Can tigers be a sustainable business model?
Viewed from conventional business lens, tigers are an awful asset class.
The fundamental problem: timing of cash flows
In any business, you want to match the duration of your assets and liabilities. More simply, you want your bills to be due at the same time cash flow comes in. Otherwise, it’s easy to get into trouble.
Let’s pretend you own a tiger cub. Let’s call him Tigger. And let’s look at the timing of cash flows over the course of Tigger’s lifetime.
People adore tiger cubs and are willing to pay big bucks to pet them. For example, Jeff Lowe, who still owns GW Zoo, charges the equivalent of $500 / hour!
So Tigger generates some serious cash while he’s young. But as we saw on the Netflix show, after a mere few weeks, he is no longer be cute and cuddly. Tigger quickly becomes a dangerous liability both physically and financially.
So all of a sudden, you are making no income and you have some big bills to play with no end in sight.
You are scrambling for ideas, and the thought comes to mind, what if you exhibited adult Tigger and charged admission?
You realize that is almost certainly not feasible from a business standpoint, or else there wouldn’t be a big cat crisis in this country. So you scratch that idea.
Now what do you do? You are getting desperate.
Morally dubious tiger business practices
Well, there are two morally dubious shortcuts you could take to mitigate liability.
Option #1: Joe Exotic taught you that the market rate for tiger cubs is ~$3,000. You find Tigger a girlfriend, breed cubs and sell the cubs. You generate immediate cash for yourself and shift liability to someone else. When Tigger Jr. grows up, those costs will be someone else’s problem. Congrats, you have just made the big cat crisis worse.
Option #2: If you think Option #1 is bad, Option #2 is even worse. In the Netflix show, you learned about the allegations of euthanasia against Joe Exotic & Doc Antle. That’s certainly one way you can end your liabilities immediately. Are you barbaric enough to dispose of your beloved Tigger?
Assuming you don’t want to take either option. Let’s start over and see if there is a principled AND profitable way to operate a tiger business.
Brainstorming an ethical tiger business model
You can try to pull a Carole Baskin and operate a rescue park, but good luck if you wish to compete against her. After all, you’ve seen what happens to her enemies!
You could sell tiger naming rights (maybe even multiple times over like a timeshare model).
You could sell sponsorships or “adopt-a-tiger” programs, but Carole Baskin seems to have cornered that market.
Gimmicks aside, realistically, cub petting is the only feasible path for you to become the next Tiger King. But running a tiger petting operation humanely is expensive.
To avoid animal abuse, you shouldn’t allow petting until Tigger is 8 weeks old, after all of his vaccinations are complete. And according to the USDA, tiger cubs become too dangerous to pet after week 12.
So unless you are okay with young Tigger getting sick, or your customers getting maimed by teenage Tigger, you only have 5 full weeks in which you can earn serious income from the animal.
Running the numbers to try to make it work
Remember, after Tigger is no longer cute and cuddly, he will become a financial burden.
Using Carole Baskin’s $8,000 estimate as the annual all-in cost of supporting Tigger for the next 20 years, the total lifetime cost adds up to $160,000.
Can you make $160,000 profit in 5 weeks?
Assume 6 exhibiting days (1 day of rest / week), 6 hours of petting time a day, a couple of employees, insurance, etc. You would need to make somewhere around $1,000 an hour to break even.
That’s double what Jeff Lowe charges at GW Zoo, which I would assume to be market rates.
It’s hard to adopt ESG (Environmental, Social and Governance) best practices when less high-minded competitors are able to undercut you.
Now, maybe my assumptions & calculations are wrong. And maybe I’m being unfair to Jeff Lowe, and he is in fact an upstanding businessman who a) really cares about animal welfare and b) is running an ethical operation. I can’t really opine on that, but you should just watch the show and decide for yourself . . .
A solution to market failure
Hypothetically, if everyone in the tiger industry agrees to a set of sustainable business practices and abides by them, then the supply of tiger cubs should decrease. Naturally, the price of tiger petting will go up, which can support the ethical model outlined before.
The problem is that as the price of tiger petting goes up, the incentive to cheat the system and breed more tiger cubs grows. Without someone to enforce the rules, any kind of industry agreement is unworkable.
We need someone with the power to punish the rule breakers. But as you saw in the show, it’s been politically difficult to pass any such legislation.
There is a solution though – in the absence of the law – we have the Carole Baskins and PETAs of the world.
As the next Tiger King, rather than antagonize the animal rights people as Joe Exotic did, why don’t you work with them?
You could put in safeguards against abuse and publicly showcase your humane practices. You could livestream each animal 24/7. You could be transparent about everything, i.e. share medical records, food records, financial records, and more.
You saw the animal rights people chase Joe Exotic out of the malls. They are powerful. Get them on your side. Not only can they help you acquire demand, but they can also hinder your less honorable competitors.
Tiger cub petting doesn’t seem likely to disappear, so the industry might as well be led by someone ethical.
That someone might as well be you!
About the author: Yishi is a former hedge fund investor and current entrepreneur who enjoys thinking about businesses in his free time. http://www.yishizuo.com/about/
He is the CEO of DeepBench. We connect users with experts on any topic in any industry, and we also license our software to enterprises to help them build their own knowledge networks. (Check us out if you are interested in joining our network or using our product!)