ShopWell, Ideo’s First Big Spinoff, Says Better Health Starts at the Supermarket

11/1/10Follow @wroush

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apply our purpose,” that is, creating impact through design, Boyle says. “One that kept coming up was this question around health and wellness”—an area where Ideo does lots of brainstorming, due in part to its relationships with big food and beverage clients like Kraft and ConAgra.

Michelle Lee, a senior designer in Ideo’s Palo Alto office, was assigned to lead a six-week project to look for a commercializable concept within the health umbrella. “Michelle put together this multidisciplinary team, just like we would on any client project, except that we funded it ourselves,” says Boyle. “There were six concepts that emerged, and one of them was this concept for ShopWell”—a website for personalized nutrition recommendations.

Witlin joined Lee’s team toward the end of the six weeks. “I though that ShopWell could not only be a viable business but could also have a significant positive impact on this growing problem in the U.S. and the world,” Witlin says. He was also excited about the opportunity to work with Lee—whom he calls “the best of the best at Ideo.” His challenge, as a business development guy, was to help the team flesh out a business model and make the idea feel real.

So in true Ideo style, Witlin and Lee decided to make a video. Not a line of software code had yet been written, but the video “illustrated in a smoke-and-mirrors way what the site could be,” says Witlin. The video helped Lee and Witlin get buy-in not just from Ideo and from outside investors, but from potential food industry customers. “We were able to present that to some of the most senior food executives in the world, just to get their feedback, which helped us to shape a business plan,” Witlin says.

ShopWell would not be Ideo’s first experiment with launching a company. In 2007 the firm had helped physician-entrepreneur Larry Weiss create a line of herb-based, non-toxic hand sanitizers under the CleanWell brand. But it would be the first venture born from an idea conceived entirely within Ideo, so the team wanted to get it right.

“We are very interested in doing more of this—creating businesses,” says Boyle. “But we are careful about it. It’s a lot of investment, so we think a lot about it.”

Surveying users and potential customers during the idea-formation stage is a big part of the process at Ideo—just as it is for a growing number of startups that subscribe to philosophies such as Steve Blank’s customer development methodology. At Ideo, this was the key step that validated Lee and Witlin’s ideas. Says Boyle: “We got some feedback from users and had some strong responses, and at that point it felt like it was something we could create a business around.”

What was that something, exactly? It starts with the consumer-facing site. Witlin draws a triangle with vertices labeled H, T, and V, for health, taste, and value. “We believe we can differentiate our site by leading with health as the starting point—the notion of how people make decisions around food,” he says. “We know that value and taste or experience are also factors, and that for any given purchase decision, one person might give more weight to one of these areas.” But at least to start, the ShopWell team wanted to create algorithms, with the help of registered dietitians, that would translate complex ingredient lists and nutrition data into drop-dead-simple recommendations: a literal green light, yellow light, or red light, with green reserved for the products that best match an individual users’ health goals. Over time, the team thought, such a service could help consumers to build shopping lists consisting entirely of green-light items—or at least to be more conscious about the tradeoffs when they choose yellow- or red-light products.

But that was only half of the idea. The other half relates to a completely different problem: the difficulty faced by food manufacturers trying to bring new products to the supermarket. It’s a bizarre fact, given the huge profusion of food choices in U.S. grocery stores, but 99 out of every 100 new food products fail in the marketplace, meaning that manufacturers are wasting billions of dollars every year on doomed ideas. Thanks to supermarket scanners, manufacturers have plenty of information about what people buy; the main problem, Kim and Witlin argue, is that they don’t understand why people make the choices they do. By analyzing, in aggregate, which products from the ShopWell database get placed on actual shopping lists, and how those choices correlate with users’ health goals, the ShopWell team believes it can provide food makers with much richer market data than they are able to collect through traditional focus groups.

The dual-sided nature of the business model, Witlin says, was what ultimately got Ideo’s executives and ShopWell’s investors to sign off on the spinout. “What interested them was the fact that it wasn’t just a consumer-facing business that would help consumers understand the food they buy, but it’s also a great platform for food manufacturers to learn what to make, so that they aren’t always looking in the rear-view mirror and have a way to interact directly with consumers.”

Coming tomorrow in Part 2: How Ideo assembled the ingredients needed to turn the ShopWell concept into an actual company, and how the startup is cooking up a working product.

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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