Stories
The best moment in the last month for Pat Phelan was walking in the Flatiron district in New York towards the latest location for his fast-growing aesthetic clinic chain on West 23rd Street in New York. Phelan had trudged those streets in a previous life as a technology entrepreneur. He knew what it was like to be in an unforgiving city fighting to win customers and raise money. Now Phelan was on his way to sign a lease to open a Sisu clinic in a building owned by the Italian family behind the luxury suit company Ermenegildo Zegna.
“I almost shed a tear,” Phelan said. “I spent many years walking that street near the Flatiron, but I never thought I’d have anything to do with it.”
Accompanying Phelan on his trip to New York was one of his co-founders, Brian Cotter, a doctor. The visit also took them to Texas and Miami, two locations where they are also working on more locations for Sisu. For Brian Cotter, the highlight of the trip was getting the keys for a Sisu outlet in Soho, a chic neighbourhood in lower Manhattan. “It was like a dream come true,” he said. “From Cork to New York, we are bringing an Irish brand to the States that we believe will become a behemoth. It is indescribable.”
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Rewind the clock back four weeks. I’m in the lobby of the Four Seasons Hotel in Lisbon at the Web Summit waiting for Pat Phelan. I’ve known him since 2015 when we met in a hotel on the fringes of the summit, back when it was in Dublin. At the time, Phelan was on the cusp of selling his previous business, an anti-fraud startup called Trustev, to Transunion for $44 million.
It was a high-stakes deal that made Phelan, who started his career as a butcher in the English Market in Cork, a multimillionaire. Phelan has a compelling backstory, of dark times and success. He is easily one of Ireland’s most interesting entrepreneurs, with a dynamo approach to dealmaking. Phelan is brave in business, but also relentless in his attention to detail.
Six years ago, Phelan had no visible tattoos nor was he super-fit as he is today. He hadn’t started to use Sisu’s products either, which makes him look younger than his years: his skin is clear, and teeth are sparkling. Phelan is fresh from preparing to speak at the Web Summit, and for the next 30 minutes, he runs through some of the things he is going to say. By the end of 2021, he says, Sisu will have 15 clinics open in Ireland, and next year it will open at least 15 more outlets in the United States.
“This December we expect our gross revenues to creep on €1 million for the month. That is growth of 250 per cent on what we did in December the previous year,” Phelan said.
In September 2020, Sisu raised a $5.5 million series A round led by Greycroft and Bullpen Capital. Mana Ventures and the Gaingels Syndicate also participated as did Phelan’s friends Liam Casey, founder of PCH, and Dan and Linda Kiely, the co-founders of Voxpro. Linda Kieley is a director of Sisu as is Kamran Ansari, a partner in Greycroft, who was previously head of corporate development at Pinterest.
I ask Phelan if he is planning to raise more to fund international growth. “We have multiple offers,” he said. “We have multiple loan note offers too. Maybe, maybe but not in the next quarter. We have a tonne of cash on hand. We raised $5.5 million but the majority is still in the bank. The more locations we are adding, the better we become and the more cash we are generating.”
Sisu, according to Phelan, is generating revenue of $1,710 per year per square foot of outlet, putting it up there among some of the world’s leading brands. And this is despite Covid-19 and the fact it was only founded in 2018.
The market in the United States for Botox and other injectables had traditionally been split between “super upmarket” clinics and so-called medspas, which offer all sorts of treatments often by unqualified staff, Phelan explains. “In the middle, there is zero,” he said. “We are doctor-led and focused only on aesthetics and injectables, but at a price that is reasonable.”
“In time we can be the Warby Parker of our industry. We see the opportunity in North America for hundreds of stores.”
Warby Parker, an eyewear start-up that went public in September 2021, has a market capitalisation of $5.5 billion. Is that where Sisu wants to go? “Without a doubt. There is zero doubt Sisu will go public,” Phelan replied.
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It is now Tuesday of this week, and I am on a video call with the three co-founders of Sisu – Pat Phelan, and brothers Brian Cotter and James Cotter, both of whom are doctors. The call is to talk about America, but our conversation turns instead to London, where Phelan and Brian Cotter visited two weeks ago.
“We are now looking at opening five clinics in London,” Phelan said. “We get approached by landlords regularly to look at places, and we had a meeting with one in London the week before last.”
Pre-Covid, Phelan told me that he felt London property prices were too high to make the Sisu business model work. What’s changed? “The price per square foot broke our model before,” Phelan said. “But now they’ve started to drop considerably.”
Phelan said he’d walked Harley Street with Brian Cotter to view a number of places offering aesthetic services. “They’ve a brass plate, no front door, no references… There is a real opportunity for a strong brand,” he said. “What brands there are, are trying to be all things to everybody. In Sisu, we will do injectable treatments and nothing else. Other services are being removed from every other clinic other than Cork, where we will still do beauty.”
This focus on a narrower range of more specialised services means that Sisu needs smaller clinics between 900 and 1,100 sq ft, opening up more options in cities like London.
“There has been a shift in London in terms of where the high street is going,” Brian Cotter added. “Some of the big, massive operations like Topshop have gone. Now you have a lot of online brands going into the offline space. Landlords have just embraced that idea. They understand the shift has happened. Now when we look at London, it fits the model. The opportunity is large, and we feel we can work there.”
Sisu will be in 15 locations in Ireland soon. Is there much capacity for more? “The southeast of Ireland is next,” Phelan said. “We are also looking at a north Dublin suburb so there is room to grow.”
Brian Cotter said the market for injectables, which can range from anti-wrinkle Botox to skin boosters like Profhilo, was expanding rapidly.
“When we started the average age of patients was the mid-40s but now it is late 20s,” Brian Cotter said. “Patients want treatments that will allow them to stay the same or look slightly better. It is a quick non-surgical procedure that might take 10 or 15 minutes, for a cost that is not prohibitive.”
“People want to look better without anyone thinking they have had anything done,” James Cotter said. “That is translating into people in their late 20s or early 30s coming in rather than leaving it until much later.”
Managing Sisu, as it expands outside Ireland, has led it to make a series of new hires in recent months, as well as bulking up its board with Ansari and Kiely.
Lisa Donohue has joined as senior vice president of operations from Xponential Fitness, a listed $1 billion fitness group. Geraldine Mangan has come in as director of operations in Ireland, from the Cliff hotel group which owns three five-star hotels in Dublin, Waterford and Kildare.
Sisu’s other recent hire is Spencer Derrico, the new chief marketing officer. I ask Phelan how his CMO plans to build a brand in as large a market as the United States, and he suggests I speak to Derrico.
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Spencer Derrico is joining Sisu from Second Nature, a venture-backed air and water filter “healthy home” start-up that raised $16.4 million last year. I ask him how is Sisu going to create a brand in America? “The sheer size of the US market is almost unfathomable, and it continues to grow at an accelerated rate, which obviously bodes very well for Sisu Clinic,” he said. “Additionally, when you look at the state of the CosMed industry, you quickly realise there is nothing but green, fertile ground as far as the eye can see – the space is highly fragmented, and there are no de facto national brands taking the lead.”
He said better treatment care combined with digitisation and personalisation would allow Sisu “disrupt” its industry and become the leading brand.
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Pat Phelan gave a talk at Web Summit in front of hundreds of people. It gave an insight into his thinking about the business model behind Sisu, which he sees as having similarities to software-as-a-service type (SaaS) companies. I ask him what he means by this. “Botox last 90 days so people have tended to treat it like a haircut: ‘I get my Botox when my hair gets long.’”
“We have explained to our patients this doesn’t exist as Botox is gone entirely in 90 days, so you need to get it four times a year. If you think about it, our online CAC (customer acquisition cost) is probably about $15. Our CAC to LTV (lifetime value) is just like a venture capitalist’s dream. We acquire online and we acquire through refer-a-friend. We know if we get a patient, they will visit us four times a year,” he said.
What is Sisu’s LTV? “At the moment it is estimated at $31,000,” Phelan said. I reply that it is a lot, but Phelan said it is a number based on experience. “We feel our customers will stay with us for ten years… We know that Brian and James are injecting the same people for that long. Once you give people an amazing service, have a proper brand, and medically qualified people they don’t want to leave.”
Phelan said Sisu’s US-based backers saw the business as a “face-as-a-service” business that generates recurring revenue as customers keep returning.
“If you look at the US, it is far more subscription-heavy than Ireland or Europe,” Brian Cotter said. “I think face as a service will appeal to a time-poor demographic that wants to have things done with ease. We are looking at a subscription-based model in the US.”
“It will be ultra-bespoke and ultra-specific and tailored to the specific individual,” he said.
“It also allows you to value the business differently as now you have repeatable clients,” Phelan said. Sisu tested this proposition on Black Friday when it offered a €1,000 offer in return for Botox treatments for one year. “We did over €180,000 worth of business,” Phelan said.
How valuable can Sisu become? “There is no doubt that this will be a multi-billion business,” Brian Cotter said. “And to do that we want to float on the stock market eventually.”
