Dollar Shave Club: A $4,500 Video and a $1 Billion Sale

Michael Dubin met Mark Levine at a party. They got talking about how much razor blades cost, and the two decided to sell razors by mail on a monthly subscription. Dollar Shave Club was founded on January 18, 2011, in Venice, California. The blades came from Dorco, a South Korean manufacturer.

Dubin was not a razor executive. He decided to launch the company with a video.

March 6, 2012: The video

Dubin starred in it, delivering a deadpan pitch for cheap razors under a title built around a censored swear word. It cost about $4,500, Entrepreneur reported, and the money came from Dubin’s own savings.

The video went up on YouTube on March 6, 2012. The traffic crashed the company’s website within the first hour. Once it was running again, Dubin enlisted friends and contractors to help fill 12,000 orders that arrived in the first 48 hours. Apart from some Google ads, Entrepreneur noted, the company had done no other marketing. The video has since been watched tens of millions of times.

Growing on subscriptions

Investors noticed. Dollar Shave Club raised a $1 million seed round in March 2012 and much more later. It added shaving cream, wipes and other grooming products, and it kept growing on monthly subscriptions. Revenue reached $152 million in 2015.

The incumbents were losing ground. According to The Wall Street Journal, as reported by Newstalk, Procter & Gamble’s Gillette controlled 59% of the North American razor market in 2015, down from 71% in 2010. Dollar Shave Club had about 5% of the overall market. Gillette launched its own shave club and, in December 2015, sued Dollar Shave Club for patent infringement. The case was settled in 2019.

July 2016: $1 billion

On July 19, 2016, Unilever announced it was buying Dollar Shave Club. It did not disclose the price, but multiple reports, citing people familiar with the deal, put it at $1 billion in cash. The company had 3.2 million members and expected sales of more than $200 million that year.

By Reuters’ arithmetic, Unilever was paying about five times annual sales, more than most US consumer deals, which were usually done at under four times. Dollar Shave Club was reported never to have made a profit. Jefferies analysts said the purchase gave Unilever about 60% of the US subscription shave club market. Dubin stayed on to run the business.

2023: Selling most of it

The deal did not work out as Unilever hoped. In October 2023 it sold 65% of Dollar Shave Club to the US private equity firm Nexus Capital Management, keeping 35%. The price was not disclosed. Unilever’s chief executive, Hein Schumacher, told investors on October 26 about “unsuccessful attempts to move away from our core,” and Digital Commerce 360 named Dollar Shave Club as one of them.

For Dubin and the early investors, the 2016 sale had already happened. A video made for $4,500 had helped build a company sold for a reported $1 billion.

What the record shows

• Attention was the cheapest marketing. A $4,500 video brought thousands of paying customers in two days.
• Buyers pay for growth. Unilever reportedly paid about five times sales for a company said never to have turned a profit.
• Incumbents feel it in market share. Gillette’s share of the North American razor market fell from 71% to 59% in five years.
• The buyer carries the risk. Unilever sold most of the business seven years later for an undisclosed price.

Other low-cost beginnings in this archive led to large fortunes. Sara Blakely started Spanx with $5,000, and Hotmail’s founders turned $300,000 into a $400 million sale to Microsoft.