Creating Experiences Through AI with Lindon Gao
There’s no doubt that online shopping is changing the way consumers shop. However, in 2018, 97% of groceries were still bought in brick-and-mortar stores. We had the pleasure of chatting with Lindon Gao, Co-Founder & CEO of Caper, about how AI is creating new experiences for 97% of that consumer market.
Here are some of the most important insights that we were able to take away from our conversation with Lindon:
Networks matter. It was during the Y Combinator W16 batch that Lindon Gao was working on his previous startup, Queuehop (a technology that set out to reinvent the retail experience through implementing smart, anti-theft security tags on all items, which would unlock upon payment). However, during the YC Demo Day, while many other startups in the batch were signing term sheets, Queuehop walked away without any investments. Yet, Lindon still took away disproportionate value from this experience. During Demo Day, the Co-Founder of Instacart liked what Lindon and his team were building at Queuehop. Lindon kept in touch, and by the time he started developing Caper, the Co-Founder took an immediate interest in them, eventually becoming one of their investors. Opportunities like YC, or any startup ecosystem in general, can provide disproportionate value through their vast networks. “It’s a very valuable network if you leverage it” Lindon says.
User research...the right way. Customer discovery and validation processes are essential if you want to create amazing experiences for your customer. Often times, however, many entrepreneurs talk to customers framing questions in a way, in which the customers will always say yes. Ex. “If Queuehop’s security tag could help you save money from hiring cashiers, would you use it?” You’d hear a resounding YES, just as Lindon did, but this answer doesn’t tell you much. The better question to ask is, “what are some pain points that you face on a day-to-day basis.” Ask very open-ended questions. As an advisor at the YC Startup School Lindon tells founders that “you’ll know customers want your product when they are answering your open-ended questions and they come to the conclusion that there is an imminent pain point and they are willing to pay you to solve it.
Masters of scale. In the retail industry, scalability matters, and it’s something that you should keep in mind when delivering upon your value proposition. Lindon learned a valuable lesson from his first plunge into retail tech during his Queuehop days. He said that “Queuehop was difficult to scale because we needed to change the way people ran their store.” (The security tag needed to be applied on every single garment, which made it very difficult to implement since it required an operation overhaul). With 200K left in the bank, Lindon and his team decided to pivot from Queuehop into Caper. Rest assured, Caper primes itself on scalability. Unlike the technology behind Amazon Go (which requires entire stores to be outfitted with sensors and cameras) or even Queuehop, Caper’s plug-and-play cart-based system complements existing store operations which makes it much more scalable and attractive to retailers. Gao explained that “Amazon Go works right now because Amazon has enough money to create their own stores. But do I see Amazon Go technology going into Whole Foods? Probably not, because you’d have to tear down the entire store’s existing infrastructure to implement sensors and cameras.”
Data. Context. Experience. The seamless checkout experience that Caper provides is one thing, but we can’t forget the fact that Caper carts can directly interface with the shopper through a screen, while simultaneously collecting important data on shopper behavior (if you opt-in, of course). The key is that Caper leverages data to personalize and contextualize the shopping experience for the customer in the most hyper localized way. For example, if customers log in with their loyalty card, Caper will have access to their transaction history, by which they can already predict what items that they will purchase. Using this data, Caper can remind shoppers if they forgot to buy certain items that they typically buy, while also providing personalized recommendations for new products to explore. This is where it gets really interesting. Lindon walked us through typical shopper behavior where “for the items that you’d buy regularly, it takes about 5 seconds to put them in the cart. However, for items that aren’t typical purchases, it usually takes around 30 seconds or more. So imagine in those 30 seconds, you’re probably making a decision on what pasta to buy...this is the perfect time for Caper to push a recommendation or offer a coupon for a particular brand,” creating a sense of urgency and reward. In addition to this, Caper carts could collect heat maps of your shopping journey—to understand how customers walk through the store or if they shop by certain recipes. Creepy? Maybe. But this helps Caper paint a contextualized picture of the customer’s preferences, which doesn’t really exist in retail today. What’s best, is that customers who do not want to share data can simply use a regular shopping cart, since Caper’s plug-and-play cart-based system doesn’t change an entire store’s infrastructure, but rather complements existing operations. Great experiences always leave room for optionality.
Lindon Gao is the Co-founder and CEO of Caper, a startup that is creating a frictionless consumer shopping experience by building smart shopping carts that are powered by deep learning and computer vision to enable cashierless checkout. Essentially, Caper is the cart-based point-of-sale system that aims to rival AmazonGo. Shoppers can simply place items into their Caper cart (which have built-in sensors/cameras that identify the items and tally a virtual basket) and once finished, they can conveniently pay on the cart and leave the store. The technology is currently deployed in a number of NY supermarkets and is piloting with 3 of the largest grocery companies in the world. To date, Caper has raised $3M in seed funding led by First Round Capital. Besides being a Y Combinator advisor and a part of the YC (W16) batch himself, Lindon has previously worked as an investment banker specializing in the retail and consumer M&A.