The $4,500 Investment that Turns Dollar Shave Club into a $1 Billion Company
In case you didn’t know, Dollar Shave Club was a startup that sells monthly razor subscriptions for $1. In July 2016, the company was acquired by Unilever for $1 billion US. It all can be traced back into a $4500 humor-filled explainer video.
When Michael Dubin, the co-founder of DSC was asked about how he started the company he said:
“I ran it from my apartment. It was totally bootstrapped — proving out the concept before going out to get some investment.”
The idea that led him to start his own company was very simple: the frustrating experience of buying new razors every so often (not to mention costly). This includes going to the store, parking your car, and finding the right razor, and then doing it again a week or two later.
He didn’t want to rush in without educated guess. So Dubin spent his company’s early (not to mention few) dollars from the beta phase into creating an explainer video, which you’ve probably seen more than once.
After Dubin launched the video in March 2012, the first few days were heavy for Dollar Shave Club’s IT team.
“The site crashed because of the traffic, and the video had gone viral, and we ran out of inventory in the first six hours. And I mean, you know, I blocked a lot of that out because it was a very trying, difficult time to get through.”
The company that started out in Dubin’s apartment with a bootstrapped budget made $4 million revenue in the first year.
What’s more shocking is how they got more than 400% more revenue in 2013, around $19 million. This revenue grew constantly and rapidly, and in 2014 Dollar Shave Club closed their year with $65 million. Dollar Shave Club is currently on the $100 million+ annual revenue run.
It’s quite unbelievable, because when Dubin was asked how he made the video he said:
“Not professionally at all. I spent about $4,500 on it. I wrote it.”
For basically next to nothing (from a business’ point of view), Dollar Shave Club skyrocketed to “billion-dollar company” status in 4 years.
Some of the 23 million viewers signed up for Dollar Shave Club’s tempting $1/month subscription for blades.
They claim that their blades are not good, but they are “f****n great”. Which, judging to the company’s growth, proves to be true. In addition to quality, they grow their brand through a responsive customer service and ongoing focus on social media marketing.
This is how Dollar Shave Club created an army of brand ambassadors who endorse them for free.
That’s how they can afford to charge a mere $1/month. Big brands like Gillette, on the other hand, have paid billions for TV spot, brand ambassadors, and front-shelf placements in multiple stores. It’s a simplified statement, but that is what inflates prices on products.
Now, let’s talk more about the Dollar Shave Club video.
What makes the video such a massive hit?
It was funny and true. There are millions of funny videos on the internet, but Dollar Shave Club’s explainer video was one among few that told a relatable story and served a real purpose.
Cost =/= quality
Michael Dubin spent only $4,500 for Dollar Shave Club’s explainer video. He and his team managed to achieve the perfect mix that makes an explainer video explanatory and entertaining at the same time.
This comes back to the concept of their business. Because Dollar Shave Club directly confronts a daily problem their audience has, it’s not as hard as for them to be emotionally relatable as it is for a B2B company, such as a corporate security provider company.
If you (and the company you hire) are creative enough to make a dull topic relatable to its target audience, then you don’t necessarily need to pay more for the explainer video.
An explainer video is a gateway piece of marketing content that will drive more customers to your conversion funnel. However it doesn’t work on its own. Even the amazing ones, like Dollar Shave Club’s video, still need responsive customer service, a high-quality product, and a competitive price to ensure business success.
But when everything is done with precision and in sync, significant success waits for you, just like Dollar Shave Club has achieved.