Get The Memo: Issue 11
Fyyne
Company Overview
Help, I need a new barber! Seems like the best option is to check out Fyyne, a platform founded by Jeffrey Fasegha, that ensures everyone can find the very best beauty services for them. Think barbers, braiders, nails, makeup etc. They are starting with hair (their largest segment) to validate their solution and quickly growing to the broader beauty space. They use technology to make that connection seamless. Fyyne is like that friend you have who always knows all the best spots in a city, they recommend the very best artists for customers and makes it incredibly simple to book, buy complementary products and pay.
Jeff was born in Nigeria, immigrated to Canada at a young age and grew up in Calgary, Alberta. In Calgary, he fell in love with hockey, rising through the rankings and was eventually recruited to play junior (semi-pro) hockey. He moved away from home at 15 to pursue this dream and was drafted 2nd overall into the North American Hockey league. Unfortunately, a recurring shoulder injury ended his career, but he pivoted his focus to the University of Toronto where he studied finance, psychology and economics. He channeled the passion and intensity from his sports career into his academics and was able to graduate in 3 years at the top of his class, being named a Rhodes scholar. His career background includes investment banking, management consulting and most recently founding the Black Career Conference, which is the largest conference of its kind in Canada.
His co-founders are absolute rock stars too. They met each other in university and have been working on building Fyyne for the past year.
Olugbenga Olubanjo (Olu) is a serial entrepreneur and has been running startups more than 7 years. Most recently he founded Reeddi Inc. which is providing clean power to over 600 families and small businesses in Nigeria.
Al-Ameen Ogundiran (Al) has over 6 years of professional experience in software engineering with top global organizations. He was an early hire at Andela and most recently, Al built and maintained a platform at GoNoodle that supports 14 million kids every month with movement and mindfulness.
Market, Model & Inflection Point
The beauty industry is over $500B, and growing year over year. Without the integration of technology, there is a structural mismatch between customers and beauty artists. Customers can spend upwards of 3 hours checking Instagram profiles, searching the internet, and asking for word-of-mouth referrals. After that, they engage in a back and forth with artists on price and availability before finally arriving at an agreement. Artists can spend upwards of 15% of their day handling logistical details like this and miss out on earning opportunities.
Fyyne initially picked this problem to solve because it is personally relevant to all of us in the Black diaspora. They have all lived in many different locations around the globe, and found it extremely frustrating not being able to find reliable barbers that can work with Black hair. Black people spend on average 9x more on hair and beauty than our white counterparts yet, there are major barriers to finding ethnically relevant beauty services and products.
On the artist side, they can build their online portfolio, share their beauty expertise, and connect with customers looking to book them. Fyyne is enabling creators by helping artists go direct to customers and build their individual brands while avoiding middlemen (barbershops/salons).
Fyyne makes money through transaction fees, subscription fees for artists, and are in conversations to start monetizing through ads.
Fyyne is in private beta and currently making ~10% on transaction fees (split between artist and customer) and from early users and expect to be able to charge at least $30 a month in subscription fees when they launch.
Fyyne believes that good booking tools are table stakes, and they have built that to serve that need. Where they create differential value is by providing the independent artist with the tools to engage with their customers and grow their business on their terms. In fact, one of their earliest adopters, Gyasi, told them he is reducing his hours at his barbershop because he makes more money in 2 weeks doing house calls than he does in a whole month at the barbershop, and he works less hours. There has never been a better time to launch a product like this.
In the beauty industry, digital tools have accelerated through COVID. Fyyne is currently based in Toronto, officially the most locked down city in North America. Barbershops and salons have been closed for most of the past year and out of necessity, artists have shifted to more distributed methods of operating. They expect this trend to continue and believe that artists stand to benefit from the flexibility that the platform offers.
The future of work in the beauty industry is changing, driven by the rise of the Creator Economy. Fyyne builds the tools that let beauty artists go direct to their customers.
The global social commerce market is growing at a staggering 31% y-o-y, largely driven by Chinese innovation. In North America we have barely hit the tip of the iceberg and Fyyne brings this unique insight to the world of services.
Competition
Squire and Booksy are the most prominent. They have good barbershop/salon level tools that digitize the complexities of barbershops/salons. Both products have customer facing apps that serve as a tool for customers to execute, typically mediated by a barbershop/salon. Customers only go to these platforms to transact when they are already in search of a service. Fyyne builds a social community where customers go not only to transact, but to get answers to their questions, connect with their peers and appreciate the skill and artistry of top artists.
The key difference between Fyyne and their competitors is that other companies digitize existing barbershops/salon processes. They compete to build better booking tools for barbershops and salons. Fyyne believes that the future of work is changing, the organization of barbershops/salons are in flux and individual independence is the key. In other industries, they see platforms enabling the creator economy, similarly, they are building the first set of tools to empower the individual beauty artist and create the option for them to build their own brand and business.
For example, look at the relationship of a barbershop owner and a barber. The barber is an entrepreneur that pays rent to a barbershop for the customer exposure that the barbershop brings. In fact, a sign of success, and the only way to grow business once they hit a price maximum, is for a barber to open their own shop and collect rent from other junior barbers. This structure can lead to misaligned incentives. Barbershops are incentivized to restrict barbers and in fact some even go so far as to block barbers from accessing customer lists or taking customers with them when they inevitably leave. We see very similar structures in hair salons and other traditional beauty organizations.
Fyyne’s moat is that they are completely focused on the artist and building the infrastructure they need to scale their business. To stay ahead of potential competitors, Fyyne will continue to fulfill the different needs artists have and are currently fulfilling with disparate solutions. They are creating one product for the entire process of running a skill-based beauty business and have some exciting things in the works.
How would you deploy capital if you would hit your next milestone?
Fyyne would transition their current team to full-time and grow their engineering team. They would also heavily invest in referral marketing and growing their early base of supporters.
With funding, they expect to exit private beta in 3–6 months, and expect to have hit their first milestone of 250 artists 6–9 months thereafter.
The biggest challenge they have today is that a lot of the team must work part-time to fulfill personal and family responsibilities. They have done incredible work already, but want to be able to bring the team on full time, move quicker and hit the market with speed.
What is the legacy you as a Founder want to leave?
I want to be proud of what I build and know that my work changed people’s lives for the better. With Fyyne, I want to see millions of artists going direct to customers and making money on their own terms. I want to see currently underserved customers able to access the very best beauty service providers for them no matter where they are.
