DogVacay raises $25 million, is Rover over?

In November 2014, the popular dog sitting platform known as DogVacay raised $25 million in Series B financing, bringing their total to $47 million. An impressive milestone, indeed. But how does this affect the other dominant marketplace in the space, Rover? With a sizable war chest at hand, DogVacay has jumped ahead with this last funding event. Is play time over for Rover?

Given that my day job involves comparing and contrasting startups services, I figure I’m in a good position to elaborate. Let’s break it down.

Market size can often be an important indicator in the number of competitors that can survive and thrive. The pet sitting market is a big dog indeed; national kennel revenue is estimated to be between $5 billion to $6 billion annually. For startups Rover and DogVacay, their combined figures are only a drop in the bucket, even as impressive as they are in their own right. Rover CEO Chief Executive Aaron Easterly said sales are now more than $1 million per month for his company, and will be “well into eight figures” for the calendar year.

If we make the assumption that DogVacay’s sales are similar to Rover, it looks like there is enough room for both dogs to play nicely. They still have a ton of growth ahead before crowding each other’s space.

While the competition may not be as heated as the infamous battle of ridesharing juggernauts Lyft and Uber, it certainly warrants a conversation. Capitalism advocates would argue in favor of competition. They’d say that it drives innovation, lowers prices, and forces companies to improve their product offering. Peter Thiel, at least according to his recent book Zero To One, would probably argue that competition is not a good thing. He advocates, “Competition is like war: allegedly necessary, supposedly valiant, but ultimately destructive.”

Perhaps his statement is targeted towards competition in markets that are already established. After all, his book is about going from zero to one; from creating something where there was previously nothing. It’s a much more lucrative endeavor to create, rather than to compete in a saturated space with incumbents. In a perfectly competitive environment, new business allocated to company A is only the result of taking it from Company B.

Such is not the case in today’s pet sitting environment, at least between the two startups. To give to Rover does not require to take from DogVacay. But what happens to the local kennels? Does it mean that they suffer?

I’m not so sure they do. Yes, prices are generally cheaper through one of the emerging platforms, and basic economics would suggest users will gravitate towards the most cost effective solution. However, I think that the convenience of the new kids on the block is creating additional market space, not carving out from existing. Where dog owners once called in a favor from a friend, or left a huge bowl of food, or brought Fido along on that road trip, they are now turning to Rover & DogVacay to take the pooch off their hands for the night.

Only time will tell if local kennels will endure the same fate as what happened to mom-and-pop shops via WalMart & Amazon, taxis via Uber & Lyft, and record stores via iTunes. However, I do support that there will nonetheless always be a place for traditional kennels. Some doggies/humans just want that environment.

For one reason or another, DogVacay and Rover have often been the poster children for the frothiness that is the impending tech bubble. “The Airbnb for dogs!?” is the underlying sentiment. As I described in an earlier post (see halfway down), these are not bubble companies. Rover and DogVacay provide immense utility. The number of pets, just in the US alone, is staggering. Compounded with the increasing rate of travel for business or pleasure and the pervasiveness of tech into every element of our lives, the need for a distributed network of pooch pals becomes evident. With the financial backing of top investors, cash coming in at a steady pace, and tens of thousands of happy users, I think it’s only appropriate that we recognize these players as game changers that are here to say. Better yet, they are both here to stay.

As someone who owns a dog, uses the services frequently, and is the cofounder of a sharing economy site, I think this is undoubtedly a good thing. My cofounder and I are so obsessed, we are even building a tool to search for sitters on both platforms at once. (Follow our pet sitting category to get updated when we roll it out.)

If you call yourself a proud pooch owner, and you haven’t signed up for either Rover or DogVacay yet, do yourself a favor and head over to our Pet Sitting page, where you can score up to $20 in fee pet sitting credits.

If you found value in this, it would be tremendous if you scrolled down a little further and hit the “Recommend” button.

Greg Muender is the founder of Whttl, described as the “Kayak.com for the sharing economy.” Use it to compare dozens of different providers and marketplaces at once, including RelayRides, DogVacay, and HomeJoy. Drop Greg a line via greg<at>whttl/dot/com. For further reading and a nifty “Rover vs DogVacay” infographic (coming soon), check out the Official Whttl Blog.