Founder Story: Anat Shakedd, co-Founder and CEO at Nexite

Anat Shakedd on how Nexite is building the largest AI company for the real world

Thank you for sitting down with us Anat. Let’s dive right in, tell us, what’s the founding story behind Nexite?

Ironically, I started the company because I really hate shopping. I have five kids, and I started the company with my husband Lior while I was pregnant with our fourth.

Five kids — you can imagine that’s a lot of shopping. So we used to go twice a year, and buy everything they needed.

At the time, while I was pregnant with my fourth, looking through the store shelves for styles and colors was tough, I didn’t have the patience to stand in crazy long lines. After we were standing in line for at least 25 minutes I said to Lior that it’s incredible that it takes more time to stand in line to pay than to actually do the shopping.

Lior is a veteran from army technology units and has been a radio guy his whole life working at some of the largest tech companies. He said, well, you know, it’s the same problem that we used to talk about at work whenever there is new management.

You see it all the time  in Israel’s largest category-leading companies. Management knows little about the customer, less about where their products are in the chain or in stores and how their stores behave because they work manually and have little data.

So that’s basically when the company’s idea was born. We spoke about two aspects:

1 The fact that it’s nearly impossible to effectively manage a business with so many moving parts. You have millions of pieces, thousands of stores and tens of thousands of employees without actually understanding very deeply what each one of them is doing.

2 The nuance of standing in line, finding a way to provide a better self checkout experience

So once you understood the idea and concepts, how did the company evolve from there? What were the first steps you took?

In the beginning, we thought about doing it with software based on RFID (radio frequency identification). During the initial concept, as I mentioned I was pregnant with my fourth, and Lior was very much looking forward to taking paternity leave.
So initially I found another co-founder who came solely from software, and we started doing it on software based on RFID, but it didn’t work out. The problem with RFID is the range.
The more we dug into it, Lior became very active in solving this solution and we understood quickly that it would be impossible to provide the ranges required to get the data we needed with RFID. This is because the data is automated, and you can’t understand what customers are doing in the store by manually collecting the data.
So then we began discussions around developing our own chip. This is when I realized that we couldn’t be a software company anymore, we needed to be the full solution — the software, hardware and full scale outcomes.
Lior and I agreed, he joined the company full-time, we raised series A and went full force with the company.

From that point, what would you say was the biggest challenge you faced, and how did you guys overcome it?

It was really complex for us because we were creating a new category in a market that isn’t innovative — we’re talking about retailers here, not the Google and Amazons of the world.
Very early on we understood that we needed to provide a full-stack solution. It wasn’t about the chips or about the data. It’s about providing contact-less jobs and experiences, providing Google Analytics for the physical stores. This meant we needed chips, tags, hardware, readers, and printers for the tag, that allow you to offer full-stack software solutions.

The truthful challenge was that the more we developed, the more we realized we still needed to develop. It felt like we would take one step forward only to realize we have three more steps to take just to get to a place where we can actually provide service.
So that was a very complex challenge, and it took much longer than we initially thought. I’ll tell you that right now we’re very proud of what we have, that we have a full solution to offer.

Each one of our solutions is the best of its kind, and the tags provide about 10x results of existing tags. The hardware is 10x cheaper than existing hardware and is at least 10x better than what they have today — but it was definitely a journey to get here, it still is.

With these challenges, when you felt you were hitting them consistently, what motivated you to keep going?

We eventually realized that the only real way to build a lasting company is step by step. It’s almost irrelevant what you thought that it would be like initially, or how you want it to be. At the end of the day you have a vision, and there is a world that you need to manifest.
So you do whatever it takes to get there, regardless of how hard it is or how complex it is or how long it is.

At the end of the day, we had a huge market that needed a solution and there weren’t any alternative solutions. The more we continued, we saw the potential is bigger than what we initially thought, and this motivated us to make the vision a reality. Regardless of how hard it would be or how much time it would be, we knew we had to do it.

You mentioned retail is a more traditional industry. How were you able to adopt customers and bring them towards more modern solutions when they are very used to traditional models?

Yes, so it’s really different than the usual sales tactics many companies are used to today. It’s not fast, and it’s not about hundreds or thousands of customers.
It’s really about chasing that first customer, then chasing number two and then three. And once you have that, you’re chasing the number four and number five. It’s a follow-up market. You need to get to some kind of density of customers, something around five, and you do it one by one.

In terms of how we did it, we have a few things going for us. First, we do not sell technology, we sell a solution that speaks their language of volume because they have no idea what to do with technology.

We don’t give them the tags and expect them to figure it out, we’re selling them a solution not a technology.
Second, our solution genuinely caters to each one of their needs across the organization.
We’re not offering them a huge revolution, but instead a solution for every aspect of their business, everything from supply chain, retail, merchandise, customer experience and staff management.
Yes, it takes a lot of time to develop it, but once you have it all, it provides for both us and our customers in every aspect of the business. Again in the end, it’s about getting customer by customer until you have enough of them.

What was the process like once you got some of these giants in retail to test out your solution, while trying to ensure all the moving parts indeed work?

It comes down to forming the right partnership and making sure that they become partners, not just customers.

A partnership with an understanding that their success is our success, and our success is their success.

They are building it with us, that’s a lot, so you need to find the ones that are up for that. I don’t know if it’s a stroke of luck or not, but we went for at least two very innovative customers that actually understood what startups are, and this is what helped this process.
You can imagine that nothing really works at the beginning. We’re talking about the real world here, not an online service. You’ve got different materials, lots of people and if you have one crack within, suddenly everything can go wrong.
So honestly nothing really works at the beginning, but the key is to find customers that are innovative enough to see the same vision you see. Our customers were always keeping their eyes on the ball just as much as we were, so they had the patience to see it through.
Now that we’re at the point where they’re actually seeing the results and it’s amazing. I think they’re very proud of what we’re doing together.

How do these learnings of partnership translate to how you sell the product?

It’s not about selling a product, it’s about selling success. In the case of retail, it’s about selling them a solution that offers increasing sales.
It’s not a one-time thing. Once it works, you need to implement it in thousands of stores which takes time, meaning you have to be focused on retention. One-time successes don’t foster retention. You need to sell implementation, successful implementations.

We’re selling change management, successful change management and we have to make it super easy to work with us. So we put in the weight to sell a partnership.

Let’s talk about the disconnection in retail. What are the blind spots?

Think about it. Companies are manufacturing tens of millions of pieces of merchandise yearly, and there are segments through hundreds or thousands of stores globally, plus thousands of employees they’re managing — all while not visiting most of these stores. So it’s a really complex puzzle, and now they need to ensure that each piece of merchandise they manufacture, perfectly fit their customers, each store places the right product at the right time, right location, and each store staff will find the right product for the right customer.
It’s impossible to do it effectively today, even with hiring the best people they can with the most experience and the best gut feeling — but at the end of the day, they’re going off of a gut feeling.
All they have to analyze is sales data, and sales data tells a very small story. Around 30 to 50 percent of your merchandise is not getting sold at any given moment, and you have no idea why.
Regardless of how big a retail company is they all have the same goal to increase sales. Some of them even have 300 analysts analyzing their sales data. They do a lot of analysis because they’re very keen on data, but it doesn’t matter when at the end of the day, you have one very limited data source which is the outcome, the sales. It tells you nothing.
So really companies have sales and great employees, but what they don’t have is a deep understanding of what they need to do in order to take the next step for their business.
Think about all of the data that you have today. For example if you have an eComm website, you have everything you need to know. You know exactly what customers are looking at and what they’re clicking on. You can optimize everything from this data.
Now imagine in retail that all you have is the outcome. All you know is that not enough customers have visited your website and those who have, haven’t gotten to the next step.
That’s all you know and you have no idea why. You have no idea if it’s the website itself or the product or the way that it is built or your call to action is not strong enough.
They don’t know when something is not selling. For each point in the customer journey you would have reacted differently and offered a different step to create another outcome if you knew the data, but how can you do that when you don’t know?
What we’ve seen is that the average ratio between looking at something and actually buying it is 20x. So you have a very small set of data that only tells you the end of the funnel, but you could have collected 54 more data points across the funnel in earlier stages that you’re missing today, and those data points are critical when you want to increase your sales.

Let’s go back to the story you told earlier about standing in line for so long. What is Nexite’s solution for that?

Our tag serves as a security solution, but unlike the existing tag, it’s a soft tag with an anti tamper mechanism.
If you try to take off the tag before payment, an alarm would go off. It’s not controlled by the cloud, which means that we can monitor theft in real time and offer a mobile check out solution while still maintaining the same level of security that they have today.
It’s interesting because when we started, we thought everyone would want this solution the most. But what we came to realize over the years is that it’s actually the second thing that they want, the first thing being the data and how to increase their sales.
We believe it’s because mobile self checkout doesn’t depend on the end customer, providing mobile check out requires some kind of education.
So with all of our customers, we started with the data, and now that they’re onboarded with this, we’re now releasing for the first time our security tag solution which is very exciting.

Let’s talk about AI in retail. How is AI changing the retail industry?

Retail is interesting in this equation because when it comes down to it, AI is only as good as your data. In the digital world, we have all the data that you need but in the real world, you don’t have the data. That’s what we’re trying to do here, generate this critical data.
So there is a very small amount of AI solutions that exist to optimize allocations based on what businesses are doing today, just to automate it or something like that.
Everyone in retail is very much aware of the fact that unless they have the data, AI won’t work. In order to actually use AI, and there are millions that you can do with it, you need to actually add data sets to feed into your AI algorithm.
So the industry is very interested in that, and they are very much aware of the fact that they don’t have the data to provide it.

So for us, the increasing awareness and interest is a huge help because this is essentially what we’re doing. Each of our solutions is based on AI, but unlike other solutions, we actually collect real-time data of everything that is happening in the store.
Everything is being displayed. Each location in the store and the contribution that it adds to each of the stores. KPI, each engagement metric, what customers are seeing, picking, trying on and leaving behind, security and availability.
It’s a very exciting time because once you actually have that data, there are millions of things that you can achieve with that, and we are just starting to scratch the surface on the data we can bring into the retail AI era.

We’d love to hear about leadership at Nexite. With so much growth and pivots, how do you make sure everyone in the company stays on track towards the vision?

Two things. The first is a cliche, but it’s always right: you need the right people at the management level. Specifically with startups always growing and changing, sometimes it’s not always the same people. You could have someone for a specific phase, and then you might need to make changes. But definitely one of the things that I have always prioritized at every stage is a very strong leadership team.

Our entire leadership team is very much experienced, and we all share the same vision and the same goal — building the largest AI company for the real world.

So getting those people in play and making them feel that this is their company too is critical. Once you’ve done that, the second part is always focusing on how customers benefit from the solution.
Almost all of our communication is not about the technology, and believe me, we have really cool technology. It’s very easy to talk about technology, but the main conversations that we have is about how customers are utilizing our technology to increase their sales.
It’s about getting everyone focused, again and again on how customers will benefit from the solution and not focusing on the solution itself because at the end of it, no one cares about the technology.
We do, those of us in startups, but the customers really don’t care about technology. If they could receive what we’re giving them by placing, you know, 10 people in the store to monitoring everything all the time, they would.
It would have been easier than implementing complex technology that sometimes fails, that you need to maintain and develop so many complementary solutions for that.
No one cares about technology. They only care about one thing, an increase of sales of at least 10% in the easiest, smoothest way possible.
Believe it or not, we probably have one of the coolest technologies ever, but if it won’t work in a way that they can actually use on a daily basis, they can scale it, and easily implement it — if it will create any type of friction, they won’t do it.

It’s about using and implementing the technology in a way that is almost unnoticeable by them. The only way to achieve that is by focusing on how they would use it, and not how cool the tech is for us.

So if you give one piece of advice to founders to help them succeed, what would it be?

Find a way to get to what you need. It doesn’t matter how hard it is, it doesn’t matter how much time it takes, or how you wanted it to be. No excuses are relevant. It’s up to you, you’re writing the story of the company.
Know that there is no “right way.” No one knows what’s the right way. No one knows how it would have played out in a different way. You’ll make thousands of mistakes, I’m probably making some mistakes right now, but it doesn’t matter.
Understand that obstacles are an inevitable part of the journey. You’ve chosen a path where challenges will continuously arise, and that’s a testament to your bravery and determination. Embrace this reality, knowing it’s your choice. Accept the journey wholeheartedly and commit to making your vision a reality. Overcome each hurdle one step at a time, with no excuses.
It’s your journey, don’t stop until you find a way to make it a reality.

What is some exclusive juice that you can share about Nexite, anything we should lookout for?

Yes! We’re launching our self-checkout security tag, and it’s really cool. It allows us to provide the ultimate customer experience.
Today when you’re talking about checking out or self-checkouts in stores, you’re talking about kiosks — and no one likes kiosks. They don’t really work and it’s not a good experience.
The ultimate experience that you’d like is to just take the items, scan it and walk away — walk out technology. Taking what you have and just simply walking out. When you want to return something, it’s as simple as going into the store, placing it in the designated area, scanning it so that the alarm turns back on and leaving the item in the store there.
That’s the experience we’re creating, getting in and out with as minimal friction as possible, so get ready for it.