#60. Heyday unbundles the facial from the spa, opening it up to a whole new audience. We talk with Co-Founder Michael Pollak, about the company’s origins, the excitement of being a retail-first business, and how highly-trained and qualified employees take the experience to the next level, both online and offline. The Loose Threads Podcast features in-depth discussions with leaders across the rapidly changing consumer economy.

Check out the full transcript below.

Richie: [00:00:06] Welcome to the 60th episode of the Loose Threads podcast, a show about the rapidly changing consumer economy. This episode is brought to you by Loose Threads Membership, which gives you actionable analysis insights and events that drive growth, and Loose Threads Espresso, your energizing and high pressure filter for consumer news—in context. We also have a newsletter that features the latest open letters to CEOs, podcasts with industry leaders and news from Loose Threads. Check it all out at LooseThreads.com. Joining me today is Michael Pollak, a co-founder of Heyday, a company that is unbundling the facial from the spa and opening it up to a whole new audience.

Michael: [00:00:43] We were never about being express and were never about being quick. It was about making something accessible and available that was the same—if not better—than what was out there.

Richie: [00:00:54] We had a great talk about the company’s origins, the excitement of being a retail-first business and how highly trained and qualified employees take the experience to the next level, both online and offline. Here’s my talk with Michael Pollak.

Richie: [00:01:10] I guess why don’t we start talking a bit about your background and then we’ll work our way up to [Heyday] existing.

Michael: [00:01:15] I sort of did the typical [thing—I] entered college and didn’t know what I was going to major in. Loved the art side, loved the science side of things, which landed me in architecture, which I think was a great middle ground. There was an arts and artistic quality to it, but it was all about sort of problem solving in a visual way and I really enjoyed that. I did internships in architecture. I knew pretty quickly I didn’t want to practice it in its pure form. I moved into interior design because I liked that [it] was what the general public responded to most—I think about a space often and I really enjoyed that part of it.

Michael: [00:01:48] I ended up, after college, managing a furniture line for an architect who… On the first day, the person who managed the furniture line, the production, the sales—the one-man show side of it—left and she was like, “Can you just fill this in?” And this is my very first job, so I was like, “Of course, I’ll do whatever it takes to have this.” I love seeing that business side of things and I think at that point, after about a year doing that, I realized I wanted more business education to complement the artistic side and the gut that I had developed there. And so I ended up at the hotel school at Cornell, which I like to call it “a diet MBA.” It was the first year of MBA coursework and then all the complementary courses were in the hospitality industry, which I think kept that design side of me engaged.

Michael: [00:02:31] So I came out of that, came to New York and worked for an awesome hospitality design company here, helping them with strategy and execution on large client projects, but also really small boutique project. They owned a couple of restaurants in the city here so I was able to see that laboratory up close and sort of take those learnings and apply them to larger clients. Eventually I moved to an innovation consulting firm called Fahrenheit 212, worked there on really consulting with big Fortune 500 companies, marrying sort of the creative stuff again with the commercial sensibilities and developing products and services across everything from banking to consumer goods, frozen pizza to rewards programs. It was an amazing breadth of projects and I think I’ve always enjoyed the communication and the creation of ideas but never got to be on the entrepreneurial side—consulting always left me with this hand [where we] finished this great project [and had to] hand the baby over to somebody [else]…

Richie: [00:03:26] It’s always some else’s.

Michael: [00:03:27] Yeah, someone else’s to raise. One of our—what I thought was a really brilliant product ended up coming out the other side not quite how we intended it to and ended up being made fun of on the Colbert Report, which was a proud yet funny moment. I think it was one of those moments where I was like, “I really want to be on the side of building a brand from scratch.” Fast forward a couple of more years of consulting and I met my business partner who had the idea of Heyday on paper, [already] formulated. And I had just started getting facials probably about a year-and-a-half, two years before that, so I saw the need, I saw the deck, talked to them and was totally [ready to] see how this could and should be brought to life and went from there.

Richie: [00:04:04] So I guess what was that early formula. What was the incarnation that you happened upon and where was it in that early stage?

Michael: [00:04:12] So when I met [my co-founder] Adam… At that time, the idea had been formulated. It was like a really crisp PowerPoint deck that had the business opportunity outlined and was very clear. The numbers were clear. He had built a successful business before this and had a number of investors [who] were interested in coming along for another ride. So a lot of the boxes were checked in terms of, I think, how serious the business idea was and the opportunity [for it to come to fruition]. And I just remember saying, “I totally see how this should be brought to life.”

Michael: [00:04:29] And what excited me [were] the prospects of giving it a name, giving it a look and feel, thinking about the language. How do you take the world of facials and skincare as it currently exists and turn it on its head a little bit and present it to what I think is a huge new demographic that could engage with it? And those are the parts I was really excited about. We actually met in a consulting capacity and I was like, “Don’t hire agencies to do this—you need to bring somebody in-house who can own that side of the business or at least see eye-to-eye with you on that side of the business and execute [it]. So you’re not paying somebody $250 for a JPEG every time you need something created.” And then we ended up continuing discussions from there and then [I joined] the effort fulltime as a co-founder.

Richie [00:05:18] So explain the business then.

Michael: [00:05:20] It’s really similar to what it is now and what it was after we went through that last year before opening—of branding it and bringing it to life in all its dimensions from staffing, to branding, to experience and digital and all that. The tagline was “taking the facial out of the spa and into your life,” and that still holds. We don’t use it as much anymore but it still holds and the idea was “take facials out of a space where they lived—which was luxury spas or vacations where people engaged with it once in a while, or it was for “ladies who lunch.” So it was a very inaccessible and very foreign experience, when really it’s having an expert treat your skin, look at your skin, give you advice on how to take care of it on the other days that you are not in that spa or space, which is most days of the year—how do you democratize that a little bit?

Michael: [00:06:27] In the shortest possible phrase, people would say, “Oh, it’s like a Drybar for facials,” which totally hits it on the head, with Drybar taking the blowout out of the salon and creating a new marketplace for it. It’s not like they invented the blowout—our grandmothers used to go to the beauty parlor once a week. And so I think it was interesting to look at them [Drybar] as a parallel and say, “How do you take the facial out of this place [where] it lived that was surrounded with all of these connotations that I think made it more difficult?” [Heyday became an] entry point for people and made a very simple un-intimidating proposition.

Richie: [00:06:38] Why was it such this elevated, locked-away experience?

Michael: [00:06:43] I would say it’s always lived in spas because it’s always been paired next to massage or a couple of those other modalities. And I don’t know, I think that was one of those reasons when we started circulating the deck with people and talking to people, a lot of people would be like, “Well, why doesn’t this exist already?” And I had that fear too a little bit going into it. Like, why hasn’t this worked.? Shouldn’t somebody have tried this before? And again, you look at Drybar and say, “Well, nobody tried that before in this generation.” But I think that they’ve—for a long time, they sort of lived there and even all the licensed estheticians. I often talk about, when you think about skincare, the general consumer thinks, “Okay, I can go to a store, whether that’s a Duane Reade or a Sephora and talk to an employee about products that I could buy to solve whatever issue I’m having, or manage my skin, or I go to a dermatologist.”

Michael: [00:07:32] And you look at those two things. One is based solely on marketing and sales. One is based on looking at things from pathology. There’s nothing wrong with either of those approaches, but they’re at the extremes.

Richie: [00:07:43] Right, they’re binary.

Michael: [00:07:43] Yeah, exactly and there’s this whole cast of people in the middle who are super passionate about everyday skincare—not from a medical standpoint, not from a super sales standpoint, but [rather], how do you take care of your skin to look and feel your best every day? And to me, they never had quite a home.

Michael: [00:07:59] And when you start talking to the workforce out there—many of whom are now with us—you realize that [when] you look at a typical spa, it’s like a 9 to 1 ratio of massage therapist to skin therapists, to estheticians. So it’s a lonely craft that was left to the side a little bit and I think that talent pool needed a place, needed a voice for both themselves, but also a place where clients could actually interact with that expertise and get the most out of it.

Richie: [00:08:24] I’m curious to talk more about the everyday skincare bit because that also seems like an evolution, if not something new, that is changing, more on a macro level. Talk a bit more about that bigger adjustment.

Michael: [00:08:35] Definitely, definitely. I think at a macro level, what’s happened there is—and I feel that we’re a part of that conversation and came in in a right time—is that makeup, things like that are always going to be rooted in beauty. But even the fact that makeup gives you confidence, that moves it into a higher need, a higher benefit, and a higher sort of right to exist. And skincare certainly toes that line between beauty… I think the old world of spas, the old world of facials that was all beauty, beauty, beauty, pampering you…

Michael: [00:09:00] Ask somebody “what is a facial?” and they picture a white towel on your head and cucumber on your eyes and an orchid maybe on your ear. It’s so stereotypical and so female-driven. And I think where that language has moved across the industry is to a place of wellness, to a place of self-care. It’s still figuring itself out in terms of the language there, but that’s giving people their permission to say, “It’s okay for me engage in these things. It’s not purely superficial.” And I think if you pick a layer deeper and talk to some of the people who engage with us regularly, there’s a lot of other things other than their skin looking and feeling great. For a lot of our clients, it’s an hour a month when they can just completely chill out and have somebody take care of them. And we don’t talk about those needs in general as much as [how important] they are on the business side.

Richie: [00:09:46] Again, from my cursory understanding, there have been chains of salons that have existed that you can find consistency. Did that exist on the spa level or were they always these local propositions?

Michael: [00:09:57] It’s a super fragmented industry, so if you look at the spa industry—and we don’t use the word “spa” to describe us because that comes with a lot of loaded connotations, but I use it to talk about the industry.

Richie: [00:10:07] And you’re unbundling a service from it.

Michael: [00:10:09] Exactly, exactly. But the spa industry is huge. But if you look at it, there’s a couple really big players out there. Bliss is obviously a famous one, Massage Envy is probably the biggest one out there. It’s a super fragmented industry and if you look at it, there are some big players, but for the majority it’s a very mom-and-pop situation. And I think to make the business model of—we’ll call it “yesterday’s spa”—work, it was always big build-outs. People expect to get multiple treatments through their “spa day,” right? In their steam rooms and their saunas, and those used lot of modalities in one location. A lot of maintenance, a lot of build-out cost. So the costs have to rise for the consumer to actually engage with that.

Michael: [00:10:49] And then you look out at how many times a year do people do their “spa days”—once or twice when they get a gift certificate for their birthday or anniversary.

Richie: [00:10:57] And what are the costs associated?

Michael: [00:10:57] And that would be a couple hundred dollars, I think. When we did our research as consumers, but also talked to people, a facial could set you back $200-$400. You get the treatment once a year and then based on how the therapists are commission, you feel like you should walk out with six products on you. You get home. You don’t know how to use those products. You feel bad because maybe you look all right, but you’ve spent $600 and didn’t intend to. So you’re not going to come back for a year. And so that sort of sets everybody up for failure—you’ve got all these products you don’t know how to use, you feel bad you spent this money and then you don’t come back for a facial so a year later, what progressive work are you actually getting done? So I think just the setup was something we knew we wanted to change. I also think that because you had these fragmented experiences from luxury spas, day spas, corner places, the Chinatown place, there’s a lack of focus on the consumer—from the sense of simplicity and just presenting the right amount of information, giving consumers the right amount of choice, putting the therapist in the driver’s seat in the right way. There were a couple of key anchors that we knew we wanted to put down to change that experience.

Richie: [00:12:05] So when did you guys meet, what year was it?

Michael: [00:12:07] It was summer of 2014. And then because we were a brick-and-mortar business, once you start looking for spaces, it gets really real, really fast. And I remember we were still circling around what our new name was going to be while we were looking for spaces. We introduced ourselves as the old name and had to do this song and dance. That was…. Looking back that was stressful at the time, but it was actually super exciting and not a big deal at all. But we met then and we were probably working on the concept for good nine months up to opening our first shop in the NoMad neighborhood in June of 2015.

Richie: [00:12:38] All right, so to talk about those nine months. There was no way to do this and not have to be retail business, right?

Michael: [00:12:45] Correct, correct.

Richie: [00:12:45] This was not, “I’m going to send people to homes” or anything like that.

Michael: [00:12:47] We knew it was going to be a brick-and-mortar service experience. We also knew it was going to be on the first floor, which means our rent was going to be higher, but that’s a big bet in the sense that we’re trying to again democratize something that had been very hidden away. So we knew that accessibility, that visibility was really, really important. And I think, rolling up our sleeves really at that point, it was first off figuring out what the name was going to be, what the language was gonna sound like. We went through a pretty in-depth naming process to figure out what the business was going to be called. That was important for us—we knew we didn’t want the name to be something that was too basic or too functional. I think if you look at the category, there’s a lot of derm-this and this skin-that. Those are fine; they tell you what it is. But my big thing about naming… And a lot of the folks in our team were like, “SoulCycle is a great name.” I love that name, but I’m like, “That could be a charity ride for a church in the south, just as much as it could be SoulCycle.”

Richie: [00:13:37] It was also of that era, and I think if they were to name it again they probably would not.

Michael: [00:13:41] I think they would name it the same thing and I just think that a name is only new the first time you hear it. And I think that it’s important that that name carries with it some emotion and some higher-order benefit. And so when we started naming, the easiest answer for everybody around the table was, if I take away the facials and I take away the products, what is the feeling you are walking out of our shop with? And everyone was very clear to answer. It was two things: short term—you feel really great the moment you walk out—and then long term—in the back of your mind, that you’re doing something good for yourself because taking care of your skin does have a cumulative effect on us in a way that makeup and hair sometimes doesn’t have physically. So this idea of a short-term instant gratification and long-term health and care was the genesis of the name. So we went back to the table and started looking at what words [embody] this idea of being at your best all the time, feeling like you’re in your prime, hit Thesaurus.com as everybody does, and just stumbled on the word “heyday.” And it was like buried in the little list.

Michael: [00:14:44] And it was one of those “aha” moments when I was like, “That is totally a word that means exactly what we are trying to do.” It’s sort of a grandmother word of “back in my heyday, I was young and beautiful and vibrant” and we just immediately gravitated towards that name. It was easy to say, it’s cheerful—you kind of can’t smile when you’re saying it if the word heyday it makes sense [to you]. If you don’t know the word heyday, people think it’s just like, “hey!”—that’s fine too.

Richie: [00:15:07] Plenty of people in that camp.

Michael: [00:15:09] And we just figured everyday should be your heyday. We just happened to start with skin and that was one of those great moments that we crossed and felt like, “Okay, we’ve got our clothes on now.” You can go forth and build. And then I think over those next nine months we are continuing to look at real estate..

Richie: [00:15:26] How’d you approach that in New York?

Michael: [00:15:29] Because we were all New Yorkers… Sure, you can look at demographics and you can look at this, that and whatever data. But if you know a city well and you know your consumer fits well for the idea, you’ve got to trust your gut on that. And so we knew right away that we loved the NoMad neighborhood just north of Madison Square Park, [it was] up-and-coming, the rents were still affordable at that point—they are definitely not now, [and] now we’re glad we got it when we did. But it was an area that I think was a crossroads of people who’ve lived here and worked here and was our demographic and that was important. That was a big gut decision. It still holds true I think for us at the other locations we’ve found. But we knew it and then when it came to the actual space, it’s just like apartments. You walk in and you just know. Even though we hadn’t built a Heyday [yet], we just we walked in our first space at 1130 Broadway and we’re like, “This just feels totally right. It feels right with the setup.” It had a really good feeling to it. And so we went with that and started working with our architect and interior designer and really, really putting [it] together, [thinking,] “Okay. What is the not only the look and feel, but the function?” And I think an important thing for us was that design elements… So many spas are about long hallways, candle-lit treatment rooms that have four walls and a door, and you’re sort of told to go put on a robe and show up in this area and it’s a very foreign experience.

Michael: [00:16:42] And we wanted to strip that away and make it something that was accessible—that you could do on a lunch break, you could do after work. Busy New Yorkers. And so we did away with the robes and the locker room situation and went for a much more sort of semi-private space. We wanted to change the sounds you hear, from the music—you don’t hear Enya and whale noises. And those are fine, but we wanted to do something a little bit more different and people always want to know how they can get our playlists. And really tweak the experience into something that was fresh, but familiar for clients. So that was another big focus. And I would say the last big focus was the core product itself. It was those last couple of months of really figuring out, “Okay, we know we want to have a simple menu and give clients just the right amount of choices—30-minute facials? 50-minute facials? 75? 20? Like going through all the iterations and seeing what was right for people’s skin what was right for the team in terms of execution. And then curating products and obviously hiring talent and figuring out what that was going to look like. So a lot went into not only the physical building of the space and the digital website and all that, but really thinking about who those initial hires were going to be to execute this vision that we had and were developing as we went.

Richie: [00:17:53] So who was the customer at this point and how did you triangulate who it was, because it seems to be very different customer than what the traditional spas would attempt to serve?

Michael: [00:17:57] Totally. If you went back to that PowerPoint deck, it would be a female customer somewhere around the 27-39 range—our core customer who… Probably if we had like three company logos on [her], [it] would be like Drybar, SoulCycle, and SweetGreen. And I will never forget… There was one night about a month after we opened—and I was at the front of the shop a lot in that first month—and I saw these three girls, they had their hands cuffed on the glass and were peering [in] and trying to figure out what we were. And they started to walk away and I just I happened to be leaving, so I walked out and I was like, “Hey, I saw you guys look in—what do you know about us?”.

Michael: [00:18:36] And they said, “Oh, well, we’re on our way to this concert. But I heard that you guys do facials and honestly I’d rather do that.” And I was like, “Why don’t you come in? It’s totally on me. Come in for a 30-minute facial.” And they were like, “Screw the concert, let’s go, let’s go.” And they came in and [one of them] asked me, “Can you take a picture of us? I really want to Instagram this and tag my SoulCycle t-shirt and my SweetGreen bag.” And I literally was like, “You fell out of our PowerPoint presentation.” So here we are.

Richie: [00:19:02] You raised money at this point, or no?

Michael: [00:19:04] Yes. We had sort of finished our sort of family-and-friends round that suited the build-out of the first unit and gave us some runway.

Richie: [00:19:10] So I’m curious, on the customer side, you’re basically creating consumption away, right? You’re not saying this cost already spent X, Y, Z on this, we wanted to bring them to our location and do this. You’re saying I believe there’s a need here and this customer will adapt. How do you wrangle that in a way, because I assume Drybar was the corollary that hung in the back of your mind, but it still wasn’t like you could point to the spend and go, “Yeah, we’re just going to take this percent of…”

Michael: [00:19:28] Exactly, yeah, you could do the whole typical deck where, you know, “this spa industry is $5.1 billion, if we capture 1%… Yeah, we didn’t need to do that it was sort of like did you believe in the model, did you believe in the idea, did you believe that that customer is there and did you believe in the team that was going to execute this. And I think that there is that leap of faith. I think with any business that you launch that you take… Well sure, you can try to quantify that customer a little bit. I would say I was the skeptic of the bunch. We had our head of skin care at the time who was developing the product, who was like—

Richie: The product is…?

Michael: The facial. Yeah, when I say product, I mean the facial, the experience—mainly the service component. She was like, “Of course this needs to exist. This is what I live and breathe as a profession and it should be available to more people than people are who have $500 to spend on an experience like this.” And my business partner felt very strongly that the numbers lined up and that the market was there and I was like, “Okay, I’m just going to focus on the presentation and the brand side of things and we’ll see what happens.” I mean, it was a huge, pleasant, wonderful, surprise to get that initial press and see all these appointments coming in on the calendar and believing, “Wow, there are so many people who are interested in what we have to offer.”

Richie: [00:20:40] Yeah, I’m curious to talk a bit about the launch and that moment because if you look at the lean nature of how a lot of these companies start, you can tap the Facebook ads or put up a Squarespace or all that—you can’t do this in a lean way really.

Michael: [00:20:52] We talked about that a lot and I think that is probably one of the toughest parts about a brick-and-mortar businesses. You are literally putting out over $500,000—closer to one million—just building something out, signing a 10-year lease on a space for an idea. It’s not just throwing up a landing page and testing things out in that way. And we were smart about testing things before we blasted things out, either from a technology standpoint or even with our team when you’re trying to operationalize something with now 125 employees. You’ve got to take small steps and think through everything twice over. But in the beginning, it was sort of like, “Wow, you really do have to take that risk and go for it.”

Richie: [00:21:30] What was the product when you launched and then how did it go?

Michael: [00:21:34] I think as we planned toward launch—I mean, once that lease is signed and you’ve got your contractor building in, yeah—it’s got a total clock and we just knew everything that had to get done. And really a lot of dividing and conquering, unifying and conquering. On my end, I was working heavily on the website, overseeing the first build-out really closely with our general contractor just to make sure the presentation of the brand, both in the physical walls and its digital presence were ready to go before we opened so we could take appointments and present ourselves on the skincare side.

Michael: [00:22:07] We were developing the protocols for the facial—really working on the training program. For that, we didn’t have a facility, so we were finding breeder spaces around town to host trainings. It was really just being scrappy, having a really long to do list and just knocking through it. And on the hiring front, it was just a lot of interviews and a lot of helping people, again, take that leap of faith and come and try something with a new company. And almost our entire original team is still with us, which is really, really exciting. On the front of our product, we launched with two facials: the 30-minute facial and a 50-minute facial. That 30 minutes is a bit of a quicker variety. We don’t do extractions, which is [when] we clear out the congestion of your pores, mainly because in that short timeframe, we can’t bring your skin up to the level where we can perform those and then bring it back to a baseline. The 50-minute gives us a longer time to do that. We didn’t know what to expect with that. We were positive it would be maybe 50—maybe New Yorkers who are time strapped would want to do that 30. Quickly it became obvious that people were much more interested in the longer time period. I think between 30 and 50 minutes… It’s a 20-minute difference, a $35-dollar difference on our menu. I think people… If you’re spending some time investing on yourself, they’d rather be there for an hour.

Michael: [00:23:22] And so we heard the call for a little bit longer treatment. So a couple of months into it, we decided to launch a 75-minute facial, which is a little bit more closer to a experience that people were used to at a luxury spa. But that allowed us to pull that customer in with something that they’re a little bit more familiar with and have us not be seen as a 30-minute quickie express thing, which the press latched onto, which we really… That’s one thing that we are really allergic to. We were never about being express and were never about being quick. It was about making something accessible and available, тhat was the same—if not better—than what was out there. I mean, we really stand behind our protocols and the products that we use in our treatments. My partner talks a lot about the Warby Parker analogy of the $95 glasses because you’re cutting out the middleman and all these other things. And it was similar to us—it was like, “Our facial isn’t $125, it’s $225 because our model is different” and we were able to achieve that.

Richie: [00:24:14] It’s the entry point that none of the other places had, which is, you can just try it for 30 minutes and worse case whatever…

Michael: [00:24:22] Exactly. And you can book online. And all these little pain points along the way that you start to solve that just minimize the friction to jump into the concept.

Richie: [00:24:29] So you mentioned before the middleman Warby analogy. How did your approach contrast that of the old fragmented guys?

Michael: [00:24:35] I mean, a big part of it was the decoupling of facials, which allowed us to say, “Hey, if we’re going to take just this offering at just this ideal price point we want to hit, what do we have to do to make that work?” So obviously that meant cutting out massage, cutting out steamers, cutting out saunas, cutting out the big facilities that come with it, rethinking products at the front. A lot of spas contract with one or two brands and offer those; brands are the ones who actually create the protocols for the facial. And you only use those brands’ products in the facial. It’s fine, it’s safe that way, but it actually—I mean, we all know if you open anyone’s medicine cabinet, rarely do they have one brand’s entire roster in there. And how credible can it be to actually treat a wide number of people with all the same products? You really just push go on something without thinking your way through it. So we knew we wanted to offer something customized, which is really hard to execute from a consistency standpoint. It requires critical thinking and so we knew we wanted to represent a lot of brands. We have just over a dozen brands in our retail space alone.

Michael: [00:25:39] We use about half that in the treatment room, but really it’s like a “Choose Your Own Adventure” with the therapists in the back. If you lay down for a facial and tell us what your goals are, [what] your concerns are. And then they’re also doing an in-depth analysis on you and they see what those goals maybe should be and what those concerns might be, they can piece together a protocol that fits within the Heyday mold, but it’s different than what somebody next to you is getting because it’s geared to you. So that required a lot of training and I think that allows us to really create something different than what’s out there with our model.

Richie: [00:26:09] So how did the launch go?

Michael: [00:26:11] Looking back it was pretty smooth. We were very lucky. We had a great contractor who finished on time, training went well. We were a small, lean team, but we were buttoned up and thought through all those little details. I think [I liked] people with a hospitality orientation because they think through those details that matter to people. And I remember our first week, we got in this space and it was really beautiful to see the whole team figure it out together. It was like a beautiful chaos of the family-and-friends period or just everybody running around and figuring out what to do. And we were introducing technology systems so we could keep track of every client’s facials and what we used on them and their goals and concerns and all that. So everybody is getting the lay of the land.

Richie: [00:26:50] Did you build that?

Michael: [00:26:51] Yeah, we built that—that doesn’t really exist You build that or yeah, we’ve rebuilt that—that doesn’t really exist; we is sort of used like an online database program to build that, which we still use that today. Launch was fun. I think the moment that really hit [us] was when we got a press announcement from Well+Good about our opening because suddenly I was sitting there looking… At that point [I was looking at the] bookings and it was just like new appointment, new point, new appointment and [I] realized what had happened. And that was the moment we were like, “Okay, it’s showtime.”

Richie: [00:27:14] How did you land on the prices you did?

Michael: [00:27:16] [We] definitely looked at the cost of what it would take to run this business, assuming the biggest cost is going to be labor. And then you factor in all the operational costs of rent and products and overhead and all that. There’s a consumer aspect to it too, right? So take the 50-minute facial, which… 80% of our clients opt to choose that one. We knew we wanted to try to get it under $100—just if you’re going to hit on this notion of accessibility, something that someone can do once a month, which a dermatologist or esthetician will tell you ideally you’re doing about once a month [because] once a month your skin cells renew. It’s great to get that treatment in at $95. It felt like the appropriate price—again, the Warby price appears a lot and it’s… I don’t think that’s a new startup idea. It’s classic consumer marketing, but we knew we wanted to get under $100 for the price point, so we said, “Can we make this work at $95? And how does the experience have to be to make it so?”

Richie: [00:28:05] Alright, so the company launched, it went well, a lot of appointments filled up. What was the rest that you’re like and then will work forward.

Michael: [00:28:09] Well, so to go back to your question earlier about how it [felt] to take that risk and make all these investments in brick-and-mortar before was going to open. It happened, again, really, really quickly because it takes about—at least a New York City—it was about nine months from the time we identified a space to negotiating it, getting through the lease, getting through the architecture and design and the city and the general contractor and all that. Nine months till we opened. So if you’re going to open a store the next year, which we wanted to do, we had to sort of say, “Okay, the model seems to be working but we have got to pound the pavement again. And it was like three months after we opened, we were already looking in our next neighborhood. And it did feel like we just launched this thing and here we are again, having to sort of think about that when we wanted to focus on the [first] business, which we were. And I think that was something we agreed on at the table at the very beginning. We knew we were building this to scale—this was not going to be a mom-and-pop operation, but we said for this first year or two, we have to think about this like a family restaurant. Like you’re there all the time, you’re on the ground. You’re listening… You’re in everybody’s faces in a really good way and that’s important because you’ve got to know what’s working and what’s not.

Michael: [00:29:18] And I think that’s just a good business practice for any “people” business, any hospitality business. I think on the flip side, what I didn’t know going into this is if you look at the industry of estheticians of massage therapists, it’s a pretty crazy industry of people who give their bodies, their energy to help other people feel better and to heal who are not treated the best. It’s a lot of 1099-ing. It’s a lot of places that may not always pay their employees on time. There’s a lot of shady stuff or no benefits for a lot of stuff like that, that in our former consultant lives, we take for granted as a basic benefit package. That bottom pyramid of Maslow’s hierarchy [of needs] is not there, right?

Richie: [00:29:57] Even I remember reading the big article The New York Times did about the nail salons—a similar crop of employment.

Michael: [00:30:03] Exactly. Yes, yes. And I think that that was a huge thing and I didn’t want it to be viewed as owners who just owned this thing and didn’t pay attention to it—that was so not the intention. And I think making the intention [about] being there and listening and understanding… There was a lot of trust that had to be built—you are on the ground, you’re with customers. If the product that we launch with isn’t working, let’s talk about it. Let’s talk about what features need to change, what the struggles are in the treatment room, how can we use technology to make your job better? And in that spirit… You can say that on paper, but it requires really just being there and reaching across and working with people to prove that that’s truly what you are.

Richie: [00:30:40] Gotcha. So you had enough confidence then that three months it’s time to go for the next one, TriBeCa’s the spot. Was it different?

Michael: [00:30:47] It was a little bit different. We had developed some tools. We now had a place to train. We had a place to show people our business. So I think it was different. The hiring front changed a lot and it was less about people taking a bet on us and more referrals from employees who said, “Hey, you should come here,” which was a huge help. I think from the build-out perspective, we had sort of been around the block once so we sort of knew what we needed in order. We knew what the pain points were and so that was smoother. I think it was there again though that every one of those inflection points or growth moments, you just have to think about what could go wrong, what will change and how will that change impact the first unit. It’s totally like having—I don’t have kids, but I’ve heard when you have another kid, [you have to think about] how that affects the first kid’s experience. It’s very much like that.

Michael: [00:31:30] So I was thinking about how do we take care of the new baby, but also make sure that the existing one is continuing to grow and get the attention it needs.

Richie: [00:31:40] So that brings us to 2016. Talk a bit about that year in focus.

Michael: [00:31:44] 2016. We opened Tribeca in August that year—so a little over a year after the first store opened, we opened the second one there, close by, right? That’s a subway ride away, but a lot of our clientele sort of lived around or between those locations, so I think it was helpful to seed the concept. We opened in the Upper East Side in March of ‘17—of this year—and that was a very different opening because it’s a different neighborhood where some people were like, “I have never heard of you. Who are you really?” That year I think was about that one step of expansion and starting to build an important level of consistency across the two shops with that team and really systems and operations. Internally, we launched an intranet so we could communicate with everybody when you have a workforce that isn’t necessarily on email and computers all day thinking about technology. Some of those things that we were testing at the first shop—now you’re running across two shops and you want to get down a little bit more. So I think working on that operational efficiency was important in that year.

Richie: [00:32:45] When did the membership piece come in?

Michael: [00:32:47] We actually launched with.

Richie: [00:32:48] Explain it really quickly.

Michael: [00:32:49] Yeah, so obviously, we offered à la carte services. If you come in for a 30-minute facial at $60, a 50-minute facial is a $95, and 75 is a $135. We’ve got a couple enhancements that can add onto that as do most spas or other businesses like us. With the membership, we didn’t know what that was going to do, but it was a feature of our booking software and we were like, “Let’s just try this, let’s price out to what it would be if somebody agreed to subscribe to do a facial once a month. What is the appropriate price break for them and what are the appropriate benefits for them?” So we knew you had to save a little money on the treatment, as you should. For the commitment, we gave 10% off products purchased any time in the shop. We gave a discount on some of those enhancements for treatments. If you’re coming regularly, you’re going to be stepping up your game into those things. And it was just like a really nice, steady growth of people who… And that was really surprising when I was at the front desk and [a customer] in the first two weeks was like, “I think I want to do the membership thing.” And I was like, “I think that’s awesome.” It’s… it’s that moment where it really was like, “Okay, the idea of frequency and accessibility in this model works in that way. Someone tries it wants to engage with this thing more regularly. So membership just continued to grow steadily at that first unit and we weren’t really sure where it was going to top off.

Michael: [00:34:02] We had an incentive with our team for membership mainly because the old model was, you get commissioned on treatments at a spa, you get commissioned on products and you get paid a small wage. So you can see why the pressure was always on upselling and most clients will tell you what they hate about spa experiences. “I feel upsold. Not only am I naked in a robe and laying on a bed—I don’t feel like I have the power to say no to these things.” And you walk out. And during the treatment… During the treatment and after at the counter when you’re buying products, it’s an icky feeling for the client, but it’s also icky for a therapist who’s told, “You’ve got to meet $2,000 of sales quotas for this brand this month.” That’s bull—then of course you’re going to push…

Richie: [00:34:46] It’s almost like a department store.

Michael: [00:34:47] It is, yeah. And so we said, “That has to go away.” We have no quotas on products. We just do right by people’s skin. That should be the mantra and if we do that, [sales] will happen. And I think with membership, we laid out… I remember with the original team, [it was] like, “Let’s look at the old model of behavior because we don’t commission on treatments because we don’t need that drama in fighting over clients or anything.” And we said, “Let’s look at the old model as somebody comes—let’s call it twice a year—and you send them home with a big basket of products each time. What does that net out at the end of the year for you?

Michael: [00:35:17] Let’s look at a member. A member comes in 12 times a year. So you actually get to build a relationship, you build some predictability in your book of business. They can see more change in their skin. They might only buy a product once every time, maybe every other time. But you still net out with a better proposition with a member. So it became this very natural way for people to engage. And I think as we look forward to next year, a real focus is on what do we do for our members for their loyalty [to] really build a community around that and start to do more events and things like that to bring people together. But it’s been I think rewarding all around to have that stability for our business and for clients to see the difference in their skin from being regular customers.

Richie: [00:35:55] It’s also interesting just from a lifetime value perspective. It’s just a fascinating price elasticity question, which is you bring the barrier down and then extend the lifetime as opposed to just saying, “we’re a spa where our treatments are a $1,000 once.” And you come once.

Michael: [00:36:09] Yeah, exactly. How big does your market have to be? And I think that also necessitated the expansion question too. It’s like, “Oh, wow, we’re seeing a lot of monthly members, we’re seeing a big cohort of people that come monthly, we’re seeing another one that clearly is coming more quarterly. How many people can we actually serve?” We’re like an eight-table restaurant at NoMad—at that location. We have treatment rooms and everybody wants an appointment at 5:00, 6:00 or 7:00. So you start to see what the utilization of the shop is and if the model holds you’re like, “We can only see X number of thousands of customers really at this location.” So if we want to bring in new people in the doors, we’ve got to expand a little bit.

Richie: [00:36:44] What was the evolution of thinking through the scale question? Retail stores— you could fit people in there, there is traffic flow, all these things. You have chairs, effectively. So as you said, there’s a very finite utilization. How did that thinking evolve as you grew the business?

Michael: [00:36:57] I think that was just again looking at the demand that was being placed on the shops and knowing we had to expand to keep serving the audience. And our NoMad store—this one performs really optimally, but it’s jammed. I think when we launched, people were like, “I love this idea. I can walk in and get a facial in the same day.” And then we heard people complain like, “I have to book like three weeks in advance. Now this sucks.” It’s a really really lovely problem to have, but it’s sort of necessitated the expansion into the other locations.

Richie: [00:37:27] I guess it’s interesting on the scale side because there is no exponential growth to this business. But that’s not bad, right? Because you’re opening retail, you’re utilizing it and you’re opening more retail and utilizing it—it’s not taxed or it’s not Facebook or whatever.

Michael: [00:37:39] Exactly. It’s not tech in that way. I think that for me, that’s an important piece of it, right? I think we have a right to play in other cities and other geographies really, really well. And we’re looking forward to doing that. I think the scale question for us that compliments the brick-and-mortar business—which is a much more steady-as-you-go growth—is ecommerce and what that looks like. And we’ve just begun to scratch the surface on that—that’s an area I’m really, really excited about because if you look at the ecomm experience out there for so many beauty and skincare brands, it’s just websites with tons of products on them and this is even putting aside Amazon in the conversation. What right do we have to win there? And I would argue it’s huge in the sense… I talked a little bit about how estheticians are this hidden character—you have all this knowledge about products, like, where are they in the conversation in online buying. For somebody who hasn’t been to a Heyday or can’t have a facial with us: What does the hump that they have to get over to try a product with us [look like]? I would argue [that] we’ve got a team of amazing experts who have different opinions on products. Let’s have that out there. Let’s take the data from the 100,000 facials we’ve done that we keep and use that to help a client who hasn’t been into a Heyday [whose] skin analysis we can’t do. Help them get to some more personalized recommendations and answers to skincare.

Michael: [00:38:52] There’s so much that we can do with the brick-and-mortar work that we’ve done and you can’t decouple that too, right? So the scale… I think layers on as we’ve built these amazing sort of laboratories to learn and gather data and then feed that into something online that scales beyond geography.

Richie: [00:39:07] Yeah, and it reminded me instantly of what Stitch Fix is doing.

Michael: [00:39:10] Yeah.

Richie: [00:39:10] Which is predicated on the idea that you can’t remove the human from this process totally and [that] apparel [or] whatever it is—this has even more medical, scientific, personalized aspects to it. And so it seems it would be even more predicated on an intelligent, knowing, thoughtful person being involved in that process.

Michael: [00:39:27] Totally. I mean, an anecdote on that was this year for Black Friday, we knew our mailing list was a lot larger and we were kind of gearing for quite a big sale for us. We launched a live chat feature on the website because I wanted to use that period when we’re going to get a lot of eyeballs to test. So I spent my Thanksgiving weekend answering all the live chats which is really, really illuminating and cool and could really see the need for expertise that those who had come to us before were looking to connect some dots from their experience in the store to online shopping. But also people who had heard about us and wanted some recommendations on a certain product and just that level of assistance coming from an expertise of skin therapist [that] does not really exist out there.

Richie: [00:40:10] Even… I just found on the website as a total novice that even the “how to use” section was something where I was just like, “Please tell me how to use this in the simplest terms possible,” which I found just really nice, not having to read the little fine print on the back. That’s like the medical direction, which is basically put it on and don’t put it in your eyes.

Michael: [00:40:28] Yes. Exactly. We want to layer that with video and even hack tips. With a lot of our products, we love sharing, “Hey, if you read the back of the label, this is how they tell you to use. But really you can also use it like X, Y, Z and you get amazing results from it too.” And those are the types of nuggets that we have and we can share in a really meaningful way.

Richie: [00:40:47] Yeah, the other part too, and I’m curious to talk more about the product side—there seems to be a really powerful replenishment use case also. And I don’t know if you’ve tested that, I don’t know… I guess talk about what stage the ecomm product piece is, but that seems like a massive business in and of itself,

Michael: [00:40:55] Completely. And I think we talk about these sort of core four [products] for every routine: you cleanse, you exfoliate, you moisturize and you protect with sunscreen. Those are the four basics if you’re going to build a routine. But those core products would make a couple seasonal shifts with people. But consistency is really key to making your skin happy. So a subscription component or a replenishment component is huge. We haven’t played too much with that on the website because our customer base is so brick-and-mortar right now and they come back in the stores and replenish in the stores because if you come for a monthly or bi-monthly, you’re finishing there. And I think people enjoy sometimes the shopping at the end of their facial and grabbing what they need and having that experience. But it’s totally correct for how we can reach an audience who’s in St. Louis where there’s no Heyday, but [who] might want to replenish a product without thinking about it. That seems like a no-brainer.

Richie: [00:41:51] Will you ever make your own products?

Michael: [00:41:53] I would say yes. Very carefully—I think right now, I think what a lot of clients do really, really appreciate is that we don’t have our own products. So at the end, the conclusion isn’t “This Heyday cleanser is the right one for you” because I just feel like it’s all about building trust and people like that we curate a lot of different lines out there. If somebody is really into hardcore science and results and ingredients, we’ve got lines for that that are more cosmeceutical. If someone wants completely all natural, we have some options for that. We’ve got some lines that cover organic. We really cover the spectrum in a healthy way and I think people really appreciate that as part of the shopping experience. And it allows therapist to really cultivate what’s right for that customer. I think a product line would be really interesting down the line. We’ve got a laboratory of therapists, where I could put anything on the breakroom table and be like, “What do you think?” And there’s passion and ideas. And so that’s with whom I would develop our product in mind because they’re also seeing and touching all these faces and understand what’s missing in the market or what isn’t being used correctly. So I think down the line for sure.

Richie: [00:43:00] Would you ever sell that service to other brands? Would you ever see Heyday as a testing ground for other brands?

Michael: [00:43:06] Absolutely, yeah, I think so. And I think there’s a couple of brands that want to do an exclusive product with us, which is really cool. There are a few brands that we work with already—One Love Organics that we love out of Georgia… They do our massage medium oil, [which] is custom-made by them and they give it to us. We don’t sell that to clients, but because we are live, working with clients on products every day, I think a lot of brands will look to us as a place to really try and test things before they bring them to market.

Richie: [00:43:31] Do you see the services expanding in terms of going beyond facials or…?

Michael: [00:43:36] That’s a great question, we get that a lot. Obviously I think skincare is complicated enough and simplicity is one of our chief hallmarks. We will probably always stick with facials. Our team loves that we don’t do brows and we don’t do waxing like a lot of people have to do. That’s a sort of compliment. The business I think will continue to do facials, will continue to evaluate technologies, techniques, protocols, products that are out there to bring in the latest and greatest. And our enhancement menu, which we haven’t really gone into because we…

Richie: [00:44:05] Talk about that.

Michael: [00:44:06] So we do a series of peels—peels are sort of a chemical, an advanced exfoliation… We are going to get a little skin knowledge for a second. So, microdermabrasion is another advanced exfoliation, except what it uses is sort of like a little tiny sandblaster for your face. And we do light therapy which uses an LSD variety of light with a frequency that helps awaken skin cells a bit beneath the surface. We also do beard therapy for gentleman too, because the skin under the beard doesn’t see the light of day for a while. So those are some extras on the menu that we add on. And again, we don’t push those. We sort of educate clients about what they are in their first or second visit and say, “Look, you can graduate to these if you want to.”

Michael: [00:44:45] But again, it’s not a push thing. But that’s an area where we’re able to keep the chief menu very simple. It’s just that 30, 50, 75[-minute facial] and then you can add these modules in and they fit within the time frame so that’s an area where we can bring in I think newness [or] at least try it seasonally and then bring it into the menu.

Richie: [00:45:01] So you raised a good amount money recently. Talk a bit about that—maybe what the process was like and then what’s the plan to put it to use?

Michael: [00:45:08] Yes. So as the press mentioned, we closed the $3 million round. The lead investor was Lerer Hippeau ventures and we really love them for their savageness of building content and commercializing content. And we think that’s a huge area for us, [we’re] really looking forward to gaining some insights from them on how to integrate content and commerce together as we think about the new ecomm experience. Certainly a good portion of those proceeds will go toward expanding the footprint of Heyday and other geographies. And then sort of growing our office team to execute on those things. And I think that process—just to touch on your question about the investment process, I think the toughest thing through that process was finding the right partner because on paper, people loved the numbers. But a big question was, “Okay, we like your numbers. It looks really good. We only invest in tech companies but this is really interesting. But you’re brick-and-mortar and you basically are a retailer.” And so there was a lot of… You could see a lot of gears crunching in investors’ minds of what box to put us in.

Michael: [00:46:09] We wanted partners [who] were willing to sort of see the forest from the trees. We were like, “Okay, if you really need us to fit in a neat box, then this probably isn’t right.”

Richie: [00:46:19] Which is what makes this entire company interesting is that it doesn’t fit in a traditional box.

Michael: [00:46:23] Yeah, and at the end of the day, I always say…I would joke with investors that the most important things to get right for my business are the people and the laundry. And if I get those two things right, things run really well. And if people look at you like you have two heads and you’re not funny, then probably is it right.

Richie: [00:46:39] Right, but it’s also… I guess when I think about the ways to push the buttons that you’re pushing on, it’s taking elements from a digital space, from a tech base, from an ecomm or retail, and you’re repackaging them, unbundling them, presenting this thing in a whole new way is what makes this whole thing interesting and if you try and deconstruct it with the mentality of how stuff used to work, that defeats the whole purpose.

Michael: [00:47:00] Exactly. You look at all this fear and chatter around what’s going on in retail right now and experience—people want an experience. Amazon may take our ecomm business—you can’t get a facial on Amazon.

Richie: [00:47:14] Yeah, again, Amazon will likely own the transactional part of the space forever, for a very long time. So be it. But I assume that in your chair, you’re like, “Great—that will only get them so far.”

Michael: [00:47:25] Totally.

Richie: [00:47:25] Which is really interesting and I think when we look at all these brands going back to retail, going back to wholesale. The days that this purely transactional world would exist and we would all just be drones to our credit cards is ending as we realize actually all these very traditional parts of building these businesses are coming back and arguably are more important than ever.

Michael: [00:47:43] Yeah, I mean, that cycle exists right. I feel like to see what new ideas are interesting right now, it’s like go back to the late 70s, 80s and what business models were interesting and fresh then. [Now it’s,] “Okay, what’s the 2000s, mid-2000s’ take on it?”

Richie: [00:47:57] What’s been the cheapest and most expensive lesson buildings so far?

Michael: [00:48:01] Cheapest lesson—I think that I may need to think about that. The most expensive lesson… Our biggest expense obviously as a business right now are our build-outs and there’s a lot of pressure and a lot of things that have to go right around that. And I think our most expensive lesson unfortunately was with a contractor who was not as above the board as he was made out to be. We ended up having to clean up a lot of his mess at the end and negotiate with the all the subcontractors that he wasn’t paying. We just want to do good and you can’t be too naive about these things. But that was a pretty painful experience that took us a couple of months to unwind. It was just one of these annoying dark clouds that I get really resentful [about] because I really want to focus on the positive parts of the business and growing it and the creative side. And here we are having to negotiate with angry plumbers who are angry for really good reason. That was an unnecessary sidebar that we had to deal with. That’s just the reality of things and we try not to let that get us too cynical and down about it because that’s the reality of brick-and-mortar businesses. The cheapest lesson I would say [was] just being with the team and learning and listening and making sure that the company’s values are being lived.

Michael: [00:49:15] And I think that six months in, I remember we sat down with the whole team just to have a check-in on like, “How are you doing? How has Heyday changed your life for better or for worse? How do you feel?” And I can still remember everybody’s answer as they went around the room with our first initial team. And there were tears, there was happiness and that was one of those moments where I was like, “Okay, we’re doing something really special and if we just continue to listen to people and support them, that’s a huge defense for us on a very basic level” and, I think, a decent and humane thing to do as a business. To me, the company is a vehicle for all the people [who] are in it to get to wherever they’re going next sort of and that’s it. So you should enjoy, and feel supported in that journey together.

Richie: [00:50:01] Thanks so much for talking.

Michael: [00:50:02] You got it.

Richie: [00:50:11] Thanks for listening to the Loose Threads Podcast. Join the newsletter at LooseThreads.com and feel free to leave a review on iTunes—we always appreciate it. This episode was edited by George Drake Jr., and my thanks to him for his time on it. We have a great roster of upcoming guests including Ben Kaufman of BuzzFeed, Alex Fogelson of Taste Beauty and Jack Carlson of Rowing Blazers. Thanks for listening and talk to you soon.