How Bepretty CEO Alvaro Noain grew Bepretty to $3.4M revenue and 3.5K customers in 2019.

hello everybody my guest today is alvaro lara naga he's an experienced founder and with a demonstrated history of working in the health wellness and fitness industry he's skilled in negotiation business planning sales entrepreneurship and public speaking with strong business development professional background and a bachelor's of ba focused an international business now building this company called be pretty all right alvaro are you ready to take us to the top yeah let's go all right so what's be pretty do is it a software company there's a well we are a marketplace for beauty services but with a huge focus on our software for our beauty salons okay do you charge fees on one side of the marketplace as a sas model or no exactly yeah we have the sas model where we charge a fixed fee to our to all of our beauty salons in order for them to use the sas okay so so beauty salons or who you're kind of monetizing and how many beauty salons are on the product today we have 3 500 beauty salons all over latin america and they're all paying they are all paid that's great tell me about the other side of the marketplace who are they connecting with so they're connected with uh 90 of our users are women between 20 and 45 years old looking for uh beauty services everything that has to do with beauty massage spa haircuts nails everything that has to do with it so alvaro i know this is hard to imagine but imagine i am a 29 year old female latin american looking great want to get my next spa service why would i not just go to google and say spa in my city that's that's a great point we did bpt came to life exactly because of that the information in in latin america it's really bad organized it's not easy to find there's it's not up-to-date so for a woman uh 29 years old looking great as you too it would be really hard it would be really hard to er to find the the i don't know useful information for them to book an appointment online or even call their beauty salon if they want to do it over the phone but that's the main reason we started this this company it was it's a huge market with really small uh businesses but really but uh organized do the do the consumers do i pay as the person looking for the services or just the beauty salons no that's the beauty salons okay and what are the beauty salons pay on average per month would you say we charge them it's uh around eight to nine percent of all the beauty services they they they do through our platform and that's approximately in u.s dollars that's eighty dollars a month ninety dollars a month per salon depending on the markets but that's an average okay so about 80 bucks per salon and that's eight percent to maybe 10 of what you drive them so we can multiply that by 10. you drive them about 800 900 bucks worth of business a month exactly that's that's that's more or less the the number we we are we are we have today very interesting interesting is the revenue predictable like i mean is it really about 80 or 90 bucks every single month or is it very seasonal it goes up and down it's seasonal it's seasonal on the marketplace side but it keeps growing month-to-month basically the summer months are the best months it's when women tend to do higher or more expensive services and on the winter months it's it's a bit harder that's why our margin sometimes changes but more or less we tend to be around the 8 margin more or less when you say eight percent margin you're talking about 80 bucks a month per salon on average exactly exactly so can i take 80 bucks a month times 3 500 salons that would mean you're doing about 280 000 a month right now in revenue exactly that's exactly correct okay great where were you exactly a year ago in terms of monthly revenue we grew three times a bit more it's 3.6 times uh exactly our year growth we opened two new markets this new year so that has helped increase our our our revenue okay so that means you were doing what about ninety five thousand dollars a month uh about a year ago and you've 3x to your every year exactly that's exactly correct getting 3 500 beauty salons signed up especially in a marketplace model you have a chicken and egg problem it's very difficult how did you get the first beauty salons and the first women consumers using you that's a great question we the first thing we did was uh build a really strong relationship with our first beauty salons so we uh we started in chile and we went to the to i don't know to visit the top 200 and we started this really close relationship with 30 of them and we managed to have them use our software and be like our uh you know first vip clients where we work together a lot and we did developments of our software just for them we we really got them engaged and having those 20 salons really engaged what's what was what really make the difference growing because we started having their users using our app and receiving feedback and their users sharing their their experience with their friends and that's the way we started growing and growing and the first man it was 20 second man we had 40 uh venues by er being really you know engaged with our software and then we kept growing and today it's cheated still our best market but we have 1 400 salons how do okay so you get your first 20 signed up because you visit 200 in person and you sign 20 as vip clients you build the software specifically for them you make them feel special how do you get your first female though using the consumer facing app to book one of these 20 salons so it was it was one of the users of the of the clients from the so it was one of the clients from our salons so basically we did we did through them all the other first marketing campaigns we did it to their to their clients so we launched emails for them we did a marketing campaigns and so but just for their clients so you convince those 20 vip clients to email their past customers and say use this app it's but why why would they need to use your app why is it better to use your app versus just keep working directly with the salon that that's also a great question because on our software we have a tools that help them have a better organized business so we have the we have a file a crm where they can see what services they're using they they have also some um loyalty programs where they can start like saying hey if you come 10 times to us alone you're going to have a free services and and they have also business intelligence they they can start downloading reports on what's happening on their salon on a daily basis what hours are the most i know booked and what days are the most booked and how price pricing wise they can start doing revenue revenue management to maximize their their times uh and and got it and that's our speech when did you launch the company what year we launched in 2015 2015. and then have you bootstrapped or raised capital no no we've raised capital we've raised over 4 million dollars okay so basically 4 million yeah 4 million raised and that was from chile investors or you went to the united states for it we we've raised it all with european investors okay most of the european very good and how many people are on the team today we are 57 in four countries okay mostly chile chile was our headquarters it's still our biggest office but we are starting to move people north to mexico chile and remote moving to mexico and then talk to me about profitability are you guys making money each month or are you still burning and investing in growth that's also a good question it depends on the market so for example chile it's a market we are already on a break even but if we go to mexico that we opened i don't know six months ago it's still a market that requires huge investment well look at your whole company though yeah overall no but then overall we're still on negativity okay and about how much are you burning every month you're talking like 100 grand a month 200 grand a month 100 guns a month okay so that's not the reason i ask is i want to get a sense of how aggressive so if you burn 100 grand a month but you raised 4 million assuming you did that recently you have some runway obviously to get to profitability well right now we are closing what we expect to be our last uh financial route oh okay we are that we are why are we doing that because we still have a couple of more markets we want to expand to and with that investment we're we're hoping to to um be our last round before uh break even so we are talking to to right now we are we we have a couple of terms on the table we are negotiating the terms with potential investors how much do you think you'll end up raising like we're talking like 10 million or 5 million or 100 million or what we we don't want more than 5 million and we are they want to invest seven we want five and i think five it's a it's a reasonable number yeah that's good and can you give me you're not giving me the exact number but how do you when you raise if you raise five million bucks what valuation do you hope to raise at what would be like a very good situation for you so uh basically when when when raising the money right now we're we're thinking or talking on a 25 million dollar evaluation okay so that would be if you're doing kind of 280 grand per month right now you're currently at what 3.3 million in terms of arr and...