips on a nightly basis is something that you could use technology for, and innovate for. That makes the transition that much easier.
You used to walk out of the barbershop with $100 in your pocket from your tips for the day. You’re still walking out of the barbershop with $100 in tips every day. It’s just not in your pocket as bills. It’s in your pocket because it’s on your Squire card or your debit card.
I think you have to innovate. You have to move forward. The industry is moving forward. Honestly, it’s customer driven. It’s not that we’re forcing barbershops to only accept credit cards. It’s that customers don’t want to pay in cash anymore. The trend is going to continue. I think more and more barbershop owners and barbers are catching on and understanding that, actually, this is where I’m going to end up anyway. Why not just start changing my operations in a way where it’s not as disruptive, and we could ease into that change?
“It’s not that we’re forcing barbershops to only accept credit cards, it’s that customers don’t want to pay in cash anymore. That trend is going to continue.”
Head of Product at Squire
You mentioned Stripe. You’ve mentioned cards. What have you learned about building on API platforms for some of these embedded fintech features, and what makes a good embedded partner?
A very good question. We are working with Bond for our card-issuing product. Great organization. Great people. Highly recommend them. We worked with Stripe so far. We worked with Bond. We know each other very well. I hope that we will work together in the near future.
Look, I think it comes down to a few things. You have to be a good customer first and foremost. You have to make sure your partner, the API-embedded solution provider, really understands your use case and your pain points. All of the things that you don’t appreciate about the customers that you are serving, when they are complaining, and they’re not actually telling you what the problem is… They’re telling you how the solution should be. Understand that now you are also a client. You’re also a customer to someone.