THE EXPERIENCE was surreal. Jeff Raider and Andy Katz- Mayfield, the co-founders and co-CEOs of the trendy grooming-products startup Harry’s, were wearing suits and ties. They were surrounded by lawyers. And they had just experienced an hourslong grilling by antitrust regulators in a room at the Federal Trade Commission headquarters in Washington, D.C., a hulking limestone edifice on Pennsylvania Avenue. Their apparent sin: competing too well against razor giant Gillette.
Isn’t antitrust law supposed to work the other way?
Raider and Katz-Mayfield launched the New York City-based Harry’s in 2013 with the seemingly improbable idea of taking on not only Gillette but also Schick, two enormous brands owned by consumer packaged goods conglomerates that together controlled some 90 percent of the men’s shaving market at the time. Using a direct-to-consumer model initially, Harry’s became a player in shaving, with nearly 7 percent of U.S. nondisposable-razor sales in 2019.
Emboldened, Harry’s launched other personal-care brands and attacked its bigger rivals on their own turf, at retail stores such as Target and Walmart. This kind of accomplishment would have looked unthinkable to anyone familiar with the personal-care aisles a decade earlier. In just a few years, Harry’s, along with another DTC disrupter, Dollar Shave Club (acquired by Unilever for $1 billion in 2016), had helped slice Gillette’s share to around 50 percent, from north of 70.
And yet, because Harry’s funded its growth with a mega-haul of venture capital (some $375 million from 20 firms), it needed an exit strategy to reward investors, which typically means a buyout by a larger company or going public. In 2019, just such an opportunity presented itself when Edgewell Personal Care, a conglomerate headquartered in Shelton, Connecticut—and Schick’s parent company—offered $1.37 billion to buy Harry’s.
In the deal they negotiated, though, Raider, 40, and Katz-Mayfield, 38, were taking over much of Edgewell while keeping control of Harry’s. As co-presidents, they were going to run Edgewell’s American business, a portfolio of venerable if vulnerable brands— Playtex, Carefree, Hawaiian Tropic, Banana Boat—in need of some Millennial marketing mojo.
Then the feds showed up.
The January FTC meeting, eight months after the deal was announced, kicked off a series of intense sessions with each of the FTC’s five commissioners, plus countless prep sessions and debriefings. Harry’s had three law firms working on the deal, each with half a dozen lawyers assigned to it; Edgewell had its own representation. (“Try doing the hourly math on that,” Katz- Mayfield groans. “It’s not pretty.”)
What had seemed like a charmed startup finding a charmed exit was turning into something more complicated—and set many to wondering if the Harry’s experience spelled trouble for other challenger brands hoping to one day engineer similar exits.
Andy Katz-Mayfield and JeffRaider (shown here at Harry’s Manhattan HQ) met as college interns. Raider would later become part of the founding team at Warby Parker.
“Can you tell the difference between Gillette Fusion, Gillette Fusion Pro- Glide, Gillette Fusion ProShield, and Gillette Fusion ProShield Chill? No? Then why are they different prices?” asks the normally reserved and relentlessly diplomatic Raider in a rare break in form for him. He’s pointing out one of the core tensions in the shaving industry that made his company possible.
For decades, Gillette and Schick’s duopoly let them create confusing arrays of products—aerodynamic designs, colorful lube strips, and other purported innovations that might or might not represent true performance improvements—at a variety of prices. Without much competition, the companies were free to dictate what constituted value and reinforced the idea through large ad budgets.
The profusion of products also created an opportunity for a newcomer like Harry’s to build a business around simpler and lower-priced items without the theatrics. What Harry’s offered, instead, was a whimsical brand (its lovable logo is a line drawing of a woolly mammoth) and expertise at selling directly to consumers. Simplification included subscriptions, too—razors show up at your door and you don’t have to shop. Then Harry’s migrated to the real world, winning space in big chains such as Target and Walmart.
In winning at retail stores, Raider and Katz-Mayfield recognized that they might be able to pull off the same trick in other categories. In early 2018, the two raised $112 million to fund Harry’s Labs, a new division tasked with growing new brands, either by creating them or acquiring early-stage startups. The first product to market was a women’s shaving line named Flamingo that launched late that year.
At the same time, Edgewell was realizing that it needed to build a startup’s online capabilities for itself. Edgewell’s stock had been on an extended slide, and the company was in the process of promoting its CFO, Rod Little, to CEO, with a mandate to make the business more digitally savvy and relevant to younger consumers. Edgewell began flirting with Harry’s toward the end of 2018. Each had something the other needed. Even as Harry’s started to act like a conglomerate itself—stockpiling nine figures of cash for M&A is hardly scrapping—it had the operational resources of a much smaller company. Most urgently, Harry’s was reaching the limits of its razor technology and manufacturing capacity.
While a lot of shaver design is indeed gimmicky, making sharp and durable blades at scale, it turns out, is complicated. Although Harry’s owned a factory in Germany, Edgewell had decades of experience and vastly more capacity—enough that it would be a cinch for Harry’s to double its output with Edgewell’s help.
In the early months of 2019, the Harry’s founders and Little began to shape what a deal would look like. The fact was that Edgewell, which had spun off from Energizer’s battery business in 2015, was puny ($2.1 billion in sales) compared with Gillette’s parent company, Procter & Gamble ($71 billion in sales). The latter is the world’s largest CPG company, parent of such household names as Tide, Pampers, Crest, and Charmin, with a market cap then nearing $300 billion—more than 10 times Edgewell’s. To P&G, buying Harry’s would have been pocket change. To Edgewell, it was betting the company.
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