This article first appeared October 14, 2009.
Today on Lunch with an Entrepreneur I’m talking to David Gold, a very successful young entrepreneur who has been behind LookSmart, dStore and Azure. He sold his last venture Azure in December in 2006 for around $20 million. He’s now into something new which he’s going to talk to us about today and some of the trends you’re seeing online.
So David what are you up to now?
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Well I’m still investing in technology based businesses but my core focus at the moment is a company called Igloo Zoo which is focused on the retail, healthy sort of food area and specifically sort of a frozen yoghurt kind of product with a strong health focus. But we’re also integrating technology into retail.
Can I just go back to the product, health food is really going nuts at the moment, but there is a lot of yoghurt around.
Firstly this is a frozen yoghurt product. Second thing is most of the frozen yoghurt products you see around aren’t actually really yoghurt. They were created as a result of the low fat boom that went on in the 80s and the early 90s and they were effectively developed as ice cream replacements. The term frozen yoghurt came to describe them because it was more of a marketing term than a true description of what the product was and the newer generation of frozen yoghurt that has sort of taken off in the US and Asia over the last 12 or 18 months is actually made with real yoghurt and has real live cultures. Our product’s all-natural, vegetarian based and no chemicals.
So at the moment there are physical stores, how many physical stores are there?
At the moment we’ve opened four so far in three states.
Did you buy into this?
No I started it.
When did you start it?
It took about 18 months to develop the recipe because it’s actually quite difficult to do.
Do you like yoghurt?
No, not specifically, but I saw the opportunity and I mean a soft serve product has about 80% water and then you’re churning about 40% air into it through the machine and that’s a premium product. So you can see just from that there are quite healthy margins in the product, much better even than coffee or other things. It was the economics of the business that sparked my interests.
So that was one thing you were looking for, something that you could have a good margin on?
Well margin was important and I was also interested in looking at something outside of the technology sector given that I’d been in technology for so many years. I thought it might be exciting to delve into something else for awhile.
Now tell me what you’ve learnt about setting up these physical stores.
Well, firstly the things in the “physical world” is a lot slower and a lot more bureaucratic than the online world. I think on average our stores opened about six to eight months late, mainly due to bureaucratic council process and a range of things like that. You’re dealing with real builders, real consultants, real people which to a lesser extent you do in an online world and it just made it a lot slower and a lot more bureaucratic. Things happen in months and years not hours and days.
So you’ve learnt to be patient. Were there any ways you learnt to get through quickly or circumvent anything?
Not really. I guess what I have learnt through the process is why a lot of others aren’t really utilising the technology that is available today to really hasten a lot of processes that are still around that are quite archaic.
Why aren’t they?
Well I think they slowly will. I think partly it’s generational. A lot of tradespeople are slowly being forced to go online but still, they’re out on the job most of the day and just starting to use smartphones and a range of other mobile platforms to be able to run and operate their businesses. But I think even on the government side, local councils and stuff like that are still significantly behind where they could be for the most part, but there are some exceptions.
What are some of the particular technology advancements that you’re going to introduce into the business or have introduced to the business?
Our stuff is more around consumer profiling and understanding our customers better, so we’ve just introduced a smart card kind of system which integrates with the online experience we have with our customers through our website, through our own loyalty club, through Facebook, through Twitter and link that in with what we’re learning about the same customers in our physical store environment.
What we’re trying to do is really take advantage of the computing power that actually exists within a retail store and be able to see if we can develop a brand experience, develop a relationship with the customer in new and exciting ways.
So you might take the information of what they’re buying and how often and Twitter special deals in that?
We’ve already been doing a bit of that. We can tweet stuff based on what we know about customers and customer spending habits. So there’s no point us giving promotional offers when we know the store is going to be busy for example.
Twitter is unique in the sense that it actually has some real immediacy similar to SMS and we can see results. We might offer some promotional thing or special within half an hour or an hour’s notice and have it only valid for an hour and we’ll literally get scores of customers coming in to take advantage of it. It’s still early days – we’ve only been playing around, certainly with the Twitter side for probably about eight or ten weeks now so that’s fairly new for us. But we’re getting some really good and promising results.
And how are you using Facebook?
Facebook we’ve developed more of a community around the product. What’s been interesting for us, we’ve found our stores tend to attract a female demographic, 15 to mid-30s. We’re finding that the younger people aren’t on Twitter yet, it’s more people in their 30s that have really embraced Twitter at the moment. And some of the independent research now, even in the US is showing that and we’re certainly finding that. So Facebook really allows us to keep in touch with a much greater number of our core demographic at this point which Twitter doesn’t allow us to do.
Are you using any other social media?
No, but we are testing other things, the more “traditional” things like SMS and newsletter, email based stuff. But they just don’t offer us the immediacy that Twitter or Facebook does and doesn’t allow us to get the feedback and create the communities that we’re trying to create in the way that Twitter and Facebook both do.
Is there any way you integrate Facebook and Twitter together or do you run them separately?
If we’ve got a promotional thing we’ll post it on both and we’ve got them linked which really means we post it once and it appears on both. So we do it from that sense. I think it’s still early days and I think you don’t want have too much in any one platform because you don’t know how soon people will move onto the next thing. I mean two or three years ago we all would have been talking about MySpace in this context and now we’re talking about Facebook and Twitter.
I think there is a difference, as a lot more people are talking about Facebook and Twitter than ever really talked about MySpace in business.
Correct from a business perspective. The more exciting thing to me is just the principle of where mobile is going rather what platform it is. So I’m very focused on looking at how we can utilise the computing power that’s in mobile devices given that we are a retail business and consumers are already out on the go, it enables us to potentially interact with them in ways you that you can’t when someone’s just connecting via computer.