Dollar Shave Club Punches Gillette Where It Hurts (In the Marketing Budget)

By Sarah Lacy , written on March 6, 2012

From The News Desk

This trend of entrepreneurs in the greater Los Angeles area shipping me things I want or need on a monthly basis has to reach saturation at some point, doesn't it?

Every month I enjoy what I've taken to calling "Brian Lee & Co." It's like Christmas, when my new boots from ShoeDazzle show up along with a crate of hipster diapers and baby products from If Eli were older I'd totally sign up for Kiwi Crate. And I've considered signing up for Birchbox and BeachMint's Tshirt vertical, StyleMint.

But some of them -- underwear by the month, chocolate by the month, jewelry by the month -- are just not value propositions I buy. (Literally.)

Then just when you think a business premise has been stretched too thin, along comes something like Dollar Shave Club. I'm totally signing up for this one.

Dollar Shave Club is aptly named: You pay a dollar and you get a month's supply of twin-blade razors shipped to you. That's right. $1. A few more dollars and you get a few more blades. The top of the line is the "executive" where you get a month's supply of six blade razors for $9 a month.

I don't know if you've bought razors lately, but this is astoundingly cheap. In fact, razor blades are the cliché people use to convey a business that continually bilks customers out of money, long after a modest initial purchase. (See also: Printer ink. Bastards!)

One time -- when we were particularly strapped for cash -- my husband and I were in Costco comparing per-razor costs trying to figure out the best way to buy these obscenely overpriced four-blade luxury items in bulk. At one point my husband screamed in frustration at the heavens, "ARE THEY MAKING RAZOR BLADES OUT OF OIL!?" Like most consumers, the price points just made no sense to us. An eight pack of Gilette Fusion Pro-Glide razors can run you north of $50. $50!

According to Michael Dubin, CEO and founder of Dollar Shave Club, the vast majority of that is going to marketing, as companies like Gillette and Schick work hard to hang onto marketshare in a massive industry, paying athletes and actors exorbitant endorsement contracts. Dollar Shave Club is stripping all that out.

Dollar Shave Club is hoping razors will be just a beachhead in getting into the broader grooming industry, and it has some interesting ideas on marketing. A funny video evangelizes the service, starring Dubin who previously studied improv. We can't embed this video for thirty minutes because of some weird exclusive with Thrillist. I'm going to be asleep in thirty minutes, so go here to see it on the site. You can tell it's an LA-based company because the video is, frankly, too good to have come out of the Valley. Astoundingly it only cost about $4500 to produce. Yep, I asked. (Side note: I love how the cliché of former actors becoming waiters has now become former actors becoming Web entrepreneurs.)

This content-based sense of humor is going to be a differentiator of the company, Dubin says. The company is committed to producing new content every month, frequently via video. It's a strategy that has worked well for Orabrush.

Another idea to up DSC's social juice is to get people to sign up is an anonymous petition via Facebook to convince a friend with unfortunate facial hair to shave. Dollar Shave Club will deliver the bad news, along with a coupon. And Dubin will A/B test new products by sending various samples to users and mass produce the ones the most people like.

To stay relevant, they'll need to do something clever. Copy cats abound when it comes to the monthly subscription ecommerce business model. "We are going to bake social right into our brand," Dubin says. "Brands of the future need to talk directly to our customers so we can know what they like and how to better serve them."

Dubin cites H&M as a corporate role model. "You can go in H&M and walk out having spent $100 and look like you just walked out of Barney's, and you don't mind telling people you went to H&M."

The company has raised about $1 million. The first $100,000 was by Science, the Betaworks-like accelerator run by Mike Jones and Peter Pham down in LA, and the rest was led by Forerunner Ventures and Kleiner Perkins Caufield & Byers, along with Andreessen Horowitz, Shasta Ventures, Felicis Ventures and some other angels. Said Kirsten Green of Forerunner, "They are taking on a massive industry where there's been no disruption for decades, and they are doing it with a unique voice."

(Disclosure: Marc Andreessen is also an investor in PandoDaily. Bizarre shaving photo courtesy of Shutterstock.)