#StartupsEverywhere Profile: Andrey Klen, Co-Founder, Petcube
This profile is part of #StartupsEverywhere, an ongoing series highlighting startup leaders in ecosystems across the country. This interview has been edited for length, content, and clarity.
Reimaging pet care with interactive technology
Premier pet tech industry leader Petcube keeps owners connected to their pets by providing cameras that offer real-time video monitoring and other interactive features. We spoke to Co-Founder Andrey Klen on the impact of being a Ukrainian-founded company, their experience fighting abusive patent assertions, and how they’ve navigated various privacy rules, both in the U.S. and abroad.
Tell us about your background. What led you to create Petcube?
I am a dog enthusiast at heart and a designer-turned-tech founder. My co-founder and I created Petcube in 2018 with the goal of connecting pets to the Internet and giving them a voice. Pets are our family members, are incredibly important companions for hundreds of millions of people around the world, and are literally seen as babies by many of us. They deserve our best effort in everything we do.
What products and services does Petcube offer?
We offer a line of home cameras that help owners monitor their pets remotely and enhance pets’ lives with technology. We have regular cameras that stream video and audio to owners’ cell phones, and interactive cameras with treat dispensers, and a laser toy feature, which are all tools that are effective in dealing with anxiety, basic training, and rewarding positive behavior. The laser tool is an especially cool feature that makes it possible to play with your pet remotely or dissuade them from any negative behaviors, with a simple finger drag across the screen. Cats go nuts for that, and some dogs, too.
We're also moving beyond just hardware to offer software services as a cornerstone to enhance pet care and user experience with our cameras. We store video recordings in the cloud so that customers can have long-term access to them. And we’re setting up smart alerts that will let users know when a person or pet has come into the camera frame and recognizes barks and meows as well. Apart from constantly enhancing the features of our cameras, we’ve recently introduced a couple of new products. The first is a feature that allows people to chat with licensed veterinarians inside of the application in real time. Another is the establishment of an emergency fund as an alternative to traditional insurance that allows you to redeem $3,000 If something bad has occurred with your pet. We're using third parties to incorporate these services, but we're keeping our app and our brand front and center as the hub for our camera experience, care experience, and emergency fund.
What unique issues have you run into as a startup operating in the hardware space? Is there anything policymakers can do to help?
For hardware companies like us, financing inventory production is quite important. When we go to banks or firms to access working capital, we face lots of roadblocks. For example, as a condition for receiving a line of credit, many firms will require that 25 percent of the company is owned by one entity or individual. This is completely out of the realm of how things work with startups because cap tables can be fractured, and it’s rare for a stakeholder to have a quarter of the company. Some traditional businesses may work this way, but startups like ours don’t. Currently, we access working capital by going to individual private investors, but that is not optimal and there should be a better option for startups.
We're also about to face a large issue with components. Chip manufacturers and American workers, specialists, and professionals are moving out of China right now. We’re unsure how this is going to affect our business or if it’s going to influence the price of the goods we need to be manufactured. So that's definitely a challenge, and we're looking into options to relocate our manufacturing. Startups don’t have the resources that large companies do to overcome these sorts of disruptions.
What has been your experience navigating the patent system?
As a patent-holding company, we have not really had issues with our patents. Like any startup, though, we have had a few run-ins with patent trolls, but those have been resolved as they often are. For example, a patent troll withdrew a claim against us after a larger, more-established company stepped in to help. The patent troll tried to sue us on the premise that they invented basic laser tracking technology. But that patent was overthrown after another company, which was also accused of infringement, challenged its invalid claims. Young companies worry about attacks from patent trolls a lot, and it could have turned out a lot worse than it did. Fortunately, we’ve only encountered a couple of trolls in the 10 years we’ve been operating.
Petcube is based in the U.S., but I understand you have operations across the globe and your presence in the U.S. has shifted over time. Could you tell us a bit about that?
We used to have a bigger presence in the U.S. with a California office, but in 2018-2019 we ran into a difficult period and are now headquartered in Ukraine. I don’t see this as permanent, though, and as we scale I expect we will reestablish a larger presence in America after Ukraine’s victory. Fundraising for non-American founders outside of the Ivy League network has been a large-scale issue due to biases, but for now, we are focusing on what is working for us and continuing to grow our U.S. presence through other avenues.
As a result of our transition in the U.S. market, we downscaled and changed our sales strategy to focus solely on Amazon as the main channel for our product. Amazon makes it easier for us to optimize sales and manage inventory, and it obviously contains lots of potential customer traffic. We had an issue, however, with how our product is categorized on Amazon and the margin we pay to them. The amount of each sale paid to Amazon varies based on product category, and we were placed in the pet product category (alongside dried food and other pet supplies)—which has a higher margin—rather than the consumer electronics category—which has a lower margin and is a better fit for our product. Our competitors, meanwhile, are in the appropriate consumer electronics category. We appealed to Amazon for years, and have only recently resolved the issue.
How is petcube managing a changing landscape of privacy laws in the U.S. and abroad?
We went through a transition period with GDPR—we updated our terms, our app, and our website—without any major harm. Our actual product features did not have to change much, but we did have to alter our user flow in a couple of places. Of course, that all takes focus and time to implement.
Right now, there are not efficient channels for small business owners and tech startups to learn about new privacy laws or policies that are on the horizon. Large companies have legal departments and robust operations teams that can keep all these developments on their radars. But our operations are already stretched very thin, and it’s hard for us to keep up.
What are your goals for Petcube moving forward?
We are planning to extend the number of software features and services that we're offering to become a one-stop destination for pet parents. Our vision is to have our app be a home for caretaking advice and help.
All of the information in this profile was accurate at the date and time of publication.
Engine works to ensure that policymakers look for insight from the startup ecosystem when they are considering programs and legislation that affect entrepreneurs. Together, our voice is louder and more effective. Many of our lawmakers do not have first-hand experience with the country's thriving startup ecosystem, so it’s our job to amplify that perspective. To nominate a person, company, or organization to be featured in our #StartupsEverywhere series, email advocacy@engine.is.
