How We Started A $1.2M/Month Lifestyle Store For Dog Owners

$1,200,000
revenue/mo
2
Founders
50
Employees
product
iHeartDogs
from Anaheim CA
started May 2013
$1,200,000
revenue/mo
2
Founders
50
Employees
52.1K
alexa rank
357K
followers
16.7K
followers
1.16K
subs
Discover what tools Justin reccommends to grow your business!
platform
email
shipping
customer service
social media
productivity
app
inventory
Discover what books Justin reccommends to grow your business!
Listen to the audio version of this story!

Hello! Who are you and what business did you start?

My name is Justin Palmer and together with my co-founder Marshall Morris, we started iHeartDogs, a lifestyle store and blog for passionate dog parents. We’re fortunate to have grown one of the largest online communities for dog lovers, with over 25 million members in our Facebook groups, pages, and email newsletters.

We sell a pretty wide range of products for both dogs and dog owners. Most popular is our line of supplements, treats, and CBD oil. We’re also known for fun lifestyle products like t-shirts, bracelets, wine glasses, car stickers and magnets, and a lot more. Our customers love anything that allows them to make a statement about how much they love their dogs.

The one thing that ties all our products together is a cause. We’re passionate about funding animal rescue efforts through every product sold, and each item donates to a specific program. For example, most products donate anywhere from 3 to 15 meals to animal shelters. We also donate toys, blankets, shelter transports, and help fund service dogs for veterans.

Every month our customers receive a “Hero Report” showing them the exact impact of their purchases. For example, the report shows how many meals for shelters they’ve personally funded. We’re incredibly blessed to have served over 1.5 million customers, or as we call them, “heroes”.

how-we-started-a-1-2m-month-lifestyle-store-for-dog-owners

What's your backstory and how did you come up with the idea?

I’m a very unlikely person to have started a pet product company. Growing up, I was highly allergic to both dogs and cats. After getting married, my wife begged me to get a dog. I fought the idea for months, but after a while, she convinced me to go visit a husky rescue.

We fell in love with a 2-year-old husky named Splash who was found wandering in the mountains near our home. But there was just one problem, the moment I walked in the door of the rescue, I had a severe allergy attack.

So we did the most logical thing, of course, adopted her anyway. Somehow, I never had an allergy to her again.

how-we-started-a-1-2m-month-lifestyle-store-for-dog-owners

In 2013, I was working a day job as a marketing manager for an eCommerce startup. This was the golden age of organic Facebook reach, and I was learning how to quickly build large and passionate Facebook communities.

To this day I’m a proponent of building an audience before building a product. Products come and go and get copied easily. But an audience is far harder to replicate.

Inspired by my own dog Splash, and the virality I was seeing around pets on Facebook, I started a few dog-themed Facebook pages. Initially, I just ran “like ads” on Facebook. We were getting followers for less than 1 cent per fan. Back then, posts would organically reach over 50% of your followers. Pretty soon, several of the pages started going viral and reached several hundred thousand fans. I realized it was time to build this concept into a real business.

Around this time, I reconnected with my friend and now business partner Marshall. Marshall had deep experience in building and scaling media companies. My background was in eCommerce. We came up with the brand for iHeartDogs and decided it would both sell physical products, and become media property that sold advertising to other pet brands.

Many businesses start their story off with a genius product idea. Our story is nothing like that. There was no initial product, only an audience. To this day I’m a proponent of building an audience before building a product. Products come and go and get copied easily. But an audience is far harder to replicate.

Take us through the process of designing, prototyping, and manufacturing your first product.

The first product we ever manufactured was almost an accident. On a whim, my partner Marshall and his wife designed a beaded bracelet with a couple of charms. We placed an order, and sooner than we expected we had 500 of them sitting in our office.

In our Facebook communities, we had noticed how many people posted memorials of their pets who had recently passed. We decided we’d make this bracelet a memorial for those who had recently lost a pet. Each of the 22 beads on the bracelet represented a meal we donated to a shelter pet in honor of their beloved pup.

how-we-started-a-1-2m-month-lifestyle-store-for-dog-owners

We posted the product on our website around 5 pm. By 10 am the next morning, all 500 had sold. We realized we were on to something big. Today the same product is still one of our best sellers and we’ve sold over 100,000 in total.

But the most valuable lesson we learned from our first launch is that the best products tell stories. There is nothing incredibly innovative about this bracelet, it can (and has been) copied over and over. But the story we told by pairing it with a charitable cause and letting it represent a memory is what propelled it to so much success.

One of our next big hits was a line of paracord bracelets and matching dog collars. Part of each purchase went towards providing companion or service dogs for US veterans suffering from the emotional and physical scars of war. We have been fortunate to have raised over $300,000 towards this cause.

Describe the process of launching the business.

Long before we ever launched our first product, we created a blog for dog owners. We wrote on topics ranging from Buzzfeed style listicles, viral news stories involving dogs, and in-depth health and training articles. Around the end of 2013, we got a lot more serious about publishing regularly.

Pretty soon we got our first monster viral hit, flooding our site with over 4 million pageviews in one day:

how-we-started-a-1-2m-month-lifestyle-store-for-dog-owners

It was an article about why some people tie a yellow ribbon to their dog’s collar (hint: because some dogs are reactive and need space). The article was fraught with typos, slow-loading images, and ads, and was nowhere near our best work, but somehow it struck a chord.

Our biggest lesson from our launch process was simply “try stuff and see what happens.” When the cost of failure is low (as it usually is in the digital world) you get rewarded for iterating quickly and not overthinking things. If we had over thought our initial content and product ideas, we may never have gotten started. Instead, we were rewarded by letting our audience tell us what they wanted, not what we wanted.

Since launch, what has worked to attract and retain customers?

Facebook has always been our #1 channel for acquiring customers. But unlike most brands that only run website conversion ads, we find one of the best and lowest cost strategies is building organic communities. We run over 150 Facebook pages and groups. The time and effort to manage these communities is immense, but over time they are still the best source of low-cost customers.

Email newsletters and SMS has also been a huge part of our growth over the last couple of years. For us, success here is all about niching down into more specific interests and building many newsletters that cater to different pet owners in different life stages.

We tested selling on Amazon for a while but didn’t like the fact that we couldn't have a direct relationship with our customers. We believe if you don’t own your customer, you don’t own your business.

When it comes to retaining customers, for us its all about showing the impact of our charity work. While many companies do great charity work, we think that most lack showing their customers proof of the good work that was done. When customers see the direct impact of their purchase, they become extremely loyal.

Last year, we ran a campaign called “A Christmas Miracle for Shelter Dogs” over Black Friday and Cyber Monday. A week after the campaign we surprised over a dozen rescue & shelter organizations with much-needed food, dog beds, blankets, and more:

embed:instagram

When it comes to our marketing philosophy, we focus on acquiring customers at break-even or better 100% of the time, with no exceptions. Anytime we’ve tried prospecting at a loss for an extended period of time we’ve run into cash flow challenges. Profitability in business is all about the delta between your LTV and your CAC. We’ve seen repeatedly that as you scale, your LTV on new customer cohorts tends to go down (see Andrew Chen’s excellent explanation on why). For this reason, we’ve chosen to focus on ways to achieve an ultra-low CAC so we can break even day one rather than relying on an elusive LTV that may never materialize.

Some of the strategies we’ve used to achieve this are low-cost trial products and free+shipping offers. And of course, our best source of low-cost customers are the investments we’ve made into our organic content, Facebook pages, groups, and email lists.

How are you doing today and what does the future look like?

We’re fortunate to have been profitable since our very first month of operation and have been every year since. While we’re still in growth mode, it's growth on our own terms. We’re still independent with only two owners, 100% debt-free, and have never taken VC/PE funding. I personally believe that there is an inverse relationship between how fast you grow, and how long you last. We’re in it for the long run, so many of our decisions actually intentionally slow growth to a reasonable pace.

Understand your personal goals when building your business. For me, it was a desire to have more freedom.

We recently developed a unique approach to product development. After some expensive product launches that failed to meet expectations, we developed a survey system for asking customers ahead of time which product they would buy. It works a bit like a Kickstarter and has about a 90% success rate in predicting winners. Since we’ve implemented this, our success rate of new product launches has skyrocketed, and we’ve been able to better manage our inventory by making smarter buys.

Inspired by a challenge with separation anxiety with my dog, in 2017 we started a pet CBD brand called Cannanine. Selling CBD online is an incredibly challenging industry fraught with regulation and restrictions, but it's been an extremely rewarding experience seeing the impact it has on our customer’s older dogs. Today our CBD products are some of our most successful and have the highest repeat order rate out of anything we sell, helping tens of thousands of dogs with anxiety and chronic pain.

how-we-started-a-1-2m-month-lifestyle-store-for-dog-owners

Through starting the business, have you learned anything particularly helpful or advantageous?

If I were to summarize my top lessons they would be:

  1. Build an audience first, a product second. Passionate audiences will stand the test of time. Products come and go.

  2. If you stay in the game long enough, odds are you’ll eventually have a bit of luck. Avoid risky moves that can take you out of the game (too much debt, bad inventory buys, partnering with people who don’t share your goals, etc).

  3. Partner with people who share your goals and values, but have complementary strengths and weaknesses. Always work with someone for at least a year before you form a partnership.

  4. If the cost of failure is low, iterate quickly and don't overthink things. If the cost of failure is high, move slowly and carefully.

What platform/tools do you use for your business?

By far, the most important tool we use is the EOS (entrepreneur operating system). While Marshall and I had a lot of experience growing online businesses before iHeartDogs, leading and managing a team of 50 people was a whole new challenge. EOS provides a framework of managing a larger organization and the accountability that younger, less experienced leaders need.

Some of the other software and tools we use are:

What have been the most influential books, podcasts, or other resources?

Some of the most meaningful books I’ve read and reread are:

  • Start with Why by Simon Sinek has been hugely influential for how we’ve built a caused based brand. Favorite quote “People don't buy what you do; they buy why you do it.”

  • Black Swan and Antifragile by Nassim Taleb provide a framework for how I think about managing risk and preparing for the unknown.

  • Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne taught me to define my own market and ignore the competition.

Advice for other entrepreneurs who want to get started or are just starting out?

Don’t think you need to quit your job and give 100% of your time to your business idea. While that’s a path many took, it's a route that often scares away more conservative entrepreneurs away from taking action.

Having the security of a day job can provide for a longer runway for your business to get off the ground. Having a constraint on your time, such as only a couple hours a night to build your business isn’t always a bad thing. It can help clarify your actions and ensure you only focus on what matters.

Understand your personal goals when building your business. For me, it was a desire to have more freedom. If your goal is to build a massive company and sell, you might need to raise funding. If your goal is more personal freedom, raising capital may introduce a host of problems you’re not prepared for.

Other business owners often ask me about our exit plan. “When are you going to sell the company?” I have always found this question a bit odd. If you love what you do, you’re in no rush to stop doing it. Marshall and I are blessed to be working with some of the brightest and most passionate people we’ve ever met. Our team constantly challenges us and pushes the limit on what seems possible. We’re making a huge difference in the animal rescue communities we serve, and building a brand that we hope and believe will be around 50 years from now.

Are you looking to hire for certain positions right now?

We currently have 2 open positions we’re hiring for: a graphic designer and a product photographer.

Where can we go to learn more?

If you have any questions or comments, drop a comment below!

-  
Justin Palmer,   Founder of iHeartDogs

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