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In the US, every industry inevitably gets taken over by corporate America. Whether it's groceries, ambulances, or electricity, private equity and institutional investors control supply of everyday commodities and services. The playbook at this point is wellknown. You buy out established players in an industry with proven cash flow and assets. You acquire majority market share through M&A and price cuts. And once you achieve that majority market share, you then standardize, streamline, and consolidate. You finally cut costs, raise prices, and maximize profits, and customers at that point would have no choice. There would be few alternatives left as any existing independence would
have been squeezed out in the initial race to the bottom. And it would be unappealing for any upstart to enter this market as their only options would be to chase for the scraps at the bottom or to try to create something at the top. The barbershop is a unique industry that corporate America has been unable to penetrate despite investing countless millions every year for the past 40 years. Over 80% of barber shops in the country remain independent and chains like super cuts have been falling behind. Corporations have been unable to find their footing despite the brand recognition, unprecedented scale, and even first mover advantage. They slash prices and offer loyalty programs to win on value, but they still can't match the
local rates. They renovate and blast advertising, but still can't pull in high-end clientele. The industry continues to be led by independence as new upscale concepts coexist in harmony alongside established old school no frrills traditionalists. In this modern NBA original, we go from macro to micro to understand this business from the chains to the independents. We'll cover the rise and fall of Regis, the largest owner and operator of barber shops in the world and the pebacked corporation behind the once dominant super cuts from the 1980s. Then we'll dive into three independents who work in the most competitive markets in the world. The first is a lone wolf in Silicon Valley. The second is a 20-year master in New York City. And the
third is a maverick in the San Francisco Bay area. There's no player bigger than Regis, who has unsuccessfully tried to take over the industry since the 80s as the single largest owner and operator of barber shops and hair salons in the world. They bet everything on retail, which was a sound bet in the era before the internet. They opened everywhere and in the9s Regis had assembled a portfolio of over 3,000 locations through M&A. Supercuts, Master Cuts, Trade Secret, Smart Style, and Costs were just some of the most famous brands under their umbrella. Having multiple brands allowed them to blanket any given mall with multiple stores at once and to give
customers that illusion of choice when in reality, every sale went to the same pocket. Their unprecedented size granted economies of scale and labor and demand. For anyone who wanted to be a barber or already was one, Regis was the place to be. They train you faster than any independent and had the best locations, marketing, and volume. Valuation grew in line with performance and made them an attractive recessionproof blue chip stock into the 2000s. Regis went so deep into retail that they had developed a playbook to crush independence at every level of the market. Malls were blanketed with upscale Regis salons for women at the top of the market and master cuts for families in the middle of the market.
Plazas and strips were saturated with supercuts and cost cutters targeted at the working man. The company was under no illusion that their breadandut and moat was in the low-end walk-in concepts rather than the fashionable higher margin appointmentdriven full service high-touch salons. Haircuts are a volume business, and back in the early 2000s, the total addressable market for a top-of-the-line $30 haircut was just too small. There weren't enough customers, and by extension, not enough franchisee interest to reach the 400 to 500 location minimum that the company demanded of each concept. Beyond TAM, the other angle was that Regis knew that it could not hold onto its talent and
design their business to combat brain drain. Brain drain is when talent leaves one place to go to another for better compensation. Countries, industries, and companies all experience brain drain, but it's especially pronounced in barbering, where barriers to entry are low and the upside is high. Anyone can get started with a pair of scissors and without formal training. Throughout history, barbering has been an attractive gig for people who want to work their own hours and to make money on the side. We can see this in the average wage for barbers, which is lower than an average 9 to5, but still higher than minimum wage. And then there are top performers who have turned cutting
hair into lucrative careers that exceed these industry averages. Peter in Silicon Valley was packing groceries in the supermarket just 6 years ago. He rents a chair at a local mom and pop so he's not an employee. Peter is his own boss and he keeps everything he makes. He's built up his own clientele, packs his schedule, and sets his own prices. Barbering is a volume game and Peter is a speed demon who's optimized every second to maximize income. Clients don't sit around. The moment they walk through the door, he gets them in his chair as fast as possible. With a tub of pre-workout, he pumps through 15 to 18 clients a day and finishes each haircut in 30 minutes or
less. I looked at the industry here in San Jose and basically kind of peeped out like, you know, the wide variety of barber shops that we got and what they charge and what their skill level is. And you have a lot of these smaller barber shops that have been around for a long time, but their price point is $7 to $15 and they're treading out haircuts in 10, 15 minutes. Their main priority is getting you in and out for a cheap price. And then I look at the other higherend barber shops. They're doing a really, really good job. It's really technical. They have a lot of skill and they're taking a lot of time and they're charging top dollar for those haircuts. And I respect that. When I first
started, I wanted every single haircut to be the absolute best masterpiece I could create. And then eventually, I started to find out not all my clients were interested in having the best possible masterpiece haircut. They were more interested in getting a good haircut in a good amount of time. And so that's what I'm going to do. Maybe not going to focus so much of my time and energy on making every single cut amazing that I'm going to make it as good as they want. And then uh they can get in and out of here. I thought to myself, I could charge more money and go slower, or I could do more haircuts and go faster, or I could just find that sweet spot and go right in the middle.
So, I feel like I'm getting like the wide variety of the population. The majority of the people who are wanting good quality haircuts that aren't going to be ridiculously expensive or they don't want super cheap haircuts that are going to be super fast. They want something in the middle to where they can get a little bit of both. And then also, customer service obviously is huge. You know, this is a service industry, so you want to have your customer service on point. We have a client over there that, you know, he had an appointment at 8:00 a.m. It's uh it's 9:19. You know what I mean? I'm not trying to throw any anyone under the bus, but he's over there waiting for a haircut right now. You know, he had an
appointment. You know what I'm saying? Like, if that I mean, personally, I never do that. You know what I mean? Like, I'm I'm not going to have, you know, my clientele come here and wait. Essentially, it just boils down to offering top tier customer service and top tier quality at the fastest rate possible. In my opinion, it's not this way is better. It's just that I find it for my own style to be the best way that I could do it, you know, where I can make, you know, I mean, to be quite honest, where I can make the most money and still enjoy the process. Peter grosses six figures a year, and becoming a barber has been life-changing for him
and his family. He's a prime example of how far and how fast an individual can progress in this industry on merit alone. Yet, Peter represents the top 1% as few are willing to work the hours that he does. And he's been able to achieve this success as an individual all without the overhead and risk of owning a shop himself. Ultimately, haircuts are deeply personal and once people find a barber that they like, they tend to stick with them. From the standpoint of shop owners, this leads to perpetual brain drain as customers are loyal to individual barbers like Peter rather than the shop. When a barber leaves, their clients will generally go with them. This hurts the shop because
they lose talent and a portion of their customer base overnight. Once the salon catches back up, it's only a matter of time before another barber leaves with their clients and the cycle continues. The power dynamics are tough. Barbers need shops just as much as shops need them. Yet, while the parlor takes on all the short-term risk developing that barber, they keep none of that value long term. It's an industry where individual workers hold all the power. This issue affects every shop, but for a corporation like Regis with thousands of locations in so many different markets, brain drain was magnified. At their scale, their goal is to maximize
throughput and to service as many customers as possible every hour, every day. This is why Regis laser focused on its walk-in value concepts like super cuts. Selling cheap haircuts to the mid to low end of the market grants a big enough TAM, but also provides a theoretical hedge against the industry's long-running power dynamics. To get ahead of attrition, Regis trained just about anyone who wanted to be a barber quickly to backfill those who would leave. They leaned into walk-ins so clients would be more likely to remain even if their favorite barber left. Everything was designed in an attempt to restore power to the chain for customers to build loyalty to the location and to diminish the value of
the individual barber. While people point to the death of retail as the reason behind the collapse of Regis, their biggest mistake in reality was assuming that barbers are funible. This is a widespread problem even in corporate America where executives believe all workers are the same. Even in the face of decline, Regis refused to admit to the reality that there are good barbers and bad barbers and that their strategy only helped keep the bad ones. The company trained thousands out of pocket every year. The good barbers would hit the ceiling and leave while the bad barbers remained, dishing out bad haircuts and losing customers. The newbies brought on as backfill could not
replicate the talent that left. The ones that could ended up leaving for greener pasture themselves. Regis tried many things over the past decade. They closed stores, consolidated supercuts, ramped up marketing, invested in training, and pushed franchising. But offloading responsibility did not slow down the brain drain and service decline. They tried getting good barbers to stay by promoting them into franchise owners, but cutting hair and managing people are completely different skill sets. Now, in the 2020s, Regis has collapsed, and the revolving door of CEOs has only affirmed that no corporation, no matter how wellunded, can beat the independence in this industry. In the heart of New York City is Arthur,
the owner of Barberhop NYC and a 20-year master who's been cutting hair before social media and when haircuts cost just $9. He comes from a family of barbers and his business is rooted in decades of intuition and acumen. He's got two shops in Midtown Manhattan, one in Hell's Kitchen and one on Fifth Avenue, right down the block from Trump Tower. It's not only Coca-Cola, it's every company when they come into New York, Manhattan, they treat each neighborhood as his own city from Harlem, Upper East Side, Upper West Side, and they just treat each portion separately and they market like specialize for that area. When you open a business, you don't want to open just a brand decing one specific
portion of society. You want your brand to be as identified as possible with that neighborhood. I'm located right in between Hell's Kitchen and Time Square. So, Times Square, that's where you get all the tourists coming in and the business office. Hell's Kitchen, it's probably one of the oldest gay community in Manhattan. They very hipster. A lot of them young. Uh, so young guys usually come in and they want to be around that area. That's where all the restaurants, that's where all the bars, that's where all the hangouts. Whilst we go to Time Square, that's where you get the office people. That's where you get majority of the lawyers, the bankers, the people in Hell's Kitchen, they're looking for
something more trendy, the fade, the short haircuts, the high and tied, the going out haircut, the flashy one. They'll definitely challenge you with the haircuts. Once you get the guys, the office guys, which is the lawyers, they want to look as corporate as possible. Little bit trim, very regular haircut. For them, preserve their look. It's more important because they go to meetings and they don't want to have that look of I just got a haircut. I got a haircut just for that deal. It's the jewel of the crown to be on Fifth Avenue. You got the highest brands there. The biggest hedge funds are sitting there. The biggest law firms are sitting there. Fifth Avenue sits right in the middle of the city. Most of the
people in there, they split or they go really east or they go really west. So there's nobody over there. For me, demographic was worth it. Barbers get paid in two ways. They can either be employees making an hourly wage and keeping the tips like at supercuts or they can be independent contractors renting out a chair at a parlor. Under the chair rental model, barbers are running a shop within a shop as each individual barber sets their own hours and prices. They share a roof but ultimately are their own boss. Barbers looking to maximize income will rent chairs, but they're responsible for
bringing in their own clients and arranging their own schedule. Barbers who don't want this overhead take the paycheck. You either raise your ceiling or secure your floor. Those who rent chairs only make money when they cut hair, whereas those who are salaried get paid just for showing up. For Arthur, he's found that the only way to guarantee quality and to combat brain drain is through an iron fist. No one is above the shop. All his barbers are salaried employees, and the prices are the same for everyone. He controls the appointments and schedules for everyone. His barbers don't exchange numbers with clients. They show up, cut hair, and then go home after a day's work. And nothing comes before the customer experience.
A lot of those high-end concept in California in Texas, their idea is let me build a beautiful place and let me start renting the chairs. When you rent the chairs to other people, first of all, you can't validate them if they good in the craft room. It's like you renting an apartment. Can the le tell you what you do inside? No. It's your place. When you rent the chair, you lose quality control. You lose your control of the right ethics for that job. The guy have to come in at 9:00. The guy have to finish. The guy have to treat the customers with certain integrity, certain respect. When the guy rent a chair, you can't tell him that. He's renting a chair, his chair. He'll do
whatever he wants. They start slacking off. They don't come in on time. They'll book their 10 customers a day, five customers a day, and they're okay. But they don't understand. You have to keep building those chairs. Customers disappear. They go different places. My job as an owner is to build the place and make sure the clients will come in. So I'm paying as hourly basis and I'm telling my guys don't worry about building your chair. All you have to do is come in to work, work and give the respect and bill your chair. I'm more comfortable with the elderly guys. They just want to work. They're very consistent. They're here in the morning.
Most of my guys, they're here at 9:00 in the morning. They don't slack off. You know, it's vital for everybody to make money. It is right. Yeah. You work on your craft. You want to make the quick buck. But the lack of the ethics, the lack of showing up in the morning, they go hang out too late. They come in drunk the next day or don't come in at all. I don't know what's better. Don't come in at all. Come in drunk. Every small things bothers you and you're too emotional about, oh, you broke up with your girlfriend. You take it on your customers. That's something you don't get with the elderly. They
pass that life on stage. They have the kids. The kids in the house then college. They know they need to work. The first thing you got to set the tone saying, "Hey, the shop is first. You guys all fitting out of that shop." Arthur's worldview was shaped by his uncle who threw him in the deep end at the age of 18, cutting hair next to 40 to 50 year olds in East New York. His uncle had run his own shop in a similar fashion, and Arthur had proved his worth one haircut at a time before striking out on his own. Novice barbers under Arthur get a $16 hourly base and make mid20s after tips. Seasoned barbers get 28 to $35 an hour and make mid40s after tips. Arthur's shop on Fifth Avenue has
only been open for a few months and is his responsibility to make sure that there's enough for everyone. Having barbers idling around is not just a waste of payroll, but also an accelerin for brain drain. Only once the volume is there, he can put his barbers in, but not before. So, for now, he's putting it on himself to build up this location one client at a time. How are we doing? Uh, busy. By what? Um, the usual. So, down to a half on the sides and then maybe just like only a little off the top. I kind of like the length it's at, but just to like freshen it up, I guess. So, yeah. In cities like Manhattan, new concepts
have emerged, pushing the envelope on pricing, service, and ambiance. They're generally appointment-based, charge $80 to $100 for a haircut, and emphasize quality over quantity. While conventional parlors aim to finish haircuts in 30 minutes or less to maximize throughput, these luxury concepts move slower with haircuts that can take up to a full hour. They also tend to market themselves as lifestyle brands with minimalist designs, massive buildouts, modern decor, and apparel. Arthur is not a traditionalist out of principle. To him, pushing margin in a volume business is shortsighted. Some of them are good concepts, some of them work, maybe not work, but giving a guy to sell someone a concept of a beautiful
shop of come in and have shots or get that beautiful lady up front and lure you in and there's high chances you're not going to get a good haircut. I'm here to excel the craft. I'm here to provide a service. So, I want to take that half hour of the guy that comes in. I want to take him out of his normal day. Just give him that comfort. Get American, make him feel good and let him go back to the office. When you start all those concepts, you neglecting your craft. You kind of sell the space, but the space is not your craft. The space is created. The owner build you
beautiful place. They give you that bar, they give you the lady, they give you the massages. But when you talk to those clients that came in from those concept, they'll say, "I went in first time. Concept is great. I got okay haircut. I was okay with it because the atmosphere was fun. I went in second times. I didn't want to get the okay haircut anymore. I want to get good haircut. I pay enough money to get a decent haircut and they still end up getting the same haircut again because people cannot perfect their craft. So when you come over here, I want to sell on the haircuts. That's what I want to sell. I want to sell that you can go to any chair here, you still get a great
haircut. Any person, anybody. The priority of the guys that work with me is to keep the client loyal to the shop. It doesn't matter if he's loyal to you as long as Prioritize is loyal to the barber shop itself, to my brand. There's no reason to charge a person $120 for a haircut. You want to bring the customers as much often as possible. So, if you charge a guy, let's say $120, he'll come in a month and a half. I rather the guy to come in once a week, once every two weeks, and charge him less. $40 to $50 or $35 to $50. It's a good range and I think it's comfortable for the customers to pay it and come in every two weeks. I rather see them coming in more often. I don't want them
to go and look for something cheaper. You want to stay competitive with the rest of the guys. If the rest of the guys charge you 40 and you know your place is a little bit more upscales, charge 42, 43. It's still enough to make money. It's still enough. There's enough money in there to make. All you have to do is just make sure the customer come back. The moment the customer come back, it's a more easier build of making money. You just build customer on top of customers. And at one point after a year or two years, your place is buzzing. You have four or five people working non-stop all day because your price is accountable. The experience is great. That's what it is about business.
Arthur's Barber Shop in Hell's Kitchen grosses on average $48,500 for an annual run rate of $582,000. The goal with the second location is to match these numbers to reach a combined seven figures. Shop level operating margin sits at roughly 38%. His pricing strategy is to stick to the neighborhood. And for this new parlor, he set the lowest local average. To Arthur, it makes more sense to build up clientele and make incremental raises over time rather than to blast out the gate with a high figure. What's going on, buddy? Yeah. Eddie, haircut. If customers aren't coming in, his barbers will leave. If he doesn't have enough barbers for customers, he's leaving money on the table. And if they don't cut hair, well, he'll lose customers anyways. Arthur has to be as
good as marketing as he is at cutting hair, managing, and scheduling. The name of his business, Barberhop NYC, is so generic that it breaks every cardinal rule about branding. Yet, the rationale behind the name is classic old school wit. It's very generic. Nobody can go after trademark of Barberhop. Nobody can go to trademark of New York City with Google. When you're always going to be on the top and you don't have to spend a lot of money on marketing. It's just your name going to keep pushing you up front. Whoever is going to search best barberh shop right away. Barber shop is there match. You'll come first. Barber shop near me. Barberhop is there match right away. Best barber is there. It will match right away. You'll come in
first in 90% of the searches which gives you a lot of leads of clientele. My website right now generate about 150,000 views a month. That's pretty much with the big brands. That's how many search you get leads. Arthur plays a long game and sees every side of the coin. Just like he and his uncle before him, people get into barbering to make money. And Arthur knows firsthand that an iron fist cannot stop even the most talented of barbers. I'll tell him from the beginning, hey, if you ever want to do in the future something, let me know. I can help you out. First of all, it's vital information for you. If the guy, he'll say right away, you know what? Yeah, I
am looking to open up something. So you like, okay, listen, you have those and those portions in the city. There's not many competition over there. Try those portion. And then you pitch them. It's like, hey, join to my brand. Let me give you some seed money. Let me help you up to open a space. We can make as a joint venture. I'm already established. I got my name out there. We'll do some partnership agreement. I'll use my resources. we will get a place and we'll just go from there. A lot of the guys they'll consider very difficult because what's the city became recently it's especially after co landlord will not give you a space without being operated before. So you got to have few
businesses already in place before you actually approach to a place. Even the realtor that going to work with you said the first question going to be do you have a store? The moment you say no they down with you. They're not going to work with you. No landlord will give you any space. Once you show, hey, I have couple location. The whole process became so much easier. I really do enjoy competition and once you go to 9inth Avenue in Hell's Kitchen, there's maybe five just within those two blocks. There's maybe like 15 of them within the next four or five blocks all around them. In general, competition creates a better brand if you up for it. Some people, you know, they just want to come
work, take their money. They don't care for that. For me, I'm very competitive guy. I evolve together with the business. The business evolved, I evolved, my competition evolves, too. That's part of being in Manhattan. You can never get an area that doesn't have a competitive on you. All you have to do is just be better and always keep working on yourself. Always work on your craft, always work on your brand. While Arthur's conviction in business is built on generational expertise, not every shop owner has that advantage. On the opposite coast in Silicon Valley is Rod, the owner of Mysterio, a hybrid concept that's an appointment-driven high-end barber shop as much as it is a
lifestyle brand. While Arthur's haircuts are priced at $40, haircuts at Mysterio start at $60. We like to take our time and it's not a volume shot. It's more about quality. And so when we produce quality, we get quality clients. I always tell people, have you ever driven in a Lamborghini or a Ferrari or been in it? And then have you been to like a Honda Accord? Once you get that taste of luxury, you want to keep going. You want to keep that high standards. What our clients, that's what they look for. They're willing to pay for that price because they appreciate the service. They appreciate the craftsmanship and also the details in the shop, the cleanliness. It's the full
spectrum of the moment you come in to the moment you leave. While New Yorkers rush in and out at Barberhop NYC, haircuts at Mysterio are slow where the conversation is as important as the cut itself and a single haircut can take as long as 90 minutes. Good morning. How you doing? Yes, sir. Rod believes that customers are evolving and the shop is not exclusively for the top of the market. Before the pandemic, Silicon Valley techies just wanted cheap buzz cuts and fades. Since co he's seen the same population put more effort into appearance and seek out shops that value what they want to achieve just as much as the money they pay. Go into a barber shop without even knowing anyone or know that type of culture was intimidating.
And so I felt that same emotion going in to the shop. So if I have a lot of people it's their first time here at the shop and they're nervous. They don't know what to do. My goal is to make them feel comfortable. And so greeting them it's like hey how's it going? Do you have an appointment today? So, yeah, I have an appointment with, you know, Daniel or Brandon or Ryan, Jolan. Uh, I'll say, "Oh, sweet. Would you mind? You can just grab a seat right here. Would you like water? Brandon will be right with you after he's done." And so, that's super important to make them feel not just a warm welcome, but also feel comfortable. The first thing I like to
ask is, "What type of style do they want to do today?" And I always tell my clients, I want to ask as many questions I can just because, you know, I want to be able to achieve the same exact look that you're looking for. Rod doesn't come from a family of barbers and he entered the industry late after a career change in his 30s. He doesn't have the battle scars or generational expertise of Arthur. And by nature, Rod is more of an idealist. If you go to like traditional barber shops, everyone's against the walk. They're all congested. It's all about real estate.
The more space that you have, more barbers you can fill in, the more money you generate. But my mindset was definitely it was more than money. It's like creating a brand. It's creating an experience, creating something unique in San Jose that no one really offers. So everything here is all custom. The stations, the displays, the lights. So you see one that's on the top, you see one that kind of lowers. It kind of gives it more dimension to the shop and also give it a hint of green. We have a special scent when you enter the shop. So when you come in, you're like, "Oh, wow. It smells good. It's not your traditional, you know, barber shop scent." And then the lights and then the
station. So to me is my mindset is really trying to figure out how people come in and just be mesmerized with the art, the details. Um cuz everything matters to me. The every detail matters. It cost Rod $120,000 in 16 months to build Mysterio, which is comparable to what Arthur spent in Manhattan. Both owners still invested less than what it would have cost for them to go with the chain when factoring in the upfront franchise fees and licenses. In Rod's mind, such an investment was always inevitable. His shop is tucked away in a random alley in downtown San Jose, far from the street. It's definitely a challenge to bring walk-ins, bring
clients to our space. Cuz before it was just a parking lot. It was brand new. When people think San Pedri Square, they go to like the main market, you know, the main spot. While when people go to the alley, they actually have to really, you know, oh wow, I actually didn't know that we exist. I think it's just trying to figure out how to bring awareness somehow. Now I'm doing Yelp ads, doing our social media. We do cross promotion with local small businesses. And that's pretty much the only way. It's not like, you know, we're at a plaza where there's so many people coming in and out.
Mysterio is appointmentbased given the non-existent foot traffic and the general lack of barbers that are available to take on walk-ins. Because the upfront costs were so high, Rod rents out his chairs to keep overhead manageable. His barbers are all independent contractors who set their own prices, work their own hours, and bring in their own customers, which in theory takes the pressure off Rod. The business models of Mysterio and Barberhop NYC are completely different. Arthur's earnings depend on how many clients walk in the door and how many haircuts they do. Hence the emphasis on location and proximity to tourists, workers, and commuters. Rod's earnings, on the other hand, depend on how many
chairs he can rent out and how much he can rent them for. Hence the emphasis on branding over location. In an ideal world, there would be more demand than supply, more barbers than chairs, which would allow Rod to raise rent on his chairs to increase shop revenue. Mysterio's space is meant to appeal to barbers as a place to work as much as it is a cool space for customers to get their haircut at. Under the chair rental model, Rod's business is better insulated in theory against brain drain as he doesn't have direct investment in his barbers and never gained from their clientele in the first place.
I think for me it's just the more I can create a better space slowly build that infrastructure, I think it's going to be hard for people to like leave. But that's the only I can do is just create this nice space and hoping people will stay longterm. Rod has built up a loyal following and is booked out every day from open to close. The longer haircut time means less volume as he cuts a maximum of 8 to 10 clients a day compared to Peter's 15 to 18. Yet his individual success has not quite translated to shopwide success. His space attracts younger upand cominging barbers who appreciate the aesthetics, have big dreams of their own, but have little experience and few clients. While Rod is slammed, his
barbers are generally not. But he also can't force them to wait for walk-ins if they only want to do one or two clients a day and then go home. He has no control or even visibility into their schedules as barbers show up and leave unannounced throughout the day. He wants to mentor them, but not everyone has that growth mindset and no one is obligated to listen as they're all contractors. I'll tell some of the other guys like super important how you greet clients and how you vibe with them, showing them respect and show them a lot of love. And when they come in, I think it allows them to, hey, you know what? I kind of like the guys here at
Mysterio. Um, I want to, you know, stick with just the barbers here. I'm not going to go to another shop. And so to really keep everything in house, it helps everyone out. Technically, since they're all contractors, it's usually the barbers responsibility to find our clients through doing their own marketing, Instagram, social media, things like that. For me, it's just because I see their view. If they're not busy, then how can I attract more stylists into the shop? And so technically, that is the responsibility because we're not in a prime location. It's also my responsibility to build that value. Sometimes I'll bring in educators to come to the shop like we flew out another person from Canada and you know say ask the guys, hey, you know, do you
guys want to learn how to cut hair from this guy? And give them the option. I think it's really hard for me to like enforce that and I know probably should but for seasoned barbers that you know they're already set. Then there's barbers like maybe new barbers, up and cominging barbers where they want to learn and I get to mold them and say hey every Monday, every Tuesday we're going to have to do training. Most barber shops in Silicon Valley charge barbers $400 to $500 a week to rent a chair. Rod personally grosses on average $12,000 a month on cutting hair alone for an annual run rate of $144,000. Mysterio's total revenue in an ideal world combining Rod's contribution and assuming maximum chair rental would come to $323,000.
Rod has had to keep his rents below market at $375 a week. And out of the eight chairs available, only three have been rented out. He grosses on average $500 a month from apparel for a combined annual run rate just above $28,000. His operating margin currently sits at 30% and would get a lot higher if all the chairs got rented. It's a conundrum in that what's good for the shop is not necessarily what's good for the individual barber. Rod's success as a barber and the success of his shop are two different things. I think the hardest balance is, yeah, I cut hair and like I understand what all our stylists go through, but then there's like another part of it where it's like I'm also emotionally involved
because this is my baby. I got to like figure that out, balance the two emotions, but also understand what they go through and trying to figure out how I can point out what I go through as a business owner. And I always tell the guys, I'm going to be completely honest, write down the numbers and things like that. I always say I'm never going to fake it till I make it. I'm going to face it till I make it. And so I'm always going to be complete honest and educate, you know, even them like what needs to be done, what I'm struggling in. This is year two, you know, we're still brand new. We're not a walk-in shop. So, we have to put in a lot of work. I got to figure out how to attract more clients for all our
stylists. And at the same time, I also got to see what's also within my budget. And that's a difficult part. I look out for them. you know, I'm always going to look out for them. I market them. I, you know, promote on Instagram, things like that. I don't have another person that looks out for me, you know, and so that's the hard part when you have another business partner. It's like, hey, this is what I know is, you know, you're I'm going to focus on the structure, the infrastructure. I'm doing that. That's part of the most difficult part of this journey is being those two pieces, which is super crucial. Rod is an accomplished barber and is learning how to be just as successful at running a shop. He knew things would be
difficult. He's waited years for the chance to open up a shop on his own. And when he first saw this empty lot, he could already visualize what Mysterio as a shop would look like. I don't treat my clients a transaction. It's more like a transformation where I want them to be able to kind of get that full-on experience, take my time, build that relationship, which is super important. I feel um a lot of people skip that process, and that's the reason why I tend to get all my clients back. So, it's super important to like really take my time and it's really more about the whole experience rather than just, oh,
it's putting money into my pocket. Everything's based off emotion. And so, the reason why it feels good on my soul to make them feel good is because I want them to feel like they can take over the world. And so I feel like haircut is super important to me because just that whole experience and you know leaving the door with a different mindset that feels good to me because you know they're also like my walking billboard. So if they feel good they'll send me a text and say hey you know what it's like bro this is the one I love this haircut and when I get that text that you know that just brightens my soul. Barberhops are a modern case study on not just service providers and the power dynamics between
workers and owners, but also how the absence of private equity and the lack of consolidation enables organic innovation from small bootstrapped independents. Like Arthur in New York City, you can rule with an old school iron fist and exacting standards to create the most efficient business possible. Or you can be like Rod in Silicon Valley who places passion over money and brings a more modern holistic view to his business. Or you can be a mercenary like Peter and focus exclusively on elbow grease and your own two hands to maximize earnings.
