Welcome to the SMB Tech Innovators podcast series powered by Gusto, where we explore the intersection of Fintech and vertical SaaS strategy and discuss 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 speak with Obi Omile Jr, CEO & Co-Founder at theCut, to discuss Why Men’s Grooming Has Been Booming and how their application is helping drive success in this vertical market. theCut is a Barber Booking App that empowers barbers to modernize their businesses by allowing them to manage their schedules from the palms of their hands. The app helps Barbers book clients, manage appointments, process payments, and analyze business metrics.
Obi covers why he targets individual barbers instead of entire barbershops, the hidden opportunities within the industry, and why his brand has barely scratched the surface of the available market.
Topics include:
- How theCut bootstrapped before it grew into 4.5 million users.
- The unique aspects of theCut’s vertical SaaS strategy in the industry.
- Managing barber shop needs vs. individual barber needs.
- Determining what products should be free and what should be paid.
- Adopting digital payments in a primarily cash-based industry.
- How to prioritize your product strategy and roadmap.
The following excerpts are from the podcast and have been transcribed and edited for clarity.
Talk about your journey from when you started this company and decided to go on this venture-based business.
My co-founder and I started this company in 2016. And we started it with money that we had bootstrapped and saved up from working. And so, that’s what got us on the way. He was able to build an incredible platform. And I spent the rest of the time figuring out how do we grow it? And so, that’s how we got out the door. We raised funds along the way through a variety of different methods. We worked through our angel network firm and our alumni universities. That led us to launching a crowdfunding campaign in which we went through Republic.
We raised a couple hundred thousand dollars. We had a ton of our barbers and clients actually invest in the company. So it created real ownership. And that was a proof of concept that allowed us to get into Techstars, which allowed us also to raise additional funds. So, we’ve had a lot of steps along the way, which culminated in us raising our first official venture round in 2020, right before the pandemic, where we were able to raise 4.5 million. Yeah, no. It’s definitely been a journey.
Tell us about what theCut does and some unique aspects of your vertical SaaS strategy.
So, theCut is a mobile technology platform for the barbershop industry. Today, we have a business management tool for barbers to use to optimize their schedules and promote the business in a more efficient way. And then, as we built up this network of barbers around the country, we’ve been able to surface them to anyone like you or me looking for a barber anywhere, around again, across the country.
So, you can be here in Virginia or California; you can book a barber in Texas or New York when you’re going to be in town. And so, that’s how the platform works today. We built this two-sided marketplace where barbers can run a business. And then anyone like you or I can discover a barber, book with them, and pay, all with the app.
“When we built our platform, we built it specifically for barbers to allow them to be entrepreneurs in a way that they haven’t been before.”
Obi Omile Jr
CEO & Co-Founder, theCut
What’s going on in the barber landscape?
People are looking for new ways to run a business, to make a living for themselves outside of traditional schooling, right? Education costs have been through the roof. People are looking for new ways to go out and make a living without having to be saddled with debt. I think you’re also looking at the trend of men’s grooming being more widely accepted. When you look at it, I think 2015 was the first year that men’s searches for grooming and facial care products started to outpace that of women.
When you see an increased demand like that, you need more supply. And so, that created an opportunity for more barbers to come up in the industry. And then, within the industry, I think you’d also see things like the growing trend of salon suites where barbers no longer have to rent out a booth space within a traditional barbershop. They can rent out, call it co-working spaces for beauty or other service professionals.
And in that, they’re able to create their own experience and their own vibe. And you’ve seen a lot of barbers lean towards that trend in the industry. And that’s where we play and find the most success. Because our platform is literally full of those type of barbers where they don’t have, again, the brand of a barbershop to drive that foot traffic and walk-ins. And so, those barbers are able to use theCut, and get that visibility, and get that new business in a way that they weren’t before.
How are you acquiring consumers? How are you acquiring the barbers?
For us, our focus and how we really build our brand is leaning into the consumer that we’re really targeting, which are barbers. And when I say that, again, I say barbers and not barbershops. So, when we go to our platform, we built them specifically for barbers. And allow them to be entrepreneurs in a way they haven’t been before. You don’t have to rely on a shop’s brand to drive your new business. You can use theCut as a platform to showcase your skills and ability and get discovered by new clients that way. That’s how we differentiate our platform, and our acquisition strategy is really around going after individual barbers.
An individual barber typically already has a book of business, right? They’re going to come with clients already. And so, we’re able to find a barber, get them on our platform, and show them the true value. And then they bring some clients with them. Those clients tell other friends. Those clients maybe tell another barber they know. And so, we have this full network effect that starts to happen. And yeah, organic growth is really how we’ve grown to where we are today. It still holds true; about 50% of our barbers who sign up on a monthly basis, say that they signed up because another barber told them to. So, referrals are great, word of mouth. Building a community for barbers has been how we positioned ourselves in the marketplace.
Tell us about the difference between your free and your paid products. And how does that drive adoption of your subscription products?
So, when we came out the gate, we were free for barbers to use. So they didn’t pay a monthly fee. We made money out as you process transactions on the platform. Those are still our key revenue drivers. However, we started to introduce a couple of new ones. More to come on that later. But how do we think about pricing? I’d say that once we switched over and started charging barbers a monthly fee, that decision was made through trying to understand what made business sense in terms of the value that barbers are getting from the platform. And so, literally, everything else that we do comes around pricing.
It’s trying to really pair together the value that the barber is receiving versus what they would get in the free version. But today in our free version, we essentially have a booking tool for a barber to use to manage their own schedule. So, a barber can book his own appointments. And they will load on a schedule within the app. That’s our free version. With that, a barber doesn’t get discovery. So, he can’t be found by other people. Clients can’t book with him. And so, that’s two of the biggest value-adds we have around one, discovery, right, free marketing, build your business.
And then, it’s around that time save of texting clients back and forth. The ease of use of a client being able to book at their convenience. And the peace of mind for you as a barber where you don’t even have to confirm it. You set your schedule. And you allow people to book again at their convenience. And then you just show up with your clippers, and you do what needs to be done. And so, those are those, call it three or four biggest pain points that barbers have expressed to us. And so, understanding how we separate those from our free versus our paid version is how we decided on our pricing model today.
Talk about your payments journey and what you’ve learned over the last few years of offering new ways to help your barbers invoice and collect money from their clients.
Payments are definitely a love-hate relationship, right? A lot of hard work goes into payments, whether it’s implementation via partners. I’d say for us, we’ve gone through a couple of different payment partners in the past before we just ended on Stripe, which we love. And I’d say that’s probably one of the biggest mistakes. I wish we had gone with Stripe out the gate. It could have saved us a lot of time, pain, and headaches. But we eventually landed there. So, what has our journey been like? I think it’s really, again, a journey of discovering how you’re providing value.
How do you build an intuitive payment experience that provides value that people are willing to use? I would say specifically about the barbershop industry; traditionally, it’s cash-based, as I’m sure many people know. When you think about this industry and some of the others, yeah, proactively you try to avoid digital payments, is the challenge that we are faced with. And so, along the way, we’ve had to build features, we’ve had to build experiences that have the right environment for our barbers and our customers to adopt our payments at a higher rate.
It’s been a lot of learning. But today, yeah, we’ve grown our payments on our platform 50X over the last two years, if not more. Now, we’re super excited about payments as a part of our business. I would say one thing. As payments become more of a utility, I think you’ll see a lot more ease of use for different platforms or, I guess, connect integrations to different platforms. Even today, we’re starting to see Cash App, and soon they’re going to be accepted via Stripe.
So, this will make payments on our platform, and I imagine a lot of other platforms easier where people who have money saved across different money movement apps can use them in a central location. And I think, again, that’s just providing another level of convenience to customers. And that’s everything when it comes to payments.
How do you go through the prioritization process, and what advice do you have for other founders on being opinionated with their product strategy and roadmap overall?
Absolutely. To your point, small team, a little bit more than a handful of developers, but still not nearly enough that we need. So, if you’re looking for a job as an engineer, there’s definitely hiring. How do we think about it? When we make decisions, we look at them on the axis of impact on the business. And then obviously, level of effort. How long, how much work, how involved, and how much of the team is this going to require their attention? But then we also look at it like this is obvious. Does it directly impact some of our key this metrics KPIs? And then also, does it indirectly impact some of those metrics, right?
Does a feature, cause as a feature, may not drive transactional revenue, or it may not maybe drive transactional revenue, but it might impact churn and retention? So, now you’re able to retain more barbers and more customers. And then that compounds itself. You get more net revenue down the road. And so, when we think about how we prioritize, it’s on that level of impact, direct or indirect impact towards those metrics. And then lastly, one thing that we look at is user sentiment, which is more about whether or not our customers have been asking for a feature versus whether or not it’s something we think will be cool that they haven’t acknowledged or hinted about.
When we look at that, sometimes it’s a little harder because you have the vocal minority who express interest in things that don’t really impact the rest of the users. And so we found success looking at just data and how our product is being used to help us identify if we should allow certain features or how we should change or adapt our product. Yeah. Those are the three ways that we typically use to prioritize, rank products, or design our roadmap—level of effort, impact on KPIs, and then our user sentiment.
How do you go through the prioritization process, and what advice do you have for other founders on being opinionated with their vertical SaaS strategy and roadmap overall?
Absolutely. To your point, small team, a little bit more than a handful of developers, but still not nearly enough that we need. So, if you’re looking for a job as an engineer, there’s definitely hiring. How do we think about it? When we make decisions, we look at them on the axis of impact on the business. And then obviously, level of effort. How long, how much work, how involved, and how much of the team is this going to require their attention? But then we also look at it like this is obvious. Does it directly impact some of our key this metrics KPIs? And then also, does it indirectly impact some of those metrics, right?
Does a feature, cause as a feature, may not drive transactional revenue, or it may not maybe drive transactional revenue, but it might impact churn and retention? So, now you’re able to retain more barbers and more customers. And then that compounds itself. You get more net revenue down the road. And so, when we think about how we prioritize, it’s on that level of impact, direct or indirect impact towards those metrics. And then lastly, one thing that we look at is user sentiment, which is more about whether or not our customers have been asking for a feature versus whether or not it’s something we think will be cool that they haven’t acknowledged or hinted about.
When we look at that, sometimes it’s a little harder because you have the vocal minority who express interest in things that don’t really impact the rest of the users. And so we found success looking at just data and how our product is being used to help us identify if we should allow certain features or how we should change or adapt our product. Yeah. Those are the three ways that we typically use to prioritize, rank products, or design our roadmap—level of effort, impact on KPIs, and then our user sentiment.
“If you can get creative with the value-adds to the people in the community that you serve, you can start to identify some new revenue opportunities.”
Obi Omile Jr
CEO & Co-Founder, theCut
Listen to the entire podcast with Obi Omile on Spotify or Apple.
To learn more about theCut visit theCut.co and connect with Obi on LinkedIn. And, to get notified when new podcasts are available, subscribe to the Gusto Embedded Newsletter.
