334. This Pet Food Founder Scaled from £1M to £10M in a Year w/ Shiv Sivakumar | Omni

0:00I'm Shiv, I'm the co-founder of OmniPet. For the last four years, we've been building the allergy-friendly pet nutrition solution in the UK. So we do everything from food, treats, to supplements, and providing that full 360-degree care for dogs that are prone to allergies. So this is gut problems, food sensitivities, itching, irritation. That's quite predominantly seen in the pet market. roughly a third of pets are sitting with these allergies and so our nutrition is designed to

0:32Amardeep Parmar:assist to be preventative and curative where possible. And then you just recently announced quite a big raise as well which especially for the consumer goods industry is like quite exceptional so can you tell us like where you are today? We've just closed our 11 million pounds series A round in total we've raised around 15 million pounds of capital yeah as you say in the UK consumer landscape, that is quite tricky to do, especially in the times that we are in right now. So it's very validating for the proposition that we're building. And with all the uncertainty that comes with building a startup, it's good to get that backing from institutional investors to sort of take us to the next level.

1:15Amardeep Parmar:And what do you think about where you are today enabled you to get that capital? How did you convince those investors that? Yeah, it's a long journey. It's been many years in the making. I can't lie, I would have loved to raise that capital earlier than now. You always try to sort of raise as much as you can at every stage of your business. And, you know, one of the main reasons businesses don't work out is cash at the end of the day. So cash is king. I would say for our journey, what was really pivotal was the level of growth that we've been able to achieve in the last 12 months. So we went from£1 million in annualised sales to over£10 million in the space of 12 months.

1:55So that growth trajectory really crafts a VC narrative where, OK, you are a fast-growing business tackling a big problem and the prize is big if you keep growing at this sort of growth sort of momentum. So that's the part I think that kind of got the interest of a lot of people. What sealed it at the end of the day is things like the economics of the business. It's solving a real problem. We have a competitive advantage in the way that we've formulated our products to solve that problem. What also helped was going on Dragon's Den as a consumer business and selling to the consumer market. Going on Dragon's Den, sort of securing Stephen Bartlett, Debra Meaden and sort of the success of that show and what it did for us.

2:42it's very hard to know ahead of going on to that how it's going to go it can go anyway as i'm sure you've seen the episodes it's a risk to take but for us that risk really paid out and really

2:51Amardeep Parmar:contributed to the growth we had um janeš for on here before who takes something you went on dragon's den and then just like out downloads exploded right so like you mentioned about how going for like 1 million to over 10 million what part did dragon's den pair now what other strategies did you use to grow right after the show uh we saw a spike in sales but that's to be expected most brands do see a spike, but we were warned ahead of time that doesn't always last. And in fact, we were raising capital right after that spike. And that actually hurt us because investors said, this is a temporary spike.

3:24It's going to go down. We're not going to give you credit for it. So that actually made them more cautious because they were seeing this sudden improvement and they didn't believe that it was going to continue. We doubled down on the attention that we were getting. We doubled down on the investors and the celebrity endorsement that we got from that show and continue to remarket and bring customers onto our products. And we consistently did that month on month, showed that month on month, growth in new customers, growth in returning customers, and really craft that narrative over a six to eight month period to show, no, this is not just a one-time blip.

3:57We're now eight months in and we're consistently growing. This is real growth. And so that's the sort of growth that it contributed.

4:05Amardeep Parmar:And then we were on back to the beginning, right? So then where did the idea come from? And like, what made you decide to go into like pet food for people with allergies or pets with allergies? Coming next, maybe. The idea really stems from my co-founder. He's a veterinarian by trade. He's been in the industry for over 10 years, seeing over time dogs with these allergy related issues. And of course, you can treat it in the clinic. But what's more effective and he could have way more impact is if you can prevent it from happening in the first place. He's an absolute lover of dogs and animals in general.

4:40And he genuinely wanted to do something that would make their lives better. Around the same time, I wanted to, I have my own dog who was prone to allergies as well. And I was tinkering with this idea of building a brand around him. And so we connected. It doesn't usually work out for most people. We connected on workingstartups.com. It's an online platform. I just put up an ad saying like, hey, are there any veterinarians here? his housemates saw that and said hey somebody's looking for a veterinarian you guys should connect and then we just got chatting it was sort of in the middle of lockdown we were just sort of brainstorming this idea together and then we thought okay we're both passionate about this why don't we sort of build it together and yeah four years in and uh we're still we're still we're

5:20Amardeep Parmar:still building it um what do you think about like your relationship makes it work four years in i think what's great is that we're very complimentary in terms of what we bring to the table. He has a very scientific background. He is so close to the customer, the product. I bring in that sort of finance world, fundraising, sort of more on the data side, that sort of thing. And that's what we're building. It's not just on the face of it, it's a brand that we're building. But behind it, there's a lot of science, a lot of data, there's a lot of analytics to take judgments and calls on how you scale a D2C business by predicting sort of consumer behavior and sort of allocating spends in such a way that you get that return much later down the line.

6:05So it's things like that that's going on in the background that make it quite fascinating. And it's that gelling of that sort of finance world meets sort of the science world coming together and building this business. So I think that's where our respective skill sets fit in quite nicely.

6:19Amardeep Parmar:On that science side as well, so you mentioned earlier, you've got competitive advantage in the way you make the product. Can you tell us a bit about that? Well, it is in the sense of like, the co-founder having that sort of deep scientific understanding of the way the products need to come together and that 360 degree solution that we offer but also as a business we're investing in clinical research where we can actually demonstrate the clinical efficacy of what we're doing in terms of alleviating and helping to alleviate these allergy symptoms in dogs that's not something that's widely available and actually as a startup being able to do that we're doing on a very limited budget, but we are against, we're competing with the big guys.

6:56So we're doing what we can in that regard and helping us go. The other thing that we have is, so again, having that sort of veterinary angle, we can offer sort of free veterinary consultations. Very few brands in the space offer it, but we do because we know our customers have a greater need of help and assistance when their dogs have these issues. So that veterinary network that we have, you don't get a product you get sort of lifelong veterinary support as well completely free um so things like that are very unique to omni and gives us that advantage and obviously like the first customer i

7:29Amardeep Parmar:guess is like yourself with your own dog right yeah and the allergies but then going from like a customer one customer to then like 10 100 and 200 how do you start to really get that early traction with other people and like convincing that what you had was good yeah that's a good question. I mean, bearing in mind, first-time founder had no idea how any of this really works. We were just kind of going for it and sort of figuring out, as we're both first-time founders, the way we approached it was that, okay, there are these Facebook groups where people love pets, and they talk about pets all the time.

8:01So we went into these Facebook groups, and we just said, hey, we just made this product with these two founders. We have no idea if it works. we think it's a great idea you've mentioned that you have allergies whatever can we send this to you for free please let us know if you have any feedback that's how we got our first first first bunch of customers um gave it to them for free and just asked for feedback and then afterwards would you like to pay for it and then we when people start to pay for it and they've got a hundred customers from from this week okay we've got a small business that you know serves a few people and they want to keep buying and they're buying on a regular basis so and we really believe again having that sort of veterinary understanding that this is a huge problem and you know in the clinic you see it day in day and day in and day out there is a big addressable opportunity then we thought okay let's let's build this out in a bigger way let's go and raise money from investors again the whole journey of like raising from angel investors very small tickets and always trying to

8:57Amardeep Parmar:manage that cash but yeah how did you get those small tickets into investors small tickets was Oh, gosh, I'm trying to think. So we joined an accelerator called ProBedge. It was like a German-based accelerator at the time. And so that was our sort of first. They gave us like 30K or something like that just to sort of get started. And then they connected us to other investors. But really it was a relentless pitch. So I was on LinkedIn like hounding every sort of investor title that I could find just to be like, hey, can I get a call, send a teaser, send a deck, did all of that. and at that stage it is a hard graph because nobody really takes you seriously and it's you're really but but a lot of it is sort of you know you know you try to raise what you can and then you keep raising so we you know we'd always present it as like you know 50 funded whatever like you try to create momentum you're selling at the end of the day right you're trying to create whatever hype you can but at the same time we're trying to prove out data and give enough validation as well so those two came in handy and sometimes you get a lucky win where somebody all of a sudden wants to put in 100k 200k and it's just sort of changes everything so a little bit of luck as well you said about the hard graph at that point right when like you're getting a lot of no's or people just not replying how did you keep going through that like how did you keep their belief and momentum going i think at one point it just becomes like you can't go back because it's really embarrassing.

10:25And so you just have to keep going. But we really believed in the product. We really believed that there's something that we could build here. This is what we wanted to do at the end of the day. So we wanted to find a way to make it work one way or the other. So there wasn't really no, and it was a mindset of life of like, we will give everything to this and make it work. But what keeps you going is that, you know, there are wins along the way, right? You have an investor who comes in and then they introduce you to somebody else and that you're building up a pipeline of potential leads that are going to come so you see the vision of where it could get to and then fundamentally if the business is growing and cash is coming in that's also super validating because at the end of the day there's customers buying your products saying amazing things coming back to repurchase that gives you a lot of faith that okay the product works the customers love it.

11:19We just need to fix this capital issue. So it's hard because capital is just harder in the UK and Europe in general. So you know that. Again, from the finance world, I kind of came in knowing this was not going to be an easy journey. And compared to like, you know, for in the US, for instance, it's, I don't want to say it's easy, but like maybe not as difficult as our market. So it was a challenge. I knew it was going to be difficult. But in practice, it was more difficult than anything I imagined. But still, you know, it's going to be difficult.

11:47Amardeep Parmar:when you got here now right yes yeah then on that finite side right so when you're trying i said at the beginning you gave out for free yeah but when you start charging for it it was i guess work out where do you place yourself in the market like are you at the like luxury end are you at the like lower end how do you kind of think about that pricing and making sure that you're like optimizing that yeah that's a good question i think um so in our industry it's pricing also says something about you because there is a lot of low budget sort of products in the market which are very private label, those types of products, and you don't want to price in that market because it doesn't signal health as well.

12:25So it's about pricing in a way that is reflective of the quality of your product, pricing, capturing sort of enough margin to run the business, make the unit economics work as well. So and then looking at competition and where competitors are pricing and but i wouldn't say we pricing is something we're figuring out even today to be totally honest with you we were just having a call uh at least about are we pricing all of our products in the right way are we offering the right discounts are we giving too much discount it's a constant question in our minds yeah and that goes back to the data piece and the mats and and how it all works together uh which is always a an interesting sort of part of the

13:04Amardeep Parmar:business and with the furniture you just said now as well where's that money going to go to What's the reason behind that raise? What are you going to plan for? Yeah, so most of the raise is that we have a very proven model right now. So it's about scaling faster in the UK market, building out that. So we're a D2C business in the sense that we sell directly to the consumer through our website, very subscription oriented. So doing that in a much more aggressive way and using that capital to funnel ads through Meta, Google, etc. And winning as many customers as we can. but another part of that is also continuing to build that moat around the business, around sort of research and development and doing the clinical research to validate the efficacy of our products.

13:46Again, we don't have the big budgets of the big guys but because we have a core science team internally and our veterinary network, we're able to do this with very little funding. And then another piece of it is testing the new market. So the US is another market that we're interested in And so allocating a small proportion to also testing and validating that this transfers across there.

14:06Amardeep Parmar:And then looking at the expansion side as well, right? So is like the US and the UK market for pets fairly similar? Or what's kind of some of the differences? Do you need to adapt the product in some way? We don't adapt the product in a major way. Regulations slightly vary and things like that. But it's more that we will, I guess we will learn as we enter the market. But the US is a much more competitive market. There are greater brands on offer in that market as well. The cost of acquiring is potentially greater. So it's a more brutal environment. Not to say the UK isn't. It's also we have some big players with big budgets that we're going after as well.

14:48but what we see is that is the next transition in terms of the next biggest opportunity in the world's biggest pet market to sort of grow in that region but having said that we don't need that to make Omni work because there is a huge opportunity here so 70 % of everything is going to be focused on the UK market and the growth that remains a priority and you said how it's

15:12Amardeep Parmar:like DTC at the moment right yeah and it's something which is interesting for like especially of early stage founders where a lot of them often focus on getting into Selfridges or getting to Harrods and then when they introduce themselves, like, oh, we're listed in Selfridges. They don't necessarily say how many units they're listed in Selfridges, right? And did you kind of explore going into pet shops and other places too? Or have you been very always focused on DTC? Have you done any experiments? At the very early stages, we considered everything in terms of, okay, hey, do we go retail? Do we go DCC?

15:43I think DCC opens up so many opportunities for new brands, really in terms just getting your product out there, testing, learning, getting that customer feedback, and then iterating. And in a way, that environment is a lot more forgiving than retail. Like if you could win a Tesco deal, but if you mess up, like and you're off the shelf, it's very hard to get back on there. And then like you have such a big exposure. As an early stage company, you are still learning at that very early stages of the product, the packaging, the design, the positioning of your product, like how it's related to the consumer.

16:16Retail is not as forgiving of an environment as D2C is, where you can, one month you can test something, if it's not working out, you can, the feedback loop is so quick, that you can iterate your positioning and your way of reaching the consumer so fast. So with this sort of voyage of data, we're now in a good position to say, okay, we know everything we need to know about our consumer and what works and what doesn't work. And we've sort of positioned the product in the right way as well. We're now ready to go into retail. I wouldn't say we were ready even like a year ago, because so much has changed even in that time in our understanding of our consumer and what they want to see from us as well.

16:54So that's why I think, sure, it's great to get one of those listings. But again, the volume is not going to be there massively in one of those. It's prestige, which is great. But at the end of the day, I would always recommend starting D2C and then building out the retail side. But it works well for a product with repeat purchase dynamics like pet food, where you get a customer and they come back to you month after month for a product. When you're just selling one time, it's hard because cost of acquiring customers is getting more and more expensive. So you have to think about whether your business model actually does make sense for D2C as well.

17:33Amardeep Parmar:You said about how your view of consumers has changed over the last year or so. How has that changed? What's evolved? Well, it's more that we just understand our consumer better. We get more and more data. We've expanded our product portfolio as well. And we can now have a wealth of data to understand what works, what doesn't work. We have better understanding of which products people continue to make multiple repurchases of. And so that gives us data on the lifetime value of those consumers. And then we also learn products that don't work as well. There are some products that just don't work and we've tried putting budget behind it.

18:07It doesn't work. And so it's just listening to that feedback and also just understanding sort of how the consumer wants us to communicate what matters to them in the hierarchy of communication. Like we are free of animal ingredients. We always have been. But it's just the hierarchy of what's important to the consumer. The consumer cares about health messaging. They care about the fact that it's allergy friendly. And of course, they also care about the environment. but like there's a hierarchy of working that out and maybe in the early stages what we thought is not where we landed today so hello hello i hope you're enjoying the show so far i'm amadeep palmer co-founder of bay hq and the host of this show for those of you don't know bay hq is the community

18:52Amardeep Parmar:for high growth asian heritage founders and investors in the uk over 7 500 people have attended our events. 200 people have been for our impact programs and obviously there's been over 250 episodes of this podcast. If you want to join us and take part in the programs and come to the events go to bayhq.com forward slash join. We also just released our first ever book called Startups for Outsiders which you can get on Amazon now and the link is in the bio. Hope to see you soon at our event. Hope you enjoy the rest of the episode. And on the adaption side as well so obviously you've changed the messaging a bit as you've worked out the customer better is anything else you've thought about in the early days where like now over time you just realized you weren't really on the right track you've had to kind of pivot and change and like adapt to that as well any missteps oh loads of mistakes for sure you make loads of mistakes on everything like from silly little mistakes to like sometimes expensive mistakes on like stock and order volumes and things like that, partnerships that you work with.

19:57I would say the learning, though, has been just on team, really, in terms of sort of hiring the right people. It's always really difficult to get the right talent into the business and sort of keeping that talent and sort of making sure their mission aligned and evaluating that. It's a really tough balancing act. And it's something that I didn't appreciate how difficult it would be. I guess having always been an employee when he works in banking, whatever, You're just saying, well, I'm doing a great job. I don't see what the issue is. But when you're in that different position of thinking about, because that is, as the business grows, becomes one of your key roles to hire the right people in the right places.

20:37I think for me, the product stage, the customer testing stage was a lot more, well, I wouldn't say it's easier, but it's just a lot more suited to my skill set. And now it's a learning in terms of managing the team and sort of thinking about what is the right people for the right roles. That's been new.

20:55Amardeep Parmar:How big is the team now? We're about 15 people now. Yeah. And like with those people as well, like what do you think is like the kind of common traits or what you're really looking for to hire? Maybe that's changed over time that you really index on more now. Yeah, I think the learning has been like hiring good people to do a good job is just really hard. And, um, I think sort of you under, at the early stages, you can get away a lot with agency support and sort of outsourcing a lot of your needs. But as you think about bringing things in-house and building that core team around you, um, especially as the demands grow, like at the early stages, things are a bit more forgiving in terms of things that can work or not work.

21:39But as they become, as you build a brand and a reputation, now the standard is getting higher and higher and higher. And so the people that are building this need to be at the top of their game. So balancing that has been a bit more difficult than at the early stages. We just get an agency to do this and we just figure it out. And if it doesn't work out, we can change it. You can't be that nimble anymore. You have so many products. You have so many things that if you don't get right, it's very, very costly.

22:05Amardeep Parmar:So that's where it gets difficult. So we mentioned about fundraising as part of your role, managing the team and getting the right people involved. what like aspects of your job or like where you are today do you enjoy the most like what's the bits that you look forward to that's a good question i think it still sits in the more the like what i find fascinating about building a consumer brand in the way that we're building it is that you have the creative side of marketing and brand but connecting that to the data and then understanding consumer behavior and actually being quite predictive in what marketing messaging you're going to put out what creative you're going to put out and then tying that back in a very numerical way that i kind of geek out on that that's that's fun and exciting uh bringing those two worlds together um so i think that that's the part that i find most enjoyable and on that marketing side is that something which you knew about before you started omnipeg or you had to kind of teach yourself along the way i knew nothing about marketing absolutely nothing it's just i just wasn't i just was fascinated by the concept of dc businesses i was when i was working I mean, I was seeing these businesses sort of being sold, all that sort of stuff.

23:14So I thought, like, you know, give it a go. Like, you can't know everything when you start, right? You learn, you teach yourself, whatever. But the biggest lesson has been just doing it and, like, things not working out and then sort of learning as you go along. But also just having, I mean, even my co-founder, he's a veterinarian, but now he's, like, an absolute marketing expert. So it's one of those things where you can learn, but learning by doing is the best thing.

23:40Amardeep Parmar:When you were like hiring the first members of the team as well, what was the thing that you needed the most at the beginning where you felt like with you and your co-founder, you were missing the most and you needed to hire somebody to send it to help for that? One of our early hires was on the brand side of things. That's because neither of us are graphic designers or anything like that. So we have ideas. He does the science side of things. I can do sort of the number side of things. But yet we couldn't do much of the creative. So we outsourced it and then we brought it in-house. But then, so we built out operational support because you don't want to spend too much time on that, especially when you're fundraising.

24:13And then we built in sort of a head of growth to look after sort of the day to day growth functions and then sort of built from there onwards. But even sort of like unique to Omni, we built out sort of our veterinary functions as well to offer that sort of ongoing veterinary support. Again, that that was a test. That was a very small test. We say, okay, if we do this, will customers stick with us longer? And then we sort of look back at the data and you can see that, okay, anytime somebody has a consultation with our veterinarians, they're staying much longer, they're spending more money, they're buying more products here as well.