How Dollar Shave Club got started

Dubin: So the beginning of the story is about solving a problem for guys. And the problem that we’re solving at the very basic level, and that we have been very focused on for the last couple years, has been that razors are really expensive in the store. It’s a frustrating experience to go and buy them. You have to drive there. You have to park your car. You have to find the razor fortress. It’s always locked. You have to find the guy with the key. He’s always doing something else that he doesn’t want to be helpful. We actually just launched a bunch of TV commercials set in the store that kind of have some fun with that frustrating experience. They’re doing really well for us.

I launched a beta site in 2011, and I ran that for about eight months. I ran it from my apartment—it was totally bootstrapped—proving out the concept before going out to get some investment. And so I kind of funneled the early dollars from the beta phase into the production of the original video, which I used as a tool to help raise money.

Ultimately we closed our angel round in January of 2012, and that was $100,000 from an angel in L.A. And then we re-launched the site in March of 2012. We closed a million-dollar seed round on March 6th, 2012, which was coincidentally the same day that we launched the video.

The first couple days of that were terrifying. The site crashed because of the traffic, and the video had gone viral, and we ran out of inventory in the first six hours. And I mean, you know, I blocked a lot of that out because it was a very trying, difficult time to get through. You work so hard for years on this idea that everybody has told you is a terrible idea, and suddenly you’re about to prove them all wrong, and your wildest dreams turn into your worst nightmare.

And so that was an intense time. A lot of label-printing at the office, driving the labels down to the warehouse, which was a very small warehouse, not equipped for any commerce operation. I mean, literally there were days when I was taking the trash bags—we were printing out thousands of labels a day, and we were putting them into trash bags because that was the only thing that could carry them. And we were hurling them over the fence at night for the people to pick up the next morning and slap on the packages.

This was a fulfillment house that had never done any kind of mail order e-commerce or anything. They were doing things like wrapping up soap bars and putting them back in boxes for wholesale, or like sticking windshield wiper washer fluid pellets into tubes and putting it back on the truck. They were not experienced fulfilling customized e-commerce orders.

This was in Los Angeles?

This was all in L.A., yeah.

So how did you do that year?

We did $4 million in revenue in 2012. We did $19 million in 2013. And we did $65 million in 2014. And we’re now on a 100-million-dollar-plus annualized run rate. We did $8.5 million in revenue in December of 2014.

I would say that that was an intense period for hiring. We brought on a lot of great talent in the very early days that are still with us, all of them are still with us, and all in service of solving that kind of key problem.

How professionally produced was the video?

Not professionally at all. I spent about $4,500 on it. I wrote it. It was directed by a friend of mine who I had studied improv comedy with in New York when I lived there for about eight years. When I was working during the day at Time Inc. [The company that publishes Fortune. —Ed.], I was studying improv at night along with other things, taking some business classes, et cetera.

Somehow the story has gotten told that I am a former standup comic. That is not the case. I was never a professional comedian or actor. Maybe you can clarify that. But it’s sort of become this urban legend that I was a standup comic. I studied improv with a woman named Lucia Aniello, who became a friend, and she just happened to move to L.A. like two weeks before. And I said, ‘Hey, I’m launching this business and I want to launch this video. I want to film this video. Can you do it?’ And she did it for next to nothing.

And all that money basically went into production, and we probably shot it in about eight hours in the original warehouse in Gardena, Calif., where we were doing all the fulfillment at that time. So I remember leaving that shoot day and thinking to myself, ‘That was good. We did good work today.’ And then I got on a plane to go home for something, I forget what it was.

Which was where?

Philadelphia. I’m from Philadelphia. And I just remember thinking like, “We did some good work yesterday, and I’m excited to see how that turns out.” And I had no idea what would happen. I had no expectation for how the video would do. I knew when I saw it that it was good, and It was a piece of work that I was proud of.

Because it was funny.

It was funny, and it told the story really well. There’s a lot of funny videos on the Internet. And this one had a real purpose and a real story. And the reason it hit emotional pay-dirt for people was because there was an enormous amount of frustration. And finally here’s something that somebody’s doing about this really big problem. And we also created this piece of social content that was very sharable. Guys talk about how expensive razors are, and we gave them a piece of content that said, “Hey, remember this? We were just talking about this. Check this out. And it’s really funny.” So it went much more viral than I would have expected. And we would have planned a lot differently server-wise, inventory-wise, if we had known. It was a crazy time.

For more on Dollar Shave Club, read “The cutting edge of care” in the March 15, 2015 issue of Fortune magazine.