Pethub 2012 Founder Showcase Pitch

Hi, my name is Tom Arnold. I'm the founder and CEO of PetHub. And what we're doing is we're taking pet ID tags into the 21st century by adding QR codes to collars and tags and linking them to an online profile. We're focusing on the $54 billion pet industry that's been considered a recession-proof industry because it's growing 6-8% per year, and people are quick to give up a latte to buy a doggie toy or some really nice dog food for their dogs or cats. 62% of us, as Hideo just pointed out, in the audience actually have pets. And what I started out with was doing our own ID tag, and we quickly backed off of that and said, wait, we're software guys, we wanna sell software services. So we started licensing our QR codes at $2 a code to a bunch of different tag manufacturers, including Red Dingo, which is one of the first ones they're about to launch. Put us into around 6,500 stores starting in Next month, actually. So what happens is somebody goes and buys one of the tags from Red Dingo or one of our other 3 partners. They come to our site, they set up their profile, and they control exactly what is the data that they want to show up when somebody scans their pet. So the way we're making our money is not just through the licensing of the tags to all the different tag manufacturers that sell about 135 million a year in tags. We have a free subscription that comes with your tag. We also have our silver, which lets you bundle up all the data you've entered and send it out to shelters in your area saying, "My pet's gone missing. Here's the medications," and so on. You also get a GPS notification and an email with a map when somebody scans your pet. And last but not least, our gold subscription for only a dollar more a month. If your pet is injured while it's missing, you're covered for up to $3,000 pet insurance. And unfortunately, 1 in 3 pets will go missing in its life. And the sad statistics are that 1% of cats and 12% of dogs will return home and the rest don't. So the way it works, I already mentioned, is your pet goes missing, you can bundle up that data, send it off to your shelters. If somebody scans your pet, they can either enter the URL found on the tag, the phone number that's on the tag, we do that too, or scan it with their smartphone and it brings up all this information and sends you a notification. By all this information, I'm referring to the pet profile. Again, it's your neighbors, your— the phone number for your sitter, your medications that the pet needs, dietary needs, and so on. We launched in September all of our services, and we have 7,000 subscribers and 12,000 pets on our site. What we're going after is 15% of the pet population within the next 5 years, which should take us to around $75 million. And we're raising $500,000 to launch a mobile solution which allows you to share your data with your pet sitters so they can do check-ins and acquiring 1 million users by the end of this year. And you can find us on the web as well. Thank you.

Thank you. Woo-hoo!

I had some tags for the judges to look at in case they were curious.

Thank you.

Wow.

I ran out of one.

What was the period of time that you've acquired the users?

We actually launched our site in March of last year, but we were really pushing when we started doing the subscriptions. And so 5.5% of our users are paid subscribers as of September.

So someone finds Fido and they see this tag. First of all, how do they know that they're scan it and second of all, what do they need to have on their smartphone to be able to do that?

Right, so first of all, the newer tags, some of those actually have it on it, it says scan with smartphone, it also has a web URL on it, so most people know what that is. On our collars we actually let you put the phone number and all that on there as well. So that's the hint as far as scan with smartphone. As far as the software, it's not our software, it's anybody's software that scans QR codes. And most Droids, the newer Droids are coming out with it installed. I think Windows 7 for mobile started coming out with it installed. And you can download it for free from the Apple Store. Is the belief that if your pet has this tag that there will be a higher rate of recovery than a normal tag that might have a phone number, for example? That is the belief because a lot of times the data can be out of date. People don't answer their phones. We even have people bring up microchips and say, what about a microchip? But 58% of that data a lot of times is out of date according to the American Humane Association.

So pets are an inherently social activity. To what extent are you thinking about driving sort of collaboration or some sort of driving them to the site where you could generate lead gen or do other forms of monetization?

Right.

So lead gen's in two forms. One's the tags that we're having that are already out there. We're handing them off to Etchers that are already in pet stores, the tags that are going out there. As far as driving more people in, we've got the mobile app that's coming out here in about a month that we're working with pet sitters, doggy daycares, things like that. They can basically scan the tag just the one time and then they have it in their phone and they can do quick updates like, "I just took the dog out," or, "I just fed the dog." You know, quick little updates like that. It becomes very Facebooky where you're getting a notification that there was an update, a new photo, something happened with my pet. And it gets people coming back. We're trying to get that churn because we're trying to get to an ad display thing as well.

So Tom, I really like your point of sort of the channel going through these stores that have thousands of pet tags out there that you can partner with. To me, and we're early investors, it would be interesting to really see what the adoption is and the metrics there. I don't know if you're getting any projections from any of those stores or any commitments or advance payments and stuff like that, but that would be interesting. And then really to George's question as well, then ultimately seeing the conversion in a sense of, well, how much of the benefit are you seeing for having the QR code versus just a regular tag or regular necklace on them?

So we did a daily deal through Tipper just about a month ago. And we offered just the tag and the tag plus gold subscription. And we were blown away that 22.5% went for the gold subscription bundled with the tag.

And the rest—

You got to charge more. So you're not charging them.

Well, we definitely charged for the— We were definitely charging them.

You want to see lower conversion.

Price elasticity of demand. All right, we haven't voted. I didn't want to interrupt because it's like obviously there was something good going on on stage. I mean, I hope. Are you guys ready? Give me like the nod, yes? Okay, 1, 2, 3. All right, sweet. Thanks, guys. Is this by like have pets, thinking of buying pets, hate pets, allergic, allergic?

My pet died.

That was very sad.

All right. Any final thoughts or are we good?

Sorry, I didn't realize we were dropping feedback there. Pitch was great. Message was very clear. I think the market's strong. I'm friends with Ted at Dogster, so I have a little bit of intuition for that. We're also investors in Life360, which I think is sort of similar. Story on the kids side. Main thing is probably just understanding kind of how you're getting customer acquisition. That feels a little low given the period of time that you're out there. I don't know whether that's organic versus, you know, trying to do some paid testing. Feels like you've got a business. I don't— again, I would try and be understanding who the competition is and what do you think customer acquisition costs. Any data you have on sort of length of customer life is interesting, although I'm guessing it's still early. But yeah, feels like there's a business there.

Thanks. All right, any—

you feel tempted?

Go, go.

Tempted, biting, chomping at the bit here.

And we tag horses.

Tag horses, that's actually what I was gonna ask, so we're good. Read my mind. Do you do this for portfolio company CEOs? No.

Sometimes we want to lose.

He's actually in He said he was going to be there.

Well, it's funny that you bring that up because—

Oh, no, stop. Both of you. Anything or we're good?

Just a quick question. So right now, when we got— we have 2 rescue dogs from the pound and they put a chip in, right? And that's kind of the way that people mentally think about kind of the standard these days. And so the whole ecosystem, the police, everything is kind of based around that paradigm. Paradigm. How do you break through that? I mean, this is interesting. I mean, I like the idea in terms of, you know, you can update it without having to do anything with the tag, but you got a whole infrastructure, you got a whole bunch of folks that are doing something very different right now.

So the numbers that we got from American Humane is that only 3 to 5% of animals are chipped, and those that are chipped, 58% of that data is outdated. As far as breaking through What about the microchip? I say that we're a complement to the microchip. I tagged my dog or chipped my dog as well because it's a safety net. And what I'm trying to do is with 50% of us having smartphones, the goal is to get it home before it even makes it to the shelter to be scanned because you can't scan it anywhere but a shelter or a vet.

All right.

Big round of applause.

Good job.