Customer Survey Kiosk Start-Up
THE CHALLENGE: Building a successful business by connecting retailers with their customers.
THE STRATEGY: Place touchscreen terminals and kiosks in public spaces to gather feedback and e-mail addresses from consumers.
Story on Star Tribune
Small Business: The other side of the dialogue
Larry Werner
May 16, 2005 SMALLBIZ0516
THE CHALLENGE: Building a successful business by connecting retailers with their customers.
THE STRATEGY: Place touchscreens in public spaces to gather feedback and e-mail addresses from consumers.
Phil Hotchkiss said his latest start-up, a consumer-feedback firm called Talkingpoint, isn't that different from the company he sold in 1999 for $6 million in cash and $160 million in stock. He said his new company is a mirror image of his first big idea, which was called BigCharts.
That company, which provided online company information to individuals for their investment decisions, was sold to CBS MarketWatch and turned the young Bloomington native into a wealthy young Bloomington native with a reputation for a golden entrepreneurial touch. His new company uses technology to provide companies with information about their consumers.
Given his success with BigCharts, it wasn't surprising that the founders of his current company asked Hotchkiss to take their concept from the idea stage to the venture-capital stage.
Two years ago, Hotchkiss became the CEO and largest shareholder of a start-up company called iCount, which he renamed Talkingpoint. The company places touchscreens in retail spaces to gather feedback from customers. This year, Hotchkiss persuaded some venture capitalists in Seattle to invest $1 million in the idea.
As Hotchkiss sees it, he's turning his first business plan upside-down.
"With BigCharts, it was delivering [business] content to individual investors," Hotchkiss said over coffee near a Talkingpoint kiosk in Maplewood Mall. "Here, the consumer is providing the data that we deliver to the business user. It's kind of inverted."
The pitch apparently made sense to Maveron, a venture fund that includes Howard Schultz, CEO of the Starbucks coffee chain. Although Talkingpoint has no revenue to speak of and is in the pilot stage with a handful of Minnesota-based clients, the company appeared on the list of Minnesota companies that got venture investments last quarter. That list is dominated by companies from the medical device industry, which got 44.7 percent of the $56 million in venture funds invested in Minnesota companies, according to the MoneyTree report released quarterly by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association.
One of the smaller investments of the quarter went to Talkingpoint. Ben Black, a Maveron partner, declined to reveal how much of Talkingpoint his firm got for its $1 million.
"We don't comment on ownership and valuation in our investments," Black said in a telephone interview. "We're the largest institutional investor. We believe in Phil. There will likely be additional investment behind him. He came highly recommended."
That's quite a compliment from a national venture-capital firm for a 36-year-old English graduate of Gustavus Adolphus College.
"My core competency is to help lead product-design strategy and bring all that together and bring it to market," Hotchkiss said. "I began as an entrepreneur at 25."
He was convinced that providing company information to individuals at their personal computers was a good idea. And he said he is just as convinced that it makes sense to provide feedback from individuals to businesses. But he thinks the process should be easier than logging onto a retailer's website from a personal computer. So his company has worked with 3G Cellular to create touchscreens that are placed in stores or malls to ask customers what they think about different products and services.
The devices use wireless technology to deliver the feedback to Talkingpoint's computers. From there the information is made available to clients through the Internet. In return for participating, consumers get a reward, such as a coupon for a Blizzard at Dairy Queen or a 15 percent discount on Sun Country Airlines. The company gets the feedback and the consumer's e-mail address, which can be used for follow-up marketing.
"Multi-channel selling is important -- the customer who interacts with your website and your store is a better customer oftentimes than one that only interacts with your store or your website," Hotchkiss said. "If you interact here and register and then you go to a computer and you engage again and it takes you right to the website, we've just created a cross-channel connection. That's a really core premise of Talkingpoint."
He said the process of getting information through the Talkingpoint kiosks might resemble market research that could be criticized as anecdotal information that cannot be projected to a larger population, as is done with random-sample polling. However, he said, there is value in knowing how a customer feels about a store when he or she is shopping in it. But the real value of Talkingpoint, Hotchkiss said, is its ability to connect retailers with shoppers electronically.
"It really is an interactive marketing application, not a market research application," Hotchkiss said.
The expert's opinion: Kevin Upton, a senior lecturer of marketing at the University of Minnesota's Carlson School of Management, said the Talkingpoint service is interesting "but presents any number of problems."
One problem with immediate-feedback mechanisms, he said, is they attract extreme views from customers.
"You get the lovers and the haters," Upton said. "The takeaways are limited from the perspective of the merchant."
Also, he said, the customer information is going to Talkingpoint before it's shared with the client. Even if the data are simply being transmitted by Talkingpoint, he said, retailers should be very protective of customer information.
"If I was a merchant, I wouldn't be sharing my database with anybody," Upton said. "If there is valuable information to be gained, why would I let a third party do this? Ask your customer questions."
Posted by keefner at May 16, 2005 04:36 PM