Ted Rheingold Founded Dogster in 2004: Five Questions About Building a Startup, Selling a Startup and Whether SF Is Still a Good Place


Photo Credit: Christopher Michel

Hunter Walk: I know you started Dogster, one of the seminal early online communities, but I don’t know Dogster’s founding story. How did the site come about?

Ted Rheingold: In 2003 I owned and ran a web service business called OneMatchFire, and made a number of image sharing products for customers (or as side projects). Camera phones were just happening and I saw people really liked showing off their pet photos. One day I came home and Molly, my future wife, was crying. I asked why and she said she liked to look at dog pictures to feel better but she ended up on a shelter site that euthanizes dogs. It hit me there needed to be a place for people to post and share their own dogs. This was pre-Google images, pre-MySpace/Facebook. I spent 6 months coding and building Dogster myself. Arin Fishkin did all the original graphic design.

Dogster launched January 12, 2004 (Happy 12th Birthday Dogster!) with strong tailwinds behind it: a) Christmas 2003 was the year of the digital camera, b) Pets had quietly been moving from something families had to becoming members of the family c) the Internet nuclear winter was just passing, and a fun, colorful, whimsical site that anyone could use turned out to be quite newsworthy. I wish I could claim I deftly foresaw this, but I was just seeking recurring revenue to to cover OneMatchFire’s office expenses. Two weeks after launching, Molly made a terse posting to Craigslist that there was a site you could make a website for your dog and usage exploded from that day forward. By the end of 2004 I had brought on two co-founders: John Vars – who is now the Chief Product Office at TaskRabbit, and Steven Reading took over Sales and Revenue. Though I should point out was still doing client work for OneMatchFire until mid-2005 until the business could pay full salaries. From the middle to 2005 to early 2010 the business was break-even or better every quarter.

HW: Because of Dogster you’ve been a sought-after advisor/investor for pet-related startups, which I know for a long time resulted in eye rolling from some of the wild business plans sent your way. Any companies that actually made it through your filter and you think are building something impressive?

TR: Pet businesses can easily get early traction, but have great challenge finding sustained, high-volume growth. While 66% of American households have pets, these people have little else in common and reaching them at scale is like trying to gather rain in a rain storm. Dogster and Catster broke through to large scale because we offered something fun to every pet owner, but just a couple years later there were so many ways to make a webpage for your pet, all our follow-on competitors could never reach critical mass.

Since selling Dogster I’ve been looking for just the services that we heard asked for in our forums, groups and customer interactions over and over again. A top request was always for help with dog sitting, so I jumped to both advise and then invest in DogVacay which is now huge and unstoppable. Another recurring issue we heard was that pet owners feeling guilty leaving their dog home alone. So I was thrilled to find CleverPet, an AI game for dogs made by animal behavioral scientists and electrical engineers. It just took another 1st place at CES. Finally, I’m very keen on Treat, a concierge service for pet owners to answer and support any needs a pet owner has. First year pet owners have endless questions as do owners of older animals and the peace of mind they are doing everything well is very important to them

HW: When you sold Dogster to SAYMedia (and joined them as a VP), was it difficult to let go of a company you’d spent so much time on? How do founders think about whether it’s time to move on or not?

TR: This was an easy one for me. I was relieved to find Dogster & Catster a superior home because we were burnt out. Pets and the people that love them are (mostly 😉 wonderful, but the pet industry is still cold and industrial as the 1960s. Early on my original expectation was that, like a social club, Dogster site members should be able to incur all cost of site operations. We had a lot of members spending a lot of money directly with us to buy memberships and virtual currency, but it never got higher than 25% of total expenses. The most reliable way to make up the remaining 75% was direct selling to the ad agencies that represented pet food and product brands. We were often a must-buy for the brands, but weathering the Great Recession was exhausting. Ad Buys went from 6-12 month advance commitment to 6-12 days and buy lengths went from 6 months to 6 weeks, and stayed that way. Household pet spending isn’t highly affected by recessions (pets are family, remember?) but before long the secret was out and by 2010 our 2 person sales team was competing against dozens of huge publishers bundling together pet sections and use their large nationwide sales efforts to fight for our bread and butter ad buys. It got cutthroat, and if you think big brands and their ad agencies place passion over reach you should quit your ad-model business right now.  

When Say Media, with its 100 personal sales team, masterful IT, publishing design, video teams took over it felt like landing a very battle-worn Millennium Falcon directly from light speed into an Alliance Star Cruiser. A core of long-time Dog/Catster team members got to take over running the sites and leading the community and I got to work on much higher order functions of audience engagement since I no longer had to deal with the business of running the business. Sales and IT were now handled by life-time pros and not start-up mercenaries.

HW: You’re on the verge of ending the role of COO at InVenture, a business that provides mobile-based credit scoring and direct lending in emerging markets. How’d you get connected with that team and what struck you as compelling?

When I completed my term at Say Media (10 years to the month after I started working on Dogster), my research led me seek out a mission-driven for-profit with deep social impact. I prefer to find new business opportunities than to duke it out in proven, crowded markets. Ben Horowitz talks about asking founders what secret they know that no one else does. My answer was, and still is, that socially-oriented purpose-driven for-profits outcompete their marketplace competitors due to superior revenues generated from deeply loyal customers and expense saving from free word-of-mouth marketing and long-term employee retention (and even sacrifice). Social benefit companies also have access to impact investors which can provide 6 & 7 figure zero-dilution grants, which are an early stage secret weapon.

To find my perfect fit I logged over 50 meetings with all the people I knew and respected in the greater tech industry and laid out my thesis to each of them. Chris Sacca heard it and said I had to meet InVenture, a company he had just invested in that was in need of Operational and Strategic support.

It’s been an amazing run. When I joined InVenture’s product line was SMS-based and required 30 days of daily customer usage to be able to credit score them, and loans could only be gotten to them if we could get a local bank to use our scores. But we obsessed over the emerging market customer and we made some hard, big bets on Android and mobile money being used around the globe. InVenture now credit scores and directly lends to worthy customer in under 3 minutes of installing our Android application in 3 emerging markets and growing. Most importantly the customers love it and thank us every day for providing it.

InVenture is in a really great place. In Peter Thiel terms it’s officially gone from Zero to One. Now it’s time for the Finance, Portfolio and Expansion teams to take over. So while leaving now is bittersweet for me, I’m thrilled to get to start afresh without having to wait 10 years like last time. I’m still obsessed with the intersection of profound social impact and exceptional business opportunity. I expect it will take another 50 meetings to find the perfect next one, and I’m looking forward to that process again.

HW: If you were just starting your career in tech, would SF still be where you chose to settle? What do you make of the discussion whether or not dominance of tech in the economy is making SF worse?

I thought you said the questions were going to be easy Hunter? It’s becoming a little more debatable, but as of now I would recommend getting to The Bay Area. But be forewarned that for all the superior opportunities, there’s a lot of crud, hype, and employer misinformation meaning you can still have a mediocre personal experience. You could easily work for three “sure things” in a row that all turn out to be disasters. Yet you could work for one unknown company in a city near you that improves your life forever. So, wherever you are, work hard, commit to your job and your team, make sure you’re being respected enough, don’t believe half of what you read in TechCrunch, and make sure you’re always meeting lots of people all along the way.

As to “Is the dominance of the tech industry making SF worse?” No, it’s also making things better (see the mid-Market area). But what it is doing is making SF more boring. The populace is homogenizing, and many new residents care as little for the city’s long-term welfare as they did their college town. SF has always been a transient boomtown, and now is no different, but the vibrancy of the previous transients is simply not present in the people that spend more time looking at their phones instead of their neighbors.

It’s my optimistic expectation though that SF-as-tech-epicenter of the Bay Area will dissipate, and of the many who do realize they’ve grown roots and want to stay in SF for the climate, culture, geography will give back from what they’ve gotten. How many times can you go to the free Hardly Strictly Bluegrass before you realize that being a Venture Capitalist also means you can provide great civic benefit. Or when their children are born at the spectacular Benioff Children’s Hospital, that they can use their success to fund something the city greatly needs.

In fact, I’m done feeling a need to speculate what changes are problematic and am much more keen on noticing how SF is reblooming. Ironically it’s a Grateful Dead song about a urban neighborhood going to seed that I’ve been singing a lot. Everytime I see something new, vibrant and communally-oriented I’ve been singing a refrain from Shakedown Street. “Don’t tell me this town ain’t got no heart. You just gotta poke around.”