Ventureweek

BY David D. Burstein Fastcompany.com

Rachel Shechtman just launched her new venture, A Startup Store, in New York’s Chelsea neighborhood. The store, still in “beta,” currently features a rotating selection of startups and their products in a physical retail space, including: Artspace, Birchbox, Baublebar, Joor, and Quirky. But A Startup Store will be ever-changing and ever-morphing. Today it features merchandise from startups; come back in February and it will look totally different and feature products centered around the theme “Love.” In fact, the store will change products and physical design every 4-6 weeks. Shechtman wants her store to be a living, breathing community. Here, Shechtman explains why, although A Startup Store is a small space, it might be a big idea in the long-troubled business of physical retail outlets.

Fast Company: Where did the idea for the store come from?

Rachel Shechtman: It really started when I was 12 years old. I was at a gift sale with my mom shopping for wholesale bar mitzvah favors and I was like “Oh, my god, you can have a job where you shop for a living? I want a job like that!” Ever since, I’ve been in training for this. I’ve been a consultant for nine years. I took a six-month job at Bliss Spa, which turned into nine years consulting first at Bliss Spa, and then with TOMS Shoes, Gilt Groupe, and other brands. I’ve always been really excited about new business models and mashing them up. I’ve been talking about this idea for more than seven years. And one day I was driving with Blake Mycoskie from TOMS and he said to me, “Shechtman: enough of this ‘someday’ stuff, you just have to do it!” So I did. The basic concept is that A Startup Store is a store in a retail environment, a space that has the point of view of a magazine but it changes every 4-6 weeks–like a gallery–and yet it sells things like a store. A Startup Store is our first exhibition. We’re in beta because I don’t think it’s fair that digital companies are the only ones who get to be in beta. We have our official launch February 1, with our next exhibit, “The Love Store.”

How will “The Love Store” be different than a Valentine’s Day section at any big retail store or specialty shop?

What makes Vogue different than Harper’s Bazaar is the point of view of the editor in chief. We see ourselves as editors and buyers and merchandisers. What’s different is the type of products we source and how we source them. We also have a strategic relationship with Archetizer, so every month we’ll not only have different products, but we’ll also have different architects reinvent the space. [Archetizer is a web community enabling new ways for architects to interact, show their work, and find clients. It describes itself as "an open community created by architects for architects."] We’ll be telling stories through hanging signage and wall installations. This is transactional storytelling. No iteration of the store is ever repetitive, whereas if you go into a Valentine’s Day section of a department store, they’re using fixtures that month that they use all year round.

It seems like your model requires you to have a product mix that is just there long enough to be successful, and then you are tossing everything out and starting all over again a few weeks later. Is that model sustainable?

We’ll be profitable very early in our first year. I think the untapped frontier of advertising is retail engagement. We’re selling sponsorship of the store for anywhere from $50,000 on the low end to $175,000 on the high end. In the same way you might have “MoMA” put on an Andy Warhol show made possible by Procter and Gamble, we will have sponsorship within the store. In February, you’ll have “The Store” presents “Love” made possible by a dating site or some company that is relevant to the theme. Later in the year we’ll be rolling out an e-commerce platform which will continue to sell some of the more popular products from individual exhibits.

It’s rare to find a new business today where online is secondary to physical, but it sounds like the online component is secondary in your vision …

It is. For us, it was really important to have a physical place for people to come. Today there are so many ways for people to communicate, so many devices, so many networks … there’s been a huge focus on digital innovation but not as much innovation has taken place in the human experience. We live and thrive off being with other people. The physical has been the forgotten child for a while. Tactile human experiences are incredibly important. There’s plenty of content and community online … but there aren’t a whole lot of physical environments that bring together content, community, and commerce.

But don’t people come to expect they can get certain things at a store? How do you get people to understand and accept that it’s a changing store and they can never step in the same river twice–even if they liked the river the first time?

People know where they can go for things that they know that they want. They don’t need another GAP or Apple Store. They need an environment where you can discover something new. 75% of the people who have come into the store in the past week have given us their email addresses because they want to know about the next theme. They look at the store like a journey and they want to come along with us. People are saying “Oh, my god! I’ve never heard of something like this.” People know about pop-up stores, but the idea of a constant pop-up, or a retailer acting like a gallery and talking like a magazine, that’s new.

You’re also going to close down regularly …

We’ll go down for 3-4 days to change over. We have to because we will be completely rebuilding the space for each exhibit. But as we’re building, our windows will become our version of a billboard. So even when the store is down there will still be a purpose. Some months we might invite people in during the building process, and there might also be months where the windows are uncovered and people watch us build up.

Magazines usually have an editorial point of view. Is there an additional perspective you’re trying to communicate?

I want to tell a compelling story through merchandise and events. I believe in the concept of giving people 70% of what they understand and the other 30% should be surprise and delight. So in February, when you come into “The Love Store,” the 70% might be flowers and chocolates but the 30% might be a video booth where you record a video of your first date, then we might have an event where we screen a short film of those videos. Every single month you can come in and buy something for $20 or for $2,000. Every month you can buy something for a 20-year-old or a 60-year-old. The only way that you can have such a broad appeal and still tell a cohesive story is to curate a really interesting collection of brands and products. Everything here has a description next to it, explaining where it came from. It gives it personality and allows the product to become less of a thing and more of a story. We want everything here to be a story first and a thing second. I think the future of retail will always be about consumption. Consumption’s not going anywhere. But it will start to change; retail spaces will become more about content and community. People don’t just want to go in and buy something, they want to hear a story, they want to learn something. So when we’re coming up with a theme or a concept like “startups,” we’re not only having an exhibit but talks, book signings, film screenings, and other events that complement the theme.

What do you think it will take for retail to look more like that?

I think it’s already happening in some ways. Certain mass brands are catching on slowly. For instance, I really admire that Bloomingdales has Clarins skincare on the second floor with fashion and contemporary, which is unheard of–so they’re making a statement by editorializing skincare in a fashion context. Or by putting Magnolia Bakery in their men’s floor, which they also do.

What does success look like for you?

One goal is to be successful with this first store and then to open five stores around the country in the next three years. But ultimately success to me is proving this new business model for retail. I’d much prefer to walk into a department store and instead of someone attacking me by spraying perfume at me, have someone tell me a story or give me something that I don’t expect. I want every store to do this, so go knock us off, bring it on!

Start-up uFlavor is offering consumers the chance to create their own soft drinks, with the potential to earn money for their products. uFlavor’s founders believe they have launched the world’s first user-generated refreshment company. Soon customers will be able to choose from a list of 100 flavors, which they will be able to combine in varying amounts as they create their own unique drink. Beverage entrepreneurs can  upload an image for a personalized bottle label. Eventually drinks will be  available to purchase from uFlavor vending machines, which will mix the drinks on the spot.

For now, all drinks created are available to buy online via the uFlavor marketplace, with the most popular drinks creating revenue for the designer. This is potentially a huge idea that could disrupt the beverage industry.

“Surround yourself with the best people you can find, delegate authority, and don’t interfere as long as the policy you’ve decided upon is being carried out.”

— Ronald Reagan

SoJo Studios is a Zynga for charity that has just launched with some high profile funding.

SoJo Studios says it plans to make money through advertisers and sponsors as well as in-game purchases by players, with a mandate to donate 50 percent of the net profits (never less than 20 percent revenue) to its charity beneficiaries. This company is taking social enterprise to higher level.

By: Marty Zwilling From Startup Professional Musings

We all know that every startup is risky. No risk means no reward. Yet every investor has his own “rules of thumb” on what makes a specific startup too high a risk for his investment taste. You need to know these guidelines to set your expectations on funding.

Of course, if you intend to fund the business yourself, or have a rich uncle, external investment funding concerns are not a problem. Yet, it’s still worthwhile to understand the issues so you can minimize your own risk of failure. Here is a summary of the “big picture” high risk considerations:

1. Inexperienced team.I’ve said many times that investors fund people, not ideas. They look for people with real experience in the business domain of the startup, and people with real experience running a startup. An expert in software is considered high risk in manufacturing, and a Fortune 100 executive running a startup is high risk.
2. Historically high failure rate category. Certain business sectors have historical high failure rates and are routinely avoided by investors. These include food service, retail, consulting, work at home, and telemarketing. On the Internet, I would add new social networking sites, and new matchmaking sites.
3. Dependent on government regulations. If your business model is dependent on government approvals, that can take a long time, or require political connections. All new medicines, for example, require expensive and extensive testing for side effects before FDA approval. Of course, successful approvals may also mean high returns.
4. Large initial investment required. If your startup involves new electronic chips, that may require a huge investment (more than $1B) to ramp-up manufacturing. By definition, all but the largest investors will pass, and it becomes high-risk to all investors. New drugs often fall in this category, due to long clinical trials and FDA approvals required.
5. Businesses with small return potential. Businesses with a low growth rate or a small opportunity (less than $1B) are considered high risk by investors, who get measured on portfolio return over time. That eliminates from consideration family businesses, small niches, and business areas with declining growth.
6. Poor public image businesses. Most investors like to maintain a squeaky clean image, so would consider it high risk to invest in businesses on the margin of legality or social acceptability. Don’t expect investor enthusiasm for your gambling site, porn site, gaming, or debt collection business.
7. Operations in another country. Investors in one country are generally reluctant to invest in a company outside their realm of operational knowledge. We all know that the success “rules” in Russia are different from the USA, so cross-boundary investments are considered high risk, even if you have operating experience there.

These rules of thumb should not be viewed as barriers, but just another factor that needs to be addressed specifically in your business case and investor presentation. It’s better to be proactive on these, rather than hope your investor is too naïve to notice. Your challenge, if your interest is in one of these areas, is to point out quickly why the high risk is mitigated in your case.

In summary, it pays to have some insight into how investors will likely see you, since this allows you to prepare the best case, both for your own decisions, and for approaching an investor. It’s never smart to switch your plans to a “less risky” business that you know nothing about, because your lack of experience there simply moves that alternative to the high risk category.

If you can’t handle risk, don’t do a startup. But even if the risk energizes you, do it with your eyes wide open. Even the best adventurers do their homework before starting down a new path. Known obstacles are a lot easier to overcome than surprises. Enjoy the challenge.