You asked for more content around business finances, so we’re delivering. Welcome to Money Matters where we give you an inside look at the pocketbooks of CEOs and entrepreneurs. In this series, you’ll learn what successful women in business spend on offices spaces and employee salaries, how they knew it was time to hire someone to manage their finances, and their best advice for talking about money.
Photo: Courtesy of Virtue
“The world didn't need another hair care company. So we created a biotech company to repair hair.”
Virtue Labs’ company profile sums up the ideas that drove founder and CEO, Melisse Shaban to invest her time (and money) into the wildly-successful restorative haircare company. After hearing about laboratory discoveries involving keratin and regenerative capabilities, led by Dr. Luke Burnett, Shaban (although skeptical at first) quickly came to realize just how incredible this technology was, and thus Virtue was born.
Virtue’s first-of-its-kind technology did not appear out of thin air—on the contrary, developing the products that Shaban proudly produces today took a lot of time, research, and—you guessed it—money. But it has quickly gained a cult following thanks in part to the celebrity hairdresser and brand ambassador, Adir Abergel whose client roster includes Kristen Stewart, Charlize Theron, and Saoirse Ronan to name a few.
Shaban’s navigation of the entrepreneurial world is truly inspiring, and the economic strategies and lessons she learned along the way will have you inspired to get to work on your own. Read on to learn how she built the celebrity-approved haircare line (yes, Jennifer Garner is a fan and recent partner in the brand) into a global business.
If you bootstrapped the company at any stage, can you talk us through that process—How did you self-fund your business?
“In the very early days, I basically financed everything myself. For Virtue, there were several years of development with zero revenue, so I used my own credit card to float and guarantee business payables.”
If you raised money, can you share three crucial elements everyone should include in a pitch deck when raising money?
“Key points to hit are:
Strong category with growth trajectory
Differentiated products and services that are unique enough to gain share and scale
Experienced team capable of executing on the vision”
What are some of the most common mistakes people make when raising money? Why?
“One mistake people make when raising money—especially for a startup—is that they look at things through rose-colored glasses. They underestimate what can happen. Things are not linear, they go up and down, and almost never according to plan. It’s sort of like construction: it’s always going to cost more and take longer than you expect.”
How much did you pay yourself? How did you know what to pay yourself?
“Initially nothing. I was banking on the dream, and I was fortunate enough to be in a position where this was possible for a time. Even today, though, it’s a very low salary.”
Celebrity hairdresser and Virtue brand ambassador, Adir Abergel with the actors from Charlie’s Angels.
How did you decide what to pay employees?
“Quite frankly, as a startup, we started significantly under market with compensation, and there were months when we literally paid people nothing. I’m very lucky to have a team of believers who hung on and hung in. Over the years, we have done our best to improve compensation to get closer to market. But one thing I have done is to make sure that literally everyone on the team has equity in the company—that’s something I feel really strongly about.”
Where do you think is the most important area for a business owner to focus their financial energy?
“We are a premium consumer brand, so we have a focus on growth with a pathway to profitability, but it’s a struggle in the early days.”
What was your first big expense as a business owner?
”At Virtue, we have a first-to-market technology which is amazing, and truly transformational for haircare. We’re extracting pure keratin protein from human hair and keeping it whole and fully functional. The downside was that it is a totally new and highly complicated process. We couldn’t find anybody in our industry, or any other industry, with the capability to make the ingredient for us.
“We ended up having to build a lab facility and extracting the protein ourselves, which—trust me—was never anticipated. Again, these things happen when starting a business. So some of our first big expenses were capital expenditures for manufacturing equipment.”
Photo: Courtesy of Virtue
What are your top three largest expenses every month?
”People, advertising/promotion, and travel.”
How much do you spend on office space?
”We’ve been pretty scrappy to date. We spend about $75,000 a year.”
Did you hire an accountant? Who helped you with the financial decisions and set up? What do you recommend (programs etc) / advice do you have for that?
“Initially, we were on Quickbooks and outsourced to a financial services group. We then migrated to NAV and now have a small internal finance team.”
What apps or software are you using for finances? How did you decide when to hire a financial advisor (if you have one)? What are some of the tools you use to stay on top of your business financials?
“NAV is our ERP system. We use SalesForce for CRM, Looker for business intelligence, Cybersource, Authorize.net, and WatchGuard firewall.”
“One thing I have done is to make sure that literally everyone on the team has equity in the company—that’s something I feel really strongly about.”
What do you wish you’d done anything differently in your financial journey as a business owner? Why?
”Not that I don’t believe there were mistakes, but everything good and bad leads to your outcome.”
Do you think women should talk about money and business more? Why?
”I think women should talk about whatever they want to talk about.”
Do you have a financial mentor? Do you think business owners need one?
”I don’t really have a financial mentor, but I do have business mentors. In fact, my current board chair has turned out to be a great mentor for me.”
What money mistakes have you made and learned from along the way?
”Too many to talk about, but as a general rule, boats are a bad idea.”
What is your best piece of financial/money advice for new entrepreneurs?
”Raise more money than you think you need—you will have rainy days.”
What have been some of the hardest money lessons you've learned along the way? What is your #1 money tip for small business owners? Why?
”My #1 tip is this, fail fast. What I mean by that is to recognize quickly whether something is working or not and be willing to pivot. We can get stubborn about our ideas sometimes, and that can cost you money. So, fail fast, learn quick.”
What was the biggest lesson you learned since starting Virtue?
”Everything takes longer.”
