Zoom Room’s CEO, Mark Van Wye, was the featured guest on the Modrn Business podcast with host Zack Fishman. During the interview, they discuss current and future trends in the pet services industry, the impact of COVID and pandemic puppies on dog-related businesses, and the role of technology in differentiation.
Transcript:
All right. So today, as I mentioned, we are going to be getting into the pet services space once again here. You know Ryan and I have definitely interviewed a lot of the folks that are at different aspects of this but never before have we interviewed somebody who focuses on this part of the pet market within franchising. I’m really happy to have on the CEO of Zoom Room, Mark Van Wye. Mark, thanks for joining us.
Thank you so much. It’s great to be here.
Absolutely. So you know I would love for you just to kind of create some context here into the brand itself and just tell me a bit about the humble beginnings and how you – i know that you’ve been around for quite a while within the brand – just talk to me about in the beginning of it all, how the idea came to be and you know why you guys decided to focus on such a niche part of the pet services space.
Of course. Zoom Room is an indoor dog training gym and our emphasis is on socialization and that’s been our sole focus from the very beginning. And what we do therefore is put the attention really on the dog owner. We’re not a drop off. We can kind of describe the business very much in all the things it is not, which really leads to the founding story because this business was created through an act of subtraction. My original business partner was the head of the American Boarding Kennel Association at the time and knew there were so many entrepreneurs who loved dogs wanted to get into the space, but the only businesses around were very top-heavy, expensive to start, huge operational costs, and just lots of headaches. Not to say they’re not good businesses, but the idea that you’re going to have fun and make friends and play with dogs all day was very very far from the reality.
And so we got out the old whiteboard and put down a list of every one of those headaches: you know, phone calls at three in the morning because a dog got sick or was in a fight – well, we won’t be open 24 hours; we won’t have any boarding; and so on down the line. And what we came up with was Zoom Room. And initially, from the get-go, we made dog agility – that’s the thing you see on ESPN, you know, fun obstacle course stuff with dogs – we made that sort of the splash, the sizzle, and that’s something that nobody else was really doing. I mean clearly the fastest growing dog sport, on ESPN, while the WNBA was relegated to ESPN2. But no one was really creating something that was replicable. And so we designed this as a franchise from the very beginning, and that was how we got started.
I love that. Very very cool, because I think you know it’s something that really nobody else is doing at the current moment which is kind of why I like it and you know I think that as i kind of mentioned at the top there that you know Pet Supplies Plus just recently made an acquisition into Wag ‘n Wash. And I’m sure you’ve been seeing that and been getting many calls yourself.
Yes, we are very popular at the ball. Your guess was right. We get a lot of that in our inbox, and I’m happy to say we can politely decline. We’re growing just fine on our own right now.
Yes, absolutely. And I’m sure that you will be continuing to get those, and I’m sure this podcast won’t help. But I think that you know. At the end of the day, I am kind of curious. I know you guys obviously have a very well established niche, but you know how are you seeing when folks are starting to get into dog training and adding it into the arsenal I know that a lot of the bigger players have done that but it’s obviously not quite to the same extent what you guys are doing. Talk to me a bit about, you know, how you’re differentiating from others in the pet services space today.
Our motto is: “We don’t train dogs. We train the people who love them.” And it’s great as a motto, but it really is our business plan. I mean that is legitimately what we do and how we differentiate and so much comes with that. It means that everyone else in the pet space is dictating everything to pampering dogs.
We are very rational. We use only scientific methods; we do positive training only; and we are so good at being diagnosticians that like your child’s best teacher we can’t just, you know, help you, but we can say, “Hey, we’ve noticed your dog’s doing this and here’s why,” and they can learn something from it. It means that we cater our entire experience to the human. They’re the ones who are coming in; they’re the ones making friends.
And the first thing that we really chipped away at was just this myth that dog training is something you’re obligated to do. You go to some big box for six classes when you first get a dog and you’re done. If I said to you, “Hey, next Wednesday I’ve got yoga, and then they give me my certificate, and I graduated, and now I’m a yoga graduate,” that would be ridiculous. Same with the gym. Same with so many other of our pursuits.
And yet that was the myth I wanted to bust with dog training. That it is actually something that you do every day. And you can do it at our place where you don’t have to worry about getting permits at a dog park and having people doing tai chi next to you and it raining and snowing and everything. You’ve got a reliable place that always is climate controlled, that knows what they’re doing, and that we’re going to give you the skills to have a better life together with your dog year-round.
So give me a sneak peek into the curriculum and kind of how you guys do that because I think I’m just I’m curious to see because you know dog training generally speaking as a broad term is something that hasn’t you know it’s historically not brick-and-mortar-based as as you kind of alluded to and you guys are really taking a bit of a different spin to it but you guys have definitely caught fire quite a bit because of it and I think I personally believe just anecdotally that it’s probably the right direction to go because I think it must seem stickier to me but talk to me a bit about the curriculum and why you know when a franchisee is looking at this you know it would be worth the investment of having a brick and mortar to be training the people behind the dogs and the dogs themselves versus just doing it in the park as you mentioned.
I’ll answer it in reverse. Why they should do it from an investment is they should just look at our Item 19 which is as detailed as you can find. And so you’re seeing that our stores have a 40% profit margin. And you look at the net profits that we report. Even the stores that are brand new are hitting last year 27% net profit margin in their first year.
And you look at the lifetime revenue from customers who come back. If you go on our website and you pick a location you’ll see leaderboards of just how many classes dogs have attended in the last year. And as people come in, it changes that anchoring point. They’ll see that like way down on the leaderboard dogs who are coming 60 times in just the last year – that’s more than once a week – and it really shows that we’ve broken that model, and you can see that we are able to guarantee that.
Take any other pet business and what do you have? A drop-off. When you drop your dog or your child off somewhere and you go pick it up; your expectation is you kind of pick up your dog the same way you left it; you have everything to lose as the business owner. If you don’t return that dog in exactly the right shape and form and all of that then you have very negative expectations.
For us, people come in with a dog, a puppy they’ve just gotten, a dog they’ve just rescued, and when they come in and they spend time with their dog and the trainers in this positive environment, they have positive experiences. So for us, we have a sky-high ability to delight customers instead of being afraid of all the potential liabilities. So it’s really sticky in that sense.
And because of what we can do to bring down acquisition cost and drive up that lifetime revenue, we end up with a pretty gorgeous Item 19 and our year-over-year growth you know we report there is you know 10 times that of the pet industry itself.
Yeah, I mean that that certainly does speak for itself, and so why I mean just talking about the pet industry just generally and kind of positioning you really as you know a thought leader in that because you guys really are inventing a new category I kind of want to take this from two angles. I think the first one being you know why now? For pets, you know, what are what are you hearing? What are you saying to prospects when they’re deciding between you know a pet services brand versus you know food and beverage, you know, what are some of the stats or some of the things that you know you can speak to that might kind of detail why getting into a business that has to do with dogs makes sense as currency?
I will say that that in the franchising space we haven’t really had almost anyone looking at us and like something in QSR. They typically are really focused; they may be looking at us and elder care, something in that services space, but people have probably – they came to a franchise consultant or they went to Google something online or heard about us through a friend; they have a passion for animals and for dogs; and they found us, and no one else is doing what we’re doing.
Or, it is a larger-scale investor who’s going to become a multi-unit, and they want to see what are the emerging brands that have caught fire, have proven financials, and where there still is so much availability in prime territories that they could actually snatch up. So that’s really i think that people are grabbing.
But the pet space in general: Covid has certainly driven up dog ownership, and I think an awareness of just what a huge – you know, 110 billion plus dollar industry it is – and so I think there is a growing awareness, and any time we start hearing about depressions and recessions and inflation, I think that among savvy investors there’s a common understanding that time and time again the pet industry has done very well.
There’s countless studies you can find out there about people cutting back on coloring their own hair but not cutting back on taking their dog to the groomer and so on down the line. So it’s a wonderful, recession-resistant business.
And you know we were born during one of them during around 2008-2009 and it I think has a lot of strong appeal on the financial side. But when people come in and they see how much fun it is, and just the smiles on everyone’s face that it clearly has a lot of curb appeal that way as well.
Yeah, I mean the pandemic puppy you know epidemic or whatever through the pandemic or whatever you want to call it really did make a difference for pet services brands I think that that really kind of vaulted the growth and why a lot of M&A has been starting to happen and why you know the interest from a franchise perspective has you know skyrocketed even in comparison to being one of the higher performing categories year over year over the past five years regardless, and before the pandemic. So I think it’s only going to increase. And I think that you mentioned something in there is that when you’re kind of diving deeper into if you are a pet services brand, you guys are unique and I think we’ve talked about that a bit today, but how are you educating people of that? I think that that’s really the big thing, is that there is a slight barrier because you guys are inventing a new category and with that comes responsibility. Is there any methodology that you’re using from a marketing perspective that’s really helping to move the needle to really educate people a little bit more about why you guys are different? And not only from a franchise development perspective, but also from a consumer perspective, too?
That is such a great question. I’m really glad you asked it. Because you know you identified right away what our secret plan is in the back room, which is: we have found a category that not just in the U.S. but worldwide has no ownership and even at our current size we are in pole position to own an entire category.
There are so many great businesses, but very few who are in position to own an entire category and become absolutely synonymous with it. And everything we do is driven to make Zoom Room synonymous with dog training.
So to answer your question: in 2020 we came out with our book on puppy training. I don’t even know of another franchise that has published a book in their field of expertise. That was the number one dog training book in America in 2020 and continues to bop around the top two slots right now. That was one fantastic way to demonstrate ourselves as thought leaders.
Did we invent puppy training? It’s positive reinforcement! No! I mean we can’t claim that no one else knows how to train a puppy. We do it incredibly well; we do it methodically; and we do it with so much fun and our own special spin on it. But that said, what we are incredibly good at doing is teaching. And so what people loved about the book, it was a little taste of that Zoom Room experience. No nonsense. No going into long anecdotes about “Oh I used to have this dog and blah.” It’s just a manual. Here’s what you do. No nonsense. Very direct. Not getting all schmaltzy about it.
And people really really love that. They love to get answers, and they love to be in a community of other like-minded people who are going through the same issues just like you’d see in a mommy and me group. And so something like that book, we followed it up with a dog training book for kids, and we have another one, another brand extension coming out. Things like that I think really really help to position us that way within that world.
Yeah, I mean I think that that’s definitely helpful is to not only to allow the media to say that you’re a thought leader but also to put the pen in your hand and go and write a book. I mean not everybody has that luxury, I suppose, but I think that especially during 2020, which I don’t anticipate you really planned from a timing perspective, but i mean or rather I don’t think you planned to have happen what happened, but I think it certainly helped that people were sitting at home, and they were adopting dogs at a higher rate than we’d ever seen in the world ever during that time, so that obviously helped. Talk to me a bit more about as it relates to people and how you guys are trying to socialize people and the owners of said dogs you know how did the pandemic play a role in that and how did that really kind of further your cause because obviously I would imagine it was difficult because you guys couldn’t have people come in for the first couple months but then again you know they wanted their dogs to be able to get outside and they wanted to get outside themselves and talk to me a bit about how the pandemic may have played a role in kind of forwarding your methodology of you know socializing people in addition to the dogs that they own.
We were incredibly fortunate. There’s no other way to say it. When we started Zoom Room, if you had come in when we first started the first thing you would have learned is what we call “the six foot rule,” not because we have a crystal ball and we knew that the pandemic was coming years later, but that’s the length of an average dog leash. And so every Zoom Room is literally built to spec around the concept of small group classes in a space that gives you enough room to run a full agility course while keeping six foot distance from every other person there.
And we specialize, all the veterinarians in town know to send puppies to Zoom Room because we train puppies who don’t yet have all their vaccinations. We have all of the right procedures for sanitation with hospital-grade germicides down, so that they have a safe place to come and do that. We don’t schedule them like right after an adult dog class or anything; they’re in the first thing in the morning. And so we had all of the tools to handle Covid there.
And the people who knew us, they already knew that even though this is – we’re talking a 3,000 square foot facility – it feels very open and lots of space inside. So the moment that state by state we were allowed to be open, people were very comfortable coming in. And adding masks was the only real special change we had to make to the business. Otherwise we were already ready to go.
Very lucky. The six foot rule before there even was a six foot rule for people was definitely…
– We even had the signs already printed from from a decade earlier!
But actually I would say the biggest difference was on the economic side – the great resignation or whatever they’re calling it, the instability of financial markets. What really changed was the flood of our development pipeline.
I mean we went into 2020 with nine locations. Today as I’m talking to you we have 63 total after not that much time of which by this summer we’ll have 25, and they’re opening fast. We just signed eight more leases and so we’ll have 25 of them open by this summer. We should be at 100 by probably at least the fall if not late summer in total including the ones signed but not open and open. And unlike the smile of California, Texas, Florida, now we’re opening all through the midwest, the northeast, we’re in 17 different states, and it is a complete – I mean our development team we’ve doubled and the demand has just been incredible including lots of multi-units that I really do think owes a great debt to the fact that so many people had to rethink, “Do I really want to go back to my job?” And when we read the applications, they are so passionate, from people who you know were not dog professionals; they were something completely different, but very impressive, and they just don’t want to do it anymore, and they want something that they can own and something that can make a real difference in their community.
Yeah, that’s amazing growth. I, you know, I’m not surprised because I know that you guys were definitely kind of a bubble that was waiting to burst so to speak as it relates to all those folks that you had in development and I suppose you had the time to catch up because the demand certainly didn’t hurt, so you kind of lit a fire under your butt a little bit. But I think that’s definitely really cool to hear that you guys have kind of reached that point. I want to ask and go down the technology route for a second because it’s something that’s really the bedrock of this podcast, and I would be remiss if I didn’t ask how are you guys using technology to really gain an edge over other folks, as i’m sure you will be getting more entrants getting into your space eventually because I think that there’s no better form of flattery than I suppose repetition or competition. So talk to me a bit about how you guys are using technology to kind of stay nimble and to stay ahead.
It’s one of our greatest strengths. And I mean we could just do a full tech talk. It would make me personally very happy. This is one of my personal areas of expertise. We from the beginning, I mean, if we just go way back to set the stage, we got lots of national and even international press for being the first business in the world to use an iPad in business. That is quite a designation, but you know that’s old but kind of gives a sense of looking ahead. Later on we were one of the first businesses to get rid of flash.
Catching up more to the present, going back a few years before the first really major change in Facebook’s algorithm, in how the feed worked, we had actually anticipated that was coming six months ahead of time, and we started writing our own machine learning algorithm for our own ad tech that has been a real game changer. All of our predictions came true, and we can empower our franchisees, even brand new ones. Someone opening in Orlando or in Arizona where there’s no brand recognition can use this technology to within five days, at the most minor spend, have their entire grand opening weekend packed. We just did the same thing again in Reno, Nevada, in Bakersfield, and all these places where we had no real presence. We didn’t say, “Oh Zoom Room’s coming to town,” but just using our ad tech.
And the thing I’m most excited about that’s coming up is we’ve completely overhauled our entire franchisee and trainer training program to use new technologies. Covid of course brought remote learning into the worldwide – there’s been so many advancements and although there are so many great platforms, we decided to build our own. So we actually have our own technology for that, and that’s to me the biggest change that’s coming this year.
Wow. Well, I mean I think that we can kind of just go right into it you know what else you guys have planned for the rest of the year that’s really exciting. I know you mentioned openings. I know you mentioned some new tech you’re rolling out. Anything else that you haven’t mentioned that we want to get into kind of in conclusion here?
The training one is actually I think worth saying a little more about because I think this is something for people listening that are in totally different fields, the one thing we all have is the need to train new franchisees or to train new employees and that I thought was what we were the best at was training people to be dog trainers to train owners to train their dogs. And it just was this wonderful thing.
But when it was all in person you know you maybe would come to training today, and then by the time your build-out’s done and you open, you want to go back and relive that, but it’s not there, or you know you maybe wanted to bring your dog to come be part of training but it was a little distracting.
So by taking all of our assets and making it searchable, accessible, something you can go back, something when you hire your own trainers in the future they can go through the same thing, and everything is right there at your disposal. It’s really improved that learning experience and works – I mean of course it also scales infinitely – but our ability to nimbly extend and provide continuing education and streamline that onboarding in that richer way, I’d say that’s the one thing I’m most excited about besides opening all these new stores.
Yeah, you have quite a few that you’re going to be opening this year, hopefully some in Chicago to come, because I know I have a lot of friends who will love that.
We do! We’ve got Chicago coming, and all up around you know into Wisconsin and Michigan and Ohio. And right in Chicago.
Very nice. Well, I’m certainly looking forward to it. I have many friends that would love to tucker out their dogs a little bit by letting her at one of your locations. And you know, Mark, I really appreciate you hopping on today for a little bit just to talk to us a little bit more. For folks who are interested in learning a bit more about Zoom Room and potentially becoming a franchisee, where can they go to learn a little bit more about that?
zoomroom.com. And if you want to jump right to the page, zoomroom.com/franchise.
Awesome. Well, I love to hear it. I’m going to ask you one more question before we go. You know the pet services space obviously has been getting a lot more popular as we’ve kind of hinted at. Any new trends that you kind of have your finger on the pulse of, that you think might be coming to fruition at some point in the next couple years as it relates to the pet services space?
I think a backlash. A negative one. I think the – clearly, you and I share a love of technology and a love of dogs. And I think there is misspent energy in trying to to abruptly bridge those two, that they belong together.
People ask me where will Zoom Room be in the metaverse? Even though I am a technologist, I am someone who believes the Zoom Room to be future proof, because the difference between dogs and humans is dogs absolutely require socialization; they require the physical presence of other dogs; and they require the sense of smell. And there is no Peloton or Zoom version of truly having your dog become a great member of your family, able to go to your work with you, go to dog-friendly pubs and trips, without having an actual place where you don’t have to depend on the weather, anything like that, where you can be physically in presence.
The UK just came out with a great research study by van der Linden last month where they looked at how dystopic and unhappy dog owners were by the use of some of these so-called technologies to remote treat your dog, remote train your dog. The ones that people loved were like things that make picking up poop easier. So yay on picking up poop using technology to improve that, but when you try to get a machine or an app to stand in for the human-animal bond, you’re missing the whole point on why we have dogs in the first place. And so I think some of the technologies being leveraged in the pet services space will get rejected by some of the early adopters as being dystopic.
Very interesting. I appreciate the parting words. I was honestly just curious to just to hear it. I always have an opinion! So happy to answer! Well good. Well, Mark, we really appreciate you hopping on and for folks that do want to listen to more episodes just like the one we just had with Mark here from Zoom Room, please check out all and really anywhere that you listen to podcasts. It’s M-O-D-R-N Business. That’s Modrn Business. M-O-D-R-N. Folks, thanks so much for listening. And Mark, thank you again for another awesome episode and looking forward to coming back to you very very soon.