I Started a Business That Made $760,000 in the First Year

This story as told is based on a conversation with Daniel Rotman, founder and CEO of beautiful trashAn innovative pet care brand with traditional sales of over 50 million Litter bags to date, according to the company. PrettyLitter started with just $1 million in seed funding and was acquired by Mars in less than five years Reported $500 million to $1 billionThe piece has been edited for length and clarity.

The inspiration to start my business PrettyLitter came from real-world pain: I lost my 15-year-old cat, and her rapid decline. She suddenly became lethargic with her normal behavior. It was a really painful experience, and I learned from the vet that this is actually very common for cats – they are built by nature to hide illness really well because they are quiet and don’t want to feel unsafe.

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A few years later, in 2015, I was participating in an incubator program where people were hacking a business idea. I was at a point in my life where I had completed graduate school and was going to go into public policy, but then I decided to get back into entrepreneurship. So, while everyone was thinking about ideas inspired by their lives, I remembered what I went through with my cat. I thought, What can I do to help cat owners so they don’t have to go through the trauma of watching their cats decline rapidly?

“Lightbulb goes out: litter box.”

I remembered the vet explaining to me that urine diagnostics is an important tool in understanding health problems in both cats and dogs, so I wondered if I could use their waste as a kind of warning system. Lightbulb went out: litter box. This is what we as cat owners are used to every day; We all hate it, but we have to have it. I wanted to turn a litter box into a health-monitoring device.

The incubator program ended with a competition. There were 30 different entrepreneurs there, and we were divided into two groups – B2B and consumer-facing ideas. We won on the consumer-facing side, so I got a check for $50,000, which was a big deal to me at the time.

“It works as a color-changing alert system that gives you comprehensive information about what’s going on with your cat.”

First, I did extensive research in veterinary laboratories to see if there was any way I could make this formula. Would this even be possible? Fortunately, it was. I found a wonderful veterinary laboratory that helped develop the formula, which we have and always have had, but the laboratory helped us create it.

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I put on my entrepreneur hat – I had to find a substrate material that would work, and it turned out that Type C silica gel, one of the most abundant naturally occurring minerals in the world, is a substrate material that is pH neutral. The pH-neutral formula prevents false positive or negative results. We wanted to be accurate, but we also intentionally advertise that we do not diagnose any disease. So it works as a color-changing warning system that gives you comprehensive information about what’s going on with your cat, and then you go to the vet to find out the diagnosis.

The substrate material had other benefits as well. Unlike cat litter material, the substrate absorbs bacteria and urine by trapping it in its microscopic pores, so there is no need to pick it up and throw it out every time the cat uses the litter box. This was a revelation – because it meant I needed 80% less substrate material, which also meant the product would be viable for shipping.

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Once I had the product, I learned more about Shopify and running Facebook ads. I turned my apartment into a fulfillment center. People really responded to the product; Orders started coming. Step by step, I’ll make it – print a label, pack it in a flat rate legal envelope, go to the local post office and mail it. Within about six months, the operation outgrew my bedroom, so I moved to a fulfillment center. That first year, my income was about $760,000.

“Taking big rounds was not in my DNA.”

Philosophically, I never wanted to raise money for PrettyLiter, although I eventually raised a $1 million seed round. I am a first generation American. I watched my parents build businesses to feed and support us. So I don’t come from a culture of short runway, big burn rate, needing 100 employees to say, “I have 100 employees.” Even though VCs approached us as we were becoming more successful, organizing on a larger scale was not in my DNA. I prioritized profitability, high gross margins and making sure we were not growing beyond our needs.

I outsourced until I had to hire in-house. My first appointment was to my customer service director because it had gotten to the point where I was answering 200 customer service tickets a day, most of which were asking for their tracking number. Then I eventually hired a marketing director who was able to outsource the rest. That model allowed me to build PrettyLiter into a financially strong company.

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I went from $760,000 in my first year to $6.5 million in the second year, then to $16.5 million the next year, then $32 million, $64 million, $125 million, $250 million, $350 million – all with a staff of less than 10 people.

We were already growing at a rapid pace, but when the pandemic hit, pet adoptions took off, and people didn’t want to leave their homes to shop in person, so sales took off.

There was some turnaround time between when I placed my orders and when they arrived at the warehouse and were shipped, which meant I had to pay the cost of those orders. So either I have to take some credit line or loan facility to meet the volume of orders coming in, or I have to be open to strategic partnerships. I’d been connected to the people at Mars for years, so I decided to strike up a conversation – what started as a friendly meeting turned into a strategic discussion about what might interest me. That was a turning point and a huge leap in terms of my vision for PrettyLitter: moving from a litter company to expanding into a pet care and health ecosystem, which would require a lot of capital and a research and development team that I didn’t have yet.

“They made me an offer I couldn’t refuse.”

Thus we got taken over by Mars. Mars is quiet about these deals, but there is public information about the acquisition.* I always thought Mars would be the best place for PrettyLiter. Mars is obviously one of the largest veterinary owners in the country, but beyond that, it’s still a private, family-owned company, and the family cares very deeply about the health of the pets, so it was a great philosophical fit. He made me an offer I couldn’t refuse; They also structured the deal to keep me on as the founder, really invested in the future and management of the company. We were also successful in retaining our entire team.

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Cat owners are a very savvy group of people, and they’re a group of people that is vastly underrepresented from a business standpoint.forty-nine million American families Have a cat So you have a large segment of the population that loves their cats, you have Taylor Swift and Katy Perry, yet there’s this cultural stigma: the cat belongs to the crazy cat lady, while the dog is America’s pet, a man’s best friend.

PrettyLitter really grew from a very organic place to meet the needs of an untapped, misunderstood consumer – one who was spending a lot of money.

This story as told is based on a conversation with Daniel Rotman, founder and CEO of beautiful trashAn innovative pet care brand with traditional sales of over 50 million Litter bags to date, according to the company. PrettyLitter started with just $1 million in seed funding and was acquired by Mars in less than five years Reported $500 million to $1 billionThe piece has been edited for length and clarity.

The inspiration to start my business PrettyLitter came from real-world pain: I lost my 15-year-old cat, and her rapid decline. She suddenly became lethargic with her normal behavior. It was a really painful experience, and I learned from the vet that this is actually very common for cats – they are built by nature to hide illness really well because they are quiet and don’t want to feel unsafe.