Amazon's $13.4 billion acquisition of Whole Foods in June took America's $600 billion retail grocery industry by surprise. Overnight, Amazon went from being a pure play online retailer, to owning one of the biggest chains of physical stores in the country.

But well before Amazon's move into the brick-and-mortar world of grocery shopping, Rosie, a fast-growing startup based in Ithaca, New York, has been quietly but successfully building an online platform that is helping America's smaller regional grocery store chains reach more customers through ecommerce.

Co-founded in 2012 by CEO Nick Nickitas, a former Wall Street executive with an MBA from Cornell, Rosie is backed by investors like NXT Ventures of Boston. Nick and his co-founders are launching their second round of venture financing to help them scale up from the 27 employees they have today.

I recently spoke with Nick about his ambitious plans for building Rosie into a billion-dollar company, and how he is building a company culture that inspires employees to focus on their customers. The following are edited excerpts from our conversation:

How did you get the idea for Rosie?

Nick Nickitas: I started my career in financial services in Manhattan. Living in major cities, I experienced the conveniences of modern life like ordering online and having products delivered to my home from my favorite stores. When I was in New York City, we used Fresh Direct all the time. We ordered online and they delivered groceries right to our door.

But when I moved to Ithaca to pursue my MBA at Cornell, these were not available anymore. I thought, why are these great services available in major cities but not available in every small town across the US?

I thought, how could we make that available to any local retailer? So we started by asking grocery stores, "If we put this together would you use it?" Grocery stores were very passionate about the idea. They were trying to transform to be more innovative, but they didn't have the technology, resources, and expertise to do it.

We found not all customers are well-served by the existing store format. If they're time starved, mobility impaired, if they're a young family, or if it's difficult to go to stores, they'll want to go with a more convenient option and order online.

There was this tension in the market between stores that wanted to offer the service and customers that wanted to take advantage of it, but couldn't. Rosie came in to provide a service that would allow local stores to become a mini Amazon.com distribution hub for their community.

The grocery store of the future will be physical and digital. Amazon's purchase of Whole Foods shows that it's not enough to be just digital; you must have a footprint close to the customer. And these retailers have a footprint that is very very close to the customer.

We give stores the tools that enable them to offer shoppers a blend of online and in-store experience.

What exactly does Rosie do?

Nick Nickitas: Rosie provides four things to leading local retailers. The first is ecommerce: the ability for customers to place orders online with their favorite local stores. Each order is picked and prepared by trained personal shopping professionals. Service is backed 100% by the store.

The second thing we provide are delivery logistics, address validation, and route optimization. We provide best practices, storage materials and delivery materials, and everything the store needs to bring products to the customer's door. Delivery is done by store employees or outsourced to a third-party, depending on the community.

The third thing we offer is omni-channel marketing support. These stores are transitioning to offer digital grocery shopping, so they need to attract digital customers but they can't do that through traditional marketing like print, TV, or radio.

They need to start doing digital display, automated marketing, and SEO. Rosie makes it very easy to take advantage of best practices in digital marketing so they can find new customers and grow market share.

The last and perhaps most important thing Rosie offers is data analytics. Rosie collects consumer data and makes that data available to the stores through dashboards and reports so they can make better decisions for their in-store and online business.

How do you manage your company?

Nick Nickitas: Almost every discussion we have with investors revolves around what we call the "4 Ts": thesis, traction, technology, and team.

1. Thesis.

The thesis is this: there's a problem we've identified which is that local retailers want to compete in the digital age but lack the technology, resources, and expertise to do so. The solution? Rosie, with the four modules we've created: ecommerce, delivery logistics, omni-channel marketing, and data analytics.

The size of the problem makes it so attractive to solve. We're starting with the first vertical: grocery. There are over 36,000 grocery stores in the US doing $600 billion in revenue. 15,000 of those stores do $135 billion sales. Independent grocers are locally-owned and operated stores that have anywhere from five locations up to 100, and are doing $5 million to $1 billion in annual sales.

2. Traction.

Currently Rosie is working with over 100 retailers representing 300-plus locations in 23 states. We're national, and we're working in all sizes of markets: rural, suburban, urban. We're serving customers young and old, Millennials and baby boomers, all the way up to people in their eighties. It's truly a nationwide community of people supporting local businesses by engaging with them through technology.

Rosie has signed an exclusive or preferred deal with seven out of the top 20 wholesalers, including the number one wholesaler, C&S, which represents 3,000-plus stores and $27 billion in sales. The company is larger than Nike.

3. Technology.

Rosie is well past its minimum viable product (MVP) state. It's deployed in production at one-store retailers to retailers that have hundreds of locations. We built it all in-house: our core website, iOS and Android apps for shoppers, mobile responsive retailer app for stores, and a data analytics platform that provides insights to retailers that enable them to better serve their customers.

We get our clients very engaged in the product development process. It's not just something Rosie is cooking up and serving to the client. They are participating in roadmap discussions, and giving us ideas and feedback on how to improve and make the solution better.

4. Team.

We have three co-founders, including myself. The other co-founder, Jon Ambrose, comes from a consulting and consumer packaged goods background. The third co-founder is Michael Ryzewic. He's the technical cofounder. He's astrophysicist from Columbia.

When you're a founder you're actually building three companies. First, you're building a company for the employees. You're putting their professional development in your hands. What are the opportunities that we're creating for our team members? Our team is now up to 27 full-time people, and we're hiring across the board in all functions.

Second, you're creating a company for your clients, one that will serve their needs continuously and treat them the way they want to be treated. To give them that Waldorf Astoria or Zappos level of support experience where you respond any time of the day.

Finally, you're finding the right investors who can contribute to the value you're creating for clients and employees. It's very difficult; to get that type of alignment you've got to find someone who's the right fit for the client, employees, and the founding team, and you can't compromise on it.

How would you describe your company culture?

Nick Nickitas: One of the things that is really important to us is something Peter Drucker once said: "culture eats strategy for breakfast." We took that to heart.

We've codified our culture into three main values. The first is intellectual curiosity. We very purposely recruit people who have a deep intellectual curiosity for how things work, and who are constantly looking to understand what makes something work or make something great.

The second value is that nothing is sacred. Great companies can't be run with dogma. They have to be a marketplace for great ideas, whether someone's just been in the company for a day or for years. Whether someone's just started their career, or they're a seasoned professional: everyone has something to contribute.

The final core value is that enthusiasm makes ordinary people extraordinary. People really want to work with individuals that are passionate about what they do. This can't be faked. It's the thing that demonstrates to customers and partners that you will go the extra mile.

(Note: Rosie is not a client of mine, nor do I have any other business dealings with the company.)

Published on: Aug 18, 2017