Give me a little background on Phorest…
Phorest is 11 years old. It started here in Dublin. I was a couple of years into University
when I started this. We do software in the hair and beauty industry, doing everything for salons from the appointments to point of sale, stock control and the marketing tools. The specific thing that Phorest does for salons and the reason why they buy us is that it guarantees to help get their clients back in more often.
We grew quite slowly at the beginning, but it has sped up in the last few years. We now employ just over 80 people, and coming up to ten million (Euro) in revenue. We bootstrapped for the first six years, and then did a seed funding round, but we haven’t taken any more funding since then. We’re now basically funding all of our own growth ourselves. That’s quite a big part of who we are.
The decision to bootstrap for the first six years, was that something you preconceived?
It definitely wasn’t preconceived. We didn’t want to give up the direction of the company before we even really figured out what that direction was. We had no notion of being a bootstrapped company forever; at that point, we were just trying to to survive. We weren’t thinking that far ahead.
Through the years, we started to formulate a kind of philosophy around funding. It’s not that we think what we’re doing is the only way to do it; every company has different needs, but in terms of our business, bootstrapping, or just doing it ourselves, has loads of benefits that I think other companies should consider. Basically, with a company it can take many years for you to really understand the industry that you’re working in. It can also take many years for you to see the real opportunities that lie in front of you. You don’t really get that time if you take venture capital from day one because you’re working within a five-to-seven year horizon and straight away, that’s not enough time to see what those opportunities are.
In relation to Phorest, we started by selling a software for salons, which was straightforward at first. The more clients that we have, the more time I’ve spent, tens of thousands of hours at this stay in salons, collecting data and knowledge as I go. That’s when the opportunities start to open up to you, unbelievable opportunities to be a market leader worldwide for what we do. It’s only coming around because we’ve done the ten or eleven years of boring lifting to get to here. Do you know what I mean?
You’ve given yourselves the time to evolve…
Not being funded has given us that chance. I think other companies out there, with a bit more time, might actually dig into something bigger. They won’t get that opportunity if the company sells out before they get really get going. A lot of startups kind of missed out.
Why aren’t they taking this approach?
The story is much more exciting if it revolves around people getting funded or people getting acquired. That’s all you see in the paper, if you think about it. Success is like ‘Get some funding, and then you’ve won the game’. You know when you’ve got an exit, that’s it, you’re a hero, well done. There’s a place for that, sure. But there are also companies out there, ones you don’t read about as much, building for the long-term.
I have spoken to other people who feel exactly as you do. You’re definitely not alone.
Don’t get me wrong. Of course we consider offers and we’ve met some really good and smart people. And sure, they could have helped us grow our business but fundamentally the business is accelerating anyway. The extra money that we would have got, wouldn’t have really increased the growth rate of the company, but we would have given up a significant portion of equity. Ultimately, we would have given up more control proportionally than the extra growth we would have experienced. It would have been more out of our hands. Who’s going to be making the ultimate decisions if you have less control?
Tell me about your philosophy, in terms of resources and growing the team…
The more you can grow your own team, the much stronger your culture is. If someone comes into your company and grows into a senior level over a good few years, is steeped in your culture and learns to do everything the way you would, that’s totally different than just bringing someone in. Obviously, there are skills you don’t have in your team and you can bring someone in that has done it before elsewhere, and that’s going to help loads. It is just you need to balance the two as much as you can. The team here has a very strong bond. We can say anything to each other. They know how it is. They know the rewards. They know what’s important. They’re all excited about going to the next level. And we’re all having to level up. And I’m confident that everyone in our company can do it.
That’s an exciting approach to take…
Yeah. And the rest of the company can see that. It’s a great way to hire people. We are able to say, “We do this all the time. If you want to grow as a person in your career, this is a really good place to do that.” That’s important for us as well, in hiring people. When you’re trying to grow your own guys, you’re naturally thinking about the longer term.
Last week you celebrated a couple of your employees being with the company ten years…
Yeah. Like three of our guys. We’ve still got pretty much the core team from ten or eleven years ago. I think six of the first ten employees are still here. They had a great attitude. They had a real willingness to learn. That takes you a long way. The main thing we look for is a good attitude and being open to learn.
What’s your own long-term vision for Phorest?
We feel like we’re building the roads in this industry. This is a huge industry. There’s 60 million people working in salons worldwide. And there’s 120 million people working in the industry in total in terms of businesses supplying salons. It is a huge industry, one of the biggest in the world, yet it’s almost out of touch with technology compared to travel or health. One of the reasons is because it is a very fragmented business. Most salons are owner-operated. They’ve been pen and paper longer than a lot of businesses that were consolidating and systematizing decades earlier.
As a result, there’s a huge opportunity to put an underlying layer of technology into this
industry. We’re doing that by collecting bookings and all the data that’s happening in the salon. There’s stock control, staff reports, financial reports and marketing. We’re creating that layer on top of which all of these advances in technology that are coming in the next decade can be built on top of.
Do you think we’re coming around to understanding that there are other ways of building businesses as opposed to getting funding at a very early stage?
Take a really good programmer like one of our software engineers, who’s worked in a couple of VC-backed companies before. You have a real advantage over a VC-backed company if you hire that person because they really respond well to a company that’s building something for the long-term, because you really have to think about what you’re doing, and what’s the right thing to do when building software that’s made to last.
A lot of people talk about doing the right thing, but fundamentally if you’re just trying to get an exit in the next three or four years, the decision making is affected. A software developer loves being told ‘Look, this had better still be working in ten years’. The work she does then has a lot more meaning and is much more fulfilling.
I’m starting to see more about bootstrapping, and about companies not taking on funding, there seems to be more talk about it at least. So, hopefully…