Things ain't what they used to be. The art of resilience by Cornerstone.
When it comes to what it takes to successfully run a Direct to Consumer business, a lot has changed in the past half dozen years or so. It seems implausible to call Oliver Bridge an industry veteran when he founded his current business, Cornerstone, aged 26 just six years ago. However, despite his youth, Oliver is most definitely a veteran, both in business and in eCommerce. 2014 seems like decades ago in respect to how things have evolved since then. There is now more competition, VCs are more reluctant to make investments and digital marketing has become more expensive. This is true of nearly all DTC channels and none more so than in the razor blade business, which is where Cornerstone have made their mark.
Like many of the founders I have interviewed in this project, Oliver has been setting up businesses for as long as he can remember. It started with the typical kid's lemonade stand set up, but things quickly escalated from there. First, there was a magazine printed on his dad’s photocopier and sold to his neighbours, then came a mobile disco and finally a bona fide business selling shoes at the age of 15. The business was called Biggerfeet.com and was an online business sourcing shoes for those people with larger than average feet, which included Oliver, a size 13. He explained “Buying shoes was a problem, so I decided to do something about it. This was before shoes were widely available on the web. Even Amazon was still mainly books and CDs at the time. I went to a few trade shows, and even now, I am not sure how, but I managed to convince some shoe suppliers to set me up as a wholesale customer and a business was born. I went to school in the day, did my homework and then spent each evening processing orders, sorting stock, and ordering more inventory. We were quite successful.”. Things eventually came to a head as Oliver’s exams loomed. While his parents encouraged Oliver’s early entrepreneurial endeavours, they decided it was time for him to focus on his education. That was not the end of Biggerfeet.com as Oliver had already found a buyer for it. His mum and brother took on the business, and they continued to run it for several years while Oliver went off to university.
Although he went to university with the aspiration of getting into investment banking, it had become reasonably predictable that Oliver was never going to follow a traditional career path. The entrepreneurial fire was just burning too brightly. Even while studying for his degree, Oliver did not stop trying something new. While at university and following a stint working for a charity, he set up Genderchecker.com. At the charity, he noticed how hard it was to work out whether the name on a paper was male or female. It was this awkward motivation which created Genderchecker.com, an online resource to double-check the likely gender of a name from anywhere in the world. This handy database is still owned and managed by Oliver and even today brings him a regular income stream from organisations who pay for the database.
With his drive for creating businesses, it was somewhat of a surprise to learn that upon graduating, he became a full-time employee of an innovation consultancy and then worked for a venture capital fund investing in consumer brands. In hindsight, this now seems like part of a grand plan as these roles gave Oliver first-hand experience of consumer brands, new technology and finance.
It was 2013 and the 25-year-old Oliver had a problem. He had sensitive skin and disillusioned with his monthly trips to Boots to buy razors and shaving cream, which left his skin raw. Like buying shoes, it seemed there was a demand for a product that was not being adequately met. Further inspiration also came from the US where a new business called Dollar Shave Club had launched, and it’s now legendary launch video had just become viral. These two factors convinced Oliver that a UK based Direct to Consumer razor blade business could be successful, and the idea for Cornerstone was born.
With their launch video US-based Dollar Shave Club set the bar high for a DTC razor blade business. Cornerstone was quick to follow in their footsteps in the UK.
Oliver was keen to stress while Cornerstone was about razors through the post, the focus was much more on product quality and helping men with sensitive skin, more than a rock bottom price. That said, when he started to do his research, he realised by removing the wholesalers and retailers from the value chain, he could compete on both price and quality.
With the business idea in place, Oliver got to work with formulating a business plan. This was done before work, in the evenings and at weekends. Oliver admitted one of his proudest achievements was the astonishment of his bosses, at the VC fund, when he told them he was quitting his job to pursue this new venture. They just could not believe how much planning and preparation he had already done while also achieving everything expected of him in his day job.
With a business plan done, the job quit, it was time to launch the business. So right on cue, the first problem arrived, which nearly ended the whole venture before he ever sold a single pack of razors. Oliver had found a German razor manufacturer that could produce the required quality, at an acceptable price, and were willing to become his supplier. The problem was that Oliver, in his mid-twenties with no job, had no capital. Well, that is not entirely true, he had about £5000 allocated for his first batch. Oliver takes up the story, “I was sitting around my kitchen table, in my London flat, and I phoned up the factory and said I would like place an order for €5000 worth of blades. The sales manager said he was very sorry, but the minimum order value is €100,000, so he was not going to be able to help. I then said to him how about if I got to your office at 9 AM the following morning and gave you €5000 in cash. His response was something like if you are crazy enough to do that, he would see what he could do”. Never being one to shirk a challenge, Oliver got his euros together, roped in his stepfather and critically his stepfather’s car. They then headed off to the Eurotunnel, drove through the night across France into Germany and as promised Oliver was sitting in the factory’s reception at 08:45 asking to see the sales manager. With a glint in his eye, Oliver recalled, “When he saw me sitting there, he just doubled over in laughter, gave me a pat on the back, took the cash, wrote out the invoice and got two pallets of razors forked around to the car, which my stepfather and I loaded into the boot and back seat. We had our launch stock”.
Oliver Bridge, big feet and big ideas.
After putting the finishing touches to the website, finding another supplier for the shaving gel, and making sure the branding was up to scratch, Cornerstone was ready to launch. Oliver worked hard to spread the word dabbling with Facebook, google, twitter etc. handing out fliers and encouraging everyone he knew to try the product. Their first real marketing success came from a post they put on Reddit, entitled “Do you enjoy shaving?”. “We asked how many people had a problem with their shave and skin, and we introduced the brand. The post started trending, and we soon had 1000 customers. This 1000 customers enabled us to do some Facebook ads using the look-alike function, and we were on a roll. 1000 customers turned into 5000 customers over the next 12 weeks.”
The business was growing, the products and brand were well received. They used their early success to do a successful crowdfund investment round on Crowdcube. This raise meant they now had money in the bank to build the team and spread the word. Subsequent growth meant they were then also able to raise some VC investment in 2017. It was the Crowdcube raises that Oliver particularly liked. This community created brand advocates who would actively promote the brand. It also gave the company over 200 engaged investors to call on dor advice on new products, branding changes etc.
Raising the VC money in 2017 proved prudent for Cornerstone as the UK male grooming marketplace was about to become a lot more competitive. In the previous few years, Cornerstone had already seen off lots of lower price competitors who may have had an attractive price but did not have the same quality or customer service. This difference meant that unlike Cornerstone, they were not able to build a loyal customer base and ultimately could not grow at the same rate. They soon, however, faced a much sterner challenge, the well funded US DTC razor companies, Dollar Shave Club and, in particular, Harrys.com had chosen to expand into the UK.
The entry of well funded Harry’s.com has forced Cornerstone to make some changes.
The arrival of Harry's transformed the landscape dramatically for Cornerstone. The big difference between Cornerstone and Harry’s and the other DTC brands from the US, is the funding and scale behind them. Oliver explained how these US brands have been able to raise hundreds of millions of dollars which put them in a different league to Cornerstone and other European counterparts. For example, Harry’s does not have to worry about being let down by their razor supplier, incidentally, also in Germany. As part of their launch strategy, they went out and bought the factory, for a reported €100M. Oliver explained that this scale and buying power not only enables them to pay for more marketing; they also have the resource to do things like expanding into brick and mortar retail. Harrys.com products can now be found on the UK high street in Boots, Superdrug, Sainsburys amongst others. Oliver admits Cornerstone just does not have the resources, or skills to be able to do this.
Harry’s and Dollar Shave Club have also made a big dent in the online marketplace in the UK. Oliver explains “This is not only a problem in terms of them having more marketing spend but also because it reduces the Total Accessible Market (TAM) for us. Our initial thinking was that the men’s grooming industry was so big that even if there was more competition, there was still plenty of the market to go around. The problem we have is that while the total shaving market is huge, in hindsight, it turns out that the actual market for men who are willing to buy their shaving equipment online is a lot, lot smaller. This means that when someone like Harry’s comes into the market, they can quickly erode our market share.” While there have been predictions that the TAM for most online categories is likely to increase following the recent changes in shopping habits due to the COVID-19 lockdown, the TAM for most categories is still a lot smaller than the total market size which includes retail sales.
So where does this leave Cornerstone? “We have adapted pretty well and have moved the business into more products, still with the focus on what a man might have in his bathroom cabinet”. These products include ones which suit an online purchase like hair loss ointments, erectile dysfunction products, condoms, and weight loss treatment. Moisturiser, toothpaste, deodorant, and shampoos are also available. “Essentially, we want to be a concierge for the modern man. This is why we have added the new products into our portfolio. The requirement to make these changes has given the business a new lease of life.”, explained Oliver.
Cornerstone - A concierge for the modern man.
“What has reassured me most is that many of our customers have never bought any Viagra-type products or the hair-loss treatment before. We are the first company they have trusted with these sorts of products. I am proud we have been able to build that level of trust into the brand. We did this first through the quality and service of our razors business, and now we are bringing that same level of care and expertise into these new products”, explained Oliver.
This level of trust has built up over years and years of work. Oliver’s take was “Our focus has been on quality, good service and using feedback to make the products better. This has resulted in a loyal base of customers who trust us when we bring in new products. We are also fortunate that we can ask for feedback from our existing customers and crowd investors when we are thinking about introducing a new product.”.
As well as diversifying their product range, the other thing which Cornerstone has done to counter the impact of this new competition is to try not to compete. “Our expectations are definitely more modest [than the competition]. Our focus is on profitable growth, not growth at all costs”.
This disciplined approach towards profit and the changes to their operating environment have resulted in Oliver, reducing his team size from twenty-plus employees to ten or so key individuals. The changing operating environment and a focus on profit seem to suit Oliver. They have forced the business to grow in different directions, all the while maintaining high standards they had established from the very start.
The DTC landscape has changed, there is more competition, it’s harder to raise cash and it’s definitely no longer feasible that you can just sell a product that is a bit cheaper and expect to succeed. Oliver’s view is that today your product needs to be 5 to 10 times better than what’s already out there before you have much chance of success. True to his word, Cornerstone certainly does things 5 to 10 times better than most.