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Dollar Shave Club vs. Gillette (aka, You Can Be a Billionaire by 2020)

By August 3, 2016 No Comments

I can tell you the moment that I became a disciple of the juggernaut razor manufacturer Gillette. It was August 1986 when I first walked into my freshman dorm room at James Madison University. There, strategically placed on the plastic-enclosed mattress that would become my bed, sat a care package. I can’t remember any of the other contents of that care package, but I can tell you with 100 percent certainty that within that box was an Atra razor from Gillette.

“How kind of them,” I thought, noticing how much nicer the Atra looked compared to the Bic disposable razors I used, a dozen of which I could buy for about a dollar. I’d only recently succumbed to the reality that I needed to shave every day (even if I didn’t always do so). And you could tell the days when I did shave because razor burn on my neck and dots of blood-stained toilet paper on my face betrayed the fact that shaving for me was more of a battle than a harmless morning ritual. But Gillette wasn’t being kind with their Atra razor “gift,” not at all; the care package was nothing but pure marketing genius. 

The Atra changed my life. With its pivoting head, lubricating strip, and sharp blades, shaving actually became a pleasant experience. It actually became a major topic of conversation in the dorm with every guy on my floor now worshiping at the altar of Gillette.

It took about a month for me to exhaust the three complimentary Atra blades (or cartridges) that accompanied the first razor. That’s when I naively headed to the campus convenience store to get more…and got the shock of my life. Five replacement cartridges would cost me seven bucks! Putting that into the perspective of an 18-year-old college student, five razor cartridges would cost more than an entire case of Milwaukee’s Best.

Can Social Media Substitute for a $750M Marketing Budget?

I put my foot down, reluctantly returning to the torture of disposable razors…but not for long. Again, the marketing folks at Gillette weren’t being nice when they dropped that care package on my dorm-room bed. They were crack dealers and I was their newest junkie.

That care package was the best guerilla marketing I have ever seen. And it’s but one small part of an annual marketing budget at Gillette of…wait for it…$750 million.

I followed Gillette from the Atra to the Atra II to the Sensor, Sensor Excel, Mach 3, Fusion. Each costing progressively more until, many years later, grocery stores actually began putting replacement blades behind security glass to prevent shoplifting. But I kept paying.

Creative Application of Technology Will Define the Future

So, as a business, who with a sane mind would take on Gillette and its $750 million marketing budget?

Four years ago, two young men – Mark Levine and Michael Dubin – used $1 million in seed money to create the Dollar Shave Club. The idea was that, each month, they would ship great razors right to your mailbox at a fraction of what you’d been paying Gillette. Rather than using Roger Federer and Tiger Woods to sell their razor blades on television commercials, Dollar Shave Club instead relied entirely on a humorous, viral video to spread the word. They took aim directly at Gillette. They spent less than $7,000 producing the unorthodox video (by traditional marketing standards), proclaiming on the video that “Our blades are f***ing great” (appropriately bleeped, so SFW).

Did the video work? It was responsible for 12,000 orders within two days. Fast forward four years and the video has been viewed 23 million times on YouTube.

Two weeks ago, the European consumer goods company Unilever acquired the Dollar Shave Club for $1 billion! I’m not prone to use exclamation points, but think about that for a second: Two guys who were angry with Gillette over the cost of its razors went from an idea to $1 billion in their pockets…in less than five years!

The “Silicon Valley Garage” Could Be Next Door

This Internet thing? It’s really catching on.

But it’s not the technology alone; it’s the creative application of technology that has allowed regular people with big ideas, like the guys from the Dollar Shave Club, to do the unthinkable: To take on giants like Gillette that are perched atop their respective sectors with unlimited resources at their disposal. And win.

It’s this same concept—creative application of technology—that has allowed Uber, which owns no cars, to become the largest transportation company in the world. It’s how Airbnb, which owns not a single hotel, has become the largest hospitality company in the world. It’s a virtual certainty that right now, maybe next door to you, two people in a garage are hatching a plan that will revolutionize an industry that now seems infallible (think energy, banking, pharmaceuticals).

Everyone is Empowered; Everyone is Vulnerable

For its part, Gillette at least reacted to the change. Do a Google search on “shave club” and the first item that appears at the top of your search will be “the Gillette Shave Club” (this even if a Procter & Gamble executive recently confided to me that they took too long to react).

There is a long line of formerly iconic brands that vanished, practically overnight, because they neglected to make creative use of technology and ignored the revolution going on outside their doors. Radio Shack, Circuit City, Tower Records…companies that at one time dominated their sectors were decimated because someone else made more creative use of technology in their space and they didn’t recognize what was going on outside their doors.

Could the Dollar Shave Club ultimately make Gillette disappear? Ask the executives at Blockbuster how much they wish they’d been paying attention in 1998 when this little company called “Netfix” had an idea.

Jim Cudahy is a principal at SRD Communications and now uses Dollar Shave Club razors. You can reach him by email at jim@srdcommunications.com.

 

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