Why This Startup Made a $100 Million Gamble on a 100-Year-Old Factory

The co-founders of New York City’s e-commerce startup Harry’s are taking an unconventional path to category disruption— purchasing a nearly century-old factory in Germany.

- Bernhard Warner

THE SMELL OF dying unicorns is in the air on a gray February day in downtown Manhattan. The Nasdaq has just fallen to a 15-month low, and e-commerce company Gilt Groupe, once valued at more than a billion dollars, was recently unloaded in a fire sale for $250 million. Jeff Raider, co-founder of online shaving startup Harry’s, is trying to diffuse the jitters permeating his company’s loft space. “Last year was the year of the unicorn,” he says to the room of mostly 20-something employees. “This,” he adds, “is the year of the cockroach.”

Harry’s, Raider argues, is better prepared than most for a future of less magical, and more earthly, stamina. “Times are about to get harder for e-commerce companies,” he says. “But I think it’s helpful to be aware of the fact that we have a real business. We are making real money.” Plus, the 35-year-old reminds them, “we have a factory.”

Behind this fact lies an unlikely story of disruption that pairs blue-collar craftsmanship with a VC-fueled business model. Four thousand miles from the Harry’s loft in SoHo is a sleepy German village called Eisfeld, population 5,600. A three-hour drive from Frankfurt, the hamlet is best known for its medieval castle. But what’s put Eisfeld on the map is Feintechnik, a factory that’s been churning out double-edge razor blades since 1920.