Best Buy alums focus on scale-up and matchmaking for producers of retail goods
For every gadget you see on the shelves at your local Best Buy, or in Amazon’s digital warehouse, there’s another that never sees the light of day. (Actually, there are countless others.)
Not because those absent products aren’t every bit as worthy. They are. They just never make it through the idea-to-shelf gauntlet, for a multitude of reasons that we could literally write a book on.
Rick Rommel, Sprosty Network partner and actual former rocket scientist, wants to soften that gauntlet — or, at least, make it easier for ambitious, deserving, consumer-product startups to break through and scale up. He heads RetailXelerator (RX), a “scaleup accelerator” housed within Sprosty Network and populated by a passionate group of retail and early-stage veterans. Rommel comes to Sprosty by way of the 1990s-era L.A. startup scene, Eastman Kodak and Best Buy, in that order.
From proof of concept to dominance
Launched last year, RetailXelerator bills itself as “a first-of-its-kind scaleup accelerator, bridging the gap between startups and retail.” It’s meant for startups with viable, market-tested products that they’ve already begun to sell, often direct to consumers, but that haven’t yet broken through with big retail brands like Walmart, Best Buy and Target — the second stage of retail growth.
The typical RX startup has a daring vision for growth. “We work with [startups] aiming beyond the ‘two founders and an idea’ stage,” says Rommel. “They’re poised to grow from two, to 20, to 200 employees, they seek markets across the United States and North America, and in some cases they’re starting to look at global opportunities.”
RX in a nutshell
RX just graduated its third startup cohort so Rommel, et. al., are getting the hang of things. Each cohort begins with a “curation” phase, wherein RX partners with Startups.co to select good-fit candidates. RX is compensated via situation-specific combinations of equity stakes and commissions on startups’ sales, so it only selects companies with (in its view) high success probabilities.
“We only win when our companies win,” says Rommel. Since RX is location-independent, cohort members aren’t expected to pack up and move to Minneapolis for the duration — a potentially disruptive process required by popular incubators and accelerators like Techstars and 500 Startups.
If selected, cohort members dive into a “10-week virtual retail-readiness program” that includes “classes, case studies, and workshops led by a range of industry participants to provide the capabilities and support that later-stage startups require to scale quickly,” according to its website.
These industry participants are known as “capability partners,” and they’re a key ingredient in RX’s retail-ready secret sauce. Surprisingly, they’re largely absent from other growth vectors, including traditional business incubators, early-stage startup accelerators and angel investing groups.
“[RX] provides what others don’t: coaching and expertise from retail industry leaders, and face time with major retail decision makers,” said Rommel in an early 2016 blog post announcing RX’s launch. “RX is the best place to get the tools, resources, mentorship and direct retail connections that startups need to scale.”
Each cohort ends with a “retail pitch day” that directly connects founders with “key retail decision-makers” from some of the country’s top brands — Best Buy, Target, Amazon and many more. They then deliver “refined, retail-ready pitches” to these decision-makers. Implicitly or explicitly stated in those pitches is the RX seal of approval, which Rommel paraphrases thusly: “This startup has covered all the bases and has all the support, guidance and capabilities it needs to be retail-ready.”
Build a better needle
If it wasn’t already clear, RX is not your typical startup accelerator. It’s best viewed as a matchmaker that brokers profitable connections between ambitious makers and blue-chip retail partners. RX’s cohorts keep retailers’ product pipelines fresh and exciting — table stakes in a competitive industry driven by consumers with unprecedented amounts of information at their disposal.
RX is relentlessly meritocratic: it’s all about getting the best products in front of partner brands’ decision-makers. According to Rommel, RX responds to three secular trends:
Shorter decision cycles for buyers. Disruption is the new normal, and time-to-retail is shorter than ever.
The growing volume of consumer-facing startups. “It’s harder to find the needle” — the one startup out of one thousand with truly game-changing potential — “when the haystack keeps growing,” says Rommel.
Limited retail-readiness. “When you do find the needle, it may not be retail-ready,” says Rommel. Getting it right is a daunting task that requires multiple layers of support — “and not getting it right, frankly, often means failure.”
It’s still early going, but Rommel is encouraged by RX’s progress — and its cohort members’ performance — thus far.
“Coming out of our first two cohorts [which ended in August and December 2016], our startups are finding more opportunities than they expected,” he says.
They’re finding a greater breadth of opportunities too. RX startups sometimes aren’t aware of lesser-known market strategies, such as private labels and B2B sales, which offer valuable diversification in competitive niches.
“Our companies are coming out of RX with substantially improved go-to-market models,” says Rommel. “And we’re very excited about what the future holds.”
HEADQUARTERS: Eden Prairie
LEADERSHIP: Rick Rommel
DESCRIPTION: A "scaleup accelerator" for hardware and consumer-product startups seeking retail partners.