Inside WalmartLabs: How the Former Kosmix Team Plans to Help the World’s Largest Retailer Get Social and Mobile

8/1/11Follow @wroush

One of the most head-scratching tech headlines of April 2011 was the news that Kosmix, a Mountain View, CA-based startup best known for building a Twitter filtering tool called TweetBeat, had been acquired by Walmart. Yes, that Walmart—the one with 9,000 big-box stores spread across the American heartland.

For one thing, Walmart already has a large technology presence right here in the Bay Area: you can see the big “Walmart.com” sign on the e-commerce division’s building from Highway 101 in Brisbane. So it wasn’t clear why the company needed a second Silicon Valley redoubt. Even more puzzling, Kosmix’s so-called “social genome” platform, which the company had been applying in areas like news aggregation and categorization, didn’t seem to have much to do with Walmart’s business problems—such as narrowing the gap with e-commerce market leader Amazon, for example.

There was speculation that Walmart’s real interest was in Kosmix’s founders, Venky Harinarayan and Anand Rajaraman, who have unbeatable pedigrees in the world of e-commerce technology. The pioneering comparison shopping site they co-founded in 1996, Junglee, was acquired by Amazon in 1998 for $250 million; inside Amazon, the pair helped to create the e-retailer’s huge marketplace of third-party retailers and came up with the technology behind Amazon Mechanical Turk. Perhaps Walmart—which paid $300 million for Kosmix, according to AllThingsD’s Kara Swisher—wanted Harinarayan and Rajaraman to work similar miracles for Walmart.com?

Anand Rajaraman

Those were the questions on my mind when I drove down to the former Kosmix headquarters, now WalmartLabs, in Mountain View a couple of weeks ago. I talked for about hour with Rajaraman, who now shares the title of senior vice president of Walmart Global eCommerce with Harinarayan; he’s also an active Silicon Valley investor and writes about his big technology passion, data mining, at a blog called Datawocky. It turned out to be the most extensive interview that either Kosmix founder has given since the acquisition, and I learned a lot about why Walmart thought Kosmix was interesting, and what kinds of capabilities Rajaraman thinks his 70-person team can bring to their new employer.

A lot of it has to do with unsurprising things like improving the product recommendations that Internet users get when they go to Walmart.com, and tapping shoppers’ smartphones as a marketing channel. But Rajaraman also pointed to some more interesting applications for Kosmix’s social genome technology—like monitoring social media conversations in the vicinity of a physical Walmart store for signals about what goods that store should stock.

But we’ll have to wait a bit longer to see what concrete products, features, or campaigns emerge from the Kosmix acquisition. Rajaraman said his team is hard at work on some features that will likely make their debut before the 2011 holidays. He dropped heavy hints that smartphone apps and an enhanced presence for Walmart on Facebook will figure in the changes somehow, but stayed largely mum about the specifics. “In six to eight months the impact is going to be visible, for sure,” he said.

Here’s the interview transcript, edited for length.

Xconomy: What’s the big picture behind Walmart Labs—why would Walmart want a bigger presence in Silicon Valley?

Anand Rajaraman: Walmart is the biggest retailer in the world, but they are not the number-one player in e-commerce—Amazon is. About a year ago, Walmart decided that e-commerce is a strategic priority. It’s not like they had not been investing in e-commerce, but they said, ‘It’s time to go to the next level.’

When you do that, what’s important is to look at how the world has changed. Are there some assumptions that can be challenged, or some trends that can be used, to leapfrog the 800-pound gorilla in e-commerce?

If you think about the way the world has changed in the last two years, there are two big, disruptive changes that have happened, and one of them is … Next Page »

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

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