Paws for Life
Paws for Life allows consumers to select and purchase pet food online, which is then delivered to their doorstep, eliminating the need to traipse through supermarkets and lug home heavy bags.
The business launched in beta a few months ago before officially launching the service. Miller and Frizell talk to StartupSmart about creating a canine-inspired concept.
What prompted you to start this business?
Kim: Great companies are founded in down periods. We saw the remnants of the GFC as the opportunity of a lifetime to go and start one of these great companies.
Why did you limit your offering to the pet market?
Kim: Paws for Life is about improving our customer’s lives and giving them back their free time.
Pet food is a large unsolved problem in Australia, and focuses our team’s expertise on another large unsolved problem in Australia – B2C logistics and warehousing.
How long did you work on the site before the launch?
Kim: We have been working on the idea since January – it has taken a lot of sweat equity to create this opportunity.
We were not willing to go into something on a whim, not willing to be reactive in a market or to chase the latest trend.
We conducted a very thorough review of the pet industry, which is key to our success.
We gained a thorough understanding of the current players, supply chain, the position of B2C logistics in Australia, and how that all comes together with respect to the economics of a start-up business.
What were the biggest challenges?
Michael: Finding information to support our assumptions was challenging. We had to get out there and kick tyres, and sometimes ruffle a few feathers.
This taught me two things: 1) You need to understand that your assumptions about real world situations will be wrong, and 2) 99% of research can’t be done from a desk in an office on the computer - you have to get out there in the real world.
How did you fund the business?
Kim: We put up the seed capital ourselves as we think it’s important for management to have significant skin in the game.
That said, the most significant cost has been the lack of a salary – moving from an investment banking salary to nothing is a massive change and took some getting used to.
It has brought a sharp focus to the business and the success of Paws for Life.
What are your revenue projections for 2011/12?
Michael: Our focus over the next year will be to continue to build best-of-breed infrastructure to ensure our customers get their food as fast as possible.
The key to our business is a custom-built warehousing and logistics platform that is fully integrated with both our frontend website and our logistics partners.
There has been a lot of investment in automating our systems to ensure we can scale efficiently.
The problem in Australia is moving a regular, large parcel from B2C – this was largely unsolved before Paws for Life came along.
James Edwards is our head of technology. He has a PhD in mathematics and degrees in computer science, and is focused on this aspect of the business. His focus has been on solving the B2C logistics problem.
Kim: The other focus is building out a great team. One thing I learned in investment banking was that revenue and profit targets are nice but they are nothing without a great team.
Businesses are really just a group of people all pointing in the right direction, trying to solve a problem.
Our belief is that the right team is crucial – this is why we have team targets, not revenue. We measure how we build our team, how the individuals are progressing and what else they need from the business to achieve their personal and business goals.
How did you promote the business?
Kim: We haven’t had to yet. When Mike and I left the world of finance, people naturally wanted to know what we were off doing. So there was a little bit of buzz from that.
On top of this, I am the proud father of Turtle the Weimaraner, so I’m up at the dog park and talk to my dog pals regularly.
We haven’t gone out and marketed the business aggressively yet. However, the initial feedback has been tremendous, so we’re bringing on a marketing manager and PR team to help tell the story to as many as people as possible.
Our real marketing push is in front of us. That said, our focus is always going to be on the customer – we’re not in the business of jacking up prices on our customers to accommodate inflated advertising budgets and funky branding.
Our focus is on selling great quality dog food at affordable prices.
How have customers responded to the concept?
Michael: Our customers love the recurring pet food concept.
We had thousands of loving dog owners day one who really resonated with the problems we were solving: paying too much for good quality dog food and having to lug around heavy bags.
The response was so strong we even had cat owners begging us to start catering for their four-legged friends, and we’ve already brought great quality cat food into the range.
Kim: I have everything I can delivered to my house these days – fresh fruit and vegies, clothes and Christmas presents.
We work really hard at Paws for Life, and I just don’t have the time to worry about getting down to the shops for the necessities.
Everything is on my door step when I get home at night, which leaves me more time to spend enjoying life and building this great business.
What’s the biggest risk you face in the current economic climate?
Michael: We are not leveraged to the economic climate at all. In fact, the GFC proved that pet spending is not related to economic conditions at all.
The biggest asset we have is our team – we want the best people, and keeping them engaged and happy is a task we deal with every day.
Therefore, the biggest risk is losing them, not any fluctuations in the markets.
What advice would you give to other start-ups operating in a niche market?
Kim: First of all, the pet industry is not a niche industry.
Pet food spending is currently at $2.78 billion in Australia and is expected to grow to $2.88 billion by next year, according to IBISWorld.
That aside, it’s important for any start-up to know their product, their customers, their market and their competition. Each product has unique characteristics that lend itself to certain logistics, marketing and customer channels.
If you haven’t done your research, you’re going to spend a lot of time and money learning some hard lessons before you start. Do your homework.
Michael: Ask for help. People are out there in the world, doing what you want to do already. Ask them for help – most of the time they will be willing to have a coffee and a chat.
You have to go into business assuming people are generally good. Try to find win-win situations whenever you can.
Negotiations are conversations aimed at understanding what the other side wants, and how best you can facilitate that. Ironically, I learnt this in investment banking.
Sit around a table and optimise the outcome for everyone involved and don’t be greedy. This way, you are the most likely to come to a deal and have the most people engaged in the outcome as possible.