In America, dogs have a higher standard of living than many kids in third-world countries. Dog owners love to spoil their best friends with special BBQ treats and squeaky toys even though Fido devours the cat’s litter fritters just the same and knows no difference between a $3 monkey or a $252 one.
Austin, Texas-based PrideBites takes spoiling Fido to new heights with its custom-made toys, beds, and other dog products. Aspiring to be the NIKEiD of pet products, the company claims to have built a proprietary system to the deliver goods within four weeks. Prices range from $10 for a plush mailman to $150 for a large custom dog bed. You can choose the fabric and piping color, the shape of the banner for your dog’s name, the font, the font color and even add a picture of your snuggle-puss. Or buy pre-made designs from the Ruff Lauren, Kate Spayed and other collections.
Sean Knecht and Steven Blustein entered the Shark Tank in April 2016, seeking $200,000 for 10% of PrideBites, valuing it at $2 million. Other notable investors who’ve taken a bite of the company include Tucker Max, ATX Seed Ventures, BlueStel Ventures. PrideBites launched in October 2012. The company raked in $2 million in sales in the first three years with 10 employees.
PrideBites sells its products online and at 2,500 stores throughout the U.S. and Canada. It earned the distinction of “Dog Toy of the Year” by Pet Business Magazine in 2012. It manufactures its products in China and distributes through its warehouse in Austin, Texas.
Despite the company’s success, Dallas Mavericks owner Mark Cuban and educational software mogul Kevin O’Leary both thought it’s too rough a business to play in.
“There’s no barrier to entry,” Cuban said. “It’s a very challenging business. I can’t help you scale. I’m out.”
“This is a customized commodity play,” said O’Leary. “I am not really moved by it.”
Cybersecurity king Robert Herjavec offered $200,000 for 20%, cutting the company valuation in half. Knecht and Blustein held out for other offers.
FUBU founder Daymond John passed, simply saying “I don’t think it’s for me.”
QVC queen Lori Greiner offered a slightly better valuation of $200,000 for 18%.
After some tense back and forth, Knecht and Blustein talked Herjavec and Greiner into accepting $200,000 for 20%.
Blustein started the company while working on a master’s degree in taxation at the University of Kansas. After graduating, he moved to Los Angeles, where he worked for an accounting firm, Fishman, Block + Diamond (FBD). He worked at FBD by day and on PrideBites by night. After about six months, he quit to work on his side business full time.
Blustein shares how he’s grooming his business to become the NIKEiD of the pet industry, the most bone-head business mistake he’s ever made and more.
Ky Trang Ho: How did you come up with the idea for your business?
Steven Blustein: We were a group of dog loving college students that wanted to create better quality pet products with more fun choices. While watching the emergence of sites like NikeID, we believed that we could build the same unique experience for pet parents everywhere, allowing them to make products as unique as their pups.
The pet-related market we’re going after hit $60 billion in 2015. The purchase of pet products online is seeing double-digit growth year-over-year.
Barking Up a Crowded Space
Ho: What made you think it could be a successful product and/or service (especially when there are so many competing products)?
Blustein: The industry research we conducted indicated that consumers want more control and personalization in the products they purchase. While leveraging our strong manufacturing advantage, we found a niche in the pet category and decided to take advantage.
Ho: How much did you personally invest in your business?
Each founder invested $5,000 initially. Additional money was raised from friends and family.
Ho: How did you juggle working at a day job and your company at the same time? How many hours a week did you work?
Blustein: At the beginning, we were working out of our college apartment. Spending nights building business plans and prototypes. As I transitioned into the working world as a tax accountant, I was working on PrideBites during my nights and weekends. I would be at my day job by 7:00 am and leave around 9:00 pm.
I would eat dinner, workout, and then work on PrideBites at night with the other founders until we were too tired to work. Once I decided to make the leap, I was putting in 80 to 90 hours a week.
Ho: How did you go about making a prototype, sourcing the materials and finding a manufacturer?
Blustein: We identified factories with broad manufacturing capabilities who would be willing to design a unique manufacturing system for us. All of our custom manufacturing is Just In Time (JIT), so it was important to find a strong long-term partner.
Ho: What hardships did you encounter in developing and launching it?
Blustein: We had to navigate some difficult waters to grow from a single award-winning dog toy into a full-fledged pet product company that allows you to design, customize and buy anything you want for your pet.
While competing in a heavily saturated market like the pet industry is hard in itself, one of our biggest challenges was developing the logistical capabilities to handle mass single-unit customization with a hand-designed twist. We use technology and transparency as the centerpiece of our manufacturing system.
Fetching a Shark Tank Deal
Ho: How long between when you taped the show and when it aired? What was that time in between like?
Blustein: We waited about 10 months from the time we taped to when the episode aired. In the first couple of months after taping, we tried to forget about it. Once the season started we became more and more anxious and by mid-March we were almost ready to pull our hair out waiting for our two-week notice.
Keeping it a secret was the hardest part. Friends and family would “recommend” applying to Shark Tank, and all you wanted to do is tell them. But even when they are the ones who supported you from the start, you can’t.
Ho: How did you prepare for your appearance?
Blustein: We watched every previous episode, wrote down every single question every shark has ever asked in a massive excel document, and would grill each other those questions every day for hours upon hours. We practiced more than four hours every day, leading up to our tape day
Ho: What about being in the Tank (or whatever happened before or after) surprised you the most?
Blustein: When you’re done filming, that is basically the end of communication with the show until/unless you get the email telling you your air date.
Ho: What misconceptions do you think viewers have about the show?
Blustein: 1) It’s taped then aired fairly soon after. In truth, there are months in-between.
2) It’s cut and edited down to six to eight minutes that you see on TV. In truth, we were in there for 50 straight minutes. We did one take with no interruptions.
3) The misconception is that the sharks are mean. In truth, the sharks are fairly nice and want you to succeed… as long as you know your business. The second they see weakness, they will pick it apart.
Ho: What can you teach others about your Shark Tank experience? What are the secrets of a successful audition and appearance?
Blustein: Come overly prepared, don’t overvalue your business. As cliche as it sounds, definitely know your numbers. The sharks will always ask and it justifies your valuation, which they always question too.
Chasing New Business
Ho: What are you doing now to move your business forward and expand?
Blustein: We plan to launch 30+ more products this year, expand our retail presence, and implement an in store/mall kiosk display for on-demand ordering. We will become the NIKEiD (NKE) of the pet space.
Ho: What are your goals for your business over the next year and five years?
Blustein: Our goal is to grow PrideBites into a global brand and provide pet parents everywhere the ability to design, customize and buy products that are as unique as their pets.
Ho: What is your media and marketing strategy? How do you acquire new customers and what are your customer acquisition costs?
Blustein: Our business-to-business unit creates custom-branded pet products with companies like Tito’s. That feeds into our business-to-consumer segment business by putting our brand in front of potential new customers.
Ho: What was the most effective thing you did to get more exposure for your business before going on Shark Tank?
Blustein: Exposure to date has really been by word of mouth as happy PrideBites customers share with their family and friends. We also attended many trade shows, took products to dog parks to give away coupon codes, and partnered with social media accounts to help promote our brand.
Ho: How do you find business partners, instructors, salespeople etc? What qualities do you look for?
Blustein: We like to find people who are extremely passionate and hardworking. Our company motto, quoted from my mother, Cindy Blustein, is “Money Doesn’t Sleep” and expect our employees to share this mentality… and of course love dogs.
Ho: What other products do you have in the works? When are they set to launch?
Blustein: We have an expanded line of pet products in the works including all new accessories, beds, collars and leashes, and clothing. We want to launch bowls and even expand into additional pet categories outside of just dogs.
Business Advice to Chew On
Ho: What business books do you recommend people read and why?
Blustein: by Ben Horowitz, by Dan Ariely, and by Starbucks CEO Howard Schultz. These three books were instrumental in providing me with an entrepreneur’s perspective and a look into the rollercoaster ride that is starting your own business.
Ho: What are you favorite business websites, tools or resources that you love and why?
Blustein: We have a great network of mentors that help us with any issues we have. They always welcome us calling, texting, emailing them with questions we might have. That has been one of the biggest asset we have in our back pocket.
Ho: What’s the worst mistake you’ve ever made in business and how can others learn from it?
Blustein: The worst mistake I’ve ever made in business is telling the customer that they were wrong. Even if I believed it was true, it doesn’t matter. Taking care of your customers and vendors should always be your number one priority.
Ho: What is the best advice you’ve ever received?
Blustein: Stay flexible, identify opportunities, prepare for all outcomes and believe in yourself. Also, don’t be afraid of the cold call. It really works and you’d be surprised how many people actually respond and are nice about it. The worst thing that can happen is you end up in the exact same position you were in before.