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Published April 9, 2018
Published April 9, 2018

As a key player in the success behind Bumble and Bumble, it’s safe to say that Eli Halliwell, Chairman and CEO of Hairstory, is no hair newbie—he has been around the block and seeks to spread an industry-disrupting message: put down the shampoo and conditioner bottles and never pick them up again. Ever.

New Wash is Hairstory’s hero product and has become a cult favorite that is propelling the detergent-free, suds-free, less-is-more conversation into prominence. The Hairstory product line isn’t focused on what ingredients are in each bottle, but rather the ones that aren’t. And this has made all the difference.

In addition to producing innovative product, Hairstory also invented a new way to sell products, saying bye to: regional distributors, bulk product sales to salons, big-box retailers and behemoth e-tailers (looking at you Amazon). Instead, they establish meaningful partnerships with hairdressers and reward them for both encouraging clients to shop online and for referring other haircare professionals for selling Hairstory products.

BeautyMatter had the opportunity to sit down with Eli Halliwell, Chairman and CEO of Hairstory, the man in charge of the brand rewriting haircare rules and revamping salon models.

With Bumble and Bumble you raised the bar on both haircare products and hairstyling. How has the industry changed since your Bumble day?

Simply put: Everything has changed due to massive technology disruption. The rise of the smartphone has enabled hairdressers to book appointments, charge credit cards and essentially manage their entire business for almost no cost. They don’t need a front desk, salon software, or management support.

Instagram has enabled hairdressers to acquire new customers directly online, leveraging social networks to present their portfolio directly to hundreds of potential new customers every day. Expensive, street frontage real estate is no longer relevant or necessary to drive new customer acquisition.

As a result, the power dynamic has shifted from the salon owner to the individual hairdresser. That is putting pressure on salon service profitability.

On top of that, from my time analyzing hundreds of salon P&Ls at Bumble & Bumble University, I know that running a salon has never been very profitable to begin with. Any profit came from retail sales, which are now under at least as much pressure as service revenues. Every professional retail line is for sale on Amazon with free delivery, and half of them are sold directly to Amazon by the brands.

Putting that all together, I believe the salon as we know it is going to be extinct in ten years.

What inspired you to launch a new company and embark on this Hairstory journey? Why now?

In contemplating all that has changed, I kept returning to the one fundamental thing that hasn’t changed: hairdresser recommendation is still the most powerful way to introduce consumers to hair products. The bond of trust is unlike any other—except maybe a doctor. And yet every single hair company is abandoning the salon channel. They started selling on their own websites, then added in department stores and specialty retailers like Sephora and Ulta. Amazon is probably already the largest retailer of professional hair brands in America.

I thought to myself: Does it have to be that way? What if you could enable hairdressers and salons to participate in ecommerce rather than be trounced by it? Wouldn’t that be a win/win for both consumers and hairdressers? And it would clearly be a win for anyone who launched such a system, because, as I mentioned, hairdresser recommendations are as good as it gets.

Within literally minutes of connecting the dots on this concept, I realized I would quit my job to bring this idea to life.

You're a company breaking all the rules without breaking hair. What rules were the first you mad a point to break and rewrite?

Most hair companies are built on the gut instincts of a flashy personality. They are long on fluff and short on substance, with lots of smoke and mirrors. I decided from the start to take the opposite approach. Hairstory is a data-driven company. We measure everything, and leverage data to inform every decision we make. Our unique business model gives us access to more data than any other hair company, and we take advantage of that to the benefit of our hairdressers and ourselves. Rather than hoard our data, we share it readily with the belief that transparency builds trust and credibility. From our ingredient listings to our customer reviews to our margin structure to our sales results—we are an open book.

Hairstory's New Wash is the cult product everyone can't stop talking about. What sets it apart from other hair products on the market?

New Wash is creating a whole new category for haircare. You have shampoos; you have conditioners; now you have a whole new way to wash hair that is neither a shampoo nor a conditioner, but that both cleanses and conditions.

New Wash cleans your hair with no detergent. All shampoos clean with detergent. Detergent is an irritant, and an excessively effective cleaner that over-cleans hair, stripping hair and scalp of its natural protective barrier, and forcing your body to respond by over-producing oil to protect you. It is a perfect vicious cycle.

All detergents are made from chemically bonded amphiphilic substances, meaning they have one side that loves water and one side that loves oil. The oil-loving side is very good at attaching itself to any oil, dirt, or product, and when you rinse, the water-loving side grabs very firmly onto the water, stripping everything away from your hair and scalp and pulling it down the drain.

New Wash also cleans with amphiphilic substances, but ours are naturally derived. The oil-loving side is just as strong as detergent, but the water-loving side is weaker. When the rinse water runs through, the bond to water is only strong enough to pull away excess oil, product, and other loosely attached particles. The water bond isn’t strong enough to pull away the protective barrier, and the New Wash molecules that remain act as highly conditioning agents, which is why you don’t need conditioner when you use New Wash.

When you stop using detergent, your scalp stops over-producing oil and calms down, and your hair becomes healthier. The difference is very noticeable and once people stop using shampoo, they never want to go back. Our repeat purchase rates are through the roof, and we have more five-star reviews than other hair companies have total reviews.

You also invented a new way to sell products. What are these new strategies you created to sell products, and what compelled you to do this?

We wanted hairdressers to be able to participate in the ecommerce revolution, and to be fairly compensated for introducing Hairstory to their clients. This meant creating a model whereby hairdressers and salons earn the same profit when their client buys New Wash regardless of whether the purchase happens in the salon or online. Once a client becomes a New Wash customer, the hairdresser gets credit for as long as the client keeps buying. It becomes an annuity stream, because New Wash has such high repeat purchase rates, and the return on investment gets close to infinity as more sales shift from in salon to online. The economics are amazing for hairdressers.

The only way we can ensure the hairdresser always gets credit when their client buys is to keep the system a closed loop. We can’t sell to any retailers like Sephora or Ulta, or to any ecommerce companies like Amazon if we want to keep the integrity of our model. So we’ve turned all those channels down. Many times. We could be much bigger, but we chose to build a business with integrity that respects the hairdressers who are enabling our success.

The Hairstory NYC Hair Studio has garnered attention due to its diversion away from the classic salon model, instead embracing an artistic and meaningful atmosphere. What inspired these unconventional elements?

As I said before, we believe the salon as we know it will be extinct in ten years. So we challenged ourselves to come up with a new model for what it means to be a salon that can thrive in a world where the old rules no longer apply. Hairdressers want both community and independence. They want both security and the ability to earn money like an entrepreneur. And by leveraging data, I knew I could improve profitability for both the salon and the individual hairdressers who work there. That’s all behind what we’re doing in the Hairstory Studio, and more of it will be revealed in the months ahead.

How does the Hairstory salon model help hairdressers grow their own business?

The model we are working on—and you should know, this is still a test; we are still in the laboratory here—this model is all about enabling hairdressers to optimize their capacity utilization. What does that mean? It means a hairdresser only has so many hours in a week to work, so how do we leverage data to make sure those hours are spent most efficiently and the rates the hairdresser is charging are fully optimized? Does everyone on a flight from La Guardia to LAX pay the same price? Does everyone spending the night in a hotel pay the same price? Never. Why should hairdressers not benefit the same way?

And we’re taking that same principle to running salons: Leverage technology to determine pricing and reduce overhead. Most salons don’t even need a front desk anymore if they set themselves up right.

Do you see this dynamic as the future of hairdressing?

We think we are charting ONE future of hairdressing. Hairdressers are creative people, and I’m sure other new models will evolve. We don’t claim to have all the answers, but we’re certainly working hard to discover—and test—what the future of hairdressing could look like.

How are you utilizing technology to reach and educate hairdressers?

In the ’90s, 100% of post-grad hairdresser education happened in the field. Hair companies would send educators into salons across the country to perform demos and do hands-on training. The benefit to the students was ease of access, but there were serious downsides: Low (almost no) quality controls, poor consistency of experience, and it was very difficult to offer a transformative experience. Plus, sending people all over the country was very expensive for the brands, so brands were forced to cut corners.

With the launch of Bb.U, the big innovation was we brought the hairdressers to New York, where they could experience a world-class education, consistently executed, with a focus on transformation. When we opened Bb.U, people would be crying as they left at the end of the week. It was incredible.

But as technology disruption has shifted professional haircare sales from salons to places like Sephora, Ulta and Amazon, hair brands have not been able to justify the spending for hairdresser education. You can’t have strong education platforms if sales through hairdressers are declining year after year. It has become a vicious cycle.

So that’s a long-winded introduction to how Hairstory is looking at education. Our hope is to transform hairdresser education once again, just as we did with Bb.U. The goals will be totally different, but we hope it is at least as powerful. Different, but still transformational.

I can’t go into too many details, but the core of it is that we will be leveraging technology to deliver personalized, live training, remotely. The goal is to emulate a hands-on experience. Some aspects will be missing, but others will be better. We are still working on the technology to enable it all. Stay tuned.

You just opened your first salon outside of NYC in Dallas, TX—why did you select this location? What makes it unique?

We had an employee—Beau Bollinger—who is an amazing hairdresser and a super-smart entrepreneur. He really wanted to open a salon, and he lives in Dallas. We decided to support him because Dallas is a great market and one that has aspects that are reflective of the whole country. Basically, if you can make a model successful in Dallas, you should be able to make it work in San Francisco and in St. Louis too.

Beau is running this salon with an entirely new business model. He is proving our belief that, if you apply technology and a new mindset to operating a salon, both the owner and the hairdressers can achieve higher profitability. Like everything else we do at Hairstory, we decided to rethink the entire model. It is very exciting to see how things unfold, but we’re just getting started.

Finally, what are Hairstory's future plans for salon expansion?

At this point there are no plans to open up a series of Hairstory-owned salons. That said, we are already partnering deeply with several entrepreneurs who want to replicate the model we’ve created in Dallas with Beau. They can take parts of the model and apply it as they see fit. For example, we are no longer charging some of our core customers for retail inventory—we consign it to them and only charge them for what they’ve sold after they’ve sold it. Again, it isn’t hard when you leverage the right technology. That frees up huge amounts of capital for the salon to reinvest in other important areas, and it drives ROI (return on investment) through the roof. We expect to be deeply partnered with hundreds of salons across the country in ways like this soon. Some may want to adopt the full model and earn the ability to call themselves a Hairstory Studio, but many others will not. We’re very open minded on this front. It’s all very exciting.


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