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Case 2 Bark & Co. Can a subscription service aimed at dog but 75 percent of Bark & Co's revenue still comes from its owners grow fast enough to satisfy Bark Bor subscription the demands of the venture capital Bark & Co. annual sales have doubled in each of the companies that have invested in it? last two years and now total 100 million. The company em ploys 150 people but owns no warehouses, choosing instead Aller Mati Meeker, Henrik Werdelin, and Carly Suite House ble en boucription des ancies is profitable, the to outsource packing and shipping of met through mutual friends, the trio decided to launch company as a whole is not yet profitable but is cash flow business together. They noticed that consumer spending on positive. The company has built its customer base primarily pets in the United States had grown by 33 percent between through social media, landing 1.2 million Instagram follow 2006 and 2011 to SS1 billion, two thirds of which owners en and 2.1 million Facebook likes. spent on dogs. The entrepreneurs also saw the success that In 2016, Bark & Co. raised an additional S60 million in Birchbox, a company that sells cosmetic and beauty sup funding from venture capital companies, including August plies through a subscription model, had achieved and began Capital and Resolute Ventures, to fuel its growth. Competi soliciting valuable advice from that company's cofounderstors, including PerGiftBox and PowPack, have entered the about their business model. In 2011, while still working in market, but Bark & Co. remains the dominant player in the in their day jobs. Meeker, Werdelin, and Strife used their own dustry segment. The entrepreneurs recognite the importance money and investments from family members and friends to of constant innovation and have created Bark Beta, team launch Bark & Co., a business that for about $20 per month that is charged with developing new business ideas for the ship boxes of dog treats and toys to subscribers. In their company, BarkBeta's budget is 1 percent of the company first month, the trio shipped 94 boxes to friends and acquain revenue. Several of the company's innovations have failed, tances who had signed up. To differentiate their company's including Barkam, a mobile app designed to connect peo products, the entrepreneurs scoured Etsy. The Grommet, and ple with rescue dogs, and BarkCare, an in bome concierge trade shows, looking for items that pet owners could not find veterinary service launched in New York City and San Fran at large chains such as PetSmart and Perce. Each box fol cisco. Bark & Co. currently is exploring Bark Air, a chartered lows a theme. For instance, on April, the Bark Box included jet service that allows people and their dogs to fly together in baseball-shaped cookies and toys that resembled baseball comfort and style, and an Ancestry.com-style DNA test for caps and bars. The boxes have a gross profit margin of about dogs ("'Any wolf in your genes. The company also is test 36 percent of sales, and the company has shipped more than ing pup-up" retail stores that will allow dogs.cach equipped 4.5 million of them with RFID technology and unaccompanied by their owners Sales began to grow, and in 2012. Meeker, Werdelin, and in shifts of five to enter the store and shop for their favorite Strife landed $1.7 million in venture capital, they received toys and treats while their owners Walch another $15 million from venture capital firms over the next Mecker, Werdelin, and Strife are feeling pressure from two years. Meeker says that with its blend of unique prod- the company's venture capital investors. Because of the risks ucts, Bark & Co., which is based in New York City tapped associated with their investments in young companies, en into a large and growing segment of dog "parents who treat ture capital firms.expect to receive returns of least five times their pets like children. Today, pet industry sales are 570 bile their original investments. For the venture capital firms that in lion per year, and Bark & Co has extended its product of vested in Bark & Co to get back five times what they invested, ferings beyond its original BarkBoxes to include BarkShop, the company will have to grow to an estimated 500 million an e-commerce site that allows dog owners to purchase a in sales within the next three or four years. Meeker says that variety of products without committing to a subscription, the founders' goal is to give the investors a return of 100 times The founders say that BarkShop has sold 25 million prod. their investment by becoming the next "Diney for dogs." The ucts. Its Bark Post blog filled with dog news and feel good question is: Can the entrepreneurs produce these challenging stories, attracts 10 million unique visitors per month and is results, and, if so, how do they do it? supported by advertisers such as American Express, Procter Questions & Gamble, Subaru, and others BarkLive sponsors events aimed at dogs and their owners, such as Bark Festa day long 1. What advantages does a subscription pricing model festival in cities across the United States that features live offer a business? music and fun events. The company's product extensions 2. Notice that several of Bark & Co's ideas for new busi carry gross profit margins that average 50 percent of sales, nesses have failed. Is this unusual? Why is it important 773 Using the case study guidelines from the video in the student resources module complete the following case study located in the textbook: Case 2: Bark & CO