You figure a guy who runs a company called CoffeeTable would know something about coffee. And in fact, Ben Choi has more than passing familiarity with the bean: Three years ago, Starbucks CEO Howard Schultz wooed Choi away from Menlo Park's Storm Ventures to open the Silicon Valley office of Schultz's venture firm, Maveron. Schultz, via email, told this newspaper he was wowed by Choi's "terrific track record as a venture capitalist" and "stellar reputation."
But after years of bankrolling entrepreneurs, Choi felt the itch to get back into the game himself. He got a funding pitch last fall from CoffeeTable, which works with retailers to create online catalogs for the iPad. Choi liked the company so much, he signed up as chief executive (though he remains a part-time venture partner at Maveron).
San Francisco-based CoffeeTable has since landed more than 140 major retailers as clients, including Neiman Marcus and Crate & Barrel. And earlier this year, R.R. Donnelley -- the biggest printer of retailer catalogs -- bought an undisclosed piece of the startup for $2.5 million.
Choi recently sat with this newspaper to discuss his wild ride and what comes next.
Q: Did your wife think you were crazy to ditch Howard Schultz for a startup?
A: Well, look, Howard has his hands full running Starbucks, so it's not like I was working with him every single day. But I wouldn't have left venture capital if I didn't think this was a large opportunity. Technology is changing how businesses interact with customers.
CoffeeTable was co-founded in late 2010 by Christian Friedland, who's head of Build.com, a leading online home-improvement retailer. He wanted to know why all these catalogs of his wife's that were piling up on the coffee table couldn't be converted into an elegant app. The iPad had just come out that spring.
Shayne Sweeney had worked for Chris and built the early prototypes for CoffeeTable, then shortly afterward got the fantastic opportunity to become the lead developer at Instagram. Chris, meanwhile, really is more focused on Build.com, which does $400 million in e-commerce every year. I tried to convince him to take an investment from me, quit his day job and build CoffeeTable. Instead, he convinced me to come on board as co-founder. I thought, "This could be really big."
Q: iPad publishing seems like a pretty crowded space, with Flipboard and Zite letting people create personalized magazines and Pinterest now on the platform. How are you guys going to continue to stand apart?
A: Those companies have done a great job using the tablet platform to create a discovery experience. But there's a difference between window shopping and catalog shopping.
The only real direct competitor we have is Google (GOOG) Catalogs, which was originally launched 10 years ago and relaunched last year. But it's a do-it-yourself product, and it's just for advertising; there's no e-commerce element.
Q: So what's your value proposition for retailers?
A: Catalogs are very old school -- it seems like the sleepy part of retail. But they drive $270 billion in sales, by one industry estimate.
The problem is, they're cost-intensive. Each Restoration Hardware catalog costs $10 to print and ship, to say nothing of the costs to create it. And it's hard for retailers to track back how much a catalog drives demand. CoffeeTable dramatically reduces those costs by delivering digitally. And our analytics platform gives retailers a real-time view into how their audience shops the catalog.
The tablet interface is much more similar to reading a catalog than scrolling through a Web page. Twenty percent of e-tailing is being done on mobile, and the iPad is half of that. The conversion rate (from browsing to buying) doubles for "express," in-app checkout, like we offer, vs. a Web checkout, where a customer has to click through a lot of screens and has more friction in the purchasing process.
Retailers just provide us with a PDF of their print catalogs and a data feed. We only charge when somebody opens their catalog in the app. We can show them how customers are interacting with their content, and we can provide A/B prototype testing for potential new print catalog designs.
Q: What do shoppers think?
A: We recently hit No.1 in the "Catalogs" category in the App Store, and we're closing in on hundreds of thousands of downloads. Plus, Randy Jackson (from "American Idol") told USA Today we were his favorite shopping app, which created a little Oprah effect for us.
People like that the app becomes personalized to them over time as they open the product more; we can introduce them to new brands based on who they already shop.
Q: You worked for a year at the CIA's venture arm, In-Q-Tel. Do you still carry a poison-dart pen?
A: I taught "Tradecraft of Venture Capital" at Langley. It's definitely not as cool as Showtime's "Homeland" makes it look. I also led an investment in Rhevision, which developed tiny fluidic lenses for smartphones ... and other devices that one might want to put cameras into.
I was in the long process of getting my top secret clearance, but I ended up leaving In-Q-Tel before that was completed. I believe the poison darts come with the top secret welcome package.
Q: Have you ever considered hiring Linda Richman from Saturday Night Live's "Coffee Talk" as a celebrity spokesperson?
A: Amazingly, you're the first to suggest that.
Contact Peter Delevett at 408-271-3638. Follow him at Twitter.com/mercwiretap.
Current job: CEO, CoffeeTable
Previous jobs: Product manager at two startups after college, then launched early mobile products for Yahoo in Southeast Asia. Venture capitalist at RRE Ventures, In-Q-Tel, Storm Ventures and Maveron
Education: Bachelor's degree in computer science, Harvard University; MBA, Columbia University
Family: Married to Google executive Lydia Cheng Choi; twin 3-year-olds ("and a small village of grandparents helping to raise them")
FIVE THINGS TO KNOW ABOUT BEN CHOI
1. Pored over J.Crew catalogs while growing up. Later, took a brief leave of absence from his second startup to learn about the retail business by working the holiday shift at Banana Republic.
2. Proposed to his wife -- whom he's known since age 12 -- from a 20-foot video screen on the main drag of Singapore.
3. During his paternity leave, wrote an iPhone app to teach toddlers Chinese.
4. Serves on the board of the Chinese Culture Center in San Francisco's Chinatown (where he learned "a mean kung fu tiger claw" at age 10). Also has led relief missions in Bangladesh and Afghanistan.
5. His brother, Andy, co-founded mobile ad network Greystripe, which sold to ValueClick last year for $70 million. Ben Choi was a strategic adviser to the company.