From driving down to Frankfurt with €10,000 stuffed in a briefcase to raising £500,000 in 48 hours, Cornerstone founder and CEO Oliver Bridge told Business Advice how he plans to leverage a subscription model to have a company turning over £1m within a year.
Oliver Bridge is one of the less frequent examples of someone who has gone from the investment world, working for a venture capital firm, to becoming an entrepreneur – it normally works the other way around.
However, his hatred of shaving and even greater hatred of all things shopping, led him to create a business offering men throughout the UK (and hopefully soon other areas of the world) with a shaving products subscription service.
Cornerstone, as the company goes by, brings together German-engineered razors and British-blended skincare products online.
Taking inspiration from wildly-successful subscription businesses such as Spotify, Bridge spent 18 months working under cover – waking up and going to bed at “stupid o’clock” and maybe pulling a few sickies.
Bridge believes the shaving market lends itself in a very natural way to subscription as, if you do shave, it is something done very regularly and comes with it constant need for products. Dollar Shave Club in the US has shown that the model works, it is now just a case of proving that in the UK for Bridge. And when lined up next to snack delivery service Graze, which Bridge is amazed by due to its ability to create a subscription business out of a non-essential product like nuts and dried fruit, Bridge believes he is on to a winner.
The core consideration when starting out, he revealed, was a firm focus on quality products. As the nucleus of the business was borne out of shaving rash, the first port of call for Bridge was “top notch” products.
He spent “months” working with dermatologists, going to premium department stores to buy products and then make notes on what worked for him and what didn’t – with all that fed back to his team of chemists.
He remembered back to one of his initial desires to create a shaving gel that would warm up, mirroring the effect a hot shower has in softening up the face and in essence becoming thermo reactive. However, finding out it was too chemically unstable, Bridge decided against becoming the Willy Wonka of shaving products and instead set out on finding the best ingredients.
“On the razor side, the first thing I did was emailed and wrote to every razor factory to get sales. Having got one back from Germany that I liked, there ended up being a huge minimum order quantity,” he revealed.
“To get round this I ended up driving down to Frankfurt with €10,000 in a suitcase. After this 30-hour round trip I came back with 15-20,000 razors, but was emailing my mum [on the go] to check import regulations to make sure I wasn’t breaking the law.”
Since launching to the market in June 2014, Cornerstone has acquired 5,000 subscribers and is now turning over approximately £30,000 a month. With his sights fixed on becoming a £1m turnover business inside the next year, Bridge decided he needed access to additional capital – and so took to equity crowdfunding.
Using the Crowdcube platform, Cornerstone has just finished a round which saw it raise just shy of £900,000 from 246 investors. What is perhaps more impressive is that the company was 79 per cent oversubscribed, having broken though its initial target of £500,000 inside 48 hours, and that Will Hobhouse (ex-chairman of Jack Wills) and Nick Wheeler (founder of Charles Tyrwhitt) came on as backers.
Diligently doing his homework, Bridge shopped around the various equity crowdfunding platforms in the market and ended up plumping for Crowdcube because of its dominance in marketing and strength of its network, he said.
“It has 180,000 registered investors, which is enormous. One of our objectives was money, but we also wanted free PR. We are a B2C product, aimed at men between 30 and 50 – which is the same as the investor world,” Bridge added.
Anyone coming into the round with more than £5,000 in their pocket got “A” voting shares – accounting for about a fifth of all backers. The biggest investor, someone in banking, put in £100,000, with about eight stumping up around £50,000.
Securing commitments of approximately £250,000 before even putting the pitch live was key to getting the fundraising moving and ultimately reach its target, Bridge said. Aside from that, the networker in Bridge ‘worked his socks off” meeting and greeting potential investors thought the pitch window. His biggest surprise came when a Taiwan-based investor incepted £25,000 into the fundraise, despite the fact Cornerstone doesn’t yet ship to the Asian nation. He also held an evening at a barbershop in Marylebone, London, where interested invidiuals could come along, have a beer, and try products. Bridge ended up getting about £50-60,000 of backing from that evening alone.
“It’s pretty obvious is have a nice pitch, good video, sound business plan and answer questions. But the moral of the story is have as much money lined up at start and then work really hard offline,” he advised. “It’s a real shame that cases such as Camden Brewery and JustPark make young entrepreneurs think they can launch on crowdfunding platforms with nothing prepared. It’s bit like asking someone to marry you, you need to know the answer to the question before.”
The immediate future will see Bridge begin to use the £900,000 he has in the bank by simply trying to sell more of the shaving range via his subscription model. He’s planning to add more products, re-do packaging and build awareness.
A large part of how he’ll acquire new customers, on top of the 5,000 he already has, is though data analysis. Despite still being a small team of under ten, Bridge has just finished employing two data marketing employees.
The subscription model is a hot one right now, with companies such as Netflix showing that if you get enough signed up and talking about an offering then it actually becomes possible to increase prices and still not suffer a drop off. Bridge is hoping that enough men in the UK, and then overseas, will see the benefit of ditching brands such as Gillette and Wilkinson Swords for a more comfortable shave – and then not having to give up their lunch break to buy those pesky replacement blades.
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