Ed. Note: The opinions, beliefs and viewpoints expressed by the contributor do not necessarily reflect the opinions, beliefs, and viewpoints of this publication. The breadth of the AlleyWatch contributor network is a key strength of AlleyWatch. With the exception of a few writers, tech journalism is usually devoid of fact checking, research, analysis and insight. Online media companies with VC investors often pander to those VCs and hype their portfolio companies. Considering the dearth of insightful writing covering the startup ecosystem, First Round Capital’s blog First Round Review – Actionable Insights for Technology Entrepreneurs seems like a great idea. First Round Capital Partner Josh Kopelman even boldly said, “In short, our (modest) goal is to build the Harvard Business Review (HBR) for startups”. So I was shocked to find fluffy, promotional writing on First Round Review (FRR).
Last Friday, FRR published an article about Harry’s, a grooming startup, titled, This Startup Cracked a $2.4 Billion Market with Branding — Here’s Their Formula. The definition of cracking a market is generally based on revenue and market share when there is an existing market. If First Round and Harry’s cannot share that information, they should not make outrageous allegations that they cannot back up. The article also discusses Harry’s branding strategy at length, but their analysis is very biased and lacks actionable insight. (For this article, I reached out to the First Round Review’s Editor Camille Ricketts and Co-Founder/Partner Howard Morgan for comments and some clarity. Ricketts responded with no comment to my request, and Morgan did not respond. Ricketts eventually responded to a direct question I posed to her within the article’s Disqus comments section.)
According to HBR’s guidelines for authors, it has one goal: to be the source of the best new ideas for people creating, leading, and transforming business. All articles are written for senior managers, by experts whose authority comes from careful analysis, study, and experience. By contrast, the FRR article offered branding strategy that included a section on “drawing napkin sketches” and was not written by a marketing or branding expert. Yes, napkin sketches. I’m not kidding. The whole article is an insult to the startup community. Besides being very biased, it lacks insight and offers a very poor branding analysis of Harry’s and understanding of branding in general.
If FRR sincerely wanted to discuss successful startup brands in the grooming/beauty industry in order to educate the startup community, it should take a look at Julep or Memebox. Both of these companies have accomplished more with a fraction of the funding that Harry’s has gotten. Julep has a multi-category product portfolio and has received editorial mentions and multiple product awards for creating very innovative products. To date, Julep has launched over 300 Julep-branded nail colors, cosmetics and skincare products each year. (Compare that to Harry’s two products.) Julep has doubled its revenue each year for the past couple years, and, while it would not reveal exact numbers, the company stated it brought in between $1M and $5M in a Securities and Exchange Commission filing from October 2011. Julep has an impressive distribution deal with Sephora, the leading global beauty retailer, as well as Nordstrom and QVC, which has exponentially expanded its reach in the past two years.
Korean startup Memebox is now an international hit after launching just two years ago. In its first month, Memebox achieved $19,000 in revenue, followed by $54,000 in the second and $180,000 in the third. Despite a minimal marketing and sales presence in the U.S., Memebox has managed to pick up 10,000 customers across the U.S. and joined Y Combinator (YC) to help with its expansion here. During the YC program, Memebox hit $15M/month and is on track book $150M in revenue for 2014. Memebox has only raised $1.3M so far. By contrast, Harry’s, which was founded in October 2011 with $4M in pre-launch funding plus two additional rounds of funding for a total of $136.5M, has not accomplished much, despite their advantages of having access to money and having started nearly three years ago. It only has two products, although it only costs $2M to launch a brand with five SKUs. While FRR may claim to be aiming to be like HBR, its last article was merely a fluffy publicity piece for Harry’s, with no actionable insight.
Rebuttal to the FRR article
The primary problem with the FRR article is the premise: Harry’s is vying against giants like Gillette and Schick for a $2.4 billion market. “Sounds like a moonshot, except for the fact that Harry’s has raised $136.5 million from the tech venture community.” That FRR title states that Harry’s cracked the market by raising lots of money, but the grooming industry is a very tough industry to crack. Even global beauty giant L’Oreal has never cracked the men’s grooming market (either the mass or prestige/luxury sectors), despite having deep pockets, excellent R&D and its own factories. The majority of L’Oreal’s grooming brands, such as L’Oreal Men Expert, Biotherm Homme, Lancôme Homme, and Armani Skincare for Men have always trailed behind Axe, Old Spice, Nivea Men, Lab Series, Clinique Men and Zirh. Biotherm Homme even pulled out of the US market and relaunched years later. The fact that Harry’s got $122.5M in funding to buy a factory is impressive, but extremely odd. Never before has a year-old startup that is not a household name or not market leader that’s achieved major milestones gotten this kind of additional funding to acquire a factory in a leveraged buyout deal. The funding for the acquisition of the factory is merely indicative of their connections to venture capital and private equity folks, nothing more. Owning a factory may improve margins, and access to capital may offer more opportunity to compete, but neither will guarantee success. In the CPG/beauty/grooming sector, the key to success is great branding and product along with business acumen.
The secondary premise of this article doesn’t make sense either: “On top of that, one of its co-founders is Jeffrey Raider, who played the same role at Warby Parker and has experience cracking markets with cool branding.” What was Raider’s role at Warby Parker? That’s not clear, but a quick look at his background on LinkedIn reveals that Raider does not have a branding, product or ecommerce background. Warby Parker is indeed a great brand, but Harry’s Co-Founder Raider did not create the branding. Harry’s other Co-Founder, Andy Katz Mayfield, who was not a part of Warby Parker, does not have a branding, marketing or ecommerce background, either.
The rest of the article explores Harry’s branding. The Harry’s founders decided that there had to be a better way to infuse shaving with an affordable brand. If you consider cost per blade in respect to blade duration, Harry’s is not a more affordable brand. Harry’s razor costs $8 for four blades; Harry’s claims that their razor lasts about six days. Gillette Fusion razor costs $16.40 for four blades; Gillette claims it lasts five weeks. (I shave my legs using Gillette Fusion blades and can attest to its five-week claim.) If you compare shave creams, Harry’s is 3.65 times more expensive than Gillette. (Harry’s Shave Cream is $8 for 3.4 oz. Meanwhile, Gillette Fusion Shave Gel is a bargain by comparison and costs $7.78 for a pack of two 5.9oz. tubes.)
Then the article dives into Harry’s branding and says, “When your goal is to sell an experience, story has to be central to your strategy.” Neither Harry’s nor the article explains what the Harry’s story is. Who is Harry’s? What’s the brand’s tagline and mission? If their mission is value, the above paragraph explains how their value proposition is flawed. The brand doesn’t have a clear, compelling or memorable story. In some instances, their story doesn’t make sense at all: “When the company debuted a line of limited edition razor handles, (Director of Digital Products Mathew )Tully and (Design Director Garret) Morin ventured to upstate New York to film a vignette of a man spending a weekend alone on a lake.” Why would a man, alone for a week on a lake, bother to shave? This plot line isn’t great for selling razors.
The article then goes on to discuss three things critical to any brand’s success:
1) Turn customers into advocates. “What’s memorable becomes a conversation piece.” Unlike the Old Spice campaigns and the first Dollar Shave Club video, there has never been much conversation surrounding the Harry’s vignettes or limited edition razors mentioned in the article.
2) Stay part of the conversation. “Last year, Harry’s launched National Shave Day on December 1 to much fanfare — riding on the coattails of another cultural facial hair phenomena: Movember.” While it’s great to launch a National Shave Day, Harry’s did not stay part of the Movember conversation at all and merely rode on its coattails for selfish purposes. Movember is more than a cultural hair phenomenon. Its purpose is to raise awareness for men’s health – specifically prostate and testicular cancer. Harry’s could have contributed with social impact to the cause in the same way Estee Lauder has with the Pink Ribbon Foundation and the Breast Cancer Foundation.
3) Emphasize expertise. “Harry’s took two actions that boosted their credibility as shaving savants: They opened their own corner barber shop in Manhattan, and they invested a whopping $100 million to buy their own razor factory in Germany.” The Harry’s Corner Barber Shop does not lend any credibility to Harry’s being a shaving savant. Becca, the receptionist at the Corner Shop told me, “Harry’s razors and products are not used at the Corner Shop since they are not meant for a barber experience. So we use other brands, like Queen Helene and Baxter of California.” Old school barbershops offer hot shaves with straight razors, and Harry’s does not make a straight razor, despite owning a razor factory. Since it does not have a pre-shave oil or after-shave product, Harry’s does not have a full shave offering to in order to offer a unique or complete shaving experience. Harry’s does not have hair care or hair styling products for a unique barber haircut experience, either. What the Corner Shop offers is a very generic barbershop experience, unlike what one would expect to experience at a branded barber shop or salon, like the Art of Shave Barber Shop, Blind Barber, Freeman’s, Martial Vivot, Frederic Fekkai, Bumble & Bumble or Redken. Those salons use their own proprietary products in their services. Unlike the branded salons founded by stylists like Fekkai or Vivot, the founding team of Harry’s has no authority or expertise in the category of shaving, or in the broader category of personal care/beauty/grooming. Before investing in real estate to promote Baxter and Queen Helene, Harry’s should have created a complete shave portfolio and haircare and styling products to use for their services at their Corner Shop.
Next the part of the article discusses Harry’s formula for brand building, which isn’t original. The fact that First Round Review mentions mood boards, swatches, and napkin sketches as part of their brand development strategy is ridiculous. It is clear that Harry’s does not understand global branding, or marketing to an audience beyond Brooklyn hipster types. For the first 10 months, the men featured in their imagery were primarily white Brooklyn hipster men. On the Harry’s Facebook page, people ridiculed the brand and asked, “Is this razor for white people who all look the same?” After I brought attention to this in a Business Insider article, Harry’s deleted the Facebook status update and picture. Additionally, part of Harry’s brand code includes a Woolley Mammoth that’s more fitting for Crest for Kids than a brand for grown men.
When you look at the consumer companies that have successfully taken on major competitors by projecting a new type of “cool” — like Warby Parker, or TOM’s Shoes, or Patagonia — it’s clear that branding extends into and shapes the products themselves. Warby, TOM’s and Patagonia all have extensive product portfolios and their products are part of their social impact. Harry’s has only two products. Though Harry’s designed a razor handle, it has not done anything distinctive for its shave cream, which is encased in stock packaging. The Harry’s razor handle comes in multiple colors, but the color options don’t drive more purchases, since a customer only needs one handle. Harry’s Design Director Garrett Morin says, “He (the Harry’s customer) doesn’t want a diamond-plated bathroom. He just wants a good shave.” Well, I don’t think he wants four different colored razor handles, either.
Most marketers will agree that “the stories you tell need to supplement the shopping and purchase experience.” The problem with Harry’s stories and visuals is that Harry’s products are background props instead of being the main focus, so the stories lose impact. My husband thought that the #OwnYourMorning campaign was about enjoying a great breakfast, rather than a good shave. He didn’t notice the razor, since it blended in. The problem with Harry’s is that it has not developed a compelling story or consistent theme. Their stories are generalized and don’t really pertain to the products. Great beauty and fashion brands like NARS and Alexander McQueen usually tie in the stories to a collection and its products. They use elements of the product, such as the product names, packaging, copy, color, and texture, to tell the story. In doing so, they supplement the shopping experience.
Lesson learned: No VC publication should be seen as anything other than portfolio pushing.
Image credit: CC by Lara Cores