Here’s the scoop on how Whisker, maker of the Litter-Robot with $180 million in sales this year, aims to get stinking rich from the business of kitties doing their business.
Eric DosSantos loves his cat, Autumn, but he hates scooping Autumn’s poop.
Like most cat lovers, DosSantos, a Los Angeles media producer, was using the typical plastic litter box with a rake. He found it disgusting. DosSantos decided to do something about it. About five years ago, he shelled out $545 for a self-cleaning box called Litter-Robot 3. He’s since upgraded to the Litter-Robot 4, which has a list price of a whopping $699. He now has both the old robotic litter box and the new one, each in a different area of his home.
“Cat shit is a horror, and the Litter-Robot makes it a little bit better,” he says.
Compared with all the terrible things going on in the world, dealing with cat scat is a minor annoyance. But for the 45.3 million American households with cats, it’s a daily one. And pet owners are big spenders. Pet industry sales reached $124 billion last year, according to the American Pet Products Association.
That spending, combined with the popularity of robotic vacuum cleaners and the acceptance of technology in our homes, has led to a growing business for Whisker, maker of the Litter-Robot, an automated feeder and an expanding list of other products. It’s not the only company designing high-tech litter boxes. Competitors include larger companies like Spectrum Brands (LitterMaid) and Radio Systems (PetSafe), as well as a host of cheaper knockoffs made in China, a perennial problem for most consumer-products companies.
Still, Auburn Hills, Michigan-based Whisker is growing rapidly. Revenue hit $150 million last year, a 20-fold increase from $7.5 million in 2015. It expects to reach $180 million in sales this year, despite glitches with its latest product rollout that angered some customers and forced the company to slow sales. Meanwhile, it’s preparing more tech-enabled pet products for rollout and coming up with ways to use the data its devices generate to flag animals’ health problems early.
“We’ve grown a hardware business the good, old-fashioned way of turning a profit to fuel the business,” says Whisker CEO Jacob Zuppke, 34, who notes that the company has been profitable since 2005. “We didn’t get ahead of ourselves. We didn’t take big bets that risk the company.
Zuppke, a marketer and former consultant to the business, became CEO this year after working with founder and chairman Brad Baxter. Baxter remains the largest individual shareholder with a 43% stake to Zuppke’s 7%; investors led by private equity firm Pondera Holdings own the remaining 50%. In an effort to follow the trajectory of iRobot, the $1.4 billion (market cap) maker of the popular Roomba vacuum cleaner, Whisker brought that company’s former head of R&D, Tim Saeger, onto its board of directors in summer 2021. “I feel like I’ve parachuted into iRobot 15 years ago,” Saeger says. “It’s like I’ve watched this movie before.”
The marketer and the inventor: Whisker CEO Jacob Zuppke (left) and founder Brad Baxter.
Whisker
Back in 1999, Baxter, now 56, was down in his basement cleaning up the mess from two cats he inherited. “I would forget to scoop the box, then I would go to the basement and the cats would be protesting and going outside the box,” he recalls. A tinkerer who’d cut his teeth at Ford and was at the time working as a consultant to automotive companies, Baxter figured he could solve his own problem.
He bought an early self-cleaning box from LitterMaid, but didn’t like how it pushed the clumping litter. “Like a snowpile,” he says. He had the idea of letting the litter pass through a screen to separate the dirty clumps from the clean litter. He ran a patent search, and discovered someone had already come up with the idea. He contacted the inventor, Don Reitz, and the two ultimately signed a licensing deal.
Baxter convinced his dad, Jim Baxter, to invest $35,000 for 35% of the company to help launch the first product. The Litter-Robot is a large enough device that the cat steps inside to do its thing. After sensors detect the cat’s departure, the device rotates, sifting the dirty clumps and depositing them in a waste drawer below.
Like a lot of passion projects, the business, then called AutoPets, began as a financial sinkhole for Baxter. “My wife was questioning the sanity of it after about five years,” he says. He figures he invested more than $350,000 during that time period. “Everybody at the time looked at my product as this ugly elephant because it was so different than anything else out there and it was fairly large compared to the box with the rake in it,” he says.
One reason for the losses was his manufacturing process for the plastics, but the cost to retool was high. “No bank was going to loan me money,” he says. “There wasn’t any collateral. A mold that costs $50,000 has no value to the bank.”
Thanks to his relationships with plastics suppliers from his work in automotive, he convinced one company to let him amortize the cost of tooling and another to extend a two-year loan at 12% interest. “That was all done hook-by-crook with the relationships and vendors I’d worked with,” he says. “After we retooled in 2005, we started making money.”
Helped by profits from the growing business, Baxter and his team launched new versions of the product with technological improvements. With the direct-to-consumer business growing, they moved to a 30,000-square-foot factory in Juneau, Wisconsin, in 2008 (it has since increased the plant to 225,000 square feet). Zuppke joined in 2015 as a consultant to crank up the digital marketing. A holiday marketing campaign that year with feline influencers such as Venus the Two Face Cat on Instagram, where Litter-Robot now has 140,000 followers, increased web traffic ten-fold.
Made in America: Whisker makes all its robotic litter boxes and automatic feeders in Juneau, Wisconsin.
Whisker
In 2019, Whisker put out an ad called “Don’t Be a Scooper” that made fun of people using old-school boxes. Company sales reached $40 million and Pondera led a $31 million recapitalization that allowed Jim Baxter to cash out and Brad Baxter to take some money off the table, too. “What Apple and Dyson have done for consumer technology is what we’re trying to do for the pet industry,” says Pondera partner Seth Barkett.
The company’s future depends on how many pet owners will be willing to shell out hundreds of dollars for a high-tech product. Packaged Facts, a consumer market research firm, found that just 12% of households with litter boxes owned an automatic or self-cleaning version. Those who bought the high-tech devices typically kept them for years, with just 8% replacing them within 12 months and another 7% doing so within two years, according to its 2022 survey.
Those numbers help explain why Whisker is counting on growth beyond its robotic litter boxes, with products like automated feeders, as well as from the data created by its devices to sell consumers on subscriptions. Knowing how often each cat uses the litter box and whether that pattern changes over time, for example, could be a warning sign of a urinary tract infection. “Our goal is to shape the future of pet healthcare,” Zuppke says. “We believe the future of healthcare involves tracking your pet across food, water and waste.”
In May, Whisker brought out its latest robotic litter box, the Litter-Robot 4. The launch didn’t go easily as high demand ran into firmware and hardware issues. A last-minute color change on a bezel from black to white at the behest of the marketing department affected the way the sensors reacted. Another problem cropped up with the device’s ability to measure a cat correctly when placed on a carpet. “It’s always the stuff that you think doesn’t make a difference that makes a difference and then you’re scrambling to fix it,” Baxter says.
The company had to put the brakes on shipments to fix the bugs, cutting into expected revenue for the year. In September, Zuppke posted an apology on Reddit and said the company had “paused” its phone lines to catch up. Customers with glitchy products were angry. “Please respond to the support tickets! I have put in four!” wrote a customer under the name MinnieMooseMania. “Please make it all work again,” wrote another under the name o_caritas.
As the company gets bigger, “the stakes get higher,” says Saeger, the board member and former iRobot R&D chief. “Now if you have a problem with your products, the numbers become big very fast so you need to invest in how you build a quality design into the product.”
Zuppke notes that the company shipped its one-millionth Litter-Robot in early December, ahead of schedule, and that it has other products in the works. “iRobot [maker of the Roomba] has become synonymous with its category,” he says. “I think we have the same opportunity with the Litter-Robot.”
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Source: https://www.forbes.com/sites/amyfeldman/2022/12/16/inside-the-company-that-uses-robots-to-deal-with-cat-poop/