Case Scenario: COMPANY: DOLLAR SHAVE CLUB
Business idea: Launch an online subscription service that provides men basic but functional razors at a deep discount from brand-name razors purchased at retail stores. pitch: A common irritant for men is buying razor blades. Not only are they costly, but men often run out of serviceable blades at the most inopportune time, which requires a hasty trip to the store. Because razor blades require constant replacement, and are relatively expensive, they are often depicted by marketers as the perfect consumer product. There is even the old joke, which is more than just tongue and cheek, that the razor blade companies would gladly give away razors just to lock more people into buying replacement blades. Enter the Dollar Shave Club. In March 2012, the Dollar Shave Club debuted in a cheeky video featuring cofounder Mike Dubin walking briskly through a warehouse making wisecracks and encouraging men to quit spending $20 a month on brand-name razors. his alternative- buy razors from him on a monthly subscription plan for as little as $2 per month. The video has now been watched more than 13 million times.
It's even won several awards, including the "Best Out-of-Nowhere Video Campaign" at the 2012 AdAge Viral Video Awards. The Dollar Shave Club has a simple and straightforward premise: manufacture basic but usable razors in Asia and sell them through a monthly subscription service at significant discounts. It has three categories of blades: The humble Twin, The 4X, and The Executive. The humble Twin, which is the base model, includes two stainless steel blades, a lubricating strip that smooths and moisturizes the skin, and a shallow pivot head and a handle. A subscriber gets five cartridges a month for $1 (thus, the name Dollar Shave Club). Subscription plans for the 4X and The Executive cost $6 and $9 a month, respectively, and include additional features, such as a more robust blade. Shipping and handling is free. Every member gets a free compatible handle. Subscribers can cancel their subscription at any time. The company's razor blades are not only less expensive than competitors, but also provide men the opportunity for a cleaner shave by using fresher blades more often. Many men, to save money and another trip to a store, milk their blades for as long as possible. Dollar Shave Club blades are delivered directly to a subscriber's doorstep and a subscription includes enough cartridges a month to always be shaving with a relatively new blade. In 2013, the Dollar Shave Club added two new products: Shave Butter and Wipes for men. The products are sold as add-ons to the company's monthly subscription plans.
1. Based on the material covered in this chapter, what questions would you ask the firm's founders before making your funding decision? What answers would satisfy you?
2. If you had to make your decision on just the information provided in the pitch and on the company's website, would you fund this company? Why or why not?