Illustration: Aïda Amer/Axios

With a pair of improbable billion-dollar acquisitions, huge conglomerates have snapped up both of the cheap shaving startups that shook up the men's grooming business.

The big picture: The deals — for Dollar Shave Club, Harry’s and yet a third startup called Bevel — reflect a trend in which new companies pop up and upend large industries, but don’t last long.

"What's happening in the grooming category is a microcosm of bigger industry shifts," says Robin Sherk, an analyst at CB Insights.

Giants like Amazon, Unilever and Walmart, though they are not necessarily stifling innovation, are swiftly buying out plucky companies that start to threaten them.

  • In the past two years, Walmart has scooped up two disruptive clothing companies: Bonobos, a maker of inexpensive yet cool clothes for men, and Eloquii, a popular online plus-size brand.
  • Amazon has used this playbook for decades, acquiring companies like and Zappos after they began to chip away at its market share.
  • Apple buys a company every few weeks, according to CEO Tim Cook, and has acquired 20 to 25 firms in just the last 6 months.

When it comes to shaving, the global industry is tens of millennia-old, going back to the cave days, and is now worth more than $20 billion a year. But there are just 5 major global razor manufacturers, including the startups, says David Pakman, a venture capitalist at Venrock Partners and an early Dollar Shave investor.

  • "It's very, very hard to enter the razor business," he says. "If you try, you will be sued for 3 to 5 years with a battery of patents. All the razor guys have tons of patents."
  • Yet Harry's and Dollar Shave instinctively sensed they were much more vulnerable than they looked.

Before the new companies came along, Schick and Gillette controlled around 90% of the U.S. market. Each charged around $20 for a three-week supply of popular brands like Mach III and Quattro, amounting to about a dollar a shave. And each had steadfast loyalty from its customers.

  • My dad has been using Gillette razors for 25 years. "I'll buy whatever T-shirt. I don't care. But my blades are like Netflix. It's the same cost every month, and I buy the same one every month."
  • Steve LeVine, my editor, has been using Gillette's Mach III for years, too. He even hunted them down when he was reporting from Pakistan.

Men were hooked on the same product month after month, overpaying but what was the alternative if your aim was a naked face?

  • Then came the upstarts: Dollar Shave, which offers an entire month's worth of blades for $1, quickly grabbed 8.5% of the market. That might not sound like much, but within the $3 billion U.S. men's grooming industry, it's over $250 million a year.
  • The rise of Dollar Shave and Harry's shrunk top dog Gillette's share from 70% of the market to 50%, CNBC reports.

Now they've been gobbled up.

Just this week, Edgewell, the parent company of Schick, spent $1.37 billion on Harry's, which was launched in 2013 by two men not named Harry (Jeff Raider and Andy Katz-Mayfield). They sell a set of four blades, shaving cream and a case for $15. "This is the number 2 manufacturer buying the number 5 manufacturer," Pakman says.

  • Unilever took Dollar Shave, the other men's shaving startup, for $1 billion in 2016.
  • And in December 2018, Procter & Gamble bought Walker & Company, the firm behind Bevel and FORM Beauty, a pair of personal care brands aimed at customers of color. The sum was undisclosed.

The upside of these acquisitions for industry titans is obvious.

  • In a single transaction, these deals transform upstarts from worthy competitors to weapons in the giants' battle with other giants. The big companies begin to profit from the disruption.
  • New blood can jumpstart companies that have slowed down. "The large companies are buying the small companies because they need growth," says Chedly Louis, a senior analyst with Moody's. "Performance for Edgewell has been weak, while Harry's has been growing by leaps and bounds."
  • Most of the startups that are getting eaten up are direct-to-consumer brands that sell online and have detailed data on their customers, Sherk says. Those insights make the big companies even sharper, she says.

But, but, but: There are advantages for the disrupters, too.

  • So far, most of big players have not significantly changed the smaller firms' business models, according to Louis and Pakman, who was involved in the talks between Dollar Shave and Unilever. They are keeping the old management and letting the new companies run themselves.
  • Though Harry‘s is not siloed after its deal, Axios‘ Dan Primack notes. Their management team is now in charge of all of Edgewell’s U.S. business.
  • With the resources of a conglomerate, they can grow faster, launch new products and get into new countries. "Money talks," says Sherk. "If you want to keep scaling, this will help you do that."
  • Prices at Dollar Shave have remained the same. A Harry's spokesperson tells Axios that its prices won't change either. And since the Unilever acquisition, Dollar Shave Club has broadened beyond the razor, a company spokesperson said.

Go deeper

Trump, Biden strategies revealed in final ad push

Data: Bully Pulpit Interactive; Chart: Danielle Alberti/Axios

President Trump is pouring hundreds of thousands of dollars into Facebook ads on the Supreme Court and conservative judges in the final stretch of his campaign, while Joe Biden is spending over a million on voter mobilization, according to an analysis by Axios using data from Bully Pulpit Interactive.

The big picture: Trump's Facebook ad messaging has fluctuated dramatically in conjunction with the news cycle throughout his campaign, while Biden's messaging has been much more consistent, focusing primarily on health care and the economy.

How NASA and the Space Force might fare under Biden

Illustration: Eniola Odetunde/Axios

Joe Biden hasn't gone out of his way to talk about outer space during his presidential campaign. That could be bad news for NASA's exploration ambitions, but good news for the Space Force.

The big picture: NASA faces two threats with any new administration: policy whiplash and budget cuts. In a potential Biden administration, the space agency could get to stay the course on the policy front, while competing with other priorities on the spending side.

54 mins ago - Health

Axios-Ipsos poll: Federal response has only gotten worse

Data: Axios/Ipsos poll; Note ±3.3% margin of error for the total sample size; Chart: Andrew Witherspoon/Axios

Americans believe the federal government's handling of the pandemic has gotten significantly worse over time, according to the latest installment of the Axios/Ipsos Coronavirus Index.

Why it matters: Every other institution measured in Week 29 of our national poll — from state and local governments to people's own employers and area businesses — won positive marks for improving their responses since those panicked early days in March and April.