Funding for Barbers: How Sorek Pitched $250K for a Grooming Line and Got No Offer

We're here at Sorek Menswear and Barbershop in East Austin. Launched in 2020, they started super fast. Well, what happened in 2021 in terms of sales and the business in general?

I'd say we did like 200, 250. Let's go. Thank you, brother. Yeah. Let's go. It's exciting.

Now they wanna increase their revenue per square foot with a brand new product line.

What my brother and I have have really honed in on and and recognize is the last portion of our business that we don't currently manufacture would be our grooming products specifically. Cleansers, moisturizers, body wash.

How much capital do you need to execute this strategy?

For what I'm seeing, probably a $250,000 start up.

Where will they get the cash to do all the research and manufacturing before it launches? That's where I come in. If I love the vision, I'll offer to invest on the spot.

Hey, how are you? Doing great. How are you, Nathan?

I'm Nathan.

Nice to meet you brother, Jason.

Jason, really really good to meet you. Thanks for having me. So where are we standing? Tell me where we are.

So today, you're at Sorek Barbershop and Menswear. The way I like to explain it is we curate tailored looks in both clothing and grooming. Grooming is a big prominent portion of our business in terms of what people originally expect and see. Mhmm. But we get to expand even into dressing them too.

These feel like two very weird things to put together. How did you know to put, you know, tailoring in suits with haircuts?

My co founder is my younger brother, Jared. He was in retail with clothing. Oh. And so it was a little bit of a colliding of two worlds. But with the concept, what I realized being in the hair industry was that there was an underutilization of the footprint within a barbershop. So all these guys are coming in, they're sitting, waiting, maybe reading a magazine when we could be adding to that experience.

So when did you two come together and launch the business?

Actually, getting open, it would have been six years ago. But it was at a moment where I was managing a salon, actually two salons in Houston. He was in retail, and I saw this burgeoning opportunity with barbering. The opportunity I was currently doing was kind of coming to an end, and I saw this explosion in barbering, and that's where talking to Jared and saying, hey. Let's let's make this clothing barbershop thing happen.

The Houston sort of winding down, that's not code for you were fired. Right?

No. No. It's code for owner struggles, owner can't pay me.

Well, this is why I'm asking the question. If you were in a business and you saw the economics weren't working and it shut down, it's very interesting. You said, you know what? I'm I'm not gonna run away from this. I'm gonna lean in.

No. It's a good point. It's a really good point. And, you know, I was in a salon space originally, so that's more specific to women's hair and hair color. Barbering is a little bit of a unique business in in comparison to the salon world and that the services we provide here come with different costs, different pricing.

Was it a big convincing exercise to get your brother to quit his job to join you?

It was an easy conversation. And we were 22, 23 at the time. Mhmm. So the world's kind of your oyster at that point.

Who owns more equity? You or your brother? I I do. Yeah. YouTube, a lot of you guys maybe have thought about starting your own company with a family member. I know for certain if I try to convince my brother to join me, no way in hell he would do it for any less amount of equity than me. It'd have to be even or him a little bit more. Yeah. Leave a comment below. Let me know if you've ever thought about starting a business idea with your family but you guys made it work. What day did you officially open the doors to this location?

We opened 08/04/2020. Hell of a time to open. Yeah. Yeah.

Help me understand some of the financial risk you were taking. What did you sink in to get it open?

So with this space specifically, it was an evolution of what was originally supposed to happen actually in Houston. K. And so we had an original property that we had executed a lease on. We had all the money together for it and we're ready to go, but the developer got cold feet and during that time, we got introduced to the Arrive Hotel. And the Arrive Hotel Group presented this opportunity as well in tandem. The square footage here

is much less than what we were originally gonna do in Houston, so this was really an exercise of efficiency. So the cost here with millwork, everything would be around a 250,000. What about inventory and your initial clothing? Inventory, that's gonna be an extra, probably $30,000.

Where did you get a 250,000 from to open up?

You know, our family invested in us.

Did you give them a good deal or was it like they donated? Was more charity or you

paid No, it's a good deal. Yeah, My dad, he made money off of the deal and it's all worked out good.

So you've paid him back on time. Any other debt on the books today? No. So you're debt free today? Debt free. Congratulations. Thank you. That's exciting.

At the time we were being permitted from opening. We had finished all of our contracting work and got the space ready, but we didn't know if the city was going to shut us back down. So my brother and I, given that he's in retail, I'm barbering, we just looked at each other, we're like, we just need to open the store. And so I was cutting hair. He was running the storefront, and we opened with the intention

of, like, let's cover our overhead. And, you know, our first month, we did $10,000 Our intention was probably to get around 20 to $30 a month in the first year, like, maybe gross. I think it was $3.50 I forecasted that first year.

These were total sales in 2020.

80 or 90 with that amount we were doing.

I think there's a lot of business owners that would kill to get sort of $80 of sales in their first couple months in You're in a location that has a lot of foot traffic, think here in East Austin. Yeah. How much of that success in the first couple months was from random strangers coming off the street versus friends you were texting saying, just open, come check us out.

I'd call it eighty twenty because 80%? Yeah. 80% friends. Sorry. Okay. And you know, friends and acquaintances. Right? People that have heard the story, know what's happening.

What happened in 2021 in terms of sales and the business in general?

We hit a stride. I had my first apprentice who turned barber, so it was two of us cutting hair. Later into that year, we had a couple other people working for us. I'd say we did like 200, two fifty probably. My younger brother was in retail selling clothing, but he had never handled logistics and inventory management. And so of these numbers, there was a lot of, you know, working and and protecting margins and things that is

so crucial to a business that we've since really ironed out and hit our stride.

What happened in 2022?

2022, I think we went to probably more like four fifty. Great growth. Yeah. Huge. Yeah. Okay. 2023? That was probably like 600. Growth? Yeah. This is good. Yeah. It's all good. 2025? Last year we did, I think it was eight fifty or so, maybe 900. Yeah.

Consistent growth.

Yeah. This is good. Year we're gonna do like 1.1. Let's go. Thank you brother. Yeah. Go. It's exciting.

So all these... All the clothing the audience sees behind us, whether it's the suit jacket or the jeans, you manufacture these all yourself. It's a Sorek brand.

Yes. Exactly. And what about the haircare products? Haircare products, that is all Aveda, Firsthand and Fulton and Rourke But we do have aspirations of starting a grooming product company.

The pattern makes sense.

Yes. Exactly, exactly.

Full vertical integration. Completely. You said you'd do about 1,100,000 of total sales. Yes. What percent will be clothing versus a barber haircut?

So another portion of our business that's unique to us is our membership program. So our membership sales definitely accelerated the grooming or the the barbering services, and that sat us at... I'd say somewhere around seventy thirty, 70% being barber services and membership sales, and 30% being menswear.

I would not have guessed that.

Our clothing is very unique in that we're a very high touch experience. The custom clothing aspect of what we do, because we do majority of our clothing sales do not come from ready to wear. It comes from Nathan needs a new wardrobe. We measure you. We get your measurements on file, and then we make clothes for you. It's also a lot more premium. Right? The difference of coming in for a $65 haircut and buying a $2,000

jacket. For us, construction and made to last is a big focus, and that's a differentiator for us. I think men's fashion, in our mind, and my brother would definitely agree with this, it's really about staples. We do these classic men's staples in a way that it can stay in your closet forever. Fabrics specifically we source from all over the world. Our manufacturing is in The Czech Republic. Our jacket is completely deconstructed, very, very light. So it's

a very rounded casual shoulder that sits much better in form to your body than like when you would wear your dad's suit and the shoulders are all really built up and structured.

And so what does this retail for?

Our suiting starts at $14.99. This would probably be in our second tier, which is 2,500.

Okay. So for 2,500, that's for the top and the bottom. What would this cost you to make?

We have 60% margins. It's a variable cost based on fabric. So we base all of our tiers off of the most expensive fabric within that tier of pricing. Clothing itself as a business is very lumpy in that we are building full closets for guys. So these transactions are rarely $500 or $400. A lot of times they're like $5,000, $15,000 sometimes in the the larger sales.

The customer that has paid you the most in one session for your clothing, what was that price or what was that all in fucking value, basket value?

I think it would have been $16,000 around there.

Yeah. Redo my closet. I want five suits, that kind Yeah.

Of Or a full wedding. Right? So, we could have the the groom and all of his groomsmen. And that also is a huge ticket, especially if they wanna get more premium suiting.

I'm getting a sense all of your pricing is pretty premium. Right? The the the full on suits, like, 500. The jeans, like, $5.39. The Oliver shirt, I think, $3.24 or $2.34.

$2.34.

Is that intentional? I need to have

confidence in the quality of what I'm selling. But if I can know and really have confidence that the product itself that we will be landing and delivering to our customer is that nice, it's an easy sell.

You said this year the whole store will do 1,100,000. Yeah. I think you said 70% is the barbershop, I'd say, yeah.

Yeah. It'll it'll be probably anywhere from $6.50 to 700,000.

So you're doing almost $200,000 of revenue per share. I'm not like a barbershop expert. You are. That seems to me like you're crushing industry standards.

We are. Yeah. Annihilating industry standards. Per chair, a barbershop would probably hope to do somewhere around 10,000. Like, that would be a dream. Per year or per month?

Per month. Per month, yeah.

And then for us, we're sitting more so in terms of services performed, more like 13, 14, even 15,000 some months.

So you're crushing industry standards. Now let's understand how you do it. So, what are you selling? If I walk in here and I buy a haircut, what am I gonna pay?

The Express haircut, which is just our standard haircut, that is $65 and then we

have our signature haircut which comes with a shampoo, conditioner and hot towel treatment, that's $80 Okay. And how does that compare to other prices in Austin, your competitors?

We've consistently been on the top end of strictly barbershops.

If I came in for the first time, I buy the $65, I say, man, Jason, I look great. I feel great. You would try and upsell me to a membership. Sell me. Act like act like it's real.

Being that you like your hair shorter, it's $65 for the Express haircut. If you're... Let's say you were normally coming in at a three week cadence, which I'd assume that's probably around what you're doing now.

We can get you to the membership, which for the Express haircut is a $100 a month Mhmm. For two haircuts and unlimited neck trims. So if you were to have an event and let's say we didn't have full availability for a full haircut that day, we could still get you in for a neck trim. And that would be the equivalent of $50 a haircut instead of $65. And then you also get 15% off of all menswear and grooming products.

And how many $100 per month memberships are active today?

Like, a $270

a month is round. You have a 170 members there. That creates a consistent revenue base for you every month of $17,000. What about your margin? I'm gonna guess your margins on membership are much higher because some people don't come in They don't use it.

Yeah. We also have yearly memberships as well that customers are on, so that... That's a little bit more of a discount. Last month, we did 15... Almost 16,000 in membership, like redeemed membership haircuts, and we sold 17,750. At the beginning of the year, I think we were at 14,000 a month in memberships. Now we've grown to 17.

If there's another small business owner watching right now saying, man, I've wanted to do creative pricing like this, but I just don't have the systems in place, the POS to actually execute this. How do I do it? How do you do it?

Dude, that is the exact problem to solve. Right? And for us, it was a lot of communication with our software point of sale system.

Which is?

Boulevard. And they've done a wonderful job with us. With every membership sold and renewed, there's an allotted voucher to you as a customer, and that voucher has that discounted value to it. So when you come in and get a haircut, it redeems that voucher and allows us to distribute our commissions to that barber for that service.

And what do you pay Boulevard?

Boulevard, it's $3,000 a year.

How how many reviews do you have on Google? 325. Okay. Yeah. And how do you get someone when they leave the seat or they buy a suit, they're walking out the door to actually take the time to open their phone and leave a referral? It's very hard conversion rate.

We train all of our barbers on to have that especially with new clients that are really excited to have that conversation of, you know, Nathan, thank you so much for stopping by. Google reviews are like gold for us. If you wouldn't mind leaving one, it would be much appreciated. Hope to see you again soon.

And how many folks are full time at the business today?

It's outside of Jared and myself, it's four other barbers.

So those four barbers, do they have to eat what they kill, no base salary, only commission?

It's only commission, but with that, we pay a very, very, very competitive commission rate of 50%, and then obviously tips are huge. And with the culture and the environment we've created here, the tip rate is, I mean, it's close to averaging 30%.

Okay, well. We're shooting in the morning, I think you what time do you guys open?

We open at nine Okay.

What time is it now? So we gotta get out of here basically.

Gotta get out of here. Yeah. Yeah.

So where should we go to talk about growth?

We can go next door to Lefties.

Okay. Should we head over?

Let's do it. Alright.

How do you grow this business from 1,000,000 to 5,000,000 of revenue?

What my brother and I have have really honed in on and and recognize is the last portion of our business that we don't currently manufacture would be our grooming products specifically. Use Sorek more so as a platform for both our clothing and now a new grooming product company to help grow that.

Inside, you told me that the grooming upsell when they're sitting in a barber chair is like nothing. You almost blew it off like it wasn't important. So why do you wanna now double down on that?

It's cyclical. So you come in every three weeks, you buy your product, and then you run out. Three months later, you buy another product. And so that limits a little bit of our our our traffic in terms of grooming product. But that doesn't mean that the opportunity doesn't exist from a broader market, from a direct to consumer standpoint.

Okay. Well, so convince me. You're from this space. How big is the grooming market in The US for men?

It's billions of dollars and only growing. So if you look at it from the perspective of of guys and how they've treated themselves, especially the self care routines, the fragrance space, and even hair product. There's so much more awareness now than there has been in... You know, if you look even past twenty years, it's exponentially grown. I think there's a lot of legacy brands that are struggling to keep up with and create a valuable subscription model

that actually solves problems for guys.

Describe the product you wanna launch. The first product.

A suite of some simple skin care products. So cleansers, moisturizers, and then we wanna do a couple of, like, a body wash, all things that are very universal to the customer. So, like, a beard wash is very easy for us to manufacture domestically. The skincare products are universal to guys. And then the body wash, similarly, everyone needs to wash their body.

Well, I don't really think about my body wash. I think I have, like, a green dial bottle in my shower. Just... I've used it for years. Yeah. Do you think you can change that behavior Absolutely.

Like me? Absolutely. With the hero ingredients and helping you understand how these products are going to help you from a longevity standpoint, how your skin feels.

If you told me that my body wash would help me live longer, I'd say you're full of shit.

Well, if you're thinking about it from the perspective of your skin looking good over time.

Okay.

Right? I'd be very confident in saying that that market is going to consistently grow. And someone like yourself, as you build more awareness to the benefits of these products, you would also convert too.

The the number one driver of how I buy skincare or haircare products as a male who travels a lot is it's gotta fit through airport security. Yep. So how do you think about this?

So so it will be separately branded as truce, which in French means kit. Mhmm. And my goal is to kit around all these different experiences in your life. One being travel and making sure that I'm providing you all the travel needs you have at a subscription cadence that is manageable and works with your usage. Having it solve those problems specifically, whether it be while you travel or while you're at home in the shower, making it organize

itself nicely in the shower for you and have it come at a subscription cadence that makes it convenient and thoughtless.

What would the price point be for this subscription?

For us, we wanna sit middle market. Let's say majority of body washes, we'll use that as a general example, would be at $10, we'll probably be more at like $30 for the body wash, and then the subscription would decrease that price based on how often you're getting the product, but also how many products you're kidding that subscription with.

If pricing is not simple and people don't understand it, they won't buy it and there's just so much going on. There's a $30 individual price point, but if it's bundled, it's cheaper by whatever 10, 15, 20%. There's a subscription price point of all the things you produce.

It's the intake of the customer that makes it easier. It's about going through that checklist and type form immediately once you get to the website, and then it curates it for you. So it's very thoughtless from the perspective of once you're at checkout, the products are there, you see the price and cadence that they need to come in at, and you don't have to worry about it.

How much capital do you need to execute this strategy?

From what I'm seeing, I think it's more of a probably a $250,000 startup. With that, we'll have $50 allotted to inventory. The other $200 would be towards the startups around the the third party fulfillment, making sure we have everything set up in a war chest for digital marketing.

Have you ever spent a dollar on ads on the current business?

We have early on. But why do you

believe that the success of this new product is gonna be directly correlated to paid ads when you're not executing that strategy today?

So for me, it's more about how I'm diversifying into different markets and different customer bases that we currently don't have access to. Another cofounder of this business will be one of my best friends, Kit, who founded Pantalope, is a digital marketing agency.

And are you giving him 30% of the combined business?

The equity is still in conversation as we establish our startup costs and and what we're going to be investing into the business.

But how... What should I look at investing in though? There's a holdco and then now there's two companies? It would

be it would be truce, the grooming product company. I think that's gonna be

really hard because there's no history there. I... If I'm doing some sort of deal, I I wanna bet on what you've already built, not what you're going to build in the future, especially if it's two separate companies.

You're really betting on me at that point. Right? And I recognize that. There's not a lot of collateral behind it or anything to that effect, but, you know, we have a lot of experience and we have a lot of other authorities in the space currently in in the consumer product goods Mhmm. That are wanting to get involved. The initial idea was to have a safe with a friends and family round at, like, 5,000,000 with $2.50 being that total amount. I I won't be able to give you

a better deal than that. Mean, you've got real money at $2.50 k at a 5,000,000 cap on a convertible note or a safe, I mean, feels like some for our consumer products. Yeah. Right? Mean, that feels like something you should sign immediately.

Yeah. It's not guaranteed today. These are all conversations we're starting.

Look, I don't invest in pre revenue companies. Right? Now I get it. You have history. Like, this is all reasons that I should believe that your new thing is gonna do well, but I wanna I wanna bet on growing a thing you've already figured out how to go. Is there no opportunity to deploy cash there?

Today, I wouldn't say there's an opportunity until we establish this next portion that that vertically integrates everything.

And why do you need to raise money for this? Is the is the other business profitable today? Are you generating revenue?

The other business is profitable. Yes. It's a new frontier for us. We're exploring all options and what we can do now that we're in this new frontier of being a business owner with an established history.

Well, I think... Look. I I I love the business. I think I'll be a customer, but I don't see a way to make you an offer today.

I totally understand that. You know? I think for us, as as the product company we stay in touch too, as the product company comes to fruition and the concept is clear too, I think that there's gonna be more opportunities then as well.

Alright. Well, let's stay close. Jason, congrats on what you've built.

Thank you so much, brother. Nice to meet you today. Yep.

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