Annoying Morning Ritual Spawns a $165 Million Company

A few weeks ago I wrote about the effectiveness of guerrilla advertising and how that can overcome some of the more conventional limitations a start-up might have in competing for advertising space. I highlighted the sensational ad from The Dollar Shave Club that went viral in seconds and launched an empire in men’s grooming products.

Co-founder Michael Dubin (the star of this hilarious ad) conceived the idea after a conversation complaining about the inconvenience of shaving and the cost for the equipment. Before long he had secured venture capital and put the infrastructure in place. His ad went viral and business exploded. In 2014, they tripled their profits from the previous year, and have grown at an obscene rate ever since.

So. Let’s examine this for a moment. How did this phenomenon happen?

First of all, it was a great idea. By tapping into the retail industry trends of drop shipping and ordering online (Amazon, anyone?), they either created or filled a niche. Probably both. Before shave clubs even existed, ads and marketing for razors, shaving creams, and aftershaves were as ubiquitous as pharmaceutical ads and Coca-Cola. Competition was and still is fierce for grooming tools of roughly half the consumer population, so the idea of carving out even a small piece of that market is an attractive investment for anyone.

The image is stellar. Everyone knows these ads and how they satirize every facet of the shaving experience. Between buying the razors (at much more expensive prices) and the act of shaving with old blades to save money, the unconventional and hilarious message is clear. The Dollar Shave Club will make this grooming ritual easier, less expensive, and therefore tolerable. Their subscription and services include a newsletter, exclusive content on their website, and the sheer convenience of having your razors delivered to your door for cheaper than available in retailers. It’s astounding in its simplicity, and as result they have an average customer retention rate of over three years.

“People stick around,” Dubin said. “Obviously, the products are great, but they feel like they are a part of it. People don’t say they are subscribers, they say they are members.”

And as a result, the company is expanding into new products and securing more investment capital. The Dollar Shave Club’s worth is over $165 million and they’re still growing. After viral commercial success fueled initial expansion, they’ve moved to larger distribution centers and have kept growing. Now they’re poised to open a new facility in Columbus, OH to keep up with increasing demand. They’ve carved out a much larger market share then initially planned, leaving venture capitalists clamoring over each other to throw their lot in with them as they branch out into other products. As Dublin says, “We want to own the men’s room.” Even if there wasn’t an actual need for a razor blade subscription service, Dublin and his team created the desire to be a part of one.