In just a few short years, this 34-year-old sold his company to PetSmart for $3.35 billion. There are companies whose success can be filtered down to one core competency, something that sets the brand apart and lifts it to new heights. For Ryan Cohen, co-founder of Chewy, that defining characteristic was a superior customer experience. His motto of “delight the customer” transformed a bootstrapped pet products business into a multi-million dollar company.
Cohen entered the world of coding and website building very early in life. At age 13, he built a website for his father’s glassware importing business in Montreal. His father taught him the backbone of running a business, instilling into him valuable advice, such as taking the long view for growth rather than that of fast cash. He watched his father lead by example, get his hands dirty, and dedicate himself to customer satisfaction.
Ryan Cohen earned thousands of dollars as a kid
Cohen discovered the lucrative concept of affiliate marketing—directing traffic to a website and collecting a percentage of any resulting sale. By age 15, Cohen was collecting several thousand dollars a month from the websites he built to take advantage of the idea. His lessons from his father had made him careful to save heavily from those earnings. As a result, he left high school with more money to his name than with which many American adults end their careers.
As a teenager, Cohen had never been interested in college. He decided to try, but he dropped out quickly in favor of pursuing entrepreneurial opportunities. He continued building affiliate marketing websites until the age of 25 when he met Michael Day in a Java chatroom. They hit upon the idea to start a jewelry website that provided a more personal experience for the consumer, and Day dropped out of college to partner with him.
The two put up $150,000 of their personal funds to purchase an initial stock of jewelry and build the website. Neither of them was particularly passionate or knowledgeable about the jewelry field, though, something they became increasingly aware of as they attended trade shows and sales events.
The course correction that changed Ryan Cohen’s life forever
The pivotal moment for Cohen came a week before the official launch of the company when he went to his local pet supply store to purchase food for his beloved toy poodle. While there, he reflected on how nice it was to have someone knowledgeable to talk to about his dog’s dietary needs but wished that the stores were more convenient. Right then, the idea struck him for Chewy—an online pet food store that combined the best of both worlds.
Both men felt excitement and passion for the idea in a way that they had not experienced regarding jewelry. Cohen and Day were avid animal lovers and had first-hand experience and knowledge of what pet owners wanted. They canceled the official launch of the jewelry site only days before and then sold back their inventory at a 20% loss.
In 2011, they officially launched the website Mr. Chewy, although it soon changed to Chewy. In an intensely competitive market, Cohen was determined to differentiate the company through superb customer experience. They accompanied their initial offering of fifty dog and cat food brands with generous first-order discounts and competitor price matching. This tactic lost money but was highly effective at spreading the word about their platform.
Ryan Cohen’s secret weapon to success
The website exploded in popularity almost immediately, generating over $2 million in sales by the end of 2011. Despite the impressive gross revenue, however, the site lost money. Nonetheless, he insisted on not only keeping the value bonuses for customers but also pushing genuinely outstanding customer experience. Cohen’s vision of replicating an intimate local pet store experience online centered on the immediate availability of knowledgeable human support. He was convinced that by generating brand loyalty and selling high quantities of products, Chewy would be incredibly successful.
With that in mind, he hired customer service workers for round-the-clock shifts who answered phones and emails. Cohen viewed every angry customer as an opportunity to turn someone into a lifelong enthusiast. He authorized and encouraged his team to come up with creative and unusual ways to wow the customer, from over-refunding orders with issues to sending gifts personalized to the customers’ unique situations.
New keyboards, kid’s bedsheets, flowers to customers whose animals had passed—all of these examples and hundreds more began to create an intensely loyal consumer base. Cohen even hired artists to create custom portraits for customers who had sent the company pictures of their pets, free of charge. Hand-written holiday cards went out to all of their buyers. By the end of 2012, Chewy’s revenue stream had increased to $26 million.
The early investment that changed Chewy forever
With the enormous growth in fulfillment obligations but little profit to spend, Cohen faced the urgent need to bring in investment capital. In December 2012, he flew from Florida to Silicon Valley to walk in-person to numerous established venture capital firms to present propositions to them. None would even see him. Investors were intimidated by Amazon, the juggernaut of the e-commerce world. Undeterred, Cohen tried again three months later with the same results. Dozens of cold calls to investment firms all resulted in the same firm rejection. In all, over 100 investors and firms refused him.
One of those refusals came from Volition Capital’s Larry Cheng, who was polite but put off by Cohen’s young age and lack of education. However, when he checked back in six months, he was extremely impressed by Chewy’s growth, which had heartily beat the projections they had given him. Deciding to take a chance on the company, he invested $15 million.
This cash infusion was used immediately to establish a far more efficient in-house supply and distribution chain. Due to the immediate need for scaling and the time needed to build their own warehouses, Cohen instead hired experts to find and establish three fulfillment centers in advantageous locations. During this process, they experienced extensive difficulties with staffing, software, and equipment malfunctions. Despite the setbacks, they managed to have all three centers fully functional in under six months.
Chewy was acquired by PetSmart for $3.35 billion
The company grew explosively with the combination of fantastic dedication to customers and excellent value propositions, reaching $205 million in 2014 and $423 million in 2015. In 2016, Cohen employed over 7,000 team members and had established six massive fulfillment centers. They had sent over two million holiday cards, were sending 700 art pieces weekly, and had cut their response time to five seconds for calls and 30 minutes for emails. Most strikingly, they brought in just over $900 million in gross revenue.
In 2017, the founders decided to take Chewy public. Instead, however, he was approached by PetSmart, one of their primary competitors, with an offer to purchase the company outright. Within 30 days, they had finalized the sale for $3.35 billion. Cohen stayed on for another year as CEO but left in March 2018 to spend more time with his family and pursue new business ventures.
Ryan Cohen’s net worth
The casual observer would be forgiven for not realizing 34-year-old Ryan Cohen has a net worth of over $600 million. He has lived in the same house since 2013 and has driven the same car for several years. His passion and joy lie in his family and in growing things that bring happiness to millions of people, not in money for its own sake. His newest venture is GameStop, which he plans to diversify into a wider e-commerce platform. With his passion and talent for keeping a happy and loyal customer base, the future looks bright for both Cohen and his business endeavors.