Note: This interview was conducted before Chewy.com announced on March 15 that Ryan Cohen would step down as CEO.
Growing Chewy.com from zero revenues to a multibillion company and the largest acquisition in e-commerce history was an incredible ride, and Ryan Cohen, founder and CEO of Chewy, says he wouldn’t change a thing.
Cohen hasn’t done many interviews since the sale of Chewy last year for $3.3 billion to PetSmart. But earlier this year, he took the stage for a discussion with Greater Fort Lauderdale Alliance Vice President David Coddington at the Florida Venture Capital Conference in Fort Lauderdale, sharing advice and war stories with a couple hundred investors and entrepreneurs from around the state, and followed up with the Miami Herald.
The Dania Beach-based pet supplies retailer is a homegrown success story with 7,000 employees nationwide, and as Cohen relayed the Chewy story, the “surreal” and “mind-blowing” journey was anything but easy.
Cohen, who has always been entrepreneurial and has no college degree, said he started Chewy to replicate the same “amazing” customer experience of his neighborhood pet store (he is pet parent of a poodle), but online. He used Zappos, the massive shoe e-tailer, as a model and inspiration. When he needed capital to grow, he approached more than 100 investors — and they all passed. “But I thought there’s a chance … we were on to something genius. I felt with scale we will prove them wrong,” Cohen said.
When the sale to PetSmart was announced, some longtime customers expressed concern and a couple of distributors pulled out. But hypergrowth for the brand and for South Florida employment has continued. In February, Chewy opened a 100,000-square-foot facility for its customer service team, which had outgrown space in its Dania Beach headquarters. In total, Chewy employs 1,500 in South Florida, with 1,000 in Hollywood. Chewy plans to hire 400 more customer service employees for Chewy Hollywood this year.
And where does Cohen see Chewy five years from now? “This is a 65 billion industry that is growing at 2 to 3 percent. We’re still scratching the surface.”
Cohen took questions from Coddington and the audience and followed up with the Miami Herald. Here are excerpts of those conversations about what it takes to be an entrepreneur, how Chewy successfully scaled the business and challenges along the way.
Q. What led you to entrepreneurship over a clear-cut career path?
A. I have never been a clear-cut career path kind of person. I started my first business when I was 14 or 15 building websites. … My father was a business owner, so I saw what it was. I had it in my DNA from an early age. It was very clear early on that I would be my own boss.
Q. How did you raise your first outside capital for Chewy?
A. I spoke to over 100 investors and they all passed for one reason or another. At one point I got so desperate … we took a trip to Sand Hill Road [in Silicon Valley]. I literally went door to door. That didn’t work. But one of those 100 investors that passed made a visit later, and I remember it like yesterday. I was 25 at the time and looked like 15 years old. He followed up with us, was impressed with all of our numbers, and ultimately he invested.
Q. As you grew Chewy, what were some of your biggest challenges?
A. Hypergrowth. When you think of retailers that have scaled at this level, you can count them on one hand. So it was about making sure that we had the technology, the systems, the people in place, and all of that was scalable.
The biggest single event happened in 2014. Up to then, we had a third party to handle our fulfillment and they couldn’t scale anymore. … It was very clear at that point we had to bring it in-house.
We brought in-house some amazing folks from one of our competitors (Amazon) and launched a 400,000-square-foot building in Pennsylvania and we went through that process. It was three or four months of pain. Everything that could have gone wrong went wrong. We worked through those problems, and later that year, we launched our second building in Reno, Nevada, and that was literally like we had done this a thousand times already.
2014 was a huge transformational year for us because we went from having no experience in fulfillment and operations and relying on a third party company, to this becoming our core competency and becoming world-class in a short time. In order for us to scale a billion dollar company, we needed to go through that but it was very, very challenging.
Q. What do you think distinguishes Chewy from its competitors?
A. I think it’s a category where focus is incredibly important. We carry 50,000 products, and you can call us 24 hours a day. We are there 24/7 to answer any of your questions. We are the pet experts. And I would say the second thing is really embedded in the Chewy culture: We are 100 percent customer obsessed. We want them to feel as though they would never dream of shopping anywhere else. And we take it a step further and add these human elements to it — the handwritten holiday cards, the pet portraits, it is all of these things that show our customers that we’re human, we get it, we really care about them and we really care about their pets.
Q. Tell us more about the card-writing.
A. It is a massive department. We have literally hundreds of card writers that work for us full time. We start writing the cards in January and they go out right after Thanksgiving. Last year we sent out five million, and this year we are looking to break that record.
Q. Any advice for new entrepreneurs?
A. You need to make sure you are in a place in the world that you are ready for this. Scaling a business is going to test you physically and emotionally, it’s not for everyone. I have an 11-month-old now, and scaling a startup from inception to reality is like taking a human being from infancy to adulthood in a very short period of time. It’s going to get sick in the middle of the night and you are going to be up all night taking care of it. It’s going to make mistakes and you will learn from it. It is a huge act of selflessness and dedication, and if you are ready for it, it is going to be a crazy, crazy, crazy roller-coaster and it will be the journey of a lifetime.
Q. How did you go about building your management team?
A. We use a special proprietary tool called LinkedIn and we look for people with very relevant experience at companies we respect and we shoot them a message. … We hand-picked these people. They are the best of the best, the Navy Seals of management teams.
Q. How has Chewy.com succeeded when Pets.com failed?
A. Pets.com failed when I was 15 years old, and a lot has changed. Today, people are more comfortable shopping online than in the stores. I think the second thing is the humanization of pets is real. People are taking better care of their own health, and they want their pets healthier, too. They also want products made in the U.S.
Q. I know that you are able to operate Chewy independently. Now that Chewy is a part of PetSmart, does it feel any different for you as an entrepreneur?
A. Not much has changed. We’re still staying laser-focused on our business and growth strategy. The acquisition has in many ways helped accelerate the vision of building the best pet retailer on the planet.
Q. What can we expect from Chewy in 2018?
A. A lot more growth. We just opened our sixth fulfillment center in Ocala, and have our seventh one planned in Goodyear, Arizona. Our customer service team outgrew the space at our headquarters in Dania Beach, so we’ve opened a newly renovated, 100,000-square-foot customer service center in Hollywood. It’s an exciting time for us as a company, and we’re looking forward to continuing to grow and scale.
Q. What keeps you up at night?
A. I’m obsessive about making sure we always deliver an amazing experience for our customers, so I’m always thinking about ways to delight them even more.
Q. Knowing what you know now, what might you have done differently?
A. This path has been such an incredible journey, one that I could never have dreamed of, so I wouldn’t change a thing.
Follow Nancy Dahlberg on Twitter @ndahlberg and email her at email@example.com.
Title: CEO of Chewy, a pet products e-commerce retailer.
Entrepreneurial success: With no college degree, Cohen founded and grew Dania Beach-based Chewy.com from nothing to a 7,000-employee company with billions in revenues. Chewy was purchased by PetSmart in 2017 for $3.3 billion and is an independent subsidiary.
First business: Creating websites at age 14
Self-description: obsessive, relentless, contrarian.
Secret to Chewy’s success: “Scale-up, marketing and leadership.”