The dogs are eating the dog food
“Will the dogs eat the dog food?” It’s the favorite way for investors to ask whether a product has legs. It’s crude–but the question does the job. On that very theme, a job candidate recently asked me, “How did you know Grommet would work?” She was kind of amazed that we could see the opportunity for this business over seven years ago.
It was a great question.
Let’s start with the basics. Supply. And demand.
In 2008 we had to first worry about having a sufficient pipeline of worthy products to launch. Thankfully, the supply side of Grommet was pretty obvious: big technology trends were making it vastly easier to create a product. We were sure there was going to be an explosion of indie products that needed an efficient, modern way to get their stories out. Check.
But the demand side…that was a nerve-wracking black box. We had to read the cultural zeitgeist. Not easy–this takes instinct and experience. To this day it is still hard to quantify the true depth of demand for “buying differently.” In seven years I have only found three statistical “markers” of the broader flight to smaller, trusted product and food sources:
- Farmers Markets grew 76% between 2008 and 2014 (source)
- Independent bookstores grew 27% since 2009 (source)
- Organic food sales are up 72% since 2008 (source)
While these stats were not obvious in 2008, as founders, Joanne and I could feel them developing. For an investor, our “feelings” were not bankable. They like to see the dogs eat the dog food. But for an entrepreneur, if you wait until a consumer trend is obvious, and the dogs are devouring the dog food, you are way too late.
Now we apparently seem like geniuses to a job candidate. If being a genius means chronic insomnia, the description fits.
WSJ illustration by Bill Mayer
But even now, I’m always on alert for statistical evidence of these large consumer trends fueling Grommet. Why? I just like numbers.
Thus it was so satisfying to see growing consumer demand for “small/authentic” products verified in the Wall Street Journal today. The headline: The Stories Behind the Food We Eat. The skinny? Large companies are rapidly embracing more storytelling and transparency for economic–not altruistic–reasons: “It is a bid to fend off further competitive incursions from upstart brands that are winning shoppers with less-processed, simpler fare. The top 10 branded food-manufacturing companies collectively shed 4.3 percentage points of market share in the past five years, largely to small and midsize rivals.”
Of course, I really don’t really have to leave The Grommet office to find encouraging numbers these days. I just look at the sales growth of our Grommets. Those are the best numbers of all.
One Response to “The dogs are eating the dog food”
I have the same struggles in Panama, however the strong dollar has greatly affected the tourist marketplace. This has caused me to go beyond the original scope of our business plan and develop a local Expat market in addition to the tourist market.