VentureBeat

About a year ago, Dogster, the social networking site for dogs, made some eyebrow-raising news: It had turned profitable.

Now Dogster has raised a round of $1 million from a group of accomplished “angel” investors, to help it step on the gas.

In talking with founder and chief executive Ted Rheingold, we began to discover the real magic behind the site: It is all about the dogs, but then it isn’t really. Sure, dog owners are flocking to the site so that they can post pictures of their dogs, and check out the profiles of other dogs of the same breed, or of other owners in their neighborhood.

But more interestingly, owners are pretending they are the dogs, and writing little diaries, and the diaries are often becoming more about themselves, as seen through their dogs eyes. Take, for example, the “dog of the week,” a dalmatian/labrador retriever (pictured here) named “TK.” You can see all kinds of things on his profile, including character traits, hobbies, and you can also check out his diary. And this is where it gets interesting. As is typical elsewhere on the site, TK’s diary quickly becomes more about “Mommy” or “Daddy,” less about TK. Under pretense of their dogs doing the talking, owners are expressing themselves in all kinds of ways that they wouldn’t normally. See snippet below by the owner of TK:

In fact, owners may find it easier to say things they wouldn’t be able to say on dating sites. Rheingold is seeing all kinds of things — for example, one post was about a dog whose Mommy came home after something called a “date.” The dog said he didn’t know what a date was, but that Mommy said it didn’t go very well, this date, and so the dog said he stayed by her side and tried to make her feel better.

Now that Rheingold has the recipe, he wants to extend his empire, beyond Dogster, and Catster (his second site, also launched in 2004) to cover every pet — horses, birds, fishes, reptiles, you name it.

In April, Dogster and Catster combined raked in $100,000 revenue, a new milestone, and enough to start hiring more people. A three-man team in 2004 has already grown into a ten person team, and more hires are in the works.

It also gave Rheingold confidence to go out and raise cash. He wanted to be sure he had a sustainable business before taking on outside money. While he wants to avoid hiring 16 people immediately and taking $3 million — like some venture capital firms wanted him to do — it is time to pick up the pace.

The lead investor of this round, Michael Parekh, will join the board. Other Dogster investors are Joshua Schacter (of del.icio.us./Yahoo fame), Adam Beguelin (of Truveo/AOL), Michael Tanne (Wink), Jim Young (hotornot), Mike Jones (Userplane/AOL), George Sarlo (Walden Funds), Frank Caufield (Darwin VC), Aydin Senkut (of Google, now Felicis Ventures), Robert Simon (Alta Partners), Brad Feld (Mobius Ventures) and Jeff Clavier (SoftTech VC).

Rheingold says most dog and cat owners — 63 percent of households have a dog or cat — don’t know about the sites, and so it’s time to do some marketing, another reason to take cash. There are more than 70 million dogs and 90 million cats in the country. It is a $36 billion industry, says Parekh.

Dogster served 17 million page views last month. It has 290,000 dog and cat members, and is seeing a steady 7 percent monthly growth in these numbers, Rheingold said.

It is making money through creative advertising packages. Disney paid for a campaign around Lady and the Tramp, and at first said it wanted to buy a $13,000 banner ad. Rheingold warned Disney it might not be happy with such an ad, because it didn’t mesh with other parts of the site’s main activities. For a banner to be appreciated, he suggested, Disney might want to advertise all over Dogster’s site, from newsletters, to the messages Dogster sends to new members — and also let members talk with Lady and with Tramp — all so that the Lady and the Tramp branding could be better understood in the overall context of the site. Disney agreed. There was even a flat-screen TV contest. After the experience, Disney pledged to make the Dogster site a preliminary campaign for all dog-related movies, Rheingold said.

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Tags: co:Buzzlogic, co:Podshow, co:Podtech, Ted-Rheingold