Vertical SaaS 2.0: How Barbershops Are Creating a SaaS Rocketship with CRV GP and Squire Co-Founders

Myself, I'll still be here but I'll be muted for the duration. 5, 4, 3, 2, 1.

All right.

Looks like we got Dave and Song on and we're ready to kick this session off.

Great.

I'll be running this fireside chat. First of all, big shout out to Saster and the team there. I know that this is a very unique year for them as they pushed off the normal in person annual conference and pulling this together over the last few months. Quickly, as an intro to this session, we are going to be talking about Squire. We have the founders here and the title is vertical SaaS 2.0 How Barbershops are Creating a SaaS Rocket Ship on my background. I'm Reid Christian, I'm a general partner at CRV. We are a 50 year old venture capital firm investing in early stage technology companies. I'm proud to be a board member after leading the series B in Squire and we have a number of other exciting businesses that we've backed through the years like Doordash, Twitter, Airtable, Zendesk to name a few. With that, I'll shut up on my side and start peppering these gentlemen with questions. So maybe to start with Dave and Song, if you could introduce yourselves and also where you're hailing from today.

Hey, how's it going? I'm Song lavron. I'm the CEO and one of the co founders of Squire and today I'm actually in Madison, Connecticut.

Hi, Dave Salvon. I'm the president or the co founder of Squire and I'm coming. You coming from broadcasting from Los Angeles, California.

Awesome guys. Well, we've been working together for I think nine months now and I've heard this founding story a couple times, but it's still, I still think it's just a phenomenal, phenomenal intro. So if you don't mind, take a few minutes here, walk the folks that are streaming in through kind of why build a company, why build this one? And how kind of the origin of Squire came about.

Yeah, I'll start and then I'm sure Dave will jump in. So Dave and I had been friends for a long time before starting Squire. Neither one of us were actually in tech or had any background in the barbershop industry. We were in corporate law and finance and we really weren't happy on that corporate trajectory. We wanted to do something more entrepreneurial so we would brainstorm ideas and one weekend we stumbled across the idea of the Barbershop and it really stemmed out of our own experience. You know, I started going to the Barbershop as a kid, you know, around six or seven with my dad, you know, 20 years later, and the experience hadn't changed at all. It was one area where you constantly have long wait times. It's cash based business. You know, getting a haircut was awesome, but the process was actually very frustrating, particularly for busy professionals like us. So we thought, you know what, there may be an opportunity here to, to improve this experience. It was one area that technology by and large had totally overlooked. There were no real SaaS, companies, software or startup companies that were focused on the barbershop vertical and improving the experience.

Yeah, the experience was you call or text your barber, you go to the barbershop, you sit down and you have to bring cash. And this was around 2015 when stuff like Uber was starting to really take off in New York City. And we thought that we can adopt the same principles of technology and ease of use to the barbershop space. So we launched a product and the product utterly failed. We thought that clients and barbers would just rapidly adopt our solution and. But it didn't work out like that. But throughout that process, we figured out how archaic and disjointed the software systems that the barbershops were using. They were cobbling together several different software systems to make it work. But since Song and Hai had no experience in the barbershop, we decided to purchase a barbershop and really build a system from the ground up and discover, you know, what would be the best way to run a barbershop from the owner's perspective. And you know, then out of that we went to Y Combinator. And then a few years later, a couple years later, we launched what we have today, which is Squire Commander, which is a full fledged system that does everything from point of sale, online booking, CRM, payroll, and everything in between. Marketplace for supplies, which we just launched today. So everything in between.

Awesome guys. And you know, it's so interesting because the topic here is vertical SaaS. So we do, and I look at a bunch of investments in horizontal software, horizontal being SaaS that can sell into virtually any enterprise, often in the larger IT budgets or engineering orgs, or sales and marketing teams. And some of the challenges with that is that you have just such a wide, wide area to cover as far as use cases, as far as different types of organizations, geographies. But you two came in and decided to pick a vertical. But what's fascinating to me is that you picked a vertical that one, you didn't know about except for personal experience, and two, you didn't have a tech background. So, you know, that opportunity I think is really what's so exciting and interesting here. And it sounds like you dove in and you learn the vertical by running a shop. But how about on the technology side of things? How did you make technical decisions? How did you recruit in the right team and how did you become savvy as tech now tech entrepreneurs of a 60, 70 person company that's raised 40 million plus dollars?

Yeah, that was tough. It was hard being both non technical founders. We knew that the first thing that we needed to do was recruit somebody to build out our mvp, that first version of a product, which for us was a mobile app. We're an iOS first product and we had to kiss a lot of frogs to finally find somebody that could build it. We probably went through two or three co founders, CTOs in that process. And when you're not technical, you are very much kind of, there's a lot of risk for building a product that is not quality and for not being able to manage the process. So we made a lot of mistakes. And you know, the first eight months after we quit our jobs and decided to work on Squire, we're building the product. It took us eight months to realize we actually didn't have a product at first. So we had to go back to the drawing board and try to find somebody else to build a new version. So yeah, it was challenging, but we learned a lot as we as we went. And it's really important to, if you're not technical, to find that person that is technical that can join your team instead of trying to outsource or just pay consultants, you really need to be selling. And one of the first people you need to sell is a technical person that can join and be part of your growth. Otherwise it's going to be really challenging to build a tech company.

Yep. And you know, it's funny, I think of, I think of there's kind of a few different core pieces that you need early on. You obviously need an entrepreneurial team. That's you guys, you need domain experience, you need tech experience. But then you guys also sit at the intersection of software and payments and financial services. So as we go into the next slide, maybe just spend a minute on are you a software company, are you a fintech company or are you a hybrid of both?

I think we are everything that you mentioned, software and a fintech company. And what we realized, kind of like Squire 2.0, is you have this huge client base that has been looked over by major financial institutions and then you have this kind of built in customer that can also be sold other products and you can make it more unique and fit their needs better than financial services companies can do. And you know, so we started with software and the next kind of phase of software is a fintech with the payments that we're already doing, with the lending that we're going to be doing and so on and so forth. So I think it's going to be kind of a happy marriage between software and fintech but serving underserved but huge, very passionate group of folks that have been looked over.

Great.

And moving on to the second slide here, this is a beautiful market map from our friends over at Andreessen Horowitz. You know they kind of walk through the history of software in broad strokes from large on prem to moving software to the cloud, to kind of bottoms up horizontal SaaS adoption to now where we are today, which is going into more of a hybrid of SaaS, FinTech Financial Services. And I think this is really the thesis for Squire, right? It is. This is going to be the future of software and this is how software will be distributed to all these verticals that have been, have been overlooked. So maybe stopping here with we've got some great logos in this, this last bucket. You know, where do you guys draw parallels and you know, what are some of the companies that you admire or emulate as you're, as you're building?

Squire? Yes, it was nice for us to see the Squire logo there with some of the companies that we really do admire as you've mentioned. So one actually the one right above us in this picture, Service Titan, they're a few years ahead of us but we know the CEO Ara pretty well and we've really seen their growth and what they've been able to do with the H Vac plumbing industry. And we draw a lot of parallels. They're providing Software, then the FinTech and payments component and really a full solution for these small business owners and that's very similar to what we're doing and also we look at the customer base they're selling to H VAC plumbing professionals. It's a blue collar industry. It's an industry traditionally low tech, traditionally overlooked by software and they've been able to build an amazingly fast growth and really big business focus on that vertical. So for us it's a good analog of what we can do and it really shows the proof of like how the vertical SaaS approach can be successful. Previously a lot of the pushback from I think the VC industry and Just people in general was always a question of how big can the market get or what's the tan. If you're focusing on a vertical, logically it seems reasonable to think that that market size must be smaller than a horizontally focused company. But what Servicetitan and Toast and a lot of the companies on this diagram show, and I think Squire will as well, is that when you focus on the vertical, you can create a big market because you can actually provide much more value to the customers and derive much more meaningful revenue for each customer. So you end up needing fewer to build a multi billion dollar business than for companies that are trying to go after the horizontal approach.

Got it. And how about on the. That makes a lot of sense that the targeted. And we'll get into that a little bit kind of targeted go to market efforts can be a lot more efficient. And as you increase the ARPU per customer, these market sizes actually kind of grow. Not 1, 2, 3x but 5, 10, 20x. And that's very core to what we're doing here. And you guys are building at Squire. How about on the actual kind of timing in the readily available APIs that are out there? You know, you guys have made a bed a big infrastructure bet on a particular platform today, but we've been seeing a bunch of others come out that will enable payments, financial services that you guys, you know, payroll even that you'll, you'll be able to embed. So maybe just walk folks through at a very high level. Like what are some of the third party services that you're building on and that you've, you guys have really benefited from in the last few years.

Yeah, I mean one in particular has been stripe. Stripe has allowed us to not only connect every single account of Barbershop to have their own specific bank account and payment routing ability, but it's also been able to allow us to really quickly iterate and change, you know, how we want to route money. So that's been one of the APIs we lean on heavily and then another one is our banking partner which we're going to be launching on in probably Q4 of this year. And that's going to allow us to create banking products for these barbershop owners and barbers. As I mentioned before, the banking system for these guys is very archaic and doesn't speak to their needs. They charge almost $200 a year in overdraft fees. And these guys are the linchpin of the economy and the small business. So I think we can improve that by providing better services such as banking insurance to these guys to allow them to operate more efficiently and more effectively.

Awesome. Guys. I'm going to pause my screen share for a second to talk about my favorite topic. And I'm sure that every time you chat with investors, you get asked this question. And it is so core to kind of vertical SaaS 2.0 that we have many entrepreneurs on the line here that will continue to receive this question. But let's just stop and talk about market size. The big knock on any vertical SaaS business is can you build a venture scale business? So walk us through early days of Squire, people just hammering you over the head with, is it a big enough market? Are there really that many barbershops? Why don't you expand into other verticals? And then even going forward, how have you changed that narrative? And how have you. Yeah, how have you proven to investors, employees, and your peers that this is a massive $10 billion plus opportunity?

Yeah, you're right. It's a constant question, and a question that I think as we've grown and become more mature, we've had better answers for because we've had more data. But when we first started, you know, we had an idea of what we wanted to do. We were very passionate about solving this problem, but we really did not know how much money we could make from a barbershop. We had, you know, theories, but it was really unproven. So when you don't know how much money you can make from your small business customer, the investors are just going to make assumptions, and they're going to assume that that number is low. They're going to assume that kind of capped at the SAS fee amount how much these guys will pay monthly, which typically is in anywhere from 100 to $200 range on the higher end. So when you use that math and then you think about how many barbershops there are, you end up getting to a relatively small tam. That's not very exciting. And on the point of how many barbershops there are, that was another thing that we ran up against. Because this, this industry is so fragmented and underserved and kind of operating in the shadows to some extent, it's actually hard to find good numbers on the number of customers in the U.S. so, you know, when you Google and, you know, you see some of the reports, you know, from some different government on the federal level, you see really small numbers like 8,000 barbers in the US 8,000 barbershops. Like that just doesn't. That's just not intuitive. When there's 150 million men. There's no way 8,000 barbershops can service all of them. But some investors are, I'll just say it, some are lazy and they'll Google it, they'll see that number and then they'll be like, oh, small market next. Move on. But the great investors like Reed actually double click and think about it and do the work to get to an actual number that makes sense. So our research, we put the number of barbershops somewhere around 200,000 to 250,000 in the US alone. And then we also look at unisex salons or men's salons companies, businesses that don't call themselves barbershops but still are pretty much providing the same type of services and we include them as well. And then now we also know how much we can make per shot. And we know that that number on average is about 7, $800 a month at maturity. So that actually drastically increases arpu by multiples versus $100 a month. So when you combine that with the fact that there actually are way more barbershops than most know, you can get to some pretty big numbers that are exciting to be seen.

Yeah, and that's the power of vertical SaaS and the ability to scale up your ARPU. What was considered, you know, a small 100 or $250 a month amount you can charge these small business. Now you're making 3,4x that. Right now we're sitting about $8,500 in annual ARPU per customer. We think we can turbocharge that with the new products up to about $20,000 a year in annual revenue. So you know, if we're at $20,000 a year, then you just times that by a small number, then you get 200 million plus revenue in one year. And we think this is going to be a winner take all market and we are going to be the de facto leaders in this market. So I, we're confident that we're going to build a multi billion dollar company in an industry that has been historically overlooked.

And to be fair, I also was one of those VCs that did not, that just googled. And thankfully I listened to you guys. And one of the things that I thought was really interesting at the Series B when I decided and you guys thankfully chose me as the partner to move forward with, was that you guys went and did your whole market sizing from scraping Yelp data, aggregating third party data sources, because some of these verticals, the data is just not available and you have to be the ones that do a lot of the heavy lifting versus Gartner or some other industry analyst that's already sized everything and has all the, the statistics.

Yeah, yep.

And with that, you know, we will switch over to talking about arpu because you know, fundamentally this is, this is what this, I think is what has changed in the last, you know, three to six years is because these third party APIs like Stripe, because these banking APIs, you're able to charge the subscription in addition to the payments and in financial services. So walk us through just your journey of doing that. Did you wake up one day and say, okay, we need to get more per customer or did you learn from another model? How did you, you know, how did you think about ARPU over time? And you know, we already talked a little bit about where you're taking it, but maybe just historically.

Yeah, so it was actually in response to our customers need and wants. I mean if you first we started out with like online booking, just online booking. And then we realized, hey, we can do, you know, they were using, you know, another service, whether that be Chase, PayTech or Square or, or something for payments and the systems didn't talk to each other. So let's, you know, build a point of sale system. And then they were, you know, using ADP for payroll. And I'm like, you know, I'm getting charged, you know, $200 a month for that. So let's build a payoff system. And then they were using, you know, they were transferring all their appointments and loading into mailchimp. So let's solve for that. So I think what we were good at is staying close to our customers and listening and building based on feedback from our customer. I think to be successful, the market will always dictate what you build and the market always validated. And if you build and stay close to your customer and become the best product, they would have no choice but to, they will have no choice but to be in business with you. And that's what happened. It's us knowing the industry, staying close, reiterating fast, and creating great value for our customers.

Dave, what you just mentioned, there is something that's so, so critical, I think to the success of Squire, but also any vertical. Is that the reason why we even talk about increasing ARPU and the like is it's driven from the customer. But the Squire is only successful if barbershops are successful. And a great example of that is what we've gone through with quarantine and Covid. So maybe let's just Pause and talk about, you know, you wake up one day, the world's kind of collapsing around you. More importantly, it's collapsing around your customers. They're being forced to shut down. Like what was your guys response? How did you handle it? And how does that kind of tie into, you know, building a software company and focusing on customers generally?

Yeah, that's a great question. One of the things that we always would tell, you know, anybody, investors in particular about Barbershops, is that they're extremely resilient. You know, there's one of the few services that people are going to get no matter what. Good times, bad times, recessions, wars, it doesn't matter. Barbershops are gonna stay open. They very rarely close actually. But the one predicament we didn't anticipate was a freaking global pandemic of a virus that spreads through the air and would literally cause all of our customers to be shut down at once. We didn't model for that. We didn't think it was a possibility. Totally caught us and I think everybody blindsided, including our customers. So it was a very scary time in March, March and April when all of our customers were just forced to close down by the governments for good reason and essentially had no access to revenue and no ability to provide for their families. So at that time, as a company, we decided that our focus would shift to providing resources and trying to be as helpful to them as possible. So we quickly started launching features that would help them during this time. For example, we launched an online gift card feature which allowed them to sell gift cards while they were closed, to get money while they're closed for services they would provide in the future. We actually decided to waive all of our subscription fees for all of our current customers and new customers until 2021 so that they wouldn't have that additional overhead. So things like that, we feel like really we helped them apply for P loans to a partnership that we had with a major bank to try to get them some access to capital to stay open. We just basically put all the resources of Squire into helping our customers as much as possible.

I will say I work with many portfolio companies and not all of them were kind of directly hit with, with their customer base being affected quite like you guys. But the way you handled it, it was actually the calmest board meeting I think we've had was. It was, it was no question at all. You guys said, hey, this is what we're doing. We're taking care of our customers. In the end, we're only successful if they are. This is not only the right thing to do by them, but it's the right thing to do by the company. And it was kind of a no questions asked. And I know that, you know, customers of Squire and others have been very, very thankful for what you all have done. And I think it only continues to build on the brand that we'll talk about in a minute here as well.

Yeah. So, you know, shout out to Y Combinator and what they drilled in, you know, our heads four years ago. Now, as you build what your company want, your customers want, you build what your customers need. And I think us being close allowed us to reiterate faster than major companies. We did all of this stuff in four weeks. And I like to say you have to be, as a founder, you have to be always in wartime. I joke with Reed, you're not out of wartime until you ipo. So I think, you know, having that, you know, quick reaction time, you know, being close to my, our customers and really, you know, having the foresight to really build what we thought the customers needed at the time led us to, you know, have. Build brand equity within the community and also, you know, scale blitzscale from that point.

Great. And we have a question that came in that's quite relevant for, for the next slide that I'm gonna pull up. And the question is, it sounds like you have a relatively wide product offering despite being early in your growth. Can you talk through your thinking on building additional product capabilities in the suite first? Partnering with horizontal players in catering towards your vertical.

So, like, our relationship with our customers is like, it's is borderline obsessive. And it's definitely like almost a little unhealthily, like, jealous. Like we don't want them touching anything else but Squire. Like, it's like we're trying to build this ecosystem and as far as our customers are concerned, like, all they need is Squire for everything. And that kind of thinking is what has driven a lot of the features that we rolled out, which have eventually allowed us to have a higher arpu. Because it's like, oh, you're using this? Actually, no, Squire will do that and we'll integrate into the system. So you don't have to pay to use that anymore. Oh, you're using that. And that's really been our focus. So as much as possible, we try to build it ourselves. If we do partner with an API, then the functionality is completely white label, so the customer doesn't know that. All they see is that they're interfacing with Squire. We don't like kicking them out of our ecosystem to go use any other third party software.

And I'll bring up the slide on this and I know Saster did not. We had a different iteration of the deck and we had this beautiful product slide that was an iPad that had one app downloaded on it which was Squire and then another iPad that had eight to 10 different tools from QuickBooks and Square and ADP and different scheduling software and the like. But the Saster team said that we couldn't be pitching the product and selling the product. I don't think there's too many barbers on the line here, so I'm not too worried about that. But we will spend a second on product just because it is. You guys have built a ton and it is broad to date, but we're iterating very quickly and building a lot more. Dave, you talked about this initially. The initial lines of code and software you built, my understanding was around scheduling. Kind of top left here and walk us through that evolution. Were you a scheduling company for a year? Scheduling is a hard problem to solve. When did you think about it? Goes back to the question from the audience. When did you decide to add on the next product and the next product and prioritizing improving what's existing versus layering on a broader suite?

I think we were scheduling for a long time, maybe about two years, I would say. While we built out the back end Commander system is what we call it. That's because booking is the most essential component to barbershop business. If they don't, if they're not booked, they can't make money. So we solved from the highest point and the most critical feature and then we worked our way down to the other features that you see here on this slide. So scheduling was first and then after scheduling we did point of sale. So when you do the scheduling, you want to also capture the walk ins. You want to capture the folks that are on booking pay online and you just want to get a piece of all that revenue. It's not the same margin, but it helps with controlling the ecosystem because if they're totally on Squire, there's no way for someone to come up, come in that ecosystem and try to. Let's do scheduling now and try to box us out the second after that. We did analytics and CRM kind of at the same time and those things go hand in hand. You want to be able to track the customers that haven't come in two weeks. You want to be able to send marketing material to them and really engage them in a meaningful way, then all of that payments is in that infrastructure. I think we, I mentioned in an earlier discussion that we're launching banking Q4 of this year and we launched a procurement marketplace today. Actually, the other features are on the roadmap. We should have all these features, the ones that aren't completed by early first quarter, maybe second quarter. But our secret sauce is we reiterate really fast and we get feedback from our customers really quickly and we continue to build, build, build, build, build. So I think in probably six to eight months, our ARPU is going to be a lot higher than it currently is.

Yeah, and it's interesting. You know, one of the early insights I remember early on that you guys came up with when you started for more kind of Uber for barbershops is that discovery actually is less important. Right. You know, I'm a loyal customer of Mike's Barbershop in the Lower Haight here in San Francisco. Unfortunately, I've been unable to convert them over to Squire yet, but we'll get them, we'll get them soon when they open back up. But yeah, there's all these different kind.

Of.

Niche inner workings of each vertical market that you just have to figure out and know. Like, I love the example of the product feature you had to build out where you have the father son haircut, which is like as old as time, just kind of a classic, you know, come in, pay for one second, one is either free or half off and they do it in a few seconds and it's the same barber going back and forth and like, and those, those types of, of vertical specific features is I think what gets us, and certainly what gets me excited about building truly a standalone business that's defensible here in this market. So let's shift gears to an area that is for whatever reason just not talked about in vertical software. In my mind, it's talked about all the time in horizontal SaaS. And that's brand. So I'll use a couple examples from the CRV portfolio. Zendesk, when they came out, they had the Zen Buddha. If you think customer support, you think kind of hair on fire problems, people yelling over the phone or over email, angry things need to get solved and you have this incredible brand of great software, a Zenbudda positive experience for all around. And then even more recently in our portfolio, companies like Drift, where David Cancel and Elias built this fantastic sales and marketing conversational commerce brand that has really kind of elevated the business. But let's talk about a vertical brand. What does that even mean what do you guys consider brand and what have you done to build truly a very strong brand within this market?

Yeah. So if you're a vertical company, I think that you have actually some advantages when it comes to building a brand because you can be super focused on your customers and the psychology of your customers and what they're passionate about. And you can really kind of tap into building something that resonates with them versus if you're horizontal. It's hard to do that for a lot of different types of customers. So for us, you know, barbershops and barbers, it's really a subculture. These barbers and these professionals are extremely passionate about what they do. They don't look at it as a job or a career or even a profession. They look at it as their life calling. And many of them, you know, they'll say things like, barbering saved my life. So you're dealing with an already extremely passionate and motivated, you know, group of business owners and professionals. So the brand that we've built, we think really speaks to that and it's really focused on. This is exclusively for barbers and barbershops. We're not trying to sell to nails, spas and salons and yoga studios. This is for barbers. And that's something that they really appreciate because until Squire, every single other software that has tried to sell to them, they've been one amongst many and they haven't even been the most important one. You know, if you go on to a lot of these big companies, websites, you won't even see barbers listed. Or if it is, it's like a tiny font way in the right corner somewhere. So, you know, we've been able to build something that we think is really authentic because, you know, we think it's something that's really cool. You know, we love the culture. It's akin. We always compare it to, like, sneaker culture. You know, if there's any, like, hypebeast or like, sneaker heads out there. Like, the barbering world sits at the center of so many different, you know, cultural touch points. You know, they're into fashion, they're in the sneakers, they're into the tattoo culture, they're into, you know, music. And we can tap into all of those things when we build our brand in a way that really speaks directly, you know, to the bar girls and even tactically.

Right. Like, you guys have. You have this whole brand ultra. I'd love to hear us talk a little bit more about that. And then also just the tight Connection to Instagram. You know, because of you guys, I'm now following several Instagram influencers that are barbers and these are massive, massive following. So, yeah, spend a second both on Ultra and just the tie to kind of pop culture and this subculture generally.

Yeah, Ultra was launched about a year ago because we wanted to provide and produce content that spoke to our customer base because there was nothing out there for them. We wanted to actually highlight entrepreneurs in the industry. And that's once again, this is a common message, but that's being close to the industry and having an heir to the so called streets. And we were able to galvanize and really highlight these celebrity barbers within the community. And These barbers have 1002-003000-00400,000, a million followers that are all also barbers. And you know, these guys, you know, do the special haircuts, but they're actually titans of industry and they're all on Squire and what happens, it's kind of like a halo effect where everyone and every other barber wants to do what these influencer barbers do. We call them Squire champions. And before Squire, nobody else was talking to them. They were just doing their own thing. But now we have them, you know, on the Squire team sharing a good word. So I think that's just another layer of the community aspect we put out there to kind of like get the best, brightest and most impactful folks in the industry working with Squire.

Great. And I'm going to pause again with the slides to ask a question that is actually completely off script, but very interested to hear. So you're building a company at the core, right? You know, you're talking to customers, you're building revenue, but really you're building a company and you're building a culture and a team internally at Squire. How is it recruiting people to Squire and how do you sell them on that mission and that, you know, why join Squire if I'm coming in as a sales rep or an AE or you know, go to market lead or finance lead, like, what is, what's the pitch to them of why they should join you guys?

I mean, we're building an authentic community and group of people that are really, you know, passionate about what they do. And our vision that goes to our customers as well as to our employees. So when we interview, that's one of the things we ask about. Like we want to filter out people who actually are interested and kind of like this culture that we're involved in and those who just are looking at it as a job and way to make money. So we kind of self select. It's almost like, yeah, we sell them on it, but we also want them to sell us on. Why do they care about this? Because we fundamentally believe that employees are going to perform better and they're going to be with us for the long haul if they also are excited about this culture that we're part of in this community that we're engaging with. So yeah, it kind of goes both ways. During our hiring process, our training process for new employees, we actually have one of some of the barber influencers that they've mentioned are a part of it. Like they actually do a workshop where they sit down, they talk about the history of barbering. You know, they talk about like all the events and just about the culture. And we really try to get all of our employees like ingrained into it and almost make them an extension of Dave and I of what we started, you know, originally back years ago when we were going to all the trade shows, going shop to shop, door to door, getting to know all these customers and building relationships. Now our sales folks are doing the same thing. You know, they know sometimes probably more barbers than we know now because they're out there talking to them and engaging with them. And I love that. Like that's, you know, that's what we need.

Yeah. And I want to reiterate, you know, the importance of culture within squire. Culture is super, super important. It's if you make that extra call at night, if you stay at the cheaper hotel and if you really, really get it. And we want the best and the brightest, but we also want the folks that love the culture. We're going to have a good damn time, but we also going to work very, very hard and we're also going to eat sleepless. So I think that's the type of employee we want. That's the type of employee we want. That's the type of leaders we want in a company. Folks that get it, they know what type of clientele and what type of customer we service. And they know these are blue collar folks, these are guys with not advanced degrees. And you have to be able to talk, to talk and walk, to walk. And our customers smell BS really, really quickly, you know, so we want somebody that gets the culture, but also is a straight shooter and just loves what we and we actively hire. So if you know someone, you know, let us know.

That's great.

Yeah, there's, you know, the no BS I think is actually just a phenomenal, a phenomenal way to think about Vertical software. Generally, these are practitioners that are not used to being sold software, likely. And so they just want something that works and solves exactly what they want. They don't want pretty marketing websites and all this collateral that we've kind of learned to build up in horizontal software. They want exactly transparent pricing, transparency on what the product does, how it'll help them, and no bs, which I think is very relevant for barbershops. But many, many other SMB and vertical software companies out there. There were two questions around ACV and ARPU and kind of pricing. So let's go back to, back to this slide. Just as a backdrop, the first question was around for selling to this industry kind of before Squire, what is a typical kind of ACV or ARPU for SMB software? And then two, how do you transparently price that in all these different SKUs and all this different software? How do you simplify the buying in pricing for these merchants?

So I would say ARPU was probably around $2,500 a year for these small customers, anywhere from 100 to 200, 220amonth. And we got that number from mindbody's 10k before they went private. And what we realized early on is just this, there's only so much money you can charge a small business owner. Small business owners behave like consumers and we think that number is 100 to 250 bucks, depending on the level of service they choose. And we have three options. We have your basic medium and you have your kind of high end with all the bells and whistles. But the majority of our revenue doesn't in fact come from the SaaS subscription. The majority comes from payments. We have a great payments mix that leads to from 200 to about 700 and some change in ARPU. So I think we're still at the low point of, of what we can charge for a monthly subscription. That won't affect their business practice because they realize they need software to run their business and software costs money, but that's the only thing they're paying. And we make up the difference through payments and so on and so forth. So to the customer it just, they just feel they're paying 100, 150 or something dollars.

Great.

And maybe as kind of a takeaway and closing slide here, maybe walk through, kind of a summary of what we've discussed today. We got some bullet points on here and just kind of general advice for in particular other entrepreneurs that are either considering setting out and founding a vertical software company and maybe the, the reasons to do that and why now?

Talk to Reid first.

Yeah, call Reed. Email Reed.

I'm just gonna point them back to you guys. I always ask you guys what you think of these entrepreneurs and what they're building. You're the experts.

I mean, so if you're thinking of SaaS and you're thinking of vertical SaaS, you know, hone in on an area that you are really passionate about that has high enough, you know, dollar spend volume, you know, on a high enough frequency that you can build a very interesting and meaningful, like, revenue model around. So then you can layer over, you know, fintech and other products, but really start, you know, something that you care about. Because this is going to be a marathon, you know, may take 5, 10, who knows how long you'll be dealing with this vertical? And if you don't really care about the vertical, you'll probably get burnt out. And then two, focusing on net dollar retention and ARPU. I mean, that's really the secret sauce of vertical SaaS. So you've got to be really obsessively focused on how can you drive that up in a way that will still allow you to keep your customers and not be overcharging them in a way that will cause higher churn.

Yeah, I thought you're done. But also, you know, you got to eat your own dog food. You got to go do the work. You got to go, you know, to the entrepreneurs out there. You have to go door to door and really talk and really know your customer. You in vertical SaaS, you are the expert. You are the expert and you are the decision maker. So you have to know your clients intimately. And that's what we were able to do, and that's what actually led to us building a brand and having authenticity within the community. And once you have that, you become the market leader, which we plan to do.

Awesome, guys. Well, this has been a fun time, and I think the first time the three of us get to do something publicly together. So looking forward to many more discussions. But that's a wrap on vertical SaaS 2.0. How barbershops are creating a SaaS rocket ship with the entrepreneurs out there. This is a company to watch. We're kind of just getting started in many ways, but have already accomplished so much. So really exciting to hear from Dave and Song direct here and do watch as they continue to build just a Fantastic standalone vertical SaaS company here. So.