To Hell and Back: The Dramatic Tale of a Pet Company
BY Erik Sherman
It started with a simple idea: a portable loo for dogs. But building it into a $10 million company nearly sunk founder Tobi Skovron.
Tobi Skovron has lived what many would see as the entrepreneurial dream. He came up with an idea, started it with a $20,000 loan, and over 10 years built a multi-million dollar business that he sold. But it was a slog: He survived a distributor who undermined him, not to mention a sudden 40 percent drop in his expansion capital (he financed his family's life on credit cards and one home equity check after another).
Skovron comes from a family of entrepreneurs in Australia. He remembers his father, a "ragingly successful guy," teaching him two things: 1) "If you want something done right, do it yourself" and 2) "Don't wonder why or how, go in there and make it happen."
It Starts With an Idea
In 2003, he and his then-girlfriend (now his wife) Simone lived in a two-bedroom apartment in Melbourne. He bought her a dog and they immediately faced the problem of having to walk the dog regularly, as potty-training seemed unrealistic. "There needed to be a better way to live with a dog although we could only afford an apartment," Skovron thought. Simone said, "If we could only get a patch of grass on the balcony."
Bingo! Skovron invented the Pet Loo. Two years of R&D as well as patent and trademark filings and it was time. He had taken nothing out of the business and took odd jobs to help keep things together. Simone, a social worker, covered their expenses. "We went, 'Wow, we'd better do something here or die wondering.'"
He went onto an Australian show called The New Inventors. Similar to Shark Tank, a panel voted on the best idea and then the public got to weigh in. A week later, and the Pet Loo was the cat's meow, so to speak. In a 24-hour period, he sold 500 units. That turned into a AUS$1.2 million a year business. Skovron had a real salary. But what he really wanted was to build a global brand.
"In Australia we have 7 million cats and dogs combined," he says. "In the U.S., you have 200 million. I wanted to be in the biggest market and the best market."
Getting Some Big Attention
Things continued to look up. In 2008, at a European pet show, he met the CEO of PetSafe, a major manufacturer of pet-related products. Skovron flew to the company's headquarters in Tennessee. The CEO told him, "We believe you, but go prove it. Grow big enough and we'll buy you." Big enough, as in $10 million a year in sales.
He and his now-wife moved with their two dogs to Los Angeles to expand the company. The day he did, the global financial crisis caused the Aussie dollar, and the $300,000 in start-up capital he had saved, to drop by 42 percent in value. "We're entering the biggest consumer market in the world and I have $160,000 odd dollars to throw at it," he says. "It's not good enough."
Then the other shoe dropped. He already had an American distributor that was sending back roughly $300,000 a year in sales to the Australian company and was supposed to be working with retailers. Only, the man hadn't. All the sales were done direct from that company's website. Skovron's business plan had been to work with the largest pet stores in the country.
Back to Struggling
The two parted ways, so Skovron was on his own. He used credit cards, a home equity line on his house in Australia that soared to $500,000 by the end of a year, and the occasional night of eating cereal for dinner, to fund the company. Sales grew, but the business was tough.
"I was 31 years old," he says. "This could not go on. It would consume me, so I needed to find another route." The choices were taking on debt, something he was brought up to avoid, bringing in private equity investment and all that can entail, or getting acquired. His company's revenue had hit the $10 million mark. He called PetSafe's CEO.
They met and it sounded as though he'd get an offer. But, at the last minute, he got a call: "For reasons I cannot disclose today, we're not going to make an offer." It hit him hard, but he didn't give up. More time, a new line of "fresh air cat litter," and he went back yet again.
Ship Comes In
It turned out that the previous time, Skovron had shot himself in the foot by insisting that all of his staff, 12 at that point, would be brought into the company as part of the acquisition. But two of the employees were not a fit. By chance, they had left for their own reasons since and the deal, a big one, went through in 60 days.
Now Skovron works for PetSafe. "I put my family in a position where we don't have to worry like we used to worry, whether it's food on the table, keeping the lights on, or a two-day vacation," he says. Plus, he gets to keep growing the product lines he was responsible for.