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

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social networking. People are spending more time on Twitter and Facebook and the like. And the other is smartphones. For the first time this year, more smartphones were sold in the US than feature phones.

If you put these two things together, they will be as disruptive to retailing as the advent of e-commerce was 15 years ago. The biggest disruptive change in the last century was the development of the highway system, which led to big-box retailing. Then came the invention of the Web. And the third disruption is social and mobile. In each case, the way people shop was changed. The goal of Walmart Labs is to make sure that Walmart is at the forefront of “e-commerce 2.0,” so that we help define it rather than playing catch-up.

X: Why do you think Walmart was attracted to acquiring Kosmix, specifically, as the nucleus for WalmartLabs?

AR: It’s a combination of things. The first is the platform we are building. The fundamental technology we were building at Kosmix is called semantic analysis. We understand the meaning of things. If somebody tweeted “I enjoyed Salt,” we would know that it was a movie with Angelina Jolie and not a food. We are applying semantic analysis to social media and trying to understand the connections between people, topics, places, and products.

We map that space, and we call it the “social genome.” We were using it to operate the Tweetbeat site, where you could find out the pulse of what was going on in social media. But if you look at the founders and management team of Kosmix, we have significant e-commerce experience, and it was pretty obvious to us that the social genome we were building had serious applications to e-commerce.

If you think about the evolution of e-commerce, Amazon did a lot of things right, but the key was using the data they gathered about customers to improve the customer experience. Telling you “People who bought this product also bought these other products”—things like that. Still, there are two significant limitations. One is that Amazon learns about users only by what they do on-site. The products I purchase are a very small window into me, and sometimes a misleading window. Whereas social media gives a much broader window. If you can, with the user’s permission, understand more about what people are passionate about, you can market to them much more accurately.

The second insight is that we can do this anytime if we put an app on their smartphone. When they walk into a Walmart store, we could tell them, ‘Hey, here is a product that we think you will be interested in.” It’s the combination of social and mobile with the Kosmix semantic analysis technology that was the attractive thing for Walmart.

X: Okay, now let me turn the question around. Why would Kosmix want to be part of Walmart? Why would a relatively small, nimble team of Silicon Valley innovators want to work for one of the largest companies in the world?

AR: What really motivates any technologist is the opportunity to build products that are used by hundreds of millions of people and make a big impact. The thing about Walmart is that we get that opportunity. We have this really big canvas to paint on. Any product we build will instantaneously be used by tens of millions of people.

X: But in a way, it still surprises me that a bunch of startup guys like yourselves would want to be part of Walmart, which, just by virtue of its size, has got to be a pretty bureaucratic place.

AR: You’d be surprised. Walmart has been one of the most innovative companies—they practically invented big box retailing, after all. They’ve made huge innovations around the supply chain and merchandising. I teach a class on data mining at Stanford, and interestingly, one of the examples we talk about is from Walmart, which was a … Next Page »

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Wade Roush is the producer and host of the podcast Soonish and a contributing editor at Xconomy. Follow @soonishpodcast

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