Illustration by Shane Cluskey

Like pet owners everywhere, Katie Spies (MBA 2019) would do anything for her dog. In 2014, when her Italian greyhound, George, started experiencing seizures and other health problems that didn’t respond to medications, the vet recommended switching him to a simple-ingredient, raw-food diet. Spies couldn’t find such a thing in the pet aisle, so she started making it herself and quickly maxed out the freezer of her San Francisco kitchen with dog food. Within a month, George’s energy and health had rebounded. “He was like a new dog, so I was stuck making food for him every weekend. My roommate was a little annoyed,” Spies says.

Other dog owners were more enthusiastic and begged Spies to make double or triple batches. They would pick up their portions on Saturday and settle up by Venmo. In 2017, when Spies moved to the Boston area for business school, her customers went with her. “People wanted it so badly that they stuck with me, even though I was shipping them food on an irregular basis.” Spies says she kept it up for most of her first year. By her second year, after learning that one in five dogs was eating a homemade diet—in a country with more dogs than children—she started to think more seriously about the value proposition.

Spies teamed up with Christine Busaba (MBA 2019) to launch Maev in March 2020 as a direct-to-consumer (DTC) raw dog food company. Business has tripled every year since, says CEO Spies. Within a $100 billion pet market, Maev distinguishes itself with its unmatched nutritional value and food safety, with portions that are easy to store and serve. Maev shipped more than 8 million meals to subscribers in 2022 and closed a $10 million Series A round in October of that year.

“One of our key insights from the beginning was that the only way DTC physical goods make sense, as a venture-fundable, multiple-X return on your investment business, is if you can achieve the strong lifetime value (LTV) to customer-acquisition-cost (CAC) ratio that consumer investors look for. And that’s what’s gotten us this far,” Spies says.

The team has spent years optimizing the business for best-in-class DTC subscription metrics. The company enjoys retention rates of 95 percent or more, where competitors sit at the 50 to 60 percent mark. But in order to grow and scale, they think retail and omnichannel are important. Maev recently launched an Amazon option for one-off orders (as opposed to Maev’s subscription plan), with the strategy of using Amazon as an awareness channel rather than for actual distribution.

But how should the entrepreneur think about retail and omnichannel, particularly for a business that’s been optimized for DTC? Even if retail is where most consumer packaged goods are sold, it will mean lower margins and lower LTV. “So why should we launch a less profitable channel? Is retail critical for an exit or to become a household brand? I haven’t seen a brand successfully convert a retail shopper to a subscription DTC shopper,” Spies concedes. She questions whether it can be done—or whether it just hasn’t been done yet.

If Maev wants to continue to scale, they must enter retail channels. While it may not seem as attractive, that is where the customers are shopping, as category data will confirm. The relative investment in driving new customer acquisition via retail is much lower than ecommerce, where driving site traffic is costly, and even SEO and referrals require investment. So a true apples-to-apples channel comparison means including CAC. All brands will eventually plateau online with rising costs due to iOS 14 privacy limiting tracking, so retail will open the door to a huge new pool of captive customers. Maev can offer different SKUs for retail, even if it’s just a sticker on the packaging—and include a web address, to drive loyal retail converts to the site for subscription options (with tracking). And Maev should keep in mind that the purchase decision is made at the shelf, so include key conversion claims right on the packaging. Success in DTC will make for a strong pitch to retail, allowing them to find a huge new customer base.

—Laura Huddleston Artigas (MBA 2009) is the chief commercial officer at Hologram Sciences, a startup incubator and accelerator in health and wellness.

I’d counsel Katie against moving into retail. But if she does, converting retail shoppers to DTC should not be her objective. To secure and then sustain retail distribution, a new brand must have high velocity (i.e., unit sales per store), which comes from frequent repeat purchases by loyal customers. Converting retail shoppers to DTC—if Maev could figure out how to do that—would reduce velocity, which in turn would lead to a lower shelf-space allocation or being dropped altogether.

Furthermore, it’s not obvious how Maev’s superior products could sell themselves in a crowded frozen pet food aisle. With DTC, a website can tell the brand’s story; in a retail store, product packaging must do that work. That’s a tall order with a complex story like Maev’s.

Finally, failure rates for new consumer packaged goods that target retail distribution are very high. New brands can often get some traction in independent retail outlets, but to win big, they must then secure distribution from large chains. That transition can be brutal: New brands are squeezed by chains that demand payment for product placement and by wholesalers who are slow to pay. If Katie pursues this direction, she needs senior team members with the experience to navigate this challenging path and investors who can offer good guidance.

—Tom Eisenmann is the Howard H. Stevenson Professor of Business Administration; Peter O. Crisp Chair, Harvard Innovation Labs; and faculty co-chair of the HBS Rock Center for Entrepreneurship, the Harvard MS/MBA Program, and the Harvard College Technology Fellows Program. He is the author of the book Why Startups Fail.

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