As part of the blog’s renewed focus on college entrepreneurs, today’s Deal Radar features Dura Doggie, a combination e-commerce and traditional retailer that designs and sells dog toys, but with a socially conscious bent. The company has an unusual business model – it donates 20% of its profits to four affiliated causes in a program called “Chews Your Cause.”
While a student at UC Santa Barbara, Dura Doggie founder and CEO Raad Mobrem teamed up with classmates in a project to solve the problem of non-durable dog toys. Mobrem, classmate Chase McElroy, and friend Frank Jones decided to run with the idea and incorporate a company. After learning more about the pet industry, Mobrem believed that the market would embrace the idea of conscious capitalism and take well to donating and purchasing at the same time. Mobrem loves dogs but had no prior experience in the pet industry, and says he is glad for this because it has allowed him to approach Dura Doggie with a fresh perspective.
According to Dura Doggie, the pet products market is around $50 billion a year for the United States, close to the American Pet Products Association’s (APPA) estimate of $48 billion for 2010, and around $35 billion in Europe. The APPA estimates that 45.6 million American households own a dog and spend an average of $40 a year on dog toys.
Surprisingly, says Mobrem, the main target are small mom-and-pop stores. Big chain stores bring consistent revenue, but there many more small stores as a whole than chain stores. Mobrem says Dura Doggie would probably be doing about 10 times the amount of business it actually does if all stores it served were smaller stores rather than large retailers. This is unusual because many other industries, such as electronics, need the big-box stores to survive.
Dura Doggie has three main products. The Disc ($13.99) is nylon sandwiched between natural rubber and can be used as a fetch toy, a chew toy, and a water bowl. The Nebo ($9.99) is a ball and a treat dispenser. Finally, the Beba ($13.99) is a squeak toy and treat dispenser. The Nebo and the Beba each come in four colors representing different causes: pink (breast cancer), blue (animal welfare), green (the environment) and orange (diabetes). Twenty percent of the profits from these toys are donated to charities representing the four causes. All toys are made in the United States and are recyclable.
To gain traction, “We gave away free product and a lot of it,” says Mobrem. The initial goal was to get into as many pet stores as possible so that customers could see and touch the products. As demand increased, the next step was to create an strong e-commerce component, and Mobrem credits Volusion (covered by Deal Radar last year) as being instrumental in this: “In our search we made a few poor choices and wasted money on crummy online storefronts before we discovered Volusion,” he says. “It was the perfect fit for us. The user interface is functional and beautiful. The training videos Volusion offers were great for helping us figure out how to get the products set up and ready to sell.”
The company has been largely bootstrapped. Mobrem had been working since he was a teenager and used money he had made in the stock market. McElroy and Jones also contributed. There was a $35,000 friends and family round and a $30,000 angel round. Mobrem estimates total investment at $150,00, with another $180,000 worth of time invested. The founders do not take a salary and reinvest earnings into the business. On top of taking seed money, the company strives to do everything it can in-house: designing the products, packaging, website, and catalogues, taking its own photos for marketing materials, and so on. Mobrem believes this has saved about $100,000 in expenses. Revenues are over $1 million and the company is just short of break even.
The founders are seeking another $320,000 in investments and are in talks with angels. These funds, which Dura Doggie aims to have in place in the next few months, will be used to bring out more products, for marketing, and to hire more employees. The ideal investor would be Walter Robb, CEO of Whole Foods, because, says Mobrem, “He just gets it. He understands that quality and the intention to do the right thing is always greater than making more money.”
At present, Dura Doggie products are in just over 1,000 stores in the United States, Canada, and Asia. Bigger clients include Pet Valu, PJ’s Pet, and Pet Supplies Plus. The company is just entering the European market.
Competitors include other e-commerce sites that sell eco-friendly pet toys, such as Dognique.com, Ruffwear.com, OliveGreenDog.com, and Rockstar-Puppy.com. Tough By Nature, Gourdo, and KONG are other manufacturers focusing on natural-rubber pet toys.
The founders do plan to sell Dura Doggie at some point but, stresses Mobrem, “We want the idea of conscious capitalism to live on and don’t want some big company closing shop once we are bought out. We want to grow the company, create an awesome brand, and sell to someone or some company that has our values of giving back and helping the global community. We know in our hearts that there is a soul mate for our company, and we just need to find them. It will take some years, but one day, the right buyer will come along and we’ll pass the torch.”
In the 1M/1M Deal Radar series, we celebrate entrepreneurs who have reached at least $1 million in annual revenue. It is part of the One Million by One Million (1M/1M) global initiative.
This segment is a part in the series : 1Mby1M Deal Radar