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Conversations: Dollar Shave Club, From Viral Video to Real Business

April 10, 2013 by Leave a Comment

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

Filed Under: Media Business Tagged With: , ,

You’re the Boss Blog: Introducing Fashioning Change: Wear This, Not That

January 29, 2013 by Leave a Comment
Fashioning Change

A social entrepreneur tries to change the way people shop.

Adriana HerreraCourtesy of Fashioning Change Adriana Herrera

I’m the founder and chief executive of Fashioning Change, a start-up that helps shoppers purchase stylish, money-saving, safe and sweatshop-free alternatives to top name brands.

We had our “Hello World” beta test on Cyber Monday in November 2011. Every brand we carry is vetted according to our five promises: be fashionable, be well made, protect health, protect the Earth and protect human rights (we call this our “Promise of 5″). We offer more than 18,000 shopping options, including our own line of organic clothing that is made in Los Angeles. Every garment we produce includes a scannable tag that helps connect shoppers to each of the steps in the supply chain. And when people purchase our suggested products, we save them an average of 27 percent over the name-brand options.

So far, along with me, the company consists of Kevin Ball, my technical co-founder; Kestrel Jenkins, who is in charge of product sourcing, and Steve Klebanoff, software engineer. We have an office in San Diego and a house in Santa Monica. Every other week, the two-bedroom house accommodates the four of us. We wake up to live, breathe and sleep Fashioning Change. Can you imagine living and working with your colleagues 24/7?

Our business model is built on the premise that by providing access to alternatives, we can encourage consumers to make purchases of brands that protect peoples’ health, the environment and human rights at every step in the supply chain. We believe that as we grow, we will have an impact on the bottom lines of mainstream corporations, motivating them to adopt similar practices in order to regain market share.

The ideas behind the company were instilled in me by my father. He grew up in Juarez, Mexico, a city that many consumer-goods companies use as an outsourcing location. He had friends and family who worked in many of the factories, and he saw the impact people could have when they chose to purchase one brand over another. With that in mind, he gave my brothers and me three rules we had to abide by when making purchases: One, we couldn’t buy anything made in Asia because he believed the manufacturing practices in many Asian countries were worse than they were in Mexico. Two, we weren’t allowed to buy clothing made of synthetic materials. And three, we weren’t allowed to wear dark clothing because he believed that children were the light of the world and should dress in bright colors.

As a result, when I was growing up in San Diego, I used to run around the children’s department at Nordstrom, flipping tags to find clothing that hadn’t been made in Asia. Then, I would flip all of the tags again to see which pieces were made of “father-approved” materials. Sometimes, when I was particularly frustrated that I couldn’t buy a dress I wanted, I would hide in a clothing rack and pout. But early on, I was taught to think about where products come from, how they were made, who made them and under what conditions. Little did I know that my father’s shopping rules — along with my post-college work experience with nonprofit, public relations and manufacturing organizations would end up inspiring me to create Fashioning Change.

Over the last year and a half, I have navigated my way through a technology accelerator, taught myself to code, recruited a team, raised a first round of financing, opened an office in another city, manufactured a own line of clothing in the United States and managed to avoid about a hundred landmines that could have crushed Fashioning Change. Through this blog, I hope to share my experiences as a Hispanic, single, woman founder building a tech start-up that intends to make money and do good. I plan to share our successes, our mistakes and our frustrations.

In my next post, I’ll tell you more about how the company works.

Lets connect. Email me at adriana@fashioningchange.com. You can also follow me on Twitter at @adriana_herrera

Article source: http://boss.blogs.nytimes.com/2013/01/29/introducing-fashioning-change-wear-this-not-that/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,

In California, Strategy as Tough as Traffic

April 13, 2011 by Leave a Comment

“I only stopped here because I’m running on empty,” said Maura Trejo, a real estate agent. “You’d have to be pretty silly to fill up here. What a waste of money.”

It was substantially better but still pricey across the street. Shell was selling regular for $4.23 a gallon. One more mile east, it was $4.31 a gallon.

Even when gasoline is not near its peak, California almost always has the highest average gas prices in the continental United States, owing to a combination of high state and local taxes and stringent state fuel regulations. This forces Californians to be more calculating than drivers in other states about where to buy, how to track down cheaper options and whether to spread the word about a particularly cheap station.

Certainly, anyone who spends time shuttling around Southern California’s inland suburbs, where the round-trip commute to Los Angeles can be 100 miles a day, knows that buying gas from a station off any freeway is an express lane to pauperdom.

“It’s always worse here,” said Yolanda Buller, who commutes into Los Angeles, where she works as a hospital receptionist.

Those who don’t like to hide a good discovery love to boast about an off-the-beaten-path pump with the cheapest prices. There are those who debate that approach; how much can one really save by driving several miles out of the way (“In traffic?,” they’ll ask incredulously) just to save a couple of bucks?

But they have no choice when they forget to fill up in the morning. So they pull out their crumply dollars and put in only what they need to get down the road.

Dozens of California cities top the list of the current highest prices in the nation, as measured by the Web site gasbuddy.com. Santa Barbara always has relatively expensive gas, as do several cities in the Central Valley. In Santa Monica, one station was charging a whopping $5.69 for premium full-serve gas, making the $4.69 for regular self-serve seem like a relative bargain.

It’s enough to turn even the most generous car-pooler into a bit of a cheapskate.

Jacque Jones, a 33-year-old musician, agreed to drive his friend from Diamond Bar to Los Angeles, about 30 miles. Every time he fills up his Ponitac Aztek these days it costs at least $60. So this time he made his friend fork over $5. These days, he said, “I’ve got to take all I can get.”

He gave his friend a look of mock embarrassment before adding: “Man, this thing don’t drive itself for free.”

Article source: http://feeds.nytimes.com/click.phdo?i=749db7ca6b226012a879af0a2b7ed2cd

Filed Under: Business News Tagged With: , ,