We're back with another insightful episode recorded at last month's NRF "Big Show." This time our focus is on how entrepreneurs bring their ideas to market, secure venture capital funding, and fight through all the challenges to create a sustainable, remarkable business. We're fortunate to have two great female founders join us to share their wisdom. Michelle Bacharach heads up FindMine, the AI powered company that helps consumers and brands find their best looks. Katie Hotze founded and leads Grocery Shopii, an innovative technology platform that powers digital meal planning.
We're back with another insightful episode recorded at last month's NRF "Big Show." This time our focus is on how entrepreneurs bring their ideas to market, secure venture capital funding, and fight through all the challenges to create a sustainable, remarkable business.
We're fortunate to have two great female founders join us to share their wisdom. Michelle Bacharach heads up FindMine, the AI powered company that helps consumers and brands find their best looks. Katie Hotze founded and leads Grocery Shopii, an innovative technology platform that powers digital meal planning. In a wide ranging discussion we learn about the inspiration for their companies, how they've funded and scaled them, and explore some of the unique challenges faced by founders from under-represented communities.
But first we give our perspectives on the most remarkable retail news of the week, with a fairly deep dive into Amazon's concerning quarterly earnings report. We also give our quick takes on news about Sam's Club's expansion plans, a very strong US jobs report, Tom Kingsbury being named "permanent" CEO at Kohl's, Ryan Cohen's setting his activist sights on Nordstrom, Bed, Bath & Beyond's looming bankruptcy filing, and how Rent the Runway has kicked the debt can down the road.
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We're headed to Las Vegas in March for another edition of Shoptalk. Retailers and brands can get a Shoptalk ticket for a reduced rate of just $1950 rate here using our special discount code RBREMARK1950.
About Michelle
Michelle is CEO and Co-Founder of FINDMINE, an award winning software platform that uses machine learning to scale product curation for the world's top retailers. As a product and strategy expert, Michelle is experienced in growing companies by launching software, apps and websites to millions of people, putting together joint ventures, and conceiving of new products. Michelle has shared her expertise with thousands of leaders in retail and technology as a speaker at SXSW, the National Retail Federations' Retail’s Big Show and Shop.org, Intel's Shift, Women in Machine Learning and Data Science, and many others.
About Katie
Named a Top 10 Women in Grocery Tech by RIS, Katie Hotze is an innovative leader and entrepreneur with over two decades of experience in digital marketing, data analytics and business strategy.
Katie is the founder and CEO of Grocery Shopii, a Charlotte-based startup that solves a $550B problem in the CPG & Retail industry by reducing cart abandonment with machine learning. Grocery Shopii uses recipes as a recommendation engine to expedite online grocery shopping inside the shopping journey.
Prior to Grocery Shopii, Katie spent 20 years in management and technology consulting where she led global marketing teams for Mercer, the world’s largest HR consultancy, and BearingPoint.
She holds an M.B.A. and Business Analytics certification from William & Mary, and a B.S. in Marketing from Virginia Commonwealth University.
In 2018, Katie was a Direct Marketing News (DMN) 40-Under-40 Award Recipient. She’s also been awarded the Top Women in Grocery honor by Progressive Grocer. Today, she is a regular speaker on both digital and social media topics at conferences in the marketing and grocery retail spaces.
A resident of Charlotte, N.C., Katie is a graduate of UNC-Charlotte’s Ventureprise entrepreneurial program and is an active participant in the city’s tech community.
About Us
Steve Dennis is an advisor, keynote speaker and author on strategic growth and business innovation. You can learn more about Steve on his website. The expanded and revised edition of his bestselling book Remarkable Retail: How To Win & Keep Customers in the Age of Disruption is now available at Amazon or just about anywhere else books are sold. Steve regularly shares his insights in his role as a Forbes senior contributor and on Twitter and LinkedIn. You can also check out his speaker "sizzle" reel here.
Michael LeBlanc is the Founder & President of M.E. LeBlanc & Company Inc and a Senior Advisor to Retail Council of Canada as part of his advisory and consulting practice. He brings 25+ years of brand/retail/marketing & eCommerce leadership experience, and has been on the front lines of retail industry change for his entire career. Michael is the producer and host of a network of leading podcasts including Canada’s top retail industry podcast, The Voice of Retail, plus Global eCommerce Leaders podcast, and The Food Professor with Dr. Sylvain Charlebois. You can learn more about Michael here or on LinkedIn.
Be sure and check out Michael's latest venture for fun and influencer riches - Last Request Barbecue, his YouTube BBQ cooking channel!
Michael LeBlanc 00:06
Welcome to Remarkable Retail podcast, Season 6, Episode4 presented by MarketDial. I'm Michael LeBlanc.
Steve Dennis 00:12
And I'm Steve Dennis,
Michael LeBlanc 00:13
It's a great episode for the people here. Steve, as we had the opportunity to speak with two amazing founders at the NRF Show in New York City live and in person, they are really innovators in the retail space. I really enjoyed this session. Michelle Bacharach, CEO of FindMine's and Katie Hotze, CEO of Grocery Shopii. Now, I know through our discussions, you know, kind of booking the interview you knew of them or knew them? I think you knew both Michelle and Katie, before interview, how did you know them? And have you worked with them before talking about that a bit.
Steve Dennis 00:46
Well, both I actually know through the same connection, although, a few years apart. I've been an advisor and mentor at RevTech Ventures, which is an early stage, retail technology, VC firm, seed capital firm here in Dallas. And Michelle was part of I think, we call it an alumni program. So, she wasn't part of the initial cohort, she came through the XRC Labs. But I was an advisor, kind of a mentor to her early on, and we've stayed in touch. And then Katie also was at a RevTech event several years later. So, this is probably like four or five years ago now. And I met her there. And I've been just keeping tabs on their progress over the years. And it was great to be able to chat and get in depth on what they're up to. And I think a lot of the listeners, I think they'll find their stories interesting and find their businesses interesting. But hopefully, they'll also find it interesting their perspective on how to, how to grow a company, how to attract venture capital, some of the particular challenges they face as female founders.
Michael LeBlanc 01:48
We'll get to that, right after the news. Before we get to the news a reminder, folks, next time you and I will be together in March at Shoptalk we'll be podcasting there, and folks will be able to see you live on the stage. Check the show notes for a nice offer for retailers who might want to be attending the show. All right, we're gonna pick a couple of big stories. Then we're going to do some quick hits. The biggest story of the week, clearly, is Amazon releasing their quarterly earnings record on Friday, they just released late last night. There's a lot to do, as always, there's a lot to go through, a lot to parse, lots of tea leaves to be read. What, what did you make of, of their quarterly earnings?
Steve Dennis 02:24
Oh, there, you're right there, there, there, it's always interesting in a lot of respects, I think particularly because of some of the struggles they have, maybe it's a little bit more interesting than usual. So, just to touch on a few things. First of all, it's very interesting for me to see how analysts and the press and Wall Street reacted to the earnings. Several people were like, Oh, they're really good. Other people, like they're really bad and kind of everywhere in between. I think objectively, they're not so great. And I'll come back to that in a second.
Steve Dennis 03:08
But the other thing that is always interesting with them is, it's just, they're really hard to understand what's going on because of the way they report and because of the complexity of the business. So, it's fairly easy to look at AWS, their Cloud Computing business, because that's really a very, very separate business. But just about everything else is somehow intertwined. You know, the retail business has got first party retail and third-party retail. And advertising is part really of their retail flywheel. And then you've got Prime Membership, and Prime Membership is like pre-paying for delivery, but you also get streaming, you know, so all these things are so, so overlapping. Oh, and I guess the other thing to say about it is this was a quarter where they took a bunch of charges, impairment charges, particularly around severance, but also because they own a big stake in Rivian, they mark their value of that to market every quarter. So, sometimes it's very additive to earnings. And other times, as was the case this quarter,
Michael LeBlanc 04:00
Not so much.
Steve Dennis 04:03
So, when you look at the overall earnings picture, it's very much distorted by a number of, kind of unusual charges. But if you go down below that and try to parse that out, I think some of the highlights were AWS, which is very profitable, and is one of the fastest growing parts of Amazon. It had pretty strong growth by most people's measures. It was up 20%. But the growth has been slowing, and it's the slowest quarterly growth or year over year growth in a quarter since they broke that out separately. Whether that's just a function of the law of large numbers or whether that's a function of corporate pullback, I mean, in a call Andy Jassy said that they are seeing some corporate customers pulling back on their spending. So, he was not suggesting it's, it's going to be a slow growth business, but that growth might be a little bit more difficult given the economy.
Michael LeBlanc 04:53
It's also the case of AWS that they were kind of first out of the gate and then Alphabet and Microsoft have been coming on strong to eat away at their business. (Crossover talk).
Steve Dennis 05:03
They have a lot more competition for sure. Yeah,
Michael LeBlanc 05:06
Yeah, there's a big government contract, I think with the military or the US government that they won or lost. And so, it just highlights that there's more, you know, they have competition now, which is just going to take an edge off a bit of the growth as, as it always will, in some way, shape or form.
Steve Dennis 05:20
Yeah, absolutely. Then when you get to the non, the non AWS parts, so that's basically not to get too in the weeds here. But pretty much the way they break out segments are North America, and international. And that's, again, this, this bundle of things, and they provide some top line information, but not a lot about what the cost structure is and profits and things like that. But the highlights were, if you look at the product pieces, so that's really the retail, what we kind of think about is sort of typical retail sales were down year-over-year, down minus 2% in the US. And this is the fifth consecutive quarter that sales have been down. So, that's not awesome. Clearly, there's some other players in eCommerce in related fields that are growing faster.
Steve Dennis 05:38
Services, on the other hand, continue to be a pretty good place for them. So, that's both third party seller services and some smaller things, subscriptions, but also advertising. So, advertising is the big driver. But that growth there is slowing as well, but still up 19%. But that's very, very profitable. When you put it all together, their operating sales performance outside of AWS has continued to deteriorate. A lot of the issues you can kind of tell from the way they break out the numbers have to do with fulfillment costs going up faster than sales, SG&A costs going up faster than sales, marketing expenses going up faster than sales. So, you can really understand why there's so much talk around, their trying to get more productivity, you know, get capacity out of their fulfillment system, the layoffs they've had and those kinds of things. Cost strategically Oh, sorry, I guess I'll say one other thing, which definitely spooked a lot of people on Wall Street was that their guidance was, was weak, they basically said that they expect on the consumer side, as well as the corporate side with AWS that, that there will be a slowdown, that their revenue growth will be pretty modest, and that their earnings growth will also not be that, that great, you know.
Michael LeBlanc 07:23
Not what we're used to hearing from Amazon.
Steve Dennis 07:25
Definitely not we're used to hearing. Strategically, we got a few tidbits and some of this what was, it was just what was said on the earnings (inaudible). And some of this is things picked up elsewhere. But Andy Jassy did say that they were pausing, and rethink-, rethinking their Amazon Fresh grocery strategy. Also, it appears that they are doing a similar thing with Amazon Go because they did not talk about opening any more stores. And they're closing a couple apparently. Separately, we did hear that, and this is kind of funny also how the news was interpreted. Amazon closed one of their recently opened stores in London, but they just opened two new ones like just, like last week, and apparently have made l would love to go see this, but apparently have made some changes to the way the just walk out technol-, well just walk in and just walk out technology works. You no longer have to use it, essentially, to get into the store and to leave. So, my guess is they've started to learn about what some of the improvements need to be. And they're starting to test it. But they're not going to just keep opening stores until they know they've got, that's got something that's really scalable.
Steve Dennis 08:42
So, they have brought in two pretty senior people into the grocery division, one person from I think Woolworths and another from Tesco, I believe. So, you know, you look at this, and it looks to me like they're doing kind of an intense rethinking process, and TBD whether they're, where and how they will go, go forward. The other thing I'll mentioned just quickly is that they didn't say anything about the Amazon Style stores. They've opened two, I have not heard about any others being planned. You know, there was a lot more talk about their move into department stores and apparel, largely on the part of industry, not so much from the company because as we know, they test a lot of stuff.
Michael LeBlanc 09:18
Sure, Sure.
Steve Dennis 09:20
But that was sort of conspicuous in this absence. And given the layoffs they've done in the physical retail division. It does, it definitely seems like it's a pause and study, refined kind of mode as opposed to they're going to step on the gas anytime soon.
Michael LeBlanc 09:35
You know, such a sprawling business, so many different things to talk about. And I think you covered it really well. And I'm sure we'll be coming back many, many times. It's so interesting to see them pivot. A personal experience, I was shopping at the Go store in Manhattan and it was interesting when I looked at the receipt. The receipt was, thank you for shopping, just walk out. And I'm like, Huh, that's interesting.
Steve Dennis 09:55
Yeah.
Michael LeBlanc 09:56
You know, really, really trying to brand the just walk out technology versus Amazon Go. All right, let's take a real quick hit on a bunch of little things that we mentioned. Let's start out with Sam's Club and roll through it.
Steve Dennis 10:09
Well Sam's Club. So, we had people and I encourage you to go back and listen to the interview we did with Tim Simmons, their head of, head of product continues to do really well. They're kind of stepping on the gas, when it comes to growth, they're going to be opening, I think it's 20, new stores, which is like a 5% store increase, which is not massive in some respects. But it is a business that has been around a long time, it's pretty mature, they are actually building the stores even bigger. So, as much as we talk about the shrinking of physical retail, here's a company going in the other direction, much less (crossover talk).
Michael LeBlanc 10:42
(Crossover talk) category too, right? Yeah, (crossover talk) you're not the only player in the market I mean, there's.
Steve Dennis 10:43
Correct, right.
Michael LeBlanc 10:46
You know, there's a Costco in every corner. So, the fact that they can even expand the concept is impressive.
Steve Dennis 10:51
Yeah. And the fact that they're, they're putting even bigger stores, much more of a hybrid model, like we've talked about with Target, you know, adding fulfillment capabilities, curbside pickup, those sort of things, you know, this harmonized retail experience, I think, I think is pretty interesting. So, again, here's an example of a company that's, you know, premature, kind of an old dog learning new tricks. And that (inaudible) will allow them to grow physically, even in the face of some of the other headwinds.
Michael LeBlanc 11:18
All right, job reports, US job reports look pretty strong.
Steve Dennis 11:21
They were surprised on the upside. I guess. I mean, we're kind of like a broken record on this, this continues to be pretty amazing in the US at least, that the unemployment rate is very, very low, it's down to 3.4%. We're actually not seeing wages go up that much. So, I think this is in some respects, encouraging, not only it's great that people are unemployed, and obviously if people are employed, they're able to spend money, which is good for the economy, but we're not necessarily seeing indications that the strong job market is pushing up inflation. So, I think that's pretty encouraging for the future.
Michael LeBlanc 11:59
And Kohl's has got a permanent CEO, who is Tom Kingsbury? Do you know? Do you know Tom, do you know the name?
Steve Dennis 12:04
I do know the name. What people can't see is we have our notes here, or I have my notes here. And I have quotation marks around permanent because he was interim.
Michael LeBlanc 12:11
What's your point? Oh, I see.
Steve Dennis 12:14
He was interim when Michelle Gantz left. He is now viewed as permanent.
Michael LeBlanc 12:17
Whatever that means.
Steve Dennis 12:20
He's, you know, I don't know, Tom. His background is in traditional department stores. He was at Filene's a bunch of years ago. Then he was the CEO of Burlington Coat Factory, he has been on the board, I think many years and did step in as I indicated as the interim. You know, like I said, I don't know him, having you know, it's not obvious to me that like a 60-year-old white guy who spent his life in the department store is necessarily the right profile for what Kohl's is going to need to transform and be relevant. But you know, perhaps I'll be proven wrong.
Michael LeBlanc 13:02
Speaking of proven wrong or right, someone is setting their eyes on Nordstrom, this looks like a little bit of trouble for them.
Steve Dennis 13:09
Yeah. So, Ryan Cohen, who's the founder, he made all his money basically, through the founding of Chewy's and selling that to PetSmart. He is currently I guess he's the chairman at GameStop. He got a lot of press over the past year or so because he set his sights on Bed Bath & Beyond trying to make some changes there. Spoiler alert that hasn't really turned out all that well. He's kind of got this reputation of being a gadfly, or whatever you want to call them as probably some nice, not so nice names for him but an activist investor, I guess we could say. And now he is putting the pressure on Nordstrom.
He in particular, which relates to the next thing I think we're going to touch on. He in particular wants to kick Mark Tritton off the board. Some people don't know that Mark Tritton, aside from having glasses that look very much like mine, was the CEO of Bed Bath & Beyond brought in from Target. And again, that did not turn out so well. So, there's more to the story than just that he was the former CEO of Bed Bath & Beyond. But you know, the idea is that Nordstroms has not performed very well in the last few years, which I would say is true that the family is kind of too cozy with the board. So, if you, if you own Nordstrom and you've seen your stock go up, that's what's going on. We'll see what happens next there.
Michael LeBlanc 14:29
Well, Bed Bath & bye, bye perhaps because they're kind of running out options here. There's more negative news coming this week. What, what's the state of things? Do you see any, do you see a turn-around?
Steve Dennis 14:40
I don't in fact, I wouldn't be surprised that by the time this episode airs on Tuesday that they have filed for Chapter 11. They missed a big interest payment. They announced a bunch more store closings. They closed a big distribution center here not too far from where I am in the Dallas area. So, they're doing everything they can do to conserve cash, but the underlying operating performance is so bad that I don't, don't see how they continue without going into bankruptcy. And then, you know, we'll see, we'll see what happens. But if it doesn't happen by the time this episode airs, I expect it will happen very shortly thereafter, unfortunately.
Michael LeBlanc 15:18
More financial stuff Rent the Runway is restructuring their debt. I guess that's good news for them, right. I mean, it gives them another, a little bit of breathing room.
Steve Dennis 15:25
Yeah, we, you know, we talked about in the prediction’s episode, in particular about the reset among these disruptive brands. And one of the issues aside from just the difficulty of getting to profitability is many of them have fairly weak balance sheets. And you know, that's obviously an issue if you don't have a lot of cash, or ability to, to raise money, attractive terms, and you're blowing through a lot of cash on an operating basis, which has been the case at Rent the Runway for a while. So yes, they bought themselves some time, they moved back a pretty si-, I mean, given the size of their business, pretty sizable payment of 275 million, and they restructured their debt, so they don't have to pay that back until October of 2026. So, that (crossover talk).
Michael LeBlanc 16:11
Is kicking the can down the road for a couple of years, at least, right.
Steve Dennis 16:14
Yeah, and I, you know, I mean, it remains to be seen how that's all going to sort out, but I will say that it's, it's encouraging, I think that, that a lender would be willing to, to structure those sorts of terms. And I think, you know, the fact that they moved the maturity out so far, certainly suggests that this thing's not, not expected to be a big turnaround in the next year. But it does give them quite a lot of time. And I wouldn't be surprised to see more of these kinds of restructurings, as well as some of the other things we touched on in the predictions episode.
Michael LeBlanc 16:47
Just before we get to our excellent discussion with Michelle Bacharach and Katie Hotze. A few words from our presenting sponsor.
Michael LeBlanc 15:56
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Steve Dennis 17:27
Well, we have yet another set of great interviews coming from the NRF Show. Today we're joined by Michelle and Katie, how are you guys?
Michelle Bacharach 17:35
Good. Thanks for having me, doing well, thank you.
Steve Dennis 17:37
We generally like to start out with having our guests just to tell them a little bit about their personal and professional journey in the work they do. And then we'll kind of, kind of dig into things. Michelle, do you wanna start out.
Michelle Bacharach 17:47
So, I'm Michelle Bacharach and the CEO and co-founder of FindMine's we're a software company serving fashion, home and beauty brands and retailers and helping them to do better storytelling through creating inspirational shoppable content for all their products.
I started the company because as a consumer, I kind of feel like I don't know what I'm doing when it comes to fashion or beauty or interior design. And I always needed a little bit more help. And my background was in product management. So, I actually had experience like learning how to solve customer experience challenges, remove friction from customer experience journeys, and work with developers and designers and things like that to make an idea come to life. So, that was the start of the company and the idea and my background.
I kind of fell into product management. Honestly, I graduated college and didn't know what I wanted to do. I decided to work at a startup. So, I didn't have to really decide what I wanted to do, l can wear a lot of hats. And I like, got to work on the privacy policy and decided I didn't want to be a lawyer. And it was really great to kind of feel my way through and I kind of fell into product management and fell in love with it. So, that's, that's what started it all, honestly,
Katie Hotze 18:50
Hey, I'm Katie Hotze. I'm the founder and CEO of Grocery Shopii And we are a digital meal planning platform for grocers. We allow grocery shoppers to get through meal planning and online grocery shopping in five minutes flat. And we display recipes from the hottest food brands and food bloggers. I created the company in 2018.
And like $1 store notebook, I was that sort of a want-epreneur. I was, I spent 18 years in consulting. My background is in digital marketing. So, I really just loved like the data side of marketing my master's degrees in data. And it allowed me to just really solve my own problem. Some of the startups I had created on my own had failed. And I dug into my own personal problem as a working mom in the suburbs of Chicago, trying to figure out how to get dinner planned when I didn't have time to dig through recipes and like figure out how to input it into a website and get it delivered to my house. And so I basically just created a prototype in PowerPoint no less and, and designed what I thought the UX should be and, and then I got laid off six months later, I took severance money and I was off to the races.
Steve Dennis 19:57
Wow, nice, nice.
Michael LeBlanc 19:59
And speaking of off, right off to the races. You just arrived here at the NRF Big Show. So, you're kind of fresh off the airplane, (crossover talk).
Katie Hotze 20:04
Fresh from the airport.
Michael LeBlanc 20:06
Now what brings you to the show? Have you been able to, I don't, it's pretty early in the morning. You probably haven't walked the show yet. But any first impressions as you, as you've been here?
Katie Hotze 20:11
Yeah, well my team has been here. So, yeah, it's one stop shopping for me. So, I can come in. I have meetings lined up all day. And it's with partnerships pretty much.
Michael LeBlanc 20:16
Great.
Katie Hotze 20:17
Yep. So, they do all the pre-work. And I kind of come in and decide how we move forward for the rest of the year based upon certain relationships that we have been nurturing.
Michael LeBlanc 20:28
(Crossover talk). Fantastic. Now we're hearing, I'm hearing that it's a record number here. Is the team reflecting back, back to you that it's been busy to them.
Katie Hotze 20:33
Mobbed was the word.
Michael LeBlanc 20:37
Mobbed, like we, we like mobbed when, when you were here to talk to people in the industry. Steve and I were saying that it's a big difference since last year, (crossover talk). I mean, we're trying to index it back to like, when was the last, 2020 was the last full, the full one. So, they say it's even bigger than 2020, which was why we put it in the (crossover talk).
Michelle Bacharach 20:52
Pumped up demand from last year when you know, people were worried about Omicron. And then when people were, you know, just not able to fly or travel.
Michael LeBlanc 20:57
Yeah.
Michelle Bacharach 20:58
Now everyone's able to do that.
Michael LeBlanc 21:01
Yeah, yeah. So for you, let's talk about that a little bit, let's follow that thread a little bit. So, these trade shows, you know, everybody says, are they worth doing and whether attending or presenting? And, and you know, when you, when you think of the, a trade show like this, what do you, what do you come here for? And do you have a plan? And you know, what, how do you approach it?
Michelle Bacharach 21:18
Yeah, well, this one, I'm lucky because it's in my backyard. I'm based in New York. So, it takes a little bit of like, I don't know, analysis out of it,
Michael LeBlanc 21:22
Right.
Michelle Bacharach 21:23
In terms of the ROI. And honestly, like I told you guys, I'm halfway through my maternity leave right now. So, it's like being, (crossover talk).
Michael LeBlanc 21:31
Congratulations.
Michelle Bacharach 21:32
Thank you.
Michael LeBlanc 21:34
Boy or girl?
Michelle Bacharach 21:36
A boy, my second boy. Yeah, like being able to dip back into work midway through mat leave, like I wouldn't have flown somewhere else to do that, right.
Michael LeBlanc 21:42
Right.
Michelle Bacharach 21:43
So, I think for me in this particular year, the fact that it is, is in New York made it all the more possible for me, but normally at NRF and this year, also, I you know, what I'm looking to get out of the show is obviously meeting with existing customers, because everyone is kind of in the same place. And normally, we're also distributed.
Meeting with my team, because now my team is across the world, we have someone in Paris, we have someone in Montreal, we have someone in Argentina, like it, just everyone's here. So, we all went out to dinner last night. It was the first time we were all physically together ever, ever since they had started, you know. And then the other thing is partnerships. I also, you know, we have a lot of tech partners.
We're in the booth with SAP who's a partner of ours. And it's like SAP Startup. It's called SAP.IO, It's the SAP Startup Experience Center, basically. And we met the startup to the right of us and the startup to the left of us and decided that we're going to partner with both of them. So, it's a serendipitous kind of thing as well, where you just meet people who you're like, what do you do? And you're like, wow, how could we partner and now I'm thinking about ways that you and I can partner? So,
Steve Dennis 22:46
So, we talked a little bit about the inspiration for your companies? Can you give us a little greater sense? Maybe start with you, Michelle, in terms of what problems are you solving for your customers? How does FindMIne work? Just a little bit more of the details around it?
Michelle Bacharach 23:00
Yeah, definitely. So um, we kind of think of ourselves as B2B, B2C. So, like, we're actually solving a consumer challenge similar to your company. That is customers don't necessarily know how to look great in an outfit when they're on a website evaluating an isolated product. So, you don't just wear a shirt with no pants and no jacket, no shoes, that would be weird. You have to, like put it with other stuff.
Steve Dennis 23:22
We don't judge here, but it does seem, (crossover talk).
Michelle Bacharach 23:25
But like, basically, you know, customers aren't experts at the categories they are buying from but the brands or retailers selling to them are. And so there was this big gap in terms of the expertise between those two things. And like thinking about, you know, going to a beauty counter in a department store, and like you don't even necessarily know what you need, you're just like, make me look great. And you walk away having bought $500 worth of stuff. And you're like, how did that happen? It's because that person is an expert, they know more than you, they help you be a better version of yourself.
But that experience completely falls apart in 90% of the places that consumers are interacting with a brand or a product, the eCommerce site, email, social media often, and a lot of times people are turning to like influencers on TikTok or Instagram to get their information, their expertise, you know, and the brand isn't participating in that. So, how does the brand actually help the customer achieve a better version of themselves without losing them to an influencer? So, I started looking into that.
Michelle Bacharach 24:36
And the reason we're a B2B company is that the brand and the retailer is the one who has more friction even than the consumer. It's so hard for the merchandiser to create a complete furniture set for every single product that they sell, forget it, you're just never gonna have time to do that. And so they want to share that expertise. It's just they're structurally blocked from doing that,
Steve Dennis 24:47
Right.
Michelle Bacharach 24:48
And so our artificial intelligence amplifies what they're already doing. We're not putting anyone out of business or putting anyone out of a job or like, you know, making anyone obsolete. We're actually taking what they're already doing and scaling it to like the 1000th power so that you can actually show a customer a complete outfit for every product around every furniture piece that you sell, or like how to do a smokey eye, how to do the anti-aging regimen. It's a beauty counter experience wherever the customers are interacting with a product.
Steve Dennis 25:07
Very cool. How about you, Katie, can you give us a little peek behind the scenes?
Katie Hotze 25:09
It's so interesting hearing Michelle talk because we're B2B to C as well. And we broke into that space, and I'll tell you how it happened. We found recipes for a certain protein, and they were living on that protein's website, and it was just stagnant data, right, just floating out there. And they were making it shoppable. And they thought they'd kind of check the box. And I'm like, I'm telling you right now I am the person you need to get to at the time, I was the 40-year-old mom, like you're not getting to me when that is floating on an outside experience, right? You need to be inside the shopping experience. And one of the first times I tried to get a speaking op in this industry in grocery, they said, I had someone say to me, shoppable recipes, nothing new. And I was insulted, shoppable recipes that's what he thinks I am. And so yeah, we came into the space with the desire to create a platform, not, not a shoppable recipe, but a platform. And it's API driven, it’s cloud native, It's machine learning enhanced, and it adapts to the shopper.
Katie Hotze 25:55
So, when you come in, we pass that token, you're completely authenticated on the way in the door, but it's unique to use, you're writing a code unique to you. And I think that's what's so awesome about what we do, because we made it really, really fast for the busy parent, that, that really is our target. And it's about 90% women, and the data is agnostic, whether you work or stay at home, you're busy, you don't have time to figure out what you make for dinner. And we needed to help you do that.
Katie Hotze 26:15
What was so interesting was as we unpacked the problem, we spent 2019, just really behind the curtain, figuring out what is the need, and what does the customer actually want. So, that's actually how I met my CTO and co-founder. We met at an incubator, and it is a customer discovery incubator, and you're just, just making cold calls constantly to people who would actually be the buyers. That's how we figured out what you were actually B2B to C, right? But the food brands are spending a fortune on professional chefs to create a recipe so that their buyers have the best experience with their product. But they didn't have a direct path to get that recipe in front of the actual shopper who's actually going to make that purchase, right? And then online grocery shopping was 43 minutes on average, right? 84% cart abandonment rate per Mackenzie, May of 2020, right? So, the height of the pandemic actually spiked versus decreased?
Michael LeBlanc 26:53
Oh, interesting.
Steve Dennis 26:54
I Haven't heard of that.
Katie Hotze 26:58
(Crossover talk) When you think fear, fear should be you know, people should be kind of powering through the, you know, the COVID fear to get your groceries delivered, but cart abandonment spiked. And so, it's really telling of a broken UX on a grocery’s website. And so, we come in with a platform that is semi-customizable; a grocer just drops it right in. And it's accessible from the homepage and looks and feels like the grocery site. And it really allows the shopper to use recipes that are just hand crafted from the brand. We use hot food bloggers as well. We use food bloggers all across the country, because honestly, they've really high conversion rates. And it'll just allow shoppers to expedite the shopping journey. And because we integrate directly with that cart, it's the opportunity for the shopper to fill their cart, and then go to everything else, you still need bananas, you still need milk, right? Like you still have your list.
Katie Hotze 27:48
And when you're not integrated, you can't provide that level of a clean shopping journey. And we're for clicks. It takes anywhere from 24 to 44 clicks on average for a recipe that you find online to get added to cart. Yes, we just, we just you know blew it up. And that's why it's five minutes or less, it actually technically takes about three minutes and 45 seconds to get through our shopping journey with a week of meals. To be, to be precise. Man, you got it bad, (crossover talk). Plus or minus a few seconds (crossover talk).
Michael LeBlanc 28:02
That's your life.
Katie Hotze 28:04
Yeah.
Michael LeBlanc 28:05
You both have been very articulate in the genesis of your organizations and the founding and the ethos behind it and the mission. Let's, let's talk about growing the business and any hurdles you've had to overcome as you've grown the business. I mean, you, you clearly had a clear path. Talk about that. Katie, talk about that a little bit about what you've had to overcome that, perhaps was unexpected, or, or something that you had to get past to get both of you to where you are today,
Katie Hotze 28:33
There are really two key things. One, is we had to convince a male dominated industry that meal planning was a problem, flat out. It just, we, I'd get to the table, and it was just not the person with the problem at the table often. And so, we had to convince them of that. That was a hurdle that cost us a lot of time. Then, when you look at my early contracts, it was either women, or our very first contract was a man with seven children. No joke.
Michael LeBlanc 28:49
Right, right.
Katie Hotze 28:51
It's people who, it's people who've got the problem directly, intimately. So, number two, there's a real lack of understanding of fundamentals of digital marketing in the grocery space, per my perspective as a performance marketer you come in you go the websites were not designed to, you know, to really think about conversion. Everyone's just tr-, because everyone, do you really go to your groceries website to get re-, recipes. You aren't right and so they bury them. So, when I got into the industry, I was trying to get people to work with us early on, I was looking for partners, I was looking for grocery stores, like who's going to work with us, right? And people would say, well, Katie, you know, we have like 300 recipes on our website. No one ever clicks on them.
Michael LeBlanc 29:13
Right.
Katie Hotze 29:14
Let me teach you the difference between Pinterest, Facebook and Instagram and you, right. They create fresh content every second. And you've had the same kind of recipes on there since 2005. (Crossover talk), No joke. And the links are all broken, biggest, some of the biggest grocers in the country in North America.
Michael LeBlanc 29:29
Yeah.
Katie Hotze 29:30
Things are broken. And so you can't compete with that, we can, let us come in and do that for you. We work with the biggest food brands in the country. And we can just, just literally adapt a hyper-personalized experience for shoppers. And our shoppers come back four times more often.
Michael LeBlanc 30:42
It's so interesting. You know, I know a lot about the food and grocery business, I've been in it myself, and I report on it and just that intersection, the brands would go to the grocers and say we got lots of recipes. They're yours and you know the list of your products. But what you're articulating is yeah, sure but you, A) they're not integrated into the social media and the speed of social media and B) they just kind of sit there. And how do you integrate them? It's a fascinating solve; I could see how that's not a problem. I got lots of recipes, Kraft just gave me a bunch of recipes that I don't need, you know what I mean? Like that kind of thing.
Katie Hotze 31:10
Social influence is really powerful, (crossover talk). So, just being able to start to tap into how the food bloggers in different ways the people are making buying choices, and how to take that brand off to the side and get them tethered in.
Michael LeBlanc 31:23
Michelle let's talk about your journey. Again, clearly articulate the problem you're solving. But as you got to where you are today, what did you have to overcome to get here?
Michelle Bacharach 31:31
Oh my gosh, I don't even know where to start. I made so many mistakes at Stanford Business School. I wrote a case study about the mistakes that I made. (Crossover talk) it's embarrassing, but at least it can help other people avoid those snafus. I would say a similar one to yours is like pitching people, whether customers or investors who are not the first party person who has a consumer problem. And I've two examples of that. One, is pitching VCs, is usually white men, who will be like, Oh, that's interesting. I don't do a lot of shopping. Let me ask my wife what she thinks.
Michael LeBlanc 31:52
Yeah,
Michelle Bacharach 31:53
First of all, if you're a VC doing a focus group of one, fail, get a different job, (crossover talk).
Michael LeBlanc 32:09
Again, by the way, your wife is not the average shopper.
Michelle Bacharach 32:11
Exactly. She's not, she's a Connecticut, you know, like a,
Michael LeBlanc 32:16
A person of probably of means, (crossover talk).
Michelle Bacharach 32:19
And that's just not representative of how most consumers experience shopping. And then the second example is Daymond John, so I was on Shark Tank, but this was like a different kind of pitch competition for fashion tech companies. And at the end of my pitch, he goes, Yeah, but don't people know how to style themselves? Can't they just look at and be like, oh, I could wear it this way, (inaudible). Like, no, like, you're a fashion designer, because you have that, you're the 1% of the population that has that part of your brain that can visualize you know, a pair of trousers, like 50 different ways. My husband can walk into an empty room. He's a real estate developer and walks into an empty room and sees (crossover talk).
Michael LeBlanc 32:49
Just visualize, (crossover talk).
Michelle Bacharach 32:53
He can see it.
Michael LeBlanc 32:55
Yeah, what it can look like, like the potential and what fits with what and all that stuff. Yeah.
Michelle Bacharach 33:05
And you know, most people don't have that, they don't. And so, if you're, if you work in fashion, if you work in interior design, like you have gravitated towards those industries, and jobs, because,
Steve Dennis 33:16
It's not random (crossover talk),
Michelle Bacharach 33:17
Yeah, you're an outlier. And so, you are not your consumer and having to put yourself in your consumer shoes can be really challenging sometimes, because you're so different from them by design. And then I have to convince them, there's really a problem here. And so, some of our best customers, you know, we've heard from several of them, we're like, how did you find out about us? Or why did you decide to solve this problem? You know, what made you want to put a complete look on your product pages and do a personal like styling program via email, and they're like, our customer surveys, our focus groups, our customers have told us, we don't know what we're doing help us. And it's amazing to have that happen. But it's almost serendipitous, because, you know, not everyone's asking the right question in those surveys, like they might be missing a huge opportunity.
Steve Dennis 33:42
Sure.
Michelle Bacharach 33:43
And we're increasing customer lifetime value by 150% when you serve your customer like this. So, I think that's kind of the you know, other than the like, self-inflicted pain of fundraising errors, and all those things. I think that's been the biggest challenge. But it's gotten easier, especially social proof is important to other retailers, too. So, now that we have you know, our customer list includes like, like a who's who of top brands, you know, Mitchell Gold, Bob Williams and Home and like Lands' End and fashion, and we work with Adidas, and we were part of the LVMH Masonic Startups program like now, it's gotten a little easier, but in the very beginning, like
Michael LeBlanc 34:41
How do you get that momentum, right? It's, you know, it's when you look back, you can reflect on how you got here, but you know, getting that momentum going and getting that started.
Michelle Bacharach 34:49
Yeah, one of the things I reflect on a lot is that my last job before starting the company was at Univision, a media company and we always talked about multi-platform. So, there was a team for Linear television, there's a team for mobile, there's a team for desktop. And I get that you have to structure your org in some way, you have to make some kind of delineations. Because there's so many people, how do you organize them, whatever. But the problem with that was, we thought we were acting as if it mattered to our customer where they're watching their (crossover talk). They don't care. They don't even notice, like, how many times am I watching Stranger Things on my TV versus my phone versus my tablet or whatever? Like, I don't even know what device I'm on. I'm just watching the show,
Michael LeBlanc 35:19
Nor do you care.
Michelle Bacharach 35:22
And retailers do the same thing. We talk about the store, the, you know, social email like there were all these different teams. And yeah, from an organization-, organizational standpoint, you have to do that. But you have to work so hard to put yourself in the shoes of the customer and like, cast yourself in their role. And the same thing with socioeconomic status, right? If you're a senior leader, you are not in the same boat as most of the consumers at most of the companies.
Michael LeBlanc 35:50
Yeah.
Michelle Bacharach 35:51
And it's really hard to do that. But it means everything.
Steve Dennis 35:58
So, for both of you know, we've touched on this a little bit. But you know, if we think about the members in our audience, who might be entrepreneurs or are thinking about plunging into the entrepreneurial world, what advice would you give them? And I think in particular, one of the reasons we had you on is also to get more perspective of the challenges you had as female founders are underrepresented. And we've talked a little bit about that, but maybe particularly from the lens of some of the communities that are underrepresented in the VC world, what kinds of advice is top of mind? Katie do you wanna start us off?
Katie Hotze 36:32
Yeah, sure, I've evolved greatly. And so, when I came out of this, you know, since this is the furthest I've ever had a startup go, and, and then we just, you know, once we took off, we're like, we're just raising a lot of money, and we're gonna just power through and whatever it takes, we're gonna make it and, and that was three years ago. And what I've learned is that and I'm just be blind. We I had to start mirroring the guys, right? Because when you're in pitch contests, I did pitch contests for years, I'll still do anything, right. But you, it's you're one or two women in a pitch contest maybe. And if you start to watch the guys, and you know, I did a pitch contest with a guy who's in cryptocurrency, and we stayed in close touch. And he's just really loud on LinkedIn, right, dropping data, raw data, you know, big like memes, and just really pounding his chest all the time.
Katie Hotze 36:54
And I remember about a year and a half ago, I was raising a large sum of money. And I'm like, I've got data, I've got cool data. And I literally took a screenshot of some raw like, I'm talking like, hundreds decimal points, data, right. And I just dropped it on LinkedIn to see what happens. I'm like, this is, this is how we boost loyalty (inaudible) boom, and it exploded.
The one post that (inaudible), remember thinking, you have to start mirroring the people that are loud and robust and confident because you have to exude confidence to raise money. And I think I'm Southern, and I was raised a southern female, you know, you don't, I had to learn how to sell I've had to learn how to do a lot of things. And I'm super open about it. Because I think that there's so many awesome women who could be breaking through, your corporate, you know, I used corporate for like my benefits. I had my babies corporate. And all of a sudden, it's like, no, it's me time, I spent 18 years and consulting, let's go, right.
But you, you do have to look at who's doing it really, really well. And it's oftentimes the guys and I found it's oftentimes the guys in sort of like disruptive industries. And I just started sort of mirroring their tactics. And it's worked for me.
Michelle Bacharach 38:32
Yeah, I mean, I would say my two pieces of advice, regardless of like, your status, you know, in terms of representation, are always the same. And I feel like a broken record saying it but I feel like they're super important in terms of my success, which is, if you want to start a company, my, my first advice to you is, don't do it. Seriously, because, like, you have to have something so meaningful in your own life and believe in your ideas so much to get up every single day when shit is the worst. Like my son, my first son was born two weeks before the pandemic shut everything down. And then three of our customers went bankrupt, and stiffed us on a combined, I want to say $500,000 in, like money they owed us, let alone the forward-looking revenue, right. So, we lost 70% of our revenue almost overnight. I'm a first-time mom, we don't know what's going on in the world. Like who’s are we going to open and die, like it was a very stressful time.
Michael LeBlanc 39:12
Yeah.
Michelle Bacharach 39:13
And like I, the resilience that you need to get through that only comes from two places. One, you have some childhood wound and someone told you, you couldn't do something, and you have to prove them wrong. That's your Elon Musk model.
Steve Dennis 39:22
But enough about Elon? Yeah, right.
Michelle Bacharach 39:28
Steve Jobs like you know here's a bunch of people like that. It comes with a lot of risk. By the way, personality disorders and all that kind of stuff that comes with a deep childhood wound like that can mess up a company's market cap and all the way the other source of that drive,
Steve Dennis 39:43
First is don't spend $42 billion on anything. That would remind you of (inaudible).
Michelle Bacharach 40:00
Ticket prices are a little too high. Yeah. But yeah, I mean, like the second source of inspiration or like drive is the idea. Like, you just have to have this in the world. So, the reason why I say don't do it is if you can't ignore me, then you have that drive. Like I had the idea underlying FindMine for literally seven years before I did anything with it. And I, you know, I did like a little business plan competition at business school, and then didn't do any more with it. And it just kept going and going and going, because I just, it's out in the world, why hasn't someone done this, like, I had to birth this idea, because it was out important to me. And I saw that big of an opportunity. So, that's my first piece of advice.
Michelle Bacharach 40:19
My second piece of advice, if you do it, just don't die. Because honestly, like the, it's like musical chairs, like if you are still standing, you will succeed. Because everyone drops out for all those reasons. And it's so easy to drop out, because it's so, so, so hard to like, thread the needle. But if you cannot die, don't die, and then you'll be doing great. And then in terms of like, under representation, I think I have a slightly different experience than you because I found that when I tried to adopt the like white male playbook for VC, it backfires, like people will discredit some of those qualities in a woman, right? Like, they're like, you're, you're bossy or you're too aggressive or whatever, or, you know, big for your britches, like, you get a lot of that kind of pushback.
Michelle Bacharach
And so in terms of what I've tried to do is just know that I'm going to get 2% of the funding men are going to get and plan my business with that in mind, while still going for the big, you know, we've raised just under $10 million. So, it's not like I haven't done it. But every time I've gone out to raise 10, I've gotten two. And so, I've had to do that five times in order to get 10 total. And so I think if you use the playbook that men are using, and expect, you're going to get that $10 million check and have the burn and all of your company like kind of lined up to need that to succeed, you're going to, you're going to go out of business, you're not going to make it. So, you have to shoot for the stars and like have the big, I mean, we're, we're on track to be a billion-dollar company. Like we have the vision,
Michael LeBlanc 41:04
It's fantastic.
Michelle Bacharach 41:06
To back that up. But I'm not spending like that today. I know I have a contingency plan that if I don't get all that cash, I'm still going to make it to that. So, I think that's important for me to have, have in my playbook but like, I know that when I lose 70% of my revenue overnight. I'm going to be okay. Because I can adjust and be dynamic. Whereas if you look at like Fast, right, the spectacular disaster that that was. They were spending $10 million a month and had $600,000 in revenue. So, like,
Steve Dennis 40:23
I'm not great at math. But that seems (crossover talk).
Michelle Bacharach 41:34
That doesn't work, (crossover talk). Yeah, (crossover talk).
Michael LeBlanc 42:47
I mean, listen, this has been such an interesting time. It's so great to meet you both with such great stories. I mean, I think there's so many lessons to learn. And thank you for sharing both the interesting concepts behind your organization's and their journey and all this stuff. So, thank you very much for joining us on the Remarkable Retail podcast, it's been a real treat meeting you both and I wish you safe travels up in the city and back home. And thanks again for joining us.
Katie Hotze 43:15
Thank you.
Michelle Bacharach 43:17
Thanks for having us.
Michael LeBlanc 43:20
If you like what you heard, please follow us on Apple Spotify or your favorite podcast platform so you can catch up with all of our great interviews, including Organized for Growth our interview with Satish Malhotra, CEO of The Container Store. New episodes of Season 6 presented for another season by our friends at MarketDial will show up each and every Tuesday. And be sure and tell all your friends and colleagues in the retail industry all about us.
Steve Dennis 43:34
And I'm Steve Dennis, author of the bestselling book, ‘Remarkable Retail: How to Win & Keep Customers in the Age of Disruption’. You can learn more about me, my consulting and keynote speaking at stevenpdennis.com.
Michael LeBlanc 43:47
And I'm Michael LeBlanc, Consumer Retail Growth Consultant, keynote speaker and producer and host of a series of retail trade podcasts including this one. You can learn even more by me on LinkedIn, and you can catch up with Steve and I in person at Shoptalk in Vegas, March 26. And a month later in Barcelona at the World Retail Congress, April 25.
Until then, safe travels everyone.
SUMMARY KEYWORDS
people, retail, customer, big, recipes, shopper, business, AWS, talk, consumer, brand, company, bed bath, grocery, problem, store, years