The Strongest Toy Ever!

Issue #28

October 17th, 2023

Before we start, everyone is aware of the atrocities committed by Hamas in Israel on October 7th. There are currently animal organizations helping dogs that have lost their families or have been wounded or misplaced by the terrible tragedy. Here are a few donation links if you would like to help them.

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SOS Pets

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Quick Hits:

🇮🇱 Soldiers and volunteers help dogs in the South of Israel 

 🇹🇭 Pet Fair South East Asia 2023 will be hosted in Bangkok from October 25-27

🌎 Petcare startups wanted! Leap Venture Studio announces open call for global cohort

❄️ Watch this amazing avalanche rescue dog in training (from inside the hole)

🏚 The cities with the most pet-friendly apartments in the US are…

Kong - the dog chew you give your dog when he has already destroyed every other toy you’ve bought him - and maybe a couple of sneakers too. Built with toughness in mind, Joe, the founder, designed it to be able to sustain even the toughest bites. While today it is a household name in the US, few people know its origin story. So we did a little digging (no bones found) and found that the story is a pretty fascinating tale of coincidence - one that goes all the way back to the 1970’s.

In Denver, in 1970, Joe Markham owned an auto repair shop. At the time, the area where the shop was located was prone to theft. So Joe did what any reasonable person would do at the time, and decided to get a guard dog.

Enter Fritz. Fritz was a German Shepherd who almost became a police dog; but did not pass the final qualifying round. He was a great addition to the shop and to the family. The only thing was, Fritz used to excessively chew everything in sight. It was so bad that he would chew rocks and even parts of the cars in the auto shop. Fritz was a destroyer. Joe tried buying all different types of toys for him but nothing he bought could sustain the onslaught of aggressive chewing.

One day, Fritz found a rubber axle stop from a 1960 Volkswagen Type 2 Bus. The tough rubber withstood the bite of the chew-crazy pup, and also, did not hurt his teeth. Joe immediately started putting his creative mind to work, tinkering away on what was to become the Kong for 6 years - making sure he got the right material, size, and shape. He even reached out to the rubber manufacturer in Germany to make sure he maintained the build quality, as it was important to Joe to be associated with German engineering.

The final toy design had a rounder, closed top that made it bounce more like an animal trying to escape a predator. In 1976, after 6 years, Joe finally began to sell the Kong.

The dog toy was pretty much an instant hit. 47 years later, it is still one of the most popular dog toys, a household name, and is still owned and run by Joe Markham. Over the next few decades, the Kong Company went from producing a single toy to an entire line of dog products. But the original toy is still the most popular, and with good reason.

In the beginning, as Joe was trying to explain the product to people and in an effort to help show just how durable a Kong is, he constructed a mechanical dog with steel jaws that he could take to trade shows. They named it Chomps, its job was to demonstrate how tough a Kong is. Needless to say, it was a very effective demonstration - people understood it right away.

The original Kong Classic Red went from one, singular size to an offering of four sizes.

• Kong Classic (red)

• Kong Extreme (black)

• Kong Senior (purple)

• Kong Puppy (blue + pink)

In the 90s, as Kong grew, Joe decided to expand the team and move the headquarters to Golden, Colorado, where it is still located today.

Currently, Kong is sold in over 80 countries, and across the US in pretty much every major retailer or big box store. It is still a privately owned company, which is why it is difficult to get exact numbers, as online estimates vary wildly. We found a few sources that echoed the following:

• KONG COMPANY LTD's annual revenue is $23.3 million (source)

• KONG has 181 employees, and revenue per employee is $85,978

However, we have found other online sources that have it at over $100 million in annual revenue.

In recent years, Kong has formed a licensing partnership with Petsmart. Kong is licensing its name and Petsmart produces harnesses, collars, beds, and crates with the Kong logo. A smart move, given the brand’s association with durability. When people see the Kong name on a dog bed or leash, they assume it's a high-quality product from a trusted company. However, if you visit the Kong Company website, you won't find any information about these items nor will you be able to purchase them on their website.

Over the years Kong has licensed its name to many companies in the US and abroad as it solidified itself as one of the most well-known and most recognizable chew toys in the world.

In an age where you have to build, find market fit, scale, be profitable, and exit all within a very short time frame. It’s refreshing to see a business and a founder who took 6 years to iterate and build his product. Then, instead of selling to the highest bidder, stuck around for almost 5 decades without ever selling the company.

• Strategic investment - L Catterton invests in a Japanese veterinary services group.

• Post it - The Missouri-based CPG Holding Co intends to acquire the assets of Perfection Pet Foods for US$235 million. Cha Ching $.

• Mars - Has appointed a new chief brand and experience officer of Petcare in order to overhaul its Petcare segment.

• Go Dutch - The pet telehealth platform just raised $18M in Series B funding.

• A new partnership - Dr Marty Pets has just joined forces with IndiePet to further their support of independent pet retailers.

• No wagging tails here - Trupanion is suing BabelBark, a company it acquired alleging that they stole trade secrets and violated agreements.

• Investing in plants - 3 European pet food brands see expansion with investments in new manufacturing facilities.

• Chicago to Leicestershire - Wind Point Partners has acquired UK pet food firm Assisi Pet Care Group.

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• Bear & Rat - The human-grade yogurt brand will start shipping DTC via their new partnership with Yelloh.

• For the munchkins - Bully Max has launched a new food line specially formulated for small breeds.

• AI Pet Food - Biocraft is investing in AI tools to reduce costs and accelerate the development of cultivated meat for the pet food market.

• The Daily - Native Pet just launched a new all-in-one supplement

• North Carolina - Just allocated $70M of its budget for a large animal hospital and a new equine veterinary center.

• Chew the anxiety away - Chewing can actually help improve their memory, and reduce fear.

• Shelters need help - Shelters across the country are euthanizing animals for no reason other than lack of space.

• Scenthound - What are your pet’s routine hygiene practices?

• Your dog is fat - 59% of (evaluated) dogs in the US are either overweight or obese.

• Meal for a king - This Pitbull mom feeds her fur baby a 5-star meal.

• Kangaroo brawl - a man saved his dog from a Kangaroo that was trying to drown the dog by punching him, no, we are not making it up.

We spent the last couple of weeks talking about preparation for a fund-raise and trying to clarify some of the key terms you may see. But, what happens once you have concluded the raise successfully? What now? Let's spend a couple of minutes talking about that:

• You have a new partner - Bringing an investor on board is not too dissimilar to finding a partner to build the business with early on. So, as before, it is important, in fact, critical you align on expectations. What do we mean by that? Well, each investor is different so it's important you understand what your new investors care about? Do they want daily catch-up calls? Do they want to meet during Board meetings only? Don't try and guess. Comms are super important in the earlier stages of the relationship, so make sure you know what each side expects.

• You may have multiple touch-points - As you go through a fund-raise, you may come across different people in the investor organization. There may be a Partner, a Principal, or perhaps an Associate. These different folks will have different needs and ask different questions. Consider building cross-organizational relationships to avoid a single point of contact (i.e. You!) and to enable efficient workflow and knowledge exchange.

• Board meetings - Having an investor may mean that you may need to start conducting [monthly/quarterly] Board meetings. Be clear on what the expected cadence is and be clear on what you need to cover. We will do a post in the coming weeks about Board materials to help you prepare but here are two tips to keep in mind (1) You want to circulate the materials at least 2-3 days before the meeting. It allows your investor to come prepared and to make the most of the meeting. It's also just common courtesy! (2) Producing Board materials (and follow-ups) from Board meetings can suck up a lot of your time. You still have a business to run, so spread the work amongst the team to help you get this to shape within the relevant timeframes.

We will spend some more time on post-investment considerations in future posts but the above should help you build the relationships with your investors.

Stay tuned for future posts!

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Finally,

Husband: It’s raining cats and dogs now
Wife: That’s okay, so long as it doesn't reindeer.

See you next week!

The Woof is a weekly newsletter dedicated to covering the pet industry.