What can we learn from Dollar Shave Club’s billion dollar acquisition?

Last week Unilever announced it would be paying $1 billion to acquire Dollar Shave Club, the edgy startup that pioneered direct-to-consumer shaving subscriptions for as little as $3 per month.

Dollar Shave Club launched in 2012 with a viral hit video that lead to 12,000 new orders in the first 48 hours — crashing the company’s servers in the first hours the ad was live.

A completely disruptive business model

What should make every company in every industry sit up and take notice is the fact that Dollar Shave Club doesn’t own a factory, outsources its logistics and distribution, has no brick and mortar sales locations and does most of its advertising and customer engagement organically online. They’ve turned the playbook entirely on its head.

Unlike competitors, Dollar Shave Club fancies itself as a traditional technology company — leveraging the power of the internet, data and predictive analytics to win the hearts (and faces) of their customers.

“From a customer point of view, the marketing differentiates us… But there’s also the fact that we have the technology to make all of this work. What we are doing with data collection, data science, and with operations — all of this has to come together. It really boils down to the core technology, because that makes it possible.” — Kevin Datoo, chief operating officer of Dollar Shave Club.

The impact of disruption

The men’s grooming market has always been dominated by Gillette, the behemoth that Proctor & Gamble paid $57 billion for in 2005. However, in recent years Gillette’s market share has declined substantially, falling from 71% in 2010 to 59% in 2015.

Dollar Shave Club, by contrast, has gained significant marketshare and is reported to have captured 15% of the U.S. men’s razor cartridges market at the end of 2015 (a massive amount of traction for a company that is just 4 1/2 years old).

A lean and agile (billion dollar) startup

Many competitors — like Harrys, Shave Select and Gillette’s Shave Club — have emerged since Dollar Shave Club entered the market, but none have been able to stand as a formidable competitor.

Part of that has to do with speed: Dollar Shave Club was first to market with their new subscription shaving service and have since amassed 3.2 million subscribers. They had an idea, created a video (that ended up being a viral hit), and launched — allowing the market to provide immediate feedback. Compare that with Gillette — a large, traditional, slow sort of company — who took more than 3 years to launch their own subscription-based service Gillette Shave Club.

“Being a disruptive startup means you have to adapt quickly…We always have a constant evolution because we have to manage scale.” — Kevin Datoo, chief operating officer of Dollar Shave Club

Now with a loyal following of millions through social media and loyal customers they’re branching out into other grooming products like Shave Butter and One Wipe Charlies — a wet napkin.

Relevant to every business

When the New York Times originally reported on the acquisition they said: “the deal anecdotally shows that no company is safe from the creative destruction brought by technological change”. I agree.

Established organizations need to embrace taking risks, experiment with new business models and learn simply by doing. Thinking outside of the standard playbook is where billion-dollar disruptions come from.