Hair color company Madison Reed has raised more than $50 million in venture capital, bringing its total funding to date to $121 million. Previous investors Norwest Venture Partners and True Ventures led the Series D round. The beauty startup sells hair care and color kits online, as well as through its wholesale partnerships and chain of eponymous salons. According to Amy Errett, founder and CEO, the Series D will fund the growth of all three channels.
“We’re not an omnichannel because it’s a fad,” says Errett. “For consumer-facing companies in the beauty category, all that matters is what customers want and meeting them where they are.” Errett launched the San Francisco-based startup in 2013 and has since grown it into a team of 190 employees. Last year Madison Reed pulled in more than $50 million in annual revenue.
Errett, a former E-Trade CEO and venture capitalist, gravitated toward the beauty industry after learning that while 75% of women dye their hair (52% of them color at home and 48% at salons), the $15 billion industry, long dominated by Clairol and L’Oréal, was in need of major touch-ups. She drew inspiration from Dollar Shave Club, Harry’s, Birchbox and other wildly successful subscription startups. In addition to delivering dye kits directly to the customer, Madison Reed uses a mix of augmented reality, artificial intelligence and uploaded selfies to help users find their perfect color match online, be it subtle cinnamon brown highlights or a full head of silver ash. It also operates a call center staffed with certified hair colorists.
Madison Reed, named after Errett’s daughter, also took cues from the rise of clean beauty by eliminating ammonia, parabens and other harsh chemicals. “If you go to a salon you have no idea what they’re putting in your hair. If you go to a drugstore, most women don’t know what ingredients are in that box,” she says. Madison Reed chose to partner with a manufacturer in Italy that relies on natural ingredients like argan oil and ginseng root extract.
This strategy helped Madison Reed gain momentum within two years of its launch, allowing it to take on an expansion plan in 2017 that included a wholesale partnership with retail chain Ulta Beauty. That same year the company opened its first set of “Color Bar” salons. Similar to Drybar’s concept of offering blowouts only, Madison Reed Color Bars focus exclusively on services for hair color, such as root touch-ups and gloss treatments. It now has six locations in California and New York City; with the fresh infusion of capital, Errett plans to open more than 40 new Color Bars by 2020, starting with grand openings in the South and the mid-Atlantic region.
While the success of Bonobos and Warby Parker have made establishing a brick-and-mortar presence the typical route for digital-first retail startups, Errett says her decision to expand Madison Reed’s physical footprint comes after some trial and error at its first location in New York City.
“Success is learning from what didn’t work well,” said Errett. “When we built our first unit in Flatiron, it got built out very much like how a typical salon would look.” She says the design and layout of Madison Reed Color Bars have since changed dramatically as a result of “getting much smarter about asking customers what they want and don’t want.”
Mining customer feedback led to improvements in booking and scheduling, as well as a quicker checkout system for customers. Madison Reed also did away with standing mirrors at every styling station, something unheard of in the salon industry. “We’ve come to call it the ‘un-salon’,” says Errett.
The move came after her team learned from their salon customers that women actually disliked looking in the mirror while getting their hair wrapped in dye and foil. Instead, they preferred the big reveal at the end, when their hair was finished and glossed. What seemed like nuanced customer feedback would alter the customer experience and design layout of all Madison Reed Color Bars.
“It’s not just about emulating what a luxury salon looks like,” says Errett. “In founder situations, it’s common for us to have a vision but you have to sync that vision up very much with what your customers need.” That is why a portion of the Series D will also fund the development its in-house technology that tracks the hair color history and preferences of each customer — as well as new shades and hues to stock future Color Bars.
This article originally appeared on Forbes