Ideo Spinoff ShopWell Says Better Health Starts at the Supermarket; Part 2: Ingredients of a Startup

11/2/10Follow @wroush

With the ShopWell concept for helping consumers make more sense of the nutrition labels on food, Ideo thought it had a winner. But while the design consultancy has many of the attributes of a startup incubator—a large flock of creative thinkers and a commitment to testing new ideas, to name just a couple—it’s not equipped to fund and staff new companies on its own.

As soon as Ideo senior designer Michelle Lee and entrepreneur-in-residence Brian Witlin had formalized their pitch on ShopWell in mid-2009, Ideo partner Brendan Boyle put out the word that the team was looking for venture support—preferably from a firm that understood how to manage the spinout process.

“Within one or two hops, somebody told Brian, ‘You should talk to these guys at New Venture Partners,’ and that is how they found us,” says Robert Rosenberg. “It was actually a cold-call e-mail that came in via LinkedIn.” (Score another one for PayPal alum Reid Hoffman’s professional networking service.) [Correction, 11/2/10: Rosenberg sent Xconomy this revision: "The thread that actually brought Ideo to New Venture Partners wasn't LinkedIn.  It was somewhat high tech (someone at IDEO posted the question "does anyone know anything about spinouts?" on a Stanford GSB listserve), but it was also a little old fashioned in that a person who saw the post forwarded it to Frank (Rimalovski, a partner at the firm)."]

[Editor's Note: This is the second article in a three-part series on ShopWell, a Palo Alto, CA, Web startup that rates food products based on shoppers' personal health goals. Part 1 appeared Monday, November 1.]

Rosenberg is a longtime partner at New Venture Partners, which has offices in San Mateo, CA, and Murray Hill, NJ, as well as the UK and the Netherlands, and purports to be the world’s only venture firm specializing in corporate spinouts. (In a two-part conversation in September with another partner at New Ventures Partners, David Tennenhouse, I learned exactly how that process has worked in cases such as Freescale’s spinoff of magnetic memory startup Everspin.)

Jasmine Kim and Brian WitlinLee, Witlin, and Boyle presented their plan to Rosenberg and his former colleague Frank Rimalovski, who has since left New Venture Partners to head up NYU’s Innovation Venture Fund. “One of the first things we saw was how fully thought-through the whole concept was,” Rosenberg recounts. “The prototypical entrepreneur has a hammer and everything looks like a nail; they think they can take over the world with their hammer. What Brendan, Brian, and Michelle had was a much more realistic and frankly more nuanced vision. I think part of the reason is that at Ideo, where they come from, they have the discipline to think that way. But it also reflects the fact that ShopWell itself is not a point solution. There are lots of innovations that brilliantly spot a problem and pair that with a brilliantly conceived solution, but with ShopWell, it’s that times two.”

On the consumer side, Lee and Witlin had come up with a plan for offering personalized food ratings reflecting consumers’ specific circumstances—not just their age, gender, height, and weight, but their health conditions and fitness goals. “This stuff is not just for health nuts,” says Rosenberg. “There is a real desire to understand the health impact [of different foods]. It’s just really hard to get at that on a personal basis. The tools that are out there are the quintessential one-size-fits-all tools—the USDA Food Pyramid says, ‘Eat this, not that.’ Well, what’s good for me could kill my mother.”

And on the producer side, ShopWell was offering a solution to food manufacturers’ age-old problem predicting what new products consumers will buy. “These are some of the world’s largest companies, and they are swimming in data from supermarket scanners and from generations of focus groups sitting behind one-way mirrors,” says Rosenberg. “But it turns out that … Next Page »

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

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