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DogVacay, an online pet-sitting booking service that was founded in 2012, has been growing like crazy. Now with $22 million raised and around 60 employees the company is positioned to be an important business within the LA tech community. Its founder and CEO Aaron Hirschhorn has learned a lot in the last two years and shared some of his insight during the Silicon Beach Fest "Building business in LA: fundraising, acquisitions and growth" panel:
1) On making DogVacay a viable company:
“People looked at me and said, 'Pets? Oh, that's really cute, what a sweet idea. No one’s going to give you real money.' But I think the more you get out there and show that there is a demand for your product [the more justified your business], so I personally watched over 100 dogs at my home; showing that this was a real model that people will buy into. And just continue to get really smart people on your side. Continue to share your vision, continue to show momentum. I ended up partnering with Mike Jones and Peter Pham of Science. We got first round capital, and then we were growing, then we got Benchmark. It’s really about showing that momentum and constantly sharing your passion.”
2) On focusing your efforts:
“There are so many different opportunities in the pet industry; it’s a $60 billion a year industry, it’s growing rapidly. We had to pick a part of that we were going to focus on like a laser. And eventually we will get broader and get different revenue sources, but doing that too early is dangerous.”
3) It's all about recruiting:
“Half my day is interviews. It’s all about recruiting, it’s all about finding people that are smarter than me, more experienced than me and can execute on our shared vision. I joke, and it’s not a joke, there’s no way I could get a job at my company now. Because there’s no role I could fill because I wouldn’t be good at marketing or product care or any of that stuff, so I had to create a company to get myself a job there. I think if you always have that mentality of finding people that are better and smarter. Spending half your calendar doing that you should be successful.”
4) How to leverage your corporate board for growth:
“You can leverage pattern recognition. They have seen this happen before in other scenarios, and give you a little bit of an ability to see around the corner than you would otherwise on your own. As a first-time entrepreneur, that is really helpful."
"The other way is opening doors. Based on the strength of your investor network or your advisor network or your natural endorser network, say ‘I want to talk to this person, put me in touch.’ Those are ways that can help accelerate your business. But they will never, ever, ever do any work for you. All they will do is open doors and give you some advice.”
4) When to raise the first seed round:
“It depends on your business model. We have thousands of pet care providers across the country and we’re taking a small piece of the transaction, that’s a business model that only works at scale. And if you need that, you need venture capital to get to that scale, a place where your business is viable. In our situation we realized early-on that we were not going to be able to grow quickly enough to prove that the model worked without raising capital. If you are a business that is generating revenue from day one at a high margin, you do not necessarily have to make that decision one way or the other, then you think about it being growth capital. So it depends on your business model and the costs required to get the business where you want it to be.”
5) How to raise funding when your business won’t charge customers until later:
“If the right way to do it is to wait to charge, then you got to raise money and say ‘I believe so strongly that I need some sort of critical momentum and critical mass before I can begin charging.' Convince investors of that story and make it work. If that’s not your story, if yours is something that you should be charging on day one, like many products, then you should be charging. You’ve got to decide based on where you see the business going and get investors that share that vision.”
