Drybar Founder Alli Webb on the High Cost of Fast Growth

26:09And just like the way people would show up on calls, like prepared and ready and, you know, answering questions with a lot of excitement and enthusiasm about the brand. You know, on the contrary, as you would imagine, you know, the stylists who were, you know, really quiet, really soft-spoken, didn't get the sense that this was like something they were really excited about or loved. And it might sound, it feels like it sounds simple coming out of my mouth, but it is that like basic, like, I really want to do this and be a part of this brand. And I love this company and I love hair and I love styling and making women feel great.

26:43Like that's like the first barrier to entry for us is like making sure that that at least that piece is there and you're going to show up and be kind and nice. You know, that is an, you know, an intangible that you, that you must simply have in order to be successful. So if you don't even have that, there's no point in going any further. You know, and like I said, as we grew, there was a team that was instructed to really listen for this kind of stuff and make sure that we were bringing in the right personalities as well as great hairstylists. So you talked a little bit about the grind and how intensive this whole process of building a business actually was.

27:21And of course, you know, that's a big portion of what your book is actually about, this idea of losing yourself in your business, your baby. I'm curious, though, like it sounds tough and you're sort of like working and working until you get presumably to like the big payoff of some sort. And I always wonder with new startups, like how much money are you able to take off the table in the beginning? Like, how do you balance building the business and investing in it versus rewarding yourself for the hard work that you're actually doing? Well, I love this question because I think it's such an important thing to point out that people, you know, it's a tricky one because I know that there's obviously, you know, people want to ultimately make money and they want to be successful.

28:07And that largely looks like making money. I get that. And I feel that too. I mean, just like anybody else, I really like making money and I like money and nice things, but money wasn't the big driver for me in this business. And I feel like it feels to me like a mistake that a lot of entrepreneurs make is like, they're only looking at the money and, or in the, and the opportunity to make money, sell a company, whatever, versus doing something that they just really love, you know, and I feel so strongly about this. And if you look at like some of the most successful companies in our, in the last like couple of decades, like, you know, and you hear the founder story, it is always started from some sort of personal necessity, something that they felt like in their heart of hearts that they could make better and do better.

28:55And the reward, is it working? And the success of the company being, you know, being felt and growing this thing and the excitement and the adrenaline that you get from building something that people love, you know, and then, you know, providing all these jobs and all this opportunity and all of that, you know, I mean, for me, that was really what I loved a lot more than like, oh, we're going to build this thing to sell it. It was never, ever that conversation for us. You know, I think I started to realize after a couple of years in this thing, like, you know, having never had any experience in like M &A and going public and all of that stuff that I, you know, didn't even know that that happened in the world.

29:35Like, you know, I was so naive back then. And as I started to like pay more attention to that, and I was, you know, starting to become friends with more founders. And I was starting to be in these rooms where people were talking about buying and selling companies. I was like, oh my God, But that might be us one day, you know, and that was like an exciting like part of it. I mean, obviously, we sold it 10 years after we built it. And, you know, I would say in a year like after we had raised a bunch of money, obviously, everything changed. And, you know, ultimately, we raised 75 million. And that now you have investors.

30:08Now you have that's that is what they're thinking about. And that, you know, is is good for them to be thinking about and moving the business in the right direction. But all of that was so new to me when I started. I mean, this whole thing was really just started out of like a passion to like find my purpose in my life and to do something that I really love to do. And I loved it. I mean, I loved building that business and I loved every second of it. I was in that shop seven days a week. I mean, I couldn't get enough of it. And that is so much more valuable than any dollar amount to have that. Like, I love what I'm doing and what I get to do every day, you know?

30:44So, you know, again, once I realized like, oh, we might actually be able to sell this thing, like, oh, we're going to actually be able to make a lot of money. Like that was really awesome. But just not, you know, what I went into this thing thinking. I want to ask you a question about fundraising. I have heard that VCs or investors don't still necessarily have a great grasp of the business model of rapid growth physical locations. And so there's sort of like investors who sort of like understand physical operation. And then there's VCs who probably often think in, you know, the idiom of software and five people in a room growing to something that a billion people can use.

31:26And that a lot of these sort of like modern concepts of physical growth locations, whether it's like a dry bar or a kava or something like that sort of exist in this middle space and investors don't have a great understanding of it. was that the case for you when you first went out trying to explain to them your vision? And do you think investors these days, like, feel like they have a better handle on these types of startups? Well, I mean, it's such a, it feels like the wild west right now, you know, I mean, I think retail is so like tough right now that I, you know, I don't blame it, you know, VCs and all these guys.

32:02It's like, it's like, you just don't know. It's so hard to predict what's going to happen right now. So it's such a funky time. And I actually had this thought not, not long ago, like, I wonder, you know, I mean, part of the success of Drybar, I think was when we started it, we only wanted to raise like 10 or 15 million that first round. And, you know, we ended up raising 25 million because we went with private equity, not we never went down the venture capital and they wanted to put in more as they do. And I think it was, again, a very different time. And retail was very sleepy at that time, you know, in 2009, when we first started Drybar.

32:40And then Drybar resonated and took off. And we raised the first like 3 million with friends and family, which got us like to a couple of stores. But the buzz was there and the PR was there and women were like telling other friends. And so we had that in our corner. And so by the time we were in these rooms with these private equity guys, granted, you can picture the scene. It's like me and my big personality and then these guys in suits and they're like, what are you doing? You're blowing women's hair is, you know, like, and the, and talk about puns and the ridiculous jokes. So annoying, but they didn't quite get it yet, but they're like, you know, my wife's been talking about this thing or my, my daughter's, but you know, there was that kind of general, like in the air, we've heard about this and it seems to be getting a lot of attention.

33:31And, you know, and then there, of course, there were the conversations of like, are you going to do nails and makeup too? Because you can and you're doing 100 women a day and why don't you do this? Which of course, and I had to say, no, we do one thing, we do it really well. And that turned off a lot of investors who didn't want to get involved in Drybar, which was like, no problem, but not the right fit. So there was a lot of trepidation of how do you scale this thing when they didn't really understand it to begin with. And again, back to our initial projections of doing like 30 to 40 blowouts a day when obviously we far outseated that.

34:04But that was like, we were in LA and our second location, which is a franchise, was in Dallas, which obviously makes a lot of sense. But there was still a lot of like, have we proved the concept? Is this something that really works far and wide across the country? And then there was still kind of a question mark for a lot of people, my brother included, who was always like, we got to prove the concept. We got to prove the concept. And I was like, I just think it works where women have hair. like if there were there this will work and that you know was my very bullish and maybe naive idea but we kept going and we knew we we knew we had something really special and magical and so we kept going until we found the right partner and and they really understood our vision and didn't want to change it and wanted to like you know really lock arms with us and partner with us which was Castaneda which is now known as Stride and so yeah that's how it all went down Thank you.

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36:40So I want to move on and talk about your new business, Squeeze, which I've seen described as sort of the dry bar for massages. And so I guess my first question is listening to you describe again, like the grind of starting another business, why are you putting yourself through all of this again? And then secondly, how much overlap is there in terms of the business model between, you know, Squeeze offering massages and the dry bar offering blowouts? Well, first of all, I am not in the grind. Thank you very much. I'm very happy. Smart. Fair enough. Because, yeah, it's a great question. Like, no thanks.

37:21And it's funny when my brother, this is really my brother's idea. And when he, as, you know, a bald dude who never got blowouts, his frustration in the marketplace was around massage. Because as someone who went to, you know, the local chain, which you know who I'm talking about, you know, and had a pretty bad experience from having to call every location to book. And the decor was like, eh, and the massage is very hit or miss. And the whole process was just so clunky, you know, that he was so frustrated that there wasn't a great place for him to go for massage as someone who liked to get like a weekly massage, even though the price point was, was good at, you know, at the local chain.

38:00And then if, of course, if you went to a spa, you know, it was the same conundrum that you had a dry bar, the spa would be really expensive. just like a high-end hair salon was really expensive for a blowout. So the similarities in the problem was pretty much the same. And so when we were like, in the last couple of years of Drybar, Michael really wanted to start this. Obviously, we didn't have the bandwidth for it. And I, to your question, did not want to go back into like the early stages of building a business. So I was like, nope, not doing that. But, you know, then we went to Brittany Driscoll, who's the CEO and our co-founder and who ran marketing at Drybar for several years.

38:36And she was on her way out of Drybar, was like going to explore new opportunities. And we said, hey, you know, we have this idea for a massage concept because for the reasons I just mentioned, you know, we wanted something different and better that didn't exist. You know, which is always my advice to entrepreneurs is like, you do not have to reinvent the wheel. Like, obviously we did not invent blowouts or massages. We've just created a much better experience and price point and a million other details around them that nobody's paying close attention to. And the big differentiator of Squeeze though, is that there's an app that you, even though it's a brick and mortar and you go in for a physical massage, there's an app that you book all your preferences on from like, if you like a little lotion and the type of music you like.

39:19And this, if you, you know, there's a very like intuitive body that you, you know, press on. Like, I like a lot of, you know, pressure here, but not here. And so by the time you walk into Squeeze, the therapist already knows all of this stuff because you've had to have gone through the app and really filled out all your information. And that was a big undertaking. It took us over a year to build out this app that had all these bells and whistles that was super intuitive. And nobody else has this. And it is the biggest differentiator of Squeeze, not to mention it's the same founding team as Drybar.

39:49My ex-husband, Cam, did all the creative, the same architect who built Drybars. Everything, it's the same team. And it is the Drybar of massage because it's exactly the same thinking as Drybar. It's like, this is not being done well. We're going to go do it much better. You know, and if you read the reviews on Squeeze, they're all like, they're literally all five stars. I mean, we've had such great experience. And so much of that comes from the learning from Drybar, you know, especially Brittany having, you know, lived this world with us for many years. And, you know, we knew what was working, what wasn't working.

40:21And to date, I think we're doing a completely franchise model where Drybar was a little of both. But we've sold over 80 locations across the country. So you'll start seeing them popping up all over the place in the next year or so. Speaking of those locations, that actually fits right into what I was going to ask next. You mentioned sort of generally Drybar you saw as being successful anywhere that women have hair, which is everywhere. But you must have thought, you know, specific about the types of locations, whether they're in high-end malls or busy areas that are really optimal for opening a location.

40:54And these days, obviously, there's all kinds of questions about what is even the future of offices and where and how are people going to work? What have you seen in terms of or where is your thinking in terms of selecting locations in the year 2023 where you feel confident that it'll work at a time in which I think it's still very up in the air, even where people are going to be working? Yeah, it's such a good question. And I think we're trying to figure that out right now, too. I mean, you know, to go back in time a little bit, I mean, with Drybar, which I still kind of feel, and I do just for the record, far be it for me to predict the future.

41:31But I really believe the pendulum is going to swing back to experiences. You know, I think people are desperately hungry for being out in the world with other people again and having experiences. You know, I think it's just taking a minute to get back to it. That said, with Drybar, it was like we we realized very quickly that being like in, you know, a woman's like daily routine, you know, like being near a grocery store, being near, you know, her workout or where she liked to shop and where she liked to have lunch or, you know, we knew the importance of being in that mix of like your daily use.

42:07And that was always the guiding light of where we put a drybar like near and, you know, in the right area, which, by the way, can be really tricky. I mean, we certainly experienced this the hard way that you could move, you could open a store in the right like mile radius. But if you were in the wrong shopping center on the wrong side of the street that it was, you would never know. But unless you were, unless you tapped local knowledge to know that like, it's really hard to park there. And nobody likes to go there because of the way this, the shopping center, who knows, you know, it's like from an out, you know, when an outside big corporate company comes in and it looks really pretty and the other stores are good, you're like, yeah, this looks great.

42:46You know, but unless you get that local knowledge, which again, we've been, we have been burned on that before. You don't really understand the neighborhood and how it functions, you know, and how women really use it. So it's, it's an important, but small and often overlooked nuance when you're, when you're looking at real estate to make sure that you really understand, like, where do people park? Is parking a total pain? You know, is it is it easy to park? Is the is the location easy to access if you're in a mall, which, you know, malls are such a dying dinosaur anyways as well. But, you know, all those factors like we opened in Fashion Island Mall in Orange County.

43:21Oh, I've been to that one. Yeah. But, you know, then that we are strategically placed near the parking lot. You know, it would not make sense for us to be like deep in the mall for like you. if you're like, oh, I'm popping in, I have to go over to Fashion Island, which is already could be a pain, which how, because how busy that place is, you know, but like, at least we're at the very tip, you know, we're near the Barnes and Noble. I don't know if that's still there where you're like, oh, I can just park and run into Drybar, you know, and there's an Ulta right there and there's a Whole Foods. And, you know, so all of that was very strategic and, and how we always thought about our locations, making it as easy as possible for a woman to access us, And then for her to be able to do two or three other things.

44:00So Drybar seamlessly fits into her day, which is similar thinking for Squeeze in any location, in any kind of business that we open. And it's tricky when you're going into New York City because it's obviously a different animal than the suburbs. But even still, are we near a subway? Can a bunch of women walk to us? Are we near where they're going for other stuff? And sometimes it's like we always said we couldn't afford to be on Main and Main, but we could be on the little side street off main street so we could afford the rent but still be close enough where she can easily pop over what's been the biggest i guess noticeable difference between doing squeeze in the current environment versus dry bar you know 10 or 20 years ago like what has most markedly changed for you i think the biggest thing is like is costs and like getting stuff, you know, for lack of a better word to our stores.

44:54You know, real estate deals seem harder. The construction prices are so much higher than we were, than they were when we started Drybar. Not always, but we can often go into a shopping center that had a hair, a full service hair salon, because we would explain to them, listen, we're coming in and we're not going to take your lunch. Like we're not doing cotton color. We're just doing blowouts. And if you're really smart, you'll leverage us, you know, and we'll send you clients and they'll send us clients, you know, and, and a lot did and really got it. But, you know, some landlords and some, you know, tenants, if there was already a hair salon, which there usually was in most shopping centers, could easily block us from coming.

45:32And the same, you know, is, is true of squeeze. There's a lot of massage concepts in a lot of places, albeit some of them aren't great, you know, but they're there. So that impedes us from coming there as well. So that is, you know, just a challenge that, you know, anybody deals with you if you're going into any kind of business that already exists, which it did for Drybar as well as Squeeze. But, you know, so you just have to get a little more creative with where you're going. I was going to wrap it right there, but just real quickly. So do tenants of shopping centers and malls, do they have stipulations frequently about the types of competitors or adjacent companies that can move in?

46:09I didn't, I'd never thought about that before. Yeah, yeah, they totally do. I mean, And it definitely is not like one rule that it changes. In my experience, it changes from center to center. And but yeah, I mean, especially when you think of like less probably in a mall, but and we I don't have a ton of experience with malls, but in like a strip center shopping mall, they will have in there a lot of those tenants in their leases will have something that says you cannot another hair salon cannot open in here. Makes a lot of sense. And Ali Webb, the author of the new book, The Messy Truth, How I Sold My Business for Millions But Almost Lost Myself.

46:45Thank you so much for coming on OddLoss. That was great. Thanks for having me. It was a fun conversation. I haven't talked about this stuff in a long time. Awesome. Thank you. Thanks so much, Ali. Yeah, that was great.

47:06that was really fun tracy first of all i i mean it's obvious when she says it but like for example at the end it hadn't occurred to me that such things would be in uh leases that okay if you're going to open up a nail salon or a sneaker snore, a sneaker store. Should you say a sneaker snore? Sneaker snore. Sneaker snores. Or a karate studio or whatever you see in strip malls that you have some stipulation, like you can't just open another one next door. But it makes a ton of sense. Yeah, it does. I think also for shopping malls, I think like the owner of the shopping mall wants differentiation and like variety, right?

47:40So they try to build that into a lot of their leases. No, that was really interesting. So it seems like Allie really kind of hit a sweet spot at that time period where like she was offering a service rather than a good. And at a time when, you know, brick and mortar retail was experiencing a downturn. We had that episode recently on dead malls and commercial real estate. And in 2009, that was really the era of the dead mall and competition from online shopping and things like that. So she was able to identify something that people would still pay for and have to go to to receive in person. And then secondly, I think one of the things that I found really interesting was the idea of having that flexible workforce.

48:28Yeah. And, you know, offering a stylist the chance to come in for two or four hours versus a full time position. So it feels like she also tapped into that sort of upswell of, I guess, gig work, which was also just beginning at that time. Yeah, no, like I said, you know, it really felt like they sort of nailed a huge aspect of what I think of as the even though I have never been in a dry bar, my intuition sense of it, I guess, is strong enough that I associate it as one of those like defining brands of the 2010s economy. I mean, so many interesting details. I mean, just you mentioned that aspect of the labor force.

49:08And I feel like what Allie was dealing with early on, it's probably so many people are dealing with in the last few years. How do you hire people that are going to maintain the quality that you expect for your outward facing quality that are going to stick around, that are going to maintain the brand? Like, it felt like she had to deal with a lot of those things, like from the beginning in a way in which many business operators probably never really struggled with that up until maybe the year 2020 or 2021. Absolutely. And it'll be interesting to see her sort of replicate it in the massage market as well.

49:41Like, where do you get all the masseuses from? I also really like that point. And maybe we should do an episode on this at some point, like the art of location selection for a brand. You know, and the idea of like, yeah, when she said it makes ton of sense, like if the idea is you're going to be a convenient stop for women to get a blowout, then you want to be on the perimeter of the mall, not the inside of the mall. If you're at the inside of the mall, it obviates the whole thing. But the idea of proximity to parking. I think our friend who we've had on, Patrick McKenzie, has talked about this a couple of times with banks, that that is a big thing in terms of you can have two locations that look very similar, but if one is not on the right corner in the right way, it's going to fail.

50:22And so maybe we should do an episode on how we would talk to a commercial real estate broker about finding good locations. Oh, that would be so interesting. Yeah, let's do that. And then we should go to strip malls and like observe in real life. Totally. I would do that. Okay. Shall we leave it there? Let's leave it there. This has been another episode of the All Thoughts Podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway. And I'm Joe Weisenthal. You can follow me at The Stalwart. Follow our guest, Allie Webb, on Instagram. She's at Allie Webb. And check out her new book, The Messy Truth, How I Sold My Business for Millions but Almost Lost Myself.

50:55Follow our producers, Carmen Rodriguez at CarmenArmin, Dashiell Bennett at Dashbot, and Kale Brooks at Kale Brooks. And thank you to our producer, Moses Andam. And for more OddLots content, go to Bloomberg.com slash OddLots, where we have a blog, transcripts, and a newsletter. And you can chat about this topic 24-7 with fellow listeners in the Discord, discord.gg slash OddLots. And if you're a Bloomberg subscriber, you can listen to OddLots ad-free by connecting on Apple Podcasts. Thanks for listening.

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