Contemporary Business 14th Edition by Louis Boone, David Kurtz

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Case 6.1 Marco Giannini's Dogswell: A Healthy Company after All: There's no question that pet lovers around the United States are willing to spend whatever it takes to enhance their companions' lives-they'll purchase gourmet food and treats, a variety of toys, and even services such as "day camp" for dogs. Marco Giannini himself is a dog lover. He is also a serial entrepreneur whose previous business-Clear Day (a natural beverage company)- went bust about ten years ago. Giannini learned a lot from that experience, and when he started his new company in California, Dogswell, he implemented those lessons. Dogswell is a manufacturer and marketer of natural dog treats with catchy names like Happy Hips and Mellow Mut. The treats contain supplemental ingredients intended to help fight conditions like arthritis and hip dysplasia, both of which are common among medium-sized to larger dogs. The treats have been a hit-within five years, Dogswell sales topped $17 million. But Giannini wasn't satisfied with just a small bite of the pet-care market. An entrepreneur who is well known for his high energy and self-confidence, Giannini also likes the high-stakes gamble of thinking big. So he decide to introduce a line of dog food. "I wanted to become a household name, and I figured, food was the way to get us there," recalls Giannini. Dogswell's new kibble performed beautifully in taste tests-dogs chowed it down. Dogswell was already a national brand with a presence at chains like Whole Foods and Target, so it wasn't difficult to get the new kibble to the shelves. But Giannini decided to offer coupons for a free $10.99 bag of kibble with every purchase of a 15-ounce bag of treats, which sells for about $16 to $20. The coupon promotion ended up costing the company $100,000 a month and failed to attract repeat buyers quickly enough to cover the loss. As his company began to crumble, Giannini frantically searched for private-equity investors who would continue to believe in him and his products. His optimism paid off in the form of TSG, an investment group willing to take the risk as along as Giannini went back to his core business-healthy dog treats-with food following more conservatively. "With all the success, I had gotten cocky," admits Giannini." He acknowledges his own mistakes and vows to learn from them, as he did with Clear Day. Despite the ups and downs of owning a company, Giannini wouldn't be happy in any other kind of job. "Tolerance of small business and taking chances-doing what you want to do-is something that runs in my family," Giannini says proudly.
-Giannini secured financing from a private equity group. How will this affect his control over the business? What other types of financing might have been appropriate for Dogswell?