Editor's Note: Inc. Magazine announced its pick for Company of the Year on Tuesday, November 29. It's Riot Games! Here, we spotlight Dollar Shave Club, one of the contenders for the title in 2016.
If imitation is the highest form of flattery, Michael Dubin must be feeling good right about now. Since he launched Dollar Shave Club in 2011, at least nine other shaving-related subscription services have sprouted up.
There's Harry's, started by two of the co-founders of Warby Parker; Tristan Walker's Bevel, which sells grooming products for African Americans; and Wet Shave Club, which boasts an old-school shave with its monthly box. Some other subscription services include Brickell, which specializes in organic and antiaging products; and BirchBox for men, Luxury Barber, Morgans, and Dollar Beard Club, which are focused on helping men grow their beards. And then there's Gillette Shave Club from Procter & Gamble. The consumer products giant launched its shaving subscription service in 2015.
"I saw Gillette's move as validation both that we were on the right track and that we were having a major impact," says Dubin, whose Venice, California-based company first gained notoriety in 2012, after its video, "Our Blades Are F***ing Great," went supernova viral in 72 hours.
What was even more validating? In July, Unilever agreed to shell out a whopping $1 billion for Dubin's company, which isn't yet profitable but reported sales of $152 million last year.
Behind the payday.
While snapping up Dollar Shave helps Unilever join the shaving party--and cut into its rival Gillette's market share--analysts suggest that there's more to the story. Specifically, Dollar Shave, with its more than 3.2 million subscribers, presents a treasure trove of data for the London-based consumer products maker. "They have a pretty comprehensive data bank now about the grooming habits of the American male, particularly that key 18-to-29 demographic," says Matthew Barry, an analyst at market research firm Euromonitor.
Andy Hoar, analyst at Forrester Research, adds that Dollar Shave's marketing prowess is something Unilever will surely tap. To date, the company's first viral video has logged over 23.6 million views. "The most important thing in today's economy is customer attention, and if you got, it you can sell people a lot of things," says Hoar.
Dubin's just happy to forget about fundraising and focus on Dollar Shave Club's next chapter. "We just started to scratch the surface on the things we want to do," he says, noting that the company will continue to operate independently. "Dollar Shave Club didn't get to be what it is because Unilever was telling us what to do or how to do it," says the 37-year-old entrepreneur. "They want to preserve the magic."
Preserving the magic.
So what, pray tell, is next? The four-year-old company is on its way to becoming a lifestyle brand, says Rick Prostko, managing director at Comcast Ventures and one of Dollar Shave Club's early investors. "You could see that there was a movement building here and a community forming around this brand," he says. "It's much more than just razors."
Barry agrees: "Razors aren't profitable for them. You can't make money selling razors for a dollar a month. That's just not a sustainable business model," he says. He argues that the razors act as a lure; they bring in customers who add other items to their order, like bath or skin care products. And because you have a direct line to their feedback, you have a pretty good idea of what they want and look for.
Still, Dubin isn't giving many hints at what's to come--other than to refer to some degree of product expansion. In 2016, the company rolled out Big Cloud and Wanderer, two new product lines focusing on skin care and shower products, respectively. Members also get service-style content by way of Bathroom Minutes, a small magazine included in the monthly subscription box. It has also been growing its original content department, including a podcast and the newly launched Mel Magazine, which has a separate website and social media channels.
Not even Prostko knows what's on the agenda at the company. But he's not worried. "I'm constantly surprised by Michael's innate ability to put his finger on where the market needs to go," he says.