Dollar Shave Club Joins the Unilever CPG Empire

Consumer packaged goods conglomerate Unilever announced late Tuesday evening that it signed an agreement to acquire Dollar Shave Club (DSC), the Venice, CA-based men’s grooming brand. Neither Unilever or Dollar Shave Club has disclosed the financial terms, but Fortune confirmed from multiple sources that it was a $1billion deal.

The Dollar Shave Club launched one of the earliest successful consumer product home subscription models. For between $1 and $9 per month, customers got a free razor and a month’s worth of replacement blades delivered right to their doors. DSC reportedly secured 12,000 customers within two days of launch and went on to bring in $4 million in revenue its first year. Since then, DSC has branched out into additional personal care categories, such as men’s body wash, skincare, and hair styling products. In 2015, the company earned $152 million, and it is on track to bring in more than $200 million this year.

Founded in 2012, DSC made a splashy debut with one of the most viral YouTube commercials ever produced, starring its CEO and founder Mike Dubin. In the video, Dubin lamented the unreasonable price tags of other razor blades, promoting his new disruptor products using warm, provocative, and funny language (possibly a result of his years studying improv). One example from his monologue:

Mike: Yeah. A dollar. 

Are the blades any good? 

No. Our blades are f***ing great.

In another scene, Mike self-mockingly highlighted his own effort to hire previously unemployed workers:

Mike: “We’re not just selling razors, we’re also making new jobs.”  [Turning to Alejandra.] “Alejandra, what were you doing last month?”

Alejandra [grinning]: “Not working”

Mike: “And what you doing now?”

Alejandra [still grinning]: “Working.”

The meteoric rise of Dollar Shave Club quickly challenged the major incumbents in the men’s razor blades market — particularly Gillette, owned by Unilever rival P&G. Despite controlling a majority of the U.S. market, Gillette felt threatened enough that it launched the “Gillette Shaving Club” last year. In an interesting marketing move, Gillette even ran a “sponsored post” in VentureBeat promoting the fact that it had the “best razor at a lower price,” and citing a Consumer Reports test that had favorably compared Gillette Shave Club to Dollar Shave Club.

By joining the Unilever family of brands, DSC will get access to more resources and stronger support to keep up the good fight with Gillette. “DSC couldn’t be happier to have the world’s most innovative and progressive consumer-product company in our corner, “ said Dubin in a statement announcing the acquisition.

The acquisition comes as music to the ears of DSC’s investors, who have collectively put a total of $163.5 million into the four-year-old startup, according to CrunchBase. In its most recent funding round, Dollar Shave Club raised $75 million, led by Technology Crossover Ventures, which put the company’s valuation at $615 million — an amount almost doubled by this week’s $1 billion deal. Although Unilever goes head-to-head with P&G in a range of personal care categories, it did not previously have a solid presence in the razor blades market in the U.S., where P&G controls almost 60% of shaving products. Even though Dollar Shave Club has attracted only 5% of the market, Unilever is expected to build on DSC’s domination in the “shave club” sector and to benefit broadly from the subscription business model.

“In addition to its unique consumer and data insights, Dollar Shave Club is the category leader in its direct-to-consumer space,” said Kees Kruythoff, President of Unilever North America, in the announcement. “We plan to leverage the global strength of Unilever to support Dollar Shave Club in achieving its full potential in terms of offering and reach.”