Retail
Animal Kingdom: Wagly Woos Affluent Pet Owners
By Corey Maass September 1, 2016
Startup provides a range of services — medical care, exercise, grooming, boarding, dietary supplies — at one location.
There was a time when dogs and cats roamed their neighborhoods freely, reappearing only for meals and to sleep in the backyard. But Snoopy and Puff aren’t in the doghouse anymore. They sleep indoors, in their custom beds.
It’s part of the cultural trend that has pet owners treating their animals more like members of the family — and spending freely to do so. It’s a shift in attitude that Wagly, a Bellevue startup, supports by providing a full set of care and services at a rapidly growing chain of Wagly “pet campuses” in Washington, California and Arizona.
“The concept is to put all the care and services for the pet under one roof in one location,” says CEO Shane Kelly. “Once there’s that emotional connection with a pet, there’s not much you won’t do for them.”
Aimed at affluent pet owners who spend more than a thousand dollars a year on their animals, Wagly provides day care, training, boarding, grooming, dog walking and around-the-clock veterinary care.
Spending on pets in the United States has more than tripled during the past two decades. To ensure that their pets are happy and healthy, many pet owners are more than willing to pay for day care while they’re at work and to foot the bill for increasingly sophisticated medical procedures like hip replacements. This year, Americans will spend an estimated $62.75 billion on their pets, up from $17 billion in 1994, according to the nonprofit American Pet Products Association.
While it touts the everything-under-one-roof concept, Wagly has a fleet of vans that can bring groomers to a pet owner’s doorstep (or transport the animal to and from Wagly’s campus). Wagly’s licensed, bonded dog walkers and pet sitters also make house calls. Customers can use a single service, such as dog day care, or several. Wagly is also developing software that will enable pet owners to use their smartphones to check on their pets or go over X-ray results with the vet.
Toward that end, Wagly in March hired Craig Susen as its CTO, wooing him away from a similar position at Trupanion, the Seattle-based pet insurance provider. Kelly envisions tapping Susen’s ability “to lead diverse teams of talent, develop a wide ranged of technologies and collaborate with clients.”
After they’re hired, Wagly staffers undergo three weeks of training, with a distinct emphasis on cross-area specialization. Groomers, for instance, are taught how to clean an animal’s ears properly and how to identify a skin or ear infection. Dog walkers are taught animal CPR. Veterinarians are briefed on the dynamics of group behavior and play.
Launched last year with financial backing from New York’s Invus Group, Wagly already has nearly 300 employees. Kelly declined to disclose the exact amount of equity funding but described it as being in the range of $20 million to $50 million “with quite a bit more reserved beyond that.”
Wagly’s first pet campus in Washington opened in late June in Bellevue’s Lake Hills Shopping Center. It also plans a campus in Sammamish. Kelly says about a half-dozen locations in the Puget Sound region fall within Wagly’s demographic sweet spot.
Wagly will soon open pet campuses in the Potrero Hill neighborhood of San Francisco and in Tustin, California, just south of Anaheim. Next on the list are San Jose, Pasadena and Rancho Santa Margarita in California as well as Gilbert, Arizona.
Most of the pets being cared for will be dogs and cats, but Wagly can accommodate pretty much anything smaller than a horse, from reptiles to rabbits, from guinea pigs to chickens. And it’s betting there will be plenty of demand. With about 86 million pet cats and 78 million pet dogs in the United States, pet care/pet services has become one of the nation’s fastest-growing business sectors. Phoenix-based PetSmart Inc. and San Diego-based Petco Animal Supplies both operate more than 1,400 stores and rank 48th and 108th, respectively, on a recent Forbes list of the largest private companies.
While PetSmart and Petco do provide services in their stores, Kelly says there’s a difference. “They are under the same roof but in different silos as businesses,” he explains. “Our philosophy is different. It is a unified, common experience.”
For example, if a dog is struggling in day care, Wagly employees can consult with a trainer or veterinarian to see if a training program, a particular medication or a different outlet for the dog’s energy is needed.
“We have a unique ability to deal with all different types and temperaments to make it the right experience for that dog,” says Peter Brown, Wagly’s chief medical officer. “We will always do what’s best for the pet. That’s part of our brand promise.”
Before joining Wagly, Brown worked at the Chuckanut Valley Veterinary Clinic in Burlington. Wagly has acquired the facility.
Wagly is targeting a tightly defined segment of the pet market and is zeroing in on neighborhoods where they are most likely to live. A typical Wagly customer will be in the top quartile in household income and display 14 psycho-demographic traits that indicate a willingness to spend freely on pet care services. These potential customers tend to fall into two groups: upper-income suburbanites and younger, well-paid urban tech workers. The gold standard is a woman in her 50s who spends $1,400 to $1,800 a year on pet care.
“You would think families with dogs would be bigger spenders,” Kelly says, “but families with children at home tend to spend a little less on their pets and more on their children.”
Wagly is Kelly’s fifth company backed by private equity or venture capital. He was CEO at venture-backed Pets’ Choice Inc., which acquired 64 veterinary hospitals during a 30-month period in the late 1990s. That’s not Kelly’s strategy this time.
“With Wagly,” he notes, “we are not buying an existing revenue stream and culture. It’s the ability to implement a complete rollout of the complete concept. We’re really starting from a blank page.”
Still, the company has acquired three pet care services in the Bay Area to help with its launch in that market, as well as the Chuckanut Valley Veterinary Clinic. Wagly has added services at Chuckanut but the clinic likely will continue to operate under its own name. “It is a substantial hospital with a great reputation that we will probably leave as Chuckanut because it’s a great brand and culture,” Kelly says.
The Lake Hills pet campus in Bellevue serves as the Wagly prototype, Brown explains. Architect Jeff Clark, a principal at Architectural Werks in Kirkland, helped design the 10,000-square-foot campus. It features extra ventilation to reduce the risk of airborne infections spreading, easy-to-clean floors and extensive soundproofing.
It’s not surprising that Wagly got its start in the Seattle market, a place known for having more dogs than children. It’s also home to Trupanion and Rover.com, a nationwide online dog-sitting and dog-walking resource.
“The DNA of Seattle is definitely in the Wagly DNA,” says Kelly, observing that Washington state has one of the highest rates of dog ownership in the country. “That evolution of the relationship with pets is stronger in the Northwest.”
PAWS AND REFLECT: Wagly cofounder/CEO Shane Kelly believes consumers will embrace the idea of consolidating pet services under one roof.
