Tony Davis, eSalon

My interview today is with Tony Davis, co-founder of eSalon (http://www.esalon.com), a Los Angeles company focusing on the beauty industry. eSalon is backed by Encore Venture Partners, Avalon Investments, and Smart Technology Ventures.

BK: What is eSalon, and what niche do you fill?

TD: eSalon.com is a business-to-business beauty site, designed specifically for beauty salon professionals, by beauty professionals, with more than a century of collective experience. Our goal is to help the salon professional run his/her business more successfully, by offering them business support, educational opportunities, beauty products they use every day, and more - available any time, day or night.

In fact, eSalon.com is really like four websites in one: the Superstore will offer thousands of products available 24/7; the University offers lessons on the latest styles and techniques; the Community section lets industry professionals connect with peers, share ideas and catch up on industry "buzz;" and the Business Center offers advice and support in accounting, insurance and financial services. By providing beauty professionals access to information and support that they would ordinarily pay thousands of dollars for - that is, if they have access to them at all - eSalon.com is filling the major void in the beauty industry. To date there is no other business-to-business beauty site that has our range or depth of content, products and functionality.

The United States beauty market is made up of over 2 million professionals generating over $71 billion a year in revenues. The worldwide market is a $300+ billion a year business made up of over 8 million salons and professionals.

BK: What's your background, and how did you decide to start eSalon?

TD: I've been in the beauty industry for about 13 years in the manufacturing/operations/distribution side. Robert (Marc, eSalon president and co-founder) has over 40 years of industry experience, in marketing, advertising, promotion and product development. We wanted to take our collective expertise and seize an opportunity that we felt was ripe and ready for us to move in. We identified a couple of opportunities where we could make a lot of noise by finding a market niche where there used to be a void. We could create a foothold to grow a business where there was opportunity for a new player. The Internet was the perfect vehicle for us. We have tremendous industry contacts and knowledge to help us take advantage of what the Internet provides.

We know that traditionally a salon or beauty professional relies heavily upon manufacturers and distributors to deliver the products they need. That means they are also at the mercy of each manufacturer and distributor's schedule, as well as limited product offerings (no one offers everything). We are not out to replace the manufacturer/distributor. We take the best of what each has to offer, and combine that with other content valuable to the beauty professional - such as education, business advice and entertainment - and deliver it in one cohesive package that is open to them 24/7.

BK: How did you hook up with your VC's, and what was the process you took?

TD: Through an exhaustive set of meetings and networking, we identified VCs who wanted to be involved and interact with us on more than the "occasional board meeting" basis. They spend time with us; they have a diverse background in everything from finance to operations and strategy, as well as technology and Internet business. We found the VCs at Encore and Avalon to be extremely entrepreneurial and smart.

BK: How has starting an Internet business been different than your experience with more traditional "bricks-and-mortar" companies?

TD: Speed. You have to move much more quickly, proactively and aggressively, make decisions fast and change quickly. Traditionally, you build to last. In Internet, you build to take advantage of opportunities or voids in the market.

BK: What do you think is the toughest thing for your company right now, and what are your next big challenges?

TD: The main challenge facing us right now is bringing our audience into this new medium. Beauty professionals are not traditionally e-savvy, though in our planning and research we discovered that approximately 40% of them do have access to computer and Internet services. We plan to address that challenge via key strategic relationships with Internet, computer and financing institutions to help salon professionals get the equipment and any other help they need to get online. We want to be an active participant in bringing the Internet into salons and helping salon professionals get online.

Also, in an online environment we face the challenge that any e-tailer faces - the lack of tactile interaction. For us, it is perhaps more of a challenge than to business people entering cyberspace in a different industry. Our audience - hairstylists, manicurists, masseuses and facialists - work with their hands, physically interacting with people to make their living. Things like touch and smell are vitally important to our audience, and we can't offer that. What we can do is use sight and sound to deliver as much of that tactility as possible to draw in our audience. In an e-environment, knowing how to deliver your content is as important as knowing what to deliver. We're not just another corporate entity out to capture a significant but as-yet-untapped market segment. We are our audience, and we know what will make the difference.

BK: Thanks!