INSUBCONTINENT EXCLUSIVE:
Valued at $535 million, autonomous retail startup Standard Cognition has emerged as a soon-to-be tech giant and the best hope for merchants
to compete with Amazon Go
Cashierless checkout is poised to transform brick-and-mortar commerce, and shop owners fear having to battle Amazon’s technology alone or
partner with it, exposing data it could use against them.The $86 million-funded Standard Cognition is racing to equip storefronts with an
independent alternative using cameras to track what customers grab and charge them
But Amazon’s early start in the space poses a risk that it could patent troll the startup
So today, Standard Cognition announced it has acquired DeepMagic, a pioneer in autonomous retail kiosks.“We’re not an aggressive company
My personal stance on patents is that maybe they’re not the way the world should work” says Standard Cognition CEO Jordan Fisher
“But given the larger player in the space, I think it’s the right thing to do so we have coverage and can protect ourselves.”DeepMagic
let customers swipe a payment card when entering a smaller kiosk or store, pick up items that are detected by cameras, and simply walk out
while having their card charged
The idea is that businesses could operate satellite micro-storefronts in malls, apartment buildings and more without staff
DeepMagic was easier to deploy since the kiosks were built from the ground up to eliminate annoying checkout lines.Standard Cognition CEO
and co-founder Jordan FisherStandard Cognition meanwhile focuses on retrofitting full-sized grocers and other stores like one in minor
league baseball team the Worcester Red Sox’s upcoming stadium and others it hasn’t announced
It currently has one experimental shop of its own in San Francisco
Roll outs with partners are more challenging because the startup doesn’t design the building form factor or inventory but is addressing a
much bigger market of existing storefronts
It claims it can grow profit margins for shops by up to 100%.Standard Cognition sees the smaller footprint spots outfitted by DeepMagic as a
crucial piece of the autonomous retail landscape
So it’s acquiring DeepMagic’s technology, and bringing co-founder and CEO Bernd Schoner on as a consultant
Standard Cognition won’t pick up DeepMagic’s X staffers or pilot contracts, but it’s considering how to integrate the technology as
ramped up its own deployments
“We were both tackling this problem with a strong focus on the power of computer vision, so it made sense to align ourselves
with Standard.” Schoner tells TechCrunch
“We think Standard is in the best position to win this race.”DeepMagic was mostly founder-funded, but the 5-employee company had raised
$150,000 from angel investors since starting in New York in 2017
Yet Standard Cognition, which was founded a few months later, raised a $35 million Series B in July from EQT Ventures and Initialized
It has become a center of gravity in cashierless tech, having pulled in half the total $118 million invested in the space in 2018
Now it’s consolidating the space with the DeepMagic buy and its acquisition of retail mapping startup Explorer.ai in January.The purpose
of the buying spree is getting to market first
“Every day, the thing is speed
I think this is going to be a very fast market
One of my biggest jobs is to keep everybody as motivated today as they will be in 5 years” says Fisher
“6 months today will translate to 20% market share in 5 years
That’s crazy and it’s a huge motivating factor
Moving fast enough that we can get the lion share of the market is what keeps me up at night.”The company also has to outpace fellow
startups like direct competitor Zippin, Trigo, and Grabango
Along the way, Standard Cognition been focused on developing unbiased anti-theft technology that doesn’t care what a person looks like,
just what items disappear from shelves
Fisher says it’s also looking into how it can make sure it doesn’t unabashedly grow unemployment
“We’re creating more jobs than we’re displacing right now” Fisher claims, saying it needs people for data labeling to train its
artificial intelligence.Standard Cognition’s co-founder and CEO hopes Amazon will find it just as challenging if it tries to move from
running its own 18 or so Go stores to equipping other businesses
The startup also hopes to capitalize on fears about how Amazon might use partners’ data the way it does in ecommerce
“I don’t think that’s minor at all
Do they get the insights? Can they leverage that to have a better offering on Amazon.com and in their brick-and-mortar stores?” Fisher
“Our product offering has none of those strings attached
There’s no ulterior motives.”
