Make or Break

What happens when a business built on simplicity gets complicated? Dollar Shave Club's founder Michael Dubin found out

How millions of views put Dollar Shave Club on course for a billion-dollar...

When Michael Dubin and Mark Levine founded Dollar Shave Club in 2011, their vision was pure and simple: For as little as $1 a month, customers could get high-quality razors delivered right to their door. DSC's mantra — "Stop paying for shave tech you don't need" — took a direct shot at the pricey name-brand razors sold in retail stores.

Their back-to-basics approach worked. Some of the biggest names in the venture world, including Kleiner Perkins Caufield & Byers and Andreessen Horowitz, bet big on their vision, providing more than $1 million in a Series A round for the blade subscription service.

Just three years later, in 2015, Dollar Shave claimed 48.6 percent of the online razor market, shaking up giants Gillette and Schick, according to data from online retail consultancy Slice Intelligence. The company has grown to include a team of over 600 employees globally and has more than 4 million subscribers.

"I knew the business was a good idea, because I myself had experienced the problem of razors being overpriced and the shopping experience being incredibly frustrating, and I knew if I had the problem, then other people probably had the same problem as well," said Dubin, who is also the company's CEO.

In July 2016 personal-care products giant Unilever acquired Dollar Shave in an all-cash $1 billion deal. "I had never been through a transaction like that before. ... So obviously you can imagine that was pretty terrifying," Dubin said.

Michael Dubin, co-founder and CEO of Dollar Shave Club
Dollar Shave Club

The move gave Unilever a 16 percent unit share of the U.S. razor cartridge market, pitting it right behind first-place Gillette, which globally is worth $7 billion. It also allowed Unilever to make significant inroads into the larger, increasingly profitable men's grooming market. According to Statista, by 2020 the global male grooming market is estimated to be worth about $166 billion, up from $121 billion in 2016.

'At some point the big boys and girls are going to come at you'

All this success has led to some complexity for Dollar Shave's Dubin, whose simple and pure concept has now invited increasing competition from start-ups as well as a lawsuit in 2015 from Gillette.

The suit specifically cites a razor blade coating method the 120-year-old shaving company, owned by Procter & Gamble, uses in its Mach 3, Venus and Fusion razor products. According to the Gillette complaint, the method "provides the razor blade with excellent shaving characteristics … and promotes durability."The subscription razor service has filed a countersuit, saying it hasn't infringed on any of its rival's patents.

"At some point the big boys and girls are going to come at you with every weapon in their arsenal. And you know the legal weapon is one of them that they can use. So I don't think that it was a huge surprise when it happened," said Dubin. "It's certainly not a pleasant feeling when you wake up to an email, which is actually how we found out."

The secrets behind DSC's success

It was Dubin's humor and marketing instincts that initially put his business on the map. On March 6, 2012, his legendary launch video, "Our Blades are F***ing Great!" — which he wrote and starred in — went viral, crashing the site and bringing in more than 12,000 customers within the first 72 hours. Within three months the video had more than 4.5 million views. (Today DSC's launch video is still getting hits — at press time it had been viewed more than 26 million times.)

"I don't think you ever really think you have something," said Dubin. "I knew the script was good enough and that it communicated what our business was about. But I didn't think it was going to be a home-run viral sensation."

Dollar Shave quickly began expanding their line, shifting from just razors to a range of shaving prep, hair care, skincare and oral-care products. In November 2018 they rolled out a new fragrance line, called Blueprint. In all, DSC offers more than three dozen products in six categories.

Source: Dollar Shave Club

Dollar Shave's timing was optimal. Over the past decade, there has been a pivotal shift in the male pampering culture, according to Statista. Men's toiletries used to consist of shampoo, deodorant and shaving cream. Now medicine cabinets worldwide are stocked with moisturizers, facial cleansers, eye serums, bronzers, concealers, antiagers and even mud masks — all designed specifically for men.

Some people get really nervous when when they see competition come up. But I also think that it inspires you to work harder. And it also pushes businesses forward.
Michael Dubin
co-founder and CEO of Dollar Shave Club

Dubin told CNBC he takes his cues from a variety of successful leaders: "I don't think there's any one playbook out there in front of us that we should be following. You can take a little piece from Starbucks; you can take a little piece from Nike; you can take a little piece from Apple. You have to keep your eyes open and you have to learn from others that have traveled the path before."

All this has built up a loyal following of male (and female) shoppers, whose retention rate is the envy of subscription box services worldwide. According to Second Measure, a service that uses credit card transaction data to gain visibility on the performance of public and private companies, 69 percent of DSC's customers come back and transact in the first month after they initially make a purchase, and one third remain as subscribers even 24 months out. At last count, they have 87,554 Twitter followers.

"Some people get really nervous when when they see competition come up," Dubin said. "But I also think that it inspires you to work harder. And it also pushes businesses forward. I think competition is a wonderful thing."

Correction: This story has been updated to reflect that Dollar Shave Club has grown to include a team of over 600 employees globally and has more than 4 million subscribers.