Scaling Beauty Brands with Vanessa Yakobson, CEO of Blo Blow Dry Bar & Lashkind

0:00Hey, everyone here on the Builders podcast. I interview CEOs and entrepreneurs and leaders about building their business and career. We've had some really interesting informative episodes recently on the growth of local businesses through franchising. And today is another one. I interview Vanessa Jakobson. She is the CEO and partner of Blow Blow Dry Bar and Lashkind. They have hundreds of locations across North America dealing with beauty, hair, nails, et cetera. She covers what makes these businesses special, navigating economic uncertainty in the pandemic, thinking about long lifetime value of customers that use their services for a decade or more.

0:41It's a really good conversation. And if you like this topic about growth of franchising, episode 81 is one you'd also want to look into. That's Scaling Stretch Lab, so a stretch business with Verdeen Baker. And then episode 84 with Greg Majewski covers scaling restaurant brands. So we've got a whole bunch of good content these days on franchising. Thanks for listening.

1:09Hi, Vanessa. How are you? I'm well, John. Thanks for having me on. You got it. Thanks for being here. I'd love to start, if we could, telling the audience about your brands, Blow, Blow Dry Bar, and Lashkind, why they're special, what they do, and how many locations you have today. Sure, it would be my pleasure. So Blow, Blow is special because a number of reasons. First of all, we've been around since 2007. So we've been at this a long time and our founders when they launched in 2007, really created the category Blow Drive Vars did not exist. The concept of a place where you could just walk in and get your blowout that was not a full service hair salon did not exist before.

1:53So really making that beauty service accessible and available to all. So we've been at it the longest. We were the original. We're the best in class. We have wonderful franchisees, most of whom are in the U.S. We've got over 100 doors open in the U.S. and another 20 open in Canada, our birth country. and we offer not only blur out services but makeup services as well so we create that one-stop shop for beauty when someone has a special event to go to or it's a place where you can come once a week few times a week few times a month to get your services to look your best for every day we've got a wonderful membership program which makes it easy for people to maintain their their beauty goals and wonderful franchisees, as I said, who are really passionate about running their businesses, amazing, talented staff, the stylists, the makeup artists who work there.

2:53So that's what Blow is all about. Lashkind is a new brand for us. We came at it from a few different building blocks, if you will. The first is that about two and a half years ago, we acquired a business in Toronto that had four corporately owned stores doing lash and brow styling services. So we acquired that business and turned it into a franchise. And that was our entree into the lash and brow styling space. And then we entered the US market with the brand name Lashkind. And then sometime thereafter, we actually acquired an emerging franchise business called Lash Bar that started out in San Diego County.

3:35Most of their locations are in San Diego, but now they've expanded to Northern California and into Arizona. And so now we've kind of brought those three systems together under the Lash Kind banner. They offer lash extensions, lash lifts, brow shaping, brow laminations, beautiful services at reasonable price points in beautiful environments, membership programs there as well beautiful proprietary products to help guests take care of their natural brows and lashes and maintain their looks and what's been really exciting for us is being able to take all the great learning and success we've had at blow blow dry bar and bring those systems and resources for the franchisees and all of that stuff that's made blow the success that it is and bringing that to those franchisees and those systems.

4:29So it's been a really exciting venture so far for us. So tons of growth in multiple countries in less than 20 years. We were talking a little bit off air about the beginning, and I was curious a little bit about the origin story. How do you get from three locations or one location to a dozen? How do you turn a business from just owned by sole proprietor or whatever to a franchise? How do you decide to get into the US? These are all pretty big decisions and big bets. Maybe take us back to the beginning. Sure. So the prequel to our company's history is that back in 2000, yeah, my husband and I took our son, who was one year old at the time, to a hair salon in Toronto that was just for kids.

5:22And it was supposed to be the great place to get your kids hair done. And it turned out to be quite an awful execution. And my husband, who's an entrepreneur, grew up in furniture retailing, so understood that sort of brick and mortar operation. He said, I think we can do a better job than this. And shortly thereafter, decided to start a children's hair salon business. First, a single location, then it grew to multiple locations, then they started franchising it, and it grew to about 20 locations across Canada. Along that journey, somebody introduced us to Blow Blow Dry Bar. This was now 2009.

5:59Blow was two years old, and they had three corporately owned locations, and they knew that they were onto something special. And they knew that they needed an investor and a strategic partner to take them to that next level. And so my partners and I came in, we acquired the company. And the decision at the time was, do we grow through franchising or do we grow corporately? And because with the children's salon, we had the mixture, the team understood that there's often a conflict of interest. And it's kind of tricky to figure out where you're allocating your resources, where you're putting your focus when you're trying to support franchisees, but also trying to run corporate locations.

6:42So we understood that we needed to make one path forward and decided to grow through franchising. It made sense because it's less capital intensive. So it was a way to get quick scale. So that was the direction we took that business. Because it was located in Canada, we were in Toronto, that was in Vancouver, we made the decision to move the head office to Toronto, because that's where the children's salon head office was. So turned it into a franchise, sold those three original corporate stores to a franchisee who's still in our system all these years later, and one of our top performers, I might add.

7:23And we moved to the head office here and then opened up locations here. And we did that with some strategic partners. So we had some partners who were invested at the franchise or corporate level, who also invested in opening our first Toronto stores. So that gave us the chance to refine the system, prove out the model, get that proof of concept in a new market. And then shortly after that, we entered the US market with our first franchise in the US in 2010. And that was a recognition of the fact that the US, quite honestly, is a bigger market. And it was determined that we probably had more room and opportunity to scale quickly in the US.

8:09Now, I joined our team only 10 years ago. Right before I got here, we decided to sell off the children's hair salon business. We had the opportunity to do that, gave us some capital to put on the balance sheet to help support the growth of Blow Blow Dry Bar. And when I got here, the team had really deprioritized expansion in Canada. And I said, guys, come on, I think we can walk and chew gum at the same time. It's not that different. The markets are very similar, pretty much interchangeable in so many respects in terms of our concept and the customer base, etc. So we started focusing also on continuing to build out the Canadian market.

8:52So that's sort of the background of the kind of pivot points and decisions that were made along the way. You know, right now, I would characterize us as in a state of economic uncertainty. You know, there's there's there policy changes by the U.S. government. There's a there's a lot of uncertainty without getting into the politics of it. I'm interested in how you think about your business during times of economic uncertainty. Maybe we can actually rewind to the last time that I remember there being major economic uncertainty, and that's during COVID. You being a business, maybe you went virtual, I don't know.

9:32But I think that blow, blow, dry bar, lash kind, these are businesses that require you to be in person. Maybe I'd be interested in understanding how you weathered that storm and maybe how you're thinking about new times of economic uncertainty. Such a big question with so many facets to the answers. First of all, we weren't in the Lash business yet, so I can't speak to that, but I can certainly speak to what happened with Blow. As a service business, of course, we were shut down everywhere, so we knew we had to pivot quickly. We had to do that for our franchisees to support them, and we had to do it to stay alive at the corporate level.

10:12We had to make some really tough decisions very early on in the pandemic and very quickly to reduce our office overhead. And that was a tough decision to make and later required us to rebuild, which I'll come back to. What was really interesting and challenging was that there were differences across markets. Some markets were quicker to open than others. and the restrictions and requirements varied by market. So we knew we couldn't, at the corporate level, become experts in what was going on in every market and what sanitation and hygiene modifications were required in every market. So we needed to set up our franchisees to be able to ask the right questions and get the right information.

10:58And then our job was to support them. So where we could aggregate information, where we could share learnings, where we could develop marketing communication tools that enabled customers to understand what was going on and what they could expect when they came into a blow if they were in a market where things were back open. That was what we had to do. And really to be seen, to be listening to our franchisees, not just to be seen to, but to actively be creating those opportunities for the franchisees to come together through virtual webinars or one-on-one conversations where we could really learn what the challenges were that they were facing in their market and where the opportunities were that they were seeing.

11:45So, you know, if there was a market that was now reopening, could we now pivot with communications? As businesses started reopening, we wanted to be able to communicate to the customers to let them know that they could now come and enjoy their services and to let them know what they could expect in terms of those COVID restrictions and modifications that I think most of us would like to forget. So really it was, I would say, reinforcing and building on the culture and dynamic that we've always had and prioritized with our franchisees, you know, that open accessibility responsiveness from the corporate team so that we could really understand what was going on from their perspective, what supports they needed, what opportunities they could pursue.

12:38So no, we couldn't perform our services virtually, but was there an opportunity now to drive retail sales and have curbside pickup? And how could we support them in communications out to customers that let them know what was available and how things were going to work. So that was really key during that time. And then from a corporate perspective, because we had sort of dismantled our corporate team and now needed to build up, it also, that pandemic period, gave us the opportunity to have a rethink about what our opportunities were and what our strategic priority should be. So it really forced us to be much more disciplined about taking the time to do the strategic planning, to be able to grow, not just organically going through the day-to-day motions of activity, but to really have that opportunity to reflect and think about where we needed to craft and pursue the path forward.

13:44So the company that we run today as we emerge from the pandemic is very different from the company that we were before. The resources we have available to our franchisees because of the time we took to really identify what the opportunities were and where the gaps were in terms of their skillset, their knowledge base, the data that we started to share with them about what KPIs look like across the system, what targets and benchmarks they should be operating to. All those changes that we made have contributed to tremendous growth in unit economics over the last few years. And so in as much as I'd hate to say it and never want to go back there, that pandemic situation really did give us an opportunity to become a better company.

14:35That's interesting. I have kind of a follow up question about that. And it sort of maybe comes from the ripple effects of the pandemic. It relates to real estate. I know I worked in downtown Seattle for many years and a block away from my office was a place called Julep Nail. I think it was Julep Nail Salon or something like that. And it shut down just because I don't think there's enough traffic there from people going and working in the office. And I've noticed, or at least it feels like, many service companies that serviced a business community are moving out to the suburbs or moving into malls or moving to different places or pop-ups.

15:26How is that impacting your industry? How do you support your franchisees? I'd be interested, how many franchisees have had to move? You know, their business is thriving, but now it's in a different location. Mm-hmm. We actually haven't had too much of that. If I think of the teeny tiny handful of locations that have moved over the years, they were for different reasons, not related to the pandemic. But to your point, Blow has always done well in both downtown urban sort of centers as well as suburban centers. We want to be where the population is, where are women living their lives, working or at home or at leisure over the course of their week.

16:11And we want to be where that traffic is. So there have been a couple of locations that have been adversely impacted by the pandemic hollowing out of the downtown core. And that's been really unfortunate to see. I think in so many ways, our cities have deteriorated since the pandemic. And that seems to be true across North America. I'm fortunate to travel around a lot. And I think so many of our cities have seen these kind of challenges. So when we have a new franchisee, they're typically wanting to open in areas where they know the traffic exists. So if I had a franchisee that was looking to open in a downtown real estate scenario that relied on office traffic, we might choose at this moment in time to steer them otherwise and to maybe look at a suburban location that could still benefit from that work from home traffic, as well as the stay at home moms and the evening and weekend business that we see.

17:19How do you think about customer acquisition? I mean, I know there's word of mouth, there's influencer creative led, there's offline, there's online. What's really working for you, whether it's LashKind or whether it's Blum? It seems to be in the magic of the marketing mix. We know that digital marketing is most definitely where we want our franchisees spending the bulk of their budget. And we've learned over time that they really do need to spend. It varies by market. Your Google search budget required in one market can be very different than what's required in another market because of market specifics that I don't even want to begin to try to understand.

18:04So to say to a franchisee, in your first year of business, you're required to spend$1 ,500 a month on marketing. After that, you can drop it to$1 ,000. But really to coach them to say, let's really understand what your market needs. And then so often franchisees will experiment with reducing their marketing budgets for digital specifically, and then identify that there's a drop in new customer acquisition, increase their spend and continue to increase as they see results until they feel like they're hitting that point of diminishing marginal returns. So we would always say that the bulk of the budget should go to digital marketing.

18:45but then where we see the real benefit is in doing some of the stuff that is not so easy to track an ROI on but what we call community engagement marketing so where they're partnering with neighboring businesses maybe they're doing a pop-up hairstyling station at a gym maybe they're hosting a group of women at the who work in the real estate office down the street for an event Are they going to a street festival? Are they donating to a silent auction? Are they supporting a school fundraiser? All those different things. Having our franchisees networking at their chamber of commerce events and opportunities.

19:25That whole community engagement mix seems to make a difference. Again, not easy to quantify. If you meet 20 people at a street festival who come by and get a braid or take your literature, you can't always trace how many of them are going to come back, even though you might try with coupons or special codes or what have you. But we know that it makes a difference. In terms of the word of mouth, over time, we know that that is one of the biggest drivers of business for our blow locations. So how do you get word of mouth? You have to deliver exceptional customer service and an exceptional all around guest experience.

20:07So the focus on what we call our signature pink carpet treatment service protocol, how we use net promoter score and digital review ratings on those public channels like Google, Yelp, Facebook. So how we train our franchisees to think about those, to measure their success in delivering those service protocols, using those tools available to them, how they use them to inform staff, additional training or coaching requirements, all of that. So that drives word of mouth. The membership program is also key in the mix by focusing on membership. And of course, the guest has to love the experience or they're not going to become members.

20:52So back to customer service. But once they become members and they become those loyal fans, that helps fuel the word of mouth as well. There are always new trends in beauty and hair and nails. I think I'm the only man in America right now that doesn't have a mustache. This is an example of trends. So when a new trend occurs, how does it benefit your business? Maybe you could take a trend that's going on right now. And then what are sort of the logistics of rolling it out to hundreds of locations? It's such an interesting question because we always want to stay current. We want to be able to respond to that customer who comes in and says, I need my hair done for my wedding or I need my hair and makeup done for my prom.

21:39Spanning that spectrum of our guest age and life stage. So we want to be able to deliver, which means that our makeup artists and hairstylists need to stay current, which many of them do naturally. They're drawn to the social media platforms, et cetera, that enable them to stay current. But we have to be very deliberate about it as well. So we regularly have training opportunities that franchisees can have their stylists sign up for, where our director of artist education holds a monthly training webinar series where they can come on and learn about what were their trends at the red carpet at the Grammys and how can we create some of those looks?

22:25So it's always finding that balance of what's trendy that we need to know about and how can we support our franchisees in ensuring that their stylists get upskilled on performing the looks that the guests are going to be demanding at this moment in time, while also staying true to our core and not jumping on every bandwagon and opportunity that comes past. So, for example, we have what we call our five signature styles. We used to have seven signature styles. Those are supposed to be evergreen to a large extent. They're sort of core looks that a customer is going to be asking for. And then over the years since we acquired the company, some have been sunsetted, some have been brought in.

23:15So always keeping that close watch and walking that fine line between how do we not erode the service offering by trying to be too many things to too many people all at once, but also being responsive to changing customer needs. We used to talk about changing customer needs. I want to ask a follow-up question there because I think about it in any retail boardroom, whether it's Amazon, whether it's a series of brick and mortar locations, people are wondering about the youngest consumers in North America and how to make sure that they're buying your product using your service. What have you noticed about your youngest customers and how are they different than the people who've been coming to your locations for decades?

24:02They are different for sure. Certainly the styles and taste preferences are different. What's really cool and exciting about our business opportunity is that customers do grow up with us over time. So that prom girl that comes to us for her hair and makeup for prom might not come back to us until she's got a wedding to attend or some other big event in her life. But then that person becomes our core customer over time. So I love sharing the story of one of our franchisees who told me before she became a franchisee when she was a Blow customer, she says, Blow was there helping me look my best while I was out on the dating scene.

24:42Blow was there for my wedding hair and makeup. Now Blow is there for me when I have my important day at the office. And now Blow is there for me to help me get my kids off to school without having to be distracted by getting my hair done because I know I can go and sit in the chair at Blow and they're going to take care of it for me while I catch up on work on my computer. So all those different ages and stages. And so for us, it's about making sure that while needing to cater to that younger customer and find those opportunities to bring her in for prom or with the student special, reaching out to the sorority girls, for example, if a franchisee has a college near them.

25:25how can we do that in a way that lets them know that we've got services that are going to appeal to them without alienating our core customer who might be a bit older than that but really needing to continue to bring in that pipeline because we know that customer is going to grow up with us over time. Vanessa that's a great story and thanks so much for being part of the podcast today. Oh my pleasure thanks again for having me.

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26:26Thank you.