Getting Sting and the CEO of Goldman Sachs to trust your business with their dogs is a pretty positive indicator. When the Great Recession hit in 2008, Mike Lavora and Adam Light were working on Wall Street. Within 12 months after being forced to leave their jobs, they were doing six figures in revenue with their new dog walking business. What started as a simple services company has now grown to 45 employees, and 7 locations across New York City. Turns out the market for pet care services in a place like New York is massive. There’s an estimated 1 pet for every 4 households, and the team at Throw Me A Bone is just getting started even though they now service 200 pets a day.
In this episode we discuss how Mike and Adam came up with their idea after Mike visited a pet care facility in the West Village, and was placed on a three month waiting list for his dog. We also discuss how they decided to approach the market to drastically reduce the capital they needed to create their business. Within a week of operation they had their first customer, and the momentum never stopped. Soon the pair knew they would never have to go back to their finance jobs.
We also uncover how the two started to scale their business, seizing every major opportunity and partnership they came across along the way. After a decade, what was originally a lifestyle business is now becoming a quickly growing operation that has the opportunity for massive scale.
0:20 Today on the show we have Mike and Adam of Throw Me A Bone
0:38 The business is a one touch solution for your petcare needs. Dog walking, pet sitting, grooming training etc. Bringing the service to the customer
1:00 The founders are ex Wall Street guys who decided to start a pet care company.
1:25 What happened during the financial crisis?
1:30 Doesn’t seem like the best time to start a business, but the founders found themselves without a job and were deciding whether to go back into Wall Street
2:03 Everyone else was working and they were throwing around ideas about what to do next.
2:29 The insight came when Mike wanted to put his dog into a daycare and saw it had a 3 month waiting list. It seemed like there was an opportunity to open a daycare.
3:19 Cue Wild West Music
3:20 At the time in 2008 it was mostly independent people doing dog watching and dog walking services.
5:00 They started off just putting up fliers on the streets to tell customers about their services, and they got their first customer that way, even though it ended up being illegal and the city took the signs down
6:00 The guys acted on emotion and only really planned for 2 weeks, drafting a business plan for a doggy daycare. Decided to go after going a lower cost opportunity and start by walking dogs first. They jumped into the business pretty much right away.
6:52 They were excited but had to scale the idea back to something more realistic. They wanted to prove to themselves that they could build a customer base and see if they actually enjoyed it. They also went into it thinking they want to be the biggest in the city.
8:07 Once they got their first client with the flier, and with Facebook getting big in 2008, they started reaching out to their networks there and asking people to refer others with dogs, and they got another 10-12 clients within about a month of this strategy.
8:45 As a service business, word of mouth was really important to them to grow. That way they were able to get 25 or so clients in the first year and had to hire their first employee.
9:10 Smart how the guys went through the business planning process and talked to experts, which let them quickly course correct and choose an easier way to enter the market.
9:38 And the guys were willing to do the hard work in the beginning, put up fliers, walk the streets meeting customers.
10:40 Most of their outreach was direct outreach to people they knew
10:52 Then they thought of getting to know as many doormen as they could to get them to refer their tenants to them
11:40 They tried newspaper ads but that wasn’t as effective as in person verbal communication. It’s almost like a baby sitter. You wouldn’t get one from a newspaper. Need that level of trust.
12:05 We talked about the benefits of doing door to door sales in a recent episode of ours. How important is it to learn about the market directly from customers. And learn how to best sell to them.
12:28 Given that in NYC how many dog walking services are out there. How were you guys able to compete?
13:04 They found a sweet spot. There are independent individuals who offer the services but they have limited availability or flexibility
13:14 You now also have some contractors from mobile apps, but you lose the intimacy that you get and relationship you have with someone you trust. They also took the customer skills they developed from finance and always over-communicate with their clients. Mike and Adam take their business a lot more seriously than some other service providers in the market.
14:26 What might have also helped is the fact that the professional NYC client base liked that the guys came from a professional background.
15:04 They’ve met a lot of higher profile people that they probably never would have in one of their finance jobs, like Sting and Lloyd Blankenfield. Sting gets as good of a deal on the services as everyone else.
15:50 How did you figure out pricing?
15:58 Figured it out as they went along. In the beginning were competing on price to stand out, but increased their rates as the years went on.
16:38 Can you tell us how much the average customer spends on a monthly basis with you?
16:40 Average customer works 5 days a week so they need 30-60 minute of walks per day. They have packages of walks that people can pay for per month. That costs them about $380
17:30 If you do grooming or overnight stays that they provide, the average customer will pay them $500 or so per month. They still have clients who had puppies in 2008 and they’re still with them now.
18:40 The guys make it a point to be available to all of their clients even though they have hundreds of customers now, because they know for many people it’s important to know the owners of a business like this.
19:00 Trust is huge. Sergei only trusts one couple with watching his dog Pumpkin, shout out to Dan and Ella! You can find Pumpkin on Instagram @lilpumptheceo.
19:34 How much did you guys make in your first year of business with 20-30 clients?
20:03 Just under $100,000 in revenue in the first year.
20:06 The guys have been lucky to experience very little churn. Even those who change neighborhoods, which is very common in NYC, continue using their service.
20:50 $100k in revenue is enough to want to keep going, and now you guys are at 45 employees. How were you able to grow. Was it really just mostly direct outreach and word of mouth?
21:28 What also really helped is partnerships. Concierge services at hotels, and then ultimately property management groups. They consciously grew territory by territory. At this point they’re doing about 200 services a day.
22:20 Do you know how big the dog walking market is in NYC?
22:30 You can only see registered dogs, but there are about 400,000 of those in the city, and so likely double that including non-registered dogs.
22:32 With the newer partnership strategy, did you also go door to door, or how did you get their attention?
23:10 For all entrepreneurs out there, whenever you see a potential opportunity, jump on it. You never know when you’ll get a lucky break again.
23:28 In 2008 the economy was bad and hotels were struggling. In the past hotels weren’t pet friendly, but to attract more customers they became more pet friendly and wanted to offer services. Mike’s brother was working at a 5 star hotel, and he got introduced to someone at the hotel. One of their first clients in the hotel was a Saudi Prince who needed his 4 dogs taken care of.
25:05 The hotel really liked them and referred more customers to them, so they doubled down on that strategy and used the networking skills they built up on Wall Street to build more relationships with concierge services. This strategy helped their business explode.
25:50 This had to be an on demand relationship where they would go even with an hours notice to provide the service.
26:43 When you sell to a hotel, what value statements work the best?
26:45 They pay a commission directly to the concierge so that’s a big value to them.
27:14 When they partner with developers to offer full service facilities in buildings, the value add is helping fill vacancies faster and helping them retain their tenants longer.
28:42 In home services is still the core of their business. That convenience factor is big for New Yorkers.
28:00 Let’s talk about your pivot to now partnering with property managers to build out full service facilities. How did that come about?
30:00 The first meeting with a developer happened in early 2016 and the process took a whole year to get to a fully built out space with that one location.
30:20 Now they’re about to open their 7th location, in Long Island City. Pretty fast growth in just a few years. They don’t even have to really look outside to other markets and can continue expanding in NYC.
31:25 So in this case, do the developers build out the facilities and you pay rent?
31:43 Each relationship is structured differently depending on the stage of the building’s development they enter in. But yes, they do pay rent. They made sure that the cost to stay in these spaces is very limited, as opposed to some larger facilities you would find in Manhattan. The property managers also build out these spaces for Throw Me A Bone.
33:20 As this new direction becomes a focus, how are you guys building the client list there?
33:30 No outreach right now. They’re pleased with the number of projects they have right now so don’t really have to sell.
38:19 Adam said in the beginning of the episode that they acted on emotion. The reality is every business owner makes decisions on emotion. You would never sign up for something this hard if you didn’t have an emotional attachment to it. But it’s important to listen to the market. They started off with an easier path into the market with dog walking and only got the opportunities they did because they worked at it year over year. They would never see the opportunities with developers or concierges if they didn’t work at it.
39:13 Entrepreneurs need to start with something achievable before they can get to their big vision.
39:30 You can find these guys at www.throwmeabone.nyc and on Instagram, @throwmeabonenyc