This story starts with a funny but low-budget YouTube video, starring and produced by a digital marketing guy who spent his off-hours taking comedy classes. It ends (for now anyway) with more than half a billion dollars.
Maybe you remember the video, “Our Blades are F**** Great,” which went viral to the tune of something like 19 million views on YouTube in 2012. It introduced Dollar Shave Club to the world, and got a lot of press for both its tone and success.
Offering a subscription service for razors (starting, as the name suggests, at $1 per month), the then-tiny startup that Mike Dubin had launched with his life savings of $35,000 wound up with 12,000 orders overnight. Now, three years later, it’s a real company and then some, after closing a $75 million round of financing (the company’s fifth), which valued Dollar Shave Club at $615 million. With this round, the company’s taken a total of $150 million in funding.
According to The Wall Street Journal:
The company’s high valuation is the result of fast revenue growth. Sales were $65 million in 2014, triple the prior year’s figure. This year the company hopes to do better than $140 million, Dubin said.
However, Dollar Shave Club is not yet profitable, Dubin said. While the viral video helped the company make a name for itself, last year the company turned to more expensive television ads to attract new customers.
“We have two million members that get a shipment every month or every other month,” Dubin said in the same interview. “Men’s grooming is exploding, and we think we have a role to play.”
The company’s success or failure will turn on whether its cost of acquiring customers goes up or down, one investor told the Journal, which reported that Dollar Shave Club burns through “low single-digit millions” of dollars each month. Its customers pay an average of $7 per month for mail-order razors, blades, and other products.
Dubin started as a page at NBC in New York City after graduating from college, and had worked in news writing and production for MSNBC. He took comedy classes at Upright Citizens Brigade (whose alumni include actors and comedians like Amy Poehler and Tina Fey), and moved on to digital marketing at Time Inc. There, he did marketing efforts for big companies like Gatorade, Nike, and Nintendo, and video marketing campaigns for Ford, Capital One-and Gillette, which he now competes with.
“I’ve never worked for an agency, but I’ve always created content,” Dubin said in an interview with the Los Angeles Times.
He and co-founder Mark Levine, who had a background in manufacturing, met at a party in late 2010. They started talking about shaving-how much it cost, all the “technology breakthroughs” that big companies kept talking about, but that they thought nobody really needed-and decided to team up.
The original video was a big part of their pitch to investors, even before it was unveiled on YouTube. Venture capitalists wanted to see a strong business model and a bold vision, he said in the same interview. “I think once they saw that video, they understood that I was a guy who understood brand and marketing and how to speak with a clear voice about our core offer.”
It paid off-and now Dollar Shave Club will need its big war chest, as it faces fierce competition from older and much more established competitors in its battle to “own the men’s bathroom”-like Procter & Gamble’s Gillette (which launched its own “Gillette Shave Club”), Schick-and a newer entry to the market, Harry’s (launched by the founder of Warby Parker).
Source : Inc.