Dollar Shave Club: Michael Dubin, From Zero to a Billion Dollar Exit in Five Years (December 2018)

23:52It was really just, you know, what we have all come to know as an MVP, minimum viable product. And let's just get something up. Let's see how it does. And let's see what the feedback is. What we were trying to learn is what was the best product to sell? What was the best assortment to sell? What were people liking? What did they want more of? And really just, you know, can we move these razors? And what do people want out of this type of a service? So in that first year, you were really kind of seeing if people would get to the site, seeing what they were buying. How did you even reach people so early?

24:29Like by Google ads and things like that? Yeah, we did a Groupon. I went to a mom blog conference down in like San Diego or something. and I mean you know this was real street hustle at the time and like you know you buy you buy you do your own SEM in your house and I still remember our first customer it was Imran Charnania of Houston Texas. He just found you online? He just found us online I remember where I was sitting when this first order came in which was the first stranger validation right because obviously my mom had bought some and yeah you know like yeah other people my buddies had bought some and yeah the first real sale came in and like that validation like you know that first thrill of that first sale is like all the encouragement that you need as an entrepreneur to be like yes somebody gets it yeah so obviously at a certain point and and this really comes to a head in March, I think the date was March 6th, 2012, your background in video and your background in improv magically come together, unplanned, when you release a video.

25:38What was the story about that video? How did that come about? Yeah. So I knew that this was a fairly simple story. Razors are overpriced, you're overpaying for the technology, and you can get a great shave without having to pay such a high price. And I knew that if you just told that story flat, it would sound flat. So I wanted humor to be a part of the brand and I wanted to make a video and I knew how to write and I sort of knew how to act or perform. And, um, I, I called up a friend of mine, Lucia, creator and director of, of broad city now, uh, but she was, you met her at the, at the, I met her.

26:16She directed one of the shows that I was in at one point. So yeah, I met her as part of that community. And you asked her to help you with this video. I said, she just moved to LA too. And I said, Hey, I'm starting this company. I want to do a video advertisement that tells the story. It's going to go on the homepage. Like, you know, I wrote a script. Will you meet me for coffee and, and like give me notes on the script and, and then help me film it. So we met for coffee. She looks at the script. She says, I really like it. Added a couple of jokes. So the line, are our blades any good? No, they're fucking great.

26:48Used to be, are our blades any good? no and then some other bad joke and she gave me that line so i actually owe that owe that to lucia and we rented out the warehouse that we were fulfilling packages in out for the day um that background that you see i mean they fulfill all kinds of crazy stuff over the years for people who haven't seen it which is it's you starting with you behind a desk and it tracks you it follows you through this warehouse and we meet a toddler shaving the head of a grown man we see a bear a man someone in a bear costume um you've got one of your warehouse employees in a go-kart with you um it's very very funny if you haven't seen it 25 million i think was the latest number it's amazing um you released it on march 6 2012 was there a reason why you picked that date or that time of year to release the video yeah so um so we were ready to launch We had just raised about a million dollars in venture capital.

27:46And how did you raise that money? You went around and... So our first investor was a company called Science. They're out in Santa Monica. They gave us a$100 ,000 check. Actually, no, they gave us a$100 check by accident first. And I got all the way to the bank. I literally, I got to the bank and I was like, here's my check for$100 ,000. You had to fill out the form that said$100 ,000. And I fill it out and the woman looks at me and she's like, uh-uh.

28:13But who were the, I mean, I have to assume there were some investors or maybe many who looked at this idea and said, I'm not going to get into the razor. Plenty. Right. So what was the pitch that convinced those who agreed to or who said, yeah, sure, I'll put in a little seed money. Well, they saw the video. Before you released it. Correct. So that was how you were able to convince those initial investors. Yep. They were like, well, you want to do this? And then they were the first ones that said all that stuff about there's no way you can do it. And then I said, how are you going to do it? And I was like, well, I'm going to build a brand.

28:46And they're like, yeah, but what do you mean? And I was like, well, and I tried to explain. I was like, you know what? Just watch this. You said just watch this video. Yeah. And instantly many of them laughed that it was funny and thought it was creative and obviously believed in you. Yeah. And they were like, sure, I'll give you a hundred bucks. All right. So you raised the seed money. March 6, 2012. Why was that date or that time of year significant? So I had spent time in the media. I knew how the media would think about using a video like this to tell the story of our funding. And so I wanted to make sure that we announced our funding at the same day that we launched the video.

29:21We also chose that date because there was a nice lull right before South by Southwest. People get really excited right before South by Southwest, or at least they did then. They look for a big tech story. They hope something's going to break the way Twitter did in 2006 or whatever. when, you know, and that was when Twitter kind of had its big moment, was at South By, and it became a thing. So there's a lot of anticipation in the air, and people are looking for something exciting in the tech space. So I wanted to do it before the festival, before that got noisy. Because you thought there's not a whole lot of noise out there right now, and maybe this will get some traction if I do it in this window.

29:59Yes, exactly. So you guys put it out there. What happens? You upload it to, like YouTube or? Upload it to YouTube, turn the site on late the night before. And how do you get people to know about it or click on it? Were there journalists that you targeted? Were there people that you specifically went after? Yeah. So we had done a round of press, you know, to announce our million dollar seed round. And we talked to all the usual suspects, the tech crunches of the world, the Bloomberg's, et cetera. And all the stories went live at the same time. And first the tech ecosystem picked up on it. And this video, which people found funny and engaging, and also that it was promoting a real business was sort of a unique combination for people.

30:46I don't think there were too many examples at that time of a direct to consumer business that launched with a video that was funny and good. And I think that that tech community surfaced it. And then from there, it sort of caught wildfire. And what happened to, I mean, that day, the 6th, I mean, were you surprised? Were you, I mean, because a lot of people watch that video. Yeah, I, you never build anything like that and think it's going to go viral. Anybody that tells you that they can build you a viral video or don't believe them. I did not have huge hopes for this video. I just thought that this was a really compelling way to tell the story of what our business was.

31:30And we launched it. And I woke up at my normal time, it's 6.30 on March 6th. And I looked at the site and the site wasn't there. And I was like, oh my God, what's wrong? Why is the site not live? Like we should be live. And I saw some text messages. And some of my friends that were up on the East Coast earlier, they were like, dude, amazing video. Like, but the site, I can't order my razors. And, you know, you're sitting there and I'm literally in bed and every entrepreneur has had a moment like this or a hundred moments like this where they look at their phone first thing in the morning and they're like, oh, whatever.

32:07And that was one of them. So the site had crashed. I had to go figure out how to get the site back up online. Eventually we did. And then we sold out. And these are still the razors from Mark Levine's warehouse. Yeah, yeah. So you cleared that warehouse. Yeah, we had some other razors as well. We had some twin razors. The first razors were twins. Then we had some four blades. Then we had some six blades. So we actually had, but all they all sold out. And so they sell out and now you're like, what do I do? What do I do in this moment? Do I pull down the closed shade and say, sorry, we'll be back in a couple months, once we can make more razors?

32:46Or do we keep selling, put up a note that says, hey, we're going to sell these razors to you. in advance. We're going to keep your money and eventually, eventually we'll send you these razors. And people, thankfully, you know, we're okay with that. I mean, some people, some people did. We're very transparent about the fact that there was a delay in the razors, but you know, they, they hung around because, because the proposition was resonant and we actually had tapped into something. We had solved a problem that many, many people had, and we did it in a way that resonated with them and they wanted to give us a chance.

33:21At this point, Dollar Shave Club was still you and anyone else? At that point, it was, so, so science was our first investor and we had, I was the only full-time employee at that time, but science had a studio of folks, they had some designers. Then there was a tech team that was third-party tech shop that did all of our engineering. Um, and, but I was the only full-time employee. Yeah. And where were you sourcing your razors from? A manufacturer in South Korea. Here's the thing. You see these ads for Gillette or whatever razor it is and they talk about this incredible technology as if it's like something that NASA invented.

34:01If Gillette was selling a four pack of razors, let's say, for four or five times the cost that you were offering, which was$1 plus$2 for shipping and handling, I have to assume that this was a lost leader, that you were not going to make money off this for a while. On that twin razor, no. On the other ones, yes. And so explain why, I mean, we've talked to the guys who founded Warby Parker, and they explain why frames were so expensive because it was essentially a monopoly. And they said there's no reason why. Was it the same with razors? Why were razors that you could buy at a pharmacy so much more expensive than the ones you were selling.

34:46Right. Well, you know, if you think about, it's a very small community. There are not that many people in the world that make great razors. And you think about the science that's involved. For such an old school sort of product that's been around for a long period of time, there's an extraordinary amount of science that goes into taking, you know, raw metal, then thinning it out, then creating a blade edge, then coating a blade edge, that can actually slice hair off your face and not skin off your face. There's a lot that goes into it. You can do it. People do it. And so, but it's hard. And that's why there's not that many people that do it.

35:21How were you fulfilling those orders and that after the video came out? Was it like you and a few people like packaging them up? Yeah, we had printers. We had a couple of printers hanging around the office and we were running labels and it was so frustrating because we had thousands and thousands of orders and this label printer's like,

35:43so like the only answer is get more label printers so at a certain point we had these label printers and you know we're we're filling out these rolls of labels and then we put them in these big trash bags and we drive them down to the warehouse where we shot the video and that was doing our fulfillment center and this was not an e-commerce fulfillment center this is a place that like on Monday, they're filling like windshield washer pellets into tubes. On Tuesday, they're putting vodka bottles in crates. And on Wednesday, they're filling orders for Dollar Shave Club and like whatever. So we have to go over there, take the big bag of labels in a big trash bag, throw them over the fence and hope that in the middle of the night, nobody comes by and steals the big bag of rolled labels, which would be crazy if they did that.

36:26But but that's yeah, that was how the operation worked. When we come back after a quick break, Dollar Shave Club expands beyond just razors and how that expansion put them on Unilever's radar for an acquisition offer. Stay with us. I'm Guy Raz and you're listening to How I Built This.

36:56Hey, welcome back to How I Built This. I'm Guy Raz. So Dollar Shave Club launched in 2012 with a viral video that got lots of attention and demand was overwhelming. But even with all of the momentum, Michael says raising money to scale the business was still a challenge. Raising money has never been easy for us. And I think for unless you're Snapchat circa 2000, whatever, you know, it's hard to raise money for any kind of company. And for all the reasons that you pointed out in the beginning, you know, How do you think that you are going to take on these giants that have been doing this for over 50 years?

37:36And aren't they going to squash you? Aren't they going to copy you? And so it was never easy for us. Yes, you can always raise some money from some portion of the market, but the people that you want to raise money from, the smart money, so to speak, the smart money asks the smart questions. And they ask all the questions that they should. And it was never easy for us, even into our Series D. You know, once you started to gain traction, obviously competitors came in, Harry's Razors, for example. Did that make you nervous when you started to see other people who were also using the subscription model?

38:10Yeah, I mean, I think, of course, anytime that you create something and you put it out there, and it's naive to think that people aren't going to copy your great idea. And I think your first reaction is to be like, uh-oh. But I think what you learn over time is that the presence of competition pushes you to define yourself more specifically and focuses you on the things that you want to do. And, you know, definitely makes you work a little bit harder. So, you know, most people when they first start a company and then they experience competition don't think that's a good thing. I think it's a wonderful thing.

38:47We've benefited from that in some ways. It's been validating in so many ways too. Did you have to do a whole lot of advertising or were those viral videos because you went on to produce more? Was that really driving the customers? Was that bringing in new customers? Yes. So the virality wore off at a certain point for sure. And then it was, you know, jump into the paid marketing game, paid advertising game. And yeah, we shot our first television commercials, I believe in 2013. we did another video for our One Wipe Charlies, which is our Butt Wipe for Men. Butt Wipe for Men. Do you want to talk about that?

39:24Well, I mean, sure. This is 2013. You decided to expand and to diversify? Decided to diversify. Our first expansion was One Wipe Charlies. It's a Butt Wipe for Men. It's a moist towelette that you use. Some people like to mop before they sweep. Some people like to sweep before they mop. It's a better way to do it. And, you know, anybody, unless you're very flexible, you know, you're not spending any time back there. But other people that care about you might be.

40:02And so that might be a service that you provide not for yourself, but for your loved ones.

40:17A couple of things happened to you guys that are not surprising because it happens to successful startups. The first is the big players got into the game. They got into the subscription game, the Gillettes and the other companies. They are much bigger. At that time, certainly, were much, much bigger in terms of the capital they had, the cash, the marketing dollars they had. was there ever a concern when they got into that game that they could actually crush you? Any smart entrepreneur, any smart CEO or business person should absolutely be afraid of that type of thing when something like that happens.

41:00And you should be doing the chess on how to make that not happen. So yes, of course, when any competitor launches, and many have, you have to think, how are we going to be different? How are we going to fend this off? If you don't take competitive threats seriously, that's foolish. So we absolutely took it seriously. The other thing, of course, is that Gillette sued you for patent infringement as you began to take away market share from Gillette. It's still pending, but did that lawsuit freak you out when that happened? Well, yes and no. I mean, you know, it was the first time I think that we had gotten sued.

41:37and, you know, the first time you get sued, you're like, how do you react to something like that? But I think at a certain point, people have been telling us along the way to expect that because that's a playbook that big competitors, big incumbent competitors can do to make you look unattractive to capital, to make you look unattractive to potential acquirers. And so for me, you know, like, look, you take everything very seriously as a CEO. but you also say that there was a business calculation to it also that made a lot of sense from their side. So you put it all together and rationalize it that way.

42:20So you guys, I think at a certain point, maybe it was 2015, by 2015 or 2016, I think you had about 3 million subscribers. Do you remember what percentage of the subscription market you guys had at that point? Of the online Razor subscription market? I mean, most of it at that point. Wow. I won't know the exact market share numbers off the top of my head, but I think that, you know, as of now, there's about 20 % to 25 % of the men's non-disposable razor market that we have. Do you remember when you became profitable? No comment. We're owned by a very big company, and we're not allowed to disclose financial information like that.

43:04All right, so let's talk about that. So 2016 Dollar Shave Club was acquired by Unilever reportedly for a billion dollars. Okay.

43:17I mean, it's a mind boggling, astounding amount of money. Were you looking to sell or did they come to you? How did that happen? So I met one of their executives at a dinner in New York. And we just started talking about where I wanted to take the company. And he was telling me about some of the things that Unilever was working on. and that men's grooming was a big priority for them strategically. And the conversation really just started out as a, hey, is there a way that we can potentially help each other? And the conversation took another step and then another step, and then we ended up with the acquisition.

43:51I know that there was a lot that preceded the founding of the company and there was a lot that went into it and a lot of stress and hard work. But just to put it into perspective, we're talking about a five-year period from the time you founded it to the time Unilever bought it. I mean, when you think about that, are you astounded at that? Are you, I mean, do you just think, God, five years, and this is what we built? I mean, it is pretty mind-boggling. It is mind-boggling. It was a huge moment in the company's life and history, and certainly a huge moment in my life and career, no doubt. But I knew that all the hard work was really yet to come.

44:34The acquisition in and of itself is a nice moment and an acknowledgement of the progress that we made. But there was still so much to do that, you know, I didn't spend a lot of time sitting around being like, you know, popping a lot of champagne bottles because there's just, it's just. You still run the company. You're the CEO. Correct. You work for Unilever. I'm trying to think where I get my paycheck from. But yeah, more or less. Yeah. I mean, yes, my boss is Unilever. For all the people here tonight who might be in your position in 2010 or 2011, who might be starting something up, or if you were in this audience then and you were watching somebody like you, what do you wish you knew then that you know now that would have been helpful?

45:22I think there's a lot of times when you're starting a company and you're faced with certain death or near death. You have a near-death experience, which will happen a lot. it's never as bad as you think it's also not as great as you hope it will be either and you know yes there are some times when the worst possible outcome happens but it's really rare and you go through enough sort of crises and near-death experiences and you come out on the other side and you kind of like in your mind you say to yourself okay I know what it's like to be chill on the other side of the crisis, I'm just going to put myself there and know that like eight out of 10 times, it'll be true.

46:08And two out of 10 times, it's not. And it helps you, I think, get a little bit less scared because starting a business is scary. Michael, this is a question that I ask everybody who comes on the show. And if you've heard the show, you've heard me ask the question. But I'm curious from your point of view, how much of what happened to you do you think is because of luck? and how much do you think is because of your hard work and your intelligence and your skill? I think that anybody that's successful in business has benefited from luck. And anybody that tells you that they haven't or don't is not being truthful.

46:46Luck plays a role in everything. And I think that you continue to get lucky throughout your career and throughout our business. You know, we've gotten lucky in many ways. sometimes good luck is a manifestation of hard work and sometimes luck is just luck I like to think that a lot of other people who met Mark Levine at that party that night would not have done what I did with it what we have all done with it because this is not a one man show it never has been but yeah, luck is important Michael Dubin, founder of Dollar Shave Club

47:30That's Michael Dubin. He's the co-founder of Dollar Shave Club. This live interview was originally recorded at the theater at Ace Hotel in Los Angeles back in 2018. Michael stepped down as CEO of Dollar Shave Club in 2021. And since then, he's been involved in advising and investing in other startups. And he's also written a screenplay. A few months ago, Michael also came back on the show as a guest on the How I Built This Advice line. He joined me to take questions from a few early-stage entrepreneurs, and he gave them some really awesome and hilarious advice, so you should check it out. Thanks so much for listening to the show this week.

48:05Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, sign up for my newsletter at gyros.com or on Substack. This episode was produced by Casey Herman with music composed by Ramtina Arablui. Our production staff also includes Neva Grant, Catherine Seifer, JC Howard, Sam Paulson, Chris Messini, Alex Chung, Carrie Thompson, John Isabella, Andrea Bruce, Ramel Wood, and Elaine Coates. I'm Guy Raz, and you've been listening to How I Built This.

48:37And don't stop the podcast just yet, because right now you're about to hear an amazing small business story that you don't want to miss. This segment is presented by American Express. With a business platinum membership, the best just got even better. Today's story begins in Hollywood, where husband and wife Floyd and Julia Albee first met. At the time, Floyd was a production designer for TV and film, and Julia was a photographer. Floyd and Julia built a life and a family together in L.A. But in 2018, Floyd went up to Mill Valley, California to shoot a commercial, and he fell in love with the natural beauty and small-town feel.

49:21We were shooting on top of Mount Tam every morning at 6 a.m. It was like walking into heaven every day. And then at night, I would see this incredibly charming town with 10 or 11-year-olds going out to the movies by themselves at night. I'd never seen anything like that. He came home and was like, we're moving to Mill Valley. And I was like, we are not moving to Mill Valley. But it turns out Julia was ready for a change as well. So they decided to make the move. Floyd figured he'd get enough work as one of the few production designers in the Bay Area. That was sort of the logic. I'd like to say my plan of moving up here failed.

49:55I've done one commercial up here in seven years. Yeah, that part didn't work. What did work was their idea for a home goods store in Mill Valley's downtown. It was going to be a side hustle. Like, oh, we'll just open this little concept store. They'd focus on modern and minimalist designs and sell a little bit of everything. A little apothecary, a little jewelry. Plus furniture, which for Julia had actually become a health concern. So I have an autoimmune issue and I'm really sensitive to the chemicals. I walk into stores and sometimes I'm overwhelmed by the amount of plastics. And I have trouble breathing and I get hives around my neck.

50:36I just wanted some furniture that didn't make me sick. So Floyd and Julia traveled around the world and started sourcing furniture made from natural materials. And by the end of 2018, Prevalent Projects opened up its brick and mortar store in downtown Mill Valley. Pretty soon after, Floyd spotted another opportunity. Because he'd built sets all around the world, why not offer interior design services as well? One of our first real clients came in and somehow gave us a giant project to do in Hawaii. Turns out they are people from the tech industry who've done quite well. They had cashed out. They were 35-year-old billionaires and just gave us the opportunity of a lifetime.

51:20And it floated us through the next several years. And through another chance meeting, they connected with a partner who wants to expand their brand across the country. We're looking for a second location now, trying to figure out where to land in Silicon Valley somewhere, possibly L.A., interested in New York, interested in Colorado, interested in Seattle. All this from a decision to pick up and move to a new place, a place that gave them new energy, even as they worked 100-hour weeks. We'd just be, till your eyes are bleeding, like working as hard and fast as you could. And at a certain point during the day, I would just grab her and go, come on.

51:56We'd walk out our front door right up into like the most beautiful old growth redwood forest. And it would just be like a bath for like 20 minutes to just breathe all that oxygenated air and then get back at it. That's Floyd and Julia Albee, co-founders of Prevalent Projects. Their story was presented by American Express. To build a business like no other, you need a card like no other. There's nothing like Business Platinum.

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