U.S. Startup Learning From Design Terminal Mentoring Program

Retail

Design Terminal

Boston-based startup Socialmap decided to join a mentoring program in Hungary by Design Terminal to gain experience and exposure in Europe, founder Pedro Melgarejo tells the Budapest Business Journal. When finalized, their system applying artificial intelligence will be able to tell if a customer will buy a product or not – probably even before they are aware of it.

Pedro Melgarejo

BBJ: What is Socialmap?  

Pedro Melgarejo: Socialmap is a platform that can track people-to-people interaction in real time. It gets some insights into how people behave, how members of a group fit together. We started off in classrooms and studied the relationship between students and teachers and got some numbers. For example, we discovered that in a regular classroom setting, an average student looks at the teacher’s face only 3% of the time. Then we moved into corporate training, where the purpose was to see how the participants interact or engage in an activity. Also, how they interact during actual work activities. Then we took all this social human behavior background and moved it into the retail space – to watch customer behavior – and now we are working on helping stores to turn that behavioral knowledge of the customer into better conversion rates.

BBJ: Why did you change the setting?

PW: From a business perspective, retail is more appealing than the corporate environment; it is a bigger space. But we are not quitting the other; rather we are going more into a research space for the actual social collaborative platform. We are talking to some consultancies in the United States, working on some form of partnership with them so they would use the platform in a leadership program, which, hopefully, will go global.

BBJ: If face-to-face communication between people improves, what will it bring about?

PW: The technology will give insight to them on how to keep them on track when “training” the program and get them to a higher level. Our technology is able to observe subtle insights that we humans can’t: even an expert eye will miss some things the technology can track.

BBJ: And what do you aim to achieve in the stores?

PW: The retail industry is facing many challenges these days. Sales are low: 2018 was a bad year for brick and mortar stores in the world. They need to innovate, they are desperate for that. Of course, much of this innovation will happen via partnerships, as they might not have team, the experience or the time to develop the technology. We want to be a partner to them in this.

BBJ: You changed the environment, but has the basic idea remained the same?

PW: In a certain way: we wish to track how store associates interact with customers and improve that relationship. At the same time, we are focused on how customers engage with a product.

BBJ: How do you measure that?

PW: The main insight we look at is body language as it tells you a lot. One of the most important parts of it is how you move your upper body, your head and the proximity to an object. The more motivated one is, normally the more they lean toward an object/person. There are changes in the skin arousal, changes in the pupil size; the purchase process is a total emotional state of mind and stores needs to know about these customer patterns to improve the customer experience.

BBJ: What devices do you use to track it?

PW: We use eye-tracking devices, so we know what people walking around in the store are looking at. We can follow the gaze, measure fixation and points of interests, how long they spend looking at it if they revisit a product. With focus groups, we are testing eye-tracking glasses but later on we would have similar capabilities using cameras in the shop.

We retrieve and process data in real time and train the artificial intelligence system. By looking at people’s body language (for example, how far leaning forward they are, how close their heads are to the objects, etc.) you can tell about purchasing intentions. We annotate all these measurements that led to a purchase and train the system. So, next time the algorithm identifies all these movement patterns, it recognizes them. We start by collecting all this information and build a platform that can predict, for example, the chances of a person buying a product.

BBJ: How unique is this method in the market right now?

PW: One major difference is our background: behavioral science. [Editor’s note: One co-founder of Socialmap is an anthropologist who came up with the idea after studying bonobo monkeys.] This has given us some advantage as we know human interaction better. Also, to the best of my knowledge, no other companies are developing a collective real-time people-to-people social interaction tool.

We are building the minimum valuable product for the above cases and are targeting an office supplies store in the United States, trying to get the analytics from there. After that, we can build a white paper using the information.

BBJ: Why did you apply to Design Terminal’s mentoring program in Hungary?

PW: Part of the answer is my personal goals in life. Socialmap is not the only thing I do, I have other businesses. I am building my career toward having a say in the international entrepreneurship ecosystem: I started as a hardware-software engineer, then went to study in the USA and stayed there after working in San Francisco and Boston. In the beginning, I focused on the technology side only – my first startup was in technology infrastructure – then I started to be more curious about the business perspective. In five to ten years, I see myself in the technology entrepreneurship world, helping other startups. The technology side will always be there, I manage that pretty well. [I chose to come here because] I wanted to get some European experience and exposure; I have been to Canada, to the United States, but I have never worked in Europe. We were invited, it looked like a serious program so we applied.

BBJ: What did you find the most relevant in the program from your business’ viewpoint?

PW: The mentoring part was really nice; the mentors are pretty good and professional. I can see a trend in Hungary of many Hungarians coming back here after spending a number of years in the States, or London, and all those people bring their valuable experience to the program. Part of the strategic changes we made in the company was based on our work together.

BBJ: Are investors interested in Socialmap?

PW: I have talked to a couple but to some extent you to have some sales and others traction. So, we are building up the traction and we get some sales, then it will be easier to get some investors. We don’t want to push that too hard: waiting for the right investor is sometimes better than selling 50% of the company at a low price.

This year we are planning to get the product out, after that validate it in stores in the USA; that will give us credibility to get new customers. In the company we are targeting, they have 1,300 stores, so if we could be in 10-20% of those stores it would be big. After that, growth is next.

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