Embedded Finance: How It's Truly Serving SMBs with Fresha & MASAJ

Hemmo Bosscher - 00:00:01:

Welcome to Adyen Presents: Embedded Finance, real talk for SaaS leaders on embedding payments and financial products. Software platforms today are no longer just about software. Winning platforms embed payments and financial products like business loans, accounts, and cards to become full-service operating systems for customers, building loyalty and new revenue streams. Now, the opportunity is clear, and we've heard much about it, but tactics are largely undefined still, and that's why we're launching this podcast, to hear from the platforms and experts shaping the strategies. This episode explores how embedded finance is truly serving small and mid-sized businesses and creating value for them. I'm joined by Pawel Iwanow, Chief Payments Officer at Fresha, a leading all-in-one platform for beauty and wellness businesses, offering free scheduling, payments, and client management tools used by hundreds of thousands of professionals worldwide. And really excitingly, one of Fresha's customers, Massage. A contemporary massage parlor based in London that uses Fresha to run its operations and connect with clients via the Fresha marketplace. First up, Pawel. Welcome back, everyone, to Adyen Presents: Embedded Finance. Today, we are here with Pawel Iwanow from Fresha. Pawel, if you would kindly start off by introducing yourself and Fresha, maybe a bit about your origin story as a business.

Pawel Iwanow - 00:01:22:

Hi, Hemmo. Thanks for inviting us. Thanks for having me here with you. And I'm very excited to present a little bit about Fresha. So we started Fresha back in 2016. The company was launched out of Dubai, the Middle East. And then quite quickly, we settled over to London because we explored the world and captured a lot of businesses in our industry, which is beauty and wellness, quite quickly. So, very exciting journey.

Hemmo Bosscher - 00:01:47:

What was the original idea, if I may ask?

Pawel Iwanow - 00:01:49:

The original idea was that we identified customers spending a lot on beauty and wellness, specific in the region where we kind of started from. And everything was very offline. Everything was pen and paper based appointments. You called the salon. It was just not that streamlined for you or for me as an end customer to go very efficiently about booking my next appointment. Back and forth, over the phone. And that's not how it should be, right? It has been done in other industries before this digitalization, which we saw. And then we grabbed this opportunity. And voila, here we are with Fresha a couple of years later.

Hemmo Bosscher - 00:02:23:

You guys are quite unique because you've got an SMB toolkit on one hand. So if I'm a salon owner, I’ll have an operating system for my business. And you have a consumer marketplace. Was it always like that? If I want a massage, I book it on Fresha. And if I give the massage, I run my business on Fresha. Or did that go later?

Pawel Iwanow - 00:02:39:

That's a great question. So initially, we started on the supply side because we always wanted to build a double-sided platform. A business tool for the sales industry to run their business on it. Calendar management, appointment management, staff management, marketing, whatnot. And then on the other side, empowering the end user to choose whatever appointment, whatever service they desired for. And it's always a chicken and egg. Do you start with a marketplace? Do you start with a business software? We started with a business software because in our mind, supply, the supply side is the most important one to aggregate first. And then once you have enough supply, you then activate the discovery portion of the business and then talk to the customer. And then there you go. You know, like they can book whatever they want, wherever they want, with any payment method they like to, their choosing. It's quite straightforward.

Hemmo Bosscher - 00:03:29:

And now you've come so far that I assume when you talk to a potential new business client, you can say, hey, we can plug you into the Fresha ecosystem and you're going to get twice the appointments you have today.

Pawel Iwanow - 00:03:39:

Exactly right. And absolutely. And the business efficiency that comes with it, our businesses, our S&Ps, our partners, as we call them, they're very busy in providing their own service, cutting hair, painting nails, attaining to the customers so that there's no need to have somebody separate or to divide your own time in the evening and figure out who has called me, who wants what appointment at what time, and then manually going through some notes and pages to figure out who wants what. It's all in the background. It's all in one. It's all very straightforward, allowing and bringing up that very valuable time of our partners to do what they do best, cutting hair, painting nails. That's what it is at the end of the day, providing as much value as possible.

Hemmo Bosscher - 00:04:24:

Now, I heard. So you've got this two-sided business model now. It started in 2016 out of Dubai, headquartered now still in London. I think you've got a global footprint now, it's fair to say.

Pawel Iwanow - 00:04:34:

Exactly. You're like over 120 countries. When we launched a platform, we never put a border on it. We said, whoever wants to sign up, wherever they want to sign up, they do. And that's what they did, right? And now we are leading in so many countries. We are the largest operator in the self-care industry. So, that's quite exciting.

Hemmo Bosscher - 00:04:51:

On that last point from yours, is it true? Is your geographical strategy then a bit set by your customers where there's a pool from them? Like let's say eight people sign up for, oh, I would really like to use this. And you go, oh, maybe we should make it available there.

Pawel Iwanow - 00:05:03:

That's a great question. So generally we segment our markets based on their maturity. When we say, hey, what markets do we capture next? The first step for us is always to translate our platform. And that's very easy because we have built it in a very modular way. We then let it just organically mushroom. We let it out there, people. Because our platform is so straightforward, easy to use, it's not clunky. We put a lot of effort in UX and UI. We make it very simple because simplicity is the ultimate sophistication at the end of the day. And that's what we put on our platform. That's why businesses like it so much. And we just let it mushroom. And then once we see that there's a certain traction in a specific market, that's where we kind of pay even more attention to it and start putting boots on the ground and start commercializing that specific market.

Hemmo Bosscher - 00:05:50:

Is it still a part of your go-to-market approaches? Does it still involve a lot of boots on the ground? Or is it easy to sign up online? Or how does that journey work?

Pawel Iwanow - 00:05:57:

Great question. So over 70% of acquisitions that come to our platform are organic anyways. So they research, they google, they find us. We have very high rankings. And from that perspective, it's all organic. Boots on the ground, get involved, when we want to concentrate a market a little bit more. Like 80% of any market is single-owner operators, independents, individual people that provide services.

Hemmo Bosscher - 00:06:25:

Yeah, they need to be found. They're not going to be on the internet.

Pawel Iwanow - 00:06:27:

Exactly. So they need to find it themselves. And there's a product onboarding journey, which is very simple. They sign up. They provide all the details. They define the business. And then that's it. They can just start operating on our platform. While the bigger businesses, they need a bit more hand-holding because in most cases, they're transitioning from an existing system. So some hand-holding about going from a different system to our new system, which obviously streamlines the operations in a better way. And then payments right in the middle, there is. Right.

Hemmo Bosscher - 00:06:58:

Payments are right in the middle. When did that happen? So 2016, you started. 2025 today. When did you start embedding payments?

Pawel Iwanow - 00:07:04:

We started monetizing and providing payments back in 2020. That's when we launched directly with you guys. And all the bundling of all the offerings that streamlines operations and payments sits right in the middle. You know, like nobody needs to think about how payments work. It just works. It provides our partners that straightforward solution. No need for anyone else. Because in our industry, the standard is you have a software and then you have a clunky other payment provider and then you have another marketing tool and whatnot. Now it's all verticalized in one platform. They provide so much value to our businesses. You don't need to think that the customers' credit card details are already on file. They can just sign up. They can protect your appointments with no-show protection features that we have on the platform. Do you want to charge a different card type? Not a problem.

Hemmo Bosscher - 00:07:56:

Can you talk a bit more about that? Because that might be news to some people. What is a no-show protection? So I've got a nail salon. What does that do for me? Great question.

Pawel Iwanow - 00:08:04:

So we already work so much in our own acronyms. But at the end of the day, when you run a business and time is your perishable resource, if nobody books that time slot, the time is gone. Nobody can help you there if people don't show up. And then for our industry, it's so important to have a feature in place which protects the time slot. We make a commitment. I'm saying I'm coming to your barbershop on Monday at 9 a.m., and you better have to make sure that I show up because otherwise that 9 a.m. appointment is gone. You can't fill it quick enough with the replacement. So that feature allows you to say, take my credit card details and I'm confirming to you that I'll be coming on Monday at 9 a.m,  otherwise, then you can put a no-show policy in place that you charge 50% of the time slot's value as a deposit.

Hemmo Bosscher - 00:08:48:

That's interesting. I was going to ask, so you operate, I think, quite broadly when you think about your vertical, but originally you started in beauty and wellness, we can say. What are some fundamental ways that you differentiate from other vertical software providers in the same space?

Pawel Iwanow - 00:09:02:

So, verticalization is something important in our industry because, again, our partners, the SMBs of this world, are tired of working in a very fragmented way. Calendar management is one tool. Marketing management is another tool. Payments, you just get a payment terminal somewhere sitting in the corner. None of these systems work with each other. The verticalization that we have brought with our platform allows businesses to just keep everything in one. There's no need to be fragmented. There's no need to use different tools. It's all in one. And I think that is so powerful and so freeing to our businesses that they say, you know, right, that's exactly what I want. I need more time to attend to my own customers. Payments is one example of it. It sits at the core of everything. If people do something they want to be paid for, or they want to protect that appointment, they want to have that easy-to-use reporting and insights feature, which tells them at the end of the day how a tally is up, how much money did I make, how much was paid with a Visa card, with a MasterCard, with something else. And that's very important.

Hemmo Bosscher - 00:10:05:

That's good data to have for sure. I was more curious, even about the fact that there are competing platforms to yourselves and in what ways is Fresha different from competitor A or B? Is there anything you do that's unique or fundamentally different?

Pawel Iwanow - 00:10:18:

There is. So innovation is always in the business model. Our platform was always free for those independents because they make up 80% of the market. So if you are a single owner operator, you can start using our platform from the get-go. There's no subscription. It's for free. We monetize some payments and then you choose the service level and the complexity of our platform that you need and then you pay for specific things. If you want everything simple and you want a little bit of major work to be done, then it's your choice. You decide over it. If you want more automation and you want more complex reporting, as an example, or a more advanced team features and team rostering, then it's down to you. You choose what you want. But that's the differentiation because all our competitors, everyone else is charging a subscription fee, the software entrance fee, which we don't. We charge it for a specific segment, but not for independence.

Hemmo Bosscher - 00:11:11:

All right. So, that's unique.

Pawel Iwanow - 00:11:11:

Yeah. That's correct.

Hemmo Bosscher - 00:11:13:

But I'm assuming then that your win rate must be very high because if I'm starting out, let's say I start out a new shop and I do, I don't know, nail clipping professionally, and you have a formidable bit of software, why would I pay hundreds of euros for something in a monthly fee when yours just works fine and I get immediately hooked up into the ecosystem?

Pawel Iwanow - 00:11:30:

No, no, absolutely. And people have that entrepreneurial spirit. They want to start. The tendency is you start on a weekend and then you expand it across the week. And then as your customer base grows, based on the features and functionality that we provide, you know, cash flow management is very important. Working capital management is something important. Getting money up front is important. Securing his time slots is important. With these tools at hand, it's just much easier to grow over time. And then you expand and then we see, you know, like people come back to us, asking us for loans and some cash advance functionality because they're saying, hey, I've been so successful with my business number one. Now I want the same, say, like a couple of kilometers further down the road, as an example. And that financing functionality will allow them to do exactly that. So that's why they start small as you said and then over time they grow, right? Everybody demands different features and functionality.

Hemmo Bosscher - 00:12:19:

That's the dream. One thing I want to ask about, obviously, Atien supports vertical software platforms in many areas of the world and in many sectors. If you look at markets, is there anything particular about the beauty and wellness space where, I don't know, maybe you need extra durable terminals or a tap to pay, everything needs to be easily moved? What are some specificities you need to think about if you want to be successful in beauty and wellness?

Pawel Iwanow - 00:12:41:

So simplicity is one of the most important aspects in our industry because we're working with artists, we're working with creative people, with entrepreneurs that want to focus on what they do best. So,  simplicity is always key number one. Around simplicity, we need flexibility. There's the single owner operator who would like to use their iPhone or Android phone as a terminal because they wouldn't want to spend additional money to just acquire a terminal where the functionality on a tap-to-pay device is already mirror one-to-one. It makes it simple. While more complex businesses would require and would want a robust, good-looking terminal at the counter because that's what the end customer is used to. And we provide all the flexibility from tap-to-pay to the complex terminal device across many locations and whatnot, so. Definitely, yeah.

Hemmo Bosscher - 00:13:34:

That is beautiful. Running the business now, right? And you have this two-sided model. Let's say when you do your planning for next product features, how do you weigh both audiences? Like does one take precedence over and does the other follow? Or is it really a 50-50? What do you think about that? And I'm talking about on one hand, you've got millions of consumers that book via Fresha and on the other hand, you've got thousands of businesses that you directly support.

Pawel Iwanow - 00:13:56:

So, we are B2B2C at the end of the day. We always choose to have supply first. And that's part of our growth strategy. We launch it, we let it mushroom, we see density. And then when we see density, we act according to where we've seen density, like some follow-on commercial go-to-market strategies. So I would always say, from our perspective, supply comes first. We built our tool around supply. We built our platform around supply. And then when supply is happy and we provide all the tooling to the supply, to the supply set, the end customer, oh, the supply set is happy as well. And then we start thinking, okay, now we've already seen some traction. We already know how our partners engage with their customers. How can we enhance that experience? How can we provide more value to that equation, by allowing end customers on the marketplace to save whatever payment method, as an example, they would like to save?

Hemmo Bosscher - 00:14:50:

Yeah, it's good for both sides.

Pawel Iwanow - 00:14:51:

Exactly. It's good for both sides. Keeping some recommendations to the end customer on the marketplace side where people would say, you know, like, I like my nails always pink or, you know, like purple for that matter. And then which business is focused and has expertise and purple nails as an example, right? So all these kinds of value enhancing aspects of the platform is something that kind of just enhances the value. So supply first and then demand side on top as a second step.

Hemmo Bosscher - 00:15:18:

That's very clear. Thank you. Maybe a bit out of the field, but I'm wondering, now that you've got such a massive footprint with all these business owners, I'm assuming there's power in numbers, of course. Is there anything you do on the side of the suppliers with that platform? And what I mean by that is I assume that collectively all the fresh, small and mid-sized businesses buy a lot of shampoo and they buy a lot of combs and lotions perhaps. How do you look at this?

Pawel Iwanow - 00:15:45:

Great question. So, over 60% of products that our partners hold are used for internal consumption, right? Because the coloring, the shampoos, you name it, they're all used for internal consumption. For us, aggregating the product side is something that at one point in time we'll be doing because it's about accessibility. It's about fair pricing. It's about time for acquisition. How long does it take for you to, like, not necessarily having to run across the street to just buy that additional shampoo, but bundling in it with some value offering. As an example, currently, if you order five shampoos, there's no discount. If you order, you know, say 20 shampoos and we, as an example, finance you for that because you're saying, I can't afford 20 shampoos right now. We finance you for that 20 shampoos. It avails 20% discount. And then we, as Fresha, can give you value add on top because it's about, “how do we provide the highest value to our customers, our partners on the platform?” And there's so many different angles, right? I'm sure we can spend, you know, like hours and hours just exploring how that value attribution and value enhancing actually happens on our platform, what plans we have.

Hemmo Bosscher - 00:16:56:

Well, I'm just thinking if I start a new shampoo brand, I'd love to break into that ecosystem and you can plug me right into 50,000 hairdressers.

Pawel Iwanow - 00:17:04:

Oh yeah, absolutely.

Hemmo Bosscher - 00:17:05:

That's an interesting space then all of a sudden. And the same goes for every clipper and comb.

Pawel Iwanow - 00:17:09:

It goes for everyone. And again, you know, like once you start verticalizing, it has to expand because the partners get exposed to ease of use, you know, like convenience, everything in one. And then, you know, they already start wondering, asking us, you know, like, hey guys, by the way, you know, like, when can we do a one, two, three, four, five? And when we see it, our answer is, you're like, hey, we're working on it. So just hang in a little bit longer and then it will be available, you know?

Hemmo Bosscher - 00:17:33:

Now I know the drill. I'm familiar with that phrase. Do you ever lose customers?

Pawel Iwanow - 00:17:38:

What do you mean by lose customers?

Hemmo Bosscher - 00:17:39:

Does a massage therapist ever say, well, I like this other bit of software more? Or they move for some other. I'm just wondering, like, if you do lose share, why is it? Is it like a feature richness? Is it cost? Does it just not happen? I'm curious.

Pawel Iwanow - 00:17:51:

It's a great question, right? And I would generally say it depends on the country and it depends on the business. As an example, with the current focus on the self-care industry, there's definitely some industries that our platform is not fully catered to yet. We're working on it. It is a work in progress, but that's something that we're never at. So definitely, you know, like for specific industries, some missing features are an aspect. We do see some businesses, like, come to our platform. And as an example, they say, you know, like, you know what? My clientele is not necessarily digital savvy enough. I'd rather stay and stick with pen and paper. So now that that's an exception, we do see these cases. And sometimes we do see cases where businesses are tied in, as an example, into loan contracts with a house bank. And they say, well, I have to stay with that specific bank and I have to use that terminal because I'm locked in. So there's different minutiae and aspects as to why they would want to stay, as an example, with the existing provider.

Hemmo Bosscher - 00:18:52:

Do you find that overall that embedding payments has helped retention or are numbers roughly the same?

Pawel Iwanow - 00:18:57:

In our mind, it's a huge boost because imagine you're running a business where people run from eight in the morning until eight in the evening, focusing on their customers. They want to be bothered with, oh, but now I have to migrate or what do I do with my subscription memberships that I have on your platform. So, it provides a lock-in, but it's also value-add. We're not locking in our partners and saying, oh, you can't leave. We don't have minimal monthly commitments contractually or anything of that sort to say, you know, like, oh, we are holding this. No, people stay because of the value that we provide to them.

Hemmo Bosscher - 00:19:31:

That's interesting. You talked earlier about financing bulk orders of shampoo, for example, or perhaps financing an expansion. You want to build another business. I'm assuming that these are all quite cash-trapped, so there's also just general working capital use cases. Is it, first of all, just your thoughts generally on capital for Fresha users and then how you think about embedded financial products more broadly beyond capital and also about the sequencing?

Pawel Iwanow - 00:19:54:

So, general capital is something very important, I think, to our industry. Why? Because it seems quite a process, quite challenging for SMBs to get loans from the house bank. You need proof of this, proof of that. I think, like, I don't know how many years of financial data. We have that data. The data sits on our platform. So working with you guys together, it's so simple to analyze that data and assess that business is credit worthy up to this amount, right? And then they ask for that loan. They need these loans because businesses need to expand. They want to install the sixth share, or open up the third location. But the daily activity that generates cash, that cash goes to pay for whatever expenses they have. So they do need that extra support and help to open up that third location, as an example. And we have that data on our platform, so it's quite straightforward. So that's in regards to capital. Is there demand? Yes, there is. And we're working with you guys on making that available.

Hemmo Bosscher - 00:20:50:

And addressing that, yeah.

Pawel Iwanow - 00:20:51:

Exactly, right? And the broader scope of embedded fintech products, embedded finance, is something very important. Because again, with all of the activities on our platform, there's no need to have another bank account because our platform is already a bank account. We issue cards. You can have your card. You have your bank account. You can pay your utility bills. You can receive boost rental payments from, obviously, your boost rentals directly into your Fresha wallet, as an example. So all these aspects are empowering the business to just say, hey, I'm plugging it to Fresha and I'm focusing on what I do best. And everything else, all the complexity is fully taken care of.

Hemmo Bosscher - 00:21:28:

And what feedback are you seeing on the adoption? I'm just so curious. It makes a lot of sense for you and your customers. Are they liking it?

Pawel Iwanow - 00:21:34:

I know, but partners love it because, again, the complexities in how businesses are run. You have simple businesses, you know, like single owner operators. It's very straightforward. You have your wallet with Fresha. You receive all your days takings into the wallet. And then from there, you can decide what to do. You know, like 20% I pay out into my bank account. 20% I spend on additional inventory. 20% like I have to pay some commissions or rent or whatever it is, right? And then the rest, you do what you have to do as a business owner. For more complex businesses where, as an example, you run 20 chairs and out of the 20 chairs, 10 chairs are both renters. The other ones are employees. You decide on the platform who gets paid what. There's very clear calculations of tips and commissions and who gets what. And then you split it. And then people get it instantaneously in their wallets. And then they can be in control of their finances. Then nobody needs to wait for money to arrive at your bank three days later. And then you start working with the money only then. People need the money now. So they need to work with the money now. And that's the powerfulness in the strength of embedded finance, right? Specifically with us.

Hemmo Bosscher - 00:22:40:

Absolutely. Earlier, you hinted a bit at perhaps expanding horizons for Fresha beyond beauty and wellness. Can you talk a bit about that? Like what's next?

Pawel Iwanow - 00:22:48:

So generally, you know, like our operations brought in just beauty and wellness. Medical is another, obviously, segment it will be looking into. So, it's just wider than just beauty and wellness and just hair cutting and painting nails.

Hemmo Bosscher - 00:23:01:

But definitely adjacent, right?

Pawel Iwanow - 00:23:03:

It is adjacent, exactly. Because as an end customer, from a discovery point of view, once you go to the Fresha marketplace, people would also want to discover more. And we want to provide more. It's this one-stop solution. You come on in, you stay, and then you discover all the things that you would need from a self-care perspective.

Hemmo Bosscher - 00:23:20:

Back when I had hair about six months ago, let's say I would go to the barber and there'd be like this wax that I really like. Can I buy it through the Fresha platform?

Pawel Iwanow - 00:23:29:

Oh, yeah, absolutely. We have an e-commerce store embedded into our platform. So whatever inventory you already have, people can, you know, like your customers can directly purchase either in-store or online. It's down to your choosing, the way you want to configure it.

Hemmo Bosscher - 00:23:41:

But even if three days later, I decide, oh, I really miss that wax, I can buy it online.

Pawel Iwanow - 00:23:46:

Absolutely. That's delightful.

Hemmo Bosscher - 00:23:47:

That's quite cool.

Pawel Iwanow - 00:23:48:

All in one, right? So verticalization is super important across the whole value chain.

Hemmo Bosscher - 00:23:52:

And just touching back on embedded financial products, I think we probably share the same vision. You talked about it a bit already, but you say you do think there's an opportunity that you fully become the operating system or command center for the small business owner. And thus, in time, there will be no need for a traditional banking relationship with a traditional bank.

Pawel Iwanow - 00:24:09:

Absolutely, right? The work is already very complex. We will simplify it and we are making it as simple as possible for anyone to just start, right? An entrepreneur waking one day up and saying, oh, geez, you know what? I want to start cutting hair. The operating system is freshened. Let me log in. And then from downwards is a journey. We'll bring new customers to you on the back of your new business that you have just started. So much so that we can say, you know, like on Monday from 8 a.m. until 12 p.m., say you work in Mesia and you will bring your new customers in that location versus Fridays when you work in Shortage, as an example. Guess what? Will you bring your new customers to that location as well? So it's all in one. We'll take away all the headaches. You focus on what you do best.

Hemmo Bosscher - 00:24:50:

Yeah, this two-sided thing is really interesting. Do you think it will work for other sectors? Like would it work for a restaurant? Like if I go to a drop down menu, I'm in the mood for something Italian or something croissant based in my neighborhood. That doesn't exist. That could be interesting. Maybe I'll quit my job and go do that.

Pawel Iwanow - 00:25:06:

I'm sure it will work in different industries. I mean, in our industry, flexibility is important. People like to divide the days the way they need it, as opposed to, you know, like, oh, I'm just working, you know, like nine to five and that's what it is. And then the barber sometimes just sits on the chain, waiting for the customer to come in. There's no need for that.

Hemmo Bosscher - 00:25:24:

I have a question for you. I was based in London before Christmas for three months with my family. And through Fresha, I would sometimes book a massage appointment. But then from time to time, because my day, of course, is quite constrained with a young kid and work, I wanted a specific slot. Is there maybe something I could do in the future where I buy the slot off of someone? If it's especially important to me that I get that moment of self-care or is that too overly ruthlessly capitalistic?

Pawel Iwanow - 00:25:49:

Are you sure you're working for Fresha?

Hemmo Bosscher - 00:25:53:

Well, no, that to me seems quite intuitive that if I really want it done, then that I also get the option. And then I guess if I then hold the slot, I'd be happy to pay for it. But then you also have to stop people from buying all the slots. So they have their own slots marketplace.

Pawel Iwanow - 00:26:07:

So in general, we already have a waitlist feature, but that's a waitlist. So you just subscribe and then you wait for an opportunity to open up at the slot of your liking, not of your choosing. But in the near future, being able to work with partners and really say, hey, Pawel, you know, like there's this slot. I want to bid for it. And somebody says, oh, you know, like there's a potential bidder for my slot for, you know, like Friday 4 p.m. and I'm standing to gain in like, I don't know, 10 pounds more than what I would have paid for it, as an example. And then opening up because at the end of the day, it's about supply and demand, right? And every supply will find at the right price, its right demand. And sometimes people are in a hurry and they want something very specific and then they're ready to pay a little bit more for it. On the partner side, we already have on-demand pricing. And then, you know, like depending on the busyness and the frequency.

Hemmo Bosscher - 00:26:58:

Yeah, like the Friday before Christmas, you want a haircut. Yeah, you pay double.

Pawel Iwanow - 00:27:01:

Exactly. Then you pay a little bit more, right? Because again, it's value adds to the partner.

Hemmo Bosscher - 00:27:06:

And does the price go down as well?

Pawel Iwanow - 00:27:07:

I mean, the partner can set it, you know, he can say, you know, like technically on a Monday when things are running, run a bit slower and like will charge a little bit less.

Hemmo Bosscher - 00:27:15:

That's interesting stuff.

Pawel Iwanow - 00:27:16:

And like, just to a point where it's already like you can put it on autopilot because again, we want, you know, like the partner needs to focus on the customer and not worry about who has booked at what price when. There will be bookings, there are bookings and we're making sure that the highest value points.

Hemmo Bosscher - 00:27:31:

Yeah, you've probably got a model that knows what works in the industry. So you can just plug it in. So Fresha has obviously come a long way and now you're embedding payments, you're embedding financial products. What's your overall vision for the ecosystem?

Pawel Iwanow - 00:27:42:

Yeah. So with the purpose of providing a fully verticalized platform, FAS, it's super important that our partners stay within the platform. There's no need to leave for anything relating to the business. And having payments and financial products are one of the core offerings of the platform. FAS, it's important that we, first of all, provide value along the value chain of our partners in the payments world. What I'm trying to say is that there's no need for a bank account. There's no need to go to your bank, ask for a loan. There's no need to wait for money to arrive three days later in your bank account. It's all in one. We have it all on the platform. And our purpose is to turn around every dollar, five times on the platform. First, you receive the money on our platform. Secondly, you potentially pay some commissions. Thirdly, you receive some boot to run fees on the platform. Number four is either to pay for the loan that you have acquired through Fresha or pay some interest on it. And the fifth time is to actually pay for your supply on the platform where you buy your shampoos, your towels, whatnot. So, that's the ultimate purpose. That's how we are thinking to monetize our partners with the verticalization of the software that we provide at the end of day.

Hemmo Bosscher - 00:28:56:

That's really intuitive. Thank you for sharing. We could go on all day. But I want to thank you very much for your time, Pawel. Is there something else you'd like to say or add that we haven't touched on that people need to hear?

Pawel Iwanow - 00:29:07:

Again, for us, our ultimate purpose is to serve our own customers in the industry, to make everything as simple as possible. And there's no need for anything else. There's no need for another bank. There's no need for another software. It's all in one. And that's what we do. And obviously, we like working with others as a strong partner alongside. And we're empowering the self-care industry with what we do.

Hemmo Bosscher - 00:29:25:

Which is fantastic to do. Thank you again so much for coming. And have a lovely day.

Pawel Iwanow - 00:29:28:

Absolutely. Everyone take care.

Hemmo Bosscher - 00:29:31:

With the platform picture in mind, let's now shift to the perspective of the business owner. Welcome back to Adyen Presents: Embedded Finance. We are here today with Alice and Scarlet, the founders of MASAJ, which is a massage business, as the name would suggest. Alice, Scarlet, welcome to the show. Can you please take a minute to introduce yourselves and maybe say a few words about MASAJ and the origin story?

Scarlet Amies - 00:29:53:

Sure. Hey, I'm Scarlet Amies.

Alice Vaughan - 00:29:55:

And I'm Alice Vaughan. Hi.

Scarlet Amies - 00:29:58:

We're the founders of MASAJ. MASAJ is a London-based massage brand on a mission to redefine what it is to get seriously good massage in the city. We're big on quality, we're big on accessibility, and we're big on looking after our customers.

Hemmo Bosscher - 00:30:13:

Absolutely. So can you talk a bit, because we talk a lot about the industry perspective and growing margin in the space and software as a service and all of that stuff. And we make a lot of assumptions about the day-to-day life of a small business owner and operator. So, can you talk through bits like what your day looks like and what you're focused on?

Alice Vaughan - 00:30:33:

Interestingly, as a business, we are all about human connection. It's impossible to automate what we do. It's about somebody who needs to receive body work, coming into a beautiful environment, sitting face to face with somebody and being asked, how are you doing? What can I do for you today? But that doesn't mean that we don't try our hardest to innovate with the software that we use and the way that we use technology and processes to make the whole experience as smooth as possible for our customers, but also for our team as well. We're a very busy business. We have a couple of studios across central London, and it's really important to us that it never feels conveyability. Everybody is unique. Every experience is tailored. So I suppose in terms of our day-to-day, a lot goes into looking after the people in our business and trying as hard as we can to connect with new customers and our existing customers to encourage them to come back.

Scarlet Amies - 00:31:35:

No two days look the same in our day. And Alice looks after, kind of, the operations. So, she has the OO role. I have the CEO role. There's so much crossover in that and I can't predict what's happening next really. But it's busy. We're nearly 100 people now.

Hemmo Bosscher - 00:31:50:

A hundred?

Scarlet Amies - 00:31:51:

Yeah, a hundred. Yeah.

Hemmo Bosscher - 00:31:52:

Wow. So are many of the therapists, are they full-time employees then?

Scarlet Amies - 00:31:56:

No actually, therapists by their very nature and decades have been always freelance. We have looked into employment contracts and going down the payroll route. And definitely when we get to a certain size, it will be a no brainer. But for now, for the nature of the team, the flexibility of their work and their nomadic nature, it feels like the right system to keep them freelance.

Hemmo Bosscher - 00:32:16:

I understand. And probably the best ones, they have that as a demand, I assume. Well, knowing very little about the massage. And then these hundred people, tell us a bit about roughly how that's divided. What do they do?

Alice Vaughan - 00:32:27:

We have about 10 people in our central team who manage everything from marketing, business operations, finance and people management. Then we have a group of 16 or so people who work as hosts in our studios. So they're the first face that greets a customer when they come to our site or the person who picks up a phone or answers an email. And the rest, so 70 plus people, are body workers - the massage therapists. You couldn't find a more diverse team of people if you tried. We have people who come to us straight out of uni, having studied something like physiotherapy or osteopathy. We have people who train to become massage therapists later in life after they've had whole careers as lawyers, accountants, doctors, teachers, artists, musicians, like you name it. We've got someone on the team that represents it. And our team is very diverse. We have people from all over the world. And that really is part of the magic that makes our business so unique. It allows us, I think, a very special perspective on what it means to be inclusive for our customer base as well.

Hemmo Bosscher - 00:33:36:

That's really interesting. Let's go back to software. So what we're here to talk about with your ambitions and the realities of the business, how did you go about selecting the best software to use for your business? Was that like a referral or did you do a lot of research or did people come at you, call you every day what happens?

Scarlet Amies - 00:33:54:

It was trial and error. So you name it, we've probably tried it in terms of software providers. We got very lucky that Thomas Brown, account manager at Fresha, got in touch with us as the world was opening up post-COVID and persuaded us through the series of meetings to give it a go. And we have not looked back. It's been five years now and we have no intention of going anywhere.

Alice Vaughan - 00:34:15:

Absolutely. I think it's software that connects into the beauty, wellness, well-being space is a really, really interesting thing because I think there's quite a broad assumption based on the nature of this industry that people who are focused on personal services aren't also interested in technology or innovation, particularly because there are a lot of female founded businesses. My background prior to joining Scarlet as a founder of MASAJ was actually working in the tech industry. And I was truly shocked when I started working in the MASAJ world, the way that software felt so behind the times. Like Scarlet said, we tried everything, like every big booking system that you can name. We tried it and everything just felt so not built for purpose.

Scarlet Amies - 00:35:04:

Clunky is the word that comes to mind.

Alice Vaughan - 00:35:06:

Yeah, really clunky.

Scarlet Amies - 00:35:08:

A lack of understanding of what the customer needs and such a lack of innovation, which is where Fresha comes in. That innovation part is such a big deal for us.

Hemmo Bosscher - 00:35:17:

So effectively, it was a lot of trial and error. You landed on Fresha. Now you have no intention of leaving. Do you ever think about what's next after payments? Are you interested in any of the broader small business toolkits they're rolling out? Essentially, I think the promise of platforms like Fresha is that today you use them for payments and just the booking software, et cetera. But later you might do more services with them and you don't need the fourteen relationships you now need to run your business, but maybe you need five or one in the end. How do you think about that from your perspective?

Alice Vaughan - 00:35:46:

It's that exactly. Why would you want multiple relationships to manage and multiple platforms to manage if you can consolidate as much as possible? And I think that really is the thing that makes Fresha unique for a business like us. As we're growing, we see them grow and innovate as well. And they treat us like true partners in that growth. So, of course, we're really excited about what the future might hold with Fresha and have it for us having that relationship with a dedicated account manager who's been our POC for five plus years. It's fantastic because they will give us little teasers into what might be coming next. And it allows us to plan more effectively as we live to scale ourselves.

Hemmo Bosscher - 00:36:31:

Even if it's something good, you're not surprised by it, but they sort of keep you posted on what's coming. That's interesting.

Scarlet Amies - 00:36:36:

And it works both ways, right? Like when we have an idea or pain point, there's someone there that will listen. If it can be done, it will be put in the pipeline.

Hemmo Bosscher - 00:36:44:

In your  previous relationship with other software platforms who will remain unnamed, did you have a separate relationship with a payment service provider? I assume that it wasn't always an embedded journey. Can you talk a bit how that felt for you versus how it now felt getting everything from Fresha?

Scarlet Amies - 00:37:00:

Feels like a totally different world. Yeah, half the eyes, that's a long world.

Alice Vaughan - 00:37:03:

Oh my goodness. Again, it's just everything being connected, you know, is not just good from a day-to-day perspective in terms of what it means for that person on the ground taking payments. When things are less clunky, that host or, you know, that team member has more time to dedicate to what is truly important in that moment, which is making the customer feel seen and heard and understood rather than fiddling around with an external payment, like a PSE or something like that. So that's massive. But even more so at the end of the month when it comes to doing our accounts, the fact that things are so easily integrated and with the volume of bookings that we're doing and the volume of customers that we have, that's absolutely essential. Our finance team would walk out, frankly.

Hemmo Bosscher - 00:37:50:

Can you help listeners maybe quantify that a bit? Like the world of having your own relationship as a small business with a payments-first provider versus the easy reconciliation you get through Fresha and similar platforms. Does that save you personally two days or the two people on the finance team or how is that for you?

Alice Vaughan - 00:38:08:

Well, I think before we moved to Fresha, we had to outsource most of our accounting to an agency of bookkeepers to handle the volume of...

Hemmo Bosscher - 00:38:17:

Just to keep track of it all.

Scarlet Amies - 00:38:18:

If you just think about the fact that it was line by line and then you had to match it with the other provider, think about how much work that is going line by line.

Hemmo Bosscher - 00:38:25:

I would rather not think about that.

Scarlet Amies - 00:38:26:

Yeah.

Alice Vaughan - 00:38:27:

And that was when we were small and we had,

Scarlet Amies - 00:38:29:

you shouldn't have nearly as many transactions going through the day.

Alice Vaughan - 00:38:33:

And the fact that that can all be connected into broader reporting as well so that we can look into not just what payments we're receiving, but the more human side of it as well. You know, did we have to apply discount for some reason? And can we connect it back to the customer and therefore the payment that we received? It makes understanding all of those strategic decisions from a financial perspective so much easier as well. And therefore, our forecasting and our future proofing much simpler too.

Hemmo Bosscher - 00:39:01:

Well, good that they found you just as the world was opening up. When it comes to the marketing, Fresha, of course is slightly unique because they have a tool-sided business model where there's also this consumer marketplace. And I, as a consumer living in London, as I did six months ago, I can have my little app and I can try on businesses. Are you finding that you now have less marketing spend and that's just a huge avenue? Or is it a nice addition to your marketing suite? Or how do you think about that?

Scarlet Amies - 00:39:26:

We still spend money on marketing and continue to do it outside of the platform because from a brand perspective, it's really important for us. Yet certainly over the last 12 months or even two years now, the number of customers we're receiving through the marketplace is increasing month on month still. So, there may come a point when we can look at other budgets and turn them down because of the new customers coming through the platform. At the moment, it's just a bit of a nice addition, I'd say.

Alice Vaughan - 00:39:53:

And anything like that happens while we're asleep is great. It's not another decision for us to make, not nothing for our marketing team to have to manage. It's very organic.

Scarlet Amies - 00:40:03:

The other thing to say about that is that we've been with software providers before that have a marketplace. And again, it's just clearly not been thought of from the customer's perspective, from our perspective. Fees are really high and they continue when customers come again.

Hemmo Bosscher - 00:40:18:

It's like an ongoing referral.

Scarlet Amies - 00:40:19:

Exactly.

Hemmo Bosscher - 00:40:20:

Why would they not then book directly that's not thought through, as you said? Interesting. This is a bit of a non-sequitur and I know that we haven't planned, but I'm quite curious because we're now highlighting one side of the argument where Fresha helps you do so many things. And the same is true for vertical SaaS providers and other verticals, small businesses. Do you ever feel you're becoming too dependent on them?

Scarlet Amies - 00:40:44:

Oh, we had this conversation last night.

Hemmo Bosscher - 00:40:47:

This is like the glorification of Fresha. So I feel it's only fair to highlight the other side.

Scarlet Amies - 00:40:51:

I think that's very cool. And I think it's definitely worth discussing.

Alice Vaughan - 00:41:54:

100% because we are very ambitious as a founder duo. And we see our brand hopefully growing across London and elsewhere too. And future-proofing everything that we're doing at this point is essential for us. Fresha is a massive marketplace that has so many different types of businesses there. And businesses of different sizes. So naturally, they will cater for the largest cohort really. And there may come a point where we're much larger than the average business that uses a platform like that. I mean, our competitors, particularly equivalent businesses like us internationally, develop their own software, design their own app, marketplace, tech, everything. And of course, that's something that we bat around between us.

Scarlet Amies - 00:41:41:

We talk about it all the time. But for now, and definitely for the foreseeable, the positives massively outweigh the negatives. We've been around the block on this a number of times. It depends on the level of innovation, right? And the level of new features and how much they're going to support businesses as they scale. Because that's our mission as a brand. So it's all to pray for.

Hemmo Bosscher - 00:41:59:

That's really interesting. As an uninformed person looking outside in, I would assume it's weighing the benefit of all that they provide versus the dependency on them. And so long as they stay ahead and you can grow with them, then it's good forever.

Scarlet Amies - 00:42:12:

The rise of AI and the level at which tech is exploding. There are opportunities there from a kind of cost saving and experience point of view that are worth us exploring. So it depends on what Russia does with that side of things too, right?

Hemmo Bosscher - 00:42:27:

I think they're quite keen on it.

Scarlet Amies - 00:42:29:

I think so.

Hemmo Bosscher - 00:42:30:

Do you feel, you're obviously very happy with the relationship that's been made abundantly clear? Do you also feel that as you grow, attracting new customers, expounding perhaps, does your software provider, Fresha, in this case, help you actively with that? Like planning new stores, the amount of people you have to hire, things like that?

Alice Vaughan - 00:42:48:

I would say from the perspective of our team and sort of managing our people, which is one of the most time consuming and essential parts of our continued growth, it's really important. There's consistency and there's quality in all the different tools they're using to be excellent. And certainly the tools provided on the ground to our teams working in our studios with Fresha are fantastic. We already see really good retention rates from our customers. And in large part, that is also down to the fact that it's really easy for them to continue to engage with us as a brand through Fresha, whether it's rebooking appointments, purchasing memberships, assessing loyalty, benefits, and buying vouchers. There is a real stickiness that's created that certainly aids our grace.

Hemmo Bosscher - 00:43:40:

Understood. Thank you very much for talking to that a bit. I think beauty and wellness is a good example for vertical where most businesses are quite cash flow constrained. One, are you in that same position and do you find the fresh ice tools and suite of tools or promises perhaps for future tools helpful in that? Or do you feel like, oh, we have our banking relationship or we're well taken care of?

Scarlet Amies - 00:44:01:

It's tricky. I think there are benefits we got used to. We were talking about this before. I think there are things like the daily payouts that aid our cash flow immensely. That's a kind of no-brainer. But in terms of our freelancers accessing their pay right away, et cetera, we don't actually use any of that software yet. That's a conscious decision because it just doesn't work with the way we run things. We're very diligent in how we look at things line by line and we're very supportive of our team in their invoicing. And so at the moment, it doesn't suit your needs, but the promise of what's coming is certainly exciting.

Hemmo Bosscher - 00:44:34:

And the way you do it now, if you plan, for example, a new location, like this is London. So that's a big investment. Do you then attract capital from your banking relationship today, I assume, or do you raise funding?

Scarlet Amies - 00:44:44:

We raise funding and we also have a really good relationship with our banks. Been with them for a long time. So at the moment, holding is really access via, I mean, we're about to go out and raise money again. And it will be via angels and small loan providers, essentially.

Hemmo Bosscher - 00:44:58:

I understand. But if that were to become like a part of Fresha offering, would you be interested or not at all interested?

Scarlet Amies - 00:45:04:

Any way to roll out new studios quickly, you know, CapEx costs are high and it's a big investment to roll out a new studio. If there was an option to do that via Fresha we'd absolutely consider it.

Hemmo Bosscher - 00:45:15:

Any part of what we're building here at Adyen, so I have to ask.

Scarlet Amies - 00:45:19:

That's good to know.

Hemmo Bosscher - 00:45:20:

Thank you for humoring me. Okay, easier question. You've sort of answered this already abundantly earlier in the podcast, but if you had advice, let's say me and Emma over here, we're starting our own massage therapy shop. How to get started, how to pick vendors. What would you advise that we do instead of running the gauntlet as you have with all the software you've gone through?

Alice Vaughan - 00:45:39:

I would suggest that trying to find the place that we found, which is a beautiful balance between working with a company who feel like they're constantly pushing boundaries and constantly innovating, yet also have a relationship with their business customers that feels genuine, feels like a partnership, feels really reciprocal. Like that is totally unique, not just in this industry, but I think for any kind of SaaS-Customer relationship. And it's very rare. And I think that, like you said at the start, whether it's a booking platform, business or I've lost count of the number of times that discount providers have called or emailed us trying to get us to sign up to do a deal. People will bombard you with offers because they just want to get more and more people on their platforms. But finding the right partnership is about having people who will listen to what you need as well.

Hemmo Bosscher - 00:46:36:

It's beautiful. Thank you. That's good advice. Lastly, then on massage, other than me now encouraging everyone who listens to please go to a MASAJ location when they're in London, as I will do next time I am. What's next for the business? What's next for you? What are you thinking about planning for the rest of the decade?

Scarlet Amies - 00:46:53:

Good question. We are, like I said, I knew the two. We're about to go out and fundraise again. Alice and I are really ambitious. We believe that accessible body work should be normalized and not an absolute treat to fall upon. So we want to see massage on all major high streets, but it's true. Affluent neighborhoods, some places where there is a crossover of residential and people working, we want to put MASAJ in the low stop. So we're raising now. We're looking to do a raise of about 1 million and we're going to probably do four new studios with that. And at the moment we're thinking about maybe entertaining a new city to showcase that the concept works across in a new place, I suppose.

Hemmo Bosscher - 00:47:34:

In the world outside of London.

Scarlet Amies - 00:47:35:

Yes.

Hemmo Bosscher - 00:47:36:

Any ideas to cross the channel or not yet?

Scarlet Amies - 00:47:38:

We talk about a lot. Yeah, in fact, it's probably going to be part of the next race after that.

Hemmo Bosscher - 00:47:42:

Might I suggest Amsterdam?

Scarlet Amies - 00:47:43:

It's top of the list.

Alice Vaughan - 00:47:44:

Just to the list.

Hemmo Bosscher - 00:47:46:

Oh, great. Fantastic.

Alice Vaughan - 00:47:47:

The other thing to add is alongside obviously our mission being about providing access to good body work, it's about providing a really genuinely unique working environment for body workers to exist in. And that's something that will grow and expand as the brand grows too. So, that 100 people will very soon hopefully be sort of three or 400 people. And we really want the broader work that we're doing as a brand to influence what our industry is doing and also how the wellness industry is perceived.

Scarlet Amies - 00:48:22:

I think it's really important to talk about the advocacy side of what we do. Our industry is mired by outdated perceptions, right? And there are places where you can pay an exuberant amount of money for an average massage. Now, also places that you would want to avoid and we don't want to go too much into it now, but there is real room for this, for people to feel safe in, not just the guests, the people who work inside those studios. It's of utmost importance and something we both feel really passionate about.

Hemmo Bosscher - 00:48:49:

It's a wonderful mission. I wish you luck and I will be back. Thank you very much. I had a lovely conversation. Thank you for making the time.

Scarlet Amies - 00:48:55:

Thank you.

Hemmo Bosscher - 00:48:57:

Thank you to our guests for sharing their insights. There's lots to digest from today's conversations, but if you take away one thing, let it be this. Embedded Finance is leveling the playing field for SMBs, providing powerful tools that drive their growth and streamline operations so that they can focus on their core craft. Thank you for listening.