Originally Published on Forbes.com
By Ben Lee Sep 19, 2019
There’s a major boom in tech product innovation right now. But it’s happening where you’d least expect it: pets.
The pet industry has seen an explosion of growth in recent years. Data from market research firm Edge by Ascential shows that sales exceeded $225 billion in 2018 in North America alone, with that number expected to rise to $281 billion by 2023.
So, what’s driving all this pet fever? Every headline’s favorite demographic: millennials.
Millennials are now the largest consumer group in the world, and many studies show that they’re getting married and having children much later than previous generations. Instead of starting human families, many choose to adopt pets. Millennials and Gen Zers now account for 62% of all pet owners, with only 32% of pets owned by older generations. And with younger generations treating their pets like a “firstborn child,” they’re causing a huge shift in pet industry consumer preferences.
Silicon Valley’s Newest Pet Project
Millennials grew up online, so it makes sense that they prefer digital solutions when it comes to caring for their pets. Add to that the fact that millennials are willing to spend more on their pets than older generations, and suddenly we have a flood of new and future revenue into the global pet industry — and Silicon Valley is taking notice.
Pet tech startups received more than $500 million in new investments last year, and this funding boom is enabling startups to integrate technology into pet care products in innovative new ways.
Much of the money is going to companies taking relatively familiar solutions and applying them to the pet space. Wag, the app often described as “Uber for dog walkers,” currently has more than $360 million in funding, while competitor Rover has raised $310 millionand acquired two other startups.
Other startups are using internet of things (IoT) technology to build “smart” pet products that digitize the process of caring for a pet. Some are simple: Obe, which has garnered $1.3 million in seed funding, makes a smart food bowl that uses a built-in scale to prevent overfeeding. Others are more robust, with companies like CleverPet building an automated dog “game console,” providing a source of both entertainment and cognitive stimulation while owners are away.
Others have an even grander vision. BabelBark, currently with $8.6 million in funding, is working to build a platform that brings every aspect of pet care into one cloud-based terminal. They’ve built a four-sided platform with distinct interfaces for pet owners, veterinarians, pet businesses and pet shelters. All four products integrate on the back end, providing a server-based, IoT-enabled platform that allows everyone involved in caring for a pet to work collaboratively off the same pet profile. Crucially, the platform is designed to integrate with IoT devices, which means veterinarians could track feeding schedules from a smart food bowl, while owners could see vet recommendations, and pet business owners could customize their offerings based on individual pet or owner preferences.
Seeing The Bigger Picture
With revenue and investment pouring into the space, we’re sure to see a lot of growth and innovation in pet care technology in the years to come. But for entrepreneurs and technologists, the most important thing about the pet industry is what it can tell us about the future of the internet of things.
IoT technology is still in its nascent stages. But the flurry of activity in the pet tech sector offers a sneak peek of what we can expect as the broader internet of things develops.
Similar to what we’re seeing in pet tech, one thing we can expect a lot of is familiar products given an IoT facelift. The smart pet food bowl is a good example, and there are already parallels, such as smartphone-controlled lights or refrigerators that are rumored to be able to post on Twitter. But as the pet industry demonstrates, we can expect this trend to exaggerate as the tech becomes cheaper and easier to integrate. Whether it’s your keys, your wallet or your water bottle, chances are it’ll connect to the internet at some point down the line.
These products will all produce data and provide an opportunity for user control. But crucially, they’re all disparate: They may connect to the network, but they can’t be controlled or monitored all in one place — at least not at first.
In the pet industry, companies like BabelBark are attempting to build the next logical step for the internet of things: a single, centralized platform that allows users to monitor and control all those disparate data streams and devices in a way that’s cohesive and comprehensible. BabelBark’s platform makes loose data from different devices actionable by bringing it into one interface and making it easy to read and control.
I expect we’ll see this same process emerge in the broader IoT space. First, consumers will have many disparate “smart” devices that they use and control individually. But eventually, new startups will build platforms intended to bring all those smart devices into a single interface: every object you own, all controlled from your smartphone.
This, to me, is one of the most exciting things about IoT on the software side, and it’ll also likely generate the most vicious competition for market share. There’s a natural network effect to this, so we can expect it to be close to a winner-take-all market.
Google, Amazon and Apple are all obvious contenders to take this crown, and Apple’s HomeKit already serves as an early attempt. But we’re very early on in the story of IoT, and it’s still anyone’s game.
For entrepreneurs sizing up the IoT space for opportunities, there are many to be had in building innovative new smart devices. But the biggest opportunity may be in bringing those devices together under one platform — and the rewards for doing that successfully will be massive.