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THIS WEEK'S TOPICS:

• 🚽 World’s first self-cleaning dog toilet

• 🎯 Target’s pet powerhouse

• 🚶‍♂️ $5.5M for your own dog walking software

 🚽 WORLD’S FIRST SELF-CLEANING DOG TOILET

Ditch the pooper scooper...Fydoo, an Australian startup, has introduced a self-cleaning dog toilet that promises to revolutionize waste management for dog owners.

The Chief Potty Officer

Sebastian Waddell, a dedicated dog owner, spent three years developing Fydoo after experiencing firsthand the challenges of managing pet waste in urban environments.

His vision caught the eye of Davie Fogarty, the 28-year-old entrepreneur behind successful brands like The Oodie and Pupnaps.

Fogarty's $250,000 investment has set an ambitious target of $10 million in sales for Fydoo's first year.

A High-Tech Solution for Nature’s Business

Priced at $1,157, Fydoo is not your average pet potty. This sophisticated system features:

• 🌳 An elevated grass patch

• 🧼 Automatic cleaning mechanism

• ☣️ Built-in sanitization system

• 🚨 Smart sensors for safety

The device promises to save pet owners an average of two hours per week on cleanup, targeting those in apartments, townhouses, and homes without yards.

Market Potential & Challenges

Fogarty’s investment in this spectacle was driven by its sizeable market potential. He drew some parallels with Fresh Patch, a similar product that generated over $100M in revenue after appearing on Shark Tank.

While Fydoo's innovative approach addresses a common pain point for pet owners, it faces several hurdles:

Installation Requirements:

• Needs access to a water line

• Requires a floor drain for waste disposal

• Must have sanitation tablets for use

These prerequisites may limit Fydoo's accessibility for many households, particularly in older buildings or apartments without flexible plumbing options.

Also, a learning curve to train your dog to exclusively use this new toilet as a relief area.

Market Insights:

• The global pet care market is projected to reach $325.74 billion by 2028

• Smart pet device market expected to grow at a CAGR of 22.5% from 2021 to 2028

The Roadmap:

Despite the challenges, Fydoo's potential is real.

The company has already garnered international interest, with inquiries coming from the US, Italy, Indonesia, and China. 

Fogarty plans to leverage his digital marketing expertise and four-pronged business strategy to drive Fydoo's growth:

1. Content creation

2. Social media engagement

3. Exceptional customer service

4. Continuous product development

Overcoming Obstacles

To address the installation challenges, Fydoo could consider:

• Partnering with plumbing services for easier setup

• Developing alternative models for homes without suitable plumbing

• Offering modular components for more flexible installation options

Time will tell if dog owners are ready to embrace this new wave of pet waste management.

🎯 TARGET’S PET POWERHOUSE

Target has often partnered with celebrities or influencers for different product lines, such as Chip and Joanna Gaines' Magnolia collection.

Now they've extended that strategy to 6 furfluencers for their new offering, The Cuddle Collab.

We dig into some of the numbers and reason behind this strategy.

The Cuddle Collab

This is Target's first pet exclusive line, and is a limited time release of six different product lines, each tailored to a different pet influencer. They are:

1. Popeye

2. Ellie & Emma

3. Maple Cat

4. Baloo & Pan

5. Ghost and Wren

6. Zelda, Titus & Brave

The products range from pet and human fashion, to toys, to treats, decor, and more.

We noticed a lot of personalization options and pet / human matching items. Both of which we've found are solid sellers when it comes to pet commerce.

Some Numbers

The big one that stands out is 70%. 

That is what Target estimates the percent of shoppers who have a pet. So this seems like a pretty clear opportunity, which is why they are putting so much effort into this.

An influencer is only as good as their follower engagement, and these good boys and girls have that. Check out some follower and stat counts:

• Popeye - 375k followers on Insta w/ an average of 3.8k likes per post

• Ellie & Emma - 2.9m subscribers on Youtube, 1.7b total video views, 4.38% engagement rate

• Maple Cat - 567k follower on Insta, 1% engagement rate and 6k avg likes per post

• Baloo & Pan - 69k followers on Tik Tok, 2m likes

• Ghost & Wren - 60k followers on Insta, 13% engagement rate

• Zelda, Titus & Brave - 152k followers on Insta, 10k avg likes per post

As you can see this approach garners a very solid reach to a very specific audience, something to keep in mind for your own businesses.

The Marketing Content

As you often find with animal brands, Target decided to use a funny, light tone to market the launch.

In addition to traditional national tv ads, Target also decided to test out reality tv style shorts to promote the launch, dubbed "The Pets of Tarjay".

This seems to be an attempt to shift their advertising to be more in line with social media expectations of Millennial and Gen Z audiences.

🚶‍♂️ $5.5M FOR YOUR OWN DOG WALKING SOFTWARE

It's business barkdown time!

This week we've got a tech-enabled dog walking and pet sitting company that is on the market for $5.5m.

Now we tried to do some sleuthing (didn't want to have to break any NDAs!) to figure out which company this is, but we really aren't sure.

The Company 🏠

The company was founded in 2011, and says to have a team size of 101-250 (maybe that's including dog walkers?).

The value proposition is that they have software that connects owners with dog walkers who use GPS to ensure high quality.

It sounds like the software is not only owner facing, but also includes internal software that helps manage the walker operations, and can integrate with partners to provide walking services and scheduling.

A very interesting note is that within the last 6 months they've purchased two local dog walking companies that were doing a combined $1m in revenue and estimate that they've retained 97% of customers.

This is something we'd want to know a lot more around, such as what was the purchase price, what is the expected revenue increase, and more.

If they developed a good acquisition strategy, it unlocks a lot of growth potential.

The business model is both B2C and B2B, and they list the main opportunities as:

• Expanding digital marketing - a lot of customer acquisition is organic

• Moving to new markets - they currently operate in 3 states

• Hiring a sales team - drive more partnerships and direct sales

The Numbers 📊

The big numbers are the $5.5m asking price and the 2.3x multiple on revenue. In a lot of tech, it's not unheard of to see 5x - 10x multiples on revenue.

The reason why is that software scales well and has high margins. However in this case it feels more like this is a dog walking company that uses tech, so keep that in mind.

Some other numbers:

• 13% profit margin in the last 12 months

• $1m in revenue added from acquisition

• 40% annual growth rate

• ~12k average monthly traffic

Our Take 🤔

We've got some red flags we would want to investigate. 🚩

First off, this seems like a tech valuation being applied to an SMB.

Being around for 13 years and growing to about $1.4m in revenue is not a high growth company that should command such a big profit multiple (in our opinion obviously).

While they are now at $2.4m, $1m of that is from acquiring other companies, which they did recently.

Usually with a tech company, you can expect high margins, but 13% is pretty bad.

Our guess is they take a cut of each walk that gets charged through the platform, or they pay the walkers directly.

So a lot of that revenue may not be potential profit.

In July 2024 you can see there was a spike in display ad acquisition. We'd want to dig into that and see what the cost and return was.

It does seem they have some opportunity for more marketing to drive traffic and customers.

We noticed that there was some venture funding, so a concern is that you aren't buying the full company, but only a %.

The big question is what did the acquisitions cost and is this a repeatable process?

Rolling up a bunch of smaller competitors and leveraging your software is a great playbook to accelerate growth, but only if it makes sense financially.

DOGGYDEX™

Winner 🏆: S&P 500

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.

• 👀 Must see performance: Roni Sagi and her pup Rhythm put on an absolute spectacle of a dance routine at America’s Got Talent.

• 💘 Danny Trejo has a message for society about dogs: The famous Danny Trejo, who usually plays a villain or some gangster type role, has a heartfelt message about his relationship with dogs and how their species well-being is our responsibility as humans.

• 🥹 Billie Holiday with her dog Mister in 1949: Check out some of these photos of Billie Holiday with her dog, Mister, who she took to nightclubs where he would be fed steaks while she performed.

• $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

• $PETQ - PetIQ: Pet health products and medicines

• $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.