DogVacay: Building a Network of Dog Sitters
DogVacay's multi-sided platform connects dog owners and sitters, and eliminates the need for expensive and unnatural kennels.
Some dogs get sad when their owner leaves.
Others don’t get sad, they get mad.
DogVacay is here to fix both issues. DogVacay is an online community for dog boarding that facilitates the connection between “Hosts” (dog sitters) and “Guests” (dog owners). Hosts join the platform for free and create a profile with information about the services provided (day care or multi-day), physical location, and experience sitting for dogs. Hosts also set their own rates, schedule, and types of dogs to accepts. After a “rigorous approval process” Hosts can join the community and DogVacay “spends money marketing to customers…so they can find your profile.”
Value Creation: For guests looking for day care or overnight sitting, DogVacay creates a seamless connection to local hosts willing to care for their dog(s). Dog daycare typically costs roughly $45 a day in many metropolitan areas, whereas the average daycare charge on DogVacay is $20, according to CEO Aaron Hirschhorn. Hosts receive value in the form of monetary payment for their services. DogVacay also provides secure payment capabilities (via PayPal), 24/7 customer support, and $2 million comprehensive pet insurance covering the Guest pet and any Host pets.
Value Capture: DogVacay takes a 15% service fee from the total amount charged by the Host, and then forwards the balance of the payment to the Host 24 hours after the Guest picks up his/her dog. There is no 3rd party advertising on DogVacay’s website, iOS app, or Android app.
Network Effects: DogVacay’s platform exhibits indirect network effects in that an increase in Hosts leads to an increase in guests. Providing both sets of users a variety of choices helps deliver the value creation. However, as currently constructed, the strength of the network effects appears limited. Unlike with Uber and Lyft, which riders can use in any city they travel to, most dog owners (typically) only require a sitter in their home city/neighborhood. As such, once the number of Hosts in a given area reach saturation, there is limited value to Guests for each incremental Host. DogVacay has also chosen to limit the number of Hosts in order to provide Guests with a sense of security and quality. The company has received over 130,000 Host applications throughout the U.S. and Canada, and accepted only 20,000.
Interestingly, many Hosts are also Guests, which limits the overall size of total users that join the platform.
Switching Costs: Guests and Hosts are rated (5 star scale) and reviewed after each transaction, which builds in switching costs. However, since it costs neither the Guest nor the Host to post on the site, there is in fact, a low barrier to joining multiple platforms at once. DogVacay’s largest competitor (not including traditional dog daycare and kennels) is Seattle-base Rover, which operates a very similar model.
DogVacay probably wont become the next $1 billion dollar company, but has created an interesting business through a multi-sided platform and direct network effects.
Peer-To-Peer Pet Boarding Marketplace DogVacay Launches Daycare
Student comments on DogVacay: Building a Network of Dog Sitters
As a pet owner, I found this post particularly interesting and relevant. I was initially surprised to read that DogVacay is actually rejecting a large quantity of users who want to join the platform as hosts. This shows that building the largest possible installed user base is not always the end goal for platform-based companies. While this limits the network, it allows for greater quality control, and a stronger product.
What is the level of saturation amongst the dog owners side of the platform? There are an increasing number of pet startups, and with such a low cost to switching, how will this company be able to continue to create and capture value?
The curated hosts model here seems to be viewed by DogVacay as key to their model – though it may run counter to what we’ve learned about scaling up through acquiring large volumes of users on both sides of a platform. DogVacay must believe that guests won’t trust the platform unless there is a rigorous selection process for hosts – and my guess is they’re using that fact to spur adoption from the guest side of the platform, and then using the number of guests to drive host approvals and a target host/guest ratio. In any case, tons of value created by eliminating tons of fixed costs from the dog sitting industry and therefore providing the service at a much lower cost – but I agree with the assessments that the barriers to entry are pretty low here.