Gillette Walks Into Your Office…
I just recently read Chris Anderson’s excellent (and widely-cited) piece on the evolution of free business models. A lot has been said about the different analyses made in the article (which I imagine will be the foundation for his next book), but I want to take up the anecdote that he tells to set up the story.
Of course, the notion of “give away the razor, sell the blades” is business school 101 today, but at the time it was incredibly novel. Coming into the age of mass production the notion of goods being cheap enough to be disposable was, I suspect in the minds of many businesspeople of the day, quite crazy. Of course, it set up the idea of decreasing marginal cost leading to today’s essentially zero marginal cost businesses deployed online.
But let’s stick with Gillette for a minute. I want to deconstruct a little of the story Anderson tells. The story begins with Gillette shaving with a straight razor that is too dull to be sharpened, and coming up with the idea of disposable metal strips (blades) instead. And then we get this, which doesn’t receive a lot of attention:
“A few years of metallurgy experimentation later, the disposable-blade safety razor was born.”
Come up with idea. Spend a few (3? 4?) years developing it. Ok…
“But it didn’t take off immediately… Over the next two decades, he tried every marketing gimmick he could think of.”
Two decades of “experimentation”. It’s implied, although not stated explicitly, that during this period the company’s sales did not grow exponentially, but rather gradually worked its way up to what become very high volumes.
What’s interesting to me about this is what would happen with this business today. We don’t have to make it about razor blades, but some other innovation in a moribund market. If King Gillette went out to raise money, could he do it? From seed stage to production was several years. The company “moved sideways” for two decades.
Three years ago Gillette was bought for $57 billion. I wonder, though, would the company get the same shot today, or would the lack of immediate payoff to financial backers eliminate that possibility?
