Case | HBS Case Collection | March 2002 (Revised May 2003)

NeoPets, Inc.

by Thomas R. Eisenmann and Elizabeth Kind

Abstract

NeoPets, a rapidly growing Internet start-up, faces decisions about its international expansion strategy--whether to enter a joint venture with a conglomerate in Singapore to exploit Asian markets as well as which other regions to target. NeoPets allows its users--mostly children and teens--to create and care for virtual pets in an online world. The Web site is free to users and is supported by advertising akin to product placement in movies. NeoPets reached profitability four months after launching operations in late 1999, largely due to the fact that it spends nothing for customer acquisition, relying strictly on word-of-mouth. As of July, 2001, the company had over 8 million unique users and was ranked #four among all U.S. Web sites for "stickiness," the average amount of time that users spend online.

Keywords: Expansion; Global Strategy; Network Effects; Joint Ventures; Business Conglomerates; Age Characteristics; Online Technology; Product Positioning; Online Advertising; Web Sites; Internet; Corporate Entrepreneurship; Information Technology Industry; Asia; Singapore;

Citation:

Eisenmann, Thomas R., and Elizabeth Kind. "NeoPets, Inc." Harvard Business School Case 802-100, March 2002. (Revised May 2003.)