Imagine you manage a spa, salon or medi-spa — what kind of challenges would you face from day to day? Finding and retaining staff, satisfying customers, perhaps a particularly gnarly pair of feet in line for a pedicure?
Well, according to Sudheer Koneru, there’s a lot more to it than that.
“This industry’s pretty unique, and it has complex needs,” he said in an interview with Built In Seattle, adding that these types of businesses generally offer multiple services, each requiring a different professional with different skills to perform them.
“There’s a sequencing to it,” Koneru said. “You can’t do a facial before a massage — you have to have your massage first. Manicures and pedicures can be performed at the same time. The timing is also different — a senior stylist may be able to complete a waxing appointment in 30 minutes while a junior stylist may need longer.”
“The variabilities and parameters in this industry are fairly sophisticated — and it has not been served with good technology solutions.”
Koneru — a Microsoft veteran and founder of enterprise software startup SumTotal — became acquainted with the spa industry’s unique software problem after taking a break from tech and investing in a chain of health clubs, spas and salons. When he found the available business management software options lacking, Koneru co-founded Zenoti as its CEO in 2010 to build software tailored to the spa and salon industry’s specific needs.
Zenoti announced a $50 million Series C investment this morning, led by Tiger Global Management with participation from Norwest Venture Partners and Accel. The round brings the Bellevue company’s funding total past $70 million. The company serves over 5,000 customers, including salon chain Rudy’s Barbershop, cosmetic surgery specialist Sono Bello and hair removal chain Waxing the City — Zenoti generally serves larger businesses with multiple locations instead of single outlets.
Zenoti plans to invest a large chunk of its new cash into research and development — most of which takes place in its Bellevue headquarters. While he is satisfied with the current quality of many of Zenoti’s software features — checking customers in and out, accepting payment and other day-to-day business functions — Koneru sees opportunities to double down on the company’s predictive capabilities. The company is currently working on AI-driven functionality that assesses a business’ capabilities — its scheduled staff and their skills — in the coming days and weeks, then produces marketing campaigns targeting consumers with services that complement the strengths of the available staff.
“There’s a lot of areas where we can do some decision making for these businesses if we have more intelligence on our platform,” Koneru said. “A lot of the work we do around predictive analytics and AI-based capabilities is out of Bellevue.”
We don’t see any meaningful competitors in the market we serve, so we feel this is the right time.”
The company also plans to scale out its sales and marketing divisions. The bulk of Zenoti’s customers are in the United States and Australia, and it’s looking to expand in the United Kingdom, South Africa and other English-speaking markets.
“We have always been fairly conservative with money,” Koneru said. “We have not been a company that’s cash-hungry. Having said that, we believe our solution works very well for the larger businesses in this industry. We don’t see any meaningful competitors in the market we serve, so we feel this is the right time.”
Zenoti currently employs a little over 300 people, with the majority of its staff working out of Hyderabad, India. The company’s research and development engineering teams — about 40 employees — work in Bellevue, with smaller teams dispersed across Australia, Asia and the Middle East. Koneru said its Bellevue and Hyderabad teams would grow by about 50 percent over the coming year.
