A Clinical Success

A Clinical Success

ENTREPRENEUR by Isabelle Gan | Contributing Writer

Stepping into Bryan Shobe's office, you'd never know he was the head of a $6 million animal hospital chain operating 3,000 miles away.

There are no pictures of animals on the walls. In fact, there's hardly anything on display at his office next to Coasters restaurant on Stickney Point at the edge of Little Sarasota Bay. The one-room space is very basic: There's a couple of computers, desks and chairs, with a vacuum cleaner stashed in the corner.

Shobe himself is unassuming. When he talks about how he's able to live a relaxed lifestyle in Sarasota, he sounds more appreciative than boastful. Shobe, 52, is president of Vetco Hospitals Inc., a California-based company that owns and operates 140 vaccine clinics and five full-service pet hospitals in Petco stores in California, Utah, Colorado, Arizona and Nevada. The company also operates an e-commerce Web site selling preventative care products to pet owners.

"We're fortunate that we've got highly qualified managers that can run things in California. I used to go out there once every two weeks, now I go maybe once a month because they can handle things," he says as he looks out his window at the boat docks and the shimmering blue waters near Siesta Key's South Bridge. "I mean, this is perfect. I've got a great view and I work close to home."

Vetco's year-end revenue was $6 million, with earnings of about $160,000. That's a far cry from 10 years ago, when Shobe first took over the business from Petco for a mere $150,000.

Back then, Petco was having trouble running its four hospital clinics in Southern California, an operation it had originally bought from Shobe and his partners.

"It was hard for them to make it work because a retail business, selling pet supplies, is very different from a service-oriented operation like a vet clinic," he says. "You need to be more hands on. You need better training for employees."

Shobe focused on developing talent from within the company, increasing the number of managers. That enabled Shobe to delegate operational tasks to key employees and open more clinics.

"My number two guy, for example, he started out cleaning kennels as a college student," he says. "We encouraged him to be a [veterinary] technician and now he's our operations manager."

Garrett Trawick, Vetco's director of mobile services, is another example of Shobe's method of training and promoting from within.

"He looks for somebody in the company first to fill a position before hiring from outside," says Trawick, who started as a part-time veterinary assistant for Vetco in 1997. "I had no experience in the field. Slowly but surely, I worked my way up the ranks."

Shobe's got answers

Shobe's success with Vetco is only the latest among a long line of business achievements. He his entrepreneurial sprit was honed at a young age.

As a teenager growing up in San Antonio, Texas, Shobe experimented with different moneymaking enterprises. Like many teenagers, he delivered newspapers and charged for lawn-mowing services. Unlike most high school students, however, he also thought of more atypical ways to make money, growing and selling plant seedlings and offering rock arrangement services for people's gardens.

At the same time, Shobe invested the money he earned in the stock market, making $200 to $400 at one time.

After college, Shobe invested some of his money and borrowed from the bank to buy distressed retail businesses. The most successful project was a failing Radio Shack in the western slope of Colorado. After purchasing the business, he realized the former owner had botched employee relationships and customer service so badly that he had to reinvent the store. He renamed it The Listening Post, improved the store's image and opened a location in New Mexico. He eventually sold the business at a large profit.

After that, he went back to his hometown to work for Fox Photo, a photography processing company that owned hundreds of Hallmark stores. He was assigned the task of turning around some of the more unprofitable retail stores.

Through it all, Shobe says he got better at remedying lapses in management, a major cause of retail failure.

"You need to empower your employees," he says. "If they do a good job, you give them more responsibilities. If they can't handle things, you help them."

In the early 1990s, he decided to go back to entrepreneurial life. He settled on the pet industry.

A good formula

At the time, Petco and PetSmart already dominated the pet food and supply retail industry. But their stores were akin to large warehouses.

"I thought they didn't deliver the live-animal appeal," Shobe says.

A few years later, he partnered with some investors and opened four stores in Southern California. Called Pet Metro, the stores exhibited live animals displayed in their natural habitats. The stores also offered a complete array of pet services from selling food and pet supplies to operating full-service pet hospitals within the buildings.

The company eventually sold to Petco, which quickly adopted the Pet Metro concept for its other stores. A few years later, however, Petco realized it was having trouble with the veterinary services department.

After Shobe took over that part of Petco's business, he quickly realized that his company's growth would rely on the vaccine clinics. They offer low-cost service and are convenient to Petco customers. The average visit lasts 10 to 15 minutes. And clinics are open during evening and some weekend hours. "That formula works really well," he says.

More importantly, the clinics required less capital to open. Full-service pet hospitals, which offer diagnostic and surgical services and are open daily, are more expensive to set up. Vaccine clinics, in contrast, don't need as much inventory and are only open a few hours a week.

In the last few years, he's concentrated on how to take Vetco national by opening up clinics in the east coast. That's what brought him to Sarasota.

In 2004, a group of local investors expressed interest in merging with Vetco. So, he moved with his wife, two of his three kids and Fred, the family's lab-dachshund mix, from Huntington Beach, Calif. to Sarasota. His eldest daughter stayed in San Diego to attend college.

He declined to say who the investors were, as the deal eventually fell through.

Instead of moving back, however, Shobe made the most of his new neighborhood, looking for other business opportunities.

"When we moved here, we decided to jump in with both feet. That's our style. Life brings you changes and you can either fight it or go with it," he says. "The best thing is to jump in, adopt the change and get involved."

Lost and found

Shobe has moved on to another merge effort, which he hopes to complete by the end of the month. The deal would be a reverse merger with publicly owned SkyLinx Communications, a Sarasota-based wireless data company. In a reverse merger, the shareholders from the bigger private company being acquired eventually takes over the smaller parent company after attaining a large number of shares of the public company.

In Vetco's case, SkyLinx would acquire Vetco in an all-stock deal worth $3.2 million. Eventually, SkyLinx will be renamed Vetco, Shobe says.

The reverse merger allows Vetco to go public without going through the traditional route of an IPO. More importantly, by becoming public, Vetco increases its access to capital for future expansion, Shobe says. It also brings with it a promising new opportunity.

"The reason we chose to merge with SkyLinx is they have technology that allows for pet tracking," he explains. "It's unique equipment. We're looking at how we can deliver it as a product that's low cost."

Shobe hopes the product will be a better seller than the microchip technology that's used to locate lost pets today.

The new product will be a big part of Shobe's expansion plans for Vetco. But its vaccine clinics still will be its major moneymaker.

"We're going to concentrate on opening clinics in the Sunbelt states first and then along the east," he says. "Eventually we'd like to grow to 500 clinics"

Florida, for example, promises to be a lucrative market for Vetco's vaccine clinics. The state's year-round warm climate is a breeding ground for pet parasites and diseases.

Bryan Shobe on how to grow a business

•Train and promote from within: "If you want to grow past a certain region, you have to develop your people. You do that by empowering them and monitoring. If they do a good job, give them a little bit more. If they can't handle the job, help them. If they still can't do it, give them something else to work on and give the job to somebody else."

•Financial incentives: "We have very low turnover. That's also because of the fact that we pay our people well."

•Get in the right business: "Identify a business that has the margins that allow you to put qualified managers in place. If you can't do that in your business, you need to be happy to run it yourself or to sell it and look for another one."