Founder advice
Behind the scenes of building Pet Circle
Mike, James and the Pet Circle team have spent the last decade building one of the most unassuming startups.

When I first met Mike, Pet Circle’s cofounder, back in 2012, he’d been working in banking, but his true calling was entrepreneurship. Mike had been eyeing off potential opportunities in the pet space, and he asked me to come on board and bring my consumer startup experience as advisor and Chair. Prior to this, my background was building consumer startups, including Travelselect (a UK based online travel company) and 7yrs in venture capital.

Back then, there were just a handful of people in a warehouse complete with dodgy desks and bags of dog food lined up to test the back end delivery software they had developed. At one point, we were concerned about our lost stock, only to discover a friendly ferret was eating our inventory.

The original warehouse — a Kennards Storage shed
Moving into the warehouse (after an entire weekend of scrubbing the floors and walls).

Mike and James saw a huge opportunity in the pet space, which was relatively underserved by ecommerce. They had 2 insightful observations:

  • The main barrier to a memorable online pet food shopping experience starts with delivery: how do you ship a 20kg bag of dog food reliably and fast… with low damage rates (given most pet food bags were made of paper in 2012)?
  • The trend towards the humanisation of pets — case in point is my daughter Lottie’s pitch deck on why we should get a 2nd dog (by the way, the pitch was successful!)
Just 5 slides, but it did the trick!

Having had the privilege of being right by Mike and James’ side from the start, I wanted to share my reflections on Pet Circle’s journey.

Best of breed ecommerce

10 years ago, Australia was lagging behind the rest of the world when it came to ecommerce. We’d reviewed every ecommerce investment in the market, but with Pet Circle we saw a multi-billion dollar opportunity, with only a fraction of it served by ecommerce at the time. Investing in the company would give them the chance to expand market share rapidly, and in doing so, build scale and barriers to entry.

Pet supplies as a category has relatively low margins compared with other ecommerce categories. In the early days, Pet Circle’s subscription model made it an interesting business with efficient acquisition costs and a fantastic opportunity to build relationships with customers through recurring purchase activities. It also made for attractive unit economics and customer lifetime value.

Now, behind the scenes of what looks to be a pet consumer business is a beautiful, high volume, low ACV SaaS business, with a considerable chunk of its repeatable and predictable revenue stemming from a sticky subscription base — a credit to their exceptional customer experience and brand loyalty.

Quiet achievers

In a world where we can over-index on hype, Mike and James have largely flown under the radar. You’d be hard-pressed to find founders as well respected by their networks as these two.

They’re first principle thinkers, optimise for the nuts and bolts and almost contrarian to a fault. They’re incredibly bright and don’t mind applying those smarts to what others may think is a dull area. When you combine smart people with something like pet food, the end result is pretty impressive.

With a PhD in Applied Mathematics and a Degree in Computer Science, James had the perfect skillset to build out Pet Circle’s proprietary Enterprise Resource Planning (ERP) software to predict when you would have orders, how to get it in and out of the warehouse and more. So they’d figured out the backend first of how the business would run, which is generally the opposite of what most startups were doing at the time. Most would say, “I’m going to build a consumer business/brand/website,” and then struggle to deliver the model and experience. This approach of tackling most challenging problem upfront has set the scene for the success that followed.

Pet Circle — known as Paws For Life — back in 2012.

Experienced investors and entrepreneurs are drawn towards Mike’s attention to detail and big picture understanding of what’s going on. He’s feet on the ground, always making things happen. And with each warehouse move (there’s been four of them), he is there with this hard hat and boots on shifting stock around the floor while he figures out how to optimise the software, systems and robotics.

Running a team is easy when it’s just a few people in a room. It gets harder when you’re scaling the organisation with execs acting autonomously and making decisions that can have inherent tension. Mike and James’ best hires have always been those who thrive in high velocity but still have their feet firmly planted on the ground. The culture they’ve built around accountability and getting stuff done is more prominent in Pet Circle than most other businesses — low margins leave little room for error — you have to get stuff out the door.

DIY Data

Mike and James are deeply analytical thinkers. This is reflected in their complex analytics of customer behaviour to sophisticated statistics on their supply chain. To enable this, they have built a world-class bespoke ERP system, that continues to impress new investors during technology due diligence. No “buy off the shelf software” for them — MinPin (their in-house system) is their secret sauce.

And from here…

It’s been an incredible 10yrs from scratchy ideas to a $1bn+ business. But there is still so much more to do. The humanisation of pets is set to accelerate as Gen Z spend even more than previous generations on their furry family. Customer experience will go to a whole new level via more complex data analytics and machine learning. Robotics and new supply chains will add a new dimension to delivery expectations. And scaling an organisation to >1,000 people ain’t easy. But it’s a massive prize for those who can pull it off. And we are backing Mike and the team to do this.

Hats off to Mike & James. It’s been remarkable to be part of your journey…

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