Pets.com
Encyclopedia
Pets.com is a former dot-com enterprise
that sold pet supplies to retail customers. It began operations in February 1999 and closed in November 2000. A high profile marketing campaign gave it a widely recognized public presence, including an appearance in the 1999 Macy's Thanksgiving Day Parade
and an advertisement in the 2000 Super Bowl
. Its popular sock puppet
advertising mascot was interviewed by People
magazine and appeared on Good Morning America
.
Although sales rose dramatically due to the attention, the company was weak on fundamentals and actually lost money on most of its sales. Its high public profile during its brief existence made it one of the more noteworthy failures of the dot-com bubble
of the early 2000s. US$300 million of investment capital vanished with the company's failure. The company was headquartered in San Francisco
, California
, U.S.
business that sold pet accessories and supplies direct to consumers over the World Wide Web
. It launched in August 1998 and went from an IPO on a major stock exchange (the Nasdaq
) to liquidation in 268 days. Other similar business-to-consumer companies from the same period include Webvan
(groceries) and Boo.com
(branded fashion apparel).
After its start by Greg McLemore, the site and domain was purchased in early 1999 by leading venture capital
firm Hummer Winblad and executive Julie Wainwright
. Amazon.com
was involved in pets.com's first round of venture funding. Pets.com bought out one online competitor, Petstore.com, in summer 2000.
The company rolled out a regional advertising campaign using a variety of media (TV, print, radio and eventually a Pets.com magazine). It started with a five-city advertising campaign rollout and then expanded the campaign to 10 cities by Christmas, 1999. The company succeeded wildly in making its mascot, the Pets.com sock puppet, well known. The Pets.com site design was extremely well received, garnering several advertising awards. In January 2000, the company aired its first national commercial as a Super Bowl
ad which cost the company $1.2 million and introduced the country to their answer as to why customers should shop at an online pet store: "Because Pets Can't Drive!" That ad was ranked #1 by USA Today
s Ad Meter and had the highest recall of any ad that ran during the Super Bowl. The company went public in February 2000; the former Nasdaq stock symbol was IPET. It was the last dot-com to go public before the bubble burst.
Pets.com did make significant investments in infrastructure such as their warehousing. Pets.com management maintained that the company needed to get to a revenue run rate that supported this infrastructure buildout. They believed that the revenue target was close to $300 million to hit the break even point and that it would take a minimum of 4 to 5 years to hit that run rate. This time period was based on growth of Internet shopping and the percentage of pet owners that shopped on the Internet.
Despite its success in building brand recognition, it was uncertain whether a substantial market niche existed for Pets.com. No independent market research preceded the launch of Pets.com. During its first fiscal year (February to September 1999) Pets.com earned revenues of $619,000, yet spent $11.8 million on advertising. Pets.com lacked a workable business plan and lost money on nearly every sale because, even before the cost of advertising, it was selling merchandise for approximately one-third the price it paid to obtain the products. Pets.com tried to build a customer base by offering discounts and free shipping, but it was impossible to turn a profit while absorbing the costs of shipping for heavy bags of cat litter and cans of pet food within a business field whose conventional profit margins are only two to four percent. The company hoped to shift customers into higher margin purchases, but customer purchasing patterns failed to change and during its second fiscal year the company continued to sell merchandise for approximately 27% less than cost, so the dramatic rise in sales during Pets.com's second fiscal year only hastened the firm's demise.
By fall of 2000, and in light of the venture capital situation after the bursting of the dot-com bubble, the Pets.com management and board realized that they would not be able to raise further capital. They aggressively undertook actions to sell the company. PetSmart
offered less than the net cash value of the company, and Pets.com's board turned down that offer. The company announced they were closing their doors on the afternoon of November 6, 2000, mere hours before the 2000 United States presidential election. Pets.com stock had fallen from over $11 per share in February 2000 to $0.19 the day of its liquidation announcement. At its peak, the company had 320 employees, of which 250 were employed in the warehouses across the U.S. While the offer from PetSmart was declined, some assets, including its domain
, were sold to PetSmart.
The Pets.com management stayed on to provide an orderly wind down of operations and liquidation of assets. During this period, CEO Julie Wainwright received $235,000 in severance on top of a $225,000 "retention payment" while overseeing the closure. In June 2008, CNET named Pets.com as one of the greatest dotcom disasters in history.
Pets.com hired the San Francisco
office of TBWA\Chiat\Day to design its advertising campaign. The firm had recently created the popular Taco Bell chihuahua
. For Pets.com they designed a doglike sock puppet that carried a microphone in its paw. The puppet, performed by Michael Ian Black
(an alumnus of MTV
's surrealist comedy sketch show The State
), was a simple sock puppet
with button eyes, flailing arms and a stick microphone emblazoned with 'pets.com'.
As the puppet's fame grew through 1999 and 2000, it gained almost cult status
and widespread popularity. The puppet made an appearance on ABC's Good Morning America
, Nightline, Live with Regis and Kathie Lee, and even had a balloon made in its image for the 1999 Macy's Thanksgiving Day Parade
. In addition to the media appearances the Pets.com puppet made, merchandising was also done for the company including clothing, other trinkets, and a retail version of the sock puppet that delivered some of the puppet's famous lines.
As Pets.com's recognition began to grow, it attracted the attention of the creator of Triumph, the Insult Comic Dog
. Representatives from Robert Smigel
sent letters, including a cease and desist
demand, to Pets.com claiming that the puppet was based on Triumph. Pets.com responded by suing Smigel in California.
The publicity surrounding the Pets.com puppet, combined with the company's collapse, made it such a symbol of dot-com folly that E*TRADE referred to it in an advertisement during the 2001 Super Bowl. The commercial, which parodies the famous Crying Indian public service advertisement
from 1971, shows a chimpanzee riding on horseback through a ruined dot-com landscape. The chimpanzee comes across a company named "eSocks.com" that is being demolished and weeps when a discarded sock puppet lands at his feet.
After the company folded, Hakan and Associates and Bar None, Inc.
purchased the rights to the puppet under a joint venture called Sock Puppet LLC for $125,000. Bar None, Inc. an American automotive loan firm rebranded the microphone to say 1-800-BAR-NONE and gave the puppet a new slogan: "Everybody deserves a second chance." Bar None shot multiple commercials with the sock puppet.
Dot-com company
A dot-com company, or simply a dot-com , is a company that does most of its business on the Internet, usually through a website that uses the popular top-level domain, ".com" .While the term can refer to present-day companies, it is also used specifically to refer to companies with...
that sold pet supplies to retail customers. It began operations in February 1999 and closed in November 2000. A high profile marketing campaign gave it a widely recognized public presence, including an appearance in the 1999 Macy's Thanksgiving Day Parade
Macy's Thanksgiving Day Parade
The Macy's Thanksgiving Day Parade, often shortened to Macy's Day Parade, is an annual parade presented by Macy's. The tradition started in 1924, tying it for the second-oldest Thanksgiving parade in the United States along with America's Thanksgiving Parade in Detroit, and four years younger than...
and an advertisement in the 2000 Super Bowl
Super Bowl
The Super Bowl is the championship game of the National Football League , the highest level of professional American football in the United States, culminating a season that begins in the late summer of the previous calendar year. The Super Bowl uses Roman numerals to identify each game, rather...
. Its popular sock puppet
Sock puppet
A sock puppet is a puppet made from a sock or similar garment. When the manipulator fits a hand into the closed end of the sock, the puppet can be seemingly made to "talk". The puppet's mouth is formed by the region between the sock's heel and toe, with the puppeteer's thumb forming a jaw...
advertising mascot was interviewed by People
People (magazine)
In 1998, the magazine introduced a version targeted at teens called Teen People. However, on July 27, 2006, the company announced it would shut down publication of Teen People immediately. The last issue to be released was scheduled for September 2006. Subscribers to this magazine received...
magazine and appeared on Good Morning America
Good Morning America
Good Morning America is an American morning news and talk show that is broadcast on the ABC television network; it debuted on November 3, 1975. The weekday program airs for two hours; a third hour aired between 2007 and 2008 exclusively on ABC News Now...
.
Although sales rose dramatically due to the attention, the company was weak on fundamentals and actually lost money on most of its sales. Its high public profile during its brief existence made it one of the more noteworthy failures of the dot-com bubble
Dot-com bubble
The dot-com bubble was a speculative bubble covering roughly 1995–2000 during which stock markets in industrialized nations saw their equity value rise rapidly from growth in the more...
of the early 2000s. US$300 million of investment capital vanished with the company's failure. The company was headquartered in San Francisco
San Francisco, California
San Francisco , officially the City and County of San Francisco, is the financial, cultural, and transportation center of the San Francisco Bay Area, a region of 7.15 million people which includes San Jose and Oakland...
, California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
, U.S.
History
Pets.com was a short-lived onlineONLINE
ONLINE is a magazine for information systems first published in 1977. The publisher Online, Inc. was founded the year before. In May 2002, Information Today, Inc. acquired the assets of Online Inc....
business that sold pet accessories and supplies direct to consumers over the World Wide Web
World Wide Web
The World Wide Web is a system of interlinked hypertext documents accessed via the Internet...
. It launched in August 1998 and went from an IPO on a major stock exchange (the Nasdaq
NASDAQ
The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...
) to liquidation in 268 days. Other similar business-to-consumer companies from the same period include Webvan
Webvan
Webvan was an online "credit and delivery" grocery business that went bankrupt in 2001. It was headquartered in Foster City, California, USA, near Silicon Valley. It delivered products to customers' homes within a 30-minute window of their choosing. At its peak, it offered service in ten U.S...
(groceries) and Boo.com
Boo.com
Boo.com was a British Internet company, founded by Swedes Ernst Malmsten, Kajsa Leander and Patrik Hedelin, which went bust following the dot-com boom of the late 1990s....
(branded fashion apparel).
After its start by Greg McLemore, the site and domain was purchased in early 1999 by leading venture capital
Venture capital
Venture capital is financial capital provided to early-stage, high-potential, high risk, growth startup companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as...
firm Hummer Winblad and executive Julie Wainwright
Julie Wainwright
Julie Wainwright is the former CEO of the now-defunct Pets.com and current CEO of SmartNow, a wellness website aimed at women over 35. Wainwright was named "one of the 50 Most Influential Business women in the Bay Area by San Francisco Business Times, and was one of Microtimes' Top 100 Technology...
. Amazon.com
Amazon.com
Amazon.com, Inc. is a multinational electronic commerce company headquartered in Seattle, Washington, United States. It is the world's largest online retailer. Amazon has separate websites for the following countries: United States, Canada, United Kingdom, Germany, France, Italy, Spain, Japan, and...
was involved in pets.com's first round of venture funding. Pets.com bought out one online competitor, Petstore.com, in summer 2000.
The company rolled out a regional advertising campaign using a variety of media (TV, print, radio and eventually a Pets.com magazine). It started with a five-city advertising campaign rollout and then expanded the campaign to 10 cities by Christmas, 1999. The company succeeded wildly in making its mascot, the Pets.com sock puppet, well known. The Pets.com site design was extremely well received, garnering several advertising awards. In January 2000, the company aired its first national commercial as a Super Bowl
Super Bowl
The Super Bowl is the championship game of the National Football League , the highest level of professional American football in the United States, culminating a season that begins in the late summer of the previous calendar year. The Super Bowl uses Roman numerals to identify each game, rather...
ad which cost the company $1.2 million and introduced the country to their answer as to why customers should shop at an online pet store: "Because Pets Can't Drive!" That ad was ranked #1 by USA Today
USA Today
USA Today is a national American daily newspaper published by the Gannett Company. It was founded by Al Neuharth. The newspaper vies with The Wall Street Journal for the position of having the widest circulation of any newspaper in the United States, something it previously held since 2003...
s Ad Meter and had the highest recall of any ad that ran during the Super Bowl. The company went public in February 2000; the former Nasdaq stock symbol was IPET. It was the last dot-com to go public before the bubble burst.
Pets.com did make significant investments in infrastructure such as their warehousing. Pets.com management maintained that the company needed to get to a revenue run rate that supported this infrastructure buildout. They believed that the revenue target was close to $300 million to hit the break even point and that it would take a minimum of 4 to 5 years to hit that run rate. This time period was based on growth of Internet shopping and the percentage of pet owners that shopped on the Internet.
Despite its success in building brand recognition, it was uncertain whether a substantial market niche existed for Pets.com. No independent market research preceded the launch of Pets.com. During its first fiscal year (February to September 1999) Pets.com earned revenues of $619,000, yet spent $11.8 million on advertising. Pets.com lacked a workable business plan and lost money on nearly every sale because, even before the cost of advertising, it was selling merchandise for approximately one-third the price it paid to obtain the products. Pets.com tried to build a customer base by offering discounts and free shipping, but it was impossible to turn a profit while absorbing the costs of shipping for heavy bags of cat litter and cans of pet food within a business field whose conventional profit margins are only two to four percent. The company hoped to shift customers into higher margin purchases, but customer purchasing patterns failed to change and during its second fiscal year the company continued to sell merchandise for approximately 27% less than cost, so the dramatic rise in sales during Pets.com's second fiscal year only hastened the firm's demise.
By fall of 2000, and in light of the venture capital situation after the bursting of the dot-com bubble, the Pets.com management and board realized that they would not be able to raise further capital. They aggressively undertook actions to sell the company. PetSmart
PetSmart
PetSmart, Inc. is a retail chain doing business in the United States and Canada engaged in the sale of specialty pet supplies and services such as grooming and dog training, PetSmart PetsHotel dog and cat boarding facilities and Doggie Day Care.- History :...
offered less than the net cash value of the company, and Pets.com's board turned down that offer. The company announced they were closing their doors on the afternoon of November 6, 2000, mere hours before the 2000 United States presidential election. Pets.com stock had fallen from over $11 per share in February 2000 to $0.19 the day of its liquidation announcement. At its peak, the company had 320 employees, of which 250 were employed in the warehouses across the U.S. While the offer from PetSmart was declined, some assets, including its domain
Domain name
A domain name is an identification string that defines a realm of administrative autonomy, authority, or control in the Internet. Domain names are formed by the rules and procedures of the Domain Name System ....
, were sold to PetSmart.
The Pets.com management stayed on to provide an orderly wind down of operations and liquidation of assets. During this period, CEO Julie Wainwright received $235,000 in severance on top of a $225,000 "retention payment" while overseeing the closure. In June 2008, CNET named Pets.com as one of the greatest dotcom disasters in history.
The Pets.com sock puppet
San Francisco, California
San Francisco , officially the City and County of San Francisco, is the financial, cultural, and transportation center of the San Francisco Bay Area, a region of 7.15 million people which includes San Jose and Oakland...
office of TBWA\Chiat\Day to design its advertising campaign. The firm had recently created the popular Taco Bell chihuahua
Taco Bell chihuahua
Gidget "The Taco Bell chihuahua" Chipperton was a popular advertising figure and mascot, voiced by Carlos Alazraqui, and developed by TBWA and used by Taco Bell, a division of Louisville, Kentucky -based Yum! Brands. The Chihuahua is a breed commonly associated with Mexico, as are the tacos the...
. For Pets.com they designed a doglike sock puppet that carried a microphone in its paw. The puppet, performed by Michael Ian Black
Michael Ian Black
Michael Ian Black is an American comedian, actor, writer and director. He has starred in several TV comedy series, including The State, Ed, Viva Variety, Stella and Michael & Michael Have Issues. He is also a prominent poker player, appearing on Celebrity Poker Showdown several times...
(an alumnus of MTV
MTV
MTV, formerly an initialism of Music Television, is an American network based in New York City that launched on August 1, 1981. The original purpose of the channel was to play music videos guided by on-air hosts known as VJs....
's surrealist comedy sketch show The State
The State (TV series)
The State is a half-hour sketch-comedy television show, originally broadcast on MTV between December 17, 1993 and July 1, 1995. The show combined bizarre characters and scenarios to present sketches that won the favor of its target teenaged audience...
), was a simple sock puppet
Sock puppet
A sock puppet is a puppet made from a sock or similar garment. When the manipulator fits a hand into the closed end of the sock, the puppet can be seemingly made to "talk". The puppet's mouth is formed by the region between the sock's heel and toe, with the puppeteer's thumb forming a jaw...
with button eyes, flailing arms and a stick microphone emblazoned with 'pets.com'.
As the puppet's fame grew through 1999 and 2000, it gained almost cult status
Cult following
A cult following is a group of fans who are highly dedicated to a specific area of pop culture. A film, book, band, or video game, among other things, will be said to have a cult following when it has a small but very passionate fan base...
and widespread popularity. The puppet made an appearance on ABC's Good Morning America
Good Morning America
Good Morning America is an American morning news and talk show that is broadcast on the ABC television network; it debuted on November 3, 1975. The weekday program airs for two hours; a third hour aired between 2007 and 2008 exclusively on ABC News Now...
, Nightline, Live with Regis and Kathie Lee, and even had a balloon made in its image for the 1999 Macy's Thanksgiving Day Parade
Macy's Thanksgiving Day Parade
The Macy's Thanksgiving Day Parade, often shortened to Macy's Day Parade, is an annual parade presented by Macy's. The tradition started in 1924, tying it for the second-oldest Thanksgiving parade in the United States along with America's Thanksgiving Parade in Detroit, and four years younger than...
. In addition to the media appearances the Pets.com puppet made, merchandising was also done for the company including clothing, other trinkets, and a retail version of the sock puppet that delivered some of the puppet's famous lines.
As Pets.com's recognition began to grow, it attracted the attention of the creator of Triumph, the Insult Comic Dog
Triumph, the Insult Comic Dog
Triumph, the Insult Comic Dog is a character puppet best known for mocking celebrities. Triumph was identified in the early appearances as a Yugoslavian Mountain Hound, hence his distinct Eastern European accent . As his name indicates, Triumph's comedic style is almost exclusively insult comedy...
. Representatives from Robert Smigel
Robert Smigel
Robert Smigel is an American actor, humorist, comedian and writer known for his Saturday Night Live "TV Funhouse" cartoon shorts and as the puppeteer and voice behind Triumph, the Insult Comic Dog.-Early life:...
sent letters, including a cease and desist
Cease and desist
A cease and desist is an order or request to halt an activity and not to take it up again later or else face legal action. The recipient of the cease-and-desist may be an individual or an organization....
demand, to Pets.com claiming that the puppet was based on Triumph. Pets.com responded by suing Smigel in California.
The publicity surrounding the Pets.com puppet, combined with the company's collapse, made it such a symbol of dot-com folly that E*TRADE referred to it in an advertisement during the 2001 Super Bowl. The commercial, which parodies the famous Crying Indian public service advertisement
Keep America Beautiful
Keep America Beautiful is a U.S. based nonprofit organization founded in 1953. It is the largest community improvement organization in the United States, with approximately 589 affiliate organizations and more than 1,000 community organizations that participate in their programs.Keep America...
from 1971, shows a chimpanzee riding on horseback through a ruined dot-com landscape. The chimpanzee comes across a company named "eSocks.com" that is being demolished and weeps when a discarded sock puppet lands at his feet.
After the company folded, Hakan and Associates and Bar None, Inc.
BarNone
BarNone is a lead generation company based in Oakland, California. BarNone was founded in 1995 and was later purchased by the First Advantage Corporation in 2005 for their Dealer Services segment. They were later sold to Centrro, Inc. in August 2009.BarNone connects consumers seeking an auto loan...
purchased the rights to the puppet under a joint venture called Sock Puppet LLC for $125,000. Bar None, Inc. an American automotive loan firm rebranded the microphone to say 1-800-BAR-NONE and gave the puppet a new slogan: "Everybody deserves a second chance." Bar None shot multiple commercials with the sock puppet.
External links
- Pets.com (domain now owned by PetSmartPetSmartPetSmart, Inc. is a retail chain doing business in the United States and Canada engaged in the sale of specialty pet supplies and services such as grooming and dog training, PetSmart PetsHotel dog and cat boarding facilities and Doggie Day Care.- History :...
) - 1-800-BAR-NONE website which currently owns the puppet's rights
- Pets.com, Sock Puppet's Home, Will Close - New York Times article
- Internet Retailer
- Epinions
- Infoworld