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?
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.
A pilot lets a corporation test your startup’s idea, and whether a potential partnership is actually feasible and worthwhile for it.
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.
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.
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.
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.
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.
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.
Find Me A Shoe offers virtual fitting service for online and offline footwear retailers.
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.
StoryXpress is a cloud based automated video creation platform for businesses to create content quickly and easily.
Upsie is a mobile app that’s disrupting the traditional warranty industry by reinventing and demystifying the warranty experience for customers.
Twin Cities, MN
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.
Techstars is a whirlwind experience. Thanks to this incredible program, the business growth that happened for Revolar is mindblowing and keeping up with the pace pushed my team beyond what we thought was possible. But having taken Revolar and our team through this process twice, I can say with absolute confidence that the magic is in the mentorship.
This summer, I was honored to have Brian Cornell, Target’s CEO, as a lead mentor to Revolar. I had no idea what to expect when I first met Brian. I had, of course, read all about him and was excited to meet the man who had gone undercover in his own business to hear out what his guests truly wanted. This is also the man who I read had flown across the globe for the love of his life and who, in my opinion, had taken an incredibly powerful, historical and empathetic stance on the safety of his guests.
I’ll never forget our first meeting. I wanted to learn from him what it took to be the CEO of a massive business and a ubiquitous brand.
So I asked him pretty much point blank, “What does it take?” His answer caught me off guard and still makes me smile. In essence, Brian told me that a CEO needs to be very self-contained: calm in the midst of chaos. You can’t let what is happening in one area impact your ability to focus on what is in front of you.
Then I told him what I had seen in my first few weeks at Target’s HQ. I told him I saw Pride. I saw his team take pride in having stood on the right side of history, pride in the innovation he was bringing to Target. But I knew that could not have been an easy decision to make, so I asked him, “Why?”
The DNA to Care
His answer moved me. Brian walked me through the history of Target. He told me it was in their DNA to give back to communities. Did you know that since day one, Target has given 5% of their profits back to the community? That’s millions of dollars every week! Did you know that Target was also the first retailer to feature African American models in its advertising? I didn’t. But he taught me that it was in their DNA to care.
By the end of the meeting, he gave me his contact information, agreed to mentor our team and told me not to hesitate to reach out. It’s a promise he’s kept and I’m never one to be shy when I need help. I remember leaving that meeting and knowing to my core that I had met someone who had it in his DNA to care.
At our second meeting, I asked him about communication. “How do you best communicate new things to your team?” Communication in any business is difficult, but I couldn’t even fathom what that looks like with 340,000 employees. He told me to keep my communication simple enough that a child could follow along. People have a million things running through their minds and it’s your job to make the message as simple and concise as possible so that a wide and diverse group of people can immediately follow along.
Thoughts, Learnings, New Actions
Then he dug deeper and we started whiteboarding. He told me that when I present new information, I should break it down into three areas: thoughts, learnings and actions.
- Thoughts – reviewing the assumptions we made. By stating them as thoughts and referring to the whole group, you take any blame away (because it’s not about blame, it’s about learning from what we thought).
- Learnings – now that we have tested what we thought, what did we learn?
- Finally, he said to present New Actions – how are we moving forward from here?
Thoughts – Learnings – New Actions. Simple, right? This has seriously made my life so much easier!
For our third session, he asked me to present what I had learned about the program and what we would be working on moving forward. As you can imagine, I was thrilled (but nervous) because I knew that we had been brought to Techstars not just to grow our businesses, but to help Target learn from startups how to improve and do more faster.
How would he receive our honest observations? Would he like our proposal?
We presented to him in the same fashion he had recommended. Thoughts – Learnings – New Actions. We also shared the good, the bad, and the ugly. Here’s what I learned about Brian that day: he is not only an incredible leader of people, but he appreciates honesty and has a great sense of humor.
Mentorship and Friendship
There’s one thing about mentorship that I think many people misunderstand.
It’s not a take-take relationship and it’s not about having someone’s ear. Mentors are friends whose advice you actually take.
Mentorship is friendship with a focus. They are the friends that help turn your hurdles into leaps of progress. My team and I have made friendships this summer that will span the rest of our lives. We’ve made friendships that have positively impacted not only the trajectory of our business, but helped us grow as individuals.
The best part? Mentorship, like friendship, doesn’t end just because the program is over. Thank you to Brian and to all of our Target mentors for an incredible summer I’ll never forget!
Because April is Sexual Assault Awareness Month, Revolar is selling its second safety wearable on Indiegogo for a big discount off the retail price. Click here for more info and connect with them online.
Interested in receiving invaluable mentorship for your startup? Apply today. Applications close April 9.
Have a cool company in the retail space? Thinking of applying to an accelerator? Wondering if it’s right for your startup? Ask anything in our next AMA with Techstars team members: Ryan Broshar, Managing Director, & Sarah Bain, Program Manager.
Working to innovate the retail industry? Thinking of applying to an accelerator? Wondering if it’s right for your startup? Ask anything in our next AMA with our Techstars Retail with Target team members: Ryan Broshar, Managing Director; and Sarah Bain, Program Manager.
Have a cool company in the retail space? Thinking of applying to an accelerator? Wondering if it’s right for your startup? Ask anything in our next AMA with Techstars team members: Ryan Broshar, Managing Directorr, and Sarah Bain, Program Manager.
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!
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.
This month at CES, we hosted a panel of industry players to discuss product-based startups oftentimes tumultuous path to market. The panel included:
- Jacqueline Ros, CEO Revolar
- John Vaskis, Head of Hardware, Technology and Design Sales Indiegogo
- Tim Paulus, VP of Sales Arrow
- Cory Hooyman, Innovation Lead Target
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.