Today we announced our investment in Dollar Shave Club, a consumer subscription service focused on men’s grooming. I am honored to be joining the board of the company Michael Dubin has so successfully introduced to the world.

eCommerce companies can be challenging for venture investors. They tend to require lots of capital and usually have low multiples. There are a few cases where outliers can emerge. In subscription commerce, a few rules have to be met for large companies to be created. First, the market must be enormously large. Subscription, by its very nature, usually appeals to a subset of any market it aims to serve. Consumers must intend to make a long-term commitment to a brand in order to subscribe and must not tire of of the service. My experience running eMusic taught me the key metrics to look for in subscription models in order for large companies to be built. Churn rates must be very low. If your average customer leaves after, say, nine months, a large company cannot be built. Your average customer must stay in the service for many years. Think cable, satellite radio, and Netflix. These companies have average monthly churn rates of less than 3%. In the razor market, brand loyalty is measured on the order of twenty-five years. You generally can acquire a customer for a lifetime. And that is exactly what Dollar Shave Club aims to do.

Even more exciting, however, is how Michael sets out to build the brand. He believes that brands are now publishers and must market themselves largely through content. His overwhelmingly successful launch video, viewed more than seven million times, instantly went viral and jointly conveyed the brand personality and the benefits of the service deftly. In this age where social media dominates our collective conversations, we believe very large brands can be built without the widespread use of paid traditional media. It will take several years for the incumbent CPG companies to master these new marketing arts. In the meantime, companies like DSC emerge and get very large despite the massive spend of the traditional guys. We refer to this as asymmetric marketing — no matter how much money spent by the incumbent, the new brand can still become very large for tiny fractions of that spend.

Michael and his fine team have exciting plans. They look to build an enormously successful men’s lifestyle brand. I hope you’ll give Dollar Shave Club a try. I loved the product so much, I invested in the company. ;-)