(V5)Spas and SaaS: How Zenoti Launched in the Global Wellness Market, Building Incrementally on Early Lessons
CREATED: 1 February, 2018
PURPOSE: Bring out the early story of Zenoti - in India and while moving to the US. How they found early traction and product-market fit in the Indian and US markets.
Review, feedback and sign-off: Shekhar (Accel), Saritha (Zenoti)
Many startups begin by trying to find a problem to solve. But Zenoti proves that the big problems worth solving are often the ones closest to them, and are best tackled one customer at a time.
Sudheer Koneru’s 40th birthday party was meant to be more than just that - it also heralded a break from entrepreneurship. His expansive career in technology spanned a Directorship at Microsoft, a CEO role at Intelliprep which later merged with Click2Learn and finally, sales leadership at HR solutions firm SumTotal Systems which he grew to a $100-million business as the Senior VP and Managing Director.
But he was ready for a slower life, he said to family and friends. It was settled. Or so he thought. Today, you are more likely to read about Sudheer’s success with Zenoti — an end-to-end SaaS solution for managing enterprise wellness chains — than find vacation photos if you look him up.
Abhinav Chaturvedi from Accel first discovered Manage My Spa, an early version of Zenoti, in a salon in 2014. Impressed by the seamless checkout experience and the range of product capabilities, he got in touch with Sudheer and soon after, convinced Shekar Kirani to fly to Hyderabad with him to meet the team. At this time, vertical SaaS products like spa management software were still very basic and companies were vying to improve the sales engine and distribution, instead of focusing on experience. But the shift of power from the distributor to the customer was already underway, and we recognized the potential of the people behind Zenoti. They had a larger vision and a deep customer focus. They knew that products weren’t built in isolation.
By 2016, the global company had collectively raised $21 M in funding, with Accel leading their Series A and participating in the Series B round. Today, Zenoti has over 5000 paying customers distributed over 32+ countries worldwide, with a majority of its customer base located outside India.
Recently, we spoke to Sudheer to understand the trajectory of an idea that has changed the way wellness enterprise chains operate across the world. He shares his experiences in building a product in India and taking it to its primary market, in this case the US. And in doing so, he brings out practical insights about early stage market research, pricing and go-to-market strategies that is relevant to any enterprise-based SaaS founder or startup attempting to expand their horizons today.
Finding the Right Problem to Solve
After his announcement to retire, Sudheer and his brother Dheeraj found themselves doing something completely unrelated to technology: running a chain of spas and salons in Hyderabad. And it wasn’t proving to be an easy job.
At a time when the wellness industry was saddled with legacy desktop-based software from the 90s to run operations, Sudheer and Dheeraj were going through the same harrowing problems that every multi-outlet salon and spa was facing. They had co-founded the Latitudes Health Club and Tangerine Spas, but little in their careers so far had prepared them for the chaos of running several outlets from one location with no centralised software.
- IMAGE CAPTION: Sudheer and Dheeraj Koneru’s new venture - Latitudes Health Club and Tangerine Spa.
They found it frustrating and difficult. There was no way to compare the performance of employees and the salons across locations or keep track of billings in a single report. Customer experience was unsatisfactory too. For instance, if you were a regular at one salon outlet, but stepped into another of the same brand — you’d find that the service was different, you had to provide your personal information again and you wouldn’t even be able to redeem a coupon you received at your regular salon.
‘In the Spa Salon industry, more often that not, businesses were forced to switch between several software systems and interfaces cobbled together. It was clunky, expensive and error-prone as all the data was duplicated and siloed.’
But it got Sudheer thinking about a solution that could enable wellness chains to maintain consistent records, manage all their outlets and activities from one place and provide a consistent customer experience. With his background in technology and product building, he could envision a cloud-based solution that would solve all their problems and his own.
It sparked a simple ‘what if’ question which led to Zenoti’s inception (and has launched more startups than one):
‘What if we build it for ourselves?’
In 2010, Sudheer and Dheeraj co-founded the all-in-one enterprise cloud software for multi-outlet wellness businesses that could handle both back office and front office operations. Everything from managing payroll, reporting, inventory and marketing to appointment management and billing
From enterprise technology to spas to SaaS, the trajectory of their idea wasn’t a straight line but an organic evolution of their combined experiences. And whatever else they were unsure about when they began, with their understanding and deep knowledge of the customer’s business, they knew that they were solving a real problem.
Early Days and Product Development
Contrary to popular imagination, a ‘Eureka!’ moment is not always at the center of successful ideas. With Zenoti, Sudheer spent years running the spa and understanding the challenges involved from an insider perspective before attempting to build a solution. He quips with a smile that he’s been the front-desk receptionist at the spa and shadowed personal trainers at the gym, as needed.
‘I had the luxury of not having to build a business overnight. Zenoti’s beginnings were slow, incremental and structured.’