Picture this, right? You're standing in the aisle
of your local drug store. Oh, I know this feeling.
Yeah. And you just want to buy a razor, just
a simple razor. But you can't just like... pick
it up off the shelf. No, of course not. Because
the razors are locked behind this sliding, totally
impenetrable plastic shield. Which is so annoying.
It really is. So you have to press that little
blinking red button, and then you just wait.
You wait for an employee with a key ring to,
you know, slowly make their way over to you.
Usually looking thrilled to be there. Exactly.
And then, after all that awkwardness, you have
to hand over this just absurd amount of money
for a tiny piece of plastic and a few blades.
Right. It feels less like shopping and more like...
I don't know, paying a ransom just to groom your
own face. Yes, a ransom. That is exactly it.
And welcome to the deep dive, by the way. I'm
your host. Thrilled you're joining us today.
And I'm your resident expert. Glad to be here.
So today's mission, we're jumping into some really
fascinating source material. We've got corporate
history, product strategy, and marketing data.
And it really paints a wild picture. It does.
We're going to explore how a completely casual
complaint at a party transformed into a viral
sensation and eventually a billion dollar empire.
It's just a masterclass in making boring everyday
routines highly entertaining. Totally. So let
me ask you, the listener, directly. Have you
ever been so frustrated by the price of a mundane
necessity that you thought, well, there has to
be a better way? I think we all have. Right,
because today we are going to look at two guys
who took that exact drugstore annoyance we just
talked about and turned it into 3 .2 million
subscribers. It's an incredible story. And it
starts with the founders, Mark Levine and Michael
Dubin. Right. They meet at a party. Yeah, just
a regular party. And they end up bonding over
their shared just intense frustration with the
ridiculous cost of razor blades. Which is such
a funny thing to bond over at a party. It really
is. But they decide to actually do something
about it. So they pull together their own money
and they get some backing from an incubator called
Science Inc. And they officially launch operations
in January of 2011. Yeah. And we should probably
clarify what an incubator actually does here
because it's pretty crucial to how fast they
moved. Yeah, definitely. So an incubator is essentially
like a startup boot camp, right? They provide
early stage founders with the initial infrastructure,
the tech stack, the seed money to get off the
ground. So they don't have to build the website
from scratch or whatever. Exactly. That backing
allowed Dubin and Levine to focus entirely on
their pitch and their brand. and they really
needed that focus because they were entering
an incredibly crowded, basically monopolized
market. Oh, yeah. You had legacy giants like
Gillette, who had held the razor market in a
vice grip for, what, decades? Pretty much forever.
Right. So if you're going to take a swing at
a giant like that, you need a pretty big bat.
You do. And their bat was this YouTube video
that they posted on March 6, 2012. A legendary
video. Truly. This wasn't just a launch. It was
like a cultural moment. The title of the video
alone really set the tone. It was called Our
Blades, Our Thing Great. Which is such a bold
opening move. It is. And the delivery is what
really sells it. because Michael Dubin, the CEO,
actually stars in the video himself. Right. And
he delivers this pitch in this incredibly deadpan,
super sarcastic, nonchalant way. Yeah, he's just
walking through this totally unglamorous warehouse.
There's like a toddler shaving a man's head.
Paper flying everywhere. Yes. And Dubin just
never breaks character. It's brilliant marketing.
But the aftermath is what blows my mind from
the sources. So this video attracts so much unanticipated
traffic that it literally... crashes their company's
servers in the first hour. Which is the best
possible problem a startup can have. Right. And
once Dubin finally gets the servers back online,
they realize they have 12 ,000 orders. in 48
hours. Wow. Yeah. So they have to enlist friends,
they call in contractors, and they are physically
hand packing these boxes in a warehouse in Gardena,
California. Just frantically stuffing envelopes.
Exactly. And eventually they have to move their
whole fulfillment operation to this massive center
in Kentucky just to keep up. It's a huge scale
up. It is. Just to put a bow on how huge this
video was, the source data notes it hit over
27 million views by November 2020. That's insane
for a Razor ad. And it won major awards too,
like the Webian ad age viral video awards. So,
OK, let's unpack this. Let's do it. This launch
is like throwing a casual house party, right?
And suddenly having 12 ,000 people show up on
your lawn demanding snacks. That is exactly what
it's like. But, you know, humor doesn't magically
ship 12 ,000 boxes. How does a cheap, simple,
really sarcastic video instantly disrupt a billion
dollar supply chain and rattle these established
razor brands? What's fascinating here is the
power of an authentic, irreverent brand voice.
Up until that point, if you think about how razors
were marketed... A little slick hyper -masculine
stuff. Exactly. You had these chiseled models,
fighter jets, lasers, glowing blue graphics highlighting
the microscopic angle of the titanium blade.
Yeah. Like they were selling military hardware,
not, you know, something to shave your neck with.
Precisely. It took itself so incredibly seriously.
And the true innovation here wasn't actually
a breakthrough in shaving technology. It wasn't.
No. It was the relatable messaging. Dubin essentially
looked right at the camera and said, you know,
this is too expensive. I know this is too expensive.
Let's just stop pretending. He called out the
absurdity of the whole thing. Right. And by shattering
that slick, serious trope, he built an immediate
bond of trust with the consumer. He made the
legacy brands look wildly out of touch just by
being a regular guy in a warehouse. That makes
a lot of sense. But I mean, hype doesn't pay
the bills forever, right? No, it definitely doesn't.
While the marketing was obviously genius, at
the end of the day, you still have to put a physical
product in a box and ship it to all those people
on your lawn. You do. And you need a pricing
model that's cheap enough to steal people away
from the drugstore, but structured enough to
actually, you know, make a profit. It's a very
tight needle to thread. Yeah. So how do they
thread that needle? Well, this is where diving
into their strategy reveals what I think is the
biggest plot twist of their entire business model.
It definitely recontextualizes their success
when you look at how they actually source the
hardware. Let's look at their pricing tiers first
because they kept it super simple. They offered
three clear subscription plans. Right. You had
the Humble Twin, which was two blades per razor,
five razors a month for just $4. Super cheap.
Then the 4X, which gave you four blades, four
razors for $7. And finally, the Executive, which
was a massive six blades, four razors for $10
a month. So it's an easy mental calculation for
the consumer. You compare a flat $7 a month to
the absolute roulette of drugstore pricing, and
it feels like a relief. It does. But here's where
it gets really interesting. Dollar Shave Club
did not actually manufacture their blades or
handles. Nope. The corporate history clearly
shows that most of their razors were actually
resold products made by a company called Dorco.
Yeah, a South Korean manufacturer. So they were
essentially a middleman. Exactly. They bulk ordered
existing hardware and repackaged it. And people
figured this out. Oh, of course they did. The
internet always finds out. Yeah. Publications
like Lifehacker and writersformoney .com quickly
pointed out that you could just go on Amazon
and buy these exact same Dorco razors directly
for, like, A third of the price. Which is a huge
price difference. It is. So wait a second. They
didn't even invent a new razor. They didn't engineer
a sharper blade. They just put a funny YouTube
video in front of existing hardware. I have to
push back here. Isn't that just a marketing trick?
I wouldn't call it a trick at all, actually.
I'd call it a master class in the concept of
value add. OK, tell me more about that. Well,
you're completely right that they weren't selling
a sharper piece of metal. But Dollar Shave Club
understood something fundamental. The customer's
primary pain point wasn't the quality of the
drugstore razor. Right, the blades themselves
were fine. Exactly. The pain point was the friction
of getting it. They were selling convenience,
curation, and a brand identity. So people knew
they could get the exact same blades cheaper
on Amazon, but they stayed with Dollar Shave
Club anyway. They did. I mean, think about your
own subscriptions for a second. Okay. Are you
strictly paying for the physical item? Or are
you paying for the ease of having it magically
appear at your door every single month without
you having to add it to a to -do list? Oh, I
definitely pay for the convenience. Right. Doll
Shave Club essentially said, we will manage this
annoying chore for you. And the appeal of that
convenience was incredibly broad. How broad?
Well, early data highlights a very surprising
demographic fact. Despite being heavily, almost
exclusively marketed as a men's lifestyle brand
with this very bro -centric humor. Yeah, the
toddler shaving the head and all that. Right.
Despite that, roughly 20 % of their customer
base were women. Wow. Wait, really? 20 %? Yep.
I mean, I guess it makes perfect sense when you
think about it. Women were dealing with the exact
same locked plastic cabinets at the drugstore.
Exactly. Plus the infamous pink tax, where female
branded razors are marked up even higher for
no reason. Ugh. The pink tax. So the convenience
and the straightforward pricing just resonated
across the board. Precisely. It proves that their
core value wasn't just a funny joke in a video.
It was universally appealing logistics. OK, so
you've got millions of subscribers hooked on
a resold product. You're shipping cheap razors
at high volumes. But cheap razors have really
tight margins, right? Very tight. So how do you
scale a business when your core product is literally
a $4 piece of metal? Well, once you have that
recurring relationship and you own that digital
real estate in their inbox, you have to build
an ecosystem so they never have a reason to leave.
Make them stay for the other stuff. Exactly.
You essentially have to conquer the rest of their
bathroom cabinet. It's all about increasing the
average order value. Because if you're already
paying to ship a box. Exactly. If you're already
shipping the box, throwing a tube of face wash
in that same box is pure profit. And they absolutely
went for it. The sources detailed this massive
product expansion. They rolled out so much stuff.
They introduced shave butter. They brought out
moisturizers. In 2015, they launched a whole
hair care line called Boogies. Oh yeah, Boogies.
Which had, you know, pretty much everything.
Hair gel, cream, paste, clay, fiber. They were
busy. And they were expanding geographically
too, taking the Operation International into
Canada and Australia in late 2012 and eventually
the UK. Right, so they're deliberately transitioning
from just a razor subscription to a full -fledged
grooming ecosystem. The strategy is to slowly
replace every single item on your bathroom counter
until you literally never need to visit a drugstore
health and beauty aisle again. And they got really
unconventional with their marketing to push these
new products, too. For example, they launched
One Wipe Charlies. Ah, the wet wipes. Yeah, wet
wipes for men. And to promote them, in June 2013,
they dropped another YouTube video starring Dubin
called Let's Talk About Hashtag 2. Which one
assured you you wore it, actually? It did. Best
use of social media. But here's the part that
really got me. In 2014, they team up with the
Colon Cancer Alliance. A very serious cause.
Yes. They reach 23 million people. They donate
$10 ,000, plus a percentage of the wet wipe sales.
That's great. But as part of this campaign, CEO
Michael Dubin literally has his own colonoscopy
streamed live online. It's certainly a unique
approach to corporate philanthropy. I mean, I
actually have to laugh at that because that is
the absolute ultimate commitment to the bit.
You cannot accuse this guy of not putting skin
or, well, his internal organs in the game. You
really can't. And it proves that their brand
voice wasn't just a one -off joke. It was embedded
in their operational DNA. Totally. They're willing
to take risks that a legacy brand like Gillette
would just never, ever greenlight. Never. But
they didn't stop at bathroom products and medical
procedures. They had major media ambitions, too.
He did. In 2015, the company launched Mellow
Magazine. And this wasn't just a corporate blog.
They hired actual journalists and editors to
create an editorial destination focused on men's
lifestyle topics. Which was a really interesting
pivot. Yeah. The company records note it didn't
even host sponsored content. It operated purely
as a branded publisher. Right. There's this hilarious
detail from a Wall Street Journal article covering
the launch. The headline was literally, Mattress
Company Hires Journalists, which perfectly captures
the absurdity, but also the reality of modern
brand building. Right. But what's the actual
mechanism there? Why does a company that ships
razors need a journalism department? Well, if
we connect this to the bigger picture, this is
how Dollar Shave Club successfully morphed from
a simple razor distributor into a lifestyle brand.
Okay, how so? They realized that customer acquisition
costs on platforms like Facebook and Google were
only going to get more expensive over time. Because
everyone is bidding for those ads. Exactly. If
you rely on ads, you're always renting your audience.
But if you become a media company yourself, If
you provide interesting articles, cultural commentary,
entertainment, you actually own the audience's
attention. Oh, that's really smart. It is. I
challenge you to notice this the next time you're
interacting with modern brands online. Notice
how they try to become your friend. Right, with
the casual tweets and stuff. Yeah, notice how
they try to become your daily content provider
rather than just acting like a store. When a
brand gives you an article to read or a hilarious
video to watch, they aren't just selling you
a commodity anymore, they're embedding themselves
into your daily routine. And it makes it a lot
harder to cancel that monthly $7 charge when
you feel like you're canceling a subscription
to like a cool club. Precisely. You're paying
for the association and the entertainment as
much as the product. But of course, building
a massive, noisy, highly successful ecosystem
in the bathroom inevitably wakes up the sleeping
heavyweights of the grooming world. Oh, definitely.
The legacy brands aren't just going to sit back
and let their market share vanish without a fight.
And this is where the gritty corporate reality
sets in. Disruption always invites retaliation.
And we see a major clash happen. In December
of 2015, Procter & Gamble, the massive conglomerate
that owns Gillette, files a patent infringement
lawsuit. A huge move. Yeah. Their claim was that
Dollar Shave Club used P &G's patented formulas
to manufacture copycat blades. Now obviously
we are just reporting the facts of the corporate
dispute here without taking any sides on the
validity of the patent claims. Of course. But
it clearly signaled that the giants were officially
threatened. The empire was striking back. Right.
When a massive conglomerate resorts to litigation,
it's a clear indicator that the disruptor is
no longer just a cute internet novelty. You're
a real threat. Exactly. They are taking a measurable,
painful bite out of the bottom line. And the
financial numbers totally back that up. Because
to fight these battles and fuel this explosive
growth Dollar Shave Club goes through a massive
series of venture capital funding rounds. There
is a lot of money They really did they start
with a 1 million dollar seed round in March 2012
right when the video hits Then a 9 .8 million
series a a 12 million series B all the way up
to securing $75 million in Series D funding by
2015. That's a huge escalation. It is. I have
to ask though, why does a company selling $4
razors need $75 million in cash? It's all about
customer acquisition and logistics. You have
to remember, they are shipping millions of physical
boxes every single month. That's true. That requires
massive warehouses, complex supply chain software,
an army of customer service reps. Plus, they
were burning through cash to acquire new customers
faster than Gillette could react. They had to
outrun them. Right. In the direct -to -consumer
world, scale is everything. You have to grow
fast enough to become undeniable. And they absolutely
became undeniable. Because on July 19, 2016,
the massive consumer goods conglomerate Unilever
acquires Dollar Shave Club. For a massive amount.
Yes. For a reported staggering one billion dollars
in cash. A billion dollars. For a company that,
remember, started by reselling another company's
razors out of a warehouse in Gardena. It sounds
like the ultimate startup fairy tale. Two guys
at a party, a funny video, a billion dollar exit.
It really does. But there's one final massive
twist to this story from our source material.
Fast forward to October 2023. After seven years
of trying to make it work under their massive
corporate umbrella, Unilever essentially gives
up. They announce they are selling a majority
-stake, 65 % of dollar shave club to a private
equity firm called Nexus Capital Management.
Meaning Unilever only retained a 35 % share.
Right. So what does this all mean? They got the
billion dollars, sure, the founders won. But
if Unilever ended up offloading the majority
of it to a private equity firm just a few years
later, did the big conglomerate just get totally
duped by a good YouTube video? Did they buy a
ghost? This raises an important question about
the nature of corporate acquisitions in the digital
age. Yeah. Did Unilever get duped? I don't think
it's that sound. Believe. Why not? Well, they
bought a massive, highly engaged subscriber list,
over 3 million people, which has real, tangible
financial value. True. That's a lot of recurring
revenue. But it highlights the inherent, almost
inevitable friction that occurs when a massive,
traditional, slow -moving corporation buys a
scrappy, internet -native disruptor. Right. It's
like bolting a skateboard engine onto a freight
train. The gears are just never going to mesh.
That's a perfect way to put it. It's incredibly
easy for a massive conglomerate to write a billion
dollar check to acquire a subscriber list and
a digital supply chain. But it's incredibly difficult,
perhaps impossible, to absorb a unique culture.
Oh, that makes sense. Private equity firms usually
step in to restructure assets that are misaligned
or underperforming. Unilever operates on massive,
slow moving quarterly retail projections. Very
traditional. Right. Dollar Shave Club was built
on internet agility, instantaneous viral reactions,
and a deeply personal connection Michael Dubin
had with the audience. You can't just integrate
that rebellious, sarcastic tone into a multinational
corporate structure. It doesn't scale like that.
No. The magic of Dollar Shave Club was its outsider
status. Once you became part of Unilever, you
are the establishment. And maintaining that rebellious
brand voice suddenly feels very inauthentic.
That makes perfect sense. The very thing that
made them valuable, that authentic underdog voice,
was the one thing Unilever couldn't physically
own or replicate on a spreadsheet. Exactly. Well,
to bring it all together, the journey we just
explored is absolutely incredible. It really
is. Two guys complaining at a party realize that
buying a basic necessity shouldn't feel like
a hostage negotiation. They take a $4 outsourced
product, pair it with a deeply sarcastic zero
-budget YouTube video, and manage to rattle an
entrenched monopoly. And completely change the
market. Yeah. They expand from a single resold
blade into an entire lifestyle ecosystem, complete
with digital magazines and live It's a remarkable
case study, and it leaves us with something I
want you to mull over as you go about your day.
Yeah, let's hear it. What other boring items
in your life are ripe for this exact same disruption?
Oh, that's a good question. More importantly,
look at your own buying habits. Are we moving
toward a future where we don't actually buy products
for their physical utility anymore? Are we merely
subscribing to our favorite brands curation of
the world? That's a fascinating thought. Are
you buying the razor or are you buying the club?
Exactly. Well, next time you find yourself staring
down that locked plastic cabinet in the drugstore,
pressing that blinking red button, you might
just find yourself looking for a better way to.
Absolutely. Thank you so much for joining us
on this deep dive. We appreciate you taking the
time to unpack all of this with us and we'll
catch you on the next one.