In case you have not heard, Harry’s has been sold to Edgewell Personal Care Company in a $1,370,000,000 stock-and-cash deal.
The founders of Harry’s — Andy Katz-Matfield and Jeff Raider — will head up Edgewell’s US operations as co-presidents.
Edgewell is also the owner of Schick and Wilkinson shaving products and thus this is a strategic acquisition.
But, what did they really buy, Big Red Car?
Edgewell is in the shaving products business, but Harry’s is in the subscription business. [OK, I blew the punchline, rats! Read on, dear reader.]
The genius of Harry’s is they took a pedestrian and mundane product, put a bit of design mojo on it, whipped up a cool website, created a consumer brand, but the real genius was their direct-to-consumer subscription model.
They really didn’t revolutionize the product, but they did revolutionize the distribution model by creating a subscription sales channel.
Therein lies a lesson for all of us
You — an entrepreneur — can disrupt the methodology with which even a pedestrian and mundane product is distributed and create substantial value.
Are you understating the triumph of Harry’s, Big Red Car?
Guilty as charged. Let me be fair and tell a bit more of the story. It is a good story.
1. Two guys — back in the Dark Ages of 2013 — hate buying razors at a drugstore whereat they have to get a clerk to unlock the case and sell them “over priced” razors and blades.
This is the legendary “pain point” they sought to eliminate.
2. They modify their product, making it a better mousetrap, but it is still a number of blades swimming through lather to hack your whiskers off.
It does look better.
3. They buy a factory and make their own blades. Harry’s operates nine factories including a German blade factory.
4. They price their product competitively, but this attracts attention from the likes of Gillette who copies the copiers.
Teaching point: the incumbents are not going to take a beating while lying down. They will strike back, like the The Empire.
5. Harry’s is not the only fish in the sea. There is also the Dollar Shave Club deal wherein Unilver dropped $1,000,000,000 to buy Dollar Shave Club.
The Harry’s team would yell “foul” as they fancy themselves as being totally integrated, offering a broader product line with bodywash and other grooming essentials, more scalable, and a more tech savvy company.
6. Harry’s also went after women with a new fledgling brand “Flamingo.”
7. Harry’s is also quick to note that while it and Dollar Shave Club and Gillette compete online, Harry’s has deals with Walmart and Target, thereby backing into a traditional bricks-and-mortar distribution model after the fact.
But for your Big Red Car, it is the subscription model that is the stroke of genius. Sure, Dollar Shave Club and Gillette have a similar subscription model, but the Harry’s model seems the most refined, best operated (execution advantage, y’all), and crisp.
Bottom line it, Big Red Car
OK, here it is — look for ways to change the shape of your revenue. Subscription sales is one example.
Harry’s started with subscription sales and then backed into a traditional, one-off, sales model (Walmart, Target, Amazon) after it had deeply rooted its subscription model.
Did it work? They achieved unicorn value, so you tell me.