Jeff Raider Lost A Fight With The FTC. Then Things Got Really Interesting.

Harry’s co-founder Jeff Raider talks the FTC, early mistakes at Warby Parker, and why he really bought a German razor blade factory.

Lightning doesn’t strike twice. Except when it does. Jeff Raider helped launch Warby Parker in 2010 while still getting his MBA at Wharton. The plan was to offer high-quality eyeglasses, direct-to-consumer, for around $100 dollars. It was a novel idea. He and his partners actually submitted the business plan to a competition at Wharton—which they lost. But he and his co-founders got the last laugh. Warby, a pioneer in the one-for-one philanthropic model, went public in 2021 and is currently valued at over $3 billion dollars.

Raider’s follow-up, Harry’s, was perhaps even more impressive. Harry’s, the upstart razor company, was founded in 2013 to challenge giants like Gillette and Schick—and it worked. By 2019, Harry’s had amassed a seven percent share of non-disposable razors in the U.S. That same year, Edgewell Personal Care (Schick’s parent company) offered to buy Harry’s for $1.37 billion dollars. And they weren’t proposing a traditional exit either; if the deal went through, Raider and his business partner, Andy Katz-Mayfield, would take control of Edgewell’s entire portfolio of brands, including Playtex and Banana Boat. But after nine months of due diligence, the FTC killed the deal. Their rationale? Harry’s was essentially too disruptive to sacrifice.

It was disappointing. What do you tell employees who thought they were about to cash out? But something potentially more interesting came from the ashes of that lost deal. Instead of being bought out by, say, a P&G, Harry’s decided to build its own P&G. Over breakfast for the season one finale of the new Forbes series “Cereal Entrepreneur,” Raider gets candid about it all.

MICKEY RAPKIN: What are we eating today?

JEFF RAIDER: I’m eating a cereal from a brand called Magic Spoon. Full disclosure, I invested in this brand a little while ago.

ERIC RYAN: That’s an entrepreneur. Never miss a chance to promote the brand.

RAPKIN: Would you take us back to the beginning of Warby Parker? What was the a-ha moment?

RAIDER: It happened after class one day in business school. I was sitting with my friend Neil [Blumenthal], just kind of hanging out after class. Another one of our good friends came up to us and said, “What do you think about the idea of sunglasses online?” At the time, I had a $500 dollar pair of designer glasses. My prescription had changed multiple times but I hadn’t changed glasses because they were so expensive. Neil had worked in the eyewear industry. He said, “The reason they’re so expensive is because there’s a couple of companies that dominate the entire industry.” He said you could get an awesome pair of glasses for less than a hundred dollars. I couldn’t sleep that night.

RAPKIN: Did you really enter the Warby Parker business plan into a competition at Wharton—and lost?

RAIDER: Yeah, true.

RAPKIN: Who won?

RAIDER: I don’t know. But one of our good friends, Joey Zwillinger—

RYAN: Who started Allbirds.

RAIDER: —I think Joey made it to the finals with this idea for stuffed animal robots called Cuddle Bots. To this day, he still gives us a lot of flak—that Cuddle Bots made it further in the competition than Warby Parker. In fairness to Wharton, some of the things in the business model were still coming together, it was kind of wet clay.

Learning Curve

RYAN: Tell us about an early challenge at Warby.

RAIDER: Right after we launched we started to sell out. We were overwhelmed with demand, which is the best problem you could have, but still a problem. We had gotten a bunch of great press in GQ and in Vogue. I think we had 8,700 pairs of glasses and we still started to sell out of full sets of product. I’m like, “They love us, let’s just keep taking orders.” Neil very thoughtfully was like, “Let’s stop selling, create waitlists. This could take a while to get more inventory, we don’t know how high demand is.” He was right. We were out of stock on some of these frames for a long, long time.

RAPKIN: I’m assuming you’re wearing Warby Parker glasses now. You’re never tempted to walk into Moscot?

RAIDER: Not once. If we can’t make products that we love to use ourselves, I’m not sure what we’re doing.

RYAN: I say that, too. I’m always amazed that big companies try to create as much space between who they are and who they create for. As an entrepreneur, I try to close that window to nothing. I think the best companies in the world—Nike, Apple—they create products that they love and use themselves. That’s how you lead the consumer versus following them.

Family Matters

RAPKIN: Jeff, your mom was an entrepreneur. Was that encouraging?

RAIDER: It definitely made me want to do it less. She ran a business that provided end customers with loyalty marketing cards. When you got your CVS card in the very early days— Her company helped CVS to think about both the cards and the programs. I was like, “Man, this is all-consuming and the outcome is uncertain. Why would someone want to do this?” What I didn’t realize is that she loved it, and that it was all-consuming because she wanted it to be.

RAPKIN: After co-creating Method, I know Eric felt pressure to do it again.

RYAN: Once you’ve created something from scratch, you’ve learned so much. And you feel this itch to reapply all that learning. But for me it also brings up this fear—that I’d gotten lucky. There’s a reputational risk: Are you only as good as your last at-bat?

RAPKIN: Jeff, did you feel that same pressure in the run-up to Harry’s?

RAIDER: I don’t think so. Both Warby Parker and Harry’s were pretty serendipitous. My Harry’s co-founder, Andy, came to me with the idea for Harry’s. I was still involved at Warby Parker at the time, kind of moonlighting there as I was working in private equity. Then Andy G-chatted me one day. He’s like, “Hey, I had this really bad experience in a drugstore buying Gillette razorblades. I was overcharged, the brands didn’t resonate with me, they were locked up. Could you take what you learned at Warby Parker and do it here?”

RAPKIN: Warby Parker was bootstrapped. But Harry’s was an entirely different origin story. You had, like, eleven full-time employees on staff before launch. You bought a razor blade factory in Germany. Was that just because you could?

RAIDER: The context is that there’s only a few companies in the world that can make a blade that you want to put anywhere close to your face. I learned that the hard way.

RYAN: How so?

RAIDER: We once tried this blade that was like a lawnmower. It looked like a medieval torture device. In fairness to Gillette, they were making really good products. We felt like we had to make something that was awesome in order to compete. We ended up finding this factory in Germany that made great razorblades, they’d never sold in the U.S. before. We went over, got to know them and built a relationship there.

RAPKIN: I’ve heard that story before. But I’ve never heard you set the scene. What did they think when you walked into this factory? They must’ve thought, “Who are these clowns?”

RAIDER: I called them—they didn’t pick up. So, I emailed them and I said, “Hey, I started this company called Warby Parker, it’s been successful, here’s the business model. I think there’s an opportunity for something similar in razors and blades.” We had a few conversations and then we went to Germany and met them. But it took a while for us to earn their trust. We were telling them, This is going to be a big business. And they said, “OK, so what’s your first order?” We said, “What would it take to lock in this agreement?” They said a million razorblades. So, we committed to buying a million razorblades on the spot.

RAPKIN: Did you have the funding in place?

RAIDER: We didn’t have the capital to go do it. We came back to the U.S. with a contract for a million razorblades and a high-level pitch. We knew enough investors who were excited about that idea. But that was a very unique situation. We were going back and forth with the German team. We would send them an e-mail, they would e-mail each other in German, and then forward some other e-mail back to us in English. So obviously, we just took the German part of the e-mail and we put it through Google Translate. In one of the e-mails they were like, “The American Internet boys would request 500,000 razorblades.” We’re like, OK, I guess that’s who we are. The American Internet boys.

Harry’s Vs. The FTC

RAPKIN: Entrepreneurs always talk about the big exit. But Harry’s is an atypical story. The Washington Post wrote this headline: “Harry’s Fixes Shaving, Breaks Exit Strategy.” Basically, you had a massive deal lined up to sell to Edgewell. Then the FTC crushed it. In part—they reasoned—because you’d gotten too big to sell. Do you wish you’d sold Harry’s earlier?

RAIDER: No, I mean— I don’t think you could ever just wave a magic wand and sell your company. It’s kind of a two-way thing. We were going to sell our business to a company called Edgewell. It wasn’t just them buying our company; it was actually us taking over, inheriting a bunch of their brands. Once we signed the deal, we went through a review process. I think in retrospect, obviously, we wouldn’t have gone through this nine-month period and an intensive review in the way that we did. I fundamentally believed this was going to be good for people. And we were going to be able to harness some of the technology that they had, take their brands, and do good for customers. At the end of the day they made their call. And then for us it was about going back to our team and first saying, “Hey, we own this. We think we’ve all been on this great journey together, and we’re sorry in this moment for how this happened. Our vision was to build this sort of multi-brand, next-generation CPG company. We were going to do that by inheriting a bunch of brands from Edgewell to start. Now, we get to build them ourselves.” I was so deeply impressed with our team during that period—probably never more than during that period—just how resilient and awesome and thoughtful they were.

RAPKIN: OK. But no one was like, “This sucks, I was gonna buy a boat.”

RAIDER: Yeah, we had to kind of disavow them of that notion pretty quickly. Which was like, “Hey, you thought you were going to get a lot of cash. That’s not happening right now, but to be clear, the stock that you own in Harry’s—it still has real value.” And then over time we tried to find opportunity for the team to get liquidity.

RYAN: When you and I first met, you shared with me that you wanted to build a Procter & Gamble for millennials. And you’re actually doing it.

RAIDER: Just like I’d say that we don’t want to build “the Warby Parker of X,” I’m not sure we want to build “the P&G of” either. But I think the opportunity that we see is the ability to build brands for the modern consumer. We can launch them online and learn a ton about the consumer and their needs. For example, we have a brand in our portfolio called Cat Person—

RYAN: Which is my favorite brand name of all time.

RAIDER: Cat Person sells really high-quality food and other accessories for cats and their parents. Our biggest challenge at Cat Person is to figure out how to get a cat to go from eating the equivalent of fast food to the equivalent of a healthy salad every day. Cats are picky, they like fast food. But we think we make products with much better ingredients. And we’re very transparent about exactly what’s in the product. But yeah, we had this vision for a while within Harry’s which was to build a family of disruptive, omnichannel CPG brands. And Andy and I kind of woke up earlier this year, we’re like, Well, we’ve got a family. We’ve got Harry’s and Flamingo, which was a brand we built in women’s body care. We bought a business last year called Lume—started by an OBGYN trying to help women solve vaginal odor. I think it’s our challenge to continue to grow those brands—and add others in—and to enable them to get big but not lose what made them special, which is that they were disruptive and they took risk and they built amazing online communities.

Raider’s Playbook

RYAN: I would argue that to be successful as a serial entrepreneur, there has to be a certain playbook. That was one of the ideas wanted to get at in this series, What are the lessons of repeat offenders. And you’re one of the greatest repeat offenders I know.

RAIDER: One of our investors once told me that companies fail for one of three reasons. Either they have bad culture, they have a bad product, or they’re bad stewards of capital. I think about my job (in some ways) as shuttle diplomacy. Or playing Whack-a-Mole between all three. How do we ensure that we’re building a good culture and that the teams are happy and engaged? How do we ensure that we’re making products people love? And then how do we make sure we do that in a financially responsible way?

RYAN: That’s entrepreneur gold right there. It’s amazing the number of things you look at and you’re like, Shitty founder, shitty product, and a business model that’s an expression of their ego.

RAIDER: There’s obviously luck and serendipity. But if we can do those three things, we can at least build a foundation of a great company.

RAPKIN: By the way, do you have a cat?

RAIDER: I don’t. The real decision maker in my household is my wife. I’ve been lobbying her to get a cat for a while, and I’ve got my kids lobbying her right now.

The conversation has been edited and condensed for clarity. In episode five, Seed Health Co-Founder Ara Katz talks the gut boom, pitching bros, and what she learned from Michael Ovitz.