I don't want to imply that a tech reporter's inbox is a reliable window to the zeitgeist. It is not. Still, when I receive two pitches within one week from companies raising funding after having added a layer of technology to the same old industry that hadn't crossed my mind as one that even needed shaking up by the forces of Silicon Valley, I think, OK, I'll bite.
The industry: massage. You know, the kind that requires a licensed massage therapist, a massage table, an hour, and about $100. It's a $12 billion industry, according to IBISWorld, a business-research organization. And the tech companies entering it--they're doing so by letting consumers book in-home massages through an app--could comprise more than $1 billion of that industry annually.
Investors think so, too. Just last month a group of venture capital firms closed a $35 million round of investment in a startup called Soothe. It's a Los Angeles-based "massages delivered to you" company founded by a young entrepreneur named Merlin Kauffman. Just seven months earlier, Kauffman had raised an initial round of more than $10 million to start the company on a path to scaling.
Soothe launched in 2013 in Los Angeles, which is still its biggest market. It has about 40 employees between there and Nevada, where many of the company's customer-service reps are based. Recently, growth has come fast: Kauffman says the company had more than 23 percent month-over-month growth in the last quarter of 2015, and added more than 1,000 massage therapists. It is operating now in 22 cities across the United States, and expects to be in 50 cities by the dawn of 2017.
Kauffman spoke to me over the phone from Indiana, where he was raised and where he was visiting family last month. He is a former domain-name investor--meaning he was an Internet-savvy teen in the early aughts, and bought a bunch of since-sought-after domain names, and turned that into a business (he put the first $400,000 into Soothe himself).
Soothe's main competition is squarely located on the other coast, in New York City's Flatiron neighborhood. It is called Zeel, and it is the brainchild of serial entrepreneur Samer Hamadeh. Prior to founding Zeel, Hamadeh had co-founded Vault.com, a staple of the first dot-com boom that dealt in education and career advice.
In 2010, he began working on the startup that would become Zeel--but at the time, it was a booking engine for all sorts of health and wellness activities, including acupuncture and yoga. By 2012, Hamadeh says it became clear that massage was the most in-demand category for same-day booking--he says in fact, 53 percent of massage customers wanted to book one within four hours. He and his colleagues turned their booking engine into a massage-therapist-booking app, which they launched in April of 2013.
Today, the company operates in 23 cities, and has 42 employees and 5,100 therapists. Oh, and it, too, recently raised venture-capital funding: $10 million of a $12 million round from a slate of investors including Emil Capital Partners, Slow Ventures, Partech Ventures, and New Atlantic Ventures.
Today, more than 60 percent of bookings through Zeel are for massages in the next four hours, in one's home or hotel room. Twenty-one percent occur after 9 p.m., when a spa might be closed, or once the booker actually has some time to relax. Yes, at home. Yes, alone, with your on-demand massage therapist.
That last sentence raises lots of questions about safety--for the benefit of both the massage booker and the massage therapist. "Safety for both the customers and therapists is key," Hamadeh said, explaining that when a therapist signs up for the platform they are required to be licensed and insured as a therapist. Then, Zeel background checks them, and conducts an in-person interview and trial with them.
Zeel requires every new customer to verify his or her identity by scanning in a form of identification or a credit check. "Everything is tracked through the app, and we know where the therapists are through GPS," Hamadeh says.
Soothe's founder and CEO says safety is an issue it takes seriously as well. The company's therapists also are required to be licensed and insured--and the app's coordination of timing and geolocation of the massages provides the company data they use to make sure therapists are entering and leaving the right places at the right times. "It is the premise of our business to go into a client's home--so we take safety very seriously," Kauffman said.
Safety isn't the only challenge these companies face. There's also a significant logistical hurdle: That bulky massage table. While hotels may have one they can lend to their guests who book an in-room massage (this is a significant portion of business for both Soothe and Zeel), customers booking an in-home massage may not. This means a massage therapist must lug a whole table with them--along with linens, and a player for that soothing spa music that accompanies any good massage. This actually makes a city like New York, where so many on-demand services seem to thrive in the density and lack of parking, more challenging for these companies.
Over the next year, look for these two companies to expand to every major city in the United States, and then abroad. May the best, safest kneaders (and, well, table-haulers) win.