Business RX: How to take pet food product to the next level

The Entrepreneur

Over 17 years in the business, veterinarian Mark Olcott has seen his share of fat cats. Tired of telling his clients to stop overfeeding their pets, Olcott saw an opportunity to apply new technology to an old problem. He borrowed an idea from his days working with dairy cows, where controlling what the animals eat is critically important. Farmers are able to regulate feed amounts using radio-frequency identification technology that reads a chip on each cow as they are milked and doles out a specific amount of food. Why not bring this farm solution to pets?

The Pitch

Olcott

“Pet owners need a way to feed their dogs and cats as individuals, not members of a herd. My partners and I invented, patented and are developing a device called My Pet Butler. Our product identifies individual pets and prevents them from overeating or eating another animal’s food.

“Our working prototype looks like a counter-top bread machine. Pets wear an RFID tag on their collar, encoded with information on the specific amount of food they should receive. The unit recognizes the tag when the dog or cat walks up to the machine and a little drawer pops open with the correct amount of food for that animal. That pet has 15 minutes to eat the food before it disappears back into the unit, and the drawer will slide back sooner if another pet tries to eat the food. The device can be programmed to feed multiple pets.

“With more than 150 million pet dogs and cats in the U.S. alone, we believe there is a huge market domestically and internationally for a product that solves feeding problems. Our target customer is any pet owner who has multiple pets, has a pet who is on (or should be on) prescription food, leads a busy life or travels frequently, or simply wants to take better care of his or her pet.

“We have incorporated and raised more than $600,000 in outside funding, patented our device and obtained international protections. Our current goal is to perfect the technology past the prototype level, produce a limited run for product testing, then execute a regional launch here in the Washington area.

We have struggled to obtain the $750,000 we think we need to accomplish these goals, in large part because we don’t know for certain what it costs to make our product. We seem to be stuck in a cycle — we need to finalize the design to get a good estimate of how much it will cost to produce the feeder, but without that number, we have trouble getting investors interested. Without investors, we don’t have the money to finalize the design, and so on.

“In addition, we have received conflicting advice on how to price our product and we aren’t sure what the right distribution channel is. We believe that a big-box retailer such as Petco or PetSmart is not the right way to go, at least initially. You wouldn’t just see this product on a store shelf and buy it. It really needs an explanation, so is this the sort of concept where we need a sales force? How do we leverage veterinarians in this sales process?”

The Advice

Harry Geller, entrepreneur-in-residence, the Dingman Center for Entrepreneurship

“It is very difficult to find investors willing to fund a consumer product that is only in the early prototype stage, particularly at the amount you are looking to raise. I would initially scale back your target investment to a more manageable $100,000 to $150,000 with the end goal to produce a few dozen units to test out the concept. Then you have something proven to go to market with.

“Focus your energy on market research right now. Narrow your target customer market. Yes, there may be 150 million pet dogs and cats in this country, but how many pet owners have more than one animal? How many pets are obese or have other eating issues? How many pet owners are affluent enough to afford your product? By taking a more critical look, you will really find out if your market is large enough to move forward. Any potential investor will be asking these questions, so it is best to have the answers to establish credibility.

“Regarding the sales channels, if you can prove your product viability, the veterinarians are your best initial channel. They are trusted by their clients and can drive your higher ticket sales. You can even have one on display at targeted veterinary practices with a link to your site offering immediate and free shipping. First-generation electric pulsating toothbrushes and teeth-whitening products were initially sold in the $100 range, exclusively by dental practices. Now those products are commonplace. Research how those markets worked.”

Reaction

Olcott

“I’ve decided to pivot away from My Pet Butler for exactly the reasons Harry mentioned. Developing a mechanized consumer product is so expensive up front. Anyone with an idea for the next great ‘mousetrap’ needs to know that $500,000 doesn’t get you very far. Not to mention this is probably a big factor in why so few venture capitalists are interested in consumer products.

“I can get a better return on investment by moving into a different area of veterinary medicine. I’m working on a project to help pet owners coordinate their animals’ medical records.”

 
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