Unilever Buys Dollar Shave Club
20 July 2016 - 3:10PM
Dow Jones News
Four years ago, Michael Dubin launched his company with a
hilarious YouTube video poking fun at the pain and expense of
shaving. The video went viral and created the Dollar Shave Club.
Now Mr. Dubin is selling his startup for a cool $1 billion.
Unilever PLC, the European consumer products giant behind Dove
soaps and Axe body sprays, said late Tuesday it was acquiring the
Venice, Calif., startup. Terms weren't disclosed, but people
familiar with the matter said Unilever is paying $1 billion in
cash.
Dollar Shave Club, which isn't profitable, said it has signed up
3.2 million members for its mail-order service that ships out
disposable razors and other grooming products for a flat monthly
fee.
It has chipped away at market leader Gillette, which has
responded with its own Gillette Shave Club and last year filed a
patent-infringement lawsuit.
Mr. Dubin's company has been growing quickly by adding customers
as well as new product categories, such as hair gels and most
recently body washes. The startup had revenue of $152 million last
year and is on track to exceed $200 million in 2016, according to
Unilever.
In addition to giving Unilever an entry into the shaving market
dominated by U.S. rival Procter & Gamble Co.'s Gillette, Dollar
Shave Club's direct-to-consumer business model gives Unilever
"unique consumer and data insights," said Kees Kruythoff, president
of Unilever North America.
Privately, P&G executives acknowledge the company was caught
off guard by success of Dollar Shave Club, which started in 2012.
"It was probably on the radar but we weren't necessarily having the
right conversation around what might disrupt us," said a person
familiar with the company's thinking.
P&G's share of the men's razor and blade businesses in North
America fell to 59% last year from 71% in 2010, according to
Euromonitor. Dollar Shave Club had 5% of the market last year.
Dollar Shave Club offers to send razor cartridges directly to
customers for as little as $1 a month, a model that appealed to the
changing shopping habits of consumers fed up with the rising cost
of a clean shave.
"The razors were just very cheap, that was the draw," said Kurt
Jetta, founder of TABS Group, a retailer and consumer analytics
firm.
Mr. Dubin, 37 years old, will remain CEO of Dollar Shave Club.
He said Unilever promised Dollar Shave Club autonomy within the
company and resources to help fuel more growth. The company will
operate as a subsidiary of Unilever. He said Mr. Kruythoff proposed
the acquisition after the two executives had spent time discussing
a potential Unilever investment in Dollar Shave Club.
"If we can deploy those resources in service of our mission we
are that much more," he said in an interview. "It just felt right
to me and I really trust the people I met at the Unilever."
Mr. Dubin said he will report to a board that includes top-level
Unilever executives.
The sale comes about a year after the Dollar Shave Club was
valued at $615 million in a $75 million funding round led by
Technology Crossover Ventures, according to people familiar with
the matter. The company has raised at least $150 million in venture
capital.
Rolfe Winkler contributed to this article.
Write to Sharon Terlep at sharon.terlep@wsj.com
(END) Dow Jones Newswires
July 20, 2016 00:55 ET (04:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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