Chris Baus

Dollar Shave Club sells at $1B valuation

I spent yesterday researching a project I’m working on (going down paths and backing out), and in the middle of it, a story caught my attention: the sale of Dollar Shave Club to Unilever at a unicorn price [1].

While software is eating the world, Dollar Shave Club is another example how this is trend isn’t playing out through standalone software companies. Instead software is being combined with other competencies (in this case marketing and distribution) to create what Chris Dixon calls full-stack businesses [2].

Classic examples are Elon Musks’s Tesla and SpaceX. Both make heavy use of software, but software is only one part of their product stack.

This comment on the Dollar Shave Club thread stood out on Hacker News. It is in regards to creating software for the construction industry:

Convincing people to fit their workflow into your new software, effectively running their companies around it, is not as easy as it sounds. Coding it is not the hard part.

That’s the point. There will not be software companies which sell to the construction industry. There will be software companies which do construction.

Drawing from my own experience, I for years thought this trend would happen in the financial industry. There will not be software companies which sell to the financial industry. There will be software companies which do finance. The rise of robo-advisors, like Wealthfront, point in this direction.

In the money management industry it is common for core business processes to be pasted together with the help of third party software and data vendors. Money management businesses are probably 5% investment management, and 95% marketing and technology. The companies which start with technology and marketing first are eventually going to win. This going to start happening across industries. Software and techonology will not be ancillary, but part of the core business.

[1] I’ve never been interested in Dollar Shave Club’s service as I’m a wet shaver. I buy my blades in bulk from Amazon.

If you care about the environment, saving money, and actually enjoy shaving, scrap the cartridge razors, get a double edge razor, a brush, and some good creams and soaps.

[2] Dollar Shave Club’s primary competitor, Harry’s took the full-stack startup concept a bit further and actually bought a German razor factory.