Earlier this week new startup Dollar Shave Club launched.
It’s based on a simple premise: For a dollar a month you can get five dual-blade razor cartridges. It offers other plans at slightly higher prices, but the dollar plan is its main hook. It’s a nice way to save money on the overpriced razor blades offered by Gillette and Schick.
As soon as we heard about it, a few of the men in our office signed up. Our office wasn’t alone.
The company’s CEO, Michael Dubin, says it got 5,000 subscribers on day one. Since launch it’s added 12,000 subscribers.
We got on the phone with Dubin yesterday to talk about how he’s going to make money selling cheap razors.
Before you read the interview, you should watch this promo video. It’s funny, and it’s a big part of the brand’s plans for marketing. The video debuted on Tuesday and it already has 2 million views.
Business Insider: What was it like on Tuesday when you launched? We noticed the site was crashing. How many people signed up?
Michael Dubin: At the moment we have over 12,000 new subscribers which is really exciting. And we had about 5,000 in our first day. We weren’t expecting the response that we got, which is really exciting. We’re really flattered that everyone is taking to the idea and that the video has become so popular. Our servers were not prepared for the bum rush.
BI: How long have you been working on this idea?
MD: The company was founded by Mark Levine and I last April, but we’ve been working on the project since December 2010. We launched a beta site in July to do some proof-of-concept stuff and ran it very quietly for a while. It was able to get enough traction to prove the concept to Science, the incubation studio here in Santa Monica, and then to VCs in Silicon Valley.
BI: What was your background before you started Dollar Shave Club?
MD: I was in digital marketing. My first job, I was a page at NBC. And then I spent two years on the editorial side for MSNBC doing news writing and production for Keith Olbermann, Ashley Banfield, Joe Scarborough, and then I left there. Then I got into digital marketing working for a small client services firm in New York City. Left with the boss there to go over to Time Inc. where I spent a couple years developing custom content for big brand advertisers like Nintendo, Nike, etc. Then I got into the video seeding space which is a fancy name for driving views to branded social videos by the likes of Ford, Capital One, Gillette (ironically) and then that took me right up to Dollar Shave Club.
My passion is brand-building, digital marketing, and that’s kind of who I am. As for the video, you didn’t ask, but I studied improv and sketch comedy in New York City at Upright Citizens Brigade for many years along with the gal who directed the video. Her name is Lucia Aniello. She and I met a long time ago and we moved out to L.A. independently and connected over this project. I wrote it, she directed it. I’ve always loved the intersection between business and art and this brand I’m building gives me a great opportunity to have a lot of fun and use a comedic voice.
BI: You made the first video for $4,500, right?
BI: Is this part of the plan for the company? Funny viral marketing to save money?
MD: Well, certainly if you can create content that goes viral it’s going to be cheaper for you to build your business. I’m not going to call ourselves a content company. That would be arrogant. But I do think there’s going to be a commitment here to developing content here whether its video or Facebook content, we’ve got a lot of stuff in the pipeline. But whether its video, or Facebook content, or other kinds of content, we are going to make a strong commitment to telling strong stories in creative ways and just giving our audience and our customers fun stuff to play with. That’s part of the fun of being an Internet brand.
BI: What’s the story behind the idea? Were you just sick of paying for razors?
MD: I met my cofounder at a holiday party in 2010. He’s spent 25 years in product development in manufacturing and development and he and I somehow got on the topic of the brand name razors and how expensive they were. He knows people that can develop razor technology and we started out with a batch of very inexpensive twin blades, which is what is on the website right now under the humble twin brand.
So, it was a happy accident that we ended up at the same party and that the conversation came up about shaving. He was like, “You’re a digital marketing guy. I’m product guy, maybe there’s something we can do here.” He was just thinking about selling the razors straight up on the Internet. And I said we should definitely turn this into a continuity model. Not only is it perfect for this product, it’s also hot space for investment.
One of the things that’s great about our business is that shaving, next to showering and eating, is one of the most regular things men do. So most guys don’t want to go to the store and deal with the parking lot and that razor fortress where the alarm goes off. It’s a total nightmareish experience. Razors are the fifth most shoplifted item in America —
BI: Wait, is that an actual stat, or are you just making that up?
MD: Nope, that is a fact! It’s a perfect product for a continuity model, for a membership program. That’s the genesis.
BI: Where do you go from here? What’s the next step?
MD: We’ve got shaving cream, after shave moisturizer and a whole line of grooming and skin care products.
BI: How can you afford to do this? How can you sell razors for just $1 a month?
MD: We have some lower end products like the humble twin. And there’s not a ton of margin there. There’s other products that are higher margin. First of all, we’re able to cut out the middle man and make the blades ourselves. That’s a big savings to us and we don’t have the big marketing machine that Gillette or Schick does. We don’t have to spend millions of dollars on commercials. We’re able to pass those savings along to the customer.
BI: When you say, “we make the blades,” what do you mean?
MD: We have a manufacturing company we work with that makes the blades.
BI: Are the early subscribers gravitating towards the cheapest plan or are they choosing the more expensive options?
MD: I can’t reveal too much data, but I can tell you that it’s been pretty even across the board.
BI: Anything else we’re missing?
MD: Stay tuned for social product development where we develop shaving cream formulas and ask our users which ones they like best. They’re going to get to participate in the process of building this company with us. The companies of the future that succeed talk directly to their customers and that’s a wonderful benefit we have over some other companies in the CPG category, is that we get to talk directly to our customer every day, find out what they like, what they don’t like. And we’re going to grow along with them and give them what they need on the razor side and the product side.
BI: One last question, do you worry that you’re being too funny with your marketing? Can you overdo the humour and have it end up being annoying?
MD: At the end of the day our products will speak for themselves. We think we’re doing a good job of communicating our product’s benefits but doing it in a humorous way. The wonderful thing about Dollar Shave Club is that we get to tell a unique story these days and build a unique brand because we’re on the internet and because the rules are different there.
We can be irreverent, but we can be direct. If you look at the video, we are communicating the whole time the product and service benefits. We’re talking about product and pricing. We’re talking about convenience. Yes, there’s a couple of jokes that don’t talk about the business there, but our goal with creating the video was to teach people about our business. And give them a laugh at the same time and that’s going to make them remember it more. I don’t see humour as a conflict. I see it as a vehicle to communicate those same points that other people are doing in a very dry way.
Is there a line that you can cross and it becomes too funny? No I don’t think you can be too funny, but I think you can get too sloppy, but we’re never going to get sloppy. We’re always going to be very communicative with our customer about their product benefits. I’m sure we’ll make mistakes along the line and we’ll be very direct about that as well.
Buying your razors doesn’t have to be a boring, humorless experience. In my opinion nothing should be a boring, humorless experience. If I can make five minutes out of everybody’s month an enjoyable five minutes and they get a great shave on the other end of that, then I’m really happy and I’ve done my job.
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