It's just an easy excuse to pass on startups you're afraid to invest in
"Hardware is Hard!" - Interview with Fi, The Smartest Dog Collar
It's just an easy excuse to pass on startups you're afraid to invest in
I first met Jonathan Bensamoun in early 2018 thanks to a good friend Lylan Masterman who shared their teaser deck with me because he knew I was a dog person. I grew up with dogs in suburbia, always being a little hesitant to let them out in the yard because I think most dogs have figured out how to get out / dig under the fence and run away at some point.
Looking back on my emails now, I obviously was a little hesitant to invest in a pre product startup, with only a CAD design, when at the time Whistle was the only game in town and ALL my friends in the dog industry, which was very nascent, said don’t do it. Every. Single. One. Of. Them.
While writing this over the last week, a very relevant tweet went viral showing just how hard the consumer hardware world is as well:
The pitch was that Fi will be a software company that has some hardware.
Below are some questions I asked Jonathan about his journey so far; he has now raised over $40M in venture capital and was last valued at over $200M in 2020. And when I talk about sending investor updates, his are easily the best of my 60 investments - every single month I receive a long doc, usually 10+ pages - outlining everything happening in the business, down to the penny, engagement views/like and future plans.
There is a 100% correlation between investor updates and startup success.
Connected pet collar company Fi raises a $30M Series B | TechCrunch
Pet tech company Fi today announced that it has raised a $30 million Series B. The round, led by Chuck Murphy of Longview Asset Management, follows a $7
techcrunch.com/2021/02/25/connected-pet-collar-company-fi-raises-a-30m-series-b
Why dogs and how was the market for pet tech years ago when you first started?
Because dogs are awesome!
I started thinking about Fi in 2016 when I got my dog Thor. I was shopping at PetCo and PetSmart and it felt like such an uncomfortable experience. There was clearly no brand in the space that felt DTC — and even less tech enabled. The only tech in the space was some kind of electric fence shock collar that you have to bury in the ground. It all felt very industrial and “hunting tech.”
There were some tech plays in the dog space - Wag! was big at the time, just out of their Softbank mega round. Chewy was clearly becoming big. The Apple Watch was really the first wearable to ramp up as a mass market segment and I thought “It’s obvious someone is gonna build this for dogs.”
What do most investors tell you when you say that you’re a smart dog collar? What don’t they understand?
Well at our stage now they say “damn we missed this one” :) but at the time the main concern was do people actually want this. Why wasn’t this built before? I think it’s always very hard to believe that a new product category will emerge that is not an incremental improvements of an already existing market. And it’s understandable - it really does not happen that often.
That’s part of what made this very exciting for me — there is a clear possibility that there will be a world before and a world after smart collars for dogs. Same way today it’s hard to imagine that 30 years ago we didn’t really have cellphones.
“Hardware is hard!” - What are your thoughts on this VS just doing a Saas software?
I actually agree there are a ton of risks related to shipping something physical that do not exist with software businesses. If you mess something up it might not be something that you can fix with a bug fix. A lot of hardware startups die just because they pick the wrong manufacturing partner. You need to walk in there with a good understanding of which decisions are “one way doors” so you don’t cut the wrong corners.
But I also think that there are some myths that are completely inaccurate about hardware - like the need to invest an absurd amount of capex upfront. We shipped our first product burning <$5M in VC funding and it’s a fairly expensive, complex build — I see software companies raising that in pre-seed. When I see hardware companies launching v1 after raising $100M+ I already know they are failing. It means that they did not implement the diligence, the creative thinking and the process constraints to be amazing at what they do. Now hardware is hard but that also means that if you’re really good at it you get less competition. Technology complexity actually creates a natural moat for a few years for you.
It doesn’t mean you don’t need to layer software or business moats after that but if your goal is to capture a monopoly, hardware is actually not a bad play. People (investors) tend to overestimate how another team is going to come and compete you out of <something so hard to build that they are scared of investing>. It’s kind of a oxymoron.
How many parts/pieces are in your Fi collar?
258 if you count every chip on the board. That’s just the module without the band and the charging base. About 45 subassemblies.
What was your biggest challenge in building Fi as a product and company?
Awareness. I think people (including us) massively underestimate how much noise exists in the world out there. Getting in front of customers requires that (i) you find a way to get in their natural path daily, or (ii) that you create so much disruption that you rise above the noise level. I also think there is “noise inflation” — it’s getting worse so you need to become smarter and smarter to get noticed.
What lessons did you learn selling consumer hardware?
We learned so much. It’s hard to really point to one thing. But I think in our case we learned that there is really no limit to what people will do for their dogs. The love driving that relationship is a really really powerful engine.
You have the best monthly updates to investors - how do you capture all the data and utilize it?
We share the same data we use to drive the business. So actually putting together the investors update does not take that long. I guess maybe it emerges from us being a very metric driven culture in the first place. As we scaled the org it’s been a great forcing function to step back every month and summarize what we did, what were the learnings and what are the next phases. It’s not unusual that while we write the update we stop on something like “wait… why are we doing this?” — it’s a natural evolution that as you add more people on more projects, focus can drift aside. So it’s a great mechanism for us to feel confident that whatever we are doing still makes sense.
What’s a fun fact about dogs most people dont know?
There are about as many dogs in US households as there are kids under 18 years old in the US. Chew on that…
How many dogs do you have in your office?
I stopped counting a while ago. We have about 100 people and half of that is at HQ in NYC. I’d say 90% of our people have at least one dog. I’d say probably ~15 dogs daily.
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Tank Sweeney (has a Fi) is known for lavishing her owner, Sydney Sweeney
Gary Fallon (has a Fi), Jimmy Fallon's dog, and magazine cover star.
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