Long on Hair: The World’s First Venture

Oct 21, 2023

This story appears in the Septemper 30, 2019 issue of Forbes Magazine. Subscribe

At Moe's Hair Hut in Harlem, Raven Johnson, 24, wants to look good for her upcoming baby shower. She's used to paying as much as $500 for a weave. That includes $250 for long, silky human-hair extensions and another $250 for the stylist who sews them into the tight braids of Johnson's own hair.

But this time, thanks to a startup called Mayvenn, she’ll pay $250 total. After three hours of meticulous labor by stylist Ericka Barksdale as R&B blasts over the sound system, flowing tresses tumble over Johnson's shoulders. Beaming, she says, "This is the best deal I’ve ever had—purchasing hair and getting a free install."

Founded in 2013 by African American entrepreneur Diishan Imira, 38, Mayvenn is the only venture-backed startup to take aim at the $6 billion U.S. market for human-hair extensions. With $36 million from investors including Serena Williams and Silicon Valley powerhouse Andreessen Horowitz, Mayvenn is valued at $100 million. How will the company deliver venture-style returns? "Mayvenn is a high-growth, two-sided marketplace with hundreds of thousands of beauty experts on one side and millions of customers on the other," says Ben Horowitz of Andreessen Horowitz. "It's important to understand that this is not an e-commerce business or a hair business."

Great Lengths: At Runway the Salon in Brooklyn, a stylist installs a weave for a client.

Before Mayvenn launched, black women bought their hair mostly from Korean-controlled beauty-supply stores. "All the money was flowing outside the black community," says Imira, who's dressed in a dark gray T-shirt, gray sweatpants and spotless gray Nikes with no socks. He's sitting in front of a Mac laptop and a 27-inch monitor in his office in downtown Oakland, California. Aside from two cases of Hennessy VSOP stacked by the door, a gift from a friend, the gray-carpeted office is bare. "I’m kind of a minimalist," he says. His studio apartment in Oakland's gentrifying Lakeshore neighborhood is similarly sparse.

Keeping things simple helps him focus. He conceived of Mayvenn in 2012 after a stylist friend in Los Angeles asked if he could get her a direct connection to human hair from China. Back in 2003, during a postcollege job in Shenzhen teaching English, he’d learned how to import Chinese goods while picking up conversational Mandarin. He started with $20 Air Jordan knockoffs he sold to friends for $70. When he moved to Miami in 2005, he ran an all-cash furniture-import business. He had fun pocketing six figures a year, sporting his fake Jordans, driving an Acura and partying. But, he says, "I didn't have a company, I had a hustle—it had no longevity to it."

He realized he had no concept of business basics. "I didn't have anyone in my family with the financial wherewithal to explain that," he says. His black father, a criminal defense lawyer, disappeared from his life when he was 5. His Jewish mother, an ob-gyn who worked in clinics for low-income women, raised him and his younger sister.

He enrolled in an international business program at Georgia State University, studying in Brazil and at the Sorbonne in Paris and doing internships in China and at Ernst & Young's office in Addis Ababa. In 2010, M.B.A. in hand, he wanted to start a business but didn't know what kind. He moved in with his mother in Oakland, working menial jobs, like parking cars, and mulling his next move. He describes the succeeding two years as "pretty rough for me psychologically."

That's when L.A. stylist Reina Butler, a surrogate sister who had shared a home with his family in Oakland, asked him to find her a Chinese hair supplier. In 2012, he flew to China and found that human hair was a great export. Light and compact, it was cheap to ship, and retail markups ran as high as 400%. He checked U.S. Customs figures and estimated the U.S. market was worth $5 billion to $6 billion.

"I started to think of this as a venture-scale business that could do hundreds of millions in revenue," he says. With enough startup capital, he could launch an online business that would sell through black stylists whom he’d recruit as distributors, giving them a 15% to 20% cut. "I could sell something and make a lot of money," he says, "and I could also really positively impact the black stylist community."

In Silicon Valley, 35 miles from Oakland, he knew that venture capitalists were "writing multimillion-dollar checks to startup founders in hoodies and flip-flops, but I didn't know a single person there, and I didn't know how to get there." To find his way in, beginning in late 2012, he went to panel discussions hosted by venture firms and to Wednesday-night gatherings of a group called Black Founders at a San Francisco bar.

He started plugging Mayvenn (the name comes from the Yiddish word for "expert") at pitch competitions where white and Asian investors had trouble grasping the market for black hair products. He finally scored with 500 Startups, a Menlo Park accelerator, which invested $50,000 and made introductions to a dozen angel investors.

One of them was David Shen, a partner at seed investing firm Launch Capital. Imira took him to a salon in Oakland and two Korean-run beauty-supply stores. "I was incredulous," Shen says. "I loved that Diishan knew this business and was willing to put the time and effort and knowledge into disrupting it."

Learning to shoot for big checks was a process. "For many African American founders, it's not natural to ask for $10 million," Imira says. It helped that Ben Horowitz, whose wife is black, understood Mayvenn's market. "I knew the problem he was solving," says Horowitz, who sits on Mayvenn's board.

By late 2017, Mayvenn had recruited 50,000 stylists to distribute its hair. But Imira had failed to anticipate the sharp rise in e-commerce. Challengers, especially AliExpress, the giant Chinese retail site owned by billionaire Jack Ma's Alibaba Group, were undercutting Mayvenn's prices by 80%. "We were still growing, but I could see the writing on the wall," he says.

Late last year, he pitched a new approach to investors and raised $23 million. Instead of relying on an army of stylists to distribute its hair, Mayvenn now buys install appointments from stylists for $100. Then it offers the appointments free to customers who buy Mayvenn hair. In less than six months, 3,000 stylists are already listed on the site by Zip Code.

Though stylists have to accept a discount for their services, they benefit by gaining customers with little effort. Oakland stylist Ariahnn Turner, 25, has gotten 26 new clients since she joined the Mayvenn program in January. "It's a win for me," she says.

Though the company is eating the money it spends buying appointments from stylists and it is not yet profitable, hair markups (Imira won't specify Mayvenn's) are robust enough to make each transaction profitable. He expects 2019 revenue to exceed 2018's $30 million.

Imira won't reveal the source of Mayvenn's hair, except to say that it comes from Asia, where he uses trusted suppliers who assure that the outer layer of each hair shaft runs in the same direction, preventing tangles and frizz. Women who buy inexpensive hair on AliExpress don't know what they’re getting, he says, while Mayvenn hair comes with a 30-day money-back guarantee.

He is still aiming high. He believes he can expand Mayvenn's sales to high-markup products like shampoos, conditioners and bonnets that black women wear at night to protect their hair. And he welcomes customers of all hair types and backgrounds who are wearing extensions in increasing numbers (Kim Kardashian's locks are not all her own).

"I want to be the largest hair salon the way AirBnb is the largest hotel," he says. "AirBnb takes underutilized capacity in housing and they fill it. I’m taking underutilized capacity in salons and filling that."

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