August 29, 2013

A Word With the Boss: CEO builds business that helps vets treat pets

By Edward D. Murphy emurphy@pressherald.com
Staff Writer

Vets First Choice began in 2008 as part of FetchDog, a catalog and website started by actress Glenn Close and her husband, David Shaw, the founder of Westbrook-based Idexx, before Vets First Choice was spun off in 2011.

click image to enlarge

Ben Shaw is CEO of Vets First Choice, which partners with veterinarians to set up online stores offering pet medicines and supplies. More than 10,000 veterinarians have signed up.

John Ewing/Staff Photographer

Benjamin Shaw, David Shaw's son, became chief executive officer, and the business is now 25th on Inc. magazine's ranking of fastest-growing companies.

The company offers a service that takes over a veterinary office's medication operations, setting up a Web-based "store" for each veterinarian and shipping medicine and supplies directly to pet owners. It has signed up more than 10,000 veterinarians so far, and last year collected $15 million in fees from vets.

The company, with nearly 100 employees, has been profitable in some years, Shaw said. He declined to disclose his pay, and said most of his compensation is based on the company meeting performance benchmarks.

Q: Your father founded Idexx, so it seems like this type of business must be in the family blood.

A: We've founded a number of health care and tech companies in the last 10 or 12 years, and I sort of took the plunge with Vets First Choice, and that's been really rewarding.

For me, the stars aligned. It's amazing how hard it is to find great opportunities, but this, for me, had it all. It's really a transformative time in veterinary medicine, and veterinarians are fascinating and terrific customers. They have a complicated and interesting business, providing (their customers) a full range of services. It doesn't matter if it's orthopedics or cardiology or surgery or trauma; they're prepared to diagnose and treat a whole range of species on short notice.

There are a lot of them in the U.S. -- about 25,000. The average veterinary office is two doctors in a practice in basically every town in America. About a quarter to a third of their business is dispensing medicine and dietary products to their customers. And, unlike a human doctor, who might write a prescription and send you to a pharmacy, a vet will write a prescription and dispense the medicine right there.

Vets are having to stock all these medications in the event someone might walk in the door and need it. It's inefficient to have so many medications on hand for a relatively small customer base.

Q: But why turn over a significant portion of their business to you?

A: Retail and Internet mail-order pharmacies directly compete with veterinarians in a core aspect of the veterinarian's business.

The veterinarian is the one who has a relationship with the pet owners. We actually set up an online store that allows the pet owner to buy directly from the veterinarian -- it's really reinforcing the vet-client/patient relationship.

There are three prime scenarios: First, you as a pet owner might go online to try to buy more heartworm or flea and tick medicine. You know the product and you're just interested in refills. The medicine could be cheaper online. That's a pet owner-initiated order and the veterinarian has to authorize it.

The second scenario is to get a prescription from the veterinarian. Maybe you're going to go home and check prices online, and the vet can upload a prescription to our system and then our system checks with that pet owner to see if they want to complete the purchase. We estimate that 50 percent of pet owners leave the vet's office without the product, and we're really facilitating the veterinarian with the follow-up work, to remind them that we have a prescription and to follow up with the customer to make sure the medicine is ordered.

The third scenario is the one that's exciting, and that's the one where, increasingly, veterinarians are ending the inventorying of medicines in their practices. The medicines ship from our warehouse to the client, and the vet no longer has to be burdened with (carrying) a large amount of product. We have a lot of practices where we manage probably 80 percent-plus of their inventory. For a lot of pets with chronic illnesses or diet needs or maintenance and preventive medications, we're a perfect fit.

Q: How have you been able to rack up such a high growth rate?

A: We have veterinarians signing up at a high rate, and the reality is that our business is going to continue to grow very quickly. Our current customers dispense over $1 billion worth of drugs, and we have a tremendous growth opportunity. There are material benefits in economies of scale, in drug purchases and in making bigger and better investment in equipment and better business intelligence tools.

We've been able to leverage the buying power of our 10,000 veterinarians and make some unique and compelling pet owner offers that the veterinarians wouldn't have been able to develop on their own. Our growth also requires us to maintain high service levels. To date, our team has done a fantastic job keeping up with that.

Q: Presumably, you have a house full of cats and dogs.

A: My father has two dogs, my sister has one and a cat, and my mother has a cat. I'm dealing with a newborn baby at the moment -- we have a 6-year-old, a 4-year-old and 6-month old -- so we're not actively dog owners. We love dogs, particularly, and the whole family has had lots of cats, but the kids need to be at a good age where they can take care of them.

Growing up, we've always had pets and my wife has, too -- she's had five dogs. Our kids will have dogs -- we're under a lot of pressure from them to get one -- but our baby, Hannah, could be a little tough. She likes to chew.

Edward D. Murphy can be contacted at 791-6465 or at:

emurphy@pressherald.com

 

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