#125. New Stand merges your favorite blog and favorite bodega in a convenience store pop-up. We talk with co-founder and CEO Andrew Deitchman about the challenges and triumphs of merging physical products and space with digital content and experiences. The Loose Threads Podcast features in-depth discussions with leaders across the rapidly changing consumer economy.

Check out the full transcript below. 

Andrew: [00:00:01] Companies that are just reliant upon, like, we provide space for you from a media perspective…it’s just not sustainable. They’re not gonna sell enough product and they’re not gonna get enough foot traffic. How do you actually add more value from a media perspective other than just providing somebody space and some inventory?

Richie: [00:00:18] That’s Andrew Deitchman, co-founder and CEO of New Stand, which he describes as if your favorite blog and your favorite bodega had a baby. Andrew joined the company soon after co-founders Lex and David had signed a lease in the Union Square subway station in New York. They set out to build an offering that brings together physical products and space along with digital content and experiences.

Andrew: [00:00:37] I’m Richie Siegel the founder of Loose Threads which analyzes and advises next-generation consumer companies, and FaceLift by Loose Threads, a retail incubator and accelerator for leading brands and retailers. For our latest analysis and insights, check out our free weekly newsletter at LooseThreads.com. We also just announced Loose Threads Live, our invite-only and entirely off-the-record gathering for founders, executives and investors on October 3rd in New York City. Learn more at LooseThreads.com/Live.

Richie: [00:01:03] I started the Loose Threads Podcast to spark engaging discussions with leaders across the consumer economy. That’s why I was excited to talk with Andrew about how he’s managed to build a retail company, a content company and a technology company at the same time, and how he’s expanded to alternative forms of retail such as airports, ferries and office buildings. Here’s how it all began.

Andrew: [00:01:28] These guys came in to meet with me and they had this idea of reinventing a newsstand, and they had taken a lease on a space in Union Square subway station. So, still, like a really nascent idea and they wanted to meet with me and talk about it. And I loved where they were going and invested some money, and just started spending a ton of time, and really just developed the concept with them. That was, really, in 2014, when we first started developing the idea, and then ultimately launched it at the very end of 2015.

Richie: [00:02:04] Talk about that year in terms of, where was it when you started working with them, and what was accomplished, or what was the goal in that year before launch?

Andrew: [00:02:11] They were getting a lot of different opinions about, “Oh, let’s just use it as a billboard…” ‘Cause there’s a lot of people going through the subway station, and it does feel like, oh, it’s a way to kind of arbitrage real estate, ’cause the rent was very low and yet there’s a lot of people going past it, and you can just sort of use it as kind of a walking billboard with this theme of a newsstand…

Richie: [00:02:32] But not really to sell stuff.

Andrew: [00:02:33] Well, a little bit, but a lot of—tons of rotating stuff and, you know, where we really push the idea to was something that would be in service of people every single day. The thought of being a day improvement company and using these spaces as a way to serve basic needs but also introduce people to cool stuff on an ongoing basis. And the other part of what we really worked on wanted to make sure that it was sort of a complete gesture. When we launched it wasn’t just like, a store. So, building the app having it be a great way to facilitate content discovery, really be a great publishing platform, ultimately to have points and rewards, ultimately to have an embedded wallet so it’s more convenient to shop—all of these things were developed before we launched, for the most part. Because we wanted to sort of come out and just show the complete vision of what we were doing.

Andrew: [00:03:27] And so, there was a ton of work. You know, very few people who are gonna open up a 144-square-foot space through the pay zone in the subway are going to spend time developing elite architectural design, and really cool graphic design, and an app, and like, a lot of sophisticated integrations with P.O.S. systems and point systems, and on and on and on. So there’s a lot of work that went in so that when we launched we sort of had this much more complete gesture that we’re putting out there. And obviously, to start really learning about the business, there’s a lot of time spent in sort of product development.

Andrew: [00:04:01] But yeah, the central thesis was always around this intersection between consumption and attention. Sort of, that intersection is large in a digital-first realm now more and more, it’s really come into focus. I mean, obviously Amazon is really an attention or engagement platform at this point, that they monetize through everything from original content to selling you every product under the sun. You know, Facebook, their Instagram is really just a big digital shopping mall now for cool direct-to-consumer products and everything else. In a digital-first realm that intersection of attention and consumption is very much there, but in a physical-first realm nobody’s really put those pieces together. And so like, where do you start? You know, when you see all of these new gestures out there, whether it’s Showfields it’s sort of like a walk into an ad, and “We’re the most interesting store in the world.” And I respect people trying to do things like that, and it’s essentially saying, look, this is a way to create a moment of attention to pull people into some thoughts around consumption.

Andrew: [00:05:03] I think, for us, we’re really trying to be a part of people’s everyday routine and be really helpful. Part of people’s everyday routine now is, “I’m having my coffee, and I’m gonna talk to Alexa, or talk to Google home.” It’s another way of integrating into people’s routines versus saying like, “Come shop right now.” And so we’re doing that for much more of a physical-first perspective but it’s not dissimilar to that.

Richie: [00:05:29] Talk about that year, pre-launch and then into the launch. And like, what was the plan, what does the launch mean etc.?

Andrew: [00:05:35] Oh God.

Richie: [00:05:36] We’re gonna take you back.

Andrew: [00:05:39] It was crazy. I will say first, well, there’s nobody on the founding team that comes from retail. You have people who come more from the media side of things, a little bit of architecture or some design, experiential. You know, there were things like, oh wait, we need to like, stock a store, you know what I mean? Like, some basic things to have to learn about. But I think the bigger part of it was really dealing with the MTA and—I get it, the MTA’s main job is to make sure trains are coming and going on time…

Richie: [00:06:07] They’re having a hard enough time with…

Andrew: [00:06:08] Yeah. So it’s, you know, they’re not like, “Oh, you know, I don’t think we’ve delivered a white box for their store yet,” and like, “Let’s help them and make sure that Con Edison comes and signs off on X, Y and Z.” But when you’re trying to open a store there there’s no heat, there’s no air conditioning, there’s no storage, there’s no bathrooms. So even just trying to operate a retail store is a hard thing, and getting it off the ground was honestly like, calamitous. Very often in dealing with Con Edison, who’s gonna come in for approvals?

Andrew: [00:06:41] And there was a really funny moment where there was a box that was called a lockout tag-out box, and it was basically a metal box on the wall. You open the box and it has like a notebook in it, where you check off, like, I have inspected this. And you close the box. Anyway, so this was a system I think that Con Edison would use, but the system hadn’t been used since I think the 70s, but there is still this old metal box in the space. So my partner George designed the space. And he’s like, “Well, we’re gonna take out the box.” And the guys at the MTA or construction, whatever, “Oh, you can’t take that box out.” What do you mean? Like nobody…it’s literally been sitting there dormant for 25 years. “You can’t take that out.” So we like, redesigned everything around this box and whatever, and all these other holdups and issues. And then like, four, six months later he was in a meeting with the same people, and they’re like, “Well, why don’t you just take out the box?”

Andrew: [00:07:36] So it was things like that that were just like, crazy. But we don’t really know what to expect. We wanted to just start loving up people, and blasting music, and having people come in. And I should say, you know, we launched it at Union Square, but literally the following week we launched a location at Brookfield Place. And so, part of the delay that we had in launching Union Square we sort of used that time when we had met terrific people at Brookfield Properties and, you know, they really saw New Stand as this place-making vehicle. A way to amenatize a space, you know, have some cool stuff and turn people onto it. They also loved the app and the way that we were gonna use that as a media platform as well. And so we launched in Union Square, and then like a week following we launched in Brookfield Place on Black Friday. So yeah, that was sort of the beginning. And then we opened a couple of other stores early the following year and sort of started rolling from there.

Richie: [00:08:33] At what point did you start to lean away from, call it subway transportation, and more into kind of the office space?

Andrew: [00:08:39] I think we sort of entered a bit of a phase of a lot of experimentation, as you do [in the] early stages. So we opened up in another subway location which was Columbus Circle, a thing called Turnstyle. We just got an offer on a lease, they were opening this sort of retail corridor that kind of connects Columbus Circle that kind of felt like a bridge between something that was more purpose-built retail, which actually had bathrooms and air conditioning and, just like the hardcore subway. You know, we even started to look at residential buildings. So, ultimately we opened up in the VIA building. And, you know, at the same time we were kind of exploring different ways of developing the system and deploying the system that we built.

Andrew: [00:09:25] And so, before we even launched, one of my clients actually was Westfield, when I was at Mother, and I got introduced to a person who headed up their airport division, and he loved the concept and, ultimately, when we launched, came and saw it. And was like, “I’m gonna get you into airports.” Like, okay. And then he ends up leaving Westfield and calls us straight away when he became the head, the CEO of a small-ish operating company based in San Francisco called Pacific Gateway. And he’s like, “I want to bring the New Stand concept to a number of RFPs or pitches that they have for different airport locations.” So, you know, we’re pretty green about this whole thing, and we’re like, that sounds cool. You know, we worked with them to pitch these airport locations and we won, a lot, you know. So, two in LAX, two in SFO, two in Seattle, four in Newark, like, three in New Orleans and Minneapolis. And like, you know, all of these different locations that we won. So that became another kind of vector of the business that we had to start spending time on thinking about and figuring out.

Andrew: [00:10:32] And then we were also spending some time with WeWork, had met the founders there, and they were interested in doing some partnerships and various things with us. So we actually did some pop-up stores with WeWork, and we were doing one at 110 Wall Street, and a guy walks in, was like, “New Stand? We were literally just talking about you at a meeting.” His name is Terry McCrae and he’s the CEO of a company called Hornblower, and Hornblower had recently won the contract from the city to operate NYC Ferry, and the city had challenged them to have some interesting ideas around concessions and also media. And so we met with them and formed a partnership to then put New Stand onto the NYC ferry. So now there’s a New Stand on every single ferry boat.

Andrew: [00:11:28] A lot of the things that we started doing, you know, if I’m honest, we kind of were like, okay, well, we opened in a subway, that was kind of weird. I liked it. It was very cool also from a media perspective. I mean, tons of brands won’t be able to get in there. Very, very hard to operate. I would totally re-approach it at some point and look back in that space. You know, we opened an office, and were like, that really works well for us. You know, being at Brookfield Place, which is kind of a big mixed-use property—

Richie: [00:11:53] And also people have to be there or want to be there, versus you’re trying to get out of the subway as quickly as possible.

Andrew: [00:11:57] Oh yeah. I mean, the subway…I mean, look, we had lots of people still stopping in the store, and what was really funny is people, when we left…’cause we closed because the L train was closing or supposedly closing. When we did that, people were like, “No, like, where’s the New Stand going?” We’re like, really? You didn’t buy that much stuff. But people really recognized it and liked it. Like, it had stopping power, people were like, “Whoa, what is that? That’s different.”

Richie: [00:12:22] What do you think contributed to that?

Andrew: [00:12:24] I think it was just design. Certainly within the subway it was juxtaposition because it was like, a gritty corridor off the L, you know what l mean. So that juxtaposition, I think, had a lot of stopping power.

Richie: [00:12:37] How would you verbally describe the aesthetic and so forth?

Andrew: [00:12:40] We purposely have something that feels very modern. It’s clean, it’s white, but, you know, there’s a lot of sort of Memphis design influences in terms of shapes, you know, the touches of color that we use in it. We created something that was super-functional, so all of the space is modular. The walls are powder-coated steel, all the fixturing is magnetic, so you can sort of pop it on the wall, pop it off the wall, and sort of reform at the store in a very rapid fashion. We also want to be able to use the space for brand partnerships. So, you know, the idea that New Stand on some level can fade to the background and brands can really showcase themselves was really important to us. And, you know, we tried to also integrate things like the cash wrap was the cooler. It was some pretty cool things that we did from a design perspective.

Richie: [00:13:35] So I guess if we talk through end of 2015 into 2016. Like, what’s working well, and then also what isn’t working at that point?

Andrew: [00:13:43] What was working well was…I don’t know. I mean nobody had…

Richie: [00:13:48] Tried?

Andrew: [00:13:48] Yeah. Taking these ideas before. I think it was even the name. I think that people still were reading it like, oh, it’s a newsstand, but what the hell is that? It’s like, oh, I see, it’s a pun. It’s New Stand. And the fact that it was bright, well-lit. Had a very different blend of products; had a Snickers bar but also had, you know, a high-end Korean face mask, or like, really cool tech. People were curious about what we were doing. And then, you know, I think another part of what made it stand out was just the staff. You know, we tried to really train the staff in a really positive way. We talked about day improvement, we put them in cool aprons, and it just all felt like a thing that was up-leveling what would normally be, certainly, in a subway.

Andrew: [00:14:37] And then you know even at Brookfield Place where it’s high-end stores, you know, and there’s lots of marble and stuff like that. In that case it just was like, the coolest thing there. It was different from a lot of more mainstream brands that, nothing wrong with it, but having J. Crew there or high-end fashion brands or whatever it is, and then there’s like this weird thing called New Stand that is selling everything from, again, snacks and drinks and cool games, and it was just a really interesting blend of stuff. So I think we just stuck out in that way. So, that was definitely part of, I think, what we saw worked, and we got some good traction, and people signing up for the app being able to earn points, and to be able to get discounts by using our wallet and things like that. So, we were excited that a lot of the system that we had imagined was starting to work.

Andrew: [00:15:32] We also did some pretty cool brand partnerships out of the gate as well. We did a great one with eBay and we were like, okay, this kind of works also in terms of how we can use this space and provision it for brands to be able to, you know, ultimately connect with our audience in a positive way. So there was a lot of stuff that was working and way more that was not working. Everything from the mix of products that we had was like, way too avant garde.

Richie: [00:16:01] I’m curious to talk more about the assortment as well, and maybe some of those early learnings.

Andrew: [00:16:04] You know, we had everything from like, a bicycle in there to home stuff that we had, some of which was like really high-end and expensive. You know, some apparel stuff worked, some apparel stuff didn’t work. I think we went way too high-end initially in terms of just snacks, and like, kale chips and whatever, and people were like, they would like some peanut M&Ms and some Diet Coke. Like, I think we just had to dial in a lot of it. It wasn’t like we were trying to be super-hipster I think we were just trying to really be different.

Richie: [00:16:38] Moving into 2016 and so forth, where are you starting to spend your focus?

Andrew: [00:16:41] Part of it was always in fundraising and part of it has been in strategy, and trying to figure out from a content perspective and brand partnership perspective how we’re going to continue to deepen the value that we can provide to brands. And part of it was also just straight up business development with my partners. You know, figuring out what’s the deal that we’re gonna do for airports, and ultimately what was the deal that we were gonna do for NYC Ferry and things like that were tremendously time-consuming, but big swings. They’ve given us a lot more exposure than we would be able to get kind of escape velocity, by clipping off some big deals versus kind of one-sy, two-sy, let’s open another little store here, another little store there. I mean that’s where a lot of the time was focused.

Andrew: [00:17:32] And it goes back to a lot of the core insights that started the business to begin with which is, on some level, arbitraging access to people and doing positive things with it. And for NYC Ferry it’s a partnership where we don’t pay rent, we do a revenue share with our partners at Hornblower and ultimately the city, but it gives us tremendous access to lots and lots of people without having to have laid out tons of money from a CapEx perspective. And, similarly, for airports, there was no way we would ever have been able to get into airports given the tiny size of our company, but doing it as sort of a licensing partnership allows us to get our brand out there in a big way, and get in front of lots and lots of people, kind of legitimize the concept that much further, faster. So we spent a lot of time developing that.

Richie: [00:18:26] What’s it like balancing retail infrastructure, and then the digital infrastructure and the content infrastructure?

Andrew: [00:18:33] In many ways we’ve sort of started three companies at the same time. It’s one thing to be buying stuff off the shelf, it’s another thing to be building a lot of tech yourself and, you know, we’re building a lot of stuff ourselves. I’m really, really proud of our team. My co-founder David, my co-founder Lex and I have spent a lot of time thinking about product. And the tech team that we have actually in Colombia are tremendous. So there’s a lot of focus on building digital product.

Andrew: [00:19:01] And then, on the media side of things, it’s about how do we start to productize our media offering? You know, we have thousands of people [on] our app every day, we have many more people in our stores every day, and how do we develop relationships with brands to be able to give them access to that audience in a way that works for everybody. So a lot of time is really spent in developing on the app side the right curation of content, more and more original content, and how does that start to dovetail with things that we’re doing in the store. Different seasonal moments, different promotional moments that have this editorial vibe to them but still are about, on some level, people discovering products.

Richie: [00:19:48] Talk a bit more about the evolution of that. And I’m also curious about the original piece as well, in terms of, early on, what did one get from it? Was it more transactional? And then, how has that evolved, too?

Andrew: [00:19:58] Again, the idea of being at this intersection of attention and consumption. When I’ve thought about that I always was like, you know, the attention side or media side always lived in that universe and the product side always lived there. Like, you know, buy ten frozen yogurts get the 11th one free. And then like, on the other side it’s like, okay, pick up Rolling Stone magazine and there’s a bunch of ads in it, which is fine. That’s why the magazine costs five dollars. You know, if there were no ads in it it would be really, really expensive ’cause printers like to get paid, and shipping is expensive, and editors like to get paid, and photographers, etc., etc.

Andrew: [00:20:33] So, the relationship that you would have with content stays in the realm of content and the relationship that you have with products and consumption stays in that world. And, to me, I just always saw blending those things together. So that’s why every time you click on an article in the New Stand app you get a point, and when you get 300 points you get ten dollars to spend at the store. So I’m kind of rewarding your content consumption with actual product consumption, in some way. First of all, I think it makes for a much better value exchange among everybody. It acknowledges to the consumer that like, “Hey dude. You know, paying attention to the content that we put in front of you? Like, we really appreciate that, ’cause it helps us monetize it in other ways.” And I think it also deepens the relationship that we have with consumers as well, ’cause we get a better sense of the kind of things that they like and the kind of things that they don’t like. So all of that sort of blends together to me. And obviously, again, it’s sort of writ large with folks like Amazon who…it doesn’t really matter. You know, does the toilet paper come with a movie download or does the movie download come with shipping? Like, it’s all about optimizing for you as an individual through prime or whatever, and I think it’s really smart. I think they’ve done a great job of figuring out how to blend, really, the three things that a human being is allowed to spend money on. I mean, other than donating money, you can spend money on products, services or experiences. That’s it. You know. Experiences are things like movies, products are like, whatever, bottled water, toilet paper, whatever you need. And services are things like shipping and other stuff. I mean, for us we’ve created our own services now as well. Things like swap charge, you can come into any New Stand store and grab a mobile charger for free, or an umbrella when it’s raining out. You know, people can sign these out for free, and I think they’re important little essential services that we can provide to people as part of being, you know, a member of New Stand. And, again, being a member is free.

Richie: [00:22:30] Do you ever think that I would cost something or…?

Andrew: [00:22:32] I hope not.

Richie: [00:22:33] I guess just compared to Prime, which does.

Andrew: [00:22:35] Yeah. No, you’re right. Yeah. Maybe someday. It’s certainly not in our business plan. We’re not sitting there being like, “Okay, you know, by 2021 we’re gonna start charging three dollars a month.” Like, that’s not in our business plan at all. Who knows, I mean, you know, where things start to go, in terms of what other things we’re gonna be able to provide. I think it just has to be based on a really fair value exchange, and if there are things that we’re able to do that add to our cost structure then we need to be able to pass that along in some way, shape or form. But there isn’t a plan to do it. We really want to not do that.

Richie: [00:23:07] There are a lot of stories of like, companies in China and so forth trying to do those umbrella rentals and going horribly wrong. I mean, have you seen those?

Andrew: [00:23:13] No I haven’t.

Richie: [00:23:13] I remember one of these was on Shark Tank and it did terrible. And then there was one in China where they lost like 200,000 umbrellas in like, a week or something, ’cause people just took them and never returned them. Maybe it’s good you didn’t hear about those stories before you launched yours, in a sense? But how does it work so that doesn’t happen, I guess?

Andrew: [00:23:29] Well you know like, when you go to the bathroom at a gas station and there’s just like a wheel of a tire attached to the key? We just attach a giant wheel to every—no, I’m kidding. We don’t do that at all. You have to sign them out. We have a little IOT-based system that we’ve built using a QR, so you can scan that QR using the New Stand app.

Richie: [00:23:49] So you need the app to do it.

Andrew: [00:23:51] Yeah. So you just scan it with the app. And, basically, we have a card on file, so if you don’t return it in 72 hours then we ultimately charge you for it. We’ve done thousands and thousands of these swaps or rentals or whatever. And I’d say 25% of people keep it.

Richie: [00:24:06] And you just charge it and so forth.

Andrew: [00:24:07] Yeah. Because it’s also a good product. Like, the mobile chargers that we have are awesome. They’re really sleek and they look good. And the umbrellas, it’s a good umbrella. I mean, it says New Stand on it, but it’s a good clear umbrella. Like, high quality. So $20 bucks for an umbrella of that quality is actually not bad. I’m not sure what happened in China but it’s ah, it’s also a big part of our focus is certainly on sustainability. You know, everything from changing all the packaging that we have on the NYC Ferry to even the water that we use. There’s a lot of things that we’re focused on, and I think things like signing out a mobile charger or certainly signing out an umbrella and being able to return it is good. Because any time it rains in New York people just appear with bags of umbrellas that are single-use, basically, and just get thrown out, which is just awful. So I like the idea of providing a service like that, ’cause I think it also shows the consumer that we actually care in ways that go beyond like, you not getting wet.

Richie: [00:25:09] Talk a bit more about the ferry piece. You said you had to kind of build a unique sort of infrastructure for that. What was kind of the timeline in some of those lessons?

Andrew: [00:25:16] It was really interesting actually because we probably met them in 2016, and they were gonna be launching this service in, I guess, May of 2017. And so it was really rapid-fire. We had to design a store that would actually pass inspection from Coast Guard and all of this other stuff. There’s a lot of weight concerns, storage concerns, you know, how does everything sort of get locked down. You know, all of that kind of stuff. At the same time, we wanted it to feel really cool and like, you know, we have beautiful taps for beer and wine and margaritas and stuff like that on the ferries, and really cool ways of assorting the store, so there’s a lot of very rapid work that was done in design.

Andrew: [00:26:01] And then from an infrastructure perspective we had to work with Hornblower to figure out a lot of stuff, and it was literally just true partnership, in-it-together, ’cause these guys were trying to stand up an entire new part of New York City infrastructure under a microscope and in rapid fashion. It was kind of exciting, actually, kind of bearing witness to a lot of that. Like, which boat is coming up from Louisiana this week?

Richie: [00:26:30] So they’re all new boats.

Andrew: [00:26:31] These are all new boats.

Richie: [00:26:33] Wow.

Andrew: [00:26:33] And the first set of stores were built actually in New York on the boats once they got up here. So the actual fabrication and installation of New Stand happened up here, but the main part of New Stand was actually incorporated into the manufacturing of the boats themselves down in these shipyards in southern U.S. So there was a lot of work to do around that. There was a lot of work to figure out how do we get product onto the boat. It’s a whole new process you have to create because, you know, how do you replant a boat, it happens at night. How much stock do you need to put on it?

Andrew: [00:27:15] Having stores that move around all day is cool but it’s very weird, ’cause the boats don’t run on the same routes all the time, but there’s one P.O.S. that’s assigned to that boat. Like, “Why did the sales go down for this store?” It’s a store, you know? “Oh, because it ran on this route today versus that route,” or it didn’t run at all, or whatever it is. So it’s just a really interesting business but, again, I think it is like the best, or one of the best, manifestations of day improvement that we’ve had. Because, totally surprising to people. The net promoter score on the ferries overall is really, really strong. I think that Hornblower does an amazing job of running that service. I think we’re a proud part of that because people walk on, they’re like, “Whew, I can get a Rose on tap.” It just elevates the commute in a really, really nice way for people.

Richie: [00:28:07] What were the similarities and differences between, call it MTA, ferries, and airports, coming in as kind of a triangle?

Andrew: [00:28:12] Yeah. I mean, the learning so far in airports is, it’s obviously a far more transient audience. So, you know, people riding the ferries, often they’re riding them every day or once a week. Obviously people in the subway or going past you, you know, on an ongoing basis. The stores are way higher volume. I mean these are big stores that we have. You know there’s almost a 3,000-square-foot store in Seattle, there’s a 2,000-square-foot store that we have in LAX.

Richie: [00:28:38] Which is like 10x to 20x some of the originals.

Andrew: [00:28:40] Oh yeah. On NYC Ferry it’s 90 square feet. The stores that we’re opening in New York throughout the rest of this year that are like in lobbies of buildings are a couple hundred square feet. Again, part of the reason why we had an operating partner for that wasn’t just from a capital perspective, it was also from operational expertise, and the mix of products is different. You know, there’s more souvenirs there, and neck pillows and things that people would need as a traveler or want as a traveler. But we’re constantly trying to influence that assortment in a way that makes us different from anything else you would see from kind of a news and gifts thing within, you know, an airport.

Richie: [00:29:18] Bring us up through kind of 2018, in terms of your own focus, and kind of any inflection point throughout the year, and we’ll come to the present.

Andrew: [00:29:26] I think in terms of 2018, the biggest things that we’ve been focused on is really continuing to build out our product. And what I mean by that is, what are the experiences that consumers are gonna have with us on an ongoing basis that we’re gonna continue to make better and better? And we’ve been very focused on how we develop the right kinds of formats and platforms for brand partners to be able to come in and do more stuff with us. And so a lot of that stuff is actually really coming to market late this year. I mean a big part of what we’ve spent time in 2018 is product development. So developing things like swap charge and swap umbrella, we now have a much bigger wall of stuff that you’re gonna be able to sign out and things like that. So we want to expand programs like that, ’cause we see that people really like them. Things like bringing coffee service to certain locations is really important, you have to figure out how you’re gonna do that. 

Andrew: [00:30:24] On the media side of things it’s been, first of all, getting a sales team in place. You know, we did a lot of media partnerships, even the first couple of years, to learn and experiment and obviously to drive some revenue, but we didn’t even have a salesperson. So we now have our head of media partnerships, a guy named Jesse Smith who came to us from Northside media—so Brooklyn magazine and Northside Festival, all of that—and just working with him throughout 2018 to just get media kits pulled together, and a little bit more process and templatizing of the offer that we can bring to brands to be able to showcase their products, or whatever else.

Richie: [00:31:06] You’re at 37-ish stores today, you said?

Andrew: [00:31:09] Yeah. And obviously a big portion of those [are] our stores on ferries, a number of them are airports. And then, you know, we still have a number stores in New York, and we’ve started to launch our first self-checkout stores that are really a pilot right now that we have in company offices, corporate offices. It’s a really, really cool program. Part of what we’re deploying now in partnership with folks like Brookfield is geo-fencing properties. So, if you go to Brookfield Place and you open the New Stand app where we have thousands of members, some of the cards in there are about things that are happening at Brookfield Place. And obviously we get paid by Brookfield in order to do that. We’re gonna be doing more of that on an ongoing basis for Brookfield and for others.

Andrew: [00:31:55] So, you know, part of it is how do we help companies reach an audience. Last time I checked that’s kind of what media is. You know, it’s like, “I really like to speak to those people or have them experience my product or listen to me.” And then we help make that happen. And we’re gonna do the same thing for companies. So as we’re moving into corporate offices and building self-checkout New Stands that have a great, again, assortment of snacks and drinks. But also, whether it’s cool stationery on Valentine’s Day, there’s a Valentine’s Day assortment, all these things are there in a super-convenient way. But what we’re able to do is then use the content management system that we’ve built to be able to have that corporation publish content directly to the members in that cohort, meaning the employees of their company, right?

Andrew: [00:32:45] So it’s a really exciting program. We spent a lot of time throughout 2013 building a lot of that as well, so figuring out what the fixturing sets are that we can put into a company that really work. We spend a lot of time—this was not something we had out of the gate—building self-checkout functionality into our app, so you can just scan products with the app itself and use the embedded wallet to just pay for it and walk away. So, it’s obviously kind of an honor system. And that’s a lot of stuff that we’ve been working on and that’s sort of, a lot of that was 2018 and now sort of blends into 2019.

Richie: [00:33:19] Yeah. Given there are so many moving pieces to this from the media to the digital product to the physical product to the retail…how are you figuring out where not to go? Or, conversely, where to focus?

Andrew: [00:33:30] Look, ultimately we’re gonna look at this business with two lenses. I talk about what I call COE and ROE. You know, what is the cost of engagement, what’s the return on engagement. I don’t want us to suddenly get into the business where we’re taking big leases and having to pay huge rents just so that we can have an audience. We, I think, have been smart and savvy enough to say there’s a lot of people going in and out of that building, why don’t we just put a New Stand in the lobby.

Richie: [00:33:57] And your size permits that.

Andrew: [00:34:00] Yeah. We can have very inexpensive build-outs and really favorable terms, because the building owners like us and, you know, we’re really helping to add to the vibe and community of a building. We pay rent, by the way. It’s not like everything’s for free, but we can be very efficient in the cost of engagement that we have. How do we get access to an audience? So we’re gonna continue staying focused on that. And then the return on engagement side of it is really about blending attention and consumption. You know, there’s certainly locations that we have where the retail part of it is stronger, and there’s locations that we have where the media side of it is much stronger.

Andrew: [00:34:38] I think where we want to focus though now, understanding those sort of constructs from almost like a KPI perspective, we want to really build networks that are going to be valuable. And I believe that a network in office and mixed-use buildings is gonna be very valuable. You know, there’s not networks out there that exist in that way, to be able to reach people in a multi-sensory way on an ongoing basis, and in a way that’s really positive. That you’re a helpful part of their day, you’re introducing them to cool products, you’re introducing them to cool content. That might be hyper-local stuff that relates to your company or relates to geography or the building, or it might just be cool stuff that we’re curating about what’s happening in town that weekend, our cool music playlist on our app.

Andrew: [00:35:23] And also constantly, you know, sharing with you products that we’re discovering while still having all the essentials and favorites. I think it’s gotten to be a pretty tight concept at this point. We really want to push it out into office in a big way, that’s going to be certainly the biggest focus. It’s also something that we can manage and control from an owned and operated perspective versus a lot of the partnership deals that we’ve done—which I’m very proud of and we’ll certainly do more of—but we’re excited to continue building out a lot of this stuff ourselves.

Richie: [00:35:54] And then talk a bit about this year in terms of where you’ve been focused, and where you expect to kind of end the year and want to end the year.

Andrew: [00:36:01] By the end of the year will be in 50-plus locations. We’ll also have a very, very tight and clear pipeline that we’ll be activating on going into first quarter next year, in terms of locations. There’ll be a number of things that we’re gonna be launching from a media perspective. So there’s kind of new interactive fixturing that we’re developing that we’re really excited about that allows brands, in a turnkey way, to be able to put their products in stores and engage with our consumers and get feedback loops and stuff like that, you know, when consumers opt-in to do so. So there’s a big push around that, we’re excited to be launching all of that.

Andrew: [00:36:38] I mean, we are gonna be also pushing out some private-label stuff as well which we’re very excited about, too. Beyond that it’s really about getting the machine in place to be going from 50 locations to 500 locations. And I think a lot of the stuff that we’re gonna be doing as well is just being better and better at how do we engage people on an ongoing basis. So a lot of what we’re doing in 2019 is putting in place programs that, you know, coffee is a dollar for a member using this machine where you just scan your app and it gives you coffee for a buck. Expanding things like swap charge into many more products. We just want to create more points of helpfulness and more value for our customers so they’re spending more and more time with us.

Andrew: [00:37:26] And then the last one will be this push into enterprise. So when I talk about office, yes, you’ll see us in more and more ground-floor lobby spaces but you’ll also start to see us pushing up into private offices themselves. There’s also gonna be opportunities for partnership even in that space as well. There’s, whatever, the AirMarks and the CBREs. There’s companies out there that are very adept at doing a lot of things within offices that can sort of take the New Stand system and put it out there in partnership with us.

Richie: [00:37:57] How big do you think this should get and how do you modulate that so you’re not over your skis on that path?

Andrew: [00:38:04] I think that it’s a very mainstream idea. And so, we see it scaling very significantly. And I think the bigger we get the more helpful we actually can become to people. It just gives us more levers to pull in terms of the way that we can serve people, and also serve brands and serve asset owners or landlords at the same time. I think we can become a way of creating these value exchanges in a pretty transparent way. I mean people understand that when they come into New Stand and if there’s a big feature fixture for Quip that somebody paid to have it there. But that’s OK. It doesn’t feel like a lot of shelf space like that anyway, anyway. Right? You know they’ll see it in our app and they’ll see it and other things and they understand that this isn’t an advertising moment. But the fact that we’re proactive about that side of the business allows us to do things like sign out an umbrella for free. Businesses that have to be so reliant upon pure margin from a retail perspective are not going to be able to serve the customer in the same way at all.

Andrew: [00:39:07] And the flip side: I think companies that are just reliant upon like, we provide space for you from a media perspective and you just put your brand in there, and it’s sort of a turnkey thing from a retail perspective. I’m just not sure that they’re gonna be as active as they need to be from a media standpoint to really drive that much more value back to the brands that want to place things in there, you know? Some of these companies are charging $10 grand a month for a tiny little space for an emerging brand. It’s just not sustainable. They’re not gonna sell enough product and they’re not going to get enough foot traffic. You know, how do you actually add more value from a media perspective other than just providing somebody space and some inventory efficiencies?

Richie: [00:39:48] From the scale side, what do you see as like, the largest constraint to getting there at the speed that you want to get there?

Andrew: [00:39:55] Capital is always the constraint, you know, on some level, but I think what’s also interesting about the sphere of retail that we’re playing in, the bar is so low that when we show up and have employees that are well-trained, or even a self-checkout store that’s like well-trained and kind of gleaming and has some cool products, like, you’re already winning on some level. So from a product/market-fit perspective I don’t see any limitations there.

Andrew: [00:40:21] The limitation or complexity is just that the business has a number of moving parts and we’ve chosen I think, rightfully, to build them in a parallel fashion versus a sequential fashion. You know, we could have said, let’s just create a bunch of cool convenience stores, then we’ll layer on an app, then we’ll layer on media, then like—we’ve just done all of it at once, because we wanted to create the full experience and challenge ourselves to develop all of this stuff in concert and build it into a system that can now be sort of packaged up and rolled out. And there’s a lot more work to do on the system and the product that we’re putting out there but we’ve gotten it now to a place where it’s pretty turnkey, and we can just hire up more of the right people to be able to deploy it in partnership with us.

Richie: [00:41:10] What’s been the cheapest most expensive lesson you’ve learned, building this?

Andrew: [00:41:13] The cheapest lesson, to be honest, was doing things that are interesting creates momentum and excitement and brand love in a very simple way and it doesn’t have to cost a lot of money. So, you know, we would do a DJ night in the subway and people would just love it, you know? Or at Brookfield Place when it’s tax day we would bring in masseuses and give massages to people, ’cause it was tax day. So, to me, it’s a really inexpensive way to learn like, “Hey, we should just do some of this stuff. People just like us more, and they’re gonna come visit us more often.” And I think a lot of marketing or trying to drive engagement or brand love, people spend way too much time and money in strategy—and I can raise my hand as a person who did that for a living for many years—versus just like, “Oh, let’s just put a cool guy in the corner playing music.” Or what if we just gave a massage to people or gave out a rose to people.

Richie: [00:42:13] The simpler ideas.

Andrew: [00:42:13] Yeah. Just simple stuff really works. And so it was very inexpensive to do so ’cause these things don’t cost a lot of money.

Richie: [00:42:21] What about expensive?

Andrew: [00:42:22] I think we had a very, very expensive lesson in the form of lease negotiation. We spent way too much money on lawyers. We just realized that we were getting run around. It was an expensive lesson. It didn’t like, you know, sink the company, it was never anything close to that, but it was sort of a shocking amount of money that we ultimately spent to get a lease done. And when I’ve talked to people subsequent to that they’re like, “That’s crazy.” And that goes back to the cheap lesson side of it as well. Because, you know, you blow $50 grand getting a lease signed and you’re like, “You know how many massages we could have given to people? Do you know how many like, free whatevers we could have done?”

Andrew: [00:43:03] There’s nothing that was like, again, so devastating, but when you’re watching every dollar, you realize that the dollars that you’re spending on stuff that feels mission-critical, you didn’t have to spend that amount. You could [have] gotten it much more efficiently accomplished and then used those dollars for some of the cheap more delightful things you’re talking about.

Richie: [00:43:21] How did you land on the name and how much was the domain?

Andrew: [00:43:24] Lex and my former partner George developed the name. And the domain, we didn’t have it at first, it was “The New Stand.” And we, I think, at one point had the-new-stand, which is great.

Richie: [00:43:36] Dashes are killer.

Andrew: [00:43:36] Yeah. Really bad. And then, ultimately, I think somebody was squatting and we kept bidding, you know, and I think got it pretty efficiently. It wasn’t a crazy amount of money.

Richie: [00:43:50] What are you excited for that’s on the horizon? Call it the next 6, 12 months.

Andrew: [00:43:54] Oh man, so much. I’m really excited about the locations that we’re gonna be opening this year. These are, in many ways like, real kind of wheelhouse locations for us that have active audiences and office buildings that are just gonna be really excited with what we’re putting in front of them. Very, very excited about the work that we’re doing on the advertising productization side of things. We’re having a lot of conversations with big companies now who want to not just use newsstand as a way to seed products with consumers, but as a way of doing turnkey research, as a way of developing influencer programs. And we just have a very unique kind of media stack that we’re able to put together that crosses this physical/digital boundary.

Andrew: [00:44:42] And then there’s some original content stuff that we’re working on, and I’m not gonna go into detail about right now, but it’s very squarely focused on the world of business and office, but certainly through more of a millennial lens. And that involves both events and experiences as well as, I think, some really, really cool content outputs that we’ll have, too. So, really excited about that as well. And I guess the last is this push into enterprise itself. I haven’t worked in like, a big office, or a big company I should say, for a long time, but I can still remember. There’s just big offices, man, and like, there just wasn’t much. And I still go and visit people in these big offices and I’m so excited to bring New Stand into a private office and just light it up, because it’s a great way to have companies engage their employees, and for employees to feel like they are following the corporate narrative in a positive way, and that their company gives a crap about them.

Richie: [00:45:44] National, international, how are you thinking about that?

Andrew: [00:45:48] We’re working on our pipeline for 2020 right now. Most of 2019 will be just New York in addition to the locations we have in other markets for airport. But 2020, you’ll start to see us in other markets and things other than airport. So, you know, we’re kind of developing that pipeline now. And, you know, I think we’ll probably go into major markets with a lot of the real estate partners that we have in place already. So certainly like, the LAs and SFs and, you know, Boston. I mean, there’s—

Richie: [00:46:19] You have a lot to do here first.

Andrew: [00:46:21] Yeah absolutely, and I’m excited to continue getting more density here in the city and just have people be aware of the brand. We haven’t done a brand awareness study. I don’t know what it would be. I would think it would still be pretty low, so it gets me really excited when I send an email to somebody we haven’t talked to or whatever, it’s about something else, and they see in the signature that it’s New Stand, they’re like, “Oh my god, I love New Stand.” I was like, “Wait, you’ve heard of it? That’s so cool!” The brand is now like, coming into its own and we’re excited to kind of push on that a little bit more, and part of that’s just gonna be having more presence in people’s lives.

Richie: [00:46:56] Awesome. Thanks so much for talking.

Andrew: [00:46:57] No, it was great, man. Thank you so much. Enjoyed it.

Richie: [00:47:04] Thanks for listening to the Loose Threads Podcast. You can read full transcripts of the podcast and join the newsletter at LooseThreads.com. Feel free to leave review on iTunes, we always appreciate it, and thanks to George Drake, Jr. for editing this episode. We have a great roster of upcoming guests and we hope you tune in next week.