When I first saw the video pitch for Dollar Shave Club, I thought it was a joke. The fact that the site was down for a long period didn't help.
But as we know now, this thing is for real. The YouTube video now has more than 1.6 million views. A backer I spoke with said it's all part of the strategy.
At Launch, I talked with Peter Pham, from Science Inc., the accelerator that's been working with Dollar Shave Club. Science has been working on other similar plays, like the underwear company MeUndies and the subscription children's clothing company Wittlebee.
What Pham is trying to do is build new consumer brands. The Web makes that possible, he says. YouTube, Facebook, and other social mechanisms make viral and rapid brand growth possible in a way that traditional media, and companies, can't touch.
"We're taking on Gillette," Pham says. By selling razor blades? I asked him how he can keep margins up when competing with giant consumer goods companies.
Dollar Shave Club doesn't re-sell other company products, as some other subscription consumer reseller companies do (like Alice and ManPacks). Dollar Shave Club actually sources its own razors and blades from manufacturers in China ("We tested a ton of razors," Pham says). This, and its direct sales approach, means it can keep prices way low.
Pham took the opportunity to remind me how disgusting it was to do what most guys do who shave: Use the same razor or cartridge for longer than we should, since high-end blades now are horrendously expensive. The key to a good shave, he pitches, is a clean, fresh blade. And lowering the price is the key way to get men (and, eventually, women), to change out their blades more frequently.
And the key to building these new subscription companies is the brand and the buying experience, Pham emphasized. He says he's moving to Los Angeles where the entertainment talent is for branding and design. The Dollar Shave Club video only cost CEO Mike Dubin $4,500, Pham says, so one might expect his branding expenses to go up as he moves to the heart of the entertainment industry. But the move does reflect Science Inc's focus on building brands that compete with old-line products.
The products also matter, of course, but it's getting easier to source products now that are competitive with what the traditional brands now offer. So many of them come from the same plants, after all.