Pet technology is the latest industry to embody our IoT future.
Currently, we're in the midst of what many are calling the Fourth Industrial Revolution, or Industry 4.0.
The Fourth Industrial Revolution refers to a number of technologies that are blurring the boundaries between the physical and the digital. Artificial intelligence, the internet of things, 3D printing, big data and cloud computing are some of the most central elements. It's causing massive changes in manufacturing, technology, transportation and plenty of other sectors. Now, it's coming for pets.
The pet industry may be a traditionally low-tech space, but a slew of new companies are working to leverage Industry 4.0 innovations and create a burgeoning space that can only be described as the "pet tech industry." The products they're bringing to market may be a peek into the future of many other industries – and they show us how Industry 4.0 will turn almost every aspect of our lives into a quantifiable data stream, allowing us to manage everything from air conditioning to water consumption from one single interface.
The rise of American pets
Naturally, this new wave of innovation didn't come out of nowhere.
Pets have been on the rise in America throughout recent decades. Studies show that more than 85 million families have at least one furry friend, with pet ownership growing 12% over the past 30 years, and it doesn't seem to be slowing down. The past couple of years have seen a boom, and the industry currently enjoys a 14% CAGR. By 2023, industry sales are expected to reach $281 billion in North America alone.
The growth is even more dramatic among millennials. Millennials attach a special significance to their pets, and that's likely due to the differences in mentality and life choices they make compared to older generations. Millennials are getting married much later than previous generations and aren't having children at such young ages. As a result, they're adopting pets instead of starting families, which has caused a spike in consumer demand both for pets and pet products and services, so much so that younger generations own more pets than older ones. Of pets in the U.S., 62% belong to younger generations, while only 32% belong to baby boomers.
Millennials are also naturally more technologically inclined. They better understand how to use digital and software-based solutions, and it feels natural for them to look to software platforms and apps to run their personal lives. Therefore, many are now seeking digital pet services.
Finally, millennials spend money on their pets. In fact, 84% of millennial pet owners experience separation anxiety, frequently worrying about their pets when apart, and 92% purchase gifts for their pets on a regular basis. Combined with the fact that millennials now own most pets, this creates an injection of new revenue in the pet services market that's ready to be claimed by innovative new companies.
Pet companies become venture capital's pet companies
All these factors have triggered a spur of investment in pet technology. More than half a billion dollars were invested into the pet startup space in 2018 alone, and leading players like dog walking app Wag have racked up hundreds of millions in funding. The pet technology industry is expected to match and raise that amount in 2019, making it one of the hottest sectors in the global technology industry.
Most of this data comes from the U.S. and North America, but it's worth noting that Asian and European markets have also seen increases and are expected to follow a similar growth trajectory. This demonstrates that Industry 4.0 is infiltrating the pet industry on a global scale, and it also heightens the stakes for VC-backed companies: The sooner these startups are able to find product market fit and expand, the better chance they have at penetrating and claiming foreign market share.
The secret future of pets
Money is flooding into the pet technology industry. So what is it funding?
Many of the leading pet tech companies are applying solutions and frameworks to pets that have already worked in other industries. Wag, the previously mentioned dog walking app, takes a cue from the sharing economy by establishing a platform that's essentially "Uber for dog walkers." There are even pet wearables like FitBark ($125,000 in funding), an activity monitor similar to Fitbit, but for your dog.
Others are using technology to create new and improved versions of old products. CleverPet Hub ($1.4 million in funding) is a smartphone-controlled "gaming console" for pets that offers simple games to engage and train pets while their owners are out of the house, while Sure PetCare (acquired by Allflex Group) has created a smart doggy door that only opens when it senses your pet's implanted RFID microchip. Meanwhile, several companies have designed smart food bowls, water dishes and self-cleaning litter boxes that can measure, monitor and control your pet's daily intake (and output) of nutrition.
In addition to these piecemeal products, other pet tech startups are attempting to design a centralized, all-in-one solution for managing a pet's care on a digital platform. BabelBark ($8.4 million in funding) is an early leader here, with a fully four-sided digital platform aiming to offer a comprehensive, data-driven solution to pet care, complete with separate (but integrated) terminals for pet owners, veterinarians, pet businesses and pet shelters. On one level, the platform helps pet owners keep track of important things like feeding histories, medical records and medication schedules. But it's also built to connect and share data between different user groups. For example, veterinarians can see feeding history or data from a wearable pet health monitor, while pet-focused businesses can see individual pet and owner preferences to customize their service offerings.
What the pet technology industry can tell us about the future
The significance of all this is obvious if you're a pet owner, and for entrepreneurs, all signs show that pet tech is a big, juicy market that's still young enough to have a wealth of new opportunities. But watching the evolution of pet technology, especially in this early stage, can tell us a lot about how we can expect the Fourth Industrial Revolution to play out in various areas of our lives – and that provides helpful goalposts for entrepreneurs.
First, smart pet products give us a glimpse into how the internet of things will soon come to rule our homes. We already have Twitter-connected fridges, and now even the dog bowl has an internet connection. This means virtually anything that hasn't been converted to smart technology could present an opportunity: a smart water bottle that tracks daily water consumption, a smart coffee table with built-in digital board games, a smart kitchen thermometer that texts you once the chicken reaches 165 F. If you can get the economics right, there's probably a market for making just about anything in a home "smart."
As these smart devices come online, the sources and volume of data we produce and interact with in our lives will skyrocket. The future is quantified: All those smart water bottles and Wi-Fi-connected dog bowls will produce new streams of data that we can measure, monitor and manipulate. As this explosion of 'everyday data' progresses, we may even expect to see predictive AIs or algorithms, trained on big data, that can alert us when our daily water consumption drops below the acceptable level or when our dog's feeding patterns indicate she may need to see the vet.
Just like in the pet tech industry, we'll see many companies emerging with piecemeal products for Industry 4.0 – but perhaps the biggest opportunity arises from bringing all of this together. BabelBark wants to create one central hub that collects, analyzes and organizes the many aspects (and smart devices) of caring for a pet. We'll likely see the same thing in other sectors: for example, a digital home management platform that allows you to monitor and control your air conditioning, electricity, water consumption, security system, smart fridge, smart water bottle, and any other smart appliances in your home.
The Fourth Industrial Revolution is generating an explosion of innovation in the pet industry, and pet tech startups are designing new solutions to bring pet care into the 21st century. But this is just one small element of a much larger, broader change in how we live.
Industry 4.0 and the new developments that are driving it will transform our homes, our cars, our possessions and how we interact with all of it. Entrepreneurs who get in the game now have access to enormous opportunities – and if you're looking for a map of the future to base your plans off of, the booming pet tech industry provides a good one.