WEBVTT 00:00:00.000 --> 00:00:03.339 Picture this, right? You're standing in the aisle 00:00:03.339 --> 00:00:05.679 of your local drug store. Oh, I know this feeling. 00:00:05.900 --> 00:00:07.879 Yeah. And you just want to buy a razor, just 00:00:07.879 --> 00:00:10.390 a simple razor. But you can't just like... pick 00:00:10.390 --> 00:00:12.750 it up off the shelf. No, of course not. Because 00:00:12.750 --> 00:00:15.650 the razors are locked behind this sliding, totally 00:00:15.650 --> 00:00:18.570 impenetrable plastic shield. Which is so annoying. 00:00:18.730 --> 00:00:20.469 It really is. So you have to press that little 00:00:20.469 --> 00:00:22.710 blinking red button, and then you just wait. 00:00:22.769 --> 00:00:25.109 You wait for an employee with a key ring to, 00:00:25.109 --> 00:00:27.089 you know, slowly make their way over to you. 00:00:27.230 --> 00:00:29.190 Usually looking thrilled to be there. Exactly. 00:00:29.570 --> 00:00:31.269 And then, after all that awkwardness, you have 00:00:31.269 --> 00:00:33.570 to hand over this just absurd amount of money 00:00:33.570 --> 00:00:36.450 for a tiny piece of plastic and a few blades. 00:00:36.570 --> 00:00:39.070 Right. It feels less like shopping and more like... 00:00:39.070 --> 00:00:41.450 I don't know, paying a ransom just to groom your 00:00:41.450 --> 00:00:44.670 own face. Yes, a ransom. That is exactly it. 00:00:45.469 --> 00:00:47.750 And welcome to the deep dive, by the way. I'm 00:00:47.750 --> 00:00:49.649 your host. Thrilled you're joining us today. 00:00:49.729 --> 00:00:51.869 And I'm your resident expert. Glad to be here. 00:00:52.570 --> 00:00:55.710 So today's mission, we're jumping into some really 00:00:55.710 --> 00:00:58.070 fascinating source material. We've got corporate 00:00:58.070 --> 00:01:01.289 history, product strategy, and marketing data. 00:01:01.560 --> 00:01:04.200 And it really paints a wild picture. It does. 00:01:04.540 --> 00:01:07.739 We're going to explore how a completely casual 00:01:07.739 --> 00:01:11.120 complaint at a party transformed into a viral 00:01:11.120 --> 00:01:14.640 sensation and eventually a billion dollar empire. 00:01:14.760 --> 00:01:19.239 It's just a masterclass in making boring everyday 00:01:19.239 --> 00:01:21.719 routines highly entertaining. Totally. So let 00:01:21.719 --> 00:01:24.719 me ask you, the listener, directly. Have you 00:01:24.719 --> 00:01:27.680 ever been so frustrated by the price of a mundane 00:01:27.680 --> 00:01:29.879 necessity that you thought, well, there has to 00:01:29.879 --> 00:01:32.189 be a better way? I think we all have. Right, 00:01:32.370 --> 00:01:34.750 because today we are going to look at two guys 00:01:34.750 --> 00:01:37.049 who took that exact drugstore annoyance we just 00:01:37.049 --> 00:01:40.349 talked about and turned it into 3 .2 million 00:01:40.349 --> 00:01:43.629 subscribers. It's an incredible story. And it 00:01:43.629 --> 00:01:45.810 starts with the founders, Mark Levine and Michael 00:01:45.810 --> 00:01:47.730 Dubin. Right. They meet at a party. Yeah, just 00:01:47.730 --> 00:01:50.310 a regular party. And they end up bonding over 00:01:50.310 --> 00:01:53.209 their shared just intense frustration with the 00:01:53.209 --> 00:01:55.250 ridiculous cost of razor blades. Which is such 00:01:55.250 --> 00:01:57.489 a funny thing to bond over at a party. It really 00:01:57.489 --> 00:01:59.489 is. But they decide to actually do something 00:01:59.489 --> 00:02:01.049 about it. So they pull together their own money 00:02:01.049 --> 00:02:03.250 and they get some backing from an incubator called 00:02:03.250 --> 00:02:05.930 Science Inc. And they officially launch operations 00:02:05.930 --> 00:02:10.780 in January of 2011. Yeah. And we should probably 00:02:10.780 --> 00:02:13.020 clarify what an incubator actually does here 00:02:13.020 --> 00:02:14.879 because it's pretty crucial to how fast they 00:02:14.879 --> 00:02:17.419 moved. Yeah, definitely. So an incubator is essentially 00:02:17.419 --> 00:02:20.180 like a startup boot camp, right? They provide 00:02:20.180 --> 00:02:22.860 early stage founders with the initial infrastructure, 00:02:23.139 --> 00:02:25.699 the tech stack, the seed money to get off the 00:02:25.699 --> 00:02:27.400 ground. So they don't have to build the website 00:02:27.400 --> 00:02:30.000 from scratch or whatever. Exactly. That backing 00:02:30.000 --> 00:02:33.860 allowed Dubin and Levine to focus entirely on 00:02:33.860 --> 00:02:36.900 their pitch and their brand. and they really 00:02:36.900 --> 00:02:38.560 needed that focus because they were entering 00:02:38.560 --> 00:02:42.500 an incredibly crowded, basically monopolized 00:02:42.500 --> 00:02:46.219 market. Oh, yeah. You had legacy giants like 00:02:46.300 --> 00:02:48.860 Gillette, who had held the razor market in a 00:02:48.860 --> 00:02:51.659 vice grip for, what, decades? Pretty much forever. 00:02:51.759 --> 00:02:53.280 Right. So if you're going to take a swing at 00:02:53.280 --> 00:02:55.099 a giant like that, you need a pretty big bat. 00:02:55.139 --> 00:02:57.740 You do. And their bat was this YouTube video 00:02:57.740 --> 00:03:01.020 that they posted on March 6, 2012. A legendary 00:03:01.020 --> 00:03:03.199 video. Truly. This wasn't just a launch. It was 00:03:03.199 --> 00:03:06.020 like a cultural moment. The title of the video 00:03:06.020 --> 00:03:08.560 alone really set the tone. It was called Our 00:03:08.560 --> 00:03:11.939 Blades, Our Thing Great. Which is such a bold 00:03:11.939 --> 00:03:14.780 opening move. It is. And the delivery is what 00:03:14.780 --> 00:03:17.280 really sells it. because Michael Dubin, the CEO, 00:03:17.680 --> 00:03:19.979 actually stars in the video himself. Right. And 00:03:19.979 --> 00:03:24.039 he delivers this pitch in this incredibly deadpan, 00:03:24.460 --> 00:03:27.560 super sarcastic, nonchalant way. Yeah, he's just 00:03:27.560 --> 00:03:29.979 walking through this totally unglamorous warehouse. 00:03:30.460 --> 00:03:33.240 There's like a toddler shaving a man's head. 00:03:33.460 --> 00:03:36.400 Paper flying everywhere. Yes. And Dubin just 00:03:36.400 --> 00:03:39.740 never breaks character. It's brilliant marketing. 00:03:39.879 --> 00:03:42.159 But the aftermath is what blows my mind from 00:03:42.159 --> 00:03:45.860 the sources. So this video attracts so much unanticipated 00:03:45.860 --> 00:03:49.810 traffic that it literally... crashes their company's 00:03:49.810 --> 00:03:51.909 servers in the first hour. Which is the best 00:03:51.909 --> 00:03:54.250 possible problem a startup can have. Right. And 00:03:54.250 --> 00:03:56.830 once Dubin finally gets the servers back online, 00:03:57.430 --> 00:04:00.469 they realize they have 12 ,000 orders. in 48 00:04:00.469 --> 00:04:03.750 hours. Wow. Yeah. So they have to enlist friends, 00:04:03.930 --> 00:04:06.490 they call in contractors, and they are physically 00:04:06.490 --> 00:04:09.810 hand packing these boxes in a warehouse in Gardena, 00:04:09.830 --> 00:04:12.250 California. Just frantically stuffing envelopes. 00:04:12.409 --> 00:04:14.169 Exactly. And eventually they have to move their 00:04:14.169 --> 00:04:16.670 whole fulfillment operation to this massive center 00:04:16.670 --> 00:04:19.069 in Kentucky just to keep up. It's a huge scale 00:04:19.069 --> 00:04:21.870 up. It is. Just to put a bow on how huge this 00:04:21.870 --> 00:04:24.730 video was, the source data notes it hit over 00:04:24.730 --> 00:04:28.870 27 million views by November 2020. That's insane 00:04:28.870 --> 00:04:31.329 for a Razor ad. And it won major awards too, 00:04:31.350 --> 00:04:34.810 like the Webian ad age viral video awards. So, 00:04:34.810 --> 00:04:36.670 OK, let's unpack this. Let's do it. This launch 00:04:36.670 --> 00:04:38.790 is like throwing a casual house party, right? 00:04:39.110 --> 00:04:42.129 And suddenly having 12 ,000 people show up on 00:04:42.129 --> 00:04:44.670 your lawn demanding snacks. That is exactly what 00:04:44.670 --> 00:04:46.769 it's like. But, you know, humor doesn't magically 00:04:46.769 --> 00:04:50.379 ship 12 ,000 boxes. How does a cheap, simple, 00:04:50.819 --> 00:04:54.060 really sarcastic video instantly disrupt a billion 00:04:54.060 --> 00:04:56.639 dollar supply chain and rattle these established 00:04:56.639 --> 00:04:58.879 razor brands? What's fascinating here is the 00:04:58.879 --> 00:05:01.680 power of an authentic, irreverent brand voice. 00:05:02.009 --> 00:05:04.930 Up until that point, if you think about how razors 00:05:04.930 --> 00:05:06.970 were marketed... A little slick hyper -masculine 00:05:06.970 --> 00:05:08.910 stuff. Exactly. You had these chiseled models, 00:05:09.209 --> 00:05:12.790 fighter jets, lasers, glowing blue graphics highlighting 00:05:12.790 --> 00:05:14.870 the microscopic angle of the titanium blade. 00:05:14.970 --> 00:05:16.910 Yeah. Like they were selling military hardware, 00:05:17.189 --> 00:05:18.550 not, you know, something to shave your neck with. 00:05:18.930 --> 00:05:22.709 Precisely. It took itself so incredibly seriously. 00:05:23.329 --> 00:05:26.009 And the true innovation here wasn't actually 00:05:26.009 --> 00:05:28.470 a breakthrough in shaving technology. It wasn't. 00:05:28.589 --> 00:05:32.839 No. It was the relatable messaging. Dubin essentially 00:05:32.839 --> 00:05:35.660 looked right at the camera and said, you know, 00:05:35.660 --> 00:05:37.860 this is too expensive. I know this is too expensive. 00:05:38.120 --> 00:05:40.339 Let's just stop pretending. He called out the 00:05:40.339 --> 00:05:42.600 absurdity of the whole thing. Right. And by shattering 00:05:42.600 --> 00:05:45.639 that slick, serious trope, he built an immediate 00:05:45.639 --> 00:05:48.240 bond of trust with the consumer. He made the 00:05:48.240 --> 00:05:51.379 legacy brands look wildly out of touch just by 00:05:51.379 --> 00:05:53.360 being a regular guy in a warehouse. That makes 00:05:53.360 --> 00:05:55.399 a lot of sense. But I mean, hype doesn't pay 00:05:55.399 --> 00:05:57.420 the bills forever, right? No, it definitely doesn't. 00:05:57.449 --> 00:05:59.709 While the marketing was obviously genius, at 00:05:59.709 --> 00:06:01.730 the end of the day, you still have to put a physical 00:06:01.730 --> 00:06:03.889 product in a box and ship it to all those people 00:06:03.889 --> 00:06:06.449 on your lawn. You do. And you need a pricing 00:06:06.449 --> 00:06:08.930 model that's cheap enough to steal people away 00:06:08.930 --> 00:06:11.810 from the drugstore, but structured enough to 00:06:11.810 --> 00:06:14.089 actually, you know, make a profit. It's a very 00:06:14.089 --> 00:06:16.730 tight needle to thread. Yeah. So how do they 00:06:16.730 --> 00:06:19.490 thread that needle? Well, this is where diving 00:06:19.490 --> 00:06:22.550 into their strategy reveals what I think is the 00:06:22.550 --> 00:06:25.970 biggest plot twist of their entire business model. 00:06:26.089 --> 00:06:28.769 It definitely recontextualizes their success 00:06:28.769 --> 00:06:30.990 when you look at how they actually source the 00:06:30.990 --> 00:06:33.050 hardware. Let's look at their pricing tiers first 00:06:33.050 --> 00:06:35.170 because they kept it super simple. They offered 00:06:35.170 --> 00:06:38.970 three clear subscription plans. Right. You had 00:06:38.970 --> 00:06:42.110 the Humble Twin, which was two blades per razor, 00:06:42.350 --> 00:06:44.829 five razors a month for just $4. Super cheap. 00:06:45.029 --> 00:06:48.009 Then the 4X, which gave you four blades, four 00:06:48.009 --> 00:06:51.750 razors for $7. And finally, the Executive, which 00:06:51.750 --> 00:06:54.910 was a massive six blades, four razors for $10 00:06:54.910 --> 00:06:57.660 a month. So it's an easy mental calculation for 00:06:57.660 --> 00:07:00.540 the consumer. You compare a flat $7 a month to 00:07:00.540 --> 00:07:03.120 the absolute roulette of drugstore pricing, and 00:07:03.120 --> 00:07:05.259 it feels like a relief. It does. But here's where 00:07:05.259 --> 00:07:07.360 it gets really interesting. Dollar Shave Club 00:07:07.360 --> 00:07:09.800 did not actually manufacture their blades or 00:07:09.800 --> 00:07:12.459 handles. Nope. The corporate history clearly 00:07:12.459 --> 00:07:14.819 shows that most of their razors were actually 00:07:14.819 --> 00:07:17.220 resold products made by a company called Dorco. 00:07:17.399 --> 00:07:19.480 Yeah, a South Korean manufacturer. So they were 00:07:19.480 --> 00:07:23.199 essentially a middleman. Exactly. They bulk ordered 00:07:23.199 --> 00:07:26.680 existing hardware and repackaged it. And people 00:07:26.680 --> 00:07:28.620 figured this out. Oh, of course they did. The 00:07:28.620 --> 00:07:30.800 internet always finds out. Yeah. Publications 00:07:30.800 --> 00:07:34.300 like Lifehacker and writersformoney .com quickly 00:07:34.300 --> 00:07:36.000 pointed out that you could just go on Amazon 00:07:36.000 --> 00:07:38.579 and buy these exact same Dorco razors directly 00:07:38.579 --> 00:07:41.629 for, like, A third of the price. Which is a huge 00:07:41.629 --> 00:07:44.009 price difference. It is. So wait a second. They 00:07:44.009 --> 00:07:46.550 didn't even invent a new razor. They didn't engineer 00:07:46.550 --> 00:07:49.290 a sharper blade. They just put a funny YouTube 00:07:49.290 --> 00:07:52.350 video in front of existing hardware. I have to 00:07:52.350 --> 00:07:54.569 push back here. Isn't that just a marketing trick? 00:07:55.089 --> 00:07:56.850 I wouldn't call it a trick at all, actually. 00:07:56.949 --> 00:07:59.230 I'd call it a master class in the concept of 00:07:59.230 --> 00:08:01.769 value add. OK, tell me more about that. Well, 00:08:01.790 --> 00:08:03.629 you're completely right that they weren't selling 00:08:03.629 --> 00:08:06.509 a sharper piece of metal. But Dollar Shave Club 00:08:06.509 --> 00:08:09.720 understood something fundamental. The customer's 00:08:09.720 --> 00:08:11.839 primary pain point wasn't the quality of the 00:08:11.839 --> 00:08:13.860 drugstore razor. Right, the blades themselves 00:08:13.860 --> 00:08:17.259 were fine. Exactly. The pain point was the friction 00:08:17.259 --> 00:08:19.939 of getting it. They were selling convenience, 00:08:20.540 --> 00:08:23.379 curation, and a brand identity. So people knew 00:08:23.379 --> 00:08:25.839 they could get the exact same blades cheaper 00:08:25.839 --> 00:08:28.379 on Amazon, but they stayed with Dollar Shave 00:08:28.379 --> 00:08:30.879 Club anyway. They did. I mean, think about your 00:08:30.879 --> 00:08:33.059 own subscriptions for a second. Okay. Are you 00:08:33.059 --> 00:08:35.809 strictly paying for the physical item? Or are 00:08:35.809 --> 00:08:37.909 you paying for the ease of having it magically 00:08:37.909 --> 00:08:40.950 appear at your door every single month without 00:08:40.950 --> 00:08:42.970 you having to add it to a to -do list? Oh, I 00:08:42.970 --> 00:08:45.330 definitely pay for the convenience. Right. Doll 00:08:45.330 --> 00:08:47.889 Shave Club essentially said, we will manage this 00:08:47.889 --> 00:08:51.289 annoying chore for you. And the appeal of that 00:08:51.289 --> 00:08:54.750 convenience was incredibly broad. How broad? 00:08:55.210 --> 00:08:57.870 Well, early data highlights a very surprising 00:08:57.870 --> 00:09:00.950 demographic fact. Despite being heavily, almost 00:09:00.950 --> 00:09:03.590 exclusively marketed as a men's lifestyle brand 00:09:03.590 --> 00:09:06.950 with this very bro -centric humor. Yeah, the 00:09:06.950 --> 00:09:08.850 toddler shaving the head and all that. Right. 00:09:09.289 --> 00:09:11.789 Despite that, roughly 20 % of their customer 00:09:11.789 --> 00:09:15.350 base were women. Wow. Wait, really? 20 %? Yep. 00:09:15.629 --> 00:09:17.029 I mean, I guess it makes perfect sense when you 00:09:17.029 --> 00:09:19.029 think about it. Women were dealing with the exact 00:09:19.029 --> 00:09:21.070 same locked plastic cabinets at the drugstore. 00:09:21.289 --> 00:09:23.909 Exactly. Plus the infamous pink tax, where female 00:09:23.909 --> 00:09:25.950 branded razors are marked up even higher for 00:09:25.950 --> 00:09:29.259 no reason. Ugh. The pink tax. So the convenience 00:09:29.259 --> 00:09:31.860 and the straightforward pricing just resonated 00:09:31.860 --> 00:09:34.659 across the board. Precisely. It proves that their 00:09:34.659 --> 00:09:37.139 core value wasn't just a funny joke in a video. 00:09:37.720 --> 00:09:41.860 It was universally appealing logistics. OK, so 00:09:41.860 --> 00:09:45.240 you've got millions of subscribers hooked on 00:09:45.240 --> 00:09:48.759 a resold product. You're shipping cheap razors 00:09:48.759 --> 00:09:52.350 at high volumes. But cheap razors have really 00:09:52.350 --> 00:09:54.889 tight margins, right? Very tight. So how do you 00:09:54.889 --> 00:09:57.929 scale a business when your core product is literally 00:09:57.929 --> 00:10:01.320 a $4 piece of metal? Well, once you have that 00:10:01.320 --> 00:10:03.440 recurring relationship and you own that digital 00:10:03.440 --> 00:10:05.700 real estate in their inbox, you have to build 00:10:05.700 --> 00:10:07.879 an ecosystem so they never have a reason to leave. 00:10:08.019 --> 00:10:09.820 Make them stay for the other stuff. Exactly. 00:10:09.899 --> 00:10:11.519 You essentially have to conquer the rest of their 00:10:11.519 --> 00:10:13.919 bathroom cabinet. It's all about increasing the 00:10:13.919 --> 00:10:15.879 average order value. Because if you're already 00:10:15.879 --> 00:10:18.519 paying to ship a box. Exactly. If you're already 00:10:18.519 --> 00:10:20.360 shipping the box, throwing a tube of face wash 00:10:20.360 --> 00:10:23.000 in that same box is pure profit. And they absolutely 00:10:23.000 --> 00:10:25.960 went for it. The sources detailed this massive 00:10:25.960 --> 00:10:29.019 product expansion. They rolled out so much stuff. 00:10:29.299 --> 00:10:31.320 They introduced shave butter. They brought out 00:10:31.320 --> 00:10:34.440 moisturizers. In 2015, they launched a whole 00:10:34.440 --> 00:10:37.460 hair care line called Boogies. Oh yeah, Boogies. 00:10:37.519 --> 00:10:39.340 Which had, you know, pretty much everything. 00:10:39.600 --> 00:10:43.379 Hair gel, cream, paste, clay, fiber. They were 00:10:43.379 --> 00:10:45.759 busy. And they were expanding geographically 00:10:45.759 --> 00:10:48.100 too, taking the Operation International into 00:10:48.100 --> 00:10:50.639 Canada and Australia in late 2012 and eventually 00:10:50.639 --> 00:10:53.309 the UK. Right, so they're deliberately transitioning 00:10:53.309 --> 00:10:56.429 from just a razor subscription to a full -fledged 00:10:56.429 --> 00:10:59.429 grooming ecosystem. The strategy is to slowly 00:10:59.429 --> 00:11:02.309 replace every single item on your bathroom counter 00:11:02.309 --> 00:11:05.470 until you literally never need to visit a drugstore 00:11:05.470 --> 00:11:08.039 health and beauty aisle again. And they got really 00:11:08.039 --> 00:11:09.899 unconventional with their marketing to push these 00:11:09.899 --> 00:11:12.240 new products, too. For example, they launched 00:11:12.240 --> 00:11:14.940 One Wipe Charlies. Ah, the wet wipes. Yeah, wet 00:11:14.940 --> 00:11:18.460 wipes for men. And to promote them, in June 2013, 00:11:18.580 --> 00:11:20.960 they dropped another YouTube video starring Dubin 00:11:20.960 --> 00:11:23.299 called Let's Talk About Hashtag 2. Which one 00:11:23.299 --> 00:11:25.179 assured you you wore it, actually? It did. Best 00:11:25.179 --> 00:11:27.480 use of social media. But here's the part that 00:11:27.480 --> 00:11:30.200 really got me. In 2014, they team up with the 00:11:30.200 --> 00:11:32.419 Colon Cancer Alliance. A very serious cause. 00:11:32.759 --> 00:11:36.759 Yes. They reach 23 million people. They donate 00:11:36.759 --> 00:11:39.799 $10 ,000, plus a percentage of the wet wipe sales. 00:11:39.960 --> 00:11:42.659 That's great. But as part of this campaign, CEO 00:11:42.659 --> 00:11:45.799 Michael Dubin literally has his own colonoscopy 00:11:45.799 --> 00:11:48.840 streamed live online. It's certainly a unique 00:11:48.840 --> 00:11:51.039 approach to corporate philanthropy. I mean, I 00:11:51.039 --> 00:11:52.740 actually have to laugh at that because that is 00:11:52.740 --> 00:11:55.500 the absolute ultimate commitment to the bit. 00:11:55.740 --> 00:11:58.960 You cannot accuse this guy of not putting skin 00:11:58.960 --> 00:12:01.580 or, well, his internal organs in the game. You 00:12:01.580 --> 00:12:03.980 really can't. And it proves that their brand 00:12:03.980 --> 00:12:06.960 voice wasn't just a one -off joke. It was embedded 00:12:06.960 --> 00:12:09.480 in their operational DNA. Totally. They're willing 00:12:09.480 --> 00:12:12.200 to take risks that a legacy brand like Gillette 00:12:12.200 --> 00:12:15.269 would just never, ever greenlight. Never. But 00:12:15.269 --> 00:12:17.409 they didn't stop at bathroom products and medical 00:12:17.409 --> 00:12:19.629 procedures. They had major media ambitions, too. 00:12:19.730 --> 00:12:22.450 He did. In 2015, the company launched Mellow 00:12:22.450 --> 00:12:24.509 Magazine. And this wasn't just a corporate blog. 00:12:24.970 --> 00:12:27.590 They hired actual journalists and editors to 00:12:27.590 --> 00:12:30.350 create an editorial destination focused on men's 00:12:30.350 --> 00:12:32.509 lifestyle topics. Which was a really interesting 00:12:32.509 --> 00:12:35.169 pivot. Yeah. The company records note it didn't 00:12:35.169 --> 00:12:37.529 even host sponsored content. It operated purely 00:12:37.529 --> 00:12:40.919 as a branded publisher. Right. There's this hilarious 00:12:40.919 --> 00:12:43.059 detail from a Wall Street Journal article covering 00:12:43.059 --> 00:12:46.179 the launch. The headline was literally, Mattress 00:12:46.179 --> 00:12:49.820 Company Hires Journalists, which perfectly captures 00:12:49.820 --> 00:12:52.480 the absurdity, but also the reality of modern 00:12:52.480 --> 00:12:54.539 brand building. Right. But what's the actual 00:12:54.539 --> 00:12:56.879 mechanism there? Why does a company that ships 00:12:56.879 --> 00:13:01.220 razors need a journalism department? Well, if 00:13:01.220 --> 00:13:04.519 we connect this to the bigger picture, this is 00:13:04.519 --> 00:13:08.269 how Dollar Shave Club successfully morphed from 00:13:08.269 --> 00:13:11.370 a simple razor distributor into a lifestyle brand. 00:13:11.649 --> 00:13:14.490 Okay, how so? They realized that customer acquisition 00:13:14.490 --> 00:13:17.970 costs on platforms like Facebook and Google were 00:13:17.970 --> 00:13:20.370 only going to get more expensive over time. Because 00:13:20.370 --> 00:13:22.970 everyone is bidding for those ads. Exactly. If 00:13:22.970 --> 00:13:24.970 you rely on ads, you're always renting your audience. 00:13:25.350 --> 00:13:27.649 But if you become a media company yourself, If 00:13:27.649 --> 00:13:30.009 you provide interesting articles, cultural commentary, 00:13:30.289 --> 00:13:32.710 entertainment, you actually own the audience's 00:13:32.710 --> 00:13:35.230 attention. Oh, that's really smart. It is. I 00:13:35.230 --> 00:13:37.009 challenge you to notice this the next time you're 00:13:37.009 --> 00:13:39.669 interacting with modern brands online. Notice 00:13:39.669 --> 00:13:41.509 how they try to become your friend. Right, with 00:13:41.509 --> 00:13:43.889 the casual tweets and stuff. Yeah, notice how 00:13:43.889 --> 00:13:46.389 they try to become your daily content provider 00:13:46.389 --> 00:13:49.490 rather than just acting like a store. When a 00:13:49.490 --> 00:13:52.049 brand gives you an article to read or a hilarious 00:13:52.049 --> 00:13:54.309 video to watch, they aren't just selling you 00:13:54.309 --> 00:13:56.149 a commodity anymore, they're embedding themselves 00:13:56.149 --> 00:13:58.330 into your daily routine. And it makes it a lot 00:13:58.330 --> 00:14:01.070 harder to cancel that monthly $7 charge when 00:14:01.070 --> 00:14:02.549 you feel like you're canceling a subscription 00:14:02.549 --> 00:14:05.870 to like a cool club. Precisely. You're paying 00:14:05.870 --> 00:14:07.970 for the association and the entertainment as 00:14:07.970 --> 00:14:10.179 much as the product. But of course, building 00:14:10.179 --> 00:14:13.679 a massive, noisy, highly successful ecosystem 00:14:13.679 --> 00:14:16.899 in the bathroom inevitably wakes up the sleeping 00:14:16.899 --> 00:14:18.980 heavyweights of the grooming world. Oh, definitely. 00:14:19.220 --> 00:14:21.120 The legacy brands aren't just going to sit back 00:14:21.120 --> 00:14:23.159 and let their market share vanish without a fight. 00:14:23.419 --> 00:14:25.659 And this is where the gritty corporate reality 00:14:25.659 --> 00:14:29.740 sets in. Disruption always invites retaliation. 00:14:30.120 --> 00:14:33.139 And we see a major clash happen. In December 00:14:33.139 --> 00:14:36.240 of 2015, Procter & Gamble, the massive conglomerate 00:14:36.240 --> 00:14:39.200 that owns Gillette, files a patent infringement 00:14:39.200 --> 00:14:42.940 lawsuit. A huge move. Yeah. Their claim was that 00:14:42.940 --> 00:14:46.259 Dollar Shave Club used P &G's patented formulas 00:14:46.259 --> 00:14:50.159 to manufacture copycat blades. Now obviously 00:14:50.159 --> 00:14:52.240 we are just reporting the facts of the corporate 00:14:52.240 --> 00:14:54.259 dispute here without taking any sides on the 00:14:54.259 --> 00:14:56.500 validity of the patent claims. Of course. But 00:14:56.500 --> 00:14:59.080 it clearly signaled that the giants were officially 00:14:59.080 --> 00:15:02.080 threatened. The empire was striking back. Right. 00:15:02.159 --> 00:15:05.500 When a massive conglomerate resorts to litigation, 00:15:06.100 --> 00:15:08.779 it's a clear indicator that the disruptor is 00:15:08.779 --> 00:15:11.519 no longer just a cute internet novelty. You're 00:15:11.519 --> 00:15:14.480 a real threat. Exactly. They are taking a measurable, 00:15:15.080 --> 00:15:17.500 painful bite out of the bottom line. And the 00:15:17.500 --> 00:15:20.039 financial numbers totally back that up. Because 00:15:20.039 --> 00:15:22.399 to fight these battles and fuel this explosive 00:15:22.399 --> 00:15:25.419 growth Dollar Shave Club goes through a massive 00:15:25.419 --> 00:15:27.539 series of venture capital funding rounds. There 00:15:27.539 --> 00:15:29.500 is a lot of money They really did they start 00:15:29.500 --> 00:15:32.320 with a 1 million dollar seed round in March 2012 00:15:32.320 --> 00:15:35.500 right when the video hits Then a 9 .8 million 00:15:35.500 --> 00:15:39.120 series a a 12 million series B all the way up 00:15:39.120 --> 00:15:42.399 to securing $75 million in Series D funding by 00:15:42.399 --> 00:15:45.120 2015. That's a huge escalation. It is. I have 00:15:45.120 --> 00:15:47.399 to ask though, why does a company selling $4 00:15:47.399 --> 00:15:50.840 razors need $75 million in cash? It's all about 00:15:50.840 --> 00:15:53.940 customer acquisition and logistics. You have 00:15:53.940 --> 00:15:57.419 to remember, they are shipping millions of physical 00:15:57.419 --> 00:16:00.600 boxes every single month. That's true. That requires 00:16:00.600 --> 00:16:03.940 massive warehouses, complex supply chain software, 00:16:04.559 --> 00:16:07.860 an army of customer service reps. Plus, they 00:16:07.860 --> 00:16:10.580 were burning through cash to acquire new customers 00:16:10.580 --> 00:16:12.759 faster than Gillette could react. They had to 00:16:12.759 --> 00:16:14.980 outrun them. Right. In the direct -to -consumer 00:16:14.980 --> 00:16:17.279 world, scale is everything. You have to grow 00:16:17.279 --> 00:16:19.879 fast enough to become undeniable. And they absolutely 00:16:19.879 --> 00:16:23.740 became undeniable. Because on July 19, 2016, 00:16:24.159 --> 00:16:26.720 the massive consumer goods conglomerate Unilever 00:16:26.720 --> 00:16:30.100 acquires Dollar Shave Club. For a massive amount. 00:16:30.360 --> 00:16:34.039 Yes. For a reported staggering one billion dollars 00:16:34.039 --> 00:16:36.779 in cash. A billion dollars. For a company that, 00:16:36.779 --> 00:16:38.960 remember, started by reselling another company's 00:16:38.960 --> 00:16:41.320 razors out of a warehouse in Gardena. It sounds 00:16:41.320 --> 00:16:43.620 like the ultimate startup fairy tale. Two guys 00:16:43.620 --> 00:16:46.279 at a party, a funny video, a billion dollar exit. 00:16:46.299 --> 00:16:48.860 It really does. But there's one final massive 00:16:48.860 --> 00:16:50.820 twist to this story from our source material. 00:16:51.179 --> 00:16:54.120 Fast forward to October 2023. After seven years 00:16:54.120 --> 00:16:56.220 of trying to make it work under their massive 00:16:56.220 --> 00:16:59.090 corporate umbrella, Unilever essentially gives 00:16:59.090 --> 00:17:01.889 up. They announce they are selling a majority 00:17:01.889 --> 00:17:05.589 -stake, 65 % of dollar shave club to a private 00:17:05.589 --> 00:17:07.910 equity firm called Nexus Capital Management. 00:17:08.190 --> 00:17:10.910 Meaning Unilever only retained a 35 % share. 00:17:11.089 --> 00:17:13.880 Right. So what does this all mean? They got the 00:17:13.880 --> 00:17:16.460 billion dollars, sure, the founders won. But 00:17:16.460 --> 00:17:18.799 if Unilever ended up offloading the majority 00:17:18.799 --> 00:17:21.200 of it to a private equity firm just a few years 00:17:21.200 --> 00:17:24.619 later, did the big conglomerate just get totally 00:17:24.619 --> 00:17:28.059 duped by a good YouTube video? Did they buy a 00:17:28.059 --> 00:17:30.579 ghost? This raises an important question about 00:17:30.579 --> 00:17:32.619 the nature of corporate acquisitions in the digital 00:17:32.619 --> 00:17:35.490 age. Yeah. Did Unilever get duped? I don't think 00:17:35.490 --> 00:17:37.049 it's that sound. Believe. Why not? Well, they 00:17:37.049 --> 00:17:39.970 bought a massive, highly engaged subscriber list, 00:17:40.190 --> 00:17:43.569 over 3 million people, which has real, tangible 00:17:43.569 --> 00:17:45.789 financial value. True. That's a lot of recurring 00:17:45.789 --> 00:17:48.289 revenue. But it highlights the inherent, almost 00:17:48.289 --> 00:17:51.069 inevitable friction that occurs when a massive, 00:17:51.369 --> 00:17:54.089 traditional, slow -moving corporation buys a 00:17:54.089 --> 00:17:57.130 scrappy, internet -native disruptor. Right. It's 00:17:57.130 --> 00:17:59.250 like bolting a skateboard engine onto a freight 00:17:59.250 --> 00:18:01.230 train. The gears are just never going to mesh. 00:18:01.470 --> 00:18:03.910 That's a perfect way to put it. It's incredibly 00:18:03.910 --> 00:18:06.910 easy for a massive conglomerate to write a billion 00:18:06.910 --> 00:18:09.930 dollar check to acquire a subscriber list and 00:18:09.930 --> 00:18:13.170 a digital supply chain. But it's incredibly difficult, 00:18:13.309 --> 00:18:16.690 perhaps impossible, to absorb a unique culture. 00:18:16.950 --> 00:18:19.069 Oh, that makes sense. Private equity firms usually 00:18:19.069 --> 00:18:21.930 step in to restructure assets that are misaligned 00:18:21.930 --> 00:18:25.230 or underperforming. Unilever operates on massive, 00:18:25.630 --> 00:18:28.329 slow moving quarterly retail projections. Very 00:18:28.329 --> 00:18:31.119 traditional. Right. Dollar Shave Club was built 00:18:31.119 --> 00:18:34.420 on internet agility, instantaneous viral reactions, 00:18:35.059 --> 00:18:36.960 and a deeply personal connection Michael Dubin 00:18:36.960 --> 00:18:39.440 had with the audience. You can't just integrate 00:18:39.440 --> 00:18:41.900 that rebellious, sarcastic tone into a multinational 00:18:41.900 --> 00:18:43.819 corporate structure. It doesn't scale like that. 00:18:43.960 --> 00:18:46.839 No. The magic of Dollar Shave Club was its outsider 00:18:46.839 --> 00:18:49.380 status. Once you became part of Unilever, you 00:18:49.380 --> 00:18:52.079 are the establishment. And maintaining that rebellious 00:18:52.079 --> 00:18:54.720 brand voice suddenly feels very inauthentic. 00:18:54.859 --> 00:18:57.299 That makes perfect sense. The very thing that 00:18:57.299 --> 00:19:00.420 made them valuable, that authentic underdog voice, 00:19:00.960 --> 00:19:03.740 was the one thing Unilever couldn't physically 00:19:03.740 --> 00:19:07.089 own or replicate on a spreadsheet. Exactly. Well, 00:19:07.089 --> 00:19:08.990 to bring it all together, the journey we just 00:19:08.990 --> 00:19:11.430 explored is absolutely incredible. It really 00:19:11.430 --> 00:19:14.029 is. Two guys complaining at a party realize that 00:19:14.029 --> 00:19:16.750 buying a basic necessity shouldn't feel like 00:19:16.750 --> 00:19:20.230 a hostage negotiation. They take a $4 outsourced 00:19:20.230 --> 00:19:23.369 product, pair it with a deeply sarcastic zero 00:19:23.369 --> 00:19:26.009 -budget YouTube video, and manage to rattle an 00:19:26.009 --> 00:19:28.210 entrenched monopoly. And completely change the 00:19:28.210 --> 00:19:30.970 market. Yeah. They expand from a single resold 00:19:30.970 --> 00:19:34.789 blade into an entire lifestyle ecosystem, complete 00:19:34.789 --> 00:19:47.710 with digital magazines and live It's a remarkable 00:19:47.710 --> 00:19:49.829 case study, and it leaves us with something I 00:19:49.829 --> 00:19:52.390 want you to mull over as you go about your day. 00:19:52.390 --> 00:20:08.289 Yeah, let's hear it. What other boring items 00:20:08.289 --> 00:20:11.150 in your life are ripe for this exact same disruption? 00:20:11.509 --> 00:20:13.630 Oh, that's a good question. More importantly, 00:20:13.809 --> 00:20:16.390 look at your own buying habits. Are we moving 00:20:16.390 --> 00:20:19.130 toward a future where we don't actually buy products 00:20:19.130 --> 00:20:22.029 for their physical utility anymore? Are we merely 00:20:22.029 --> 00:20:24.309 subscribing to our favorite brands curation of 00:20:24.309 --> 00:20:26.490 the world? That's a fascinating thought. Are 00:20:26.490 --> 00:20:28.809 you buying the razor or are you buying the club? 00:20:29.130 --> 00:20:31.299 Exactly. Well, next time you find yourself staring 00:20:31.299 --> 00:20:33.740 down that locked plastic cabinet in the drugstore, 00:20:33.819 --> 00:20:35.859 pressing that blinking red button, you might 00:20:35.859 --> 00:20:37.880 just find yourself looking for a better way to. 00:20:38.279 --> 00:20:40.440 Absolutely. Thank you so much for joining us 00:20:40.440 --> 00:20:42.539 on this deep dive. We appreciate you taking the 00:20:42.539 --> 00:20:44.599 time to unpack all of this with us and we'll 00:20:44.599 --> 00:20:45.359 catch you on the next one.