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Good morning! It's Thursday, November 30th. Today, we are looking at Harry’s, a DTC razor company that acquired 2M subscribers in its first two years!

THE FEATURE

The $2B DTC Razor Company

Overly expensive razors have plagued men for decades, and Harry's Inc. set out to change that in 2012. 

Today, Harry's generates over $500M in annual revenue with a ~$2B valuation!

So, What’s the Business?

Harry's founders, Jeff Raider and Andy Katz-Mayfield, met while in college as consulting interns for Bain and Co. After college, Raider co-founded Warby Parker, a massive DTC glasses distributor, while Katz-Mayfield worked at consulting firms. 

In 2012, Katz-Mayfield vented to Raider on the ridiculous prices of razor blades, and the two realized they could create an affordable razor alternative using the Warby Parker DTC model.

By selling exclusively online in its first years, Harry's massively reduced overhead costs associated with maintaining brick-and-mortar stores and entering retail chains. Additionally, keeping their product portfolio confined to razors streamlined production and reduced complexity. These savings were passed onto consumers and made Harry's affordable razors possible.

On Harry's site, users can personalize their razor subscription before purchasing. In addition to selecting the number of refills per year, users submit how often they shave per week and are given a recommended subscription model.  

Harry's basic annual plan, which includes 24 blades, costs $60 (about $2.5 per blade). For comparison, Gillette's leading 3 razor pack sold for $16.6 in 2019 (about $5.50 per blade).

How They Win: Free Razors for 100K Emails

No matter how good the product is, the initial struggle for any business is getting consumer attention. For Harry's founders, they found instant success through a pre-launch referral program. 

Their idea was to create a semi-organic referral program that encouraged people to try Harry's from a credible source (their friends). To say that the referral program was a success would be an understatement– Harry's gathered 100K emails in a single week!

They pulled this off through a 2-page microsite that they drove traffic to through Facebook ads. Once on the microsite, users saw the featured product and were encouraged to sign up and "be the first to know" about the brand. 

After prospective customers submitted their email, they were sent a link to the referral program with four milestones: 

1. Refer 5 friends- free shaving cream

2. Refer 10 friends- free razor

3. Refer 25 friends- free premium razor

4. Refer 50 friends- free shaving for a year

In addition to using Facebook ads, they made the promotion easily sharable across social media platforms. For instance, when users pressed "Share on Twitter," they received the following pre-written tweet template: "Can't wait for @harrys to launch. I'm going to be #shaving for free."

What really encouraged user interaction was that they gamified the referral experience through a progress bar that tracked each user's journey to 50 referrals– taking the guesswork out of rewards. 

To put in perspective how high the participation rate was, Harry's estimates that 20K people referred about 65K friends. Even crazier, over 200 participants referred 50+ friends, meaning 10K referrals came from just 200 people. 

This marketing stunt impressed investors, leading to $100M in funding that went towards purchasing a 94-year-old razor blade factory in their first year. By running their own razor blade factory, Harry's further reduced costs via vertical integration. 

To top that, Harry's founders credit the referral program as essential in acquiring two million subscribers within their first two years!

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