🚨 Post surpassed $4B in sales for the first time ever, thanks to their recent acquisition of pet food brands.

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THIS WEEK'S TOPICS:

• 😲 Pet wearables could change dog ownership forever

• 🥤 Blending up $50K to make dog smoothies

• 🫰 The animal shelter with a $50M portfolio

 😲 PET WEARABLES COULD CHANGE DOG OWNERSHIP FOREVER

The pet wearables industry is rapidly evolving, offering dog owners never seen before insights into their dogs’ health, behavior, and safety.

With advancements in AI and wearable technology, devices are now capable of more than just tracking location. They're transforming preventative pet care and opening significant business opportunities.

Revolutionizing Pet Care with AI-Powered Wearables

Modern pet wearables are equipped with advanced sensors and AI algorithms that monitor a range of metrics:

• ❤️ Health Monitoring: Devices track vital signs such as heart rate, respiration, and activity levels, alerting owners to potential health issues.

• 🤪 Behavior Analysis: AI interprets patterns in a pet's behavior, helping owners understand their dog's needs and emotions.

• 😰 Stress Detection: Wearables can detect stress levels, providing insights into how pets react to different environments or caregivers.

Real-World Impact

One example involves a dog owner who discovered that his pet sitter was not a good fit for his dog.

By analyzing the stress levels detected by his dog's wearable device, he realized that his pet was experiencing high anxiety when left with the sitter.

This insight allowed him to make an informed decision about finding an alternative sitter for his dog, who he’d feel more relaxed around.

Industry Growth and Market Potential

The pet wearables market is experiencing robust growth:

• 📈 Market Size: Valued at around $1.4 billion in 2020, it's projected to reach $4.6 billion by 2027, with a CAGR of 14.3%.

• 🤑 Investor Interest: Companies like Tractive have attracted substantial funding, with Tractive raising $35 million in a recent investment round.

• 🧑‍🤝‍🧑 Active Subscribers: Tractive reports over 1 million active subscribers, indicating strong dog owner adoption.

Addressing the Lost Pet Problem

Lost pets remain a significant issue:

• 😭 Annual Statistics: Approximately 10 million pets are lost each year in the U.S.

• 🫂 Reunion Rates: Only about 15% of dogs in shelters without ID tags or microchips are reunited with their owners.

• 🗺️ Wearable Solution: GPS-enabled collars drastically improve the chances of locating lost pets, providing real-time location data.

Partnerships with Insurance Companies

Pet wearable companies are forming partnerships with insurance providers:

• 💵 Preventive Care Discounts: Insurance companies offer reduced premiums to pet owners who use wearables, promoting proactive health management.

• 🌐 Data Sharing: Wearable data helps insurers assess risks more accurately, leading to better coverage options.

• 🫀Improved Health Outcomes: Collaboration leads to early detection of health issues, reducing costly treatments and claims.

Accuracy of AI Models in Pet Wearables

The effectiveness of pet wearables relies on the accuracy of their AI models:

• 📖 Continuous Learning: AI models improve over time by analyzing data from thousands of pets, enhancing their predictive capabilities.

• 🫵 Personalization: Accurate data allows for personalized care recommendations, tailoring advice to each pet's unique needs.

• 🔎 Ongoing Research: Companies invest in refining their algorithms to increase reliability, though specific accuracy rates are often proprietary.

Some collars claim 98% accuracy for detecting heart beats, while others mention an 81% accuracy on monitoring activity levels.

Business Opportunities in AI and Wearable Tech

The growing market offers numerous avenues for entrepreneurs and tech companies:

• Data Analytics Platforms: Developing sophisticated tools to process and interpret vast amounts of pet data.

• Integration Services: Creating ecosystems that connect wearables with veterinary services, smart homes, and other IoT devices.

• Innovative Hardware: Designing new sensors and devices that monitor additional health metrics or enhance comfort for pets.

Impact on Dog Ownership

The integration of wearables into pet care is reshaping the responsibilities and experiences of dog owners:

• Proactive Health Management: Early detection of health issues leads to better outcomes and reduced veterinary costs.

• Enhanced Bonding: Understanding a pet's needs fosters a stronger emotional connection.

• Peace of Mind: Real-time tracking and health alerts provide reassurance about pets' safety and well-being.

Key Statistics

• Pet Ownership Growth: Over 63 million households in the U.S. own a dog, providing a substantial market base.

• Spending Habits: U.S. pet industry expenditures reached over $100 billion in 2020.

• Technology Adoption: An estimated 30% of pet owners are interested in technology that enhances pet care.

🥤 BLENDING UP $50K TO MAKE DOG SMOOTHIES

Don't worry, a dog smoothie isn't made of dogs.

Dog smoothies did however catch our eye when we learned about a small startup in UK that is making functional drinks for pups to help improve diet and hydration.

Furr Boost, founded by food technologist Louise Toal, (who fun fact is married to the CEO of Oscar Mayer, Ian Toal) launched the brand in 2020 after her beagle Phoebe starting suffering from bladder problems linked to her diet.

Louise started experimenting with protein shakes as a way to flush out her system and also provide hydration as Phoebe refused to drink water.

From there, we'd assume that any household that has the CEO of a major food industry company in it probably thinks about business opportunities they come across, therefore Furr Boost was born.

The smoothies are made with meat, fruit vegetables along with added oils and vitamins. A single smoothie retails for about $5, and they offer cases with a variety of flavors.

Recently they were featured on the UK version of Shark Tank, called Dragon's Den. Louise was able to secure £50k for 30% of the business (putting the value at $160k).

Having been in business for 4 years, that is not a very impressive valuation, but at least there is some investment interest.

One other data point on their success is that since this is a UK company, they are required to make some public financial filings on a government site called Companies House (a neat way to research UK companies).

We can see that of 2023 they had ~$50k in assets and only 1 employee:

They do have a modest 12k followers on Instagram, which isn't nothing.

Their website doesn't seem to get much traffic, but we would guess that this type of business is going to be more about partnering with distribution channels like pet food stores, chewy, etc for success.

So this doesn't seem to be a big grower, BUT, this might be an example of getting ahead of the wave as search results for "dog smoothies" have steadily grown.

We'll also point out that this company seems to be limited to the UK for now, so there could be somewhat of an opportunity in the US if you believe in the market.

🫰 THE ANIMAL SHELTER WITH A $50M PORTFOLIO

In our experiences, animals shelters are mostly a wonderful thing.

Often understaffed, under resourced, and over worked, shelters seem to be propelled by a labor of love from people who deeply care about animals.

Our nerd brains did get to wondering how larger shelters are able to operate as many smaller ones don't appear to pull in a lot of revenue, and we assume a lot of their costs go to animals that don't have owners and they may not recoup.

Let's see what we found.

The Structure

Shelters are typically mission driven organizations, and because of this, in most cases a shelter is going to be set up as a non-profit (a 501(c)(3) non-profit to be exact).

There are a few reasons why the non-profit makes the most sense for shelters:

• Mission driven and for profit don't get along so well - When you are for profit, your goal is to maximize revenue, and when it comes to caring for animals, that does not align well with what's best for the animal. Most people who start or work at a shelter care about what's best for the animals

• Money is scarce, so maximize how much you can use - Being non-profit means less or no money needing to go to taxes, allows for more donations, and makes them eligible for more grants

• Attracting Volunteers - Shelters need to rely on a lot of volunteer time, and it's easier to get people to volunteer when they believe in the mission and know that their efforts are having more of an impact

• Trust - Let's be honest, you automatically trust a non-profit more than a regular business

After the tax status comes the leadership. Shelters will typically have a board of directors and executives (depending on the size).

The board of directors is responsible for the overall strategy as well as the financial and regulatory compliance.

We've found that most BoDs are made up of volunteers who have a background in animal welfare along with finance, law, and other areas that help steer the ship.

Execs are a little more boots on the ground than the board. They run the day to day, and are often one of the few paid positions within the organization.

They'll do everything from managing staff, organizing events, overseeing fundraising, working with community and governments groups, and more.

After leadership you are mostly going to find a bunch of volunteers handling all the admin and medical work, depending on the services the shelter provides.

The Finances

One benefit when you are researching non-profits is that they have to post their financials for all to see.

So we looked through through a larger organization to see how much they make and where they spend their money.

Keep in mind that most won't be as big or have as many assets as this one.

Joybound (previously Arf)

Located in northern CA, Joybound has been around for 30 years and have homed over 50k animals and done over 100k procedures (spay, neuter, vaccinations, etc).

We'll summarize 2023, but here is where you can find their financial statements: (LINK)

• Cash savings of $3.5m - Hot damn, they got money in the bank! To be honest this surprised us, but goes to show that being a non-profit doesn't mean you can't make money, it just means that you re-invest back into the organization

• Investments of $50m - Hot damn #2! So Joybound was founded by baseball manager Tony La Russa originally, and we would guess that a lot of their investment portfolio grew from seed money that he either put in or helped raise along with donations. That $50m is made up of mostly bonds and traditional equities and provides a nice $1.5m in interest and dividend income. Their portfolio also grew by $5m from 2022 to 2023

• Property and equipment total $26.4m - I think we are seeing a pattern. One reason that Joybound has been successful is they've wisely invested money to not only help generate interest income to operate, but to also acquire real estate. In short, they've taken a very business like approach to the non-profit game

• Operating revenue of $11.1m - of this, 75% or $8.4m is from contributions. Only 5% or $566k comes from program fees. Another $500k comes from retail sales, but the other 20% is across things like sponsorships and special events

• Operating expense of $10.5m - So while they have money and make money, they also SPEND money. They do manage to come out in the black, and with their portfolio growth, they seem to be on a good track

• 84% of expenses are on program services - Frankly we aren't sure if this is good or bad, but in 2023 their services cost them $8.8m. Of that, $3.5m was spent on adoptions and care, $2.6m for their vet clinic, $2.1m on community outreach, and $479k on training. For all those categories, people make up the biggest expenses.

• Top 6 employees combine for $900k in salary - The executive director gets a handsome $300k per year, and a few other folks make 6 figures. That doesn't seem unreasonable compared to the size of the companies revenue and investment:

• Total staff expense of $6.5m - It kind of seems like with that number, Joybound doesn't rely on volunteers as much as other shelters. If close to a million is the execs and highest paid folks, that still leaves over $5m that gets paid to staff, which is a lot of people!

• 25% of donations spent to get more donations - not the best wording there, but of the $8.4m in donations they got, they spent 25% of that on community outreach to get more donations. Again, not sure if this is good or bad?

We're sure this all is vastly different from smaller shelters, but it was interesting for us to learn that some shelters can grow to be quite large.

Joybound has smartly invested donations and income over the years to build a portfolio that seems to enable them to put more back into the business than traditional shelters.

We'd also guess that they've become good at hiring and training people to drive more donations, which allows them to expand their reach and services.

We don't have an opinion on how non-profits should operate or how money should be allocated, to us this was more interesting to peek under the hood and see what the finances look like.

DOGGYDEX™

Winner 🏆: BITCOIN

Proudly introducing the DoggyDex™, an index comprised of 10 publicly traded companies whose primary focus is the dog/pet industry.

List of tickers used can be found at the very bottom of the newsletter.

The yellow line-plot in the chart represents these companies above (DoggyDex™) and their combined performance against both the S&P 500 and Bitcoin on a weekly basis.

Pawformance is measured by % gains & losses.

• 🥺 Kirk Herbstreit’s tribute to his dog: Football analyst, Kirk Herbstreit, recently lost his golden, Ben, who traveled with him to all of his games with him. Check out his touching tribute to his best boy.

• 🏆 Bloodhound wins 2024 hero dogs award: 18-month old Bloodhound, Bo, has won the nationwide Hero Dog Award for locating missing children, dementia patients and has even helped catch robbery suspects.

• ☂️ Pug doesn’t want to poop in the rain: Kiwi the pug’s owner sings a song asking kiwi “if you don’t want to poop in the rain, raise your paw” and Kiwi’s reaction is hilarious.

• $CHWY - Chewy: E-commerce platform for pet supplies

• $IDXX - Idexx Labs: Vet point of care instruments and vet software

• $FRPT - Fresh Pet: Pet food company

• $ELAN - Elanco: Manufactures pet disease prevention products

• $PETS - PetMeds: Online pet pharmacy

• $ZTS - Zoetis: World's largest producer of meds and vaccines for pets and livestock

• $TRUP - Trupanion: Pet insurance company

• $WOOF - Petco Health & Wellness co.: Pet health & wellness company

• $BARK - BarkBox: Subscription service providing dog products, services, and experiences

• $PET - Wag! Group Co.: Tech platform that allows pet owners to connect with industry professionals for services such as, walking, training, etc.