Here are my top retail tech trends for 2018

It might not mean your team gets to the Super Bowl (sighs), but being in Minneapolis has some serious perks. Last post, I wrote about why we’re America’s retail tech capital—hint: it’s got the startups, the VCs, the blue-chip companies, the Techstars folks—and this week, I’m going to tell you about the view from here looking out.

Here are the top retail tech trends on my mind as we kick off 2018:

We might finally be fulfilled when it comes fulfillment

In this era of two-hour Amazon shipping, warring grocery delivery services, and intense competition for warehouse space, companies are racing to prove their fulfillment system is the fastest horse.

I’m not quite convinced pure speed is the answer. Speed is good, but convenience is better. They’re not the same thing, though they often arrive together. I’m betting as we move even further towards laser-fast shipping, incremental gains in speed will start to matter less, and it will be all about eliminating hassle instead. How often is it that people really need their stuff in two hours or less, and are they willing to pay extra to shave off a few more minutes?

I think more customization and flexibility is the way forward. You can already schedule a Lyft ahead of time, so why not a grocery delivery to the park for that Sunday picnic you have planned? Thanks for the Coke, Amazon drone, and enjoy the friendly skies!

Blockchain’s untapped business potential

If the cryptocurrency bubbles can cool off for a little bit, we might start to see some real innovations, as businesses start to exploit blockchain’s underlying technologies.

I agree with Nikki Baird’s thoughts on this. Low transaction fees could juice consumer payments. The distributed ledger could help verify product pedigree and stop counterfeits. Blockchain’s borderless, decentralized tech could mean faster B2B payments and less regulatory hurdles.

Social media becomes an alternative retail channel

Social media sites already command huge audiences and influence how we consume news and entertainment. Some, like WeChat, dominate the payment market too. It’s not a stretch to think that these platforms could make killer alternative retail channels.

With Facebook’s ever-expanding Marketplace feature and Airbnb already selling experiences, some of the biggies are already dipping their toes in, and I suspect more will get wise soon.

Prediction and curation

Last but not least, I defer to the good folks at Square for my final two predictions. As it happens, they know a thing or two about retail, and I second their thoughts that predictive experiences and curated subscription services will keep up the strong progress.

Surveys already show half of customers (!) are likely to switch brands if their needs aren’t anticipated, and what with everything from Netflix to clothing brands trying to guess what you might like before you decide to click, there’s no sign that’ll slow down anytime soon.

What’s even better than a brand anticipating what you might choose? The brand choosing it for you! The success of companies like Stitch Fix, and it’s in-person counterparts at places like Sephora’s and Nordstrom’s personal stylist concepts, show that people are fine with not choosing something themselves, as long that something is darn good.

And if you want someone to pick the most important nuggets from the retail tech world and deliver them to you, well…stay tuned on this blog, friends.

Onwards!

Ryan

Apps are open. Here’s why you shouldn’t miss out on Techstars Retail’s next class

To all the founders, funders, and friends out there, I have a simple message: There’s never been a better time to get into the retail tech space than now.

And there’s never been a better place to do it than in Minneapolis with the Techstars Retail Accelerator with Target. Applications open January 8 for our 2018 class (APPLY HERE).

Here’s why we’re so stoked about our program (and our city).

Since we launched in 2015, we’ve seen amazing growth—and helped reinvent Minneapolis in the process.

So far we’ve worked with 20 startups and built a community of 150 retail-specific mentors. In 2016, we saw our startups raise $25M in funding, and Target rolled out team Inspectorio’s factory-inspection tech worldwide, while Branch raised over $10M. Last year, we built off that momentum, disrupting spaces from warranties to food-delivery with our companies, all while growing our top-notch network of engaged mentors and retail executives.

That’s taught us that despite the daily predictions of doom and gloom for the industry, retail is still ripe with opportunity for disruption and innovation, and retailers of all stripes want to engage with Techstars Retail startups to find out what’s next.

This momentum has helped reinvent Minneapolis, turning it into the national leader in the retail tech space, and an anchor for the Midwest startup scene.

We’ve been there every step of the way, and we want you to join us. You can find the app for our next class HERE.

This ain’t flyover country any more. It’s fly-here country. Let’s make something great together.

Onward!

Ryan

 

Startup Pilot Blind Spots: Lessons from Target

I recently held an AMA on corporate innovation with Cory Hooyman, lead innovation manager at Target.

We talked about corporate innovation and how to bring new practices and methods into your team and company.

From the Target perspective, what blind spots do startups have in pursuing a pilot, and how should they make a pilot successful and convert that to a larger rollout?

Cory: First and foremost, a blind spot is not understanding what their partners are thinking about and what they’re concerned about.

We have a lot of people that come into Target not truly knowing what the team they’re working with is trying to accomplish. I’m not just saying with the partnership, but as whole. What are their goals? What are their current resources? Do they even have money?

If you understand as a startup what the person across from you is concerned about, you can make your pilot work for you in showcasing the numbers or successes that matter to that person.

Another huge blind spot is usually based upon traction. So, those companies that are able to hand hold the corporation, if you will, and there’s a lot of work up front. It’s going to be a lot of work because you feel like you have to baby somebody. But these people – when I say these people I mean corporate teams – are used to working with people like Bain or McKinsey or, again, IBM or P&G.

They aren’t used to somebody who can pivot as quickly as a startup can. They aren’t used to somebody who’s as smart as people who are driving startups. You, as a startup, can utilize that to your advantage – showcase how you incorporated their feedback. “By the way, we pushed a product yesterday. Look at that. It’s good to go.” We can partner with you to collaborate and build together. That’s a good thing.

As I mentioned, the number one thing would be to understand what they care about, and then also the advantages that you bring to the table that others don’t.

Ryan: The other thing that startups have a problem with is going into these relationships with happy ears of saying, “I talked with the VP of my product category. He says that this is cool.”

Basically, what that person was saying is that they think it was great, or your idea is interesting. It has nothing to do with the fact that they actually want to partner with you, that they actually have the budget, or that this is actually aligned with something that they want.

You have to go to that next level. What are your priorities? What are your priorities this year and next year? What are your bonuses tied to? What are those things that are motivating you? Try to get your startup aligned with that. That might take some tweaking of the product. It might be finding the business unit that your product actually helps them with. The sooner you can find out what is motivating them and turn off your happy ears and actually get into the real commitments of timelines, piloting phases, and budgeting, then the more likely it is to happen.

The last thing we want – many startups have been killed this way and it’s dual fault from corporations – the startups get happy ears. They go fundraise, build out a product for the next six months, and then go back to that same person who said that their product was cool and they are still saying that’s cool. That doesn’t actually go to that next level of a partnership or full scale blowout.

Startups Interacting with Large Corporations: Lessons from Target

I recently held an AMA on corporate innovation with Cory Hooyman, lead innovation manager at Target.

We talked about corporate innovation and how to bring new practices and methods into your team and company.

Is there one thing that startup founders need to know to best interact with large corporations?

Ryan: The nice thing about our program in particular – especially when we’re working with a large corporation or retailer – is that there’s a massive gap between the corporations and the startups. It’s on both sides of it.

The startups, in a lot of cases, do not interact with an enterprise level corporation because they don’t speak the language. The timelines are off. A lot of the time, the professionalism of the startup needs to improve in order for them to interact with these very large organizations.

On the flip side, the corporations – and Target has done an amazing job of this – admit where they need to improve in order to interact with the startups. Not everything is going to be at the level of a huge consulting firm or a massive software company when it’s just three or four people who are iterating an idea.

When we look through the companies during the application process, we always try to project the potential of that team in their ability to work with the enterprise level companies. Just because they don’t know how to speak that language right now doesn’t mean we can’t work with that and hopefully get them to a level where they’d be able to actually interact with a 10,000 person company or 300,000 person company. That’s a big thing for us.

When we talk about team, team, team for the participants in the program, clearly, it’s about the entrepreneurial skillsets and the stuff that we identify as Techstars as an organization. But for companies that are trying to work with massive corporations, we also have to think about the potential of that team, their ability to interact with those large corporations.

Techstars sits right in the middle, between the startups on the one side of it and the corporations on the other. We plant ourselves right down the middle and try to be the middle ground between the two of them so they can hopefully speak the same language.

Cory: There are certain things that founders should watch out for. If the time is not right, the corporate yuckery can take place. They can in some way, shape, or form drown your company by not being aware of some of the things that Ryan mentioned, like the gaps.

I’ve talked to people who have, not through this program, but I’ve talked to companies locally who are on their (and I am not exaggerating this number) 28th, 29th or 30th meeting with Target. They’re still hoping for a pilot. People get passed around to various people in the organization with the intent of maybe this person might be somebody good to talk to.

Really, the only reason they keep getting passed around is because nobody has any money to do what these people are trying to accomplish. If you knew that up front, you might be like, “I’ve had my fifth meeting. I get it. I’m out. I’m going to go focus on something else.”

But because people don’t want to tell you they don’t have access to these resources, they just pass you along with the hopes that somebody else can deal with it.

5 Key Factors to a Successful Pilot

Last week, I wrote about the many things—testing a new product, exploring the potential for a working relationship, understanding your market better—that make corporations want to run pilots with startups.

This week, I want to go one step further and lay out some of key factors to actually running a successful pilot with a corporation. I’ve watched a bunch of different portfolio companies run them, and the best pilots all have these factors in common.

1. Find Your Champion

Quickly identify your champion within the organization and make sure they are along for every step of this ride. You want someone who’s experienced, open-minded, and cool under pressure; you’ll need that when roadblocks come up. Believe me, they come up.

Your champ also needs to be someone with the power and influence to keep the project moving forward. Maybe they’re a skilled navigator of your corporate culture. Maybe they know the key allies in your industry who can help grease the wheels. Regardless, this person should have the power needed to move things along throughout the process.  

2. Start with the End in Mind

That doesn’t always mean cash immediately changing hands. A pilot can be free, but make sure you have a defined time frame for how long it will be free. More importantly, make sure you have discussed your exit criteria and agreed upon eventual pricing before starting the free phase of the pilot. Especially when it comes to budgeting, setting prices early on allows your corporate partner to plan accordingly.

And don’t forget to plan for success too. If you have winning results, will you phase in the pilot in stages, or will you go for 100% implementation right off the bat? Setting these parameters early prevents a snap judgement down the line.

3. Define Learning Objectives

Never set up a pilot with a binary mindset of, If this works then the corporation will buy it. If it doesn’t then they won’t. This is a recipe for disaster. Instead, set up learning objectives for the pilot, and make sure they’re flexible enough to adapt to the situation once things get going on the ground. That way, if things don’t go as planned, you can learn, iterate, and, most importantly, continue piloting.

4. Track Every Metric Possible

Speaking of learning, measure as much as you can. If you don’t, you’re willingly ignoring the potential for new, maybe crucial insights about your business. In addition, share every valuable metric to enable your champions to sell internally.

You’ll be grateful you did later on when it comes time to prove your learnings. Feelings are great, but data is more persuasive and more translatable to new contexts—and hopefully deeper partnerships down the line.

5. Over-Communicate with Everyone

Even amongst all the data, don’t forget about the humans in your pilot. Weekly check-ins with your employees and partners let you do all kinds of things: get up-to-date info on how things are going; build trust and morale; and keep you nimble in the face of new challenges and opportunities. If possible, make as many of these check-ins in person. Jump on a plane, if needed, and make it happen!

Don’t forget to communicate back to your employees, mentors, and investors. That said, don’t oversell your pilot to investors. Corporations have all sorts of motivations for piloting, and until you have a signed, paid contract, a pilot doesn’t mean a lot.

In the end, be responsive to everything the customer asks for in real time. Remember that it is equally, if not more, important to sell your team’s ability to execute than your technology.  Showing your attentiveness and expertise is oftentimes the deciding factor.

Onwards!

—Ryan

Big thanks to Chris Smith, CEO of Kipsu, for helping contribute to this post. He definitely knows a thing or two about piloting and continues to impress with the successful pilots he’s pulled off at Kipsu. He can be reached at chris@kipsu.com for further comment.

 

 

What Actually Motivates a Corporation to Pilot with a Startup?

Working with a corporation can offer all kinds of opportunities to a startup. It lets you test new functions of your app, figure out implementation techniques, and, most importantly, learn from and build a lasting relationship with a potential partner.

I’ve watched this process first-hand at the Techstars Retail, where many of our startups have run successful pilots with major retailers. We kicked off our second class on July 17, and I’m watching our latest class set themselves up for potential pilot opportunities in the near future.

Sadly, many pilots end up failing, and I think one of the main reasons is startups do not clearly understand the motivations of their pilot partners.  

So, why would a corporation run a pilot with a startup?

  1. Learning – None of us knows everything, even in our own field of expertise. Pilots let corporations explore areas of strategic interest without betting the whole house on something new or unfamiliar.
  2. Testing – A pilot lets a corporation test your startup’s idea, and whether a potential partnership is actually feasible and worthwhile for it.
  3. Assessing Workflow – Few things derail a partnership faster than two systems that just don’t work well together. You want to be peanut butter and jelly, not peanut butter and…sushi. A pilot gives you a way to better understand the contours of a potential relationship without risking too much.
  4. Employee Motivations – While the corporation’s strategic motivations get you in the door, the motivations of the employees you’ll be working with are what ultimately get you the deal.  Always ask yourself, “Does the success of this pilot somehow influence your internal champions’ bonus?” If the answer is “yes,” you will have much higher engagement.  If the answer is “no,” you may not ultimately have a path forward with this company.
  5. Find Budget – Running a free or discounted pilot allows the testing to move forward while a corporation actually finds budget for a larger roll out. Sometimes this is just a matter of budget cycles, but it could also be budget reprioritization, which takes longer.
  6. Customers – In a B2B pilot, it’s ultimately your customer’s customers who will vicariously sustain your business—i.e., if your customers die, you die. A good pilot can teach corporations more about their customers, and whether your product helps serve them better. That’s the ultimate return on their investment in you.
  7. Iteration – In addition to thinking big picture, pilots also teach you what granular tweaks separate good ideas from great ones. In a pilot, you can experiment with what changes to a product bring the best results, and what trainings for employees supercharge adoption and boost impact.

Now that you (hopefully) understand the motivations behind piloting, how do you actually pull off a successful pilot? Check back soon as we lay out the key steps to actually implementing a successful pilot.

Onwards!
– Ryan

 

Techstars Retail with Target: Driving Innovation for Retail

I’m excited to announce that we’ve opened applications for the 2017 class of Techstars Retail in partnership with Target. You can apply online by going to www.techstars.com/apply. Applications are open through April 9th and the program starts in July.

Watch this video for a great overview of the program.

Recapping Last Year

In case you missed it, our first year of the Techstars Retail accelerator was a massive success. We had 11 startups from all over the world descend upon Minneapolis for the summer.  They received mentorship throughout the program from Target’s senior leadership, successful retail-tech entrepreneurs, and investors from across the country.

Our Demo Day was a blur but it was incredibly exciting to see almost 1,000 investors, mentors, Target team members, and supporters from all over the Twin Cities startup community show up and support our companies.

And wow — did they kill it! Here are some highlights of what was accomplished by our startups during the program:

  • Nexosis – Announced the company saved more than $90,000 in one location in a pilot with Pepsi this past summer and they are integrating into the Shopify e-commerce platform. They recently announced closing a $5M Series A round
  • Branch – Shared the results of their successful pilot program with Target stores and plans to move headquarters to Minneapolis. Branch is will soon announce the closing of their seed round.

Since our program has wrapped up, our companies have already collectively raised almost $15M, with another $5M to $10M coming soon. Stay tuned, as many more partnerships and deals are in the works to be announced this year.

What to expect in 2017

For 2017, we expect to once again find the top Retail Tech startups from around the world and welcome them to Minneapolis for the summer to our beautiful working space located, literally, within Target HQ.  

Have a disruptive retail technology startup?  We’d love to chat.  We’ll be visiting New York City, Cincinnati, Toronto, Waterloo, Minneapolis, Seattle, Portland, Miami, Austin, Washington DC, Boulder/Denver, San Francisco and Los Angeles to discuss our program. Simply send an email to ryan@techstars.com to coordinate.

All in all, it was an incredibly successful first program and we are already looking forward to the next! Apply here.

#TCSW15 + #betadotmn Recap

The week after the week has come and gone and I’ve had some time to reflect on all things TCSW.

First off…wow.  I was absolutely blown away by the startups, the events, and overall enthusiasm sustained throughout TCSW15.  I’m not just playing cheerleader here either. Well done everyone.  Hats off to you!

It really felt like the whole week began to take on a life of its own. Planning for TCSW15 began in January and a lot of time and effort was put forth by the founding partners.  However, as the week approached most of the 60+ events fell into place. Hosts did an amazing job and it sounded like attendance levels were high (still compiling data on this).

As for Beta.MN 2.5..wow.  Once again, the startups, venue, and level of attendance set new standards of excellence for us.  It will be hard to top that one, but you know we’ll be trying in 2016. Congrats to Woodchuck on taking home the coveted Golden iPod.  We’re banking on a fresh layer of wood on the trophy when it returns!

So…what’s next?  Bigger and better, of course. Planning for next year’s TCSW16 will begin in the new year.  Would love to hear any and all feedback for improvement.  Also, if you’d like to get involved in the planning, all are welcome.

– Ryan

Where I’ll Be During #TCSW15

The 2nd annual Twin Cities Startup Week is next week and this year it really blew up. 60 events over the entire week and, by the looks of it, many events are completely sold out. Whoa.

The week will be fun, busy and crazy.  Kind of like life in a startup!

Here’s what I’m looking forward to attending:

Tuesday:

Wednesday

Thursday

Friday

See you next week!

– Ryan

Calling All Minnesotans!

Lately I’ve been witnessing a positive trend for the Twin Cities startup community. One that I think positions it uniquely amongst other markets I’ve visited.

At least once a week I get contacted by a Minnesotan who lives somewhere else but wants to move back. They either work for or started a tech company and now are contemplating a move back. Maybe they just had their first kid and want to be closer to family. Maybe they’re contemplating buying a house and can’t fathom it in San Francisco. Maybe they just want to be around when the Vikings win the Super Bowl next year. Regardless, they are “hearing great things” about the startup scene in Minnesota. They are just looking for the right excuse to move back.

I think these “Boomerangs” are a phenomenon fairly unique to Minnesota. People grow up in Minnesota, love it, but want to get away for awhile while they are young. Gain some experience. See the world. Do something wild.

I should know. I was one of them. After graduating from the University of Minnesota and selling my first company, I went on a five month adventure to Argentina. I followed this up by a 4.5 year stay in Boulder. I wouldn’t trade this experience for the world, but I was excited to move back North. I had been “hearing great things” about the local startup community. Upon my return, I think my experiences I gained while away unique positioned me back in MN.

The “hearing great things” narrative is also important. Word is spreading and people are talking positively about the startup community. While I believe their is still work to do, the narrative is positive and proliferating.

While some people may argue that we have a “talent flight” problem, at least those flights seem to have a return ticket. People who take this path have unique perspectives and experience to share from their adventures. I think this adds to the local creative culture that is prominent throughout the Twin Cities.

So, to all the Minnesotans abroad….Welcome! Come back and join us. The time is now. This will be fun.