The Farmer's Dog: A Consumer Subscription Case Study

Network Effects (B-)

Win-Back Potential (B): Consumers do not go in-and-out of food for their dogs often, and when they find something that works, they stick with it. This dynamic works against The Farmer’s Dog on win-back potential

Attachment and Bundling Potential for Act II, III, and Beyond (A-)

Total Addressable Market for Initial Subscription Offering (B) The single biggest question my partnership had about The Farmer’s Dog Series A investment was about the size of the addressable market for the initial fresh human-grade food subscription service.

Payback Period on Customer Acquisition Costs (A+) At the Series A round, The Farmer’s Dog had payback on its customer acquisition costs in the very first order.

Cohort Retention (A-): An interesting characteristic of The Farmer’s Dog is that revenue retention and customer retention are very similar. This is because the frequency of purchase, as well as price of the product, stays the same over time, and retained customers can’t buy more product the longer they use the service, which is the case with some b... See more

Subscription Gross Profit (A): The annual subscription gross profit of a customer of The Farmer’s Dog is in the hundreds of dollars. While the company deserves an A grade at the Series A, the gross profit has increased substantially since the initial investment, particularly given improvements in product gross margins that have come through economi... See more

Conversion from Free Tier or Trial to Paid Subscriber (B+) I give the company a B+ grade, because there also is not a free tier or trial that the company can offer in the current instantiation of the service, whereas many other consumer subscriptions are able to offer those options.

Existing Recurring Behavior vs. New Recurring Behavior (A+) One of the most compelling aspects of The Farmer’s Dog investment was that the service tapped into an existing recurring customer behavior. Pet parents purchase food on a recurring basis, and dogs eat the same food multiple times per day for their whole lives. Unlike humans, who feel the n... See more