Why you should care
Because all is fair in love and tech booms.
In Silicon Valley, everything could be a market waiting to be disrupted. Even your dog Fido.
Americans own 395 million pets. That’s 96 million cats and 83 million dogs. Owners spent nearly $7 billion — yes, billion — on high-end dog food alone last year. Pet grooming and boarding employs over 150 thousand people, and 13 million Americans tuned into this year’s “Puppy Bowl,” which ran during halftime of the Super Bowl. And while the $59 billion pet industry has grown at a steady if not noteworthy 7 percent year-over-year rate for 20 years … well, if you can believe it, it’s about to get much bigger.
Pets are people, too!
Pet ownership has tripled over the last 30 years to 82 million households. And 91 percent of Americans who own pets view their kitties and puppies as equal members of the family, according to a 2012 Harris Poll. In the past, Americans have mostly spent money on their pets for staples like food, standard veterinary care and basic supplies. But this is changing. After all, your dog needs luxury .
It’s already beginning
The recent Global Pet Expo — yes, there’s one of those — held in March at the Orange County Convention Center featured 985 exhibitors and over 3,000 new products. Among them? The $100 iFetch, an “on demand” battery operated ball launcher so your pet doesn’t have to wait around for you to throw the tennis ball, and an assortment of Push Pushi raincoats for your animals.
It’s not all about gadgets, either: there’s Trupanion, a venture-backed pet insurance provider that IPO’d on July 17 and traded up 14 percent in its debut.
Less than 1 percent of the 180 million cats and dogs in the United States are currently insured, meaning that owners will be forced to cover medical expenses for their beloved companions out of pocket. Despite this, pet insurance companies generated nearly $500 million in annual premiums in 2013.
Think of it this way: for every marketplace, there’s pretty much a pet equivalent. That means mobile devices, wearables like Fitbit, wellness and weight, and more. Smart folks in the startup world are applying emerging business models. Take BarkBuddy, a Tinder-like app for pet adoption that promises to connect people with “ﬂuﬀy singles” in their ZIP code. In other words: There’s a huge opportunity here for entrepreneurs with creative ideas.
Single, unmarried women in their late 20s and early 30s are the leading demographic buying small dogs.
And the American love affair with animals isn’t going anywhere anytime soon. In fact, it looks to be blooming. American life expectancy, which stands right now at 78.7 years, has nearly doubled over the past century. One in three babies born today are projected to live to 100. We can expect “empty nest” Baby Boomers to accumulate more pets and to keep spending to spoil their fluffy loved ones.
On top of that, American birthrates are hitting record lows. By contrast, the ownership of small dogs (think under 20 pounds) is booming. Since 1999, their population has doubled to become the most popular type of dog to buy. (Thank Paris Hilton for that.) Research seems to suggest those little fellows are only gaining in popularity, according to the firm Euromonitor. And here’s one potential reason why: Single, unmarried women in their late 20s and early 30s are the leading demographic buying small dogs.
In the end, pet ownership — and obsession — are both products of a middle-class lifestyle. And as the global middle class grows from 1.8 billion in 2010 to 4.9 billion by 2030, people are only going to keep on buying and spoiling pets.
What we’re watching
We’ve got our eyes on DogVacay, a Los Angeles-based company sitting at the intersection of these major trends. It’s an online, nationwide community of over 10,000 vetted and insured dog sitters committed to caring for their guests like they were members of their own family. Think Airbnb for pets. And its counterpart, Airbnb, is valued at around $10 billion. DogVacay has quietly assembled a premier syndicate of venture capital backers, including Andreessen Horowitz, Benchmark, DAG Ventures, First Round Capital and Foundation Capital. While DogVacay is beginning to ramp up their “barketing” eﬀorts (we had to…), the outpouring of demand has left many muttering, “Why didn’t I think of that?”
This OZY encore was originally published July 24, 2014.
Michael Moe is a co-founder of GSV Asset Management, as well as its chief investment officer. Regarded as one of the world’s preeminent authorities on growth investing, his honors include being named to Institutional Investor‘s All-America Research Team and The Wall Street Journal’s Best on the Street. His firm, GSV, is also an investor in OZY.