NewCo Shift Dialogs, in partnership with EY
The Founder of Dollar Shave Club on Why He Sold His NewCo to a BigCo — and What’s Next
One of my favorite people in the startup world is Michael Dubin. He’s earnest, he’s smart, and he’s wickedly funny, as anyone who’s seen his famous Dollar Shave Club commercials can attest. So when Dubin sold Dollar Shave for a cool billion to Unilever, one of the largest consumer packaged goods companies on the planet, I was a bit worried. Would Dollar Shave lose its sense of humor to a soulless corporate overlord? So far, the answer is no, as this short interview with Dubin, held at the NewCo Shift Forum, readily proves. Below is the full interview and a transcript, edited for clarity.
John Battelle: There’s an old canard here in the Valley that big companies are dumb — sitting there waiting to have their lunch eaten. That may be true, but what is also true is that very large companies are filled with very smart people who are trying to solve very big problems. Sometimes, they do things right. We have an example next of a company that started in a very large space, consumer packaged goods, grew very, very rapidly and then was acquired for a very large number. The CEO and founder of that company is with us, and we’re going to talk with him today, Michael Dubin.
Michael Dubin: Hello.
Welcome. First of all, congratulations.
Your company was bought for a round billion dollars by Unilever. That was a very big deal for the category of consumer packaged goods (CPG). Now, you’re an entrepreneur. You built this extraordinary company.
It grew so rapidly. You seem to have the sky as the limit. Why’d you sell out, man?
Sell out is the wrong way of framing it, I think. It has a terrible connotation! The way I discuss the relationship with Unilever is one of a partnership, and it’s that partnership that was attractive to both parties.
When I got into this business, it was to build a great brand, build a great business. That’s what I love to do. Twenty five years from now, I want to be able to say that DSC stands on the shelf next to the great consumer brands of the world, next to the Nike’s and the Starbucks’ of the world.
When you think that’s your goal, or when you know that that’s your goal, and that’s what you want to do, you, every month, six months, year, you look at, “What options do you have? What choices do you have to put the company in the best position to achieve those things?” The Unilever conversation started out around an advisory role because we wanted some hard core CPG experience around our board table. Then it became one around investment, and then it became one about an acquisition. We were never looking to…
What was that timeline? Was that all in a day? [laughter]
Yeah right, over cocktails! No, I would say it was probably over the course of six months that that conversation evolved into what it became. We started out as a conversation around advisory and investment. The more I learned about Unilever, the more I said to myself, “The long term mindset that this company has is the one that we need around the board table at this moment.” Whereas in VC land — and my board, my venture board, was amazing, they gave me a lot of latitude and flexibility to run the company the way I wanted to — but we still had to go out and raise money every year, basically, to fund the business.
Which means that you have to make decisions that are somewhat more short term minded than you do if you are…I’m not saying we have a blank check at Unilever because that’s not true either. But when you don’t have to go out, when all you have to do is pitch your board of directors for an investment each year, you get 25 percent of your year back, and you can think about things in a long term horizon, which Unilever does.
I wanted to think about this business in a five, ten-year time horizon, not necessarily a 12- to 18-month time horizon. That’s one of the many reasons why the partnership makes sense, but selling out is not what we did. What we did is we put the company in its best position to go the distance, the way we want to do it.
The way that Unilever bought this company, and also Ben & Jerry’s a while ago, and Seventh Generation, is sort of unique. You run independently, is that correct?
I report in to a board of directors, just like I did when the company was private. That board is comprised of three Unilever executives, the global CFO, the president of North America, and the global head of Personal Care. It’s a very independent framework.
Of course, there are things that we have to do now that we didn’t have to do before, in terms of reporting in to the mother ship on progress and finances. [But] they’re not in our offices. They’re not telling us what products to launch, what markets to launch into, because they respect our culture. I think they’re notoriously good acquirers of companies, which means preserving culture. Perfecting what’s special.
Which for you is the mission, the values, the approach. I have to ask, just because I think there isn’t anybody who’s an entrepreneur, who hasn’t fantasized about a billion-dollar outcome. Don’t you lose a bit of motivation?
Not at all. I know that probably sounds like BS, and I’d try to probe the depths of why that’s not BS. Look, I never got into this for the money. The money that I made in the deal…I’m a middle class kid from Philadelphia. I didn’t grow up with really expensive tastes. I didn’t go out and buy a Ferrari. I drive a Chevy Volt. I like to travel well, but I don’t have a lot of expensive tastes. This is not my time to go out and figure out where to blow all my cash, and check out of the office, and let other people deal with the problems.
I got into this business because I love building brands, and I love building things. I love bringing creative things to life. Now, I get to do that better, more efficiently than I could before.
A lot of people, when the deal happened, said, “Oh well, this makes perfect sense because consumer packaged goods are getting hollowed out by online distribution.” You’re really the face of that direct channel with the viral YouTube ads. Is the Dollar Shave Club approach to the consumer going to go laterally across Unilever now? Is that part of your role to advise all the other products in how to do that?
So far, they haven’t asked me to advise their other companies on how to build a direct consumer portfolio. You’d have to ask them about what their global strategies are in the direct to consumer space. Of course, we’re experts at it, and we’ve got a lot to give. I’m sure that conversation will happen at some point, if not formally, certainly informally.
In CPG you’re sort of like Marc Benioff [of Salesforce] was to software. He was like “death to software,” and you’re like, who needs the drugstore? Who needs those cases with the razors that are locked in jail? You’re almost the anti-CPG guy in a way.
Listen, we’ve certainly had some fun with our advertising, and the way that we tell our story about how we choose to solve problems that the consumer faces. The problems that you referenced there, specifically one about the locked razor fortress, which is a pain in the ass to open, and you’ve got to find the guy with the key and all that, yeah look, there’s a lot of fun to be had in that category.
Of course, we want to exploit that where we can. I am not one of these “death to retail” drum beaters. I think, at the end of the day, the brands that are going to win in the next generation of commerce are the ones that create…This is nothing new in building brands and commerce, but it’s the one that creates deep connections with their customers. There’s so many ways to do that. To poo poo the power of connecting with somebody in real life would be to be blind to the ways of brand and what makes them special. Retail is not dying. It’s not going away. It’s a huge component of exploration and discovery.
At the same time, the convenience of buying online can’t be ignored, and cutting out the middle man can’t be ignored because it affects price. Those are very real economic factors in the conversation, but it’s the brands that will figure out how to unify the totality of experiences across an ecosystem that will succeed in the next generation.
If anyone have questions for Michael, there are…
What? The other guys didn’t get questions. I’m getting questions?
Yeah, I’m starting now with you.
All right, fine.
I can ask you about Donald Trump.
It seems trivial that we’re talking about consumer packaged goods in these times. But sure, it’s my business.
Someone’s got to do it, and you’re the guy. You started as a one product company.
You expanded into some interesting products that are always fun to ask you what they are. You expanded into other things for guys, to keep them fresh…[laughter] Where are you going to go? What’s next?
I think that the simple way to say it is if it goes down the drain in the bathroom, and if it helps you look good, smell good, feel good, then DSC has a statement it wants to make on it. We envision an entire bathroom for men’s grooming products.
You’ll be competing with [Unilever’s] Axe. You’re going to compete straight with your…
We already are competing with Axe.
Awesome. Are there any questions?
Audience member: I still remember the first launch video from a few years ago. It’s amazing what you guys have done since. Seeing as you’re still operating as a start up inside this large company, what are the things that you are most interested in, in terms of an innovation roadmap? Specifically, as more stuff is moving towards an impulse buy as opposed to a subscription, where do you think the next opportunities for innovation in CPG are?
Great question. God, how do I say this without sounding totally cliché? It ultimately has to do with how can you create a personal experience for a customer? That involves…Personalization is a term that’s used widely and sloppily. I would say, to mean many different things, but ultimately if you can create a product specifically for somebody and/or an experience specifically for someone, then you will have them loyal for a very long time. There are so many ways to get into the personalization. To personalize your products or your experience for people, it starts with learning as much as you can about your customer. We just saw an amazing company (Forward) that you walk up and can scan your whole body. We’re not there yet. I’d like to be able to get there, but we’re not there yet. The more you know about your customer, the more customized your products and experiences can be. It’s a great place to invest.
Maybe you can do a deal for that data with Adrian (Aoun, CEO of Forward). But HIPAA might get in the way.
My mind was racing at the opportunities we could develop together!