A trader's confession: After consecutive business failures in pet fresh food, fitness canned food, and tea bags, I finally discovered the essence of making money.

A serial entrepreneur, put less diplomatically, might be called a “serial business failure.”

The protagonist of this article, Cao, was once such an operator. In his early 30s, he had millions of dollars at his disposal and was riding high. However, after three consecutive business failures, he was in debt, anxious, and unwilling to accept his situation. At night, he would be deeply affected by short videos on Douyin.

So, he became “more realistic.” He said that the founder is just the person who sets up the game. After setting up the game, all resources, people, and money should serve the market for the project to make sense, rather than serving the founder.

Last year, he re-entered the pet industry. In the cat litter industry, which had seen little innovation, he launched a niche product: tea-based cat litter. Within six months, the monthly sales reached 3.5 million yuan. He is now involved in OEM, self-owned brands, and foreign trade simultaneously and has received tens of millions of yuan in financing.

However, when it comes to entrepreneurs who want to enter the pet industry, he tries to discourage them. Why?

Here is his self-narration:

Reviewing Three Failures: Being Deceived by Oneself and by Resources

Before talking about entrepreneurship specifically, let me first introduce my work background.

I graduated in 2006 and have worked in inverter companies, commercial real estate, agricultural companies, and AR companies, mostly in marketing and market promotion. For example, in an agricultural company, I was in charge of overall marketing. It took me two years to visit potential partners one by one and establish a network of 99 agents nationwide, completing the setup of the team and the agency system.

In 2019, I started my first business venture. This project taught me the most profound lesson.

First of all, why did I choose to do pet fresh food?

Because I feed my cats and dogs fresh food. I have a black Labrador. Since it was weaned, I have been feeding it fresh food. I would go to the market to buy chicken breasts, cook them at home, freeze them in the fridge, and thaw them in the microwave before feeding. This Labrador lived to be 15 years old, which is quite old for a dog, indicating that fresh food is indeed beneficial.

90% of entrepreneurs make this mistake: they think that what they need is what the general consumers need. Problems emerged after I started the fresh food business.

First of all, the repurchase rate was very low. We wanted to replace dry staple food with fresh food, but in the end, we found that it only replaced snacks. It became like canned food, something to give to pets when the owner was in a good mood or remembered. This led to a low repurchase rate.

Secondly, there was a low ceiling. During the 618 promotion in 2020, our monthly sales reached one million yuan. However, at this scale, we had almost exhausted the traffic. When we started advertising on Douyin, 80% of the new users were overlapping with the existing ones.

I had to admit that at that time, feeding dry food and occasionally giving canned food was the popular way of pet feeding.

Moreover, we registered the company at the end of 2019, and the pandemic broke out at the beginning of 2020. Nearly half of our products were overstocked and couldn't be shipped. Fresh food, being a frozen product, relies heavily on the cold chain, and logistics efficiency is crucial. In June, if the products were on the road for more than three days, they would swell up. We had to re-send the products if they were damaged.

Actually, if we hadn't aimed for a large-scale project and instead focused on making it small and beautiful, there was still hope. This was my initial idea.

However, after truly entering the pet industry, I was amazed by the large scale and high ceiling of the industry. My ambition started to grow, and I couldn't stop investing money. At that time, I only had a simple calculation in mind: how much profit I could make by investing 100,000 yuan or 1 million yuan.

After several rounds of advertising investment, I realized something was wrong. The repurchase rate didn't increase, and most of the new users were repeats. At that time, the cost of acquiring a new user was more than 40 yuan, and a user had to repurchase three times for us to break even. How was that possible?

When various problems emerged, it was too late to turn back.

I was quite bold at that time. When I ran out of money, I raised funds and actually managed to raise 2 million yuan. With this money, the business could last for another year, but it didn't make sense. What if the data still couldn't turn positive after the money was burned out? Should I raise another round of funds? It was better to cut the Gordian knot.

So, three months after raising the funds, I returned the money to the investors. They were very surprised and said that there was no gambling agreement. But I thought differently. I still wanted to start new businesses. If word got out in the industry that I kept the 2 million yuan at the expense of future opportunities worth 20 million yuan, it wouldn't be good for me. Even now, I'm still friends with these investors.

Normally, one should learn from one's mistakes. But looking back, I don't know why I made the same mistake again in the second project. Since I was into fitness, I started a business making canned food for fitness enthusiasts.

At that time, I was probably deceived by the available resources. On one hand, there was a canned food factory with more than 30 years of experience and its own sales team. On the other hand, a former offline manager of a well - known brand was part of the founding team.

I thought, with a supply chain and sales channels, how could this business not succeed?

We put a lot of effort into our products. We strictly calculated the ratio of protein, fat, and carbohydrates and added chickpeas, carrots, etc., to perfectly meet the nutritional needs of a fitness enthusiast's meal.

However, the results were as follows: First, we couldn't control the cost. Second, the products were too extreme, focusing only on health and ignoring taste. All the ingredients were stewed together and then heat - treated. To be honest, it looked no different from vomit.

Actually, most canned foods have a similar appearance, but other canned foods taste good. Eight - treasure porridge is sweet, and canned black beans can go well with rice. In contrast, our fitness canned food was tasteless. Moreover, who among real fitness enthusiasts who care about health would eat canned food? They prefer fresh food.

In terms of sales channels, we were able to enter channels such as Lawson and Leke Fitness. However, the products didn't sell well, and the turnover rate was low. Eventually, they were removed from the shelves. It all boils down to whether consumers are willing to buy.

In the end, a large number of products were overstocked, and the capital chain was broken. Even in 2023, I was still trying to sell off these canned foods through clearance channels.

In the third project, the bagged tea business, the problems were different from the previous two. The market for this industry is large enough, and some leading brands have emerged. However, I stopped the project during the research phase.

Why?

First of all, I found a factory for OEM production, but the factory owner kept advising me not to do it. I'm probably the first person to have a factory owner advise against starting a business, even though there is money to be made.

He said that since I'm an honest person, he could tell me the cost. The fact is that no matter how we did it, we couldn't compete with the factories in another region. Normally, a bag of tea that costs 0.4 yuan to produce could be made by them for only 0.1 yuan. If we couldn't compete on cost, it would affect the final price, and the cost - effectiveness would be gone.

Secondly, we wanted to make high - end bagged tea. But I found that some product categories are not suitable for the high - end market.

For example, for bagged tea, people who drink high - end tea want to savor the tea, and those who drink fast - moving consumer tea buy brands like Suntory and Oriental Leaves. The positioning of bagged tea is quite awkward. Most consumers' demand is for convenience and for use in business settings, something to make a cup of tea in the office in case of an emergency. In the eyes of bosses, bagged tea is like paper, a necessary office item. They want it to be usable, convenient, and cost - effective.

There are indeed high - end bagged teas on the market now, but they are produced by companies like Tongrentang and Fanghuichuntang. Consumers won't believe in the health claims of fast - moving consumer brands. How can you compete with hospitals in this field? You don't have an advantage in terms of price and procurement channels.

So, one must figure out the core demands of consumers for a product category and who the target customers are. This is a lesson I learned at the cost of millions of yuan, and I won't make the same mistake again.

Pet Industry: “Only Seeing the Thief Eating the Meat, Not Seeing the Thief Getting Beaten”

After all these ups and downs, I finally came across the tea - based cat litter project. This project was quite a coincidence.

First of all, during my 2019 business venture, I accidentally heard a professor mention that he was helping a German company develop cat litter made from tea leaves and pure plant residues. They had actually developed it, but since it was made from real tea leaves, the cost was more than 5,000 yuan per ton.

What does this mean? Even low - quality cat food only costs around 5,000 yuan per ton. With such a high cost, the cat litter would have little market acceptance, so the project was put on hold.

Secondly, when chatting with the owner of an OEM factory during the bagged tea project, he mentioned that a new factory had been put into operation, with three times the production capacity of the old factory. This led to a problem: the old factory extracted 30 tons of tea residues per day, and the new factory produced 100 tons per day. There were no downstream environmental protection companies to handle these residues, and he was very worried.

I thought, why not try making cat litter from tea residues?

It took us about a year to finalize the overall formula. We managed to reduce the cost by 30% compared to tofu cat litter of the same quality and improve the performance by 30%. Since it contains tea polyphenols, there is no need to add deodorants or antibacterial agents, but it has good deodorizing and antibacterial effects. It is also natural without adding any flavoring agents.

Cat litter is, in essence, the toilet paper for cats. We conducted a small survey of 100 users and found that when asked about the type of cat litter they use, the answers are usually tofu cat litter or bentonite cat litter, rather than the brand name.

So, we believe that the brand awareness of the cat litter category is relatively weak, and consumers are very price - sensitive. This is where the advantage of tea - based cat litter lies. Whether it's for brand OEM or consumers, they are basically attracted by the higher cost - effectiveness of tea - based cat litter in terms of basic performance.

For example, many brands sell their cat litter at a loss to attract customers. But if they use our cat litter, they don't have to lose money and can even make a profit. Why not?

This product was officially launched in August last year. Currently, we can sell 800 tons per month, with a monthly sales volume of 3.5 million yuan. We are involved in OEM, overseas sales (foreign trade), and self - owned brands. We have cooperated with JD, Yeezin, KKV, RT - Mart, and have entered some large KA stores. We have also completed tens of millions of yuan in financing.

We started with our self - owned brand “Imperial Gift from Wuhuang.” We promoted it on platforms like Xiaohongshu, Douyin, and Tmall, focusing on ROI. We invested more than 2 million yuan to build a basic customer base. Now, the monthly sales on Tmall are around 600,000 yuan, and we have already recovered our investment.

However, we didn't start the self - owned brand to make money but to drive the ToB business. After all, traffic is very expensive, and cat litter is not a high - margin product. Considering our current team, capital scale, and advantages, focusing on the ToB direction is more appropriate. Currently, brands like JD, RT - Mart, KKV, and Yeezin have started promoting the concept of tea - based and pure plant - based cat litter.

In the future, we will focus on the pure plant - based cat litter market and launch products like lemon - based cat litter and coffee - based cat litter. The cat litter market has seen little innovation for a long time, and companies have to compete on price, making it difficult to differentiate in terms of functionality. Pure plant - based cat litter will be the next new breakthrough point.

In the past two years, some people who were previously in the camping or 3C digital industries have come to ask me if they can enter the pet industry.

I asked them why they were optimistic, and they all mentioned the large market size of more than 300 billion yuan and the annual growth rate. As an old Chinese saying goes, “They only see the thief eating the meat, not seeing the thief getting beaten.”

The store - closing rate of pet brands is 70%. That means if 100 new pet brands open in a year, 70 of them will close the next year, and the remaining 30 may also be eliminated in the third year. Even if a brand has a solid foundation and continues to operate, it is either the founding team or the capital that keeps injecting money.

So, if you want to make a profit in the pet industry, either you have a large amount of capital, and you find the right people, the right market segment, and the right pain points.

Or you can run a small and beautiful business, like opening a pet store near a community. Learn pet grooming and pet medical knowledge yourself, hire a clerk, and you can make a living. It might be a little better than working a regular job. You can also refer customers to medical institutions. I've seen this kind of business model work.

After working in the pet industry for nearly six years, I've found that although people advocate treating pets as family members, and some people really do, at least 90% of pet owners still treat pets as animals that bring spiritual comfort.

I once saw some data. When the medical cost exceeds 2,000 yuan, more than 50% of pet owners will choose euthanasia for their pets. When the cost exceeds 5,000 yuan, 99% of pet owners will choose euthanasia. If it were their own children, they would probably spend all their money on treatment.

In this context, some niche markets like pet funerals and pet photography, in my opinion, are just illusions for entrepreneurs. Just like the fresh food market, it has some demand, but it's very limited.

Think about it. How much information screening cost is needed to find a single customer? And how much economic value can this customer bring? If it costs 10,000 yuan to find one customer, and the customer only spends more than 1,000 yuan on a package, is it worth doing?

I believe that a product that can make pets grow healthily and happily and make pet owners feel okay is more likely to succeed.

When a pet owner feels okay, it's like a “self - gratifying” product. For example, on a holiday, a boyfriend makes a bouquet of flowers with AD calcium milk and gives it to his girlfriend.

Who is really touched? Maybe it's the boyfriend himself. After all, he spent the whole morning going to the supermarket to buy AD calcium milk and then to the flower shop to wrap it up and deliver it. But from the girlfriend's perspective, she might feel a bit embarrassed.

Avoiding “Arrogance” Increases the Chances of Success

Experiencing several consecutive business failures naturally affects one's mindset. Sometimes, in the middle of the night, I would get emo while listening to music on NetEase Cloud. These emotions can't be shown in front of partners, the team, or