BARK: Matt Meeker

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Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Ross, and on the show today, I have a great day named Hugo became the inspiration for Bark, a subscription business that sells toys, treats, and even airplane rides for dogs. It might surprise you to learn that Americans spend more on their pets than they do on cosmetics and footwear combined. In 2023, we spent almost $150 billion on pets, and that's just in the US. The opportunity is so big that one company is now offering luxury flights for you and your dog. A standard one-way ticket from New York to LA runs around $6,000, and the seats are going fast. That business is called Bark Air. It's part of a larger company called Bark. That brand was co-founded in 2012 by a guy named Matt Meeker. At the time, Matt was frustrated by the lack of dog toys for large dogs. In his case, a great day named Hugo. So Bark began as a dog toy subscription box, which eventually morphed into all kinds of dog products. Food, treats, furniture, and now chartered flights. Before Bark, Matt and a partner launched an idea back in 1999 that was way ahead of its time, a credit card-sized device that could essentially send and receive text messages. The business flopped after about 18 months, but it's hot Matt an important lesson about what not to do when starting a business. A lesson he would definitely apply when he co-founded his next business called Meetup, and we'll get there. But for now, Matt Meeker grew up in the 1970s and 80s in the small town of Mason City, Iowa. He spent a few years in the Navy and then studied finance and marketing at the University of Minnesota, where one of his classes made a huge impression on him. And I walked into a class that was called Marketing Communications, and the professor was a visiting professor from the London School of Economics. Firstwards out of his mouth, he said, "Who in here knows what the Internet is?" And he got zero hands out of maybe 35, 40 of us, nothing. And he said, "From now on, this class is Internet 101. It's not marketing communications. If you don't want to take that class, that's fine, but that's what we'll be doing this quarter." And I didn't know what he was saying. I liked him, just I liked the person. And it was the most eye-opening experience ever. Instantly, you knew he was talking about something important and big, and that the world was about to change. And I mean, clearly that was a pivotal experience for you, because I guess when you graduated, you wound up applying for a job at a digital ad agency in New York called Eye Traffic. And that was, I mean 1997, doing that kind of work, right? I mean, you were just at the cost of a revolution. So there was probably a lot of action there. A lot of action. And by the time I got there, they had signed Disney as a client, and it was just booming. It felt like new things got invented in the world every day, and we were on the front lines of learning about those, and then incorporating them into our work instantly. And this was really the beginning of the.com boom era. But I guess this company that you were with, Eye Traffic, it got acquired before all of that happened, and probably got acquired for quite a bit of money. We did. We were acquired by agency.com in December of 1999. And it was a great learning for me. This was the first time anyone had talked to me about ownership or equity of the company you worked for. And everyone there had equity. My piece of that ended up being $30,000. And to me, that was fantastic. Yeah. That was all the money in the world. It was great. Yeah. You got a $30,000 payout for just working there for like two years or something, a little less than two years. Yeah. So when that happened, you know, you're like what, 26, 27 at that point, I guess you you started to think about maybe starting your own thing. I did. I knew my time was up, and I was looking for the next thing to do. And I came across this couple who had a bold ambitious idea at a time where the whole world had big, bold, ambitious ideas. And who was this couple and what was their idea? Shaman and Robin Newsstein at And they had a concept where what they wanted to do was-- it sounds silly today, but they wanted to put mobile devices in everyone's hands and create a text messaging channel that connected everyone in the US. Actually, the network that we were using to send the messages was the existing Paging Network. So sending text messages through the Paging Network, very low cost, into these devices that were the size, the form factor of a credit card. And the credit card had an LCD screen built into it. Imagine going in your wallet today, taking out your credit card and reading a text message on it. Right. That's what it was. Amazing. I mean, now you've got better options. But yeah, I mean, in 2000, that could be life-changing. What happened at that company? Because obviously, the device did not come out. And it's not a story that I've heard of, so what happened? I believe in starting the company we made, every mistake that you could make in starting a company. And for me, I believe that starts with having access to way too much capital leads to some bad decisions. And we had a COO who was a sea level executive at Citibank. And we brought him over. Wow, we brought over the CMO from AT&T to VR CMO. So you guys are paying big salaries? Absolutely. As a startup does. Great. So you have very talented people who are bringing-- imagine you're running marketing for AT&T one day. And the next day, you're trying to start something. You're bringing that approach. And it meant we spent a lot of days in conference rooms talking about PowerPoints. And when we got stuck on things, we hired consulting firms to help solve those. So it was just wonderful people who were not meant for that stage. So we took a good idea and didn't do it well. And probably burned to the cache. Yes. Like more than $10 million? I would guess more like $30. Wow. And it wasn't-- you were not-- I mean, you were, of course, brought on to the team. But you were not the guy who was kind of seeking the financing. But you were part of this project. And OK, and that fizzles out. And so what-- I mean, and I guess this probably-- this probably takes you through 9/11 in New York City. I mean, you were probably in the city at that time. I was. And for me, I didn't know what to do. So I kept coming into our office. And I kept working on this problem and trying to start this company that everyone had given up on. And I'm meeting with Shemmon, the founder. At the same time, Scott, who is the founder of I Traffic, he was also coming off of a failed startup attempt. And we have a bunch of ideas. And more and more, we're hanging out. We're walking around the city. Like you said, it's post 9/11. One of the most striking things in the city then was people actually cared about each other. Yeah. Yeah. And you'd walk down the street and people would say, how are you? And they meant it. They wanted an answer. And it really hit us. So we had a collection of things we could do, ideas we could start. But the one we kept coming back to was what ultimately became meetup. And one of the inspirational moments for it was, boy, when all these strangers come together, and they actually talk. They really talk, and they listen to each other. There's some serious power in that. So this is interesting. This is your friend, Scott. And Scott, have for a minute, I think this is the last name? Hi for a minute, yep. Hi for a minute, OK. And because you guys come up with this idea after 9/11, let's create these sort of a way for people to meet up. But did you feel like you must have felt like people weren't meeting up in real life? No, we didn't. And there's a really great book from a guy called Robert Putnam. Bowling alone, yeah. Bowling alone. And all the trends there showed that the American community had just disintegrated from the '50s. Much worse today than it was in 2000. For sure, for sure. And then, of course, all the side effects of that, the health effects, the mental health. So we wanted to create a construct that made it safe for people to come back together and have healthier communities and be closer to their neighbors. And how would they be organized? Like how-- it wasn't going to be a dating service, right? It was going to be like just gather. But I'm assuming around shared interests. Around shared interest? Yes. So first of all, how did you find somebody to help you kind of do the tech side of this? It was March of 2002. We put an ad on Craigslist. It was very obnoxious saying interviews are next week. We were looking for a co-founder, CTO. If you're not here in New York City next week, then you can't be interviewed. And that's it. Within 24 hours, we had 450 applicants. We chose 60. We did 8 AM to 8 PM in one hour interviews Monday through Friday the following week. So interviewed 60 people. And we came out with our co-founder, Peter Kamali. And what about financing? I mean, at this time-- again, at this time, it wasn't cheap to start an internet company. It was not. And Scott and I both felt like we had just learned the lesson that too much capital is a bad thing. And so we swung the pendulum way to the other side and said, how about zero? How about we raise $0? But to your point, it's hard to rent an office or hire people or really do much. If anything was zero-- And you didn't have any cash at the time. Very little. Very little. So what we ended up raising an angel round of $250,000. And largely from Scott's network. So many lessons in that for me as well. First, I asked my parents to invest. They wouldn't do it. And so I invested $10,000 for them. Because I said they would regret it if they didn't do it. But then you get to the end. And I'm sure it's a familiar story for founders. You get a lot of commitment saying, I'm in, I'm in, I'm in. But getting that signed document and getting that check is another thing. And so hurting the cash was a challenge. So what we did, it was the exact moment where the iPod came out. And we sent notes to all of them. And we said, Matt's going to come up and pick up your paperwork and your check. If you hand it to him today, he's going to hand you back an iPod pre-populated with 1,000 songs on it. So I went over to the Apple store. And so I bought eight of those. We loaded them up. And I traded iPods for checks. So you raised the initial money you need. And with that money, the idea was to start, presumably, just to start in New York City, right? It's just to see what you could do in the city. No, it was everywhere. Oh, wow. Which probably went as well as that sounds like it would go. You've got a computer in New York City making decisions of how things should go in Moscow. We started with a couple hundred topics. And then we would tell people, it's 7 p.m. at that Starbucks. And how did you get the word-- I mean, actually, initially, who did you think would gather together? What were their interests? So the people who were more disenfranchised and in the shadows were the ones who really grasped onto it initially. So it was witches and pagans and vampires and vampire hunters and these real fringe groups. And then technology-oriented groups around Python coding language, things like that. I mean, was it hard to get people to kind of trust in it in 2002, 2003? Like, was it just because people were, I think, wary about meeting strangers to the internet? It was very difficult. And we would go stalk the local meetups in New York. And there was a common behavior worldwide. What we would see is about half of the people who RSVP would actually show up. Right. And we would go and we'd sit across the street and sort of watch. And you had this common thing where people would walk by wherever the venue was and sort of slow down and look in the window and keep walking slowly but looking. And then they would either go up and they'd circle back and then come in or they'd run. So they had seen what they needed to see and they made their choice. But it was a new activity and they didn't know what to make of it. Yeah. But then, I mean, something pretty significant would happen that would help you guys gain traction, which is that in 2003, Howard Dean announced he was going to run for for present. He was the governor of Vermont at the time. And I mean, this isn't the days and politicians were like starting to tap into the power of the internet. And it seems like pretty early on. I guess some of his people saw the potential in meetup, right? - Yeah, in February of 2003, a young guy, our team, very boldly called the governor's mansion in Vermont, and said, "Well, I have a proposal for you," and that turned into a meeting with Governor Dean and Joe Trippi as campaign manager, at which they said, "I intend to run for president, and I don't have a lot of money, but I can promise you this from now until the day I get out of the race. I will end every speech I give with join your local Howard Dean meetup." At that point, no one knew who Howard Dean was outside of Vermont. He ended up racing to the head of the Democrat nomination in 2004. He was a big deal, and so by March of 2003, there was a good-sized venue on the Lower East Side in New York, and he showed up, and they were opening the windows, and there was a huge crowd on the street, and about 500 people inside just to hear him speak. That was the moment we said, we did this, and he knew we did it. We did it together, and that catapulted him to the point where every other campaign, Wesley Clark, John Kerry, all of them started using it. Yeah, well, came to us and said, "Can you do for us what you've done for Governor Dean, please?" And so presumably they weren't paying for it, right? But there was a business model, like you had to pay a membership fee or something to use it or to post. We were scrambling for a business model in the early days, and so the initial idea for a business model was, "This will be great for all the businesses. What we'll do is we'll direct traffic into these local businesses, and they will pay us for sending foot traffic into their business." So as an example, we sent a group of about 30 people into a Barnes and Noble in Union Square in New York, and then our smart plan was to call Barnes and Noble the next day and say, "See all those people last night? We can do that every day for you if you just passed." And we called them and we said that, and they said, "That was you. Don't ever do it again." They weren't ready for it, and so we learned something there, but we really tried everything we could, and we were cobbling it together and making a little bit of money, but it took us probably four years to get to the subscription service. I guess at a certain point, from what I understand, I mean, it got, you know, we're starting to get, you know, pretty, pretty stable, and I guess around 40 to 50 people now on staff, and you left in 2008. You decided that you didn't want to be part of it anymore. Can you kind of explain your thinking around that? Because I mean, you know, it seemed like it was just starting to hit its stride. Yeah, it was doing very well. Growing quickly, profitable, supportive investors and board, everything looking very good, and 10 million plus active members worldwide every month. Oh wow. At that point, I kind of took a look at it and looked at myself and said, "If I had said to myself at the beginning, this is where we would get to what I'd be happy with it, and I absolutely, this would have been a great outcome right here." And the other part was I was feeling very overwhelmed by the size and the size of the team, and thinking 45 people is enormous, and I think, "Oh wow, they're all depending on us to keep this afloat." So it became an overwhelming thought to me, and I decided to opt out for those reasons. So what did you do? I ran a marathon, spent some of her training for that. I was trying to find what's next, and I was struggling with that, sort of looking for that next lightning strike and feeling frustrated by it. Yeah, like financially, I'm assuming you hadn't made any money yet, right? Because I mean, meetup was not, it wasn't acquired, it wasn't sold or anything, or had you. No, it wasn't acquired or sold. I had taken a little bit of secondary money off the table and enough to sustain me for a bit. And this is going to factor into the next chapter in your life, you adopted dog. Yes, in June of 2010, I adopted Hugo. Great, a little great day. A little great day. No, I think a big great, how big was Hugo? Well, what I got him, he was 10 pounds. He grew to be 140 pounds. Wow, that's a human. Yes, kind of dog. So, all right, so having a great day, and did you live in an apartment, presumably live in an apartment in New York, right? Yep, sure did. And a great day is like a roommate, roommate not paying rent. Yes, took a lot of space and took a lot of food, a lot of medical care. Tell me how Hugo kind of starts to affect your life and the way you're thinking about a problem that eventually you want to solve. Mainly, I became obsessed with Hugo, and I loved him more and more, or he was my first child. And so I fell into the mode of I want to make him happy, and there was a local little pet store right around the corner from my apartment, and they would hand me a bully stick and charge me $12 for it. Yeah. And I'd take that home and give it to him. And if I'm honest, Hugo was probably thrilled with that setup, but it wasn't connecting for me. I was just disappointed with the offerings and tried the local pet codes and pet smarts as well. And it was all the same. And you felt like everything was made for smaller dogs? Absolutely. Even the food, it took us a while to find the right food for him and everything was difficult to find the right thing for a great day. And I guess, I mean, how does it kind of lead you to start thinking about, well, maybe there's something I could do about this? Well, it took a bit of time and there was another intersection that happened. So in April of 2011, I went to a conference called Summit Series. I had never heard of it before. I was up and coming, but this year they were doing it on a cruise ship. And so it's three days at sea. I was cheap. So I bought the cheap ticket. And what that meant was you got you got paired with a roommate who you didn't know. And that gentleman was Henrik Wirtlein, who's my co-founder and bark. Wow. And he was just, he happened to be a roommate there. Okay, keep going. And what happened was we had three days at sea getting to know each other and talking about our philosophies. We had both gone through startups in the early 2000s where we raised too much money and flamed out. We had a lot of shared experiences and ideas about how do you do this? So after Summit, we would get together every Friday afternoon, for beers and talk about possibilities and ideas. And at that time, what are the hot startups in New York was Birchbox? Yes. And so we were looking at the subscription service. Yes, subscription service, sending samples of different beauty products. And we were looking at that and saying, wow, what if we did that for dogs? And we sent samples of food and toys and treats and things that were appropriate for the different size of dog. And Henrik came up with an absolutely terrible name. He's Danish. So we forgive it. But he called it doggy baggy, which was just awful. We said goodbye for that Friday afternoon. And on Saturday morning, I woke up to a mocked up designed home page of a site that he put together that he put together overnight. And he said, I really like this. And when he's when I got the visual of it, I thought, well, that's interesting. And I had my phone. I took that image and I put it as the lock screen on my phone. And nearly everyone I would come across, I'd show them. And I'd say, what do you think of this? And they'd usually say, oh, that's cool. When it's live, let me know and I'll buy it. And there was nothing at that time in 2011, 2012. There was no dog subscription boxer must have been. No, not at all. Wow. But nothing had been designed or built. So again, this is an image on my phone with now a square account attached to it. So I started to carry a square in my pocket and I'd show people and they give me the reaction. I'd plug the square in and I'd say, it's live Swiper card. And I'd hand the phone to them and their faces would change. They'd be like, oh, so the first person I did it to is very good friend. And he said, I don't even have a dog. And I said, well, Evan, you know people with dogs buy them a gift. Come on, get out your credit card. And he got out the card and swiped it. And those were the first two we sold. When we come back in just a moment, how Matt eventually expands the business beyond dog toys to dog food, dog healthcare, even an airline for dogs, but not cats. Stay with us. I'm Guy Roz and you're listening to how I built this. Stripe is built for whatever comes next because the pace of change has never been faster than it is right now. New business models, new currencies and new expectations for speed, reliability and scale. Stripe builds financial infrastructure that helps businesses start, grow and operate. globally. From payments and billing to fraud protection and cross-border payouts, Stripe is built to support the new pace of commerce. They're trusted by the company's building at the frontier, from 86% of the Forbes AI50 to global leaders like Salesforce and OpenAI. In fact, more than 1.6% of global GDP flows through Stripe, with Stripe's users processing a combined $1.9 trillion last year. So if you're already thinking about what's next for your business, see what's possible at Stripe.com. Hi, it's Phoebe Judge, host of Criminal. I'm going on tour. If you like hearing me tell stories about people, well, I've decided to tell stories about my life and the people I love. A letter was left carelessly around. So I've sort of caught red-handed. It's a show about secrets and forgiveness. I hope you'll come see it. Find all our tour dates and get tickets at ThisIsCriminal.com/live. Hey, welcome back to How I Built This. I'm Guy Ross. So it's 2011 and Matt and his partner Henrik are trying to drum up excitement for their new business idea, a subscription box for dog toys. Meanwhile, to pay the bills, Matt's running a startup incubator in New York called Coincidentally, Dog Patch Labs. So in a way, I got paid to be the co-founder of 20 different startups simultaneously. Without the headache of sleepless nights or what's going to happen next week or any of that, e-commerce was hot at that point. It was on fire. Part of my day job was meeting a lot of companies and I'd say a quarter to a third of those were commerce-related. And I felt so dumb. I didn't know how those businesses worked. I didn't know how to engage in the conversation and to suss out as there's something here. So part of this for me was I want to educate myself through experience as to what's important, how do these things work? So we found our third co-founder at that point. And this was a Carly Strife who had worked at Uber to kind of help you guys turn this into, so she must have been really encouraged by this idea. And I think this is around the time where you've got, again, I mean, you mentioned Birchbucks which got Dollar Shave Club. And I mean, there's some really interesting new business model starting up. Was it easier for you guys to raise initial funding and financing for this? We didn't try. You didn't try. No, not at all. Henrik and I together put in $10,000. And kind of that same story of too much money or money at all isn't the type of company we want to build. We want to build something for us and something that's profitable. And this isn't going to be a venture back thing. It's going to be a business that we build. And the idea was when we needed, we'll start to raise it. We thought we would never raise money. That was the hope. That was the plan. And Henrik and I had no intention of leaving our jobs either. I was like, here's Carly. We'll give her a little bit of money and off she goes. How did you attract her from Uber? Man, to leave Uber in 2012 was, you know, turned into a massive company, right? 2012 Uber was still early days. But how did you guys attract her with a very small salary that presumably you gave her a big chunk of equity? We did. An equal chunk of equity. So a third of the company. And yes, I hope she's not listening. But it was, she was the 13th employee at Uber. They had done, had a good start in San Francisco and Travis brought her on and said, we've done this in San Francisco. We've started in New York. And so she was at that time running around making deals with black car services and, yeah, I think the line we used with her is, do you want to be a cab dispatcher your whole life? But she was very hungry to start her own thing and we made this her thing. Yeah. And by the way, I mean, what exactly did you plan to put into the subscription boxes at this point? Like, did you have a plan for how you're like, how you're going to source them the stuff inside? So Carly did the work of what you're doing and asking all the questions of what kind of products do you think, and where are you going to get that? I think a reasonable question asked. Yeah. And we said, those are great questions. You should answer them. And she's a force. And so as quickly as she asked, she's on a plane in Vegas at a pet show walking the floor, selling people on this concept and how big it will be and getting them to sell her products that she thought was cool. And she put together products from all these different companies, forced them, had them shipped to my incubator. And then in December, we went in and we packed all those boxes. We assembled the boxes into boxes and then we filled them up with the products. And because it was our first one and we're doing it by hand, we're writing holiday notes on the lids of every box on the inside. We got almost all the way through where Henrik said, "I have a question. Is holiday spelled with one L or two?" And we said, "Henrik, it's one L." And he said, "Should I redo all of these?" And he's like, "No, just leave it. Somebody'll have a story to tell about that." That was month one. And the first box was shipped in December of 2011. Got it. And these are to the initial like 50 subscribers, friends that you signed up. Yeah, we sent 78 boxes, I believe. So I guess, I mean, my question is like, with so little money, right? I mean, eventually you would not be able to survive. You would have to bring in more money. If you're going to go to, you know, if the idea was to really scale this thing, and even before you scale, I mean, you would have to buy, get inventory and you would have to ship this stuff out. And what was the subscription fee every month? How much did it cost? We started at $25 a month. Got it. Okay. And then we heard from people that that's too much. And our reaction to that was it doesn't cost too much. You just don't like love your dog enough for this product. But we, one of the things I had learned from Meetup was about generating cash flow. I had a cash flow generation trick up my sleeve, offering a long-term discount for prepayment. So saying if you subscribe now for six months or a year and you pay it up front, it's not $25, but it's 20 or it's 18. So today I would collect $200 from you that I owe you back in product over the next 12 months. But now I have $200 a cash that's going to fund this month's inventory. Yeah. And so you could frontload the cash and then presumably negotiate with the companies read by the products from for discounted prices on their products. That's right. Yeah. So this launches in at the end of 2011 and starting with your friends, right? But you launch at a fortuitous time because of Groupon. I think Groupon really kind of supercharged your early growth because you are presumably offering a cut rate price to sign up. They were very popular to the point where as we got into 2013, we were calling it, we needed to get off the Groupon crack. We were just because it was probably probably losing money on those subscriptions. Probably. Yes. I mean, we had a very good deal with them. But if I remember right, we were selling three months subscriptions for $45. So $15 a month, but you probably have a $20 cost of goods in every box. Yeah. Probably just generated tons and tons of subscribers. It did. I mean, tons and tons is relative, I guess. But that first year, we thought we were huge where we ended the year with about 15,000 subscribers. And how did you keep them? I mean, what kind of tactics did you use after those three months ended to retain some of those or many of those subscribers? Well, certainly auto-renewing subscription as part of that. But you're trying to be very responsive. We're very curious. We send out a product to you. We want to hear from you. Yeah. Did you love it? Did you hate it? If you didn't love it, tell us why we'll make it right. So I remember the first four months that we are alive. We had no churned, not one, not one subscriber left, not a whole lot of subscribers there. But out of over a hundred, no one left. I remember the first one leaving with someone that I knew and I called him and I said, whatever it is, we'll make it right. I'm not falling off of this 100% retention rate. Come on. Let's do it. So a lot of that idea though of carrying deeply that somebody paid for something and they expect something for it. And if you miss the mark, make it right. Make them make it unforgettable for them where they they just can't leave it and it becomes hard to do that when you get much larger. At what point did you feel like or did it was it clear that you had to raise money like a year into it? Again I don't know that it was clear and it wasn't the plan in May of 2012. Mike Hirschland who had started dog patch labs and Mike and I obviously worked closely while while I was there and he reached out and said I'm starting this new fund. Can I invest in this thing? Can I lead around for you? But that came with the string for me of if I invest you have to you have to jump in full time and be the CEO and run this thing and that wasn't even something I had considered before then. That was that was a difficult choice for me. All right so what do that mean? I mean how to tell me more specifically about what you raised and yeah and what that meant? We raised $1.5 million. I think it meant you're come to that fork in the road of if you're taking venture capital on you're now deciding to build a different kind of business in a different way. Yeah. Henrik and I at least we knew it was a fork in the road and we were wary of taking it. We were also I'd say somewhat inspired by the traction in those first eight months saying something like this doesn't come along very often. Yeah. It doesn't happen all the time. So when it happens do you ever have a responsibility to take on that capital and and supercharge it before someone else does? One of the things that I read at the times around 2013 you had said was and I'm assuming this is sort of a reaction to raising capital because now the the ambitions grow and the scale the scale this thing grows you said you know we're the new generation of pet brands. Like we're we want to be a five billion dollar company you know pet smart pet co aren't they don't speak to our needs and the needs of millions of dog owners and yeah. So there was a lot of ambition behind this. I mean you you were clearly you know kind of publicly saying you know sort of planting a flag and saying this is what we're going to be. There was after that turn and mentally I had to make a turn but I certainly didn't want to start something because I knew what comes with starting a new company I mean that for me it becomes the center of your world it's it's your life and often at the expense of many other things. Um obviously couldn't do that other job that was one thing. Exactly. Mentally I do very well when I focus on one thing I'm not great at giving a little bit of myself to this and this and this and so anything that sort of fell outside of bark or bark box at the time and dogs really didn't get my attention and so those things suffer. I was I was married and my my marriage suffered and I ultimately failed because of it and I didn't know that would be an outcome but it doesn't surprise me either. You were just just head down working 18 hour days. It's it's not about the heads down I'm at the office at the desk necessarily 18 hours a day but my head is in it 24 hours a day my interests are aligned to it. You asked me to go to dinner with friends on a Saturday night and it's a bother for me because there's something I want I want to crank on even if I'm just sitting in my home I I become consumed by it probably unhealthy. Yeah but that's I mean that's part of the deal. Yeah it is. Um so my my first I mean this is a question that you would have been asked today if you were starting this business today but I wonder back then if anyone ever said you know the challenge with this kind of business is that it's easily replicable there's the only thing that you you you're doing here is just curating products and uh there's risk there's inherent risk to that kind of business. True but we kind of hit the the market at just the right time where when we started there were 38 million households in the US with a dog and today that's 65 million. Wow in just a decade a little bit more than a decade that's incredible. We caught a wave and we were very lucky to catch that wave yeah uh we also caught another wave where it was early 2013 Facebook advertising became a thing Instagram started to become a thing but of course that would also attract competitors right and that and competitors started to pop up almost you know within a year of you guys launching. They did competitors would pop up and they would look exactly like us and that's where we would stop being worried about them we'd say if they lack creativity so much that they have to copy us pixel for pixel that's not a competitor we need to worry about and we would just we would lean on them uh they're usually copying the whole playbook so taking to Google search or Facebook advertising and it's easy enough to just lean on them and outspend them if you're bigger we'll we'll bleed you over time and and that happened time after time after time. The other question I have about this time period right 2013 um I have to mention that especially your investors were like well you know you're calling a bark box now but really you have to think about what else you're going to do and you know you're going to want to serve all all kinds of pets not just dogs. We were we were very clear from the beginning only dogs only dogs I hear almost everyone say the dog is my child I don't hear a lot of people say the cat is my child that's true so let's go deep on the thing that we're good at instead of branching out further into the pet department. We we had customers who had contact us early days and say what about for cats and we'd say order the bark box for your dog take all the stuff out give the box of the cat to that there's your product. And and and so what were the things that would stress you out or or keep you up at night? I mean you're growing and acquiring more users like what were the some of the things that worried you? Well we made mistakes we started a service in 2013 called bark care which was an in-home vet service in New York and people loved it dogs loved it everyone was loving it but it would have taken us a tremendous amount of capital to do it and scale it the way that it needed to be done. This was like an on call vet that would come to your house. Yeah so we had vets on staff you'd make an appointment and the appointment happened in your home. Wow and it was magical but we couldn't make it work financially with the resources we had so we shot it down. And what about conflicts did you guys I mean are you just personality-wise were you just so well matched or did you did you have disagreements about I don't know initiatives or the direction that you wanted to head in? We're very well matched. Carly and Henrik are two of my best friends in the world to this day and when there are disagreements when there were it was usually between two of us and and so the two of us would be complaining to the third one who would be taking on board that information and trying to guide us back closer together and and it was never the same two you just sort of kept rotating around the triangle so what we were trying to do was build a company where we could come in every day and be around a lot of people that we just wanted to hang with. Yeah like we we we genuinely liked everyone and if someone made their way into that we made a mistake and hired someone that we didn't like we got rid of them pretty quick it's like you just don't fit I'm sorry nothing personal but you just don't fit. All right so the first kind of five years what I'm wondering is in that time period with that really rapid growth because I think by 2016 you're doing like a hundred million dollars in revenue not yet profitable from what I understand you must have started to field some acquisition offers or some interest in potentially acquiring the brand. We did yes a few and and you just outright were not interested in in having those conversations yet. We had the conversations and we walked away from a couple of but we took them seriously we just couldn't get there. We're trying at that point you take on the new capital we invested the new capital and the way we we said we would it was successful and we get into 2018 and it was a it was a thing that Henrik and I forgot from the beginning we never looked at the market data or the market sizing and said let's go here if we had we would have never chosen toys and when we started to look at a market is when we started to make decisions for the wrong reasons. What were some of the decisions you started to make? We we started to talk to investors in mid-2018 about another round and the questions were always about food to make dog food to make a product in food. We didn't really know what it was, but we were starting to to sell the idea that investors wanted us to sell them. The toy industry is relatively small and everyone starts to point us to, "Well, food's really big. You should get into those bigger categories because you have this great brand and it connects to people." And we were just saying back to them what we thought they wanted to hear. And not surprising that that fundraising round didn't turn out well. What it felt like we were becoming. We didn't like the feel of it. So I definitely freaked out my board and our investors, but walked away from the fundraising round and said, "Forget it." In 2018. Yeah. We'll just generate our own cash. We'll be our own company. They were scared and… And presumably scared because I'm pretty sure your growth was slowing. At this point, your user acquisition was going down and at the same time, I have to imagine that your board and investors wanted you to diversify, right? Because you were a subscription service and I think just the year before you did start to sell it retail, like start to sell toys at Target. Yep. That's right. 2017. And they did want us to diversify, but it wasn't leading to the best outcomes. That's… Boy, we were really living hand-to-mouth there from mid-2018 through early 2020. When you say hand-to-mouth, what do you mean? We were running out of cash and that model that I talked about early on of how we can generate cash to pay for the inventory today. If you're not growing, it catches up to you and works in reverse and eats away at your cash. For about two years, we just ran and steady. We grew enough to maintain, but our cash was very flat. Would you call that a much more stressful period than the actual first five years when you were really just a scrappy startup? Definitely more stressful. And I was probably shouldering the stress for our board and our investors where I would say they were downright freaked out. Personally, I'm more comfortable with very little cash on hand than with a lot. So it didn't bother me a bit. I feel like I can find my way through that, but I was taking on the stress of everyone else. Yeah. And so, I mean, I guess there were initiatives that you launched. First of all, the food idea, you abandoned it, but then you must have come back to it because you do have a food vertical today, a bark, I think it's called bark eats, right? Exactly. We've gone in and out and in and out of food. The idea, again, maybe a misfortune of timing, but we went right before the pandemic. We launched a food thing saying food is food, but what is the service layer that you can apply to it that makes it special? And so we had this concept of bringing back the milkman in the U.S. and we deliver your food to your home. And I think we started that in January, February of 2020, and we found out, during the pandemic, people don't really like someone coming to their door and coming in for a conversation about their dog, so kind of shot the whole theory right there. But we've continued to try to navigate it. We continue to this day, and there's a concept just on the horizon for food that I think we're all pretty excited about is very different. All right, so let's talk about the pandemic for a moment. This is actually going to be a boom time for you because there was a, at that time, there was a spike in the number of people. There was a massive demand for dogs during the pandemic, and there was a shortage of people who couldn't get, they couldn't adopt dogs. And I imagine that you must have seen some kind of uptick at that time. We did, it was that, and now you're home with your dog all day, and they need to be entertained because they're bothering you, you're trying to work, but it wasn't that certain. We were scared, again, we were going month to month on our cash. I remember in March of 2020, having conversations with investors in our banks and saying, well, we'll see what retention looks like on April 1st, and then all of a sudden customer acquisition has just off to the races, just booming. So we accelerated very fast through 2020 and 21. You, I think at the end of 2020, stepped down as CEO, a couple things we're going on. First of all, imagine you just went through this two-year period of extreme stress, of just like cash crunch. Tell me about that decision. Well, yeah, actually the decision came almost a year before I did it. So I had a couple of conversations with our board saying, I think I need to step down and they'd say, oh, that's a good idea. We should talk about that at the next meeting, and then it would get punted to the next one and the next. And eventually, I said to them, we've got to take this seriously, I really mean it. But the rationale for me was twofold. It was Hugo was getting old, and I knew his time was limited, and I didn't feel I'd want to be around the company when he passed. And then we also had ambitions of someday being a public company, and I had an idea that I didn't want to be a public company CEO. Fast forward to September of 2020, and Manish Stepson as the new CEO of Bark. This is Manish, Geneja. Yes. And he, he was a former, I guess, Amazon executive, so he comes in as CEO, yep. Yep. He came over from Amazon, big dog person, loved, and a very good guy that I think we put into difficult spot. You're saying to someone, take on a CEO role, take it on in the middle of a pandemic, you'll live in Seattle, but you'll commute to New York. That's fun. You won't get the opportunity to meet most of the team or engage with most of them, but take responsibility for a culture. And by the way, we just signed up to do this thing called SPAC and go public. So now you're going to be a public company CEO. Congrats. When we come back in just a moment, Matt talks about Bark's latest initiative, an airline where dogs get to roam free. Stay with us, I'm Guy Roz, and you're listening to How I Built This. Hey, welcome back to How I Built This, I'm Guy Roz. So it's 2021, and Matt's temporarily stepped away from the CEO job at Bark, but he's still getting besieged with inquiries about taking the company public. Not in the usual way, but through a SPAC. Essentially, a way to take Bark public in a faster, compressed timeframe without as much oversight. I was getting calls left and right, you called the SPAC craze, like everyone was coming at me saying, "We want to merge with you and our SPAC." And I kept pushing away saying, "This is a FAD, this is a FAD." And I asked around for someone who could teach me about it and got introduced to a guy named John Ladecki, and John was introduced to me as the Godfather of SPACs. And John gave a lot of advice, and he knew the subject matter quite well. And then shortly after, John formed a SPAC and said, "Now I have a SPAC, and I think you should merge, and you should do it quickly, and here's why." And John's theory, which turned out to be right, he's usually right about most things. He said, "Chui Stock is at an all time high, the pet category is on fire." And what that means is, "Chui's the only public pet company." That means January 1st, there's going to be a line of these people signing up for SPACs. You don't want to be the 8th company, you want to be the first one, so you have access to the best quality capital out there, which means we got to go now, we got to go fast. That was mid-November, and we went fast, we did a two-day virtual road show in mid-December of 2020. Yeah, we went out to raise 100 million through that pipe process. We had an interest of nearly 500 million, so we ended up raising 200 from that in addition to the SPAC funds. He was absolutely right, the market was very hot, and the 3rd, 4th, 5th, 6th didn't have nearly the same success that we did. You stepped away for about, I think, about a year and a half, and came back as CEO in early 2022. Tell me the thinking behind it, I mean, when you were left, did you think it was temporary or did you think that it was for good? I thought it was for good. We brought in Manish, I moved to Florida with my wife, followed her for her job, and I thought that was that, and then in late December, December 28th of 2021, Hugo passed away. My feeling was the opposite of what I was thinking. I expected, which was more, this company is his. It's his legacy. I can't entrust that to someone else, regardless of how I felt about them, I felt deep responsibility to make sure that that legacy lived on. And so I had this strong urge or desire to jump in and that I don't want to speak for Minesh, but if I'm reading the room, it coincided with Minesh's probably feeling very burnt out and he's a very positive, energetic person who was just feeling worn out. So I think we caught each other at just the right moment. - All right, so you come back and you've got a big task ahead of you because this is a business that you've launched at the end of 2011. You saw it go public and I'm sure this is not fun to be reminded of, but it still was and is not profitable. And so what did that mean? Were you, did you feel like a assuming you felt a charge to kind of get it to that place? - More than a charge, our fiscal year ends March 31st. I came back January 11th. So that year ending March 31st, we burned $194 million. And if we had done that for the next 12 months, that would have been it, we're done, we're gone. So the immediate challenge is don't die. Just do everything possible to keep this thing alive and floating and great. And looked at every angle to do that. And got the unit economics and shape, got the supply chain fixed, brought on really great talent, brought on a fantastically talented CFO, brought discipline to the business, right size the team. There are a lot of those things that are difficult in the moment, they're not fun in the moment, but it was just survival mode. And we have really turned that around and gotten ourselves into profitability and into cash flow generation. And now that's starting to compound. - So tell me about where you see opportunities, right? It's a different marketplace. It's harder to acquire users today. Instagram and social media is just harder. I mean, a lot of people say you just not worth it. You spend more than you actually get in return. I mean, what is sort of, give me a sort of sense the playbook, I mean, is it expanding product offerings? Is it trying to get into a bunch of different spaces and seeing what works and what might not work? I think it's returning back to who we are and what we're good at. One of the things that we're great at and we have big advantage in is toys. And it does get, it gets poo pooed by a lot of people because, well, that's only three and a half billion dollar industry and you already own 10% of it. Okay, but we don't own 90% of it. So I understand relative to food, it's one tenth the size, but this is one thing that we're very good at. And there are a lot of places that we don't show up and a lot of different types of products that we can create and we can invent. You have your own design, in-house design team. We have our own in-house design team. We have a very strong supply chain. We're about as close to being vertically integrated on the toy side as you can be without being vertically integrated. You don't own your factory, for example. We don't, but we're getting closer. So we're inching in that direction. - Right. - We need to show up where the customers are as well. So one way we're growing very rapidly right now is Amazon. People love their Amazon Prime. - Yep. - So let's become a great product company and put our products where the people are. - One of the things that you guys have to do, and I think, I imagine this is not a huge part of your business, but it certainly has generated a lot of new stories is you are working with some charter airlines to offer flights for humans and their dogs. It's really hard to bring dogs on airlines now. They're really cracking down. Most airlines just don't, certainly big dogs, don't allow them. On their couple of smaller companies like JetSuitex and here in the Bay Area, they operate here and you can fly with your dog on those flights. So you are doing a version of this, right? You're basically working with charter companies to fly between New York and London like long awful. - Yeah, yeah, and this is a classic, huge problem for people with dogs and especially those with larger dogs, which has a special place in my heart obviously, but we are, we're going every other week between New York and Los Angeles every other week between New York and, I'll say London, but we mixed Paris in there too. - Those tickets are $68,000 one way and we're sold out in September. We were sold out in August, so we're not flying enough at those prices. But the other thing that I'm obsessive about right now is how do you take a $6,000 ticket and turn it into a $600 ticket and really, really solve this problem? - Yeah, and so the flights you're offering you literally could have your dog like out of a cage, like next to you in the seat, right? - In the seat, on the floor at your feet, but they usually wander around and say hello to everyone else and they, and there's so many touches to this experience. It's, the dogs are served meals, the dogs get their drinks first, then the humans, the dogs are pilots come back and say, come on, bring your dog up front, I'll put him in the captain's chair and I'll take some photos. So mid-flight, the dogs are up there flying the plane. It's everything is built around them and they're comfort. - And how many flights are you doing a week now? - Two. - Two week, how, I mean, how much time do you give a new initiative? Like, you know, barks, someone's like, let's do bark air and I was like, cool love that idea, obviously I'm sure you did some research before, but in your mind, like how, how much time before you pull the plug on something new? Like, six months a year or two years? - I think it depends. There are a lot of factors in that it's the capital being burned, the consumer reaction, your belief that you have, you have line of sight to something that works and can be meaningful. Bark air right now, customers love it. We have ideas of how it expands. We have line of sight too. How do we get to that $600 ticket? We have very clear line of sight to doing that I'd say in the next year. So that's one where the good idea is panning out better than I could have ever hoped. - So, I mean, is getting to, I mean, you mentioned, you know, your revenues public, right? So I think your revenues about a half a billion dollars a year, which is a nice, healthy revenue. You're much higher than your market cap. So you have reasons to be optimistic. But do you have a timeline in mind of when you hit equilibrium, when you hit profitability? - This year. - This year. - Yeah, we've turned in those profitable quarters and our fiscal year 22, when I stepped in, we lost 57 million dollars. The next year it was 31. Last year it was 11. This year we should make four or five million dollars. And up from there. And what I say to people now is, I intend to die in the saddle. It truly, it goes back to Hugo and that responsibility and the legacy. But I say that knowing that I'm a month away from having a baby boy. - A human child. - A human child, yes. - Yeah. - Maybe that becomes my obsession. And, you know, if you'd asked me if I'm gonna be in the pet industry in 2010, I would have thought you were crazy. But, but right now my intention is, this is my life's work. - Matt, when you think about where you are and what, you know, I think you've done pretty well from some of the businesses you've been involved with, how much of where you are now and what you're running and what happened in your journey do you attribute to the work you put in and how much you think has to do with luck and timing and good fortune? - I definitely work hard at it and always have. But some of this, like, you know, I think it goes back to when we were talking about 2018 and not raising that money and there wasn't a clear idea of how do we get this accelerating again and too profitability was about hanging on. And we hung on 18 months there and then the pandemic came and your fortunes changed. The world changed around you and we got lucky. We're in the right place at the right time in 2011 with the right products. We didn't do some market study. So sometimes it's just grinding away until the world turns in your favor and working hard through it and making smart, sensible decisions along the way. - That's Matt Meeker, co-founder and CEO of BARC. By the way, just getting back to your thing with the cats for a second. Do you just not like them? I mean, do you not like cats? - I'm okay, okay. Whatever. - Just lay it on the table. I mean, come on, I mean, sounds like you hate cats. - I don't hate cats, I won't go that far, but. - You deeply dislike them? - Yeah. - Cats are amazing, amazing animals. - I would encourage you to start the cat company. Go for it. - There is nothing. Like watching a kitten chase a laser pointer. Like there is nothing, not a single animal planet comes close to the entertainment value of a cat chasing a laser pointer. It's just un-breaking believable. - I'll give you that. - You're basically a huge opportunity. There's a lot of custom laser pointers you could put in those boxes. - 12 months of laser pointers. I love it. - Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show and of course it's free. And if you're interested in insights, ideas and lessons from some of the world's greatest entrepreneurs, please sign up for my newsletter at gyros.com. This episode was produced by Devon Shorts with music composed by Rampti Narablui. He was edited by Niva Grant with research assistants from Olivia Rockman. Our engineers were Patrick Murray and Maggie Luthar. Our production staff also includes Alex Chung, Carla Estevez, J.C. Howard, Sam Paulson, Chris Messini, Carrie Thompson, John Isabella, and Elaine Coates. I'm Gyros and you've been listening to How I Built This. (upbeat music)