Startups Interacting with Large Corporations: Lessons from Target

We 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.

Do you have a question about interacting and working with large corporations? Let us know in the comments!

Applications are open for 11 global Techstars Mentorship-driven Accelerator programs. You can apply now or check to see if the Techstars Roadshow is stopping in a city near you!








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 the 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.

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. 

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 percent implementation right off the bat? Setting these parameters early prevents a snap judgement down the line.

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.

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.

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!

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.








Techstars Retail Founder Spotlight: Clarence Bethea

We’ve all been there before: we walk into a big box store, we’re preparing to check out, and then we’re strapped with a confusing and unwanted warranty. This week, we talked with Upsie founder Clarence Bethea about how his team wants to flip the script on warranties.

The Team:

Clarence Bethea, founder/CEO (pictured above), and Katie Long, project manager

The Problem:

We’ve all been there before: we walk into a big box store, we’re preparing to check out, and the guy at the register offers us an extended warranty. We think that’s a moment that everyone hates.

There’s 3 major problems that happen at the register:

  1. Price: You’re paying anywhere between 200-900% more than you should.
  2. Transparency: You never get to ask, you know, what’s covered and what’s not covered? What do I do if I need to make a claim? Who do I talk to? Do I bring it back to the store?
  3. Service: Service starts for us with having your receipt, understanding who you’re supposed to talk to, when you’re supposed to talk to ‘em, and who you’re supposed to call.

The Solution

Upsie solves all three of those problems by saving you 50-90% versus the big box stores and having complete transparency, so you actually know what’s covered. We even tell you who is the carrier behind that plan. And then service for us starts with having your receipt. So we store your receipt and warranty. You know down to the day how much time you have left.

The Challenge:

We think we have a product that people really understand. The biggest challenge for Upsie is, how do we get this in front of people?

We’re going to conquer that challenge by partnerships with a number of different folks, whether that be with a retailer or an insurance company or a credit card company.








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 Accelerator, in Partnership with Target, 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?

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.

Testing

A pilot lets a corporation test your startup’s idea, and whether a potential partnership is actually feasible and worthwhile for it.

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.

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.

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.

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.

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.

This was originally published here








Announcing the 2017 Techstars Retail Accelerator in partnership with Target Startups

We are excited to announce the 10 startups that will be joining us in Minneapolis for our 2017 Techstars Retail Accelerator in partnership with Target. We kick things off this week and are looking forward to three months of awesomeness, capped off by Demo Day on October 11. The focus of these startups ranges widely—from theft to warranties to personalization—and founders come from as near as Minneapolis and as far as Belgium.

While in Minneapolis, the startups will have access to a range of mentors who will provide feedback, answer questions and offer advice to foster the startups’ growth and development. More than 150 mentors have once again signed up to mentor this year’s group.

This will be our second class to run through the program and we’re planning to build upon the success of last year.  Our 2016 Techstars Retail class’ collective fundraise was one of the largest by any Techstars class within the first year.  It included mobile enterprise staffing and scheduling tool Branch that is now running a pilot in select distribution and call centers and 130 Target stores. It also featured Inspectorio, a platform for inspecting manufacturer quality assurance that raised a $3.7M seed funding round from Target and have begun operating globally with Target and other global retailers.

Techstars is the Worldwide Network that helps entrepreneurs succeed, and strong partners and mentors help make this happen. Target continues to be an incredible partner for our Techstars Retail program and we hope to build upon the amazing success of our class last year.  

We love this city and know 2017 is going to be an amazing year for Techstars, Target and the Twin Cities Startup Community!

Here are the Techstars Retail Accelerator in partnership with Target startups:

Air Tailor provides expert alteration and repair services for consumers and retailers.

New York City

BYBE simplifies digital alcohol promotions for retailers by embedding digital alcohol rebates inside retail applications and websites.

Columbus, Oh

Find Me A Shoe offers virtual fitting service for online and offline footwear retailers.

India

Kokko is a personalized cosmetic and beauty shopping experience based on color science.

Bay Area, CA

Local Crate is the first nationally, local food company by making it easy to cook meals inspired by popular local chefs with seasonal, local ingredients in the comfort of your home!

Twin Cities, MN

Savitude’s technology provides recommendations on clothes based on a shopper’s body shape.

Bay Area, CA

Shopturn is an on-demand return service for brick & mortar retailers, enabling consumers to return purchases directly from home.

New York City

Spotcrowd stops shoplifting by using the crowd & existing IP-cameras.

Antwerp, Belgium

StoryXpress is a cloud based automated video creation platform for businesses to create content quickly and easily.

India

Upsie is a mobile app that’s disrupting the traditional warranty industry by reinventing and demystifying the warranty experience for customers.

Twin Cities, MN

 








Founder Highlight: Starting Up in Retail

Lizzy is the co-founder and Chief Creative Officer of Blueprint Registry. Lizzy started her entrepreneurial journey by founding In.Bounds in 2012, a non-profit crowd fundraising platform aimed at inner-city youth athletics. In.Bounds was acquired by Sports in School in 2014, where she is now an executive board member.

Prior to that, Lizzy founded Showman Design, LLC, a design consulting firm where she managed art direction, relationships, and new business for multinational corporations (Sikorsky, Lockheed Martin, Microsoft) and startups.

Lizzy graduated from the University of Washington where she received a B.A. in Visual Communication Design and holds a Master’s in Design from the School of Visual Arts. In 2014, Lizzy was named Print Magazine’s top 20 designers under 30.

What is your founder story?

Blueprint was born out of the frustration my co-founder Nevin and I experienced when we were buying and registering for home furnishings online. At the time, I was finishing my master’s degree in design and was also engaged to be married.

Nevin came to me with the idea of shopping online through visual blueprints as a way to discover new products. For me, registering had been a huge pain point. We had three different registries, with a random selection of items and no real sense of what we needed.

The idea was intriguing and relevant for what I was going through. After a few weeks of assessing the competition and market value, Nevin and I decided to partner and start Blueprint Registry in April 2013.

In your opinion, what is something retail tech founders should know about working with large retailers?

There are endless learning opportunities when working with large retailers; however, you should be prepared to be persistent, accept constructive criticism, and highlight opportunities while mitigating risk.

Who was your most recent hire and why?

We recently hired a content manager who is creating evergreen content so we can grow and expand our SEO presence. We have seen an impact, as our organic search is up 96% year-over-year.

What’s the biggest challenge to overcome in your industry right now?

Continuing to keep up with users demands and wants. What sets one company apart from the next are features, price, and UX/UI. We are challenged everyday to continue to improve every area of our site to keep up with these demands so we can ensure we are acquiring new users at an increased pace.

How does the decline in brick-and-mortar retail affect you?

This is a double-edged sword for our business, as we are all online. That said, a big driver of user acquisition is the fact they can register at brick-and-mortar stores and sync them on Blueprint.

We believe that the shift from brick-and-mortar stores to e-commerce is inevitable, but there will always be a need for in-person experience (window shopping, returns, social interaction, etc.). The biggest winners will be those companies that seamlessly combine the two.

What are some of the trends in the wedding/gifting industry that you see are working in your favor?

Gifting cash virtually is one of the fastest growing areas in the wedding and registry market. We see this seismic shift as a massive opportunity and are continuing to build products and improved UX/UI experiences to match this need.

The purpose of Techstars Worldwide Network is to help entrepreneurs succeed. Check out the impact of the Techstars’ network over the past 10 years.








Five Ways to Raise Capital in a Small Market

How to guarantee you’ll be able to raise capital in smaller markets.

In the competitive world of fundraising, there’s a myth that it’s harder to raise money in smaller markets. Most founders think you have to be on the coasts to start your business. After several years of investing and fundraising in a small market, I don’t believe that’s true and here’s why…

This past summer, Techstars Retail completed its first program with Target in Minneapolis. The Twin Cities has admittedly not been known as a hotbed for venture capital — but that is quickly changing. After just a few months, our companies have already collectively raised almost $15M, with another $5M to $10M coming soon.

This wasn’t a fluke. We put forth a set of guidelines that our startups followed to gain traction for fundraising in smaller markets.

If you want to raise money in a smaller market, here’s how:

Get Local Support

No matter how small. Get to know every investor in your region. Find out who has invested in local companies, what founders are from your town, what startups have come from your market. If you want bigger investors, you first need to demonstrate that you have local support. It’s great signaling.

Go to the VC

If the closest investors are not next door, get on a plane and create reasons to go visit. Do your homework and ask for a referral first. Get on a plane, show up, and network. You can’t be passive – you have to be aggressive and go to where the VCs are. Then, when you get those meetings, shine the light on your city.

Join an Accelerator that is Not in Your Geography

Tap into funding sources that would otherwise be unreachable. Bring them to you. This gives you a “shiny-effect” for tapping into your local market once you return. Check out Techstars programs – we now have over 20 accelerators in over 16 cities across the globe (including smaller markets like Austin, Boulder, Kansas City, Atlanta, etc.). 

Understand Where Your Company Fits

Understand where your company fits into the greater tech ecosystem. Who else is doing the same? How are you different? Where is your opportunity? Where is the engineering talent? What is the cost of living? Know your market better than anyone else. Then, get the data about why your company can and will thrive in your locale.

Create a Great Business with Great People

It’s sounds cliche but it  simply cannot be overstated. Bad businesses or bad founders will have trouble fundraising. Get your act together and surround yourself with an awesome team. You have to be on top of your game in every way in order to convince others to believe in what you’re doing enough to invest in you.

Don’t let people tell you that you have to move to the coasts in order to build a successful startup. Techstars believes that great entrepreneurs are everywhere and we are building a global ecosystem to support you. Join us!

Applications for our next program are open, apply today!








Six Startup Retail Tech Trends to Watch for in 2017

My 2017 has been off to a hot start. First off, we opened our applications for our 2017 Techstars Retail Accelerator in partnership with Target. Then I was able to attend, or more accurately survive, both CES and the NRF Big Show. After walking the floors of these events, talking with our corporate partners, and meetings with hundreds of startups, here are some trends I’m seeing for 2017 for retail technology for startups.

#1 – Serious Supply Chain Investment

Target recently announced it will be spending $2.5B on their supply chain in the coming years. Amazon spends $13B annually on R&D and Alibaba is plans to spend $16B on supply chain improvements. These numbers are massive and scream opportunity for supply chain focused startups.

#2 – Voice-enabled Purchasing Will Become Less Weird

Amazon Echo and Google Home were both breakout products in 2016. While at first this voice-based interface seemed weird, consumers quickly saw the benefits of a voice-based operating system. Today, these devices are mostly used to control your home or play music. The holy grail for retailers is turning these devices into commerce platforms. Startups who help existing retailers or e-commerce companies integrate with these emerging platforms could see a lot of opportunities to partner in 2017.

#3 – Integration of AI Into Everything Retail

Artificial Intelligence is the new Mobile for Retail. While most retailers have a “mobile strategy”, they now must contemplate their “A.I. strategy”. A.I. will quickly work its way into almost every facet of retail. I expect to see record levels of investment into A.I startups for retailers. This is both for backend of the retail machine or consumer facing products that help inform consumers to improve conversions.

#4 – Store as a Distribution Center

Brick & mortar stores are uniquely positioned to fulfill same-day orders online. However, this can be a supply chain/logistics/delivery nightmare and most retailers are not ready. This incredibly complex, highly technical problem is ripe for startups to solve.

#5 – Groceries Will Become the Next Hot Area for Membership + Delivery

Consumers buy only two percent of their groceries online. The grocery industry is $700B. Think about that for a second. How many times a week do you visit a grocery store and buy the same items? I bet it is many more times than you research and buy a flat-screen TV. My point is, this is a prime area for disruption. I suspect consumer adoption of online grocery purchasing and delivery will grow.

#6 – Retailer Startup Investment and Acquisitions Will Heat Up

Traditional retailers investment and acquisition activity lags behind other markets. Their are some notable exceptions (see Inspectorio and Jet.com), but I believe this will change in 2017 as more retailers look to the startup market for “outsourced R&D”.

Do you have any other retail startup trends you are tracking this year? Are you a startup looking to disrupt retail? Let’s chat!

Hit me up on Twitter (@rbroshar) or submit your application for Techstars Retail today.








Finding Your Path to Market for Consumer Products

This month at CES, we hosted a panel of industry players to discuss product-based startups oftentimes tumultuous path to market. The panel included:

The conversation was very insightful for how a product-based company like Revolar was able to navigate all the steps to market represented by the other panelists. Some of the insights included:

Creating a Product is the Easy Part

Most product-based startups are product-obsessed…as they should be. However, many times this gets ahead of the the question, “Will anyone purchase this once I build it?” Then if someone is willing to purchase it, “Will I actually be able to manufacture it, finance it, and provide customer service for it?” Considering these questions earlier in the process ensures time and money are not wasted on product development.

Buyers Treat Their Positions Like Small Businesses

When approaching a buyer about your product, it’s best to remember that they treat their product line like a small business. You must make a business case for why they would take your product over the other hundreds of products the should consider. Be ready for this and provide proposals for win-win situations.  

Treat Your Vendors Like Co-Founders

For most product startups, you’ll most likely rely heavily on component vendors for the bulk of your product. Someone else will manufacture, test, or even engineer your product for you. Treat these vendors like co-founders and choose them wisely. They can literally make or break your company.

You Will Always Need More Money

While this may be true with most startups, it is especially true for product-based startups.  Lots of money must be spent with vendors, retailers, R&D, marketing, etc before you even launch a product and hope to see revenue. If you’re seeking venture capital to fund this, you’ll always need more than you think. Make sure you raise enough to provide the runway needed for success.

If you’d like to learn more about getting a product to market, please feel free to reach out to me.

Applications for our next Techstars Retail Accelerator in partnership with Target can be found here.








Techstars and 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 here. Applications are open through April 9th and the program starts in July.

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.

Watch this video for a great overview of the program.

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.
  • Blueprint Registry – Announced multiple partnerships that is expected to increase the number of accounts on its site to over a million. They recently announced closing a $1M 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, 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 today!