The traffic attracted by the video, which has now been watched almost 10 million times, crashed the company’s server in the first hour. Frantic, Mr. Dubin placed calls to his hosting company and almost every programmer he had ever met. Once he got the server back up, he enlisted a team of friends and contractors to help him print labels and pack boxes by hand in a warehouse in Gardena, Calif., in an effort to fulfill the 12,000 orders that arrived in the first 48 hours.
In the past year, Dollar Shave Club, now based in Santa Monica, Calif., increased its full-time staff to 24 employees; began to sell three different types of blades that are sourced from overseas manufacturers and sold for $1, $6 and $9 a month; and introduced a new product called shave butter.
Mr. Dubin declined to disclose the company’s revenue or to say how many subscribers it has, but in October, he landed a $9.8 million investment from Venrock, a Silicon Valley venture capital firm that expects him to use his marketing skills to compete with personal care giants like Gillette (he had previously raised $1 million from a group of investors that included Andreessen Horowitz and Kleiner, Perkins, Caufield and Byers).
In a conversation that has been edited and condensed, Mr. Dubin spoke recently about making the transition from YouTube sensation to real business.
Q. Where did the idea for the business come from?
A. It actually dates back to a party in September 2010, where I met Mark Levine, who was my friend Gina’s father. At the time, I was helping companies make promotional online videos, and Mark had a lot of experience in product development and wholesaling. He told me he had about 250,000 twin razors and he wondered if I could help him sell them on the Internet. I knew immediately I didn’t want to sell them the traditional way.
Q. What got you thinking about selling by subscription?
A. If you ask most guys how they buy razors, they talk about being frustrated with the price and the experience of going to the store to buy them. I saw a market need to solve that problem by making it easy for guys to get it done. It was never about recurring revenue. Guys are so used to milking their blades for as long as possible because they’re so expensive, and they’d forgotten how awesome it can be to shave with a fresh razor each week.
Q. How did you get started?
A. Mark and I struck a deal and I invested my life’s savings, about $35,000, to build the Web site, which launched in July 2011. We initially ran the business out of my apartment. I spent the first six months driving down to San Diego and trying to connect with bloggers to spread the word. Without spending anything on marketing, we were able to sign up our first 1,000 members.
Q. You say in the video that your razors are great. Are they?
A. Our blades are excellent. But I don’t see us as a razor blade company. We are a lifestyle company.
Q. Where did the idea of doing a video come from?
A. I have always believed in the power of videos to tell stories. I had been working on it for several months after we started. Then I met up with my friend Lucia Aniello, who I had studied comedy with in New York at the Upright Citizen’s Brigade. I asked her to help me shoot the video, which we filmed in our original warehouse in Gardena in October 2011. We spent about $4,500 on it.
Q. Why do you think it went viral?
A. It’s a funny video that promotes a smart business, which appealed to the mainstream media. The timing of the launch was not accidental. Early March is great to launch something tech-related because there isn’t a lot happening in sports or otherwise, and it’s a lead-up to the South by Southwest festival in Austin.
Q. And then what happened?
A. It melted our servers. For a 24-hour period, no one could get on the site. It was terrifying. After working for a year and half and making all the sacrifices to get to this point, you realize your greatest dream is turning into your biggest nightmare. Maybe we’re going to blow our big moment.
Q. What did you do to get on track?
A. The first step was finding a staff to help manage this. We especially needed help in logistics. In the beginning, we were printing a shipping label every 5 to 10 seconds. That might sound fast, but it’s not when you need to print thousands and thousands of them.
We had no inventory tracking system so we were using Post-it notes and binders to keep track of who we sent razors to and when. It was all so labor intensive. But it was our early staffers that helped us turn the corner. We have since moved our warehouse and fulfillment to a third-party logistics center in Kentucky where our orders are packed and fulfilled automatically.
Q. You’ve raised more than $10 million from a roster of big-name investors.
A. We always knew investment capital would be required to get this kind of business off the ground and grow it to scale. I’m aware of my strengths and weaknesses and where I needed help. A big part of our success so far has been because of our investors and not just because they wrote us a check.
Q. How did you convince your investors that you could compete with huge companies like Gillette?
A. I think our investors are savvy professional who understand the power of brands.
Q. What is your brand’s main selling point?
A. We see a big opportunity to make guys lives better and easier by creating a system of engagement where guys get the things they use everyday seamlessly and without any type of pressure from us. That premise goes beyond razor blades. We are building the future of the Dollar Shave Club on the idea we want to be the easiest place for guys to get the things they need every day. And it all starts in the bathroom.
Q. What is your plan to get the word out about your expansion?
A. Right now we are running radio ads, and we will have some TV and online campaigns coming soon. There’ll be another video coming that I’ve written and Lucia will direct.
Q. Can you duplicate the success of your first video?
A. There’s never going to be anything like the first one that launched a new business that no one had ever heard of and did it in a fun way. That element of surprise and being new is something we will never have again.
Q. What is shave butter?
A. We’re launching our first nonrazor product, Dr. Carver’s Easy Shave Butter. We think it’s the best thing you could put on your face before you shave. It’s an excellent, original product available only to our members at half the cost of a comparable product.
This article has been revised to reflect the following correction:
Correction: April 10, 2013
A picture caption with an earlier version of this article misspelled the surname of Dollar Shave Club’s founder. He is Michael Dubin, not Dublin.
Article source: http://www.nytimes.com/2013/04/11/business/smallbusiness/dollar-shave-club-from-viral-video-to-real-business.html?partner=rss&emc=rss