While Boston didn’t win the Amazon HQ2 sweepstakes, this city has turned out to be the perfect place for online pet supplier Chewy to set up its own second headquarters.
Chief executive Sumit Singh said his Florida-based company employs about 330 people in its own “HQ2,” in roughly 50,000 square feet on Congress Street in Fort Point. Most of those jobs were added in the past 18 months. And there are many more on the horizon: Singh anticipates the Boston office adding 75 to 150 new positions by this time next year.
Chewy received a new infusion of cash in June thanks to a $1 billion initial public offering (Privately held PetSmart, which acquired Chewy in 2017, retains a controlling stake). Singh said the IPO helped draw attention and provided a new way to compensate employees, making it easier to grow the ranks of “Chewtopians.” (There are now about 12,000 of them, Singh said, mostly working at distribution and customer service centers.)
“It’s been a rallying cry for people,” Singh said of the IPO. “It also helped raise brand awareness.”
Singh previously was a top Amazon executive. He is driving the fast-growing Chewy to be more “high-touch” than his prior employer, to connect with pet parents on a personal basis. The goal: to build a repeat business by sending portraits, cards, and the like to customers.
Chewy, which reported $3.5 billion in revenue last year, picked Boston for its second headquarters before Singh arrived in early 2018. Singh, though, has some insight into the decision. The main goal was to find a city where Chewy could have its pick of tech talent, and Boston has that in spades. It also helped that Boston is just a relatively short flight away from the main office in Dania Beach, Fla., just outside Fort Lauderdale. Before setting up shop in Fort Point in 2017, Chewy had nearly three dozen Boston employees at a WeWork office.
Soon after he joined the company, Singh worked with chief technology officer Satish Mehta to grow the Boston office, which Mehta now oversees. A range of corporate functions are now handled in the office, from human resources to data science to marketing.
“When you look back, we can proudly say that the bet has paid off,” Singh said. “We are proudly dual headquartered in Boston. We love the community.”
Boston also has a historic connection with Chewy: Local VC firm Volition Capital was one of Chewy’s first investors, back in 2013.
Singh has become a big believer in Boston’s potential as a hub for consumer-focused companies, and he points to the success of home-grown businesses such as Kayak, TripAdvisor, and Wayfair as well as the significant bases for West Coast giants Amazon and Google that are here.
“These are world-class companies that attract and retain world-class talent,” Singh said. “For us to make a meaningful contribution to that pool is a very proud thing.”
From Link, funding for tech ventures
Boston’s consumer tech scene also got a boost when local VC firm Link Ventures closed a $100 million-plus fund in September to invest in early-stage Internet companies. Link then unveiled an investment in Own Up, a mortgage services firm, in October, the first from the new fund. That was followed by a deal announced last week: a $6 million round of financing led by Link, for Trust & Will, a San Diego startup that offers estate planning services.
Link’s small army of data scientists at its Cambridge offices helped persuade Trust & Will chief executive Cody Barbo to select Link as the lead investor in this “Series A” round.
“They picked us because we have some real expertise with data, and we can help them find their [next] customers,” said John Werner , managing director at Link. “We firmly believe that Trust & Will is building the foundation for a category leading brand in modern estate planning.”
To Switzerland,via Boston
Spark Therapeutics is based in Philadelphia, and Roche is headquartered in Switzerland. But like most things biotech, the road to Roche’s acquisition of Spark took the merger partners through Boston. The two drug companies completed their $4.4 billion deal last week.
But it might not have happened without help from Boston law firm Goodwin Procter, which was hired by Spark to handle the sale.
Stuart Cable, who chairs Goodwin’s global M&A practice, says there were two unusual aspects to this deal. One was the protracted nature of the antitrust review that the Federal Trade Commission and its British counterpart conducted. Regulators needed to be persuaded that Roche wasn’t just buying Spark and its hemophilia A treatment, currently in clinical studies, to thwart a potential competitor for Roche’s existing hemophilia drug. Cable said Spark and Roche submitted “millions of pages of documents” as part of the process. The regulators ultimately decided there was sufficient competition in the hemophilia space.
The other remarkable aspect of this acquisition: an unusual bidding war.
Goodwin and investment bank Centerview Partners orchestrated an auction that ultimately resulted in Roche agreeing to pay $114.50 per share for Spark, back in February. (That price, by the way, was equal to roughly three times Spark’s stock price a year ago.) Roche chief executive Severin Schwan initially offered Spark chief Jeffrey Marrazzo $70 a share last December. Then Spark decided it would test the market, to see if anyone would be willing to pay more.
Eventually, Roche and one other bidder were left in the hunt.
On a Friday in February, Spark gave both bidders only a few hours to prepare their best and final offer — this time it was for real. The message went out at 3 p.m. By 6 p.m., both offers were in, and Roche’s won, by more than $9 a share.
Cable said Goodwin has developed a reputation in the life sciences field, in part because of its expertise; many of its attorneys have PhDs in fields such as chemistry and microbiology, along with law degrees.
“We’re known as the people who sell big life sciences companies, we have that franchise,” Cable said. “The Spark deal shows that not only is biotechnology great for Boston. It’s also an example of how service providers, like us lawyers, can gain a competitive advantage.”