Harry’s Razors: Andy Katz-Mayfield and Jeff Raider

Two college-era friends set out to change the face of shaving—and in the process, took on one of the biggest companies in the world. In 2011, Andy Katz-Mayfield and Jeff Raider realized they shared a common frustration with an everyday purchase: razors. Locked behind counters like diamond bracelets, they were inconvenient to buy and expensive to replace, with branding that seemed more suited to James Bond than a regular guy. So Andy and Jeff took on the Goliath of the shaving industry, Gillette—and its parent company, P&G—to launch a direct-to-consumer razor company with a friendly name. As a co-founder of Warby Parker, Jeff had some experience with D-to-C, but nothing prepared either founder for the rigors of razor research, and the culture shock of partnering with a factory in a remote part of Germany. After weathering a failed merger, Harry’s Inc. has grown into a force in the shaving industry both online and in-store, and has begun expanding into other household products. This episode was produced by Liz Metzger, with music by Ramtin Arablouei Edited by Neva Grant, with research help from Katherine Sypher. You can follow HIBT on Twitter https://twitter.com/HowIBuiltThis & Instagram https://www.instagram.com/howibuiltthis, and email us at [email protected] mailto:[email protected]. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

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• 1:32Guy Raz?

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• 2:16Guy Raz?

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• 3:00Guy Raz?

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• 3:45Guy Raz?

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• 4:27Guy Raz?

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• 5:11Speaker 01

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• 5:24Guy Raz?

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• 7:21Guy Raz?

  You know, we hear a lot about pivots on How I Built This, how a simple change in perspective can create a whole new opportunity. And this made me think of a conversation I recently had with Keenan Thompson, who's the longest-running cast member of Saturday Night Live ever, 20 seasons. And I asked him, what if, one day, instead of performing on SNL, you were given the keys to run SNL? You will definitely want to hear his answer. Check out my interview with Keenan Thompson over on my other podcast, The Great Creators. Just search for The Great Creators with Guy Raz wherever you listen to podcasts. And now, on to today's show.

• 8:06Speaker 02

  We tried to convince them that, like, we were legit. And then we committed to buying a million razor blades, which, for them at the time, was like a meaningful number.

• 8:15Guy Raz?

  But I mean, when you made a commitment to buy a million razors from these guys, did you have millions of dollars at that point to give to them?

• 8:23Speaker 02

  Nope.

• 8:24Guy Raz?

  No.

• 8:31Guy Raz?

  Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 8:42Guy Raz?

  I'm Guy Raz, and on the show today, how two friends took on one of the biggest companies in the world to launch Harry's, a shaving brand that started online and is now a leader in the category.

• 9:02Guy Raz?

  Sometimes being David can be a huge advantage, especially when Goliath isn't paying attention. Airbnb is a great example. They kind of just snuck into the hotel and hospitality industry without any of the big players noticing. Can you imagine if Marriott or Hilton came up with a similar model when Airbnb was just a three-man operation? They probably have crushed it. But the reality is, big corporations don't always have the flexibility to move quickly. And under the right circumstances, a savvy entrepreneur can strike just at the right moment. This is sort of what happened in the shaving industry. For most of the

• 9:43Guy Raz?

  past few decades, there was really only one player: Gillette. At one point, Gillette had about 70% market share. And to be fair, Gillette is still pretty dominant. Close to 50% of all razors and cartridges sold globally have the name Gillette on them. But the reason its market share has dropped over the past decade has to do largely with two upstart brands: Dollar Shave Club and Harry's. Both of these brands pioneered a direct-to-consumer model that made it easy to order razors and shaving cream online. And they did it sort of under the nose of the big players, who still prefer to sell

• 10:24Guy Raz?

  their products in retail stores. Now, this is not an anti-Gillette episode. In fact, I love their razors. They're pretty great. But for a long time, Gillette had no competitors, and their profit margin on razors was massive. But in 2012, two friends, Jeff Raider and Andy Katz-Mayfield, thought they might be able to offer an alternative, a high-quality razor for maybe up to half the price of a Gillette. Except there's one massive challenge. Making a razor that literally shaves a layer of skin off your face, or legs, or underarms, and does it deftly and precisely, is really hard. So hard that there are just a handful of factories around the world, in very specific countries,

• 11:09Guy Raz?

  that have the technical know-how to do this. For starters, you need specialized steel. And that steel has to be milled and ground with such precision to make sure it doesn't cut someone's face off. And another thing? Most of those factories are either owned by Gillette, or they have no capacity to make razors for a new brand. And when Jeff and Andy decided to enter this industry, they had no idea the obstacles they were about to face. And like all great founder stories, these guys were, well, pretty naive, which may have worked to their advantage. So much so that they soon realized that in order to make their idea work,

• 11:50Guy Raz?

  they had to figure out how to buy their own razor blade factory. Jeff Raider and Andy Katz-Mayfield grew up three towns away from each other in the suburbs of Boston. But they didn't meet until around 2004, when they were both still in college and wound up in the same internship program at the consulting firm Bain and Company.

• 12:10Speaker 02

  I literally remember the first day, sitting there in like, business casual. I think I was like, literally wearing a Brooks Brothers shirt that my mom had bought me. Like, just kind of looking around, like, trying not to screw this up. And like, I really need a friend. And seeing Andy, and being like, yeah. Essentially being like, hey, we're kind of in the same experience together. It's up, I'm Jeff. And we just kind of got to know each other then. And then there were 10 people in our intern class, and a bunch of us became like, pretty good friends.

• 12:40Speaker 03

  Yeah, I mean, Jeff's habits, when he was particularly stressed out, was like, about a 3:00 or 4:00 PM McDonald's run to the Times Square McDonald's around the corner from our office, so.

• 12:49Speaker 02

  Yeah, from time to time, I'd be like, Andy, I just need like, a walk. Come take a walk with me.

• 12:53Speaker 03

  I was like, what meal is this, Jeff? It's 3:30 in the afternoon. It doesn't matter, I need a cheeseburger.

• 12:57Speaker 02

  It's always a good time for Chicken McNuggets.

• 12:59Guy Raz?

  Yeah, yeah, agreed. All right. So you guys become friends and your career paths kind of merge. I mean, you both were Bain for a while. You worked there for a while. And then you both go to another, like a private equity group called Charles Bank in New York. And then you both go to business school, different ones. Jeff, you went to Wharton and Andy, you went to Stanford. And did you guys keep in touch while you were at different business schools?

• 13:23Speaker 02

  Yeah, we talked a bunch. I remember seeing Andy back in New York when we were both back on break. And I remember actually sending him, you know, when I was at Wharton, we started working on Warby Parker. And in the early days, I was just looking for advice. And I remember sending him like a very early version of our business plan from Warby Parker. Literally, like I sent Andy this business plan and I get like a markup red pen version back being like, not sure about this, this one. Here's a question I'd have. And so, yeah, I think we were always kind of in touch.

• 13:56Guy Raz?

  All right. So let me, let me kind of dive into this with you, Jeff, because as you mentioned, you were part of the founding team of Warby Parker. And we told the story on the show many years ago, Neil Blumenthal and David Gilboa were on the show talking about, you know, founding the company, which was started at Penn. They were all, you were all business students. It was like, I think, four of you.

• 14:17Speaker 02

  Four of us.

• 14:18Guy Raz?

  Four of you guys. You were all students at Penn. And tell me how you like, I mean, from your perspective, how did it, how did it start?

• 14:28Speaker 02

  Yeah. So for me, the journey at Warby started when I was sitting around after class with Neil one day. And Dave walked up to us and said, what do you guys think of the idea of selling glasses online? And at the time, I was wearing prescription glasses that I'd had for many years. And I was like, oh, that I would love, you know, a pair of glasses that, you know, sort of well made, that spoke to who I like the sort of fashion statements that I would want to make, kind of, you know, were a representation of who I am and that I could get at a much better price. And Neil was just sitting there being like, you could totally do that. Like, the reason that glasses are so expensive is because, yeah, the industry's been dominated by a couple of companies. And there's a significant markup between sort of the cost to make the products and then the cost that they're

• 15:12Speaker 02

  sold for. Pretty quickly, four of us, Neil and Dave, our other co-founder, Andy Hunt, and I got together and started working on Warby.

• 15:22Guy Raz?

  This really became business school for you.

• 15:24Speaker 02

  Totally.

• 15:25Guy Raz?

  You guys launched. You started, you pulled some money together. I think presumably you had some money from your time at Bain and-

• 15:32Speaker 02

  Yep. I had an interesting situation. I'd worked at Charles Bank, as we mentioned. They had paid for me to go to business school and then I'd agreed to come back afterwards for a couple of years. And so I had business school paid for it. So what we did, what I did was took out loans that otherwise I would have used to pay for business school and then used whatever extra capital we had to start to fund Warby Parker.

• 15:52Guy Raz?

  Wow. So you guys pulled some money together. And from what I remember, Neil and Dave, when they were on the show a few years ago, I mean, you guys had all these great resources on campus. You had business school professors and people with experience starting businesses. So you were asking lots of people for advice.

• 16:07Speaker 02

  Yeah, it was awesome. I mean, we would get to go to professors at the end of class. But I know we just did a case on Coke and Pepsi, but we really need your help in terms of like, how do you price eyeglasses? You know, like, how do we think about like, what the right price is and how we make margin and how we deliver people great value and how we could sell glasses online, but also give people the chance to try them on. And I remember one of our professors being like, why don't you just do Netflix?

• 16:31Guy Raz?

  Like Netflix for eyewear?

• 16:32Speaker 02

  Yeah. Like when Netflix was sending DVDs back and forth to each other, like, ah, that's an interesting idea. And David kind of come up with the idea independently. And we both got together in a meeting and we're like, we should do Netflix. And he's like, I totally think we should do Netflix. And that ended up becoming a really important part of Warby Parker. Today, we have a home try on program where you can try on five pairs of glasses for free. And that enabled, I think, people to feel comfortable, you know, getting to try them before they bought them online.

• 16:57Guy Raz?

  Do you think you would have stayed at Warby Parker had you not had made the commitment to go back to Charles Bank?

• 17:03Speaker 02

  You know, I don't, I don't know. It was never like a thing that I actually, never a real life scenario that I had to contemplate. Charles Bank's main offices are in Boston, where I grew up. And I always thought I'd move back to Boston. And I think only after having the Warby Parker experience, did I realize that I actually might be happier doing something else professionally. Warby Parker like changed my life in that way.

• 17:29Guy Raz?

  Yeah. All right. So you are at, you know, working back at this private equity firm. And Andy, you are, this is now 2011, you've graduated from school, you're living in LA. Were you guys, I mean, were you in touch- Just generally to kind of shoot the breeze about ideas?

• 17:53Speaker 03

  Yeah, you know, we would talk occasionally. He came out and visited at Stanford when they did this Warby Parker, you know, trunk show. And I did think that what Warby was doing was interesting and unique. So I kind of had that in the back of my mind, that the idea of building a brand, launching it direct to consumer, obviously, that's not such a novel idea in 2023, but it was a pretty novel idea in 2010, 2011.

• 18:23Speaker 02

  And I remember we had lunch, I think in Boston, like 2010, early 2011. And I think at that point, it was kind of like a year into Charles Bank. And I think I was like, hey, I think I'm gonna do something else entrepreneurial at some point. I think you may have just graduated. I'm probably don't have the dates totally right, but you were like, yeah, I'm thinking about stuff too.

• 18:45Guy Raz?

  So October 2011, Andy, you get an idea for what would become this business we're about to talk about. Tell me, tell me how that would happen.

• 18:56Speaker 03

  Yeah, so I was driving home from work. I stopped at a drugstore, actually, right around the corner from where I'm sitting right now, on 14th and Wilshire in Santa Monica. And I knew I needed to buy razor blades because I needed to shave the next morning. I think I had a meeting or something like that. And I'd run out and I went into the drugstore. The product was locked away. And still to this day, oftentimes razor blades are locked away. And they're locked away because they get shoplifted all the time. And they get shoplifted all the time because they're extraordinarily expensive. So I'm wandering around the store, looking for an associate to come open the case, which I'm kind of like, this is sort of an absurd

• 19:40Speaker 03

  experience. I'm not buying, you know, a $5,000 diamond bracelet or something like that. I'm buying razor blades. And, you know, as I'm waiting for this associate to come and unlock it, I'm looking at sort of the packaging and the brands. And I think there was literally a picture on one of the packages of a razor blade, like kind of getting shot into space, you know, flying over the moon or something like that, which I understand what this brand was trying to communicate to me, which is like, yeah, you should pay an exorbitant amount because there's a lot of technology in this product. But it felt You know, not resonant, a little bit inauthentic to me as a, as a consumer. And then I get my razor blades. I go to the cashier. I check out, you know, I pay $25 for four,

• 20:23Speaker 03

  you know, four cartridges effectively, which I knew I was getting ripped off and getting taken advantage of, but you're sort of trapped is, is a pretty negative reaction.

• 20:32Guy Raz?

  Yeah.

• 20:33Speaker 03

  I could have bought sort of a cheap disposable product, but so, you know, I'm taking a knife to my face. I care about quality. And so the light bulb sort of clicked for me that, um, hey, you know, there is a single player that really dominates this industry. And that was also true of Warby Parker. And one of the reasons why prices were so inflated is that there was effectively a monopolist. Um, and so I immediately drew some, some similarities to, in my mind, from an industry standpoint to, to Warby. Um, and, you know, I was, you know, thinking about it that night and, uh, sent a note to Jeff and said, hey, like, I just had this experience

• 21:14Speaker 03

  last night. Like, what do you think about, you know, shaving or grooming as, as another category that might, um, you know, be ripe for, for disruption. Um, but that was the beginning of the dialogue and the idea.

• 21:27Guy Raz?

  Jeff, what do you remember about that conversation about when, when you first heard this idea?

• 21:32Speaker 02

  Yeah. Uh, I was sitting at work and Andy G chats me and, um, it felt to me like the early days of Warby Parker, when I was like, oh, I just want a pair of glasses, you know, that are great, that don't cost very much. And so I think like his experience resonated.

• 21:50Speaker 02

  And I was like, let's, let's go look into this. Like this is exciting. And I think, you know, the first conversation we had was, was I think about the brand and being able to deliver high quality product at good value. And then a lot on like direct to consumer. Like we felt like that was an exciting channel and opportunity to go and get to engage with people. Like the one thing that I learned at Warby, or one of the things I learned at Warby was like, it was an amazing place to have direct dialogue with customers. And the cool thing about shaving is that it was going to be a repeat purchase. And so you're going to have multiple bites at the apple to get to know people and try to sort of tailor an experience to them, which at the time was exciting. And I think would enable us to bypass, at least to start a lot of the existing industry dynamics so that we could

• 22:33Speaker 02

  build something that was a little more consumer centric, at least as, as we defined it.

• 22:37Guy Raz?

  When, when, so when Andy sort of brought this idea up to you, this is October of 2011, how quickly before you, you were like, let's, let's dig into this?

• 22:48Speaker 02

  Yeah. We started digging into it pretty quickly, if I remember correctly. And I think we did a couple of things. I think one, we started to like truly understand the industry. You know, what is the structure of the industry? Who makes razor blades? How big are these companies? How profitable are they? And what was, what was interesting is like, you know, Gillette, who had dominated the industry, had sold to Procter and Gamble for like over $50 billion. And before they sold, they would report their, you know, kind of financials. They were like one of the most profitable CPG companies ever built. And so we kind of looked at that like, huh, they're making a lot, a lot, a lot of profit. Like, you know, the reason that they're up charging so much is because they're, they're so profitable. Like they, they really truly have figured that out in this market, how to just-

• 23:33Guy Raz?

  And, and dominate.

• 23:34Speaker 02

  And dominate. And then we started talking to a bunch of our friends about it. And I think they had the same feelings that we did. And so all of those things were kind of signs to like, hey, there is an opportunity here if you could make really high quality blades at good value. That was kind of like the if.

• 23:49Guy Raz?

  Andy, you were in LA and Jeff was in New York and you guys were just both kind of doing research from, you know, from, from where you were. And then you would kind of reconnect every couple of days?

• 24:03Speaker 03

  Yeah. Um, you know, we, well, Jeff had access to like, you know, analysts and industry stuff through Charles Bank. I actually had access to some of that stuff through like the Stanford library database that I still had access to as a business school student. So we could get some of that stuff. I remember we ran a consumer survey and, you know, we spent a lot of time just trying to sort of network to people that knew something about the industry and then just talking to, you know,

• 24:30Speaker 03

  Our friends, guys in general, and to what Jeff said, I think in some ways that last thing was the most confirmatory because when you talk to guys, everybody was like, yes, I have had that experience. I hate it. But yeah, this was like nights and weekends. I mean, as Jeff mentioned, we probably spoke every night. I could never, I had, I had like a job, but it wasn't, you know, an all consuming job. And I was doing this. Jeff had like a really serious job, plus Warby, plus this. I was like, I don't know when this guy sleeps. But we, we spent a lot of time on it very quickly because I think we were really excited about the idea.

• 25:07Guy Raz?

  So it would be, I mean, it would be a year of research and kind of digging into this before you would launch Harry's, which we'll get to in a bit. But I want to, I want to spend some time on, on this sort of nine months to a year process because you had a lot of questions that you needed answered. Why is it so expensive? How do you make this stuff? And so first of all, I mean, the expensive part makes sense, right? If one company has such a huge dominance in the market, they can make slight alterations and changes to their razors and just charge a lot of money and people are kind of stuck. But there's another component here, which is from

• 25:47Guy Raz?

  what I understand, making razor blades for shaving is very complicated. It's not actually as easy as many people might think.

• 25:55Speaker 03

  Super hard.

• 25:56Guy Raz?

  Yeah.

• 25:56Speaker 03

  That's totally right. And that was, that was the biggest thing that we didn't understand immediately going into this because we're like, okay, Gillette's monopoly, they charge all these prices, like, you know, and, and most consumer packaged goods are reasonably commoditized. There's probably a hundred manufacturers, you know, throughout the world that can make, or you know, thousands that can make soap or hairstyling products or whatever. And razor blades, not so. There is a ton of really sophisticated technology and intellectual property that goes into the design. And then even if you had accents to all of the IP and, and kind of design know-how,

• 26:41Speaker 03

  the manufacturing process is really complicated as well. And so we could build a brand and a customer experience that that would be different and superior.

• 26:54Speaker 03

  But then we started trying to figure out how to make this product, because obviously you need a product to go with your brand. And, you know, trying all these, you know, non-branded alternatives and researching manufacturers. And we were like, oh, like, these products are really bad. There's not a lot out there. Like, this is going to be a real challenge.

• 27:13Guy Raz?

  When we come back in just a moment, Jeff and Andy use Google Translate to partner with a razor factory in Germany and come up with a name, Harry's, because, well, it's friendly. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

• 27:40Guy Raz?

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• 28:23Guy Raz?

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• 30:36Guy Raz?

  One more thing before we get back to the show. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And it's totally free.

• 30:53Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2012 and Jeff and Andy are trying to answer the question, does the world need another razor company? And to answer it, they're doing a lot of shaving.

• 31:09Guy Raz?

  You guys were literally presumably buying every razor you could buy and just shaving with it.

• 31:13Speaker 02

  Yes, we tried everything. I think came to the termination that Andy mentioned pretty quickly that like, there's a significant difference between, you know, kind of high performing products in this market and lower performing products in this market. And in order for us to build a brand, we had to be in that kind of high performance tier. Otherwise, it just wouldn't work.

• 31:33Guy Raz?

  And were, were most razors made, I'm assuming, probably China, Germany, Korea?

• 31:42Speaker 02

  No, there's a significant concentration, probably relative to lots of other industries, of manufacturing in North America and in Europe. And the reason is, one reason is because a lot of this stuff is highly automated. You're talking about machines that have to make little grind, a perfect edge on little blades, millions and millions and millions of times over with like zero deviation. Otherwise, you're going to fail it in your shave experience. And then slot them into cartridges with like immense precision. And so what you, I think where, where the industry grew up was in places with really, really strong engineering cultures. And, and the, the dynamic in the industry, which is interesting, is that most of the brands are fully vertically integrated.

• 32:23Guy Raz?

  They do everything.

• 32:24Speaker 02

  Yeah, Gillette owns all their own manufacturing.

• 32:26Guy Raz?

  It's harder to find like a co-packer, as you would say in the food industry.

• 32:31Speaker 02

  It's very, very hard. And so when we started, that was our biggest concern. And then the other thing we were really concerned about was even if we could find quality razor blades, how could we make sure that they were unique and distinct to Harry's?

• 32:43Guy Raz?

  Yeah.

• 32:44Speaker 02

  Because our, you know, concern is like, let's say we, we scour the earth and we find the one place that could make amazing razor blades for us, which we, we ended up thinking we actually did. Then we have to make sure that those people don't just turn around and sell the exact same razor blades to, you know, Larry's and Barry's and whoever, you know, because then what's going to be unique about us?

• 33:04Guy Raz?

  And what about, what about you, Andy? I mean, was it, was it also just all consuming? You became really...

• 33:11Guy Raz?

  Convinced that this could work? I mean, you mentioned that there were a few moments where you thought, okay, we've hit a roadblock and maybe, maybe this isn't going to work?

• 33:19Speaker 03

  Yeah, I mean, it was all consuming. And I think there was kind of a trifecta of, of factors as I, you know, was getting increasingly excited about the idea and, you know, also trying to make a rational decision of like, all right, do I want to make this jump? Do I want to, you know, spend all my time and energy on this and take that level of, you know, career risk? But in Jeff, I had somebody who I respected tremendously. Obviously, he had the Warby Parker experience and we had worked together, but, you know, we were also close friends. It felt like almost the perfect match for somebody who you would want to start a business for. So, and yeah, the thing that, really the only thing that was giving me pause was this, hey, can we make a

• 34:02Speaker 03

  product that actually works and performs and is, and is sufficient quality?

• 34:05Guy Raz?

  Yeah.

• 34:06Speaker 03

  Given the stakes involved, you know, you're literally taking a knife to your face and it's in a pretty important experience, probably the most important grooming experience for guys from sort of a both practical and emotional standpoint, that if the product doesn't perform, nobody's going to come back and buy your product again. Like, they're going to be resigned and go back and spend, you know, $25 on Gillette. And, and that's the model that had worked for Gillette forever.

• 34:32Guy Raz?

  All right. So you guys are digging into this and you're looking for some partner that could manufacture blades that would be somewhat different. And so

• 34:44Speaker 02

  Yep.

• 34:45Guy Raz?

  How did you, how did you identify what that would be?

• 34:50Speaker 02

  I was reading like a shave blog one night, written by like real shave enthusiasts, you know, who, who tend to use double edged blades.

• 34:59Guy Raz?

  That's single edged blades that you can blade that you can

• 35:01Speaker 02

  A single blade that goes into a safety razor.

• 35:03Guy Raz?

  And you can use both sides.

• 35:05Speaker 02

  Yeah, use both sides, exactly. And they were talking about this factory in Germany called Fine Technique, that they said made some of the best double edged blades in the world. And I was like, huh, that's interesting. German factory. I wonder if they make anything else. And so I literally just like Googled it.

• 35:25Guy Raz?

  Right.

• 35:26Speaker 02

  Looked them up online and they made, you know, like more advanced razor blade products. They made, you know, three blade and five blade razor systems. So, you know, where you have a cartridge and it connects into the handle. The next step was for us to try to get in touch with them. We ended up just like literally reaching out cold and I think maybe sent them an email and I was like, hey, I started this company called Warby Parker and we've had some success in eyewear. And we think there's an interesting opportunity to apply a similar model to shaving. But in order to do that, we need to find a partner who can make us an amazing product. And then we said, okay, before we move it forward, send us, will you just send us some to try? And so I think I literally remember getting a box sent to New York. I got home, immediately tried the product, walked out of the bathroom, like saw my wife.

• 36:11Speaker 02

  I was like, these are good. Like these will work. These are good.

• 36:13Guy Raz?

  All right. Let me just ask you about the razor blade technology for a moment. You mentioned that you first heard about them because you heard they made a great double edged, single razor, right?

• 36:26Speaker 02

  Yep.

• 36:26Guy Raz?

  Which is like the old school, like my grandpa used to use and some people still use them, especially people who get irritated skin.

• 36:34Speaker 02

  Totally.

• 36:35Guy Raz?

  And then over the years, you know, these three blade systems and then four blade systems and now five blade systems were introduced, which is what many people use. These cartridges you attach to a handle.

• 36:47Speaker 02

  Yep.

• 36:47Guy Raz?

  And it's got literally four or five blades. And so it like shaves under the skin. It shaves so close, right? It like actually takes a micro layer of skin off, basically.

• 36:58Speaker 02

  Yeah. It's also just, it covers like more surface area. So they're, they're absolutely superior products in terms of, you know, shave performance, like quality and comfort relative to, you know, an older style. And so in the grinding process,

• 37:14Speaker 03

  Which is really where the secret sauce of razor blade manufacturing comes in. It's the actual grinding of this very thin steel to get that edge and get that shape is a very hard process to perfect. And to get billions of these things made at very, very high velocity in a consistent way is really where the complexity of the process like comes into play.

• 37:38Guy Raz?

  Were they using like special steel, for example?

• 37:42Speaker 02

  I think ours comes from Sweden. Yeah, so very sort of technical manufacturing of the steel itself that we, you know, we sourced.

• 37:50Speaker 03

  Yes, there's special steel. There's a process effectively to heat and cool the steel, which is what kind of makes it malleable first, which has to be done at extremely high temperatures, extremely low temperatures, you know, and a ton of precision in how that happens in these giant ovens that are literally like the length of a football field.

• 38:13Speaker 02

  And then the thing that kind of blew my mind when I went to the factory the first time is through this heating and cooling process that Andy mentioned, you actually change the metallurgical composition of steel. You like liquefy it in the heating process and then you cool it to harden it. And you actually need a harder form of steel to put the edge on that we, that Andy just mentioned. And so we actually changed the steel itself, even if someone was going to source the same exact steel. The manufacturing process, the first step of the process actually is to change the steel itself.

• 38:46Guy Raz?

  Wow.

• 38:47Speaker 02

  Such that you can then grind this edge in a way that's going to sort of work well.

• 38:51Guy Raz?

  It's like using a diamond to cut a diamond. You kind of have to do that, yes.

• 38:55Speaker 02

  Yeah, I guess so.

• 38:57Guy Raz?

  You guys get these samples from Fine Technique, this factory in Germany. And I guess you decide we got to go there. We got to go check it out.

• 39:06Speaker 02

  Yeah, I think the first time we went was January of 2012.

• 39:09Speaker 03

  Yeah, we, I think we got the product right before Christmas or maybe right around Thanksgiving.

• 39:14Guy Raz?

  What was the goal of that trip?

• 39:15Speaker 03

  Well, as Jeff mentioned. You know, for us, what was going to be important was, you know, they had sort of a catalog and they would have just sold us off the shelf product, but we wanted to build a brand that looked and felt very different, that had a more elevated aesthetic. And so it was going to require some level of customization. So we needed them to buy into doing that for us.

• 39:38Guy Raz?

  Sorry, when you say customization, like that the cartridges would connect with your handles?

• 39:43Speaker 03

  Cartridges would connect with our handles, that we could make our own handles that had a very different look and feel and design, that we wanted the head to bend in a specific way that we thought was going to be best for the consumer. We wanted, you know, different colorways. So things that would make our product look and feel and in fact be unique and different.

• 40:04Guy Raz?

  Tell me about your impressions. I mean, you get to Germany, this it's a tiny town. It's like, I looked at it on the map. I think, is it, is it in the former East Germany?

• 40:14Speaker 03

  Yep. Yeah, it's, it's very rural. It's this very small town where there are a few manufacturers there, but Fine Technic was kind of the biggest employer and biggest Cayman town. And yeah, I remember getting there. It was late January, you know, at night, it was freezing cold.

• 40:31Speaker 02

  We were like, what are we doing here? And I remember we got there and it was so cold.

• 40:36Speaker 03

  I mean, the name of the town where the factory is, is Isfeld, which literally translates to ice field, if it gives you any, any sense for the, for the environment there.

• 40:46Guy Raz?

  So when you get there and you talk to them about this vision, what's their response? I mean, you guys were, you know, a couple of young guys out of, you know, business school. They probably had no idea what Warby Parker was. And I don't know if that impressed them. And they were happy to just sell you razors or, or, but, but you wanted something a bit more complicated.

• 41:12Speaker 02

  Yeah, I think it took us time to try to build some credibility there.

• 41:18Speaker 02

  In the early kind of days, they would, we'd be emailing with them. They would email to each other in German. And then we would obviously look at the, all this German back and forth between them and put it into Google Translate. Like, what are they talking about? And like, they would literally, like, in their emails being like, "The American internet boys would like to order, you know, XYZ from..." "They'd like us to customize the razor cartridge in this way." And we're like, "Oh my gosh, they're calling us the American internet boys." But, you know, I think, um, I think that through a set of, a long set of interactions, again, like over many months, we tried to convince them that, like, we were legit. And then we committed to buying a million razor blades. Like, we signed a contract to buy a million razor blades, which for them at the time was like a meaningful number.

• 42:03Speaker 02

  And that, I think, also indicated that we were legit. And we gave them a forecast based on kind of some of our early trajectory, or being some kind of modeling that we did that said, "Yeah, the million could turn into many millions, uh, pretty quickly if, if we can get this thing moving." And so, um, I think that was, uh, helpful for us in terms of building credibility, but that definitely took time.

• 42:23Guy Raz?

  What, but I mean, when you made a commitment to buy a million razors from these guys, did you have, did you have millions of dollars at that point to give to them?

• 42:32Speaker 02

  Uh, no. Nope.

• 42:34Speaker 03

  No.

• 42:35Guy Raz?

  Cause at that point, you had not raised money yet.

• 42:37Speaker 02

  Right. So we had to come back to the States pretty quickly. And, yeah, at that point, I told the folks at Charles Bank I was leaving. We were on the hook for a million razor blades, so we need to make this business come to life.

• 42:49Speaker 03

  Yeah. It was $300,000. I remember that. It was like 30 or $350,000. It was like 35 cents a cartridge, I think.

• 42:55Speaker 02

  No, it was more. It was like 500 or more.

• 42:59Speaker 03

  Was it 500? Oh, I guess our prices came down over time.

• 43:02Speaker 02

  Yeah, eurosence versus dollar cents. And so we had to figure that all out and we were like, you know. What do we do? Like, how do we figure this out? And so, yeah, we wrote a business plan. We had a contract, like literally a physical contract. And we had good investor relationships with early-stage venture investors, you know, because of Warby Parker. Warby Parker, at that point, had raised a couple of rounds of capital and had great investors. And so I knew some of them and some of them I got introductions to. But we had a bunch of Warby Parker investors who, you know, in retrospect, are going to do great on Warby Parker, who invested early at Warby Parker, not invest in Harry's. And so it wasn't like everybody was rolling out the red carpet.

• 43:45Speaker 02

  Like, we still had to, you know, go out and do our best to get that capital. And yeah, we were very fortunate to have a bunch of folks who believed in us enough to want to do it.

• 43:58Guy Raz?

  Before you, at what point did the two of you? I mean, obviously, you've got traction now. You know, it's the summer, you know, almost a fall of 2012. And I think that's when the two of you left your day jobs. And you officially founded Harry's in September of 2012.

• 44:16Speaker 02

  Yep.

• 44:18Guy Raz?

  I mean, when, first of all, I mean, when did you decide? Do you remember when the two of you said, we're going to go for this? Quit our jobs and we're going to start a business? Like, it must have been a few months before that.

• 44:32Speaker 03

  Well, I remember a distinct, so we went back to Germany in May of 2012. That was our second trip. And that's when we actually negotiated and signed the contract. And so I remember being in the rental car with Jeff, driving back to the airport, and kind of looking over at him and be like, we're doing this, right? Because like, I'm going to go quit my job. Are you going to quit yours? I don't want to quit mine if you quit yours. And he was like, yeah, yeah, we're going to do this. I was like, okay. So that, and that, at least for me, was sort of the point of no return in the moment in time when, you know, it was going to go from a nights and weekend adventure to a full-time endeavor. I don't know if that was it for you, Jeff?

• 45:11Speaker 02

  Yep, that was it. Ride back from the factory in May after we had a deal.

• 45:17Guy Raz?

  Wow, okay. And the deal was to buy?

• 45:19Speaker 02

  A million razor blades.

• 45:20Guy Raz?

  A million razor blades. Okay, so you had to go back. And at that point, did you have a name for this potential business?

• 45:27Speaker 02

  I'm not exactly sure when we had Harry's as the name, but I think we were at least...

• 45:31Speaker 03

  It was around then.

• 45:33Guy Raz?

  How did you come up with the name? Is there a person named Harry?

• 45:36Speaker 02

  Yeah, so there was a grandfather figure of mine named Harry who we liked. We liked the idea of shaving being passed down from grandfathers to fathers and fathers to sons as like a general idea. So we, we wrote down all of these kind of like people in our lives who were kind of grandfather father figures as like a beginning of inspiration. Then we kind of saw Harry's and we're like, can we really call a shaving brand Harry's? And we both kind of laughed. It was like, you know, funny in that way. And then when we started talking to people about it, we're like, you know, what do you think about calling it Harry's? They're like, oh yeah, like my uncle Harry or like my neighborhood bar Harry's. Like, and we were like, that's what we want. Like, that's the, the feeling we want. And then we felt like we could pair it with kind of warm masculine colors like navy and olive green and burgundy to make it kind of, you know, build this kind of warm, but, but

• 46:21Speaker 02

  sort of design centric world around it. I forget the references we were thinking about at the time, but like we liked, you know, Barney's or even Fred Segal, you know, they were just like, kind of these like elevated, but warm.

• 46:32Guy Raz?

  Fred and Barney.

• 46:32Speaker 02

  And so we felt like that was a good kind of place in contrast to the other brands of the category that we felt like maybe we're trying to tell guys to be the best and perfect. And, you know, the traditional kind of shaving, kind of like ads of a guy with a six pack looking off into the distance with like a perfect jawline shaving one side of his face as like a woman runs the other. Like, that was kind of like what was out there and maybe what wasn't as appealing to us. And we just wanted to be like this kind of like honest, open, warm, approachable, friendly brand that's like, we don't actually, we're two guys just like you.

• 47:05Guy Raz?

  And, and what about, I mean, you mentioned colors. I think of orange or that blue as Harry's colors. Were those colors from the beginning?

• 47:14Speaker 02

  Yeah, so we were sitting around with this design agency that we work with. Today they're called Mythology. At the time they were called Partners in Spade. One of the folks there looked at us and was like, you guys should make razors that look like traffic cones. And we're like, what? And he's like, yeah, orange, traffic cones, just try it. It'll be cool. And we're like, okay, like, um, why not? And so we mocked up a sample of an orange razor that we looked at and we're like, this looks cool. And then we started to meet with people and everyone would be like, what's up? This orange one looks awesome. Like, I love the orange. And Over time, we're like, huh, there really is something to Orange. Orange was our number one handle when we started and it totally surprised us.

• 47:56Guy Raz?

  All right, so you have, you've got the name and you've got, you've got this commitment to get the razors made, but you've got to raise the capital to pay for them and also to make the handles and then to start this business. So, so you, Jeff, had had, obviously, experienced raising money with Warby Parker. How much initially did you, did you guys need to raise?

• 48:22Speaker 02

  I think we ended up raising $4 million in our, in our first round.

• 48:26Speaker 03

  Now, now it sounds quaint, you know, there's like $10 million seed rounds, but at the time, it was actually a pretty big seed round and people were like, well, you know, what's, what's, you know, minimum viable product MVP. We're like, oh, there isn't really like an MVP here. Like, we need this thing to work out of the gate. Like, it's a, it's a razor. We need the product to be good. We need the inventory. Yeah, I think we, I think we set out trying to raise three and wound up raising four, something like that.

• 48:47Guy Raz?

  And how did you guys split the company between the two of you? Was it just, you know, 50/50? Simple?

• 48:56Speaker 02

  I, I think that's actually been really important for us, too. Like, having the same economic incentives all the time, same ownership, like, it's just good, you know, equal partnership. That's, I'm really glad we did that in retrospect.

• 49:09Guy Raz?

  All right, so you guys have this money to launch and did you, I mean, by the end of 2012, you've, you've raised the money and you've got a plan here. So what was the plan? What was the idea? I know you launched in 2013, in March of 2013, but what did you do to prepare for that launch? Did you hire people? Did you, what, what happened during that time?

• 49:33Speaker 03

  We, so we raised money over the summer of 2012. I quit my job like around Memorial Day and I think Jeff stayed at Charles Bank through Labor Day. We had all these designs. We had to go manufacture the product and ensure that, you know, we needed packaging, we needed the handle, we needed the cartridges, we needed to assemble all this stuff, we needed a website and we needed some people to help us do those things. Neither Jeff nor I had really operated before. You know, Jeff had a little bit of experience with Warby Parker, but- You know, and actually, one of our biggest, earliest investor, they were like, look, we'll back you guys, but you need to find somebody that actually knows what they're doing, like, from an operational standpoint. You guys seem smart, but you've never done

• 50:15Speaker 03

  this before. And so they introduced us to this guy, Will, who's still our COO to this day. I would say that, you know, Jeff spent more of his time and energy and what he's really, really good at, you know, sort of, brand and design and consumer and marketing. So he was really leading the charge on a lot of that work and a lot of those decisions. I spent a lot more time and energy on the operations and setting up the manufacturing partner. And so that was sort of how we divided and conquered things through that, I guess it was about a nine-month period from when we raised capital to when we launched in March of 2013.

• 50:52Guy Raz?

  I mean, and the idea was, was what at the beginning? It was to just, it was to, was it to be like a monthly subscription? Was it to be selling, you know, just razors and blades, à la carte? What was, what was it gonna be?

• 51:13Speaker 02

  We always thought of Harry's as a brand first. And so, the way that we started was not on subscription, actually. But we, we made these shave sets. They were a razor, we still have them today, a razor with a handle on it, plus two additional handles and a shave cream for $15.

• 51:32Guy Raz?

  And were you, were you making, was it branded Harry's shave cream from the beginning? Okay.

• 51:37Speaker 02

  Yeah, yeah. Harry's branded shave cream. So what we did is we tried to find the labs that made the most prestige products that we could, and the chemists. And then we were like, okay, can you just make us that? But we're not gonna charge $20 for it. We're gonna charge $8. And try to make that, again, kind of part of the Harry's brand identity, which is like, we can deliver you kind of great value across the line. Prestige products at mass prices.

• 51:58Guy Raz?

  I mean, so, it's not like one product, one co-packer, one manufacturer. There's a lot of different suppliers here.

• 52:07Speaker 02

  That's right. And as Andy mentioned, kind of while I was dreaming up ways to sell stuff, he was diligently with our team, figuring out how to bring all that together.

• 52:15Guy Raz?

  And by the way, where were they all put together? Were they, were they all brought together to like a central warehouse somewhere and packaged?

• 52:22Speaker 03

  We actually had the The razor blades shipped from Germany to China where they were assembled onto the handle and put into the packaging there. So there was like an assembly operation in China. Then those were shipped over to this 3PL in Connecticut. Our shaving cream and shaving gel were manufactured at a facility in New Jersey. We had another supplier in New Jersey that was making the, these boxes and these inserts that the initial like kits would be assembled into that would ultimately be shipped to the, to the customer. So yeah, it was a, it was a crash course in supply chain.

• 53:02Guy Raz?

  Yeah. So basically, and, and when you, when you were ready to launch, how many, how many people did you, did you have full-time as, as full-time employees?

• 53:14Speaker 02

  Yeah. We had like 12.

• 53:16Guy Raz?

  Right.

• 53:17Speaker 02

  People as full-time employees. And turned the website on, got a bunch of great press right at the start and kind of we were off to the races.

• 53:26Guy Raz?

  How, how did you do that? Did you, did you hire the same PR firm that, that Warby Parker had used?

• 53:32Speaker 02

  Yep. Yep. We hired the same PR. We actually worked with two PR firms and leveraged every personal relationship we had just to try to get, yeah, we were like literally running around New York for the, the few weeks before a launch, just trying to meet with as many people as possible to tell them about Harry's before Harry's actually launched. In that process, we were getting incredible feedback from people on the brand and how they thought about it, how we should talk about it. And that was great.

• 53:56Guy Raz?

  And so what happened? I mean, when you launched, you already had press. And so did your, I mean, did, did you guys have tons of traffic right away?

• 54:05Speaker 02

  Yeah, we were kind of blown away. There was this great, it still is this great men's blog called Uncrate and I'd reached out to the, to the guy who ran it.

• 54:13Guy Raz?

  I know that blog. Yeah.

• 54:14Speaker 02

  And, and he never responded. So I was like, oh, I guess he didn't, you know, didn't want to talk about Harry's. And then all of a sudden, right after we launched, we sent him a sample right after we launched, I just got an email from him that says, "Hope you have a good server, son." And then he posted the link to the Uncrate article and like our whole website like blew up. I was like, oh my gosh. We immediately just started to see like a ton of demand.

• 54:39Guy Raz?

  And I think what, within like a couple of weeks or maybe a month, you sold out of everything that you had bought, that you ordered.

• 54:47Speaker 02

  Yeah, we had more coming, but for a little while we were sold out. And we started this thing internally that we weren't going to shave until our customers were shaving. So we were like walking around three weeks after launching this stuff with like, you know, 10 day beards with people being like, what's wrong with you? And we're like, well, we're trying to get in stock, you know, and once we do, we'll shave ourselves.

• 55:06Guy Raz?

  Now, this manufacturer, Fine Technique, I mean, were they able to, I mean, given the demand, right? And you had ordered a million blades from them.

• 55:16Speaker 02

  Yep.

• 55:16Guy Raz?

  But each kit was coming with three to five blades, I guess.

• 55:20Speaker 02

  Three, yeah.

• 55:22Guy Raz?

  I mean, were you confident that they could ramp up production for you?

• 55:26Speaker 02

  In the short term, yes. In the medium to long term, we knew that we were going to need many millions a month.

• 55:31Speaker 03

  Moreover, while the product when we launched, we thought was really good, we immediately, and we sort of knew this already, but one of the beauty of, you know, having direct relationships with customers is that we immediately started getting all sorts of feedback, which like, oh, I like this, but could you add that trimmer blade thing on the back? Could you, you know, make the thing more flexible? It's, it would be really difficult to meaningfully inflect product improvement without actually owning the manufacturing process. So from even before we launched, we're like, we're gonna, we're gonna have to own this thing at some point. Maybe not the whole factory, but we need to own our own production line. Like, we have to be vertically integrated.

• 56:09Guy Raz?

  So, so it was clear to you that one solution could be to build a product line in their factory that would be dedicated just to Harry's and, and that was, that was a potential solution. Did you propose this idea to anyone?

• 56:26Speaker 03

  Yeah, in some ways that would have been the logical place to start. So we did have that conversation with them. And what, what wound up happening is the conversation moved from, well, we could, you know, try to have some sort of joint production line, or, you know, we could buy this thing outright.

• 56:45Guy Raz?

  Wow. I mean, this is like two months into your business where you're having this conversation, I think, something like that.

• 56:51Speaker 03

  Yeah, it was a little bit crazy. And, you know, I actually remember one of our investors.

• 56:59Speaker 03

  Who invested personally in our seed round. His name's Lee. You know, we were talking about this, the idea of vertical integration with him in the seed round. And he was like, well, how much money would it cost to buy the factory? And I was like, I don't know, probably like $100 million. And he was like, well, you should probably launch the brand first and see if it works. But if it does, come talk to me. So I think Jeff and I sort of like took that to heart. And yeah, we, we said, well, you know, probably didn't intend to try to go find $100 million to buy a factory two months into our company's existence, but the time is now. So let's, let's go see if we can make it happen.

• 57:35Guy Raz?

  When we come back in just a moment, how Jeff and Andy deal with the inevitable angst of marrying an old school German company with an upstart American one. Stay with us. I'm Guy Raz and you're listening to How I Built This.

• 58:05Guy Raz?

  Hey, welcome back to How I Built This. So it's around 2012, 2013, very early in the business. And Jeff and Andy are already looking to acquire a German company that makes their razors. And one of the reasons they want to move quickly, they're worried about competition.

• 58:23Speaker 03

  Yeah, I was, I was very worried that we would have our legs cut out from underneath us and particularly, you know, the risk of, you know, Gillette or somebody like that buying this thing and basically putting us out of business. And so we did not want, if we could avoid it, like a full blown competitive sales process. So time was of the essence to try to preempt that.

• 58:44Guy Raz?

  Hmm.

• 58:44Speaker 03

  Yeah, so we started talking to them and outlining what a deal, you know, could look like and then had to go figure out how to find $100 million to, to finance it.

• 58:57Guy Raz?

  So how did you? I mean, how did you do that?

• 59:00Speaker 03

  How did we do that?

• 59:01Guy Raz?

  Yeah.

• 59:02Speaker 03

  Well, we called Lee, who, as I mentioned, had invested personally in our seed round. And he was at a hedge fund, Tiger Global, and called him and said, hey, Lee, remember about that that factory thing we chatted about back in December? Well, we launched, like, the business is doing well.

• 59:24Speaker 03

  And there might be an opportunity to actually go buy that. And he said, well, okay, cool. Come up next week and talk to me and my partner about it. So we went up to Midtown to meet with him and his partner and pitched them on this idea.

• 59:40Speaker 02

  And we had a bunch of other great existing investors. And so I think with like, you know, Lee's excitement and support, that helped us to start to build like what, you know, a syndicate essentially of of investors who who would want to do this with us.

• 59:55Speaker 03

  And so we were able to get commitments for $65 million of equity. We then went to Germany to raise $35 million of debt, which was a whole different challenge to convince these like very conservative German bank lenders to lend us the money to go buy this factory.

• 1:00:15Speaker 02

  The funniest thing about the negotiating process was that we we didn't have a conference room in our office. And so Andy was sitting in like with like a makeshift table in the stairwell next to our office doing all of this, you know, on the phone with Germany with papers are everywhere like for for months on end.

• 1:00:33Guy Raz?

  All right, so now, I mean, once this is this is done, I mean, you now own a razor blade company. I want to ask you about so many things about it, but just, I mean, essentially, this makes you what, you know, it's a term we hear a lot on the show and elsewhere, vertically integrated. Now you own, you're not dependent on a supplier to make your your product. You make it yourself.

• 1:00:59Speaker 03

  Yeah, we went. You know, from a, you know, a, you know, a sort of technology-enabled startup, you know, that was doing, I don't know what we were doing at the time, Jeff, you know, five or $10 million of revenue on an annualized basis to like a fully vertically-integrated global consumer packaged goods company overnight, which was both exciting and daunting. I distinctly remember, you know, they put us up effectively on like milk crates on the factory floor and gathered all the workers to like announce this and to introduce ourselves. And we're looking out there at 300 or 400 German factory workers and it was definitely like an, oh crap moment of, you know, like it was exciting, but at the other time it was like, what did we get ourselves into here?

• 1:01:44Guy Raz?

  And, and now you, you went from 30 people who worked for Harry's to having 420 additional people who worked for this company.

• 1:01:53Speaker 02

  Yeah, and we felt a lot of responsibility to them. Felt like the whole town of Eisfeld was there hearing us talk about the future of this factory and like, we better make it work.

• 1:02:03Speaker 03

  I think in retrospect, we were slow to really, yeah, say, hey, this is Harry's. You know, we've got a certain set of values. We've got a certain way of doing things because, you know, they were bigger than us and, and we didn't want to upset the apple cart and we didn't know, you know, like we're not manufacturing experts, you know, we're trusting them to run the factory, but we did, we did need to integrate in some way, shape or form.

• 1:02:28Guy Raz?

  And, and what about just cultural differences, you know? What were some of the challenges that you had to work through?

• 1:02:37Speaker 03

  We might need three hours for my, my German-American, you know, cultural adventures. Probably the biggest difference that we had to work through is that, you know, we were a fast-moving entrepreneurial culture, like test, learn, iterate, like two steps forward, one step back. And the Germans perceived that as just, these guys have no idea what they're doing. It's, it's complete chaos. It's, it's unorganized, disorganized. But, you know, the Germans are a lot of planning before doing. And the American perception of the German team was they're not doing anything. Why they're not working, they're moving slowly. And of course, in a manufacturing environment, like you need to be more planful. You can't just like test and learn things on the fly on a website. You can do that stuff. So it was, it was challenging.

• 1:03:22Guy Raz?

  Now that you owned this factory, I mean, there were competitors out there and there were some competitors who started even before you, like Dollar Shave Club and, you know, obviously the big ones like Gillette and Schick. Now that you owned your own production facility, presumably it puts you in a, I mean, a slightly different position than, say, like a Dollar Shave Club, which I don't think owned its own factory.

• 1:03:46Speaker 02

  Right. And I think that did differentiate us from, from others. I think we, we sort of at one point said, said we were kind of the only truly vertically integrated company in the shave industry in that we literally grind steel and make razor blades and deliver them to your door vis a vis our own kind of e-commerce platform. And having that whole loop from the customer back to the factory was like an area of, of advantage for us, I think, at the time. And as Andy mentioned, we had all these ideas from customers and how we wanted to improve the product. And now we actually had the capability to go back to the very source and do that directly.

• 1:04:21Guy Raz?

  I wonder with respect to your, your competitors, I mean, you know, sometimes people on the show will say, well, I didn't, I don't pay attention to my competitors. I don't. But I'm not sure that's necessarily a good thing. I mean, I, I think that sometimes it's important to look at what your competitors are doing and to, to have a competitive sensibility to, to feel like you really want to beat them. And did you guys have any of that?

• 1:04:45Speaker 03

  It was an interesting dynamic because Gillette globally had, you know, 70% market share, like truly insane. And, you know, some people looked at that and said, my gosh, like, you know, that's crazy to take those guys on, like, you know, and they're owned by Practor and Gamble, the biggest, baddest CPG company on the planet. And I think for us, it was always helpful to sort of have this, you know, there was like a David and Goliath narrative that I think played into our brand and that played into, you know, customers getting behind us. And I think we paid a lot less attention to Dollar Shave

• 1:05:28Speaker 03

  Club or, you know, other upstarts. Like what everybody else was doing was sort of immaterial at the end of the day relative to what Gillette was doing.

• 1:05:36Guy Raz?

  Tell me how you, I mean, so, so essentially you got this, you've got your, your production facility and

• 1:05:45Guy Raz?

  I think you guys really went, maybe aggressively isn't the right word, but you really went for it in terms of raising capital for the next couple of years. And there's debate about this right now. A lot of people, there are lots of people who are saying, "Well, in the last 10 years, this idea of growth, growth, growth, growth, maybe not the best approach." Other people say, "Well, but that is the best approach. You've got to raise a lot of money and grow because otherwise you won't be able to establish a foothold." Talk to me a little bit about the strategy of raising money and raising more capital. What, I mean, I'm assuming it was to fuel faster growth.

• 1:06:26Speaker 02

  Yeah. So, one of the things that happened at Harry's really started beginning in late 2013, so call it six months after we launched, and then through 2014, was that we started to really learn how to market to people online and get them to come to our website. And started to grow in ways that we had not anticipated. And so, in 2014, I think our plan was to do like $10 million of revenue or something. And by like June, we'd already done $10 million revenue and we were on the way to do 20 or more. And then, at the same time, we were recognizing we were running out of factory capacity. And the industry was starting to change. Like, as you'd mentioned, Dollar Shave Club had launched. Gillette was out there changing. Like, it was just a dynamic picture.

• 1:07:11Speaker 02

  And so, we're like, "Okay, we think this is an important time for us to actually continue to grow, to really establish ourselves as a strong brand in this space." And as a result, we ended up raising a fair bit of capital. I would say at least half of that capital, those kind of early rounds of capital, went to Germany to sort of build out the factory and the plant. I remember sitting there, gosh, this was probably 2016, 2015, with a reporter who was asking us the same question. And I was like, "Look around." There were like cranes building new buildings and dropping in heavy equipment like everywhere. I was like, "This is where all the money's going."

• 1:07:48Guy Raz?

  So as you mentioned earlier, getting people to try something once is one thing, but then getting them to try it again and again is another thing. And part of that was obviously the quality of the product and the design and the price point. But did you also see Gillette lowering its price to start to match what you guys and some of the other competitive companies were offering at lower rates?

• 1:08:17Speaker 02

  Yeah, I think actually when we really started to sort of have competitors take notice was after we launched at retail.

• 1:08:25Guy Raz?

  Yep, 16, you were at Target, right?

• 1:08:27Speaker 02

  We launched at Target. We met Target in 2014. We spoke at their design month, and we liked them. I mean, I think that what struck me when we first met them was that they talked about their customer as a guest. Like, we feel like if, I don't know, we're not sure about Harry's, but if the guest tells us they want Harry's, then we should be serious about giving the guest some Harry's. And with Target, and then we launched at Walmart in 2018, and then we had to kind of work with Target to try to bring Harry's to life in their stores in a way that would be unique and sort of exciting and compelling to us. And in an aisle that was a source of frustration for lots of guys, it was one of the reasons why we started the company. And so we didn't just want to kind of do the same thing as everybody else.

• 1:09:12Guy Raz?

  And so when you started to sell in Target, you started, this is when you started to see Gillette change its response. And what did you see?

• 1:09:22Speaker 03

  Yeah. When we launched in Target, we took over 50% market share of the category at Target overnight.

• 1:09:30Guy Raz?

  Wow.

• 1:09:31Speaker 03

  And so whoever was sitting in Cincinnati at Procter & Gamble when that report came through probably fell out of their chair.

• 1:09:37Guy Raz?

  Yeah, that's crazy.

• 1:09:39Speaker 03

  I mean, it blew all of our, I mean, it blew Target's expectations away. It blew our own personal expectations away. It certainly sent us into a bit of crisis mode as it related to supply chain and manufacturing razor blades. And I think it was that moment probably that some of the traditional CPG players got religion that like, hey, these aren't like e-commerce startups. Like, these are serious consumer brands that are threatening our core franchises. And yeah, that's when you start to see much more aggressive responses in terms of price action.

• 1:10:13Guy Raz?

  Yeah.

• 1:10:13Speaker 02

  And I honestly feel like That was one of like the greatest victories that we've had since we started at Harry's. Like, we got one of the biggest companies in the industry to drop their prices, to be more consumer centric, to try to sort of engage with us. And on the marketing side, I think the place where we went public the most was they created a campaign, it was to the song Welcome Back, and it said that most of the customers who try Harry's leave Harry's. And that just wasn't true. Like, we had all the data of our direct-to-consumer business, and so we sent them back a letter with literally all the data, where like, every cohort of customers since the beginning of Harry's, the majority of customers who try Harry's stay with Harry's.

• 1:10:58Speaker 02

  They didn't really respond, and so we eventually just took that letter and made it public. It was written by our lawyers, but it was kind of funny, tongue-in-cheek. I think that's the point, when our customer base really came to our defense and said, okay, like, it's kind of messed up that these guys are picking on you.

• 1:11:11Guy Raz?

  And did Gillette back off?

• 1:11:12Speaker 02

  They just stopped running the campaign.

• 1:11:14Speaker 03

  Yeah, they stopped. I think they realized that them, as the Goliath picking on the David, was not a good strategy.

• 1:11:21Guy Raz?

  One of the things that I'm curious about, something that you did, you know, around 2018, is you established an incubator, you called Harry's Labs. And I know it's changed somewhat, a little bit from what it originally was designed to do, but essentially, it's an accelerator, right? You've developed products in-house, and then you've purchased kind of small brands and made them bigger. But before we talk about the details, was the idea here about diversification? Because at some point, right, there was going to be more competition in this space, and your market share might have stalled out.

• 1:12:05Guy Raz?

  So was that the idea behind creating an internal incubator?

• 1:12:11Speaker 02

  Yeah, I think that was part of it. You know, Harry's was doing great, but we were kind of looking at this saying, okay, how big could Harry's really, really be over time? Even if we got to, you know, huge market shares everywhere, like there's going to be some cap on our growth and shave. And so if we thought about it, we thought, hey, like, you know, if we could increase our addressable market, not just to kind of men's grooming and personal care, but to all of CPG, that's a pretty significant sort of shift in the opportunity set that we have. And then we're starting to build good relationships with some of these great retailers like Walmart and Target and, you know, later Kroger and grocery and Meyer and Costco and CVS and Walgreens and all these places.

• 1:12:55Speaker 02

  And they're excited about this. They're excited about us building brands online that are kind of modern brands that have interest and awareness around them and then coming to retail eventually.

• 1:13:04Speaker 03

  Yeah, you know, the vision really evolved from, hey, we're going to build, you know, a next generation Gillette or a next generation Old Spice, you know, from a Harry's brand standpoint to, hey, we're going to build a next generation, you know, Procter and Gamble. Like, we want a, we want a family of brands. We had, you know, an idea for a women's brand in the space, so that was kind of a logical place for us to start.

• 1:13:28Guy Raz?

  So while you're, you sort of launched the lab and begin to incubate ideas, I think the first one was Flamingo, which is a woman's razor and skincare brand.

• 1:13:40Speaker 02

  Yep.

• 1:13:41Guy Raz?

  You are approached by Edgewell, which is a company that I think that owns Schick and tons of other, you know, Banana Bode and Hawaiian Tropic, a bunch of different brands.

• 1:13:54Speaker 02

  Yep.

• 1:13:55Guy Raz?

  Essentially, they decide, they, they offer to acquire you. In, in May 2019, it's announced that they would buy Harry's for close to $1.4 billion in stock and in cash. I'm assuming that, you know, now you're, you know, roughly six years in, your investors may, they want to return. And was that the thinking behind, behind the acquisition, agreeing to it?

• 1:14:20Speaker 03

  It was certainly a benefit of doing the deal, but it wasn't. It was a little bit more serendipitous than that in that Edgewell, as you mentioned, owns Schick and Schick historically had been the number two to Gillette and Gillette is the 300 pound gorilla and we thought it was potentially compelling to combine with Schick and have a more formidable competitor vis a vis Gillette. And, you know, we were actually, you know, Jeff and I were talking about like, hey, could we buy these guys? I actually talked to a couple of private equity firms about, because Edgewell was a public company, but a reasonably small public company, about trying to buy them, take them private and

• 1:15:03Speaker 03

  fold it into our business. That was actually how it started. And we could never get the math to work to take them private, but it's a small industry. And so we got to know them a little bit through that process. And yeah, at some point, they turned around and said, well, why don't you, why don't we buy you guys, but we'll just give you the keys.

• 1:15:20Guy Raz?

  You guys were going to be the co-presidents of Edgewell.

• 1:15:23Speaker 02

  Yeah, in North America.

• 1:15:24Speaker 03

  Yeah, it was, it was very much fine technic all over again in that sense.

• 1:15:28Guy Raz?

  Wow.

• 1:15:29Speaker 03

  While they were acquiring us, it was a reverse merger in practice. And, and yeah, it was the same level of skepticism of like, hey, do these guys, you know, Jeff and Andy, do they value, you know, what we bring to the table there? You know, they've got their young fancy New York, you know, startup workforce and we're out here in suburban Connecticut, you know, doing things more traditionally. And so there was a lot of, you know, trust building and, and, you know, the same as Jeff mentioned, we were going to need our team to stick around to make this work, but we were also going to need their team to stick around and make this work and figure out a way to bring these cultures together.

• 1:16:04Guy Raz?

  So you were, so you were really investing a lot of time and energy into this because, I mean, obviously you wanted it to go well.

• 1:16:12Speaker 03

  Yep.

• 1:16:14Guy Raz?

  But ultimately, the merger got blocked and what, not by you or Edgewell, but, but by the Federal Trade Commission.

• 1:16:22Speaker 02

  Yeah.

• 1:16:22Guy Raz?

  They basically said that was like, if you guys were one company.

• 1:16:27Guy Raz?

  It would stifle competition, like it would be an antitrust thing.

• 1:16:31Speaker 02

  Yeah.

• 1:16:32Guy Raz?

  So do you remember the moment when you heard about that?

• 1:16:36Speaker 03

  Yeah, we, the actual moment was, was not a surprise because as things continued to progress, it got clearer and clearer that we were fighting an uphill battle. And so, you know, while it wasn't a surprise, it was certainly still, you know, a bit of a, of a gut punch and, you know, we felt like we had sort of let our team, you know, down this path and on this journey and, and, you know, kind of had to, to then mea culpa and, and, and pick ourselves up and, and get everybody re motivated around, you know, a standalone vision and path.

• 1:17:12Speaker 02

  It started, I think, with Andy and I apologizing. So as Andy mentioned, we had to do this mea culpa, which was important for us to say both to each other and to the team, like, hey, you've trusted us on this journey. We're really sorry that like this happened the way that it happened. We didn't think it was going to happen this way. And we know that it's caused you all a lot of work. We still believe that we have a really compelling and exciting vision for the future. This whole thing about Next Gen CPG, in some ways, it's going to be easier and better for us to just build these brands from scratch ourselves or buy them. And actually, Andy and I were talking about this the other day. I remember a couple of folks coming up to us, like people have been at Harry's for a long time and being like, just so you guys know, we're in. Whatever you need, we're in, we got you. Like, we're going to make this thing awesome. And for us, that was

• 1:17:54Speaker 02

  like so uplifting and inspiring. And investors too, just calling us and be like, we got your back.

• 1:17:59Guy Raz?

  Yeah. And then, three weeks later, COVID starts.

• 1:18:03Speaker 02

  Yeah.

• 1:18:04Speaker 03

  Nice one-two punch for us, huh?

• 1:18:05Speaker 02

  I know. In some ways, in some ways, COVID was a good thing for us. And in some ways, it was a hard thing. In the, on the good side, you know, all the people who are like, oh, my gosh, Harry is like, this business is in crisis. This deal got blocked. What are you going to do? Like, now everyone was in crisis. And so we're like, welcome to our world. It's like, that was a good thing. Also, our business did really well during COVID. So, you know, people stopped buying razor blades in stores so much, but they started buying lots of stuff online. And, you know, Flamingo, which is a brand we mentioned, has an amazing wax, at-home wax product. And people stopped going to, you know, sort of salons to get wax. And so that product totally took off. And then our online business, you know, DTC also started to grow in a significant

• 1:18:49Speaker 02

  way because people weren't going to stores. And so I think we actually, we also turned the business to profitability. We were EBITDA positive. And so, and I think that business, underlying business momentum then helped us to start to convince the team that, hey, like, this is going to be awesome. Like, we have a great sort of standalone business and exciting future vision. Like, let's all kind of do this together.

• 1:19:13Guy Raz?

  Yeah. So when you think about where you are today, right now, what are we, about 11 years into the company, 10 years into the company?

• 1:19:24Speaker 02

  Yeah, a little over 10. That makes us feel old, by the way.

• 1:19:29Guy Raz?

  You're both still pretty young. Both in your 40s, right?

• 1:19:36Guy Raz?

  How much of where you are today, do you attribute to the work and the strategy? And how much do you think has to do with luck? First to you, Jeff?

• 1:19:47Speaker 02

  I think that there's certainly been a lot of serendipity and luck in my life. Like, you know, having been sitting with Neil after class one day when Dave walked up with the idea for Warby Parker, like Andy, having gotten to know Andy at Bain, like, gosh, I could have made 100 different decisions in life that I wouldn't have, where I wouldn't have gotten to know him. And I think like, in making the ideas come to life, I think we've worked really hard to go do that. And I think made a lot of conscious decisions over time. Some days, I'm like, oh, gosh, I just wish we could get a break. And then we get a great break and it's awesome and we learned something new. But I think that's probably a function of the fact that we have a team that's continuing to iterate and innovate.

• 1:20:30Speaker 02

  And so I guess, you know, in that way, like, we do kind of manufacture our own locker success.

• 1:20:36Speaker 03

  I think Jeff's being modest because I

• 1:20:40Speaker 03

  Would find, he'd be a really lucky guy to have started two multi-billion dollar brands and just gotten lucky. So there's probably, you know, 15 or 20 people on the planet who can say that they've successfully started two multi-billion dollar companies. I would ascribe the lucky part to be like situation and circumstance. Like, I was lucky to having access to like amazing education and, you know, the, a network where fundraising was easier than it might be for somebody who was born into a different environment. You know, I think the adversity along the way and kind of determination to sort of push through that adversity is, is not luck at all. It's just hard work. It's me and Jeff that have to sort of steer the ship there.

• 1:21:24Speaker 03

  So, you know, I don't think that part is, is luck. A lot of that's hard work.

• 1:21:31Guy Raz?

  That's Andy Katz-Mayfield and Jeff Raider, co-founders of Harry's. So Jeff, are you excited to teach your 11-year-old to shave one day?

• 1:21:43Speaker 02

  Oh, yeah, totally. You know, we had, at Harry's, we made these razors in our very early days that were kids' razors. So they have like kind of toy heads and you could just like shave with them, not actually have blades in them. And we used to sort of stand there next to the mirror and shave together, him with like his, you know, little razor and, and me with like a regular Harry's razor. And it was great.

• 1:22:07Guy Raz?

  Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show, and it's totally free. This episode was produced by Liz Metzger with music composed by Ramtin Arablouei. It was edited by Neva Grant with research help from Katherine Seifer. Our production staff also includes J.C. Howard, Casey Herman, Kerry Thompson, Sam Paulson, Alex Chung, Elaine Coats, John Isabella, Chris Messini, and Carla Estevez. I'm Guy Raz, and you've been listening to How I Built This.