PG Procter and Gamble Co

By Paul Ziobro 

Being funny paid off handsomely for Michael Dubin.

The founder of Dollar Shave Club Inc. introduced his subscription model for selling razors to the world in 2012 with a slapstick YouTube video, in which he railed against high-price blades and deadpanned: "Our blades are f -- ing great."

Now, he is selling Dollar Shave Club to Unilever PLC for $1 billion cash, lining his and his investors' pockets and giving the company more ammunition to continue to go after the king of shaving, Procter & Gamble Co.'s Gillette. Mr. Dubin, who held on to a roughly 9% stake, stands to receive about $90 million from the sale, said people familiar with the matter.

Humor has long come naturally to the 37-year-old Pennsylvania native. He spent eight years after college honing his craft with classes at the famed improv group Upright Citizens Brigade in New York, while working television and marketing jobs.

But the fast rise of Dollar Shave Club also comes from Mr. Dubin's instincts as a marketer. He exploited men's long-held frustrations about the cost of razors and the inconvenience of shopping for them, and took advantage of an industry that was slow to change.

"He had a sense of what guys want to talk about and how to talk with them, rather than shout at them," said David Pakman, a partner at venture-capital firm Venrock, which led two rounds of funding for Dollar Shave Club and owns a 15% stake.

Mr. Dubin said the company grew out of an encounter with his friend's father at a California holiday party in 2010. He had asked Mr. Dubin, who had some e-commerce experience, to help him sell 250,000 razors that he had acquired from Asia. Their conversation sparked the idea for Dollar Shave Club.

But in 2011 the concept of selling blades for just $1 each through a subscription model was met with skepticism. Michael Jones, a former MySpace CEO who had founded Los Angeles-based tech incubator and investor Science Inc., recalled thinking that it would be hard to turn a profit after factoring in shipping costs.

Then, Mr. Dubin played a rough cut of the now famous YouTube spot. "The video pushed me over the edge," Mr. Jones said.

Mr. Dubin started the business out of his apartment in Venice, Calif., where he had moved to be near an ex-girlfriend. He assembled a team that included former executives from News Corp, AOL and Gilt Groupe. But his laid-back attitude continued to encounter resistance as he tried to disrupt an industry that's slow to change.

Ken Hill, who heads the U.S. arm of Korean razor maker Dorco Co., recalls his first meeting with Mr. Dubin before Dorco became Dollar Shave Club's supplier of blades and an investor. "He has on white pants, sneakers, and looked like he just rolled out of bed," Mr. Hill said in an interview. "I looked at my finance guy, rolled my eyes and said, 'Oh, boy.'"

A former executive with Schick, Mr. Hill had doubts about the subscription model. "It wasn't compelling enough to sign a contract, but it was certainly compelling for us to listen to him," he said. Dollar Shave Club had to pay for the first order upfront.

When orders poured in after his video went live in March 2012, Mr. Dubin had one small printer running nearly 24 hours a day, with a fan near it to keep the motor cool. The address labels were collected in trash bags, tossed over a fence to the fulfillment center and affixed to packages the next day. "That was a very raw time, the you-got-to-do-whatever-it-takes phase," Mr. Dubin said Wednesday.

Mr. Dubin continued to push the company introducing hair products, body washes and moist towelettes. A new product, called One Wipe Charlies, also introduced with a YouTube video called "Let's Talk About #2," was a bit uncomfortable to present to investors.

"He introduced it in a humorous way, but it was backed by data," said Mr. Pakman, of Venrock. The company raised about $150 million in venture capital to fuel its growth. Membership reached 3.2 million, and revenue is on pace to top $200 million this year.

While the growth came fast over the past four years, Mr. Dubin said he wasn't sure how far the company's come until it opened a fulfillment center in Torrance, Calif., in late 2015. "You get a sense of just how many tens of thousands of packages are going out everyday," Mr. Dubin said. "For the first time, when I looked at that, I said, 'This is a big business.'"

--Rolfe Winkler and Sharon Terlep contributed to this article.

Write to Paul Ziobro at Paul.Ziobro@wsj.com

(END) Dow Jones Newswires

July 20, 2016 21:51 ET (01:51 GMT)

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