How Pet-sitting Turned Into A $300 million Business  

April 26, 2017
Posted in Journal
April 26, 2017 O2O Pro Management

Plenty of would-be entrepreneurs participate in Startup Weekends–the 54-hour start-up marathons that are now held in cities across 150 countries. More than 193,000, according to the event’s website. But few can say they’ve actually managed to start a real company afterward–particularly one that’s attracted 85,000 members in 10,000 U.S. cities and made $100 million in bookings last year alone.

That’s the story behind the on-demand pet-sitting site Rover.com, which Philip Kimmey co-founded over the summer of 2011, after his junior year at Washington University in St. Louis. The computer science major opted to try his hand at starting up, rather than get an internship like most of his classmates.

And, boy, is he glad. The Seattle-based company has today raised $91.5 million in venture funding and ended 2016 with 181 employees. It’s doubled its revenue in each of the past three years, and is poised to do it again this year, according to the company, which declined to cite specific revenue numbers. The company, which acquired competitor DogVacay last month in an all-stock deal, was valued at nearly $300 million after a Series E round of fundraising this past September.

Image Credit: Juggernaut

“There’s always a new set of challenges that comes with this,” says Kimmey, now 27. “Rover does continue to provide a new sense of experiences every day. And to be honest, there’s like 40 dogs in the office every day. It really is kind of ideal.”

Baby (Puppy) Steps

That success didn’t always seem fated. At the Startup Weekend event, when veteran venture capitalist Greg Gottesman told the story of his dog Ruby–a yellow Lab who had gone to a kennel and returned with kennel cough–Kimmey thought it was “heartbreaking.” He had no reason, however, to think it would turn into an actual business.

Gottesman, a partner at Madrona Venture Group, had different ideas. Impressed by Kimmey’s performance, Gottesman called the budding engineer that following Monday asking if he wanted to spend the rest of the summer working on the project in a corner at the Madrona offices. “Had Phil Kimmey had a full-time job that summer, Rover.com would not exist,” Gottesman, 47, insists. “And millions of dogs would be the poorer for it.”

Aaron Easterly, Rover.com’s third co-founder, joined the team as CEO later that summer–and by December, Rover.com was ready for local business. At first, the company largely grew through a feet-on-the-street approach. The team–all five of them, by that point–would go to Seattle dog parks and strike up conversations with owners. “This is kind of silly,” Easterly, 39, remembers thinking after a few months. “The chance that you’re going to engage someone in a dog park right when they’re contemplating what to do with their dog when they go on their next vacation is kind of close to nil.”

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Opening up the service to the rest of the country, trusting that momentum from their test markets could help keep the ball rolling, proved more effective. The business model remains essentially the same; in the past four years, Rover.com has added three additional services beyond dog sitting and boarding–dog walking, doggy daycare, and drop-in visits where sitters visit pets during the work day. The app also now hosts caretakers for other pets like cats, horses and lizards.

The only noticeable change is that the original 15 percent fee Rover.com collected per transaction has risen to 20 percent. It’s a tech company in a gigantic industry–$66 billion, according to trade group American Pet Products Association–that has become a major force without a major pivot.

Bringing Rover Home

Future success, however, is never a foregone conclusion in the sharing economy. Each city is a new battleground, which is how Lyft and Uber sustain their grudge match. “There’s no reason that New York and L.A. should have the same winner in the pet care business,” says Arun Sundararajan, a professor at NYU’s Stern School of Business and author of The Sharing Economy. “When you enter an industry first–whatever the industry is–you have a bit of an advantage. Someone who starts a new pet care business would face more barriers to growth than Rover did when it started out, because there’s already a large competitor in the fray. But the game is certainly not over.”

Image Credit: Rover.com

That’s not fazing Rover’s founders. Easterly says an international expansion is on the horizon, and that in a way, the DogVacay acquisition is also about expansion. “We think that we can–as a larger, louder voice–help people understand that a better alternative to kennels exists,” he explains. “And that we can invest that much more aggressively in the technology and the product.”

The goal, of course, is to become a household name. Kimmey is aware that it takes patience and he’s confident that the past six years of work will eventually pay off. “People always say that these companies come out of nowhere and become household names overnight, but it’s so not true,” he says. “People spend the better part of a decade working hard to build a company to the point where that happens. Seven years in, eight years in, nine years in, it suddenly becomes a household name–but it’s not really sudden. The company’s been built for that long and had that much blood, sweat and tears put in.”

Source: Inc.