Infinite Web shelf space sparks a surge of food startups

As we approach the biggest eating week of the year, I’ve noticed a growing number of entrepreneurs in Boston trying to figure out how to get onto your shopping list and into your fridge. And investors are trying to figure out how to get a piece of the next Annie’s Organic (acquired by General Mills for $820 million this fall) or Vitaminwater (acquired by Coca-Cola for $4.1 billion).

“Vitaminwater was like the Google of the beverage business,” says Gad Liwerant, who this fall launched a line of packaged smoothies called Applause. “Their success provided motivation and inspiration for a lot of people.”

It’s an interesting moment for the food and beverage industry. Big companies in search of the next big taste are nurturing and acquiring startups. Social media is making it cheaper to build consumer awareness. And hustling to get shelf space at the local Shaw’s may not matter much longer.

“When Amazon gets its same-day delivery of products nailed down, there should be a flood of new consumer products” delivered straight from a warehouse to your doorstep, says Sung Park, founder of Greater Good, a Cambridge beverage company.

All those factors are creating a surge in startups, and the variety of different food ventures around Boston would make for a very strange Thanksgiving meal.

Motto is a sparkling drink made with matcha green tea, packaged in what looks like ginger ale bottles. Six Foods raised $70,000 on the funding site Kickstarter this year to crank out tortilla chips and chocolate chip cookies made with ground-up crickets (it’s high in protein).

Needham-based Purple Carrot delivers ingredients and recipes for vegan meals. Buen Sabor in Newburyport is making all-natural empanadas, rice and beans, and tamales.

Much of this is driven by consumers’ desire for healthier and more convenient foods. At Applause, Liwerant says he wanted to create a smoothie made with “100 percent fruits and vegetables, that was exactly what we like to eat at home,” but without the prep and cleanup. Sold frozen inside brightly colored bags, Applause’s smoothies are priced at $3.25. (A bag makes two servings.) They started appearing at Target stores in September

Supporting the scene are shared workspaces like CropCircle Kitchen, the Food Loft, and Hope & Main in Providence, which make it easier for foodie founders to share advice and kitchen equipment. Even investors who traditionally backed high-tech or health care businesses are branching out.

“The two biggest stocks that have gained the most over the last decade were Keurig” — the Massachusetts maker of coffee pods and brewers — “and Monster Energy drinks,” says Jeff Fagnan of Atlas Venture in Cambridge. “We are seeing a plethora of food deals.”

He says the firm is still undecided about investing in the field and hasn’t so far. But Fagnan has made personal investments, including in Avion tequila, a high-end brand run by his sister that was acquired this year for a reported $100 million.

In Cambridge, Flagship Ventures plans to increase its investing in food and nutritional products, said spokeswoman Lauren Digange. Among its investments are Quantum Designs, which collaborated with Stonyfield Farms to develop WikiPearls, a frozen yogurt bonbon packaged in an edible “skin” instead of a plastic wrapper.

In June, chef Adam Melonas opened an incubator for food products on the edge of Central Square, Chew Lab. Melonas works with consumer products companies on rather stealthy product development efforts — like “redefining breakfast so kids beg you to eat it,” he says.

Melonas has a staff of 11 food scientists, chefs, and product developers. He hopes to put together a $10 million or $20 million fund to make bets in the food and beverage business.

MICHELE MCDONALDS FOR THE BOSTON GLOBE

Kitchen manager and chef Brooke Kravetz sliced apples at Chew.

Melonas, who cooked at restaurants in Australia, Spain, and China, came to Boston in 2010 to help launch a new candy brand, Unreal; he left that company last year to start Chew Lab.

Unreal took a dramatically different approach than most startups, which scrape together cash to get a product onto store shelves, and then hustle to get people to notice. The founders of Unreal included Michael Bronner, an entrepreneur who started businesses like the digital marketing agency Digitas, and his two teenage sons, Kris and Nicky.

Unreal had one of the splashiest launch campaigns you can imagine; its endorsers included Matt Damon, Tom Brady, Gisele Bundchen, and Bill Gates. The Boston company aimed to “unjunk” junk food, selling chocolate bars and peanut butter cups with less sugar and fewer artificial ingredients.

The 2012 launch put Unreal products into about 30,000 stores nationally. But sales slumped after an $8 million first quarter, and retailers started sending product back. Unreal’s packaging was confusing. It was hard to see the brand’s name or figure out what it meant. The company also was paying big bucks for placement on shelves next to Hershey’s and other mainstream candies.

Unreal, which has raised more than $50 million, shut down production late last year. It reformulated its products, focusing on peanut butter cups, with added ingredients like quinoa and coconut. This fall, it began a narrow launch in the natural foods sections of about 900 grocery stores of the Kroger chain. They’re relying more on word-of-mouth and “mom bloggers” instead of paying for public relations and mass media.

“You’ve got to start small,” says Steve Konczal, Unreal’s chief executive, a veteran of Heineken and Unilever. “You want to minimize the cost of learning what works.”

As my grandfather liked to tell us when we learned something the hard way: Sometimes you’ve got to pay for an education.

On-demand home decor, at a flat rate

Paintzen is a service that lets homeowners outsource decorating jobs by filling out a quick survey, without a surprising bill.

DIY can be a rewarding task when it goes right, but a stressful and expensive one when it doesn’t. While simple innovations such as the iPatch have helped homeowners decide on a paint color without ruining their walls, the actual task of decorating can still go wrong. Paintzen is a service that lets homeowners outsource decorating jobs by filling out a quick survey, without a surprising bill.

Currently operating in New York City and San Francisco, the company has boiled down the process of hiring professionals to get a room painted into a couple of steps. Users simply provide their location, number of rooms and any specifics in order to receive a quote. Customers can either tell Paintzen which colors they want to use, or consult with a specialist to get some help in deciding. They can also schedule the service using the company’s online tools. Paintzen decorators are fully insured and background-checked, and they arrive with all of their own materials and clean up after themselves. The company charges a flat rate for each room, meaning customers aren’t left shocked at the bill like they might with a personally-hired decorator.

While the company is not among the first to offer on-demand decorating services, it offers a simplified process and a flat rate to help it compete with other professionals on the market. Are there other DIY tasks that could be outsourced in this way?

Online Video Offers Low-Cost Marketing and Instructions For Your Company

Peter DaSilva for The New York Times

Ed Davis wanted to have a word with his customers.

He was shepherding his small California manufacturing company, Ceilume, through a transition from a custom job shop to a maker of vinyl ceiling tiles, and he needed to begin selling directly to consumers. That raised a perception problem: many people associate ceiling tiles with the ugly, dusty and stained mineral-fiber tiles that have loomed over offices for generations. Mr. Davis, Ceilume’s president, wanted to tell consumers his company’s vinyl products were different. He decided to try online video.

Over the last several years, Ceilume has produced dozens of YouTube videos for product demonstrations, advertisements and how-to instruction. These videos are embedded in the company Web site or show up in results when customers search for keywords. As a result, Ceilume has reached tens of thousands of customers at a very low cost.

Online video is becoming a first stop for many customers. It is akin to what the Web page was a decade ago — something that can give early adopters an edge over competitors. It gives them a channel to talk directly to customers in ways previously accessible only to large companies that could afford TV advertisements.

This guide to using online video focuses on YouTube, which is by far the dominant player with two billion views per day — but many of the principles also apply to the other hosting services, including Vimeo,MetaCafe, Facebook, Viddler, Brightcove and Blip.tv.

SHOW YOUR PRODUCTS Short of getting a customer in the door or sending a salesperson on the road, online video may be the best way to demonstrate a product. According to Mr. Davis, more Ceilume customers place orders without requesting samples because video helps them find what they want.

At Ceilume, video helps customers choose among 30 different styles of ceiling tiles. Ceilume, a 40-person company that has about $5 million a year in sales, produces its “Ask the Ceiling Tile Guy” videos for little expense with internal tech staff and Mr. Davis as narrator. The videos have attracted more than 500,000 views, and Mr. Davis says he believes that video has been a crucial factor in increasing sales 15 percent a year.

CREATE A DESTINATION It is easier to win customers if you give them a reason to tune in. For BBQguys.com, the reason is food sizzling on the grill.

BBQguys.com began as a traditional brick-and-mortar store (The Grill Store and More) in Baton Rouge, La. In 2001, the company went online, which allowed it to reach legions of new customers but also reduced its ability to provide personalized service. Online video has helped the company recover its human touch virtually.

In 2006, it started posting informal YouTube videos featuring new grills, narrated by its customer service manager and chief executive. The channel grew so much that the company recruited a local chef, Tony Matassa, to be its on-camera personality.

It now has nearly 400 videos on YouTube, which have collectively been viewed 1.4 million times. Video has become so essential that the company has built a small studio in one of its warehouses. “We see the video almost like a TV commercial,” said Troy Olson, digital advertising manager for ShoppersChoice.com, the parent company of BBQguys.com. “We’re planting our brand name in their minds.”

The company does not just pitch products. Rather, the goal is to establish its people as customer-friendly experts and provide a channel full of useful information about how to fry a turkey, grill a pizza or smoke a beef brisket. The hope is that the information will draw viewers — many of whom will become customers — and increase the site’s conversion rate. According to Mr. Olson, a person who comes to the site and watches a video is twice as likely to make a purchase as a visitor who does not watch a video.

USE ANALYTICS AND TOOLS YouTube offers tools that allow youto measure the effect of your videos. BBQguys has used this data to make its videos more compelling — shortening them, for example, to two or three minutes after discovering that customers tend to stop watching the longer ones. The company also discovered “hot spots” that viewers rewind to and rewatch — particularly images of food sizzling on the grill — and it now makes sure to include more such scenes.

“Video has to be evolving,” Mr. Olson said. “You have to always be willing to change everything you’re doing.”

BUILD A BRAND CHANNEL One way to get the attention of customers is invite them to become your video producers — especially if they jump off cliffs, ski down steep powder ridges or do somersaults on BMX bikes.

GoPro.com, a maker of small high-definition cameras that can be worn during adventure sports, has built a thriving YouTube presence with customer videos. YouTube allows businesses to establish channels, or a home page that lists videos, playlists and contact information. The GoPro channel features more than 100 videos — including surfing, skiing, motocross, auto sports and flight — which have been viewed more than 24 million times.

“It is the No. 1 most convenient way for us to validate our product to customers,” said Nick Woodman, founder and chief executive. He said business was growing 300 percent a year. “Viral word-of-mouth marketing for GoPro is massive. Video is really the conduit.”

ADVERTISE WITH VIDEO YouTube is the second-largest search engine after Google (which owns YouTube) and represents a huge audience of potential customers. It offers a dozen advertising options, including banner ads, promoted videos that appear on top and beside search results, and “preroll ads” that appear during other YouTube videos much like a conventional TV commercial. YouTube recently announced that it was displaying more than three billion ads per week.

Like Google, YouTube generally follows a cost-per-click or cost-per-view model so advertisers pay only when users click on ads or watch ad videos. Advertisers can view metrics such as number of impressions, conversions and viewer demographics via their Google AdWords or YouTube Insights accounts.

Ads can be aimed at customers based on demographics, keywords or interests. For example, a person who searches for “ceiling tiles” might see a Ceilume video titled “make an ugly ceiling elegant” highlighted as a promoted video atop the YouTube page. Ceilume devotes about 10 percent of its advertising budget to YouTube.

OFFER INSTRUCTION Online video makes it easy to follow the adage “Show, don’t tell.” Many businesses have turned to video for instruction manuals and how-to guides.

Directfix.com sells replacement parts and accessories for smartphones and other electronics. The business faces a constant customer service challenge: showing lay people how to take apart electronic gadgets and install fragile components.

In the early days, the company used pictures and text, said Robert Stanley, founder and chief executive. Inevitably, those instructions left customers with questions that placed a burden on the company’s customer service department. In 2007, the company began posting how-to videos on YouTube. That summer, it released one of the first videos showing how to take apart an iPhone, a video that has been viewed more than two million times.

The company has compiled a library of instructional videos that have reduced customer questions by half, allowed the company to eliminate phone support and cut its customer service budget about 40 percent. Without video, Mr. Stanley said, he would have to hire four or five additional employees.

“You can tell somebody over the phone to turn the screw in the top right corner,” he said, “and they might understand what you mean and they might not. If you show them on a video, they get the point.
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Ex-ManPower exec says he's creating the 'Uber of recruitment' in Raleigh

Jeff Stocks has spent most of his life in what he calls the “human capital space.”

The CEO of executive recruiter the Nautical Group and a former top exec at staffing agency Manpower, it makes sense that Stock would create a startup all about jobs.

“We plan to be the Uber of recruitment,” he says.

The company, appropriately called EmployUs, aims to address what Stocks called the “inefficient, antiquated business model” behind the traditional recruitment process.

Read: EmployUs, others tapped for new Citrix Accelerator in downtown Raleigh

The story starts at North Carolina State University. There, Stocks, chair of the board behind the Poole College of Management, met an entrepreneur by the name of Ryan O’Donnell.

“I was impressed with his intellectual capacity, his drive,” he says.

O’Donnell had some interesting resume tidbits – such as winning the Guinness record for the most food raised during a can drive – more than half a million pounds.

O’Donnell created his own company, Pennies 4 Progress, which raises money for local public schools. And the two pooled their collective intelligence on EmployUs. “I had this concept in my head,” he says. “The best employees in the world come from referrals, from connections.”

So he and O’Donnell decided they’d build a platform around that fact.

EmployUs connects job requirements with people who might know someone who could be a perfect match. It’s not targeting the employees – but the referrals.

“They’ll get paid a percentage of the placement fee,” he says. And an additional 10 percent of the placement fee goes to the charity of the referrer’s choice. “There is so much talent that is not being leveraged in the market place. This is a way to leverage that talent.

He gives an example – what he calls the best employee that falls into that category: “It’s a professional female who left school, went to the market place, worked one to five years, left to go back, to have their family, one to four kids, then they want to go back to the work force.”

Referrals could help it happen, he says.

He serves as chairman of the firm, with O’Donnell in the CEO role. And EmployUs is already getting attention – even though its planned launch isn’t until January. EmployUs was one of the first companies picked for the new Citrix Accelerator in downtown Raleigh.

Learning to code as a hobby led to a startup for this MD and his patient-handoff software

DocDox’s startup story has a few interesting angles: It was founded by a physician with a knack for coding, it’s run by a husband and wife duo, and it’s solving a problem that the founder says many CIOs don’t realize exists.

Patrick Woodard is a resident physician in internal medicine at Howard University Hospital in Washington, D.C. About two years ago, he grew so frustrated with how inefficient, and sometimes ineffective, his department’s method of keeping track of patients was that he knew he needed to do something.

Fortunately, he had learned to code as a hobby in college. So he built a patient census system that he thought would be easier to use and do a better job of documenting handoffs within a hospital than whiteboards, Word docs and basic EMR-generated lists.

DocDox is a software as a service that uses a HIPAA-compliant, cloud-based data storage and transfer platform. Physicians can manage problem lists and medications from anywhere using the solution, and it can stand alone or interface with an EMR, Woodard said.

The problem of poor communication during handoffs is expected to contribute to about three-quarters of medical errors, according to the Joint Commission Center for Transforming Healthcare. Its given way to lots of hospital efforts around improving communications as well as technology solutions from companies like eDocList and PatientKeeper.

Woodard began testing his own solution in his department at Howard and found that no patients had gotten “lost” in transitions. The next step, then, was becoming an “accidental entrepreneur” by inking a deal with Howard University last year to commercialize the technology together. Woodard runs DocDox as a side project with his wife Kristy, a social psychology PhD and adjunct professor for National Labor College.

In addition to the hand-off system, they’re also working on an integrated e-prescription platform called DocDoxRx that will allow physicians to write, fill, refill and fax prescriptions from anywhere. It will also allow pharmacies to verify prescriptions directly through the software, without having to call a doctor’s office, he said, as well as allow patients to look at their own prescription data. They expect that service to launch in the second quarter of this year.

But it’s already gotten some traction. A “spontaneous and fortuitous” conversation with the consulting firm Connex International resulted in DocDox becoming the sole census management and e-prescribing solution that the firm markets to its portfolio of some 1,200 hospital clients, Woodard said.

“Now we’d really like to move into mobile a little bit,” he explained. “It works on an iPhone or Android, but we would like to have a native application.”

For that, the company would need to bring on a new staff member, he said. So the startup, which has been bootstrapped thus far, is keeping its eyes peeled for potential seed investors.

App uses video of customers’ feet to 3D print their perfect insole

The mass-manufactured shoes we typically wear are designed to fit the average foot, which means they don’t provide the unique support requirements of individuals’ feet. While new technologies such as Germany’s OpenGo science have provided the tools for doctors and sports scientists to analyze foot problems, 3D printed insole makerSOLS has now developed an app that lets consumers simply shoot video of their foot to help them create an orthotic insole tailored to them.

Available for both iOS and Android devices, the app enables users to ‘scan’ their foot by creating ten seconds of footage of the sides and bottom. Using algorithms, the company is then able to create an accurate 3D model of the customer’s foot from the video, which it can then use to create an insole. Each design also takes into account information such as the customer’s weight and activity level. The company initially worked with 50 doctors to prescribe the orthotic insoles to patients, but the new app enables consumers to order custom-built shoes straight from their smartphone. It’s currently available in limited cities and the insoles are set to cost between USD 300 and USD 700.

According to TechCrunch, SOLS may use its custom design platform to create other tailored products, such as prosthetics or plus-size clothes.

Subscription Services: The Perfect Business Model?

From Birchbox to MeUndies, subscription businesses may be the business model du jour, but John Warrillow is convinced it's both here to stay and pure genius.

The author and entrepreneur mesmerized the entrepreneurs at this year’s GrowCo conference in Nashville, Tennessee as he gave them a peek at his current passion and forthcoming book, The Automatic Customer: Creating a Subscription Business in Any Industry, due out in February 2015. The book describes nine different business models based on subscriptions and shows how any business can tremendously enhance its value by adopting one.

"It’s the perfect business model because it provides the greatest value to both the entrepreneur and the customer," said Warrillow.

As an example, he contrasted a traditional flower shop with H. Bloom, the subscription flower delivery service that began in New York in 2010 and is now in 10 cities around the country. While the traditional florist has to deal with all the headaches and vagaries of a store-based retailer selling a highly perishable product to customers who may or may not show up, H. Bloom’s founders, Bryan Burkhart and Sonu Panda, realized they could do a lot better by selling subscriptions to customers who bought flowers on a regular basis--businesses, for example. The average sale at the flower shop would be $29. The average sale at H. Bloom is more than $4,000.

That’s just one benefit of moving to a subscription-based business model, Warrillow said. Another is the smoothing out of demand. There aren't any surprises when people are getting the same order on a regular basis, for instance.

Yet another is the model’s ability to reduce the impact of recessions. He gave the example of a company that goes from installing elevators--a business that stops when construction stops--to servicing elevators, which continues no matter what else is going on in the economy.

But perhaps the greatest advantage is the effect a subscription model has on a company’s valuation. Warrillow has observed that effect through his own business,Sellabilityscore.com, which allows business owners to determine the sellability of their companies and to learn what can be done to enhance their attractiveness to buyers. A key factor is recurring revenues. The more guaranteed revenue you can offer a potential acquirer, the more valuable your business is going to be. Because a high percentage of the revenue of a subscription-based business is recurring, its value will be up to eight times that of a comparable business with very little recurring revenue.

Warrillow talked in some detail about three of the nine subscription models. Here's a synopsis:

The Price of Membership

For the membership model, he used the example of the famed Kathy Blake Dance Studios inAmherst, New Hampshire, which developed a membership business for dance studio owners. By signing up, they received regular updates and advice on how to build their businesses.

Getting Ahead

Then there was the front-of-the-line subscription model--for example, the Peach Pass in Georgia, which allows subscribers to use fast lanes, thereby avoiding traffic and, in effect, skipping to the front of the line.

Constant Supervision

The consumable subscription model builds on what Warrillow called “never-again” moments, as when the baby is crying in the middle of the night because of a wet diaper and the half-awake parent reaches for the box of Pampers, only to discover that there aren’t any left. “Never again,” he mumbles. The best example, he said, is the Dollar Shave Club, which guarantees subscribers that they’ll never run out of high-quality fresh razor blades again. He then played its famous YouTube video, which brought the house down.

“The subscription model has relevance to everyone in this room,” he concluded.

Business ideas from Tech-Asia

FitMe 
FitMe delivers nutritious and tasty Taiwan-style lunchboxes to working professionals who are too busy to prepare their own healthy meals at home. Lunchboxes come specially-made for customers’ personal fitness plans, with meals currently separated into categories for men, women, and weight-gainers
 

Hyper-customizable men’s shirts offer over a billion options

Consumers come in all shapes and sizes and have their own individual tastes, meaning that mass-manufactured fashion often falls short. We’ve already seen companies such as Stantt and Threadmason offer up to 50 different shirt size options, and now Original Stitch is enabling customers to truly personalize shirts with their choice of fabric, color, pattern and design, providing over a billion possible permutations.

Members first choose whether they want a smart or casual shirt. They then go through a 14-step process to decide almost every element of the shirts design, including obvious choices — such as the type of cut, whether they want long or short sleeves, collar styles, or a pocket — as well as more subtle elements like the fabric of the inner collar and cuffs, button design and even the inclusion of a monogram (and it’s font, color and location). The details of every order Original Stitch receives are sent to tailors in Japan, who make each shirt on demand using software-integrated fabric cutting machines. The shirts take around two weeks to be created, but the process keeps costs down to between USD 75 and USD 120.

Watch the video below to see a demonstration of the custome shirt generator:

Original Stitch essentially aims to do for the global shirt industry what Nike iD is doing for sneakers, tapping into a USD 10 billion a year market

Alice + Olivia: A Global Brand Spawned by a Need for the Perfect Pants

If, as Mark Twain once proclaimed, “Clothes make the man,” do trousers then make the woman? They do if you’re Stacey Bendet.

Thirty-six-year-old Bendet is the founder and creative mind behind Alice + Olivia, a $150 million global women’s clothing company that is little more than a decade old. Bendet described the origin and rapid-growth of Alice + Olivia at the recent Retail and Consumer Goods Growth Summit, organized by Knowledge@Wharton, Wharton’s Jay H. Baker Retailing Center and Momentum Event Group.

The company’s origins, she said, can be traced to her quest for a perfect pair of pants. “Every girl has 100 pairs of jeans in her closet,” Bendet noted. “I wanted sexy novelty pants,” the kind that could be the focus of an outfit. When she couldn’t find any that fit the bill, Bendet created her own. When she was done, the former apparel company web designer said to herself, “Yes, girls will buy these. They fill a void in the market.”

Cut slim at the hips, her signature trousers create the coveted appearance of a lean body and elongated legs. Women did buy them — and then the question became what to pair them with. “It was a conscious evolution,” said Bendet, who serves on the board of the Baker center. “People in the stores said, ‘We need tops to go with the pants.’” 

“I saw women paying $8,000 for a gown, and I said, ‘I can make that dress for $1,200.’”

That led to cashmere sweaters and eventually skirts. “Then I heard, ‘Everyone’s doing separates, but no one’s doing contemporary dresses that are chic and cute,’” Bendet noted. From there, it was a short leap from fabric to footwear. “At one point, I realized I was paying $1,000 for a pair of shoes, so I said, “Let’s do shoes that fit with our price-point,” she added.

The Alice + Olivia price-point is typically somewhere between $150 and $750 per item, with the exception of leather jackets (which can extend into four figures) and party dresses and gowns, which Bendet added to the collection. “I saw women paying $8,000 for a gown, and I said, ‘I can make that dress for $1,200,’” she said.

Although there’s a youthful vibe to Bendet’s clothes, the mother of two designs for all ages, whether it’s a dress for a girl’s bat mitzvah or prom or a mother’s gown for her daughter’s wedding. The Alice + Olivia collection is aimed at women who want high-fashion, couture-quality clothes but aren’t old enough or affluent enough to afford an $8,000 gown, Bendet noted.

Girls Just Wanna Have Fun

As Bendet introduced each new item to what is now a complete lifestyle brand, her focus was always on “thinking about what girls want and need.” When she says “girls,” Bendet really means women — women who enjoy classic, feminine, distinctively “girlie” kinds of clothes. She designs each collection with four types of women in mind.

“For instance, one might be the fashion editor who looks like she’s heading to the Conde Nast building or just stepped out of Vogue,” said Bendet. “The second would be the uptown girl who shops on Madison Avenue. The downtown girl would be wearing something short. And the fourth one is variable, the Bohemian or seasonal girl.”

While these four archetypes will change with each collection, Bendet said what doesn’t change is a focus on the qualities that fans expect from the brand — clothing that is young, fun, flirty, sophisticated and whimsical. “I’m pretty dictatorial about what is us and what is not us,” she noted. “I don’t design anything I wouldn’t wear myself.”

“So much of social media today sounds like advertising. It needs to be real. If it’s a staged photograph, it doesn’t do as well as if it’s me waving in the mirror.”

For example, AIR, a line of jersey and knit pieces, was born when Bendet became a mom and realized her clothes might need to change to fit the vagaries of parenting. “I decided perhaps that a silk ball gown isn’t practical at the park, but I still wanted my clothes to be cute and fun on the weekend. They also needed to transport well and not wrinkle, yet still feel like me.” 

From Hemlines to the Bottom Line

There was no business plan when Alice + Olivia launched in 2002 and no plan for global expansion. At one point, Bendet recalled, her business partner, Andrew Rosen, the founder of men’s and women’s clothing line Theory, said, “Stace, look. You’re running a $75 to $80 million business like a $20 million one. You’ve got to grow up a bit.”

That’s when Bendet made a decision not to expand for a time. Although she noted that she prefers picking out fabrics to dealing with procedures and people, Bendet switched her focus to putting a level of management in place that would elevate Alice + Olivia to a $150 million business in three to five years. The strategy worked — last year, Alice + Olivia opened its first non-U.S. stores in Dubai, Kuwait, Tokyo and Hong Kong, bringing the number of free-standing boutiques — including those in New York, Connecticut and California — to 22. In addition, Bendet’s clothes are available in more than 800 select department and specialty stores worldwide, including Saks Fifth Avenue, Neiman Marcus, Bergdorf Goodman,Lane Crawford, Isetan, Hankyu, Harvey Nichols and Harrods, as well as online at aliceandolivia.com and prominent web retailers including Net-a-Porter and Shopbop. 

“We need to do more with the technology for manufacturing. Three-D printing for clothing would be innovative.”

In terms of figuring out which pieces will sell, “some of it is evolution and some of it is stream of consciousness,” she said. “Street style influences couture design. As you get bigger and more global, you need reports from the field as to what’s happening in Asia and Europe.” Bendet also finds inspiration from trips she takes. “When I went to Istanbul, I bought a bunch of tablecloths and bedspreads, and then I used the look of those to make fabrics,” she noted.

‘We’re a Modern Brand’

While Alice + Olivia is a lifestyle brand to the women it outfits, for Bendet, it’s her life. She pointed out that she is involved not just in the design of the clothes, but also the whole process of production, the look of each boutique, the sales culture and how the brand is promoted.

“When a woman walks into the store, I want the clothes to fit perfectly, so she can walk out and wear it that night,” Bendet said, adding that a big chunk of her day is also spent on social media. “We’re a modern brand. We use social media so customers get insight into our world and where we are traveling. I fell in love with Instagram. I like it more than Twitter because it’s visual. We now have 370,000 followers.”

She also likes a new app called Storehouse, which allows users to combine text, photos and videos. And while fashion magazines are still important for building and promoting fashion reputations, Bendet said they are not the only voice anymore. “They’re still powerful, especially if [celebrities] are wearing something from our collection,” but bloggers can be big influencers as well if they have a large following, she noted.

Bendet handles the brand’s Instagram posts herself. “People will say, ‘It sounds so much like you.’ That’s because it is me,” she said. “So much of social media today sounds like advertising. It needs to be real. If it’s a staged photograph, it doesn’t do as well as if it’s me waving in the mirror. Followers want to see your world, spontaneously.”

Fans and followers get another look inside her world when they visit one of Alice + Olivia’s free-standing stores. While the architecture and the spaces themselves can vary greatly, she said, there are some signature elements that are common to each: molded wood, marble in the flooring, at least one mid-Century sofa and a “crazy chandelier.” Other variables can include design boards in the dressing rooms that feature fabrics and swatches similar to those that Bendet and her team use. An enlarged reproduction of one of her daughter’s drawings is displayed at another store. 

To work at an Alice + Olivia store, Bendet noted, employees need to spread positivity and strength. “[Our] employees are proud, happy, excited, energetic. If not, they don’t work there.”

Looking ahead, Bendet said she would like expand the brand into eyewear and make-up but definitely not menswear. She would also like to see more innovation in clothing production. “It’s done the same way today as it was 100 years ago,” she said. “You still break needles when you sew. It’s still a laborious process. We need to do more with the technology for manufacturing. Three-D printing for clothing would be innovative.”

Mobile-Enabled Commerce Will Yield The Next $100B Startup

Here are two bolder predictions: By 2020, smartphones and tablets will account for more than 75 percent of global online commercial transactions and more than 50 percent of spend. And the world’s first mobile super unicorn won’t be an audience company like Facebook or Google, but a commerce company like Amazon. When tech historians look back on the 2010s, they will remember it as the m-commerce decade.

The M-Commerce Opportunity

For entrepreneurs eager to capitalize on the m-commerce opportunity, the first step is to understand the lay of the land. The m-commerce ecosystem falls into six primary categories:Mobile Payments, Retail Enablement, Mobile Retail, Marketplaces, On-Demand Services, and App-Based Services.

Mobile Payments and Retail Enablement are mobile empowering, equipping smartphones and tablets with tools to support a new era of mobile-based retail businesses. Mobile Retail and Marketplaces are mobile enhanced, comprised primarily of e-commerce companies that previously existed on the web but benefit greatly from the transition to mobile. On-Demand Services and App-Based Services are mobile enabled, consisting almost entirely of companies that are not just improved by smartphones and tablets, but could not exist without them. (We excluded media, games, messaging services, and social networks, which tend to be more audience-driven than commerce-driven and monetize primarily through ads or digital goods rather than physical goods and services.)

The rise of m-commerce represents the most important wave of retail innovation since consumer brands first began selling goods and services online 20 years ago.

Opportunities for entrepreneurs looking to build the next billion-dollar m-commerce company exist across all these categories, but are particularly concentrated in the relatively greenfieldmobile enabled categories of On-Demand Services and App-Based Services. Companies in the Mobile Payments and Retail Enablement categories like Square andRetailMeNot capitalized early on the transition to mobile by building new businesses or reinventing old businesses to take advantage of growing merchant and consumer demand to conduct commerce on smartphones.

Meanwhile, e-commerce companies like Zulily and Gilt that built their platforms as the mobile trend was gaining momentum exploited the opportunity to tailor new business models like daily deals around smartphones to gain a competitive advantage.

In Q4 of 2013, Zulily generated 45 percent of its North American orders through mobile devices versus just 31 percent during Q4 the prior year. Only in the last 18 months have Uber and Lyft emerged as the first two unicorns in On-Demand Services, while the more nascent App-Based Services category has yet to generate a single unicorn outside of audience-driven mobile media apps, which we have excluded for the purposes of this discussion.

Our bet is that the On-Demand and App-Based Services categories will spawn many unicorns, and other early stage venture investors appear to agree. Following Uber and Lyft’s success, venture capitalists have poured over $100M into a dozen meal and grocery delivery startups, including EAT Club, Munchery, Sprig, Caviar, SpoonRocket, Fluc, DoorDash,Postmates, Instacart, Blue Apron, Plated, and Good Eggs.

Ridesharing and food services have been natural initial targets for substantial investment because they boast high-frequency use cases and are time-sensitive, meaning they benefit from mobile features like GPS tracking and real-time push notifications. Other on-demand subcategories are heating up, including house cleaning, laundry, and self storage. And App-Based Services are also seeing activity, with recent investments in fitness apps (FitStar,MyFitnessPal) and healthcare apps (HealthTap, Doctor on Demand).

Below is a brief overview of each m-commerce category and thoughts on what it takes to win in each:

Mobile Payments. We define Mobile Payments companies as those that provide mobile payment infrastructure, mobile point of sale systems, and direct mobile payment solutions. This is a challenging space, characterized by razor-thin margins, large capital requirements to achieve scale, and fierce competition from credit card companies and PayPal. Successful entrepreneurs in this category must be good at accurately assessing credit risk. Given how difficult it is for payment companies to reach the scale required for an IPO, it’s also critical for entrepreneurs to keep M&A opportunities open to their companies as an exit option. One example of an exit in this category is the recent sale of Check (PageOnce) to Intuit for $360M.

Image via Shutterstock

Retail Enablement. We define Retail Enablement companies as those that facilitate mobile-based retail transactions either by helping potential customers discover items they want to buy online (contextual commerce) or by helping them find offers offline (in-store marketing, mobile couponing, and location-based offers). Most of the companies in this category depend on location tracking and/or push notifications to present the right customer with the right offer in the right place at the right time. Winning is all about engaging with users intelligently to establish habit-forming behaviors without being intrusive or annoying.

Mobile Retail. We define Mobile Retail companies as those that extend web-based retail platforms to mobile or build mobile apps to sell goods to customers through smartphones and tablets. In “E-Commerce is a Bear,” Bonobos CEO Andy Dunn argues that e-commerce startups have four survival strategies to compete against Amazon: proprietary selection, proprietary pricing, proprietary experience, and proprietary merchandise. All four strategies can be improved by leveraging advantages unique to mobile platforms. That being said, the current set of breakout companies are focused most on differentiated experiences. These companies are shifting the customer experience by embedding natural smartphone services such as picture taking and messaging.

Marketplaces. We define Marketplace companies as those that facilitate transactions between buyers and sellers of goods or services either on mobile as an extension of web-based marketplaces or through a mobile app. The key to any marketplace is achieving liquidity, which companies can do more quickly by extending their marketplaces to mobile. Some marketplaces like HotelTonight and FOBO that involve local, time-sensitive or untethered transactions have gone mobile-only, recognizing their platform is fundamentally better on smartphones. Winning in this category is all about acquiring buyers and sellers cost-effectively and matching supply and demand efficiently to make transactions as frictionless as possible.

On-Demand Services. We define On-Demand Service companies as those that provide services to buyers in a short timeframe either through vertical integration or aggregated supply. While many of these companies function as marketplaces, we place them in this category if they provide fulfillment on-demand (usually within minutes or hours) and/or provide real-time status updates to buyers. Smartphone features like location tracking and push notifications have only made these services possible in the last few years, which is why this category holds so much opportunity. Many On-Demand Services function as utilities. This means that winning in this category is all about price and convenience, both of which are driven by who has the most scale and the best algorithms governing vehicle dispatch, delivery routes, and fulfillment.

App-Based Services. We define App-Based Service companies as those that provide services to customers entirely within a native mobile app. Given that users experience these services immersively on their smartphones, designing an intuitive user interface and seamless user experience can be the difference between success and failure. Entrepreneurs building apps in this category should emphasize accessibility, engagement, and retention. They should also take advantage of the digital nature of their products to conduct low-cost experiments, continuously refining their products to optimize their conversion funnel. Cumulatively, these optimizations translate into customer delight and more attractive economics.

The rise of m-commerce represents the most important wave of retail innovation since consumer brands first began selling goods and services online 20 years ago. Given the size of the m-commerce opportunity, entrepreneurs who successfully execute on new mobile business models before the rest of the market stand to reap outsized returns. Especially exciting are new categories of consumer-facing businesses such as On-Demand and App-Based Services that could not exist prior to the smartphone – and are sure to spawn a stampede of new unicorns.