E245 – Class Update

Arne H, Beyang L, Soumya M, Mithun S

Feb 26, 2012

RetaiLinkOverview Document

RetaiLink provides a collaboration platform for retailers to effectively manage trade funding to meet desired objectives

2CONFIDENTIAL DO NOT SHARE

Video

http://www.youtube.com/watch?v=T6Rdwb3GFV0&feature=youtu.be

3CONFIDENTIAL DO NOT SHARE

Team Structure

Mithun Sheth

Sloan 2013, Stanford GSB

First andlast nameTitle

Soumya Mohan

Mgt Science & Engineering 2013, Stanford

Beyang Liu

Computer Science 2013, Stanford

Summary of experience

• 8+ years of management consulting and operations experience

Areas of expertise

• Developed innovative consulting solutions with focus on retail

• Driven by strong entrepreneurial skills and also been founding member of few startups.

• Built global delivery teams that have bought numerous new service offerings to market generating more than $30 MM in revenues.

Summary of experience

• 2 years experience working as an engineer with an early stage startup with top telecom operators as customers.

Areas of expertise

• Design, development and marketing of mobile applications

• Mobile wireless network connection management

• Enterprise software quality assurance (experience at Microsoft)

• Managed and recruited engineers

Summary of experience

• 2 years of enterprise software development experience for financial vertical

Areas of expertise

• Computer vision & machine learning research in Stanford AI Lab (3D reconstruction, action recognition, and semantic scene segmentation)

• Core developer for interactive large-scale data analysis platform for banks and finance

Arne Hartmann

Sloan 2013, Stanford GSB

Summary of experience

• 10+ years experience in Growth Equity investments and Tech M&A

Areas of expertise

• Extensive experience in aligning business models with market to drive value.

• Structured numerous rounds of growth financing through equity and debt.

4CONFIDENTIAL DO NOT SHARE

• Subscription based service fee model of $15-$25 per acre,per trip

• Service required multiple times before the harvest season

• Partnership with soil sensing companies with whom our product offering can be combined (Leverage go-to-market alliances)

• Partnership with chemical companies that help accelerate our offering to reach their customers

• Support from cart providers to make modifications (as needed)

• Partnership with Almond / Walnut board to help push our technology

We deliver agriculture information to growers, using computer vision technology which helps manage crop yield and reduce cost for farmers.

• Our cart periodically tours the orchard and takes images of the leaves and trees and identifies issues helping growers take corrective measures

• Current methods deployed by farmers to detect issues in trees are either based on sampling, aggregate information or driven by highly labor intensive process.

• Our technology can be applied to most fruit and nut crops with some adaptation.

• We plan to tackle the following in our initial outreach – almond, walnuts, oranges and grapes. (Primarily driven by geography, market value of crops, growing season and business need in the orchards)

• Hardware development (Camera array mounted on cart)

• Machine-learning computer vision algorithm

• GUI development• Orchard sign up for our

service

• Fixed cost : Cart, camera sensor and array of add ons• Infrastructure: Includes computer, server, software, and other

expenses• Variable Cost: Includes gas, driver, transportation, and other cost• Other Recurring Cost : Advertising, Website, Rent, Utility,

Inusrance, Travel and other expenses

• Directly to Grower community or through Co-ops

• In partnership with Pest Control Advisors and independent consultants

• Potential arrangements with Heavy Equipment manufacturers

• Sell service for periodic farm review

• Dedicated sales team to help provide insight into the farm issues based on data

• Drive the cart and relay the information on a cloud based platform

• Team with expertise in computer vision / machine learning

• Domain expertise in agriculture farm-related issues

• Understanding of agriculture value chain

-

Orchard View

5CONFIDENTIAL DO NOT SHARE

■ Market issues

• Farmers did not see it as a big need and not ready to pay a lot

• Class did not coincide with harvesting seasons for target crops leading to challenges in prototyping and customer discovery

■ Technology issues

• Current state of research in the space is primitive

• Challenging to prove the exact value-add in prototype stage

• Customized algorithms required for each crop and disease

■ Team issues

• The whole team was not passionate about the idea.

Fail Early, Fail fast !Restarted from a blank slate !

Orchard View - Early stumbling blocks

6CONFIDENTIAL DO NOT SHARE

Birth of RetaiLink

7CONFIDENTIAL DO NOT SHARE

Value Proposition

MV

P

Features

Filter

The Path to MVP

• Collect initial customer feedback and only then

showcase the wireframe

• Focus only on the key features in initial design

• Reduce MVP further to bare minimum

• Build MVP – does not need to be functional!!

Wire frame gets 95% of validation in 10% of the

time.

• Iterate MVP based on feedback

• Helps understand dynamics between different

stakeholders

8CONFIDENTIAL DO NOT SHARE

Customer Segments

How to Sell ?

• Category managers are primary users who can validate the need but cannot make the purchase decision

• SVP Merchandising is the primary decision maker

• Category managers at all ranks below SVP and IT heads are key influencers

• CPGs are influencers of the decision making and may be paying for it indirectly

• Eliminate other retailer segments initially to focus on the grocery retailers based on need

• Map out customers according to technology adoption and their size

• Parse through latest top industry journals to figure out the early adopters

• Speak to competitors and other suppliers to identify early adopters

FOCUS : Who to Sell ?

9CONFIDENTIAL DO NOT SHARE

Key Learning’s for Channel / Revenue and SaaS economics

Channels

• SaaS based delivery model

• Direct Sales Force

• System Integrators / Consulting partners will NOT be interested in product offering at the early stage

SaaS Economics (5 “C”s of Cloud Computing)

• Committed Monthly Recurring Revenue

• Cash Flow – Gross / Net Burn Rate

• CAC – Customer Acquisition Cost

• CLTV – Customer Lifetime Value

• Churn or Renewal Rate (Logo churn, CMRR

churn or CMRR Renewed)

• Charge both CPG / Retailers a tiered pricing structure per category ($/category)

• Additional fees for Advanced Analytics/ Reporting capability can be leveraged

• No Implementation, maintenance or performance based pricing will work in the retail space

Revenues

Source: Interviews, Bessemeer Venture Partner (Articles on Cloud Computing)

10CONFIDENTIAL DO NOT SHARE

RetaiLink

11CONFIDENTIAL DO NOT SHARE

Fieberkurve

Week 2: Drop or Step up?

Week 3: New Idea

Week 4-7: 10 Interviews? Really?

Week 8: 1st Pilot User

Week 10: What next?

12CONFIDENTIAL DO NOT SHARE

Lessons as an entrepreneur

• Customer discovery can lead into successful business proposition but it is important not be in selling mode (Raley’s, Schnucks, Target)

• Customer discovery is to “validate” the intuition and not to give you the core idea

• Avoid confirmation bias during customer discovery for entrepreneur especially when showing the wireframe

• Understand different perspectives and take all advice with a grain of salt

Customer Discovery

Managing Start Up

Competition

• Each startup has only few key numbers that need to be validated. Understand what they are to manage your business

• Passion in the team is a key element to success (especially when you are dealing in the enterprise space)

• A crowded space with competitors does not mean anything. Need to understand the gaps in the current space to evaluate if you can sustain a start up

• Market research mainly analyzes the history and not the current need. So key to get out and speak to customers.

13CONFIDENTIAL DO NOT SHARE

Appendix

14CONFIDENTIAL DO NOT SHARE

Value Chain of Retail industry

Trade Funds ($200B)

Promotion, New Items, Display, Supply chain etc..

Product Support

Newspaper Ads, Display, Temp. Price Reduction etc..

Online collaboration platform that provides the right decision support for retailers and a

collaboration platform for CPG

15CONFIDENTIAL DO NOT SHARE

Ecosystem

Data provider(Nielsen, RSi)

ERP(Oracle)

Trade funding system-of-record

(Tradepoint, Nopa)

3rd party systems integrator (IBM)

Retailer CPG

RetaiLink

Modeling tools(Excel, custom)

Modeling tools(Excel, DemandTec)