The Art of the Pivot with 2ULaundry

About 2ULaundry

In the busy pre-Covid world, individuals outsourced many household chores including laundry and dry cleaning. Several startups tried to solve this by becoming the “Uber for Dry Cleaning & Laundry”, but failed due to poor unit economics, quality control, and service. 2ULaundry (2UL) entered the $61B laundry and dry-cleaning market as a valet service with a core focus on quality. By leveraging underutilized laundry assets and vertically integrating the entire supply chain, 2UL was able to produce industry-leading unit economics and unparalleled customer satisfaction. Since launching in 2016, 2UL opened operations in Charlotte, Raleigh, and Atlanta, where their own employees, not independent contractors, pick up, clean, and return customer’s laundry. The team had aggressive growth plans and sought to launch in over 30 cities by 2023, but COVID changed everything.

Endeavor Support Post Selection 

Alex and Dan were selected as Endeavor entrepreneurs in 2019 during the 87th Endeavor International Selection Panel (ISP) event in Madrid, Spain. They quickly turned to the Endeavor network for support on their scaling and fundraising plans. These hungry entrepreneurs started meeting with mentors for different topics from hiring and maintaining organizational culture, to market expansion. Because of their targeted milestones, they asked Endeavor to form an Endeavor Advisory board that met on a quarterly basis. The board consisted of two Endeavor mentors who were there to help them think through their most pressing challenges. The Endeavor board complemented 2UL’s Board of Directors. Their independent advice was solely for the benefit of the entrepreneurs.

The Big PIVOT

Just like many other growth-stage businesses, founders Alex Smereczniak and Dan D’Aquisto had aspirational goals for their business and its expansion model. Then the pandemic hit and America shut down. In a span of two weeks, busy professionals no longer needed dry cleaning or laundry services since they were working from home. They were faced with a challenge they never imagined. The burn rate was higher than weekly revenue, and orders dropped 60% overnight. The business was abruptly forced to make a difficult decision of letting go of 12 employees and completely closing the Atlanta and recently launched Raleigh operations. As leaders, they had to call an emergency board meeting to share the state of urgency. While many entrepreneurs focused on how to manage remote workers and layoffs, Alex and Dan started strategizing how they might pivot their plans amidst COVID.

They noticed their corporate-owned retail laundromat in Charlotte, the Laundry Room, was experiencing 20%+ growth when most retail businesses were declining. Revenue continued to increase and they quickly realized they could test out a concept they’d been thinking about for a while: franchising the laundromat business to create operational scale in new markets. This strategy would allow for more rapid scale and vertical integration they had some control over, while also raising non-dilutive capital in the form of franchise fees. The big question was where to begin, given neither founder had any franchise experience. Through Endeavor’s network, Alex and Dan quickly connected with mentors in the franchising space. They spent the first two months sharing their idea with Endeavor mentors who have experience with different franchise models. Endeavor connected them with two mentors, one founder operating a new franchise business and another with experience in investing in franchise concepts. They met with these mentors on a monthly basis to discuss the execution plan of their franchise business.

Endeavor Servicing During the Pivot 

Alex and Dan then presented their execution plan to the Endeavor Atlanta Board of Directors who were also able to make introductions to potential customers and provided advice on the following:

• How to structure franchise agreements, including the economics and revenue sharing models
• Market expansion and brand awareness on major US Cities that might gain traction with the model
• The real estate processes of the franchise model and how to mitigate potential risk
• Refining the value proposition of the franchise offerings
• Building an in-house franchise team

Founders Thinking Big

Fast forward almost a year later and the LaundroLab was born – a franchise model with a new spin to modernize the ownership structure of Laundromats and bring 2UL’s on-demand laundry service across the U.S. Alex and Dan continue to leverage Endeavor’s network as they scale franchise operations and relaunch on-demand laundry services.

When Alex and Dan launched LaundroLab they had no idea if the offering would be appealing, let alone compete in the market. After 6 months of careful planning, legal formation, and preparing the brand to go to market, LaundroLab was available for sale on January 15, 2021. Like many entrepreneurs, Alex and Dan are optimists and set out to sell 18 franchise licenses by the end of 2021. Three months went by, with hundreds of initial conversations, but zero deals closed. It wasn’t until late March that the founders realized that the sales cycle for an emerging franchise brand is 30-60 days longer than that of an established brand with multiple locations and franchises sold. This is when the deals started coming in. Potential franchise candidates saw the value in the model LaundroLab had built, the discount they would receive from Electrolux, the technology suite, and the pickup/delivery revenue that would be provided through the 2ULaundry brand.

The LaundroLab team held their first Discovery Day, which is the last step in the sales process, on Friday, March 18th with three prospective groups. These candidates represented Denver, Atlanta, and Charlotte. After meeting the team and experiencing the LaundroLab difference in person, all three candidates converted and signed on to develop 3 stores each over the next 4 years. From this point on, the team continued to award franchise licenses at every subsequent Discovery Day and to date have sold 17 licenses, just 1 license shy of their 18 license goal for the entire year. These franchises represent Denver, Charlotte, Atlanta, Miami, and Tampa and are all under active development.

To accelerate growth, the team has partnered with BrandOne to help further fill the top of the sales funnel and close more deals. The team is now projecting 39 total licenses sold by the end of 2021 across 17 unique franchisees.

Dan and Alex’s biggest advice to founders facing adversity is simple: persevere. They learned early on that there will be many moments in your entrepreneurial journey where it feels like your back is against a wall. The reality is that you are truly never backed into a corner. You will always have options if you look for them and think critically to create them. Some options will be better than others, but the fact that you have options in and of itself provides a sense of calm and clarity which allows you to refocus and persevere.

When it comes to the art of the pivot, it’s exactly that, an art, not a science. There won’t be a perfectly clear path forward, no exact formula to pull it off. What there will be, are people that know significantly more than you do about the direction you are thinking of heading. Gravitate towards those people, open your ears, and absorb as much knowledge as you possibly can, as quickly as you can. This will be the mentorship and guidance you will need to create those options that might not be immediately apparent.