Zenoti hopes to redefine wellness, grooming industry to make it Uber-like

The pandemic has seen several start-ups born in India hitting the golden $1-billion valuation mark. After Unacademy, Razorpay and Cars24, the latest India-born start-up to join the unicorn club is Zenoti, which eventually shifted base to the US in order to go global.
 

Born out of a small Hyderabad office in 2010 with business spread across the US, the UK, Australia and West Asia, Zenoti is the newest SaaS (Software as a Service) success story coming out of India, joining the likes of Freshworks, Icertis, Druva and Zoho.
 

It has been built by former Microsoft executive Sudheer Koneru, who took a break from work and was not really looking to build a start-up initially. Today, Zenoti has digitised some of the top salons such as Lakme, Enrich and Geetanjali via its software, and has attracted attention from some of the top PE/VC firms such as Accel, Tiger Global and, recently, Advent Technologies.
 

In fact, the first VC cheque that was written to Zenoti in 2014 by Accel Partners was the result of an experience linked to an Enrich salon. Abhinav Chaturvedi, then a young associate at Accel, had gone for a haircut at an Enrich salon in Jayanagar in Bengaluru. The smooth checkout experience, thanks to the software they were using, got him curious. The software turned out to be ManageMySpa, later renamed Zenoti.
 

Koneru has been something of an enthusiast of personal wellness as a business proposition. After quitting his first venture, Intelliprep, which later became SumTotal, an HR management software system, he invested in a wellness chain called LatitudePro when he realised that the segment did not have a software to run its operations and everything was old school. He saw this as an opportunity and with his experience in building software for Microsoft, built one for the space in two years.
 

“When people come out of a wellness centre, they feel confident. These are some of the businesses where you let people enter your personal space and come out feeling good. I am not someone who could run a brick-and-mortar business, so the next thing I thought was to take care of all their work so they can take care of their craft and make people feel good,” said Koneru, an IIT Madras alumnus.
 

The Tiger Global and Accel-backed company recently raised $160 million led by private equity firm Advent International, through Advent Tech and affiliate Sunley House Capital, at a valuation of over $1 billion.
 

With this capital, the company is broadening its ambitions. Earlier it managed customers’ appointments, front desk, payrolls, inventory and marketing for its clients. It is now trying to redefine the industry and make it more Uber-like.

 

Soon, if a customer enters a Zenoti-powered salon, the person will be charged for the service, pay a tip and rate the stylist without reaching the front desk. Koneru said there are certain things that people still decide at such centres, such as employee scheduling and inventory. The company is now investing in an AI-based algorithm that will help with these decisions, including price surge for different services during different times of the day. “Drivers who use Uber trust the platform to do everything and they just focus on the ride. The same way we want people to focus on their craft and leave the rest to us,” he said.
 

Calling the Indian start-up ecosystem a vibrant one, Koneru believes the way India used to be an outsourcing hub a while ago, it is now moving to a stage where all business software will originate from the country.
 

In that case, why did he shift base to the US after starting out in India? “Of the total global opportunity in software sales, the US accounts for 50 per cent of that market. So in order to pursue global ambition, it made sense to move to the US,” he explained.

Today, the US forms around 60 per cent of Zenoti’s new business for the company, followed by the UK and Australia. India forms less than 10 per cent of its total business, where the revenue per store is much less as compared with the US. In 2021, it will go deeper into the European markets with ambitions to go for an IPO in the US in the next 2-3 years. The company has recently forayed into pet spas, too.
 

With many vendors struggling through the Covid-19-induced slowdown, the company is looking at consolidation opportunities that may come up in the US and the UK for faster growth. It is also open to collaborate with Indian start-ups that make interesting technologies that could be used in the wellness and grooming industry.
 

Of the company’s 550-strong global workforce, Zenoti has 400 employees working out of India, serving 12,000 locations globally. With contactless transactions becoming the new normal and more companies adopting such technologies, Koneru thinks his company will zoom past the 100 per cent annual growth rate soon.
 

At any rate, Zenoti’s investors seem satisfied with the journey so far. As Shekhar Kirani, partner, Accel, said, “From Accel’s perspective, it has been gratifying to see what Sudheer and Zenoti have been able to achieve. There are enough lessons in their execution to fill a book, but we want to draw attention to one particular aspect of Zenoti’s organisational culture and leadership: Fast decision-making, which has helped them to gain momentum in the wellness market.”