CEO Interview: Squire Creates New ‘Operating System’ for Neighborhood Barbershops

There’s no shortage of business model innovation enabled by SaaS technology. It makes entering new markets easier. It makes data more accessible, a critical feature in the age of GenAI. It allows companies to scale up and down with agility. Perhaps one of the innovations that has been overlooked belongs to the vertical SaaS applications that address unique pain points and challenges of specific industries, providing greater value than generic, one-size-fits-all solutions.

Examples run the gamut from Toast, which specializes in software solutions for the restaurant industry, to Guidewire customizing the insurance industry to Procore for construction management. And on the niche-side of the ledger there’s even a SaaS platform for barbershops. Before you think it’s not a business model worth pursuing, that platform, called Squire, has been raking in funding. Through the past 10 years, Squire’s raised about about $165 million in funding rounds; earlier this month, Silicon Valley Bank announced that it had provided $35 million in debt financing to Squire.

Barbershops are among the most hyperlocal of businesses, lining every Main Street across the United States.  They have their loyal customers, jockeying for, as McCartney once sang, “every head they’ve had the pleasure to know.”  The barber’s pole is among the most universal and instantly identifiable symbols of commerce, signaling a place to gather, get groomed, trade stories and build camaraderie — often in underserved neighborhoods.

“There’s a sacred connection between a man and his barber,” Squire CEO Songe LaRon told Karen Webster recently, adding that technology — automating communications to clients, booking appointments, even streamlining tips and working capital to these small businesses — can strengthen those bonds. Barbershops, he said, “are underserved and overlooked from a technology perspective.”  The pain points are myriad: waiting times can be long, especially at popular establishments, and many barbershops are cash only.

Vertically Integrated SaaS

Squire, as a vertically integrated SaaS, has been busy setting up the “operating system” for barbershops — helping them digitize everything from inventory management to payments (with tap to pay functionality) across its platform.

“Our vision is to be with them the entire journey of their careers, from when they start barber school to when they get their first clippers to when they are owners opening multiple locations.  We’re the only platform that’s built to support that entire journey,” said LaRon.

The scheduling app is the digital front door to a wider ecosystem. “We start off with the core booking and payments,” he said, “and you have to get that right and do it really well…once you get your foot in the door… our product that allows them to pay out their barbers, and handle commission payouts and get their deposits faster is important to them.  There’s a plethora of things that you can do, but it’s all about adding value.”

Beyond the commission model, some barbershops operate through the “booth rental model,” wherein barbers pay weekly rent for their dedicated chairs.  Squire, said LaRon, enables the business owner to collect rent through Squire automatically.  Squire also offers a lending product based on transaction volumes and the data that crosses the platform; the working capital solution allows the shop owners to open a new location or renovate existing operations.  Squire’s own revenue model is based on transaction based fees tied to payment processing and the monthly subscriptions paid by the barbers.

As he noted to Webster, in a nod to the customer experience, “once you get used to the ease of mobile payments, of tipping on your phone and pre-booking, it’s hard to go back to the old ways.”

Funding — and Expanding the TAM (and Valuation)

Asked by Webster about the total addressable market — where some stats peg the value at just under $6 billion — LaRon said that there are perhaps as many as 100,000 barbershops in the U.S. that are just starting to address technology. (Some sources suggest that the number is roughly 144,000 — and an industry growing at a little less than 4% a year.)  The demographics themselves give a tailwind to Squire’s efforts, given the fact that more barbers are skewing younger, average age of 37, towards Gen Z individuals, who find the profession a lucrative one (Squire offers its services for free for six months as barbers set up shop right out of school).

“It’s early days still,” said LaRon, and on a scale of one to 10 in terms of technology’s penetration he pegged it at a three or four, “which shows you, even though we’ve been at this for 10 years — that’s how big the market is.

Or very niche-y. Fundraising was tough until 2019 when Squire raised its $8 million Series A. The firm itself noted in 2021 that, upon its 2021 Series D capital raise (with $60 million), it had tripled its valuation to $750 million.  One might say that’s frothy given the total TAM of the market, particularly when compared with the hair salon industry which has ten times as many establishments and ten times the sales volume. LaRon observed that “there are a lot of similarities between women’s salons and men-focus barbershop,” observing that “we have a lot of room to run — with a really massive opportunity,” he said.  Albeit with a shorter runway. The competition, he points out, are mostly the horizontal platforms offering booking and payment services to salons. The lack of direct competition may suggest a reluctance on the part of investors to bet on a niche with a relatively modest upside and the challenges of gaining scale economies.

For now the focus remains on the barbershops, where, as LaRon told Webster, with the advantages inherent in the vertical SaaS model: “We’re trying to go as deep as humanly possible.  And we’re not done yet…the end goal is always to help the business owner make more money, to run the business better and to get their clients to come back, and book more often, while having a better experience. We want to do everything for these small business owners.”