Rapid Response: Surviving a close shave, with Harry's co-CEO Andy Katz-Mayfield

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I had to get up the day that the FTC announced they were gonna block the deal and put on a happy face and talk about all the silver linings to the company and At the time I probably like half believed that, but now I 99% believe that. wasn't just magic that we've been able to pull through and create more value. some of the macro things around COVID have been a benefit to our business and helped, I think, been really clear on these like omnichannel capabilities that we have being truly distinct and differentiated and a real competitive advantage moving forward.

Of course, there were still some benefits to the merger, we wouldn't have done it, but we're much better off as an independent company and I think fortunate to be where we are. That's Andy Katz Mayfield, co founder and co CEO of Harry's, the shaving and consumer products company. Harry's faced a double whammy in early 2020. First, the federal government block a billion dollar plus acquisition of the company, disrupting all kinds of plans. And then soon after, COVID-19 lockdowns hit. I'm Bob Safian. Former editor of Fast Company, founder of the Flux Group, and host of Masters of Scale Rapid Response.

I wanted to talk with Andy because given that environment, you might expect all sorts of lost momentum. Instead, Harry's has been rejuvenated. Recently raising a bunch of fresh capital at a valuation well above the blocked merger deal. Through the pandemic, Andy explains, Harry's got demand from some unexpected products and introduced several new brands. And now With a war chest at their disposal, Andy and co founder and co CEO Jeff Rader are looking to acquire new brands, having switched from seller to buyer.

It's a classic entrepreneurial feat. Finding strength and new opportunities Amid disappointment and disruption. I'm Bob Safian, and I'm here with Andy Katz Mayfield, the co-CEO of Harry's. Andy is joining us from

His home in California, as I ask my questions for my home in New York. Andy, thanks for joining us. Thanks for having me, Bob. So Harris has had quite a journey over the last

eighteen months and not just because of the pandemic. I was thinking when I last talked to your Co founder and co CEO Jeff Rader in late twenty nineteen. You all had agreed to this$1.37 billion acquisition by Edgewell, the makers of Chick and Wilkinson and a bunch of other brands, Platex and Banana boat and so on. And in that deal.

You and Jeff were gonna run the combined operation as US co presidents. And then Early February of twenty twenty. The Federal Trade Commission blocks the deal, Edgewell pulls the plug, and this deal that you're all really excited about just Oh.

Went away. How did you first hear about the FTC decision and how did you all react and deal with that? Unexpected turn of events. Yeah, we entered into the merger agreement with Edgewell

I think it was April or May of Thousand and Nin. So we had been planning for integration and going through the process and I think December, January we knew that there was some resistance, so when the FTC ultimately decided to try to block the deal in February, it wasn't a complete shock. You know, we kinda gotten signals along the way, but Yeah, as you mentioned, it was certainly disappointing because we had put a lot of time and energy into that process and we were excited about the future. And then three weeks later, COVID hit. So That was a one two punch that we were not expecting.

But ironically, and with the benefit of some time and some hindsight, I think The fact that there was Initially sort of another adversity to go through caused us to get over the Edgewell thing reasonably quickly and just sort of refocus on our business in our future, and in some ways the last twelve months or I guess fifteen months for us. It's been really clarifying in terms of what our vision is, what we're good at.

I wanna just unpack just a little bit those two twin disruption events, right? Between the deal And COVID. But in between. How were you? Responding Where you like

Oh, I have to like dust off these old plans that we had of what we were gonna do. Or were there things that you had gone through in preparing for the deal that were like, Oh, this points us to where we're gonna go Even though there isn't gonna be a deal. Well, I think the good news is that the vision hasn't changed that much.

back in twenty seventeen, really twenty sixteen, really started to get excited around this vision of building this Family of brands. So we were already down that path when we decided to enter into the agreement with Edgewell. So when we exited that There wasn't like a real pivot from a vision standpoint. It was like, okay, well, now we just know that we're doing this in a standalone way, the way that we envisioned pre edge well. And in a lot of ways

Having had The opportunity to kind of look inside the bell of the beast, so to speak, and understand from an inside standpoint, like what really goes on in big C P G CPG Consumer package goods

I think it gave us that much more conviction around Doing this on our own. turning around brands and trying to reimagine and reinvent. And as we look to MA to add brands to the portfolio, really focusing on brands that are A lot more like Harry's and Flamingo that are built

for a modern consumer with an omni channel approach in mind where we can really help those brands accelerate growth is probably actually a lot I don't want to say easy, but a lot more consistent than trying to reinvent and reimagine legacy brands. There is a Discussion in a bunch of

Industries and businesses now that Especially coming out of the pandemic, that sort of starting from scratch from that clean slate. There's a lot of advantages. Yeah, that's exactly right. We believe a lot in the power of launching things direct to consumer first.

And a lot of that has to do with being able to sort of test and learn and iterate and adapt really quickly. We've got great retail partners and there's a role for that. But if you are a business that's got a bunch of brands that are entirely dependent on retail. As an example, it's a lot harder to pivot and adjust than in a direct to consumer world. I want to bring you back to the second disruption, the covet disruption. For some businesses

The pandemic turned into boom times, right? For others it sort of became like a desert. As a grooming brand, I can imagine you thinking, oh, maybe the Need for shaving drops off a little bit in a zoom world. But you've also got that direct to consumer DTC Foundation which generally held up Yeah.

How did all of that Nana was twenty twenty A good year? Was it a tough year? For us it netted to a really good year overall. We grew twenty

five percent ish year over year from a revenue standpoint and Our business today is a lot more diversified across channels, products, geographies. our capabilities and sort of leadership in direct to consumer helped offset some of the challenges that we saw in a retail environment. And even our retail exposure is a lot more heavily weighted towards

the targets and the Walmarts of the world that actually fared reasonably well And then we had interesting pockets of real growth. For the Harry's brand as an example, our body wash business did really, really well. our wax business under our flamingo brand did exceptionally well as salons were closed and women were looking for more At home solutions for hair removal.

We launched a new brand, Cat Person, in the midst of the pandemic, which Is maybe not the best time to launch a brand, but if you think about people staying at home, spending more time with their pets, investing more in their pets, and that's an entirely direct to consumer brand today. So the net for us overall, thankfully and gratefully was definitely positive. Were there any surprises to you as the year went on? Or was it Pretty Straightforward.

Despite the Pandemic in the external environment. Maybe some of the things seem obvious in retrospect, but I think when we were living through it, if I think back to the early days of the pandemic, there was a lot of concern that supply chains were gonna seize up or that retail would fall off a cliff entirely.

And there were certainly challenges there, but I think those were probably more short lived than we might have feared. Bodywash is actually an interesting example because one of the trends there that I think would have been hard to predict. Where

There's sort of an obvious thing that was going on with soap and bar soap and hand soap and and increased usage there, but that wasn't so much what was going on with body wash. It was more that because consumers were staying at home and maybe they weren't spending as much money on beauty products or their hair gel styling products. They were actually shifting spend and perhaps, you know, our body wash is priced at a slight premium. and consumers willing to invest a little bit more on those daily pleasures of which like our body wash would kind of fit that category. So I think it would have been hard to predict that type of a tailwind or dynamic. You mentioned the supply chain. It made me think of the blade factory that you have in Germany.

How did the pandemic Impact things there. Yeah, thankfully there wasn't any disruption there. And that's really a credit and a kudos to our team on the ground there who's done just an amazing job managing A manufacturing facility through COVID. And I don't think we've missed a single shift over the last 15 months, remarkably, despite challenges. There was a lot of operational changes that they had to make on the ground to ensure safety and protocol and social distancing. And we are fortunate that the factory is in a pretty rural area that in the early days of COVID was a little bit less directly impacted.

You know, as you're talking, I'm thinking. Entrepreneurs are often extolled for their flexibility and their agility. And Between the Edgewell turnabout and the pandemic Have your processes

Ed Harry, are your metabolism changed? Are you better at dealing with change? Are you more active about scenario planning or gaining out possibilities or Have there been shifts that you Draw from this year's experience? Yeah, I think that's a great question and one that I've reflected on. I do think that the team has proven to be incredibly resilient in the last fifteen months. And obviously a lot of companies have gone through adversity, but probably not many that have had the multitude and breadth of challenges that we've had. As we've talked about it internally, and like as Jeff and I have chatted, we've kind of used the term battle tested and

I do think that there is real value to having a team that is quote unquote Battle tested. I do think we're much better equipped to deal with change and and adversity in a way that will benefit us going forward, because I assume it will continue to be not linear.

Yeah, I mean, it's been a stressful environment. How do you help your team with their stress? How do you manage your own stress? How as a leader has that been worked through the way Harry's works the way you get through your days. The easiest answer to that question is empathy. Everybody's had a challenging year and trying to sort of be

empathetic on that front, understand that people are dealing with a lot, you know, outside of just purely the work context. For us As a company, there's actually a very natural tie in So we give one percent of our revenue to social causes and have always sort of thought about the community and social impact partners as an important constituent. And for the Harry's brand, the cause that we really champion and support is mental health and men's mental health specifically.

Which quite frankly when we started doing that a few years ago wasn't as common or kind of accepted as part of like the everyday dialogue as it is now, but We use that lens a ton, particularly in the early days of COVID, and just saying like, hey, mental health is really important here. How do we support the team through this? Whether that's time off, whether that's access to mental health resources, free therapy sessions.

trying to sort of understand that everybody's a person and it's hard to sort of disaggregate your work self from nor should you from your life self and try to treat employees and approach that through like a whole person lens. We have a weekly team meeting. You know, it's the primary channel through which we can communicate what's going on, highlight important projects. And we started infusing like A lot more like joy and levity into that meeting. You know, we've got a bunch of employees who are highly musically talented and have sort of side hustles as musicians. So we'd just be like, hey, cool, like Karen, sing us a song.

Three hundred and fifty people on Zoom and Karen would sing a song. It just brought joy to people's five minutes of joy to the morning. So there's a lot of little things like that that I think we tried to do to It's not a perfect substitute for in person interaction, but

Just acknowledging and trying to bring some joy and levity to what can otherwise feel like a very transactional environment when you're remote. When you've built substantial wealth through your business, it's often tied up in a single equity position. The upside is real, but so is the risk, and knowing when to act isn't always obvious. Creative planning works with business owners to build a strategy around concentrated equity. When to diversify, how to manage tax risk, and how to protect

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I wanna ask how things worked between you and Jeff, your co-founder. I mean some people think a co CEO situation isn't a good idea, right? That the buck has to stop somewhere. Obviously it's been working for the two of you. How does that division of labor work? Did that shift at all over the course of the year? Yeah, it hasn't shifted over the course of the last year, but it has shifted over the course of the company in terms of roles and responsibilities and who's doing what. I think what we've tried to do is

At any given moment in time, be very clear about what those roles and responsibilities are and where decision rights sit. I think the Co CEO model is a very important thing. when it's challenging is usually when there's ambiguity. And it's like, well, is that Jeff's fear? Is that Andy's sphere? Andy's got a different perspective. that can cause a lot of inefficiency and churn and when we're clear on hey, here's our spheres. Here's what I'm responsible for, here's what Jeff's responsible for.

Here's clearly who owns the decision in those realms. And then we can back channel to each other and give each other feedback and input. And that's where there's real value to the co CEO model. You know, you've got a partner who understands exactly who you are, what the issues are, can give you unadulterated feedback and input. But ultimately in my sphere and areas of responsibility, Jeff is gonna

Trust me and defer to me and vice versa. That's when the model works well. When things start to blur is is when it becomes more challenging. Yes, you talk about it's like co parenting, right? As long as the parents are clear about whose decision and you don't let the kids go around to the other parent to get a different answer, things can work okay. Yeah, and in the early days of Harry's when we maybe didn't do as good of a job at this, there was a lot of that. There was a lot of like, Well, you know, you didn't like the answer mom gave you, go ask dad and

Or dad just disagrees with mom and so now it's confusing. And so we've learned from some of those mistakes in the early days and tried to get better there. We've also known each other for almost twenty years at this point and can finish each other's sentences and as close to sort of a married as you could be without actually being married. And so that model also works better in that type of a dynamic where We've just got such a shorthand and just implicit deep understanding of each other that We can function as kind of one unit oftentimes.

And I assume when the Edgewell deal first emerged, you were both aligned about that this was the right promising step forward for the company. Yeah. It's interesting, you know, we weren't looking to sell the business. We were really excited about this multi brand vision that we had laid out. We had raised private capital against that. And the Edgewell opportunity was a bit of a one off. It was sort of unique in that

It wasn't a big company. There was a lot of potential synergy and shave specifically, which was still a pretty important part of our business, even though we were diversifying. And it was a unique opportunity where we were being given the keys. So even though it was An acquisition It was really like a reverse acquisition in practice. And we had even pitched multiple private equity firms on going and buying Edgewell and taking them private and folding it into Harry's and we could never get the math to work on that. But so yeah, we were excited and aligned around that. And when it comes to big strategic corporate decisions. Of course, that's not like, oh well, that's a Jeff thing or that's an Andy thing. You know, we're gonna have to debate and align, but Because we share the same values, have a similar worldview, I think have similar aspirations for what we want Harry's to become and the legacy.

very rarely are we sort of misaligned on big important strategic decisions like that. We almost always see eye to eye on those types of things. You mentioned private capital. You recently raised Another round of capital. Hundred and fifty five million dollars at a valuation well above the valuation of the Edgewell deal. In hindsight Was it a good thing that the deal didn't work out?

Yeah, it was. But I think the the operative word there is hindsight. And honestly, it's also been a lot of hard work and a testament to the effort of the team and the resilience. You know, it wasn't just sort of like magic that we've been able to pull through and create more value. I think as I mentioned also like a realization that doing this independently and unconstrained. by legacy brands or legacy corporate structure or some of the challenges that big legacy companies have. is just an easier path. So

I had to get up the day that the FTC announced they were gonna block the deal and you know sort of uh put on a happy face and talk about all the silver linings to the company. And at the time I probably like half believed that. But now I ninety nine percent believe that. Of course, there were still some benefits to the merger. We wouldn't have done it, but we're much better off as an independent company and I think fortunate to be where we are. So

You've determined you're better as an independent company, but part of your strategy now is to go convince other brands like yours To no longer be an independent company and to acquire and be part of this. How does that work? Oh, you got me, Bob. Yeah. Yeah. Are there things from going through the process that inform how you have those discussions or what partners you look for? No, totally. It's a great question. And I think for us, we've raised a ton of capital. We've built a ton of capability. There's been a lot of blood, sweat, and tears in the last eight years since we launched, and almost 10 years since we really conceived of the idea. If you looked out there at brands that might look like Harry's did five years ago or Flamingo did three years ago. There's a lot of things that we could provide.

access to founders of those brands and really help them. And you talk about independence, and yeah, of course at some point Everybody's got to make that decision of do I truly want to go it alone? Or you know, do I want to sort of partner up and

I think What we are hoping to offer and we think can offer is A bit of a different alternative. Then Yes, you can go it alone, you can raise growth capital and try to build all these capabilities yourself.

Or you could sell to a huge CPG company. But that's got its own challenges. We as founders, I think, have. A unique empathy for what that experience is like. And you know, that's how we're approaching it to say, look, you know, we get it in 95% or 99% of cases we're looking at. It's a brand and a team that we want to sort of join forces with us as this family, this collective of sort of disruptive new age underdog brands.

And how can we help? So what's at stake for Harry's In this moment. I think we've obviously proven that we can incubate and launch brands. We've done it a number of times at this point. We wanna prove that we can do this inorganically as well. And what we just talked about in M and A and really kind of establish ourselves as this

sort of asked yourself the question, hey, if Unilever or Procter or Gamble or Colgate were getting built today, like what would they look like and really proving that we are this next generation P and G. I think that's what's at stake from a business standpoint. And you know, we've come a long way, but certainly still have things to prove out on that dimension. And I think relatedly the other thing that really comes to mind when you ask that question is We're only as good as our talent at the end of the day. And so how do we also establish ourselves as

this really inspiring and sort of aspirational amazing place to work. We've been fortunate in being able to recruit and retain great talent, but as we think about building not just the investor corporate brand around Harry's Inc., but also that employer brand. And not just a brand, but value proposition and experience that enables us to just continue to have a talent advantage, you know, vis-a-vis some of these larger legacy companies. I think those are the things that'll really make or break us over the next couple of years.

I mean the P and G and Colgate of tomorrow, like there are no small aspirations in this. Uh I mean, you've come a long way, but There's still a lot of ground you see ahead of you. Yeah. So that's the exciting part. I mean, it's a big if if you look at the size of those companies and the markets there, it's a massive opportunity. And that's where I think we feel like we're just scratching the surface and getting started. And so some places maybe there'll be true white space and we wanna incubate and develop things on our own and other areas where it's gonna make a lot more sense for us to help somebody that's already doing it well. But yeah, I think that's what's exciting about being an independent company and seeing like

a very long term path to sustained growth and impact as a result. Well, this has been great. I have a question to ask you that's purely a point of of personal curiosity, which I have to ask you about. Prince Harry and Megan. So do you notice any like increased clicks when news about them pops up? Like you didn't know that Harry would be such a strong search term when you pick the name, right? Like, does anything happen? Uh You know, that is a good question. I'd have to ask our direct to consumer team if there was any actual increase in activity coming out of that interview. But ironically

Well, yes, Prince Harry is a famous Harry. If you go on social media, the Harry that most often gets conflated is Harry Styles because it's like Harry S, like Harry's. So in our mentions on like Twitter and and Instagram and like that. There are a lot of Harry Styles fans, so we'll we'll have to figure out how to uh do some sort of collaboration there in the future. I think the prince is probably gonna be a little bit harder to lock down on that front. Well life is long. We never know, right? True. Maybe both. Well, Andy, I just wanna thank you so much for joining us. It's been great.

Yeah. Well, thanks for having me. Uh very much appreciate it. Enjoyed the conversation. Masters of Scale Rapid Response is a Wave What original. The show is recorded remotely using sanitized audio gear. I'm your rapid response host, Bob Sapian. Host for Masters of Scale is Reed Hoffman.

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