The Fung Global Retail & Technology team attended the first Target + Techstars retail accelerator Demo Day at Orchestra Hall in Minneapolis on September 20, 2016. Announced in June of this year, the 2016 class consisted of 11 diverse US-based and international start-ups. The founders of each participating company in this year’s 14-week accelerator program presented their businesses to a full hall of Target executives and employees, entrepreneurs, investors and media. The 11 start-up firms were chosen from more than 500 applicants and were mentored by Target executives. Target Chief Executive Officer, Brian Cornell, was personally involved with at least three of the companies.
First to present was Inspectorio. Started by three brothers from Ecuador, but based in Vietnam, China, India, and now Minneapolis, Inspectorio is reinventing the way quality inspections are performed. Inspectorio CEO, Carlos Moncayo Castillo, explained how the start-up uses data and machine learning to help retailers verify supplier compliance and bring transparency to their supply chain. In just 11 months, Inspectorio has already completed 2,000 inspections for 21 clients in seven countries. The company helps customers improve an inefficient, expensive and slow process in which just 5% of goods are usually inspected, but defects and non-compliance cost companies billions annually. Their inspection process can also uncover unethical business practices, environmental pollution, and even child labor issues in far shorter time than traditional inspection practices, at a much lower cost.
Next was Nevin Shetty of Blueprint Registry. Blueprint Registry is a life-event driven marketplace based on a home’s blueprint. Users shop or register for products from a variety of retailers in one native platform. The start-up offers a free service with no monthly fees where users can create a home and wedding registry in a more visual, convenient and fun way. Their signature room-by-room shopping experience allows shoppers to see exactly what they need, want and desire for a new life together. The company is growing at 35% month on month, and booked $10 million in retail sales from well-known national retailers and boutiques such as Amazon, Anthropologie, Crate and Barrel, West Elm, and Williams-Sonoma. Blueprint Registry takes 7% commission from retailers and carries no inventory. Blueprint reports they have received more than 100 requests from retailers that want to be listed on their platform.
In his presentation, Chief Operations Officer, Josh Porter of Makerskit, described how his firm inspires creativity with online and in-store experiences paired with fun do-it-yourself (DIY) kits and artisanal goods sold in more than 6,000 stores. He said they are, “getting kids off the iPad and back into finger paints, allowing them to be creative again.” Makerskit worked closely with social media influencers such as Bill Nye, the Science Guy, and YouTube sensation, Michelle Phan. At Demo Day, Makerskit announced they are also launching their own TV show.
Nexosis Chief Executive Officer, Ryan Sevey’s presentation described the start-up’s mission to democratize machine learning. He said, “Forty-seven percent of jobs will be replaced by machine learning.” The primary applications are for supply chain and inventory management. According to Nexosis, retailers lose 7% of sales because of inaccurate forecasting, and 72% of the problem is human error. With Nexosis’ fully automated platform, retailers can improve forecasting accuracy by more than 30%. The company saved more than $90,000 in one location in a pilot with Pepsi this past summer. Nexosis announced at Demo Day they are integrating into the Shopify e-commerce platform.
Good and Gather
Good and Gather was recently featured in the media after the firm appeared in a Target store in Boston partnering with the Massachusetts Institute of Technology (MIT) Media Lab in 2016 where they displayed food ingredients on the front of packaging. The head of Innovation and Operations for Good and Gather, Anne Steeves, announced at Demo Day they have officially renamed themselves, Obvious. She told the audience she was not yet ready to talk about what Obvious is. While acknowledging the irony, given their name, she made it clear it was still in the area of developing nutritious, creative and beautiful lunches for kids. The Obvious team was formed from three Target employees. Steeves shared their entrepreneurial story of moving from a 300,000 employee corporation to the, “truly sink or swim” nature of a startup.
AddStructure helps consumers discover products across any retail search channel—organic, on-site, mobile, voice, chatbot—using their own unique voice. Co-founder Jarrod Wolf showed an example of traditional voice technology when he said, “the best headphones for running,” which yielded the CD “The Best of the Guess Who.” AddStructure uses product type (headphones), features (running), and sentiment (best), in order to vastly improve results, according to Jarred. He then specifically mentioned AddStructure will help retailers take on Amazon’s Alexa with a white-label solution at a fraction of the cost. AddStructure recorded $1 million in revenue so far in 2016 and is looking at 5x growth in the coming year.
Revolar Founder and CEO, Jacqueline Ros, developed the idea for the start-up after her sister was assaulted as a teenager. In fact, one in four women are victims of a sexual assault in their lifetime, and one in seven men. She initially introduced this discrete wearable safety device on Kickstarter. The product encourages people to live a more vibrant and fulfilling life because they know they can ask for help in a heartbeat by sending location-based alerts to trusted contacts. The Revolar discrete wearable works with a smartphone at the push of a button, and there are no monthly fees. Revolar is particularly applicable to college campuses; it empowers students to have each other’s backs. At Demo Day, Revolar announced a partnership with the National Domestic Violence Hotline.
Itsbyu is the do-it-yourself wedding flower kit company founded by two sisters from Philadelphia. Customers make their own wedding flowers and save up to 80%. Described as a, “Blue Apron for Flower arrangements,” Co-founder Christine Strzalka walked the audience through how brides can save 80% of what florists charge for wedding flowers. It also provides an experience the bride shares with her bridesmaids that lasts a lifetime—and leads to a natural referral path. Itsbyu carries no inventory and works with large-scale flower distributors. The company is currently on the Target bridal registry, and were featured on The Knot. Strzalka announced at Demo Day they will be on QVC monthly, starting in late October.
One of the more unique presentations was that by Spruce Founder, Taylor Romero (see his TEDx talk here). Spruce is a platform that allows brick-and-mortar retailers to customize the experience for their customers in the same way we’ve come to expect from online retailers. But, they also have a physical clothing store and barbershop where they experiment with forward-thinking retail technology, primarily using interactive bots. Driven by the motto, “The most important person in the world is the one walking through that door,” Spruce announced at Demo Day they will split into two companies; one will continue to the retail presence, and the other, SpruceBot will be the technology firm.
Branch Messenger is an application that helps retailers reduce absences and increases productivity by improving company-wide communication. Branch CEO, Atif Siddiqi demonstrated how easy it was to upload shift schedules, even by taking a photo, share and swap with colleagues, all with integrated manager approval. The application also allows for, “Slack-like” communication and can integrate seamlessly with scheduling, Human Resources, Payment and other enterprise software. Branch Messenger will initially focus on the 45 million people in the US in retail and hospitality, but ultimately will go after the 600 million global market for hourly workers.
CEO Francois Poirier presented MakerBloks’ dual-play experience that combines electronic building blocks with digital activity books. The basic set is $99 and comes with 18 “MakerBloks” that connect via magnets. It include switches, lights and resisters. The blocks can be used with an iPad app digital book. The team is currently working on expansion packs for music and the “spy” pack. Based in Montreal, MakerBloks is aiming to tap into the fast-growing connected toy market, which is growing 50% a year—from $4 billion in 2015 to $9 billion by 2019.
At least six of the start-ups were in some way working directly with Target, either selling in their stores directly, or Target was using their technology to improve operations and customer experience. Of the six, at least two were moving all or part of their operations to Minneapolis. Applications for the 2017 class open in January.