All-Star Student Entrepreneurs: Profiting From Pet Potties

Tilden Smith, 20

Junior, Chapman University

International Pet Solutions

It takes guts to launch a product at a Las Vegas trade show at any age. Tilden Smith did it at 19.

When Smith’s high school pal Dylan Balsz called in the fall of 2009 with his idea to start a business selling indoor outhouses for pets, Smith was enthusiastic. Balsz, a graphic designer, had dreamt up a smart design that involved a fake rectangle of lawn, and a removable tray. Once the two started researching the market, they found that the leading product, the high-end Pet Loo, was retailing for up to $250. Other devices cost $70 or less. Smith, then a freshman at Chapman University in Orange, Calif., liked the idea of pricing their product in the middle of the market.

In his early teens, Smith had founded an online medical equipment distributor that he says helped him save more than $40,000. Balsz had run a freelance graphics business that did both print and web design. Both had plenty of experience in sales and customer service.

Two years later their company, International Pet Solutions, has rung up more than $100,000 in revenues, mostly on sales of PetLawn, a $120-$150 doormat-sized device covered with artificial turf that masks a removable tray with a disposable, absorbent pad. Compared to rivals, "PetLawn has a better look, style and size," says Craig Saling, former Merchandising Manager at the California Passionate Pet store chain, which began stocking International Pet Solutions products in January.

Perfecting the design was tougher than they expected. Balsz’s initial wooden prototype failed to elevate the turf above the tray. After studying the way a bunk bed supports its top mattress – and testing his ideas on his dog Lucy – Balsz figured out how to make the plastic grate that holds the turf. Rather than hire a pricy designer, he downloaded free modeling software from Google called SketchUp, watched some instructional YouTube videos, and laid out the plans himself. He also found an Irvine-based manufacturer who converted his drawings to CAD (computer-assisted-drawing) files and agreed to produce prototypes.

Smith, now 20, came up with the name, PetLawn, and he and Balsz decided to launch their product at SuperZoo, a yearly pet industry trade show in Las Vegas in mid-September. The night before the show, they drove to Las Vegas, arriving at their hotel at 4:30 a.m. Since their customized boxes weren't ready, they printed out large stickers and affixed them to blank boxes. By 7 a.m., they were setting up their booth with placards Balsz had designed.

"It was a crash course on everything," says Smith, who learned how to pitch as the show progressed. Though he and Balsz were the youngest exhibitors, the store owners and managers at the show didn't mind -- perhaps because they didn't realize Smith and Balsz ran the company. The duo came away with hundreds of connections. Their first big delivery, to a 14-store chain in California, was a hit, selling $10,000 worth of products in two weeks. After a second trade show, Global Pet Expo in Orlando, Florida, PetLawn extended its reach to 130 stores in the U.S. and Canada. They also sell accessories like absorbent pads, replacement grass, plastic "waste bags" and a spray cleaner.

Click here for more about Forbes’ All-Star Student Entrepreneurs and their start-up summit with Michael Dell.

Headquarters has shifted from Smith's house and Balsz's dorm room to a warehouse and office in nearby Santa Ana. The company recently hired one of Balsz's friends as its first full-time sales representative and is collaborating with distributors to sign big chains and East Coast retailers.

It's a full-time summer job for Smith, who handles operations, and Balsz, who oversees sales, but they plan to return to Chapman in the fall and graduate in 2013. The juggle can be tough. Smith once flew back to campus from a trade show to take a mandatory test. Balsz says a professor threatened to fail him when he skipped a midterm to meet an important customer.

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In May, the two won Chapman's annual business plan competition and met Jeff Erle, an angel investor they call a mentor. Erle told them to push their suppliers on delivery dates to ensure they meet retail deadlines. He has also advised them on a May acquisition offer from a New York pet product manufacturer (Smith says they're not selling.)

Launching the company proved more expensive than they had anticipated. Tradeshows alone have cost them $22,000. In Oct. 2010, after tapping Smith's savings, they began asking friends and family for loans. Smith says he expects to pay off those debts within a year.

Despite the crunch, they plan to update PetLawn's design and introduce two products this fall, including a spray-able "attraction scent" to lure dogs to use PetLawn. The company also wants to branch into products for pets other than dogs and add stores in Australia and Japan while continuing to offer local production, natural or recycled materials, reasonable prices and hands-on sales and service.

Understandably for two Millennials who grew up in California toting iPods, iPhones and MacBooks, Apple is a role model. Balsz says he wants International Pet Solutions to be the “Apple of the pet industry” by delivering sharper designs, more frequent updates and hipper packaging than its competitors.

Click here for more about Forbes’ All-Star Student Entrepreneurs and their start-up summit with Michael Dell.