Harvard Business Review: The Founder of Chewy.com on Finding the Financing to Achieve Scale
by Ryan Cohen
Most people assume that the high point of my professional career came on April 18, 2017, when the owners of PetSmart paid $3.35 billion for Chewy.com, the pet retailer I had cofounded six years earlier. No doubt, that day was incredible. It represented the culmination of a dream and a tremendous amount of work. But believe it or not, another handshake—another deal—mattered even more to me.
That one happened on September 26, 2013. I had launched Chewy two years earlier with Michael Day, using our own cash and small loans, but my vision was to build a large business, and I knew that significant capital would be required to finance the growth. We approached dozens of VC firms—I even flew out to Silicon Valley from our South Florida headquarters and went door-to-door on Sand Hill Road explaining how Chewy would succeed by delighting customers and running an ultra-efficient operation. But everyone turned us down.
Larry Cheng at Volition Capital was one of the people we pitched our company to. We first met him in 2012; he was en route to Disney World with his family and agreed to make a quick stop at our office. I remember that he asked me, “Who’s going to take this company to $100 million in sales?” I was 26 and probably looked even younger, but I confidently answered, “I am.” He didn’t invest.
He followed up with us about six months later, though. We’d beaten the sales projections that we’d previously given him, and he was impressed. A few days later he signed off on a $15 million investment in Chewy. The satisfaction of that victory was even greater than the pride I felt following the eventual multibillion-dollar sale. After two years of building Chewy—and more than 100 conversations with VCs that went nowhere—I’d finally found someone who believed in me and our business model. Larry had validated our idea.
From that point on, the mission was larger. I was even more committed to making Chewy an industry leader because it was no longer just our own money on the line. Larry had gone out on a limb for us. I felt that responsibility.
I approached every subsequent round of financing, including PetSmart’s acquisition, in a similar way—by underpromising and overdelivering on sales. Our mission was straightforward: to build a best-in-class, customer-obsessed pet retailer. We also wanted to leave everyone who’d backed us a winner.