#74. Ollie delivers human-grade pet food straight to dog bowls. We talk with co-founder Gabby Slome about how she and her team created a nutritious alternative to the dog food already on the market and how the company is expanding to serve a growing population of canines. The Loose Threads Podcast features in-depth discussions with leaders across the rapidly changing consumer economy.

Check out the full transcript below.

Richie: [00:00:07] Welcome to the 74th episode of the Loose Threads Podcast, a show about the rapidly changing consumer economy. This episode is brought to you by Loose Threads Membership, which gives you actionable analysis, insights and events that drive growth, and Loose Threads Espresso, your energizing and high-pressure filter for consumer news–in context. We also have a newsletter that features the latest open letter to CEOs, podcasts with industry leaders and news from Loose Threads. Check it all out at LooseThreads.com.

Richie: [00:00:35] Joining me today is Gabby Slome, a co-founder of Ollie, a company that makes human-grade dog food. Gabby founded the company after realizing the effects of horrific ingredients that make up most pet food and set out to give dogs a seat at the same table as humans.

Gabby: [00:00:48] We want to make a new a dog food and they’re like, “Okay, is it kibble or it canned?” Well, it’s neither and they’re like, “Then what is it? That’s not dog food if it’s not kibble or canned.”

Richie: [00:00:55] We had a fun talk about the brand’s founding, how it created all of its recipes and how the company is expanding to serve a growing population of canines. Here is my talk with Gabby Slome.

Richie: [00:01:08] Why don’t we start. Just talk a bit about your background and then we can work our way up to Ollie existing and go from there.

Gabby: [00:01:14] So I used to be an equestrian. Generally, most people don’t start their careers talking about hobbies that they did, but for me it was definitely more of an all-encompassing lifestyle as opposed to a hobby. I did it full time all through high school and college and, for what I’m doing now, the animal kingdom comes full circle. So it was a lot of caring for my horses, not just on getting them fit, but what they were eating, what supplements they were taking, general health and wellness of their animal well-being. Horse people are naturally dog people so I’ve always had a dog. After graduating college, I looked around and just made the choice of whether I wanted to continue and go pro in showjumping or get a “real life.” I decided that I was going to go the more traditional route or, I guess, my version of traditional route. Got my first job in Boston at a company called Karmaloop which was a streetwear company.

Richie: [00:02:08] Yeah.

Gabby: [00:02:09] Are you familiar?

Richie: [00:02:10] Yeah. Rise and fall.

Gabby: [00:02:11] Yeah, a streetwear company that was really at the forefront of creating niche and specific—I would say they created a real estate online and a community online where both big and small brands were represented and really a cult following of their brand. When I joined it was definitely on the rise. I joined in their women’s merchandising department. So just learning the ropes of inventory management and buying and vendor management.

Gabby: [00:02:39] Very shortly after I joined, they looked around—this was back in 2009 when all the flash sales were coming up and they said, “We have a specific demographic that no one’s addressing in the flash sales thus far” and wanted to launch a flash sale site, similar to a Gilt Groupe but for their Karmaloop demographic. So they asked if I wanted to join that team. Initially, it was just me and a business development manager and we launched under a completely new umbrella so that we had a little bit more leeway and didn’t cannibalize the full sales of Karmaloop. It was called Plunder at the time. I did everything from operations, buying. We started creating our own lines. It was one of the best and worst first startup experiences I could have had because I got to dip my hands in everything. We grew super, super fast. We were 30 million run rate in less than two years. And so it was like, “Wow, this is awesome I want to keep doing this startup, got the startup bug.” For me too, it was a good shift from coming from a background where I was pre-professional from the age of 12 in my showjumping career that everything I was doing was building upon itself and really charting my own destiny and startups felt the most similar to that. It wasn’t just a cog in the wheel. It was really the act of creation and looking at big goals and reaching it.

Gabby: [00:03:56] So I came back to New York after a couple of years in Boston and joined Vente-privee when they launched in the U.S. Vente-privee was the original flash sale site that came out of France that Gilt Groupe and Rue La La and all of them say that they took the model and brought it to the U.S. and we did it in a joint venture with American Express. That was really a lesson in ‘timing is everything.’ We were really late to the game in the U.S. It was about the time where brands were realizing that flash sales weren’t the be all and end all. When they got out of the crisis of, “Oh my god, I have all this inventory on hand!” and started planning a lot more closely to sales and weren’t creating in such excess and seeing that customers are actually starting to wait for sales. They were then pulling back on their presence. They had these strong relationships and alliances with Gilt and with Rue and with HauteLook [that] got them out of their troubles in 2008 and they were saying to them, “We used to do four sales a year. We now only want to do one to two sales a year.” And here we are, as a completely new partner, asking them to add an additional sale. So, long story short, it was an uphill climb.

Gabby: [00:04:58] I looked around and thought about what I wanted to do and where I had come and knew that I wanted to create my own company, do my own thing. And so I did what most people do when they don’t know what to do, but want to feel like they’re doing something: I went to business school. Spent two years really focused on entrepreneurship, going to a bunch of lectures, [talking to] adjunct professors and also really learning the basics of business that I feel like, since my first job was very nontraditional that I was doing off the seat of my pants, but more giving me the framework and the groundwork of proper financial modeling and proper accounting and the marketing basics and all that stuff that I didn’t get that the quintessential consulting or banking background I felt was giving me.

Gabby: [00:05:41] Then, between my first and second year of business school, I ended up joining a startup full time, and working with them throughout my entire second year, called Primary.com which was, or is, a direct-to-consumer baby and kids-wear company. It was two women [who] had just left Quidsi, which [operates] Diapers.com and were very early there and wanted—similar story to a lot of the direct-to-consumer—better quality, better experience, better price. Really helped them—at the stage that I joined them, we were working out of the, what was then, the Reebok club on the Upper West Side in their cafe and now, actually, was bought by Equinox. So very true startup style. I joined them pre even their seed round. So helped them on building their models and their deck, on their inventory management, on what we were going to be selling. That was my first experience of building a brand. Before, having been on the retailer side, it was very much building a brand off the back of other people, but this was very much more “what do we stand for? How do we get the word out?” And so [I] helped them launch and was with them for a while but realized that I went to business school to do my own thing and still felt like I wanted to—while I loved them and was having a great time and great learning experience—wanted to still do my own thing.

Gabby: [00:06:54] I had been talking to a few people in the investor space and ended up landing at Primary Ventures, not affiliated with Primary.com, as an entrepreneur-in-residence to sift through a few ideas and give myself a little bit of breathing room and and resources to help validate some concepts. And so my dog, at the time, was experiencing,at that point—it was around six or seven months of continuous health issues. So I adopted my dog when I was on a trip during business school to Colombia, found him roaming the streets and his beautiful puppy eyes won me over and I brought him home with me. He had never been exposed to anything processed. He was eating what he could find off of the street and what people were giving him. I brought him back and put him on what I thought was the right thing to do at the time, which was a high-end kibble that the pet store recommended, and realized that he gained a ton of weight really quickly. He started having skin issues and digestive issues. So I was going to vet after vet and going to specialists and they kept putting him on different diets—an elimination diet. Ultimately, at one point, he was on a kangaroo diet. Nothing was really working. Finally, I went to holistic vet and they suggested that I cook for my dog because there might be different things in the food that we’re not picking up that he was reacting to. This was pretty daunting to me because my husband jokes that if Seamless went out of business, I would starve to death. But my dog’s my baby so I started trying it and immediately saw the results. Initially, he stopped scratching as much. His stomach was in a better place.

Gabby: [00:08:25] [I] met, around the same time, my two co-founders, Alex, who was also an entrepreneur in residence at Primary, and then was introduced to Randy, who both experienced similar things. So Alex’s dog, [whom] he adopted, also had the weight gain issue. Randy, actually, who has two cats, was going from Long Island City to Tribeca to a specialty store where he could get this fresh diet for his cats. We realized that there was definitely something there. We started looking more into the pet food industry and the more we dug, the worse I had felt by feeding my dog this stuff—and my previous dogs throughout my life—what was known as dog food.

Gabby: [00:09:03] It was this light bulb of—we talked this morning about what I ate for breakfast which is fresh, natural foods and you’re seeing this whole movement and continuous movement of eating unprocessed and real food. And yet we’re feeding our animals who have a complete place in our family like they never have before—my dog sleeps in my bed—food that’s unrecognizable. You hold it in your hand and it doesn’t look like anything. So what is it? It’s crazy processed. It’s owned by four main conglomerates. So, while you go into the pet food store and you think that you have this abundance of choice and this decision making of what is the best, ultimately it’s the same thing under different packaging with a few different variations. So it’s built around an industry that was what was convenient 50, 100 years ago of going to the pet store, buying bulk bags, sitting at my home for tons of time. It’s really low-quality ingredients. Everything that doesn’t end up in our food supply chain and worse ends up in dog food. Highly processed so that it gets a shelf life, a ton of preservatives, a ton of artificial flavorings so the dogs will actually eat it. Long story short, we’re slowly killing our dogs by feeding them this. So that’s sort of how we came to the realization of Ollie. That was definitely longer than four minutes.

Richie: [00:10:17] So what was the time span that it took to get to this point where you were like, “Okay, there’s something here?”

Gabby: [00:10:23] We started talking about it in June, July of 2015. By October 2015, we had signed our papers for starting a company. So—

Richie: [00:10:35] It was pretty quick.

Gabby: [00:10:35] Yeah.

Richie: [00:10:36] Yeah. So where do you begin? Because “Let’s take on the four big guys” is a nice place to start, but also daunting in some sense. And so how do you begin and so forth?

Gabby: [00:10:47] So, at the beginning, we did a ton of customer research, a ton of market understanding. Why is pet food what it is? I started taking a class in pet food nutrition. So I got my canine nutrition certificate along the way. Not that I’m a formulator, but just to have a better understanding of what dogs need and why they need it and the nuances around that. Started talking to a bunch of professionals in the space to come up with our original formula and, actually, we spent a lot of time at the beginning turning our wheels in the wrong direction of thinking that we needed a specific type of formulator to work with us who had been at big pet food brands and understood pet food. Ultimately, it was the complete wrong direction to go. So we flew to the Bible Belt, actually, where he was located and spoke to him, spent a whole day and a half with him talking through what we want, what we don’t want. I think a light bulb showed off for us when he said to us, early into the meeting, that he could make anything “nutritionally valid” for dogs, including using shoe leather. So it just spoke about how the industry was created and that we were trying to do something so different. Every time we talked to someone it was, “We want to make a new dog food” and they’re like, “Okay, is it kibble or it canned?” It’s like, “Well, it’s neither.” And they’re like, “Well then what is it? That’s not dog food if it’s not kibble or canned.” So we had to really find someone that could help us, got what we were trying to do, but still had the expertise in the dog nutrition.

Gabby: [00:12:23] We also went looking for a food scientist which drove us down the wrong direction too because we realized that what we’re doing isn’t food science. Food scientists come in when they’re trying to create extra-long shelf life or they’re trying to create flavors out of something that isn’t actually that. What we were doing was so much more natural that we were trying to get way more complicated.

Gabby: [00:12:41] So, ultimately when we started, we went to a vet who was a formulator who believed in fresh food diets and just started testing with him. Version 1.0 was off of our kitchen stove from a very basic ingredient that he gave us. We did test in our office with both dogs and humans but we didn’t even know what the form of the food was going to be. So we laid out was it going to be patties looking like a burger or was it gonna be little meatballs? Ultimately, we ended up with what we call a taco mix, sort of loose meat taco mix. But we put out tons of bowls of different forms and shapes of different food, both our food as well as other foods that were out there and brought people into the office and asked them, “Okay, what would you want to feed your dog? What looks the healthiest? What looks the most natural? Which one do you think your dog would like? And then, ultimately, which one would you buy?” And what was really interesting was they kept saying that our version looked most natural, looked healthiest, looked like the dog would like it the most. And then we said, “Which one would you buy?” And they pointed to the kibble. And there was this “What’s going on here?” And we realized the need for convenience. And so that led us to the personalization and the service that we built around the food.

Gabby: [00:13:50] Initially, we should have started with what’s the core product and focusing on the form of the food and we realized that there was a bigger opportunity here around the service and the personalization that we learned through all this user testing that, if we wanted to do something better, we had to make it as convenient as possible for people to feed their dogs better. I think it’s similarly to everyone likes the fresh pressed juices from Liquiteria or name your favorite juice shop on any corner in New York these days but people are certainly not spending 45 minutes in the morning chopping, peeling—or most people I should say—chopping, peeling fruits and vegetables and putting [them] through a juicer. So I think that same concept of the convenience of if we went direct-to-consumer, it was more than just bypassing the middleman and giving value, but it was creating a differentiated service of, if we know your dog, we should be able to feed your dog and you better than you could get anywhere else.

Richie: [00:14:43] This is all pre-launch you figured this out?

Gabby: [00:14:46] Yes, pre-launch.

Richie: [00:14:46] What was the service then at launch? When did it launch and then how did it go?

Gabby: [00:14:51] I guess this was October. As I said, we signed the papers October 2015. We had our first in-office testing mid-November. And then, from there, we spent over a year working on our formula, perfecting our formula, going through different iterations, sending it to kennels to do testing, palatability testing, digestibility. Then went back in to people’s homes and watched people feed their dog because a lot of this was, “What is the packaging? And how do we send this to people?” So watching how they fed their dog, where they stored their food and their behaviors around feeding their dog was how we got to the service and the form. We started off with a beta in May of friends and family where we were using our packaging 1.0 and learning along the way and there were a lot of bottoms from then until launch. So we realized that our trays were cracking in transit and that it was very hard to have the food arrive at the right temperature. So it was either arriving super frozen and we weren’t calculating enough layover from the first and second shipment because if it arrived too frozen, it took too long to defrost.

Richie: [00:16:01] It’s like when you got six green bananas but you need them today.

Gabby: [00:16:04] Exactly. Exactly. Or it was arriving too warm and that people didn’t understand the serving sizes because we were doing eight servings in a tray and one eighth is kind of complicated. And so then we created this custom scoop and a bunch of different scoop sizes, so that it was a number of scoops and a lot of trial and error in working through what the customer needed. And then we realized launching in the summer, which is probably the most challenging time because of temperatures, but also because of people’s travel and people’s lifestyle. A subscription service that was ‘set and forget’ to one address didn’t work for people because they were going away and they were bringing their dog with them or they were bringing the dog to the kennel. So pretty quickly we had to then build a system to have temporary addresses so that people could send their food where their dog is going. Because the other thing about this was, if you’re feeding your dog a kibble, you might just bring a tiny bag and then, wherever you are, go to your local pet store and buy a bag so you’re not traveling with this. It was hard to travel with a refrigerated pet food. So figuring out the backend operations of sending it to where they were going to be was a big learning piece for us.

Gabby: [00:17:09] Through all this, we launched officially and nationally in October of 2016. We were one of the only companies that launched nationally as a fresh business at the get-go. We wanted to do this that we could build scale fast and launch with national press which was definitely the right thing to do. So we had our own distribution centers that allowed us to reach our customers wherever they are and, within five months I believe, we had a customer in every state across the U.S. So that was definitely really exciting.

Richie: [00:17:41] When it launched, what was—I don’t know if funny is the right word—but what was the best bear case against it? Or what was, not the worst thing someone said, but what was someone’s reasoning for why this is absolutely the worst idea in the world but in retrospect is kind of funny?

Gabby: [00:17:56] I don’t know that we heard from anyone that it was the worst thing in the world.

Richie: [00:18:01] I don’t mean that as much. Maybe the better question is really from the investor side, possibly, of just some of the most critical takes on it is maybe what I’m asking.

Gabby: [00:18:09] Yeah, sure. Well, I was going to say—one of our better PR pieces was “The Chow”—that show—and they do an “Awesome or Over-the-Top” and we were pulled up as “Over-the-Top” and, yet, that day, we had our highest day of sales as of yet. So, despite some people maybe thinking it’s over the top to feed their dog that way. I guess that’s what they say about, “there’s no such thing as bad publicity.”

Gabby: [00:18:34] From the investor side, going through when we were raising our seed round, a lot of it was—probably a lot of people can relate depending [on whomever] you’re sitting across the table from, their ability to relate to your product has a lot to do with whether they got the idea, right? So those [who] had dogs were definitely more in tune with the issues we were talking about than, more so, those [who] had dogs and treated their dog like a member of the family versus if their dog lived outside or whatnot—[they] had very different reactions to it and different reactions to that price point. I think the hard thing for some people to grasp with us is that we’re not your typical direct-to-consumer story where, the quintessential one of Warby Parker, where it’s same exact glasses, at least half the cost, if not more than half the cost. For us, the education and the story part of it is that what you’re feeding your dog is really, really bad for your dog. Diabetes has been on the rise 900%, increase in cancer rate and obesity is—54% of dogs in the U.S. are obese. We’re selling a much better value and so if you do pound for pound, you’re getting a much, much better value by feeding Ollie, but it is a price jump from your kibble. So it’s like saying you’re eating at McDonald’s and you go to Whole Foods or your natural market. You’re going to pay more but you’re also getting more for what you’re paying and so some people had trouble thinking about whether they’re going to pay for that for their dog and whether this service was gonna be frustrating for people.

Richie: [00:20:02] Talk more about the price point and how you came to it than how, given you have this huge delivery mechanism, you’re able to work as a business while making that all work.

Gabby: [00:20:12] In any direct-to-consumer, we don’t have a retailer so that definitely helps and not having a middleman markup that we have to deal with. We looked at what was out there and looked at—segmented the market into your economy, which is your Costco food brands and some supermarkets, your middle market, your premium and then your super-premium. Most coastal premium market was widely accepted. So that’s your high-end kibble and some kibble mixed with canned food. Canned food is definitely more expensive on a price per pound basis, again, even though it’s the same thing. But just because of the form and the smaller portions, they can price up for that. And [we] looked at what’s happened overall in the pet food market which is the average price of pet food over the past couple of years, honestly, has gone up by $2 which was really significant for our market. Part of that is because you’re getting more awareness. So there was a big scare, I think it was back in 2008 I want to say, where food coming from chickens that were coming from China had a fake protein in it that actually killed a few dogs. They’ve made a few other recalls and the more that that happens, every time that happens, there’s a sort of a big backlash and reaction. So that then started this spark of Made in USA-only pet food, which created another price point. You saw the premium and the super-premium segment. That line was creeping lower and lower and more people [were] falling into it. We looked at—there are a few somewhat similar, i.e. fresh, raw diets that are out there but sold through pet stores. We knew that we had to beat them from a price point and, for the freeze dried and the raw food, we are significantly cheaper than those. Some of those we are 50% to 60% cheaper. If you’re feeding your dog canned food, we’re pretty much exclusively canned food on par. And then if you’re feeding your dog kibble or a mixture of kibble and can, we’re anywhere from 20% to 40% a little bit more expensive.

Gabby: [00:22:09] But the thing that was even trickier is that our customer—it’s not like one customer looks the same in terms of, I mean no two customers look the same in any business.

Richie: [00:22:17] They’re all snowflakes.

Gabby: [00:22:20] But we have a much wider customer base in that we are feeding a three-pound Chihuahua and a 200-pound Doberman, as an example. The way the pet food market works too, which was very interesting, is what I call the top of the shelf from the bottom of the shelf. So the top of the shelf is your, let’s call it three-pound to 15-pound dog, and because those are sold in smaller portions on a price per pound, we’re actually very similarly price point. It’s when you get to the bottom of the shelf, the 60-, 80-pound bag of dog food that is sold in bulk and that you get a much bigger price break for that bulk. That’s where the pricing discrepancy came. And so we had to work very carefully on our price that we’re more of a price jump for the bigger dogs just because of the nature of when they’re making it at such massive scale and volume, which degrades the quality of the food—but that’s the business that they’re in, it was harder to match on a price point. And so we did all that we could so that we are able to work out our margins so that, overall, we get to a place that we need to be from a business perspective. And then through distribution, owning our own distribution centers and trying to get stuff as localized as possible on a shipping perspective, that’s how we’ve managed to do that through scale to make our economics work.

Richie: [00:23:40] A lot of these venture-backed food things have generally not fared terribly well, especially on the grocery side. Amazon Fresh has had its own problems and so forth. Have there been things you’ve learned from watching other companies do this and/or things you’ve tried to do differently because of that? Or do you believe that you can’t really compare the two because they’re different customers and users and so forth?

Gabby: [00:24:00] Yeah, so a lot of people, I guess, that’s one thing that—back to your earlier question around what investors’ pushback was. So it was very much dependent on what experience and which company.

Richie: [00:24:13] Yeah, what scars they have.

Gabby: [00:24:12] Exactly. For the ones that were still doing well, it was a great comparison to make of “Oh yeah, we’re using similarly to a fresh meal kit delivery service.” The ones that had scars found our margin story harder to believe. I’m very happy to say, though, that every margin projection that we have made since day one has come true. I think a big difference between our business and a fresh food delivery business is the habit. So I don’t believe in subscription. Even if you look back, what, four or five years ago, there’s a subscription boom, right? There was monthly shoes, monthly jewelry, monthly makeup, monthly everything.

Richie: [00:24:50] Every subscription subscription.

Gabby: [00:24:52] Exactly. Exactly. And so I don’t believe in subscription for the sake of subscription because, while from a business perspective you’re like, it sounds really sexy with recurring revenue. From a customer perspective, it’s not fun unless it’s something you need and a constant reminder of like, “Why am I doing this?” And so it was really important for us to think about […] looking at subscription as replenishment and not lock-in. And so we learned a lot in terms of how to make this subscription fit someone’s lifestyle, so it wasn’t a burden but it was a “set it, forget it” and [that] made it easier to be in subscription. So, unlike meal kit delivery—I joked earlier [about] my need for Seamless and I definitely tried all the meal kits because I thought that, if I had that, I would actually cook more. Didn’t happen for me at least. You have so many options when you have, whether it’s lunch or dinner, right. So some nights I end up having to work late and eating at the office. I have work events, I eat dinner. I go out to dinner. A friend calls me last minute. I order in. There’s tons of different options and variety of what I want to do. For your dog, you want to have that consistency. It actually is harder for the dog if you’re always feeding them different things because their stomach gets used to certain foods and had it adjusted and so you can disrupt their stomach patterns by changing their food. And that’s something that you need and want all the time. So it makes sense for a subscription.

Gabby: [00:26:16] But it was a lot about how we built the service. So another good learning at the beginning was—because when you switch dog food, you need time to adjust. So you start out that first day just a quarter of the new food, three quarters the old food and gradually, over a ten-day period, you switch over to the new food. Figuring out how much food to send you in your first box was a big part of the learning of—we had a lot of people when we were doing our beta being like, “Wait, wait, I’m not ready for my next box.” It’s like, “Why not?” “Well, because I was transitioning.” For those customers, people were trying to cancel because they had too much food already and it was figuring out the right food at the right cadence. And then, back to our varying customers, sending food for a large dog, because it’s fresh, it’s a lot of food to fit in your fridge or your freezer. And so we sort of worked out how to do different cadences for different types of dogs and different types of households. So for a small dog, you might get a monthly shipment. For your large dog, you might be getting a weekly shipment. And so that was a big learning curve from what we saw out there of making it—the subscription—flexible enough to fit the different patterns and behaviors that customers needed.

Richie: [00:27:26] Did you hear anything from the big four companies as you started to put this out in public and build or did you not care or listen or they weren’t looking at it?

Gabby: [00:27:35] I think it’s similar to any sort of business that disrupts. For us, the big four are huge businesses. They’re not just pet food businesses. They own a ton of different food businesses too and they’ve invested so much in their facilities. When you’re making kibble, it’s very expensive equipment to create the extrusion, big processes that they’ve built up and are honestly cash cow machines for them. And so it takes a lot to move a big ship. And so we weren’t really that worried about them coming and chasing after us. We very much, on a branding perspective, when we were thinking about our brand, we wanted to be enlightening and uplifting and create awareness around health but be aspirational—not be a smear campaign or shaming people of past decisions because I, myself, was making those decisions not too long ago. So we weren’t out to attack the big companies by any means, more so to provide a different alternative and a different way and ease for customers to feed their dog in a way that they were feeding themselves. So we didn’t really pay attention to them at the beginning.

Richie: [00:28:40] Did you hear from them at all or no?

Gabby: [00:28:42] Not really. Now, unfortunately, our creative team always jokes that they should send invoices to the various companies because we are creating ads. We, very quickly, are starting to see different companies copying our ads with putting the fresh ingredients on nice lay downs and creating patterns with the food with our food in the middle of it, taking some of our copy. So now they’re certainly taking notice.

Richie: [00:29:10] Alright. So launch in 2016. Talk a bit through last year in terms of you’re out now, you’re iterating, so forth. How would you sum up 2017?

 

Gabby: [00:29:19] I think a lot of it is continuous learning, iteration, new product development, constantly R&Ding and re-R&Ding everything that we’re doing. We’ve been growing extremely fast. We served our five billionth meal on Wednesday of this week. That’s been super exciting but also, from a scale perspective, that’s where our margin stories come true, but we’ve had to keep up with it and start planning very far in advance. So I think, what we underestimated, maybe, the first time around was getting our kitchens up and running, how long of a process that takes. Even though, now, when we thought we have our process, we have our formula, we have our standard operating procedures, whenever we create a new distribution center or a new kitchen, it takes longer than we thought despite having all these things in place. And so we’ve learned to start planning much further out in advance as to anticipate our growth and our scale and doing R&D much further in advance.

Gabby: [00:30:17] What’s been really, really exciting is how involved our customers have been in our journey. We have, actually, a Slack channel on—”customer love” we call it. We literally get love letters from our customers around the differences they’ve seen in their dogs. The ten-year-old dog that’s acting like a puppy again, the dog that wouldn’t eat anything finally gaining weight that he needed to gain, the dog that couldn’t lose weight losing the weight that it needed because of our seamless and easy pre-portioned meals for the dog. We take the guesswork out of it. We make it easy for owners to know through our online algorithm how much to be feeding them and the service and how that’s really changed some of their dog’s lives. That’s been really exciting but also involving our community in what’s next. So we started with just two products: a chicken and a beef that we thought would carry us pretty far and it did. But hearing from our customers and engaging them on product development, we launched two new recipes; lamb and a turkey this year.  

Gabby: [00:31:16] And then [we] also launched a snacks line as an add on because people were saying that it’s awesome to have this healthy food for meals but, when I’m training my dog or when I want to give him a treat for doing the right thing, I want that same sort of trust in a company that I have in you guys for the meal. Can you come out with something? So it’s been really fun to engage our customers along the journey and have them help guide our product development in a way that takes some of the guesswork out for us of what our customers are gonna want and buy.

Richie: [00:31:44] So they’re all meat, poultry. Are there vegetarian ones?

Gabby: [00:31:47] There is not vegetarian yet.

Richie: [00:31:49] Is that a thing?

Gabby: [00:31:50] It’s a thing. Yes, it exists. We are of two minds of it. I’m actually, personally, a vegetarian. I eat zero meat but I feed my dog meat. And the reason why—and this is my personal belief—is that our digestive system, we’re very, very much omnivores. I’m able to have a completely healthy diet without supplementation by [not] eating meat. For dogs, I will not go the extreme. I’m not necessarily a believer [that] dogs are wolves and you have to feed them like in the wild and all meat and all raw because that’s what they hunted, because dogs are very much domesticated and evolved and do not look similar to a wolf to this day. But that being said, they have 22 essential vitamins and minerals that they need on a daily basis, i.e. that they can’t synthesize from other ingredients. And so we very much believe that we want to have our food as natural as possible. So, if you did a vegetarian diet, you would have to add a bunch of artificial supplementation to get them the nutrients. And so that’s something that we haven’t decided, ultimately, what—I’m not saying we will never do it but, for right now, we’re sticking to meat-based diets.

Richie: [00:32:56] Talk more about the education piece because you had, basically, entrenched habits for decades if not a century of so forth. How do you start to undo that as a company but also that’s somewhat bigger than the company?

Gabby: [00:33:10] Yeah, definitely. I think, for us, rising tides raises all boats and we’d love to see the whole industry move more in our direction. You’re starting to see that too. There was definitely—our early adopters were people that, at least my grandma as an example, my grandma has been a vegan since vegan was vegan. So there’s obviously those types of people where they were early adopters. They were cooking for their dog already and they were easy to come onboard from the get-go. Or people who were doing raw but didn’t like raw because of the potential pathogens were also easier to maneuver. So that sort of built a little bit of a groundswell. And then what we do is we used a technique when we say that we how we combat these big conglomerates was the big conglomerates don’t understand how to talk to the new consumer or the consumer that is social savvy, that wants things on demand, that does a bunch of research before. And you can look at companies like Honest Company as an example. There’s lots of examples of companies in tangential sectors that did this too, right? You thought that these household brands were trusted but, actually, here’s what’s in your food or here’s what’s in your products that you’re using every day and how they went through that education process. So we studied a lot of those too.

Gabby: [00:34:27] But we used a big influencer program and network to get going so that they could help tell the story for us. We could shout what we wanted from the rooftops but I think seeing is believing too. So at launch we had a big pushing strategy that, a couple months before launch, we started seeding influencers boxes of Ollie and having their dogs be on Ollie and giving them information about it. So we told them what’s in our food, why it’s in our food, the health benefits of our food, the ease of our subscription and gave them early access and many, many of them are still with us today and are avid brand ambassadors for us. And gave them the food and asked them to test it but asked if they felt like it was a good product and something they wanted to tell their audience about and, when we launch, would they mind sharing information about it? It was unbelievable how much organic posts we got from them and the fun that they had taking videos of their dog, what they would do for Ollie, hashtagging it #myolliephase, saying that their dog learned to tell time because now they woke them up for breakfast, the dances their dogs did around the fridge, the excitement when the box came. Seeing that along the way was really, really helpful to get awareness out around their audience.

Gabby: [00:35:39] And then, again, it was a big PR push and just everything in our brand was, why we were doing, what we were doing to tell that story. We weren’t trying to smear. We weren’t trying to make people feel bad about any of their previous decisions but making it colorful and fun and using all of our assets, both digital and physical of when the box arrived. Every part of opening it was continuously educating consumers about why we were doing what we were doing.  

Richie: [00:36:04] Were there dogs that were influencers in the program or just people?

Gabby: [00:36:08] Oh, yeah. No, tons of dog influencers.  

Richie: [00:36:09] What’s their compensation?  

Gabby: [00:36:11] Well, they’re getting food on our behalf. We don’t pay for our influencers to post because we really want it to be authentic. So we send them food and, if they like it, they are more than willing to share it.

Richie: [00:36:23] I’m sure there’s some agency that reps dog influencers somewhere.

Gabby: [00:36:26] There actually is. It’s called The Dog Agency.  

Richie: [00:36:29] Really?

Gabby: [00:36:31] Yes. I mean dogs are great as influencers because you’re not worried about them going out and getting drunk one night and saying something stupid about your brand.

Richie: [00:36:37] Or crashing a car or whatever.

Gabby: [00:36:40] Exactly, exactly.

Richie: [00:36:40] That’s a good point. Have you done any retail stuff offline?

Gabby: [00:36:42] Well we did a pop-up event when we launched. We rented out a space in the Meatpacking industry, had a big party with a bunch of shelter dogs and invited people and had a meal for people [who] came that was the same ingredients that we used for Ollie to really drive home that human-grade and had a bunch of people come through and try the food live. We weren’t selling it on site. That was our own physical store presence.

Gabby: [00:37:07] We’ve done a lot of events too. We don’t sell at events. A big part of our brand is our give back. One percent of our revenue we donate to shelters, both in food and in money. Whenever they are doing adoption events or anything, we go, we get up a table, we hand out samples. We go to dog fashion shows. We have done a few street team events. That has been really helpful too, [for] face-to-face combat [and] also [for] being able to tell the story and educating consumers too. That’s the only physical presence that we’ve done.  

Gabby: [00:37:41] The other part about the big food brands that we’re trying to combat is the feeding guidelines. Because different activity levels and different metabolisms of a dog, it’s very hard to tell you exactly how much to feed your dog if you don’t know your dog. If you look at the back of a traditional pet food brand’s bag, it would be the equivalent telling me I could eat between 1,000 and 3,000 calories a day which, you and I know, I’d have a very different health profile depending on which way I swung on that. And so, so much about our service is sending you the right portion. So we have an algorithm that we worked on with our vet which you fill in about your dog and we send you the exact right amount of food. Without that, we could give you food through a retail distribution but it wouldn’t be the same product in that it wouldn’t be as individualized as our direct.

Richie: [00:38:27] What’s been the cheapest and most expensive lesson you’ve learned building the company?  

Gabby: [00:38:31] I guess the cheapest lesson I learned was through my own dog. We call him our Chief Eating Officer. He will eat a lot of things and our first formulation he snuffed his nose up at because we put too much rosemary in there. So that was a pretty quick lesson to learn. I don’t know if this is necessarily our most expensive, but I think one of the biggest challenges for us—the flip side of having a business where people are dependent upon you, unlike what we talked about other subscription businesses where it’s a nice to have not a need to have—is how vulnerable we are to weather. And so when we have had, even this winter, everyone was sitting chilly in March thinking we got through it but then had four nor’easters in a month. It’s really hard when we’re reliant on roads being open and FedEx delivering when we get bad weather. It’s been challenging for us of how to think about planning and we had to learn that the hard way. Like last winter when we had a few big snowstorms and either we couldn’t get out their boxes or FedEx picked it up but then it sat in one of their sorting centers and then, by the time it got to them, it was inedible for their dogs. So we’ve had to do a lot of planning around, how do we deal with weather? And so this year we’ve tried to send it out early before a snowstorm or send out a little bit more food in a previous box. We still haven’t perfected it by any means but it has been one of the bigger challenges we’ve had to face in the complexity of our operation system.

Richie: [00:40:03] How big does this get? Or both, how big can it get and then how big do you want it to get?

Gabby: [00:40:08] So I think we can get very big. The pet food industry in the U.S. is about $30 billion dollars. The premium segment, which we’re playing in, is around $13 billion dollars. Even if you just look at the past few mergers and acquisitions that [have] gone on in the past six months, it’s unprecedented in any other industry. Chewy was the biggest, in history, ecommerce sale there ever was. Blue Buffalo just sold for a $8 billion dollars. It’s an independent brand which, I believe, was either six to eight-times their revenue. Ainsworth Pet Food, which is most well-known for Rachael Ray, was just bought by Smucker’s Big Heart Brands. So you haven’t seen that in any other industry. So it’s tons of opportunity for sale in a very big market that’s continuing to grow. So I think we have a lot of opportunity ahead of us. It’s the question of how big do we want it to get? Our mission is to have Ollie in every dog bowl across the U.S. So we have big dreams.

Richie: [00:41:07] Along that path of scaling, what could go wrong? What do you think the risks are that, sitting in the driver’s seat, you have to work around as this continues to grow?

Gabby: [00:41:17] I think, for us, quality and transparency around our business is very, very important, particularly the whole “We’re a mission driven company.” And so we will never grow to the rate that we have to sacrifice quality and that’s something that we’re always thinking through. As I mentioned earlier, to get a new kitchen up and running takes a long time.

Richie: [00:41:41] Are those your kitchens? Or they’re co-pack shared?

Gabby: [00:41:44] Yeah, they’re a co-packer but we have our own staff. We regulate everything. We do our own supply. We have full traceability so that we know where our ingredients are coming from, into which batch and going to which customer. So we’re very calculated to mitigate risks in terms of our growth rate to ensure that we aren’t sacrificing quality. By doing that, we’re mitigating a lot of the uh-oh’s that can happen in the future.

Richie: [00:42:09] How long does the food keep for?

Gabby: [00:42:12] Yeah. So we freshly cook our food and then we flash freeze it and have a hold period when we send it out for testing. So we test every single batch before it goes out to customers. The flash freezing it immediately after cooking it allows us to have a much more extended shelf life without having to put any preservatives or artificial anything in there. And so, in the freezer, it can last up to six months plus. Once it’s defrosted, we like people to use it within two weeks. We use a MAP which is modified atmosphere pressure packaging. So we pull out the oxygen and replace it with nitrogen that creates a stable environment. And so that’s what gives us a shelf life in the fridge. But then, once you open the package, you only have a couple days to do it.  

Richie: [00:42:55] But it can stay frozen?

Gabby: [00:42:57] It can stay frozen. Yeah. So we ship it frozen and it also gives customers the flexibility depending on their fridge. We have the customers that have nothing but water and a bottle of champagne in their fridge and so they stick their Ollie in the fridge. We have other people that their fridge is packed with food and they have more freezer space so it allows people to store it wherever they have more room.

Richie: [00:43:18] Do you think you’re responsible for an increase in freezer sales among your customers?

Gabby: [00:43:22] Maybe. We actually have heard customers say that they’ve gotten secondary freezers that they put in their garage to store their Ollie. I think what was interesting when we went into in-home houses is that so much space was actually dedicated to food. It just wasn’t necessarily in their fridge. So they were having huge bags of kibble or these big Tupperware filled with kibble that were either next to their garbage cans or in their closet. And so they were taking up, in Manhattan apartments, a ton of room. We’re actually taking up less room on any given day than what they were doing before but we’re just using different real estate.

Richie: [00:43:57] Just colder real estate.

Gabby: [00:43:58] Exactly.

Richie: [00:43:59] What are you excited for on the horizon in the next one, two, three years?

Gabby: [00:44:03] I’m excited for continuing [to grow] our community, continuing [to grow] awareness, fun partnerships that we can do on recipe collaborations, product expansion and just continuing and seeing and hearing the long-term health benefits that we’re giving dogs. We’ve only been at this for 18 months now and I’ve seen such health improvements. Studies are already out there that show if you keep your dog at an ideal weight versus overweight you can enhance her life by 20%, which is really significant for a dog. And so what we’re excited to see is the continuous health benefits of puppies. We haven’t had a dog yet live their entire life on Ollie, just because of how young our business is, but [I’m] excited to see the, hopeful, ongoing health benefits that we can give to dogs through prolonged feeding of our kind of diet.

Richie: [00:44:51] And then where is the name from?

Gabby: [00:44:52] So the name is—we always get asked this. My dog’s name is Pancho, Alex’s dog’s name is Belle, and then Randy has two cats. So none of us felt like our dogs represent [or] were going to be the good name for that brand and we wanted something that was—we realized that it wasn’t just a problem that we were facing but a problem everyone was facing. We, honestly, just did a bunch of customer surveys around what we wanted: a name that was friendly, that made people smile, that made people think of a dog, that was gender neutral, that was maybe species-neutral for the future. And so did a bunch of surveys and that came up with Ollie.

Richie: [00:45:24] Does it go beyond dogs right now? Will it go beyond? What’s the the horizontal breadth of animal food?

Gabby: [00:45:30] Right now, we’re very focused on dogs. They’re our core customer base and there’s a lot of room for growth there but we have, certainly, gotten reqests from lots of people to make this food for different animals, mostly cats. But yeah.

Richie: [00:45:43] Gotcha. And you eat the food?

Gabby: [00:45:45] I actually have tasted the dog food. So, despite being vegetarian, I have had a bite.

Richie: [00:45:49] Oh, I totally forgot about that.

Gabby: [00:45:49] Yeah, I have had a bite because I felt like I had to.

Richie: [00:45:52] It’s your company.

Gabby: [00:45:53] It is my company. Everyone, actually, in this office has eaten the food. One of our engineers who we interviewed asked if he could try it on the interview and he, literally, as I interviewed him, for half an hour continued chowing down on it. So I figured I had to hire him after that.

Richie: [00:46:07] Or like the greatest con ever.

Gabby: [00:46:08] Yeah. So we literally have eaten our own dog food here and will continue to eat it.

Richie: [00:46:14] Are there things humans in their own diets could learn from about how dogs eat? It seems very regimented.

Gabby: [00:46:19] Yeah, portion control.

Richie: [00:46:20] Or just your checking the box for all 22 nutrients and so forth.

Gabby: [00:46:23] Yeah, I mean, I think the big difference is is that humans tend to eat a variety of food, right? So, at breakfast, I might have over-indexed on fruit but that gives me a ton of nutrients and then lunch and dinner, I over-index on veggies or other stuff like that. And so, throughout the day, we look at getting all of our required nutrients through a variety of food. I think the way that dogs have been fed and honestly, it is probably more of an ease thing than anything else—they’re tend to be fed the same meal. So, if any one of their meals is not properly balanced to get them all the nutrients they need, then they’re going to be malnourished. And so that’s why it’s so important to have a well-balanced diet. So people that were doing home cooked meals, who were thinking that they were doing the right thing for their dog, it’s very difficult to create a balanced meal for their dog and so, inadvertently, were probably missing a lot of the nutrients that their dog needed and wasn’t the best for their dog. And we’re replacing that for them. I think if you were willing to constantly be feeding your dog a variety of food to make sure they were getting the different nutrients and that their stomach could handle that, that could be an okay route. But, given the behavior and way that people feed their dog, that’s why it’s important for each meal to be so balanced.

Richie: [00:47:32] Awesome. Thanks for talking.

Gabby: [00:47:33] Thank you.

Richie: [00:47:38] Thanks For listening to the Loose Threads Podcast. You can read full transcripts of the podcast and join the newsletter at LooseThreads.com. Feel free to also leave a review on iTunes. We always appreciate it. Thanks to George Drake Jr. for editing this episode. We have a great roster of upcoming guests including Jeff Denby of Renewal Workshop, Ashley Merrill of Lunya and Michelle Toney and Stephanie Cleary of Morrow Soft Goods. Thanks for listening and talk to you soon.