Web 2.0 companies profitable when it will rain cats and dogs ? The Dogster Case

Disclosure: On September 14th 2006, I announced my participation to the Series A financing of Dogster. I wrote this post a long time (September 2005) before engaging the company on an investment.

Just got a note from Ted “Top Dog” Rheingold announcing that Dogster Inc. had turned its first month of positive cashflows. This is great news for several reasons, the first being that Ted is a really cool dude and it is great news that this company that started as a mockery of other social network services is actually turning into a money making business.

On his blog, Ted shares a few insights:

Yes, you read that right, Dogster & Catster are profitable. August exenses included three full-time salaries, roughly 80 hours of contractual services, 7 rented servers, our Potrero Hill office, a party and a bunch of they-sure-do-add-up-don’t-they expenses. However, we offset that and then some thanks to higher than expected revenues for site sponsorship, CPM advertisers, boutique advertisers, bulk advertising, paid user subscriptions as well as our revenue from store sales and pet-friendly travel bookings. The fact that Nintendo and ASPCA just committed to sponsor-level support and others are in final negotaition really helps me feel that it’s no longer crazy to think it’s so crazy it just might work.

The business behind Dogster/Catster is also a great example of a ”long tail”/Web 2.0 company: minimal self funded startup costs, focus on a specific community/demographics, value created to the user base through a clever combination of services driving repeat visits and premium subscription, viral growth, advertising/affiliate marketing revenues and eventually (hopefully juicy) sponsorships.

Ted and his colleagues have proven that they have a working model, the question is how and where will it scale most easily, knowing that the dogs/cats owners market is potentially *massive*. But that is for chapter Two of “The Dogster Case”.

In the meantime, Congratulations Ted .

PS: The etymology of “raining cats and dog” can be found here.

Comments

[Roy T]

I suppose there is an audience for everything, and there are many dog and cat lovers out there, so Dogster is wise. In the end it just goes down to marketing it as the best and premiere dog/cat lovers site that will get the majority of people to love it, even those who don't use internet for special interests.

Very cool.