For the past few years, Silicon Valley has been pumping out a bunch of new Internet-connected devices -- everything from thermostats to lightbulbs. It's a growing market -- sometimes labeled as the "Internet of Things" -- but getting into traditional retail to sell these things can be tricky for all these new hardware startups.
B8ta, founded by four Nest alums, is a new startup trying out a different approach to retail. It will specialize exclusively on the growing world of Internet-connected devices, and it will give hardware startups the ability to closely monitor and manage their presence in the store with backend software.
The first store, located in downtown Palo Alto, Calif., is a 1,400-square-foot space that will open up its doors to customers this Friday. It's designed to give people a hands-on experience for how the devices work. All the hardware is unboxed and out on shelves. B8ta employees who have personally tried out the products will demo them for consumers. At launch, there will be around 70 devices on display and will include devices like drones, security cameras and virtual reality goggles.
B8ta is also trying to differentiate from traditional retailers with the software its offering hardware startups. Once in the store, B8ta's software allows the startup to get real-time data on how well the product is selling in the store. B8ta gathers information around foot traffic and can tell the company if their device is getting people to stop and look. The software will give the hardware startup the ability to experiment with sales and update marketing material that appears on the digital signage to see how it impacts sales.
One of the more interesting twists on B8ta's retail model is how the company makes money. Instead of earning some portion of the sale like traditional retail, B8ta sells space on a monthly basis. Startups just pay based on how much space they take up. "It's almost like 'retail as a service,' " said Vibhu Norby, CEO and cofounder of B8ta.
So why even bother try to start a company focused on brick and mortar retail? Because people still like buying stuff in person, especially for all the new gadgets that people need to actually pick up and play around with themselves. When Norby worked at Nest, he saw how huge of an impact selling in physical retail was for the smart thermostat maker. "Nest sold a tremendous amount of volume in traditional retail stores," Norby said.
Seeing how important physical retail was to Nest -- one of the first major companies to emerge in the Bay Area's current smart device boom -- inspired Norby to find a better solution. “There are thousands of new physical products coming out, but they never touch the shelves of stores," Norby said. "I kept hearing the same problems over and over again: it's too hard and expensive."
Many traditional retailers have been trying to figure out how to better incorporate the huge number of new devices launching these days.
Existing hardware startups are also wanting to gain more control on how they sell their products. Nest, for example, will be launching its own online store soon. Called the Nest Store, the website will be focused on shopping for smart home devices that have integrations with Nest products through the company's "Works with Nest" developer program. But even Nest, which was acquired by
All these new devices also seem to be more strategic to
B8ta isn't yet talking about its plans for more stores beyond the initial Palo Alto location. "We think we've discovered a really scalable model for retail," Norby said, "but we want to make sure we get the first one right."
B8ta was founded by four former Nest employees: Vibhu Norby, Phillip Raub, William Mintun and Nick Mann.