'Eat Your Own Dog Food'

What Is "Eat Your Own Dog Food"?

"Eat your own dog food" is a colloquial expression that describes a company using its own products or services for its internal operations. The term is believed to have originated with Microsoft in the 1980s, although the terms true origins are debated. The gist is that if a dog food is of the high quality advertised to consumers, then it should be good enough for a person to eat as well.

While it was originally used in reference to software companies using their own internally-generated tools for software development, its usage has spread to other areas as well. The term is sometimes shortened simply to "dog food."

Understanding "Eat Your Own Dog Food"

The basic premise behind "eating your own dog food" is that if a firm expects paying customers to use its products or services, it should expect no less from its own employees. Not using its own products for internal operations may imply that a company does not think its products are best-of-breed despite its public proclamation of the belief and that it has more confidence in a rival's offerings.

Fund Managers Prefer "Human Food"

There's a similar saying in investment management: "Eat your own cooking." Assuming fund managers are human beings, not dogs, the food would be fit for human consumption, and the food, in this case, is a portfolio of assets. As a marketing tactic to attract investors to their funds, portfolio managers (PM) will tout the fact that they eat their own cooking by investing their own money alongside the shareholders of their funds.

In 2005, the Securities and Exchange Commission began requiring mutual funds to disclose the amount of PM's personal investments in their funds. Morningstar, the mutual fund research and rating firm, conducted a study in 2015 that indicated that funds managed by PMs with higher personal investments delivered greater returns than the average of the competition— meaningfully so, in many cases—depending on the asset class and on the amount of personal funds invested.

For example, for global equity funds, where PMs invested $1 million or more of their own money in the funds, 68% beat the competition average, compared to 32% of funds with PMs who did not personally invest a dime over a five-year period from 2009-14.

Example from a Marketing Blurb

This excerpt from a Hodges Capital Management marketing piece helps explain the concept:

Just as you would not hire a vegetarian as the head chef at a renowned steakhouse, we believe it is important for investors to consider a manager's personal ownership when selecting a mutual fund. At Hodges Capital Management, we "eat our own cooking" as all of our portfolio managers have meaningful ownership in the mutual fund(s) that they manage.