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Dollar Shave Club Is Valued at $615M
- deleted 11y ago[deleted]
- thucydides 11y ago"Dollar Shave Club is burning through 'low single digit millions' of dollars each month, according to a person familiar with the figures."
- cft 11y agoWe are in what will be called "the private equity bubble".
- babl-yc 11y ago"Dubin claims Dollar Shave Club accounts for 7 percent of all razor cartridge sales in the U.S." I find this hard to believe given that I don't know anyone personally who uses it. But if that's really the case, it's not as absurd given that Gillette was bought for $52 billion in 2005. http://recode.net/2015/06/21/dollar-shave-club-raises-75-million-investment-to-own-mens-lives-inside-the-bathroom/ http://recode.net/2015/06/21/dollar-shave-club-raises-75-mil... http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aA.latPQBrlA http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aA.la...
- Steko 11y agoI'm curious, for how many of your (say) 10 closest friends do you know where they buy their razors? For me I'm going with one; I know one friend who swears by his electric and although I'm sure he also has some sort of low tech option it almost certainly isn't DSC.
- babl-yc 11y agoYou're right, it'd be strange if I did. However, given that they have a referral program I would have expected a bit more buzz for 7% market share. http://www.dollarshaveclub.com/faqs#/faq11 http://www.dollarshaveclub.com/faqs#/faq11
- pionar 11y agoI don't think so. The inverse, 93% of razor cartridges, aren't from them. So you're far more likely to not even have one friend who uses them.
- patmcguire 11y agoThey must be resonating with some group that doesn't really overlap with the HN crowd... I've not seen any advertising other than the original YouTube video.
- dangrossman 11y agoThey advertise on TV, nationally. I've seen the commercials. They also advertise heavily on Facebook.
- jdavis703 11y agoAt first I thought the same thing. But if you'll bear with me for some back of the envelope math, with 2 million members paying an average of $5/month, that means they're bringing in $120,000,000 a year. That's a multiple less than 6x of revenue, hardly that outrageous.
- bbcbasic 11y agoWhat is the gross profit margin on the back of your envelope?
- roel_v 11y agoKey to subscription based businesses are retention and cost of customer acquisition. Which, I predict for this business with no knowledge about the industry at all, are low and high, respectively.
- dudurocha 11y agoThat is a high multiple for a company that sell physical goods.
- kevando 11y agoWe're in a bubble? http://imgur.com/a/GaGtl http://imgur.com/a/GaGtl
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- DiabloD3 11y agoHonestly, I like their branding. It is unique enough to stand apart, but not so far out there that its unapproachable or unnecessarily too hipster, and manly enough without scaring off the metro-sexual or gay crowd (and please, don't take this as offense, it's just that they gravitate to certain brands that are more "gentlemenly" than flat out "manly"). Their website portrays their brand extremely well, their famous video (https://www.youtube.com/watch?v=ZUG9qYTJMsI https://www.youtube.com/watch?v=ZUG9qYTJMsI) is absolutely amazing for how low budget it is, and, well, how fail it is and they just keep rolling with it. Its genius. I just wish they'd veer into the double edged safety razor market, which in my opinion, needs a bit of disruption too.
- Gracana 11y agoWhat's unique about their branding? I've seen that logo a million times before[1].. http://yourlogoisnothardcore.tumblr.com/ http://yourlogoisnothardcore.tumblr.com/ [1] not that I really have any problem with it. It's a popular template to copy and many have used it successfully. [edit] Bleh, formatting fixed. I hate the various inconsistencies of markdown implementations.
- shk88 11y agoBranding != logo.
- Gracana 11y agoThe logo seemed like a good place to start. Look up "hipster ribbons" and "hipster arrows" and "hipster fonts" and you can find the rest of the pieces that make up their style. They've got a complete implementation of a popular formula; it's nicely done but it's far from unique.
- smacktoward 11y agoA better place to look is their video ads, which have gotten quite a bit of viral traction: https://www.youtube.com/user/DollarShaveClub https://www.youtube.com/user/DollarShaveClub The DSC business model is really simple: take a no-name commodity product (Dorco razor blades: see http://lifehacker.com/5903771/forget-dollar-shave-clubbuy-the-same-high-quality-razors-for-a-third-of-the-price http://lifehacker.com/5903771/forget-dollar-shave-clubbuy-th...), wrap it in very-social-sharing-friendly marketing, charge three times as much. Boom, you make enough money to cover the costs of the marketing and then some.
- JanSolo 11y agoThe valuation seems high to me. I've been told that valuations should be around 3.5x revenue; at $615m, that should mean that DSC has sold $175m of razors last year. I would be astounded if that were the case.
- runako 11y agoNote that there is not any rough revenue multiple that would apply in a broadly formulaic way for early-stage companies. They are all unique to some extent along axes that matter to investors (addressable market, growth rate, competition, etc.). However, a couple of numbers from TFA might support the notion that DSC did ~$175m last year: "“We have 2 million members that get a shipment every month or every other month" ... "On average, the company’s customers pay a subscription fee of about $7 per month" If those are both accurate, that's a $168mm run rate. (Right, that's not TTM, but if the company is growing rapidly, investors will want to have more of a forward bias and so TTM becomes less relevant.)
- toephu2 11y agowhere did you hear that 3.5x number? I thought 10x revenue was common for internet companies. Although this isn't an internet company, but they did get their start on the internet (I think?)
- tinco 11y agoThe short cut is to compacte with other players in the same industry. Somewhere else in the thread it's said that Gilette is valued 2,5x. So 3,5x is not too far off. The real way investment managers calculate potential worth is much more complex, calculating expenditures per dollar earned, looking at the market saturation, risks from competitors etc. Because these calculations are usually the same for businesses in the same industry the shortcut is usually close. In this case their multiplier might be higher than that of Gilette because they spend less on marketing and they're smaller but with a steeper growth curve.
- prostoalex 11y agoThey do offer shaving cream, shaving butter, aftershave, hair products and moist butt wipes, allegedly that's where growth will be coming from - all the various products they can pack into a box and ship to customer's door on recurring basis.
- baby 11y agoI really like what they're doing, I keep seeing their ads in facebook and I wonder if that's because I look at razor stuff on google, reddit or amazon... But yeah they're marketing well, they're doing something nice! Having say that, I wouldn't buy any, and I advise clever people here of not doing so as well. Safety razors are super cheap and are amazing.
- mattdotc 11y agoI don't really look up razors or related products online and I also see their ads all over Facebook. I'm pretty certain they're just aggressively targeting the 18-35 demographic.
- stevenmays 11y agoPrivate equity bubbles occur when there's not much money to be made in publicly traded companies. This is because there's a capital surplus because of quantitative easing, and a lower cost to access capital. Everything in economics is cause and effect.
- brownegg 11y agoAll true. Also been true for ~7 years, so maybe it doesn't matter much.
- toomuchtodo 11y agoAt some point, the balloon will get squeezed and all that money is going to rush elsewhere. I don't envy either part of the balloon.
- wmil 11y agoBut will it? The big lesson of 2009 was that ratings agencies aren't trustworthy and investment banks have no problem selling you junk investments. The Dollar Shave Club looks like a prudent investment in comparison. Perhaps it's overvalued, but it's safe from outright fraud.
- seekup 11y agoBring on the armchair private market economists.
- WizzleKake 11y agoI remember when Dollar Shave Club popped up on my radar. I thought to myself, "You know what? They are right. It's ridiculous that I spend so much money on Gillette razor blades. I only get 2-3 good shaves out of them." I ended up buying an $80 Philips electric razor and haven't looked back. Takes way less time, I don't have to use shaving cream, and I don't have to be careful either.
- osipovas 11y agoExactly this but with a Wahl Professional Peanut Clipper for like 50 USD.
- nkozyra 11y agoI did the same until I got a safety razor and found some good blades. Smoothest shave of my life, refills come out to about $.50/week. The first shave wasn't pretty, but after that it was smooth sailing and I'll never look back. Makes things like DSC seem quaint; people think safety razors are either: - archaic - dangerous But the truth is they are a fantastic, cheap way to get a high quality shave and I don't mind being an evangelist about them if it gets people away from fully disposable razors.
- _asummers 11y agoI bought a double edged about 2 years ago and haven't looked back. I shave my head with them every 1-3 days and find the closeness unparalleled. I am generally less diligent with shaving my face, but it's terrific for that as well. There's a really nice thing about the whole ceremony of it all; making the lather, making the strokes from the different angles, fixing any mistakes.
- geoka9 11y agoI did the same, until I saw a tip that somebody posted here :) Since then I've been using the same Gillette cartridge (it's been over a year) and it's still as sharp as it was when I bought it. The trick is to rub it against your bicep or forearm (effectively stropping it) before use. I also do that after use, which helps to dry it up (keeping it even sharper). I've already saved a small fortune on cartridge refills. Best shaving tip I ever got!
- wyc 11y agoTheir premium model has six blades[0]. Made me chuckle remembering this article[1]. [0] https://www.dollarshaveclub.com/blades https://www.dollarshaveclub.com/blades [1] http://www.theonion.com/blogpost/fuck-everything-were-doing-five-blades-11056 http://www.theonion.com/blogpost/fuck-everything-were-doing-...
- vacri 11y agoGag from the early '90s, being the "Gillette 3000, with 16 blades..." https://www.youtube.com/watch?v=YleuLyCUx28 https://www.youtube.com/watch?v=YleuLyCUx28 Worth watching for the description of what the blades do.
- femto 11y agoBoth are still lagging the "Trac LXXVI Razor", published in 1979 by Mad Magazine.
- kayge 11y agoIt will be interesting to see if Harry's will "catch up" with a similar valuation in the near future. Estimates at the end of 2014 put them in the $200-300 million range, although they seemed to be neck-and-neck otherwise.
- nobleach 11y agoI liked their branding. It had that hip internet company feel. The little leaflets and stuff that they sent with each razor pack were just fun. After time, their razors began to hurt and feel like they were pulling hair more than I remember at the beginning. One Saturday I did an A/B test with a store-bought Gillette 5 blade against the DSC ultimate 6 blade. I lathered up and shaved with a brand new DSC blade and it was just a little painful. Brand new Gillette, smooth as silk. I decided that even though the Dollar Shave Club was cheaper (Gillette from a drugstore is 15-20 bucks for refills) I couldn't have a painful shave experience. I had my phone in hand to take pics of the experience and thought... hey, I'll just cancel right now. I could not find a way to do it. I could only pause my delivery. Finally a couple of months later, I hunted around their website a bit and didn't immediately see anything related to "quitting the club". After a google search, I finally met with success.... only to start receiving plenty of email from them. I unsubscribed and so far I haven't heard from them again. I doubt I'll try Gillette's shave club as I've heard they just send out their "not as sharp" razors for the reduced price. Maybe I should just grow a beard....
- TIM2014 11y agoSurprised you had that experience. I've been using them for awhile now, and I think they are great. I usually get bad razor burn while shaving, but using the Shave Butter and Executive razor I get a awesome shave.
- kingoflosaltos 11y agoI was just saying the same thing to my girlfriend this morning. I love the concept of DSC. Love the leaflets, love the humor, wanted to tell all of my buddies about it...I even liked the razor quality. But over the last month or two I have cut myself multiple times a week and I'm not getting that nice smooth shave I used to get with my Gillette Mach 3's. Now I think I'm going back to the $30 5-packs of Gillette blades at the pharmacy. Oh well--It was fun while it lasted.
- erispoe 11y agoHave you tried Harry's? Harry's concept is similar, an online-only, delivery model at low cost, but their branding really emphasize the quality of the blade. They build their story around buying a blade factory in Germany... Now I wonder with Harry's being the second player, if they emphasized blade quality to hit DSC where it hurts.
- rayiner 11y agoI don't see DSC as overvalued at all. They're selling real products that everyone needs (not wants), in an arrangement that makes total sense (razor blades are the sort of consumable that needs restocking at predictable intervals). They face high competition in the sense that I wouldn't bet on any retailer that isn't Amazon, but I'm sure that's priced into the valuation.
- cactusface 11y ago> They're selling real products that everyone needs (not wants) Sikhs?
- knodi123 11y agoalright wise guy
- mrisse 11y agoAnother way to save money on razor blades http://www.instructables.com/id/How-to-extend-the-life-of-your-Razor-Blade-keeping/ http://www.instructables.com/id/How-to-extend-the-life-of-yo...
- saboot 11y ago$20 Merkur Double Edge Safety Razor $20 Large sample pack of razors from amazon $10 bristle brush and lather bar soap That was three years ago, haven't bought anything since. I'm confused why if people want an affordable solution this route isn't more popular? Is it simply because most stores have stopped selling plain razors for much more expensive handled disposables?
- ThreeAs 11y agoI am in the exact same boat. Though I have since spent a few extra bucks on a stand for the razor and brush and a mug for my soap. It makes the shaving ritual a bit better.
- arh68 11y agoThose brushes are amazing even using 'regular' 2/3/4/6 blade razors. Same goes for shave soap. I've got a double-edged Merkur and a straight Classic Samurai razor: both are great. Blade-wise, I've only tried Derby Extras & Sharks, but both are great. There is a market to find and distribute varieties of double/single-edge razor blades, not that anyone's tapping it. Wouldn't it be nice to get a couple blades sent in advance to every hotel you fly to? Or just to get a few different blades for $1 or $2/mo? (what are Feathers like?) You don't always need or want the 100-pack (though it usually is just $6 or $7).
- jewel 11y agoI've never understood the appeal of the dollar shave club. Razors are very cheap when bought in bulk, and they take up very little space to store, even an entire year's supply. Wouldn't it make more sense and save money to ship a year's supply at a time? For example, here are 64 razors for $16: http://amazon.com/dp/B00XKVH4O6 http://amazon.com/dp/B00XKVH4O6. The comparable dollar shave two-blade option would cost you $48, since it's $1/mo for blades and $2/mo for shipping. On the high end six-blade model, here's 24-cartridges for $30.49: http://www.dorcousa.com/pace-6-cartridges-6-pack-sxa1040/ http://www.dorcousa.com/pace-6-cartridges-6-pack-sxa1040/ The same thing from dollar shave would cost $54.
- aerovistae 11y agoIf people thought this way a lot of things would go out of business.
- fdanconia 11y agoI'm almost surprised daily when I see what businesses are doing well, DSC for example. Just about a few hours research a 3 years ago (admittedly too long) and I created a wet-shaving kit that has saved me more than DSC can. I guess if I really want to create a great business, help people be lazy and not think, only do.
- wodenokoto 11y agoDo you know if the quality is the same? The dollar shave club not only sells cheap shaving gear (compared to gillette at the supermarket) but also sells reassurance that the gear isn't crap, which I think many consumers fear about no-name alternatives.
- mynameishere 11y agoRazors are practically, not quite, but practically caveman technology. I'd imagine that any products making it it to the modern market are roughly the same grade. One thing I'm sure of: A good sign of a superior product is that it doesn't need monthly replacement.
- adrr 11y agoFlattered to be on featured on hackernews. We're hiring Devops, Platform Engineers, Mobile developers and QA automation engineers. For more info email: engineering-careers@dollarshaveclub.com
- nsxwolf 11y agoI shave with a razor about once a week and I think I've been using the same blade for 2 or 3 years now.
- toephu2 11y agoso? do you think you represent the average Western adult male?
- nsxwolf 11y agoI could. If they'd use a Wahl trimmer on their face a few times a week and be fine with stubble. What's with society's obsession with clean shaven men? Still? In 2015? People can mutilate their ears with gauges and tattoo their faces and it would now be considered discriminatory to allow that to hamper a man's career goals. But some stubble? Whoah hold up. It's good for the environment to shave less, right? Isn't that all you have to say to justify something now?
- prawn 11y agoI use a Wahl also. Haven't shaved clean in 10 years - just don't like the feeling so I avoid it. I wonder as to the reasons people shave clean? - tradition, expectations - partner's preference - prefer it personally (feel or way it looks)
- wsc981 11y agoAs a man who's balding a bit on the center of my head, I prefer to go all the way. Therefore I need to shave my head at least twice a week (I do have a beard though). I agree disposable razors seems to be wasteful to the environment. I will look into safety razors in the near future, which might also turn out to be cheaper in the long run.
- bkeroack 11y agoWe're hiring software engineers at DSC: SDEI (software development engineer in infrastructure), SDET, iOS/Android engineers and platform engineers. Email engineering-careers@dollarshaveclub.com
- pkaye 11y agoI think they get their blades from Dorco. I can buy that much cheaper in bulk on Amazon.
- pkaye 11y agoI think they get their blades from Dorco. I can buy that much cheaper in bulk on Amazon.
- deleted 11y ago[deleted]
- intrasight 11y agoIf you clean and dry your razors - whatever kind - you'll get many more good shaves out of them. I clean mine and then blast with a can of pressurized air.
- zorbadgreek 11y agoIf you really like their blades, you can buy them direct or on Amazon for less. http://zorbadgreek.blogspot.com/2012/09/how-dollar-shave-club-is-ripping-you-off.html http://zorbadgreek.blogspot.com/2012/09/how-dollar-shave-clu...
- yarrel 11y agoSubscribed for a while. There's not a single word of the name that's accurate.
- ild 11y agoI have a nice 1/2 inch beard, and my razor is scissors. $8/10-15 years.
- yitchelle 11y agoBest advice so far on this thread. Luckily my facial hair is very slow growing. I would only shave about once ever 3 weeks. My wife suggested that I plug my hair out, like she does with the hair on her legs. The pain is a bit too much for me.
- venomsnake 11y agoNot working for goatees though.
- MrBuddyCasino 11y agoIf you have a goatee or a soul patch, your shaving method is not your biggest problem.
- Kevin_S 11y agoFirst time laughing at a HN comment this week. Wish one of my coworkers would see this...
- siscia 11y agoIt is around one full year that I am growing a beard, but when I use to shave I used a straight razor. The one like the old far-west movie, but more secure and safe. It is a niece white piece of plastic, (2€) and I bought a little packet of 10 blades (1.2€) if you shave every morning I guess a blade will last at least a week. But you need to learn how to shave with a straight razor, the first time is just little piece of your face floating in blood, the more you practise the less you will cut yourself, I used to don't have the little scratch on my face... It is definitely a different and more enjoyable experience...
- avodonosov 11y agoEven if they were selling perfect blades, is this company really worth $615M?
- theklub 11y agoOne of the few subsciption services that made it big, congrats to them.
- ssharp 11y agoI remember reading about the development of Gillette's Mach 3 blade in the book "Good to Great". From what I remember, the spent considerable money in developing the tooling required to manufacture those blades. I think that razor has been around for quite some time now and maybe some of that tooling is easier duplicated now, but it seems like a market that would be very hard to enter because manufacturing a razor that could compete on quality and convenience would be very expensive to do. From reading some of the comments here, it sounds like DSC's razors are not nearly as good as Gillette's and they are able to sell razors mostly because of their marketing, which confirms what I had thought about new players coming in. I was less skeptical of Harry's because they specifically including messages in their marketing about how they took over an existing manufacture.
- apapli 11y agoNeat concept, but they didn't get my money. I assumed they would be cheap (per their name), but quickly realised that my local Aldi is cheaper. Furthermore, I shave daily and use disposable razors but simply don't need them at the frequency DSC ship them to you. So DSCs ad got me thinking, and all I ended up doing was swapping from Gilette to Aldi. Furthermore, it isn't more convenient for me - I still need to go and buy other things from the store, so as long as I remember once every 2-3 months to pick up blades DSC certainly isn't making my life simpler or easier. This is just another pets.com to me, neat idea but really just not that compelling.
- TheSpiceIsLife 11y agoI just want to be that person who brings up the oppression inherent in the clean-shaven-male culture. The skin on my face hates shaving. I disagree with the resources spent on shaving, and the pollution. I've shaved my face fully once in the past 10 years, but I do shave around the cheeks and neck, so I have to deal with the shaving thing a bit anyway. Also, I'm from Adelaide, home of 'The Beards', here they are with their track 'If Your Dad Doesn't Have a Beard, You've Got Two Mums' https://www.youtube.com/watch?v=RmFnarFSj_U https://www.youtube.com/watch?v=RmFnarFSj_U
- douche 11y agoI found a Schick injector razor probably five years ago, and bought a supply of blades for it off of Amazon for about $15. I really only use it for cleaning up my neckbeard, but I'm not even halfway through the blades I bought. It does take a little care until you know what you are doing, since you can really carve yourself up with the single blade if you go too hard. But it's certainly sharper and does a better job than any of the multi-blade disposable razors I used to use.
- stevehawk 11y agoWhat amazes me is that their business strategy is so easy to replicate- 1 - buy another manufacturer's blades in bulk 2 - sell yet they pull in that kind of valuation.
- omarchowdhury 11y agoIf only it were that easy.
- ben010783 11y agoI think the subscription model is a big part of the valuation. Investors love seeing steady (and predictable) income.
- toxican 11y agoI don't have to shave very often (once or twice a week), so the price and convenience of not having to remember to buy something I already don't think about very much is great. They deliver the 6 pack of blades once every other month or so and I'll often pause it if I get a backlog of blades. I can't really speak to the quality of said blades or the shave, since I'm pretty sure 14 year old boys shave more than I do. But I've never experienced a painful shave as others have.
- belugashave 11y agoAt Beluga Shave Co. we make single edge shaving like a Professional Barber easy for the first time with our Beluga Razor, and it looks like for many of you we have the perfect solution. Why pay a few bucks when you can pay a few cents right? Happy to answer any questions regarding shaving, especially for those who might be having some issues. Quick highlights on our Beluga Razor: 1. We don't even sell blades, but they cost as little as 10 cents each and available in over 75+ different varieties. 2. A single edge cuts easier and closer than multiple blades, while eliminating irritation because a single edge generates far less friction than multiple blades. 3. No clogging issues because our Beluga Razor is designed to eliminate this issue.
- paulpauper 11y agoEveryone says it's a bubble and yet seven years later, since 2008, I can only think of three major VC implosions off the top of my head: fab.com, zynga, and groupon. Fab was a train-wreck that anyone with a pulse could have seen coming. Zynga... way too dependent on Facebook and a fad. Groupon is the better of the three, only seeing its valuation fall from $30 billion to just $4 billion - but still well over $1 billion. These valuations, as lofty as they seem, ain't goin' lower.
- totalrobe 11y agoIf for some reason you love DSC's razors, you can buy direct from the manufacturer, Dorco USA, for even cheaper. dorcousa.com
- ksherlock 11y agoWho uses this? neo hipsters use safety razors. real hipsters use straight razors. Neckbeards ... I think that speaks for itself.
- xigency 11y agoHow about normal people.
- IgorPartola 11y agoPersonally I have been following the forearm method [1] of keeping my disposable five-blade cartridges sharp. Maybe it won't work for everyone, but it certainly seemed to make a difference to me. Then again, I also grew out a beard so now I only shave a part of my face, and generally do so twice a week, not every day. Having said that, my most recent cartridge lasted me just about a year. [1] http://lifehacker.com/5502841/extend-the-life-of-your-razor-blades-with-your-forearm http://lifehacker.com/5502841/extend-the-life-of-your-razor-...
- arafa 11y agoTried DSC (even with the quad blades) for several months, had terrible shaves and switched to a Fusion and never looked back. I wanted to like them since they're cheap and the marketing was cool, but the product just didn't live up to expectations.
- JimmaDaRustla 11y agoI had an epiphany when I switched from Mach 3 razors to a safety razor - some markets are dominated by marketing, meanwhile there is equivalent, sometimes better, solutions that exist but don't have the means to market their product due to having such low operating margins. Dollar Shave Club comes around as is able to mimic that concept, but hits a middle ground between a low-margin and mainstream marketed solutions. The irony in all of this is that the Dollar Shave Club is still too expensive when compared to my safety razor that costs me about 10 cents per shave. So it is actually more like the mainstream solutions they're trying to undermine than not.
- fapjacks 11y agoYou can buy a box of their top-of-the-line razors from South Korea for like ten dollars. This is 100% marketing. I don't mean there's anything wrong with that, just that this valuation is for something that is pure marketing. They don't really have an edge in their products...... badum-psh!
- brobdingnagian 11y agoExpensive Gillette razors can be resharpened with just a leather belt. Look it up!