Razors — Attracting Lightning

Razors, Big Red Car?

OK, Big Red Car here talking about when a successful small company competing with a bigger company attracts the attention of the bigger company and the bigger company takes action.

Big Red Car, what are you talking about?

OK, it’s about the razor business and entails three companies:

 1. Dollar Shave Club (first mover in the space) — razor blade subscription service;

1. Harrys (with Warby Parker vibe) — makes their blades in Germany where they own a factory; and,

 3. Gillette — which just re-launched its own subscription blade service, Gillette On Demand. Gillette is the “bigger company” of which we spoke. [Cue the ominous, dark, Darth Vader music in the background. Please.]

Each company is a little different, but at the end of the day (cliche alert) they want to get you to join a “club” so they can sell you razor blades. They will almost give you the razor itself if you will just become a faithful purchaser of their subscription based blades.

There are others in the subscription razor business, but these are the big three, y’all.

Dollar Shave Club

DSC (abbreviated, very hip) was started by a guy (Michael Dubin) in classic bootstrapped fashion back in 2011. The story is apocryphal (vocabulary word for the BRC). Today, they are doing more than $100,000,000 in sales. [It is hard, as it should be, to get numbers on private companies. One resorts to looking at places like PitchBook. Do not believe any Big Red Car numbers about anything.]

Big deal. Along the way, they took some VC money, so they have miles to go before they sleep.

DSC has gone a bit farther afield and now sells a wider range of personal hygiene products. You will adore their aloe butt wipes — yes, that is really a thing.

It is hard to get exact numbers, but DSC mumbles that they have 3,000,000 members of their club. Who really knows?

Harrys

Harrys was founded in 2013 by a founding team which had Warby Parker on their list of things they’d done. Very heavyweight success. Their secret sauce was the fully integrated vertical stack.

They saw Gillette and Schick as their competitors and they went out and raised money to be able to buy a $100,000,000 razor factory in Germany.  Bit of integration, no? Full stack, no?

I think of them as being a bit more visual and all that graphic design stuff [Full Disclosure: The Perfect Daughter is an accomplished graphic designer working at her second startup, Bustle.com, whereat she was their first graphic design hire and now they have a battalion of similarly skillful persons. Sorry.]

Harrys has raised almost $300,000,000 and one of its boardmembers and investors (through Thrive) is a chap named Joshua Kushner — the liberal brother of Jared Kushner, the husband of Ivanka Trump, and a senior adviser to the Devil himself.

Gillette

Darth Vader music, please.

Gillette is the big boy, the one your mother said was a bully in the third grade and why your Dad taught you hand-to-hand combat and how to box. [Not really, but, hey, we love the drama.]

Gillette, around since 1901 when it did a seed round, ignored the upstarts whose entire shtick was how difficult it is to buy razor blades.

Something happened over at Gillette and they are no longer ignoring the upstarts anymore. They launched Gillette On Demand in retaliation, saying, “Hey, you can’t eat out of our chili bowl.”

They launched Gillette Shave Club in 2015, but there was some ugliness and confusion about the name. They changed it to Gillette On Demand.

Gillette On Demand has CHAT, live chat. You can call Shemeka (actual person with whom the Big Red Car chatted in researching this blog post) and she will help you in ways you cannot begin to imagine. Well played, Shemeka.

The exhausting process of buying razor blades

Women have no appreciation for how time consuming and physically draining it is for guys to buy razor blades. It is grueling, like Ranger School.

You have to get in your car.
You have to start your car.
You have to drive to the drug store (or Sams Club).
You have to park your car.
You have to pick out your razor blades (this is not an easy task, girls, ask a guy).
You have to cart them to the checkout.
You have to pay for them.
You have to count your change.
You have to find your car in the parking lot.
You have to get in your car.
You have to start your car.
You have to drive home.
You have to park your car.
You have to go upstairs and shave using shaving butter (yes, no more shaving cream, it is now saving BUTTER)

Point of emphasis: this is all being done, doll face, to make ourselves attractive for you and to avoid razor burn in the clinches. All. For. You.

Don’t know about you, but I am exhausted. Who knew buying razor blades was so damn complicated and time consuming.

Bottom line it, Big Red Car

OK, dear reader, a handful of teachable moments present themselves.

 1. If you start a business which is going to compete with one of the big boys — disruption, disruption, disruption — the big boy may decide to compete with you.

You may be nimble, lean, agile and all, but the big boy can learn how to do it and they have Shemeka and LIVE CHAT in their bag of tricks.

 2. There is, essentially, no difference amongst the offerings. You want five blade razors? Everybody has five blade razors. No product differentiation. None.

 3. There is no huge price difference amongst the offerings.

I do think Gillette On Demand may go ugly on an ape (technical marketing pricing theory term) on this, but they also have to protect their brick & mortar retail pricing. [BTW, Harrys is going to be selling their products in Target. Hello, America! Hey, I thought it was incredibly difficult to go to a brick & mortar retailer to buy a razor blade. What happened to that? Target?]

I did not develop this from an intelligence spilled by Shemeka. She is not that kind of girl. Hell, I don’t even know if she’s a girl or not. Her real name could be Bob.

 4. This is a subscription service and the promise of delivery in a short period of time taps into the Internet impatience of living cool today.

This is a huge phenomenon and the Big Red Car is amongst the laziest big red cars on the planet. He almost thinks that if you can’t guy it on Amazon, why do you want it in the first place?

I know what you’re thinking — doesn’t Amazon sell razor blades, Big Red Car?

So, there you have it. The razor wars are upon us and you’re still on your first cup of coffee.

But, hey, what the Hell do I really know anyway? I’m just a Big Red Car. Date night! Take a minute and do something incredible for someone today. Not a big thing. Get a Big Red Car an oil change? cropped-LTFD-illust_300.png

 

 

 

 

 

 

  • Andrew Cashion

    You skipped a step in the list.

    You have to pick out razor blades
    You have to hunt down grocery store clerk to unlock blades…………….

    ( at this point both parties are thinking more or less the same thing of holy Jesus I just had to ask someone to unlock a pack of razor blades on a shelf in a grocery store)

    You have to lift your arm up in the air to then grab the razors from the clerk
    You have to say thanks you to the clerk
    You then…..

    Was in Costco the other month and saw a Gillette pack of blades of around 20ish if I remember correctly. And saw they were the triple bladed and then divided the total quantity by the price and Presto! Same as dollar shave club.

    I still use dollar shave club.

    Wife uses them.

    Too easy.

    I am considering buying the Gillette pack though, probably higher quality.

    Random: just saw that a cargo ship rammed a US Destoryer?

  • sigmaalgebra

    the big boy can learn how to do it

    In some cases, likely not.

    First since big boy flatly couldn’t figure out how to do it, they would have to figure out who to hire. Likely (A) they don’t know how to do that and (B) are too embarrassed to ask enough to learn how since such asking admits a lack of knowledge.

    E.g., big boy might turn the recruiting over to their HR girls, some of whom are really cute, sweet, nice, etc. But all they would know to do would be to take wild stabs at some buzzwords, most of which would be wrong, The they would turn the matter over to some industry recruiters who would do even worse. Even if by chance they got a good resume, they wouldn’t be able to recognize it was good. Even if they got a good candidate on a phone screen, due to various issues of style they would conclude “lack of fit”.

    Second assuming that somehow they hired a good person, they would have to manage him. Very definitely they wouldn’t know how to do that. In particular they wouldn’t know if the guy was doing well or not. They’d start to get frustrated and, then, angry.

    Third, due to the importance of the work e.g., roughly save much of the company, they would have to have that person around the offices, really the C-level suite, and they very much would NOT want to do that. If they hire the right person, then he will be so different in attitude, talents, interests, education, style, experience, values, work approach, etc. from everyone on the C-suite that the whole C-suite would soon come to hate him, treat him like dirt, slash his tires, cut his budget, keep him from hiring people who really could help him, distract him with a long list of side projects, put a manager over him who would direct, and thus kill, the work, etc.

    Fourth, as soon as this person starts to look successful, everyone in the C-suite and nearly everyone on the BoD will be afraid of him and hope he gets run over by a truck so that they can all get back to business the old fashioned way they liked so much.

    Fifth, even if the guy is successful through the fourth, the C-suite will so hate the new direction that there is zip, zilch, zero, nichts, nil, nada chance the work will be permitted to be successful in the market.

    • JLM

      .
      I want you to limit your focus to the situation wherein a couple of startups are going to differentiate themselves by the means of deliver — via subscription — while most other elements of the business stay the same.

      In this instance, the legacy company is not really getting into the business as an entrepreneur. They are just doing a bit of Monkey See – Monkey Do in which they are copying the disribution mojo of he startups.

      Whatever you can see, you can copy.

      The thing about Harrys buying their own razor factory is a nice twist and the “stacking the stack” is a flavor of the month type thing, but it is really a vanity. Gillette has been making their own blades longer than the Harrys guys have been alive.

      Gillette is also not abandoning their traditional business. For them, this is a broadening of their distribution model, not a wholesale abandonment.

      Hope you are looking a great weekend in the eyes.

      BRC
      ww.themusingsofthebigredcar.com

      • SFG

        I find this interesting in that the legacy gorilla is motivated here to jump in. Probably because, gosh darn it, its very freaking profitable to sell razor blades!

        Still no money see – monkey do from the auto giants in response to TSLA’s cars and distribution models. But wait, that makes sense as selling fancy electric cars is a non-profitable business.

        There sure are more and more of the hydrogen Toyota models running around here in the last few months. And I live 15 minutes from the TSLA factory. Hydrogen is the newer cool, just maybe.

        • JLM

          .
          Keep your eye on Fisker Cars and their new high capacity graphene capacitors. This is a car which can be charged in NINE MINUTES. Range of 400 miles.

          https://cleantechnica.com/2017/06/13/stunning-fisker-emotion-unveiled-9-minute-charge-time/

          Hello, America!

          NINE MINUTES v 10 hours for a Tesla?

          This means you can stop for a McDonald’s or a Cracker Barrel and power up while eating. Huge game changer.

          BRC
          http://www.themusingsofthebigredcar.com

          • SFG

            That’s a very interesting article, thank you. I gleamed from the comments section that the EV supercharger stations can be a drama-fest. Give me gasoline any day. I wonder how long it will take Fisker to full re-group and start to produce money losing cars once again!

      • sigmaalgebra

        Yes. Harry’s and Dollar Shave Club attacked Gillette on, call it, different, maybe innovative, marketing and distribution.

        Fine. Usually take an advantage wherever can, including marketing, distribution, sympathy for the little guy instead of the old, big monster, etc.

        But Harry’s and Dollar are discovering that their innovation was easy to duplicate or equal, really, just copy, and, thus, didn’t constitute much of a Buffett moat.

        On why buy a blade factory, got to make the blade somewhere. Then, hmm, if don’t own the factory, maybe there would be some sneaky ways BIg Boy could arrange that Little Boy was short on supply, more generally had unreliable supply. I don’t know how many would like to have a contract to make good blades so can’t guess more.

        Lots of people have made good money without a good Buffett moat, but generally such a moat is an advantage.

  • SFG

    This is what my male brain does to solve the problem of razor blades. While at Costco, run across a plastic container ((you know the kind where it requires a box cutter (with a fresh blade mind you) to open)) containing 26 (3) blade Gillette disposable razors. You know the fancy ones with “lubistrip”.

    Buy it for $23 bucks.

    And don’t think about razors ever again for about 2 years.

    Buying razors on demand is about as exciting as buying bottles of Tide on demand.

    • JLM

      .
      Haha, I admit to having bought 100 such razors some time ago — must have been years ago as I still have a lot of them. Got mine at Sams Club. They were very cheap.

      I get a lot of razors for presents and I have a deep bench of 5-blade razors which do shave closer.

      BRC
      http://www.themusingsofthebigredcar.com

  • JLM

    .
    A lesson for entrepreneurs who insist on tickling the dragon’s tail of a much bigger competitor. How will it work out?

    http://themusingsofthebigredcar.com/attracting-lightning/

    BRC
    http://www.themusingsofthebigredcar.com

    #dollarshaveclub #harrys #gilletteondemand #entrepreneur #ceo #founder #startup #entrepreneurship