An Nguyen began hosting others’ dogs when her own dog, a pit bill she’d fostered post-Hurricane Sandy in New York, became very ill. With thousands of dollars in veterinarian bills, Nguyen turned to DogVacay.com to bring in some much-needed extra cash. Nguyen likes that the pet-sitting company covers round-the-clock emergency support and insurance. Sitters set their own rates, and the company takes a 15 percent commission. “They provide a guarantee that if I broke a leg, they’ll find someone to come to take care of dogs,” she says. “I’m happy to give the commission back to DogVacay.”
Los Angeles-based DogVacay started in 2012 and now, with $47 million of investor money, is valued around $151 million. Nguyen began as one of the company’s hosts in 2013; it now boasts just shy of 22,000 hosts in Canada and the U.S.
DogVacay might be tired of hearing it, but they’re often compared to Airbnb, as in “the Airbnb for pets.” It’s got a ways to go before hitting Airbnb’s heady valuation heights—a reported $24 billion—but the company’s success offers more evidence the digital economy has overtaken the Internet economy.
We’ve certainly surpassed the era of Pets.com, the B2C online pet store that shuttered in 2002 due to lack of differentiation from competitors, an undeveloped e-commerce market, and the fact that consumers were still shopping at bricks-and-mortar stores. Simply put, it wasn’t profitable.
DogVacay has competition, of course—who doesn’t? Rover, based in Seattle, is another dog-sitting startup. It was founded in 2011 and now has $50.9 million raised. With a market for pet supplies valued at over $60 billion in the U.S. alone and pet grooming and boarding with revenues of $6 billion, there’s room for growth.
As the digital economy develops further, expect to see more niche players that do one thing and do it really well. DogVacay, for example, doesn’t sell food, treats, or toys, although the company recently started a doggie day care. Another example of this business model: Guesty, a service that provides management services for Airbnb rentals. The company does everything from communications to cleaning. According to a recent report by OECD, venture capital is back to pre-dot.com bubble levels.
Another development in the peer-to-peer space is quality. DogVacay says it’s picky about who it allows to be a sitter—candidates must go through a 5-step review process. Then there are the client reviews on the site. Nguyen says she’s developed relationships with repeat clients, and now that she’s working on her own startup and taking in fewer pups, it’s still a good way to keep up the socialization with her own dog. What she says is missing is the back-end support structure for new sitters.
“I think most of these peer-to-peer platforms are missing the tech piece,” she says. “One of biggest questions people ask me is, ‘How do I set up pricing?’” The system isn’t smart enough to set those up easily; you have set up a custom quote. For me, it’s too much work, so I do one flat rate.”
She’s not the only one who finds the company more client- than provider-centric. Founder Aaron Hirschorn told Fast Company that he considers DogVacay to have developed from a peer-to-peer platform to a service company—which sounds, admittedly, a little old-school.
For more on innovation-driven startups, see What Happens When an Idea Becomes the Product?