With its self-scanning solution, the Munich-based startup Scansation supports brick-and-mortar retailers in their digital transformation. In November 2019, they pitched to potential investors on the VOX show "Die Höhle der Löwen" (The Lion's Den)—but were unsuccessful. In this interview, the founders talk about the beginnings of their startup, their TV appearance, and their plans for the future.
With the smartphone app Scansation, the company of the same name Munich startup has developed a digital shopping companion for consumers. With functions ranging from creating shopping lists to offer notifications and personalized coupons to feedback for retailers, the solution covers the entire customer journey. The core, however, is self-scanning, which allows users to scan their own items. Then, at the supermarket checkout, they simply scan a code generated by the app instead of placing the entire item on the conveyor belt. This speeds up the checkout process for customers and cashiers and simultaneously provides participating stores with important information about their customers' purchasing behavior—anonymously, of course. Scansation was founded by the two business mathematicians Andreas Klett and Leo von Klenze in 2016.
Munich Startup: How did you come to found your startup?
Scanning: Andreas had been interested in startups since his studies, but his projects at that time had never been pursued full steam ahead. At the end of 2013, he finally made his final attempt and searched among his friends for people interested in startups. Ten of us then drove up to the mountains in Reit im Winkl, rented a cabin there, and had a private startup weekend. There, we explored the possibilities, who had which ideas, and which ones we really wanted to try.
The beginnings of Scansation
Munich Startup: Ten friends in a cabin for a weekend sounds more like partying than work.
Scanning: That was Andreas's fear too, but it was totally productive, super professional, from start to finish. The weekend basically went like this: The participants had said in advance that everyone should bring their ideas and prepare a mini-pitch. So we collected over 80 ideas and created a longlist of 15. We then evaluated them, looking at the competitive situation, whether it already existed on the market, and how it could be monetized. Finally, we shortlisted five ideas. Back in Munich, we further evaluated this shortlist in detail. Three or four weeks later, the decision was made to start with the self-scanning topic. Interestingly, this was actually an idea that Andreas had brought to the weekend.
Munich Startup: What happened next? You didn't become a 10-person founding team.
Scanning: As is often the case, one person or another drops out while working, and the group becomes less and less active. We were all still working at the time, and that naturally took priority. In our free time, we looked at how we could implement our idea from an IT perspective, how to build an app, integrate a cash register, and so on. Leo wasn't involved in the whole thing, by the way. I had asked him if he wanted to come to the cabin with me, but he was too busy with the company at the time, and it was too much for him to do it on the side. But once it was clear what we were doing and what the technical problems were, I was able to entice him with the challenge. He found the whole thing exciting and joined us. At the beginning of 2016, we reached a point where we, as technicians, had lived up to our potential.
From leisure project to business
Munich Startup: That took quite a long time.
Scansation: As I said, up until then, Scansation was a hobby project. We never wanted to let our work suffer; it was always our priority. It wasn't until we started marketing and needed regular working hours to be able to properly talk to customers that we had to make a decision. Either let the project die or quit and turn it into a real business. The GmbH has existed since July 2016, and since October 2016, we've both been doing it full-time.
Munich Startup: In 2017, you found your first partner, the Edeka Isargärten supermarket in Munich. What were your lessons learned from your first practical experience?
Scanning: Unfortunately, in this store, we relied on a mix of placing customers who had scanned themselves in the same queue as regular shoppers. This isn't the optimal solution, as customers don't see their own advantages. Objectively, they're still there, but subjectively, they're no longer perceived because they have to stand behind regular shoppers. We recommend that new partners open a separate checkout just for scansation customers or use a terminal.
Scansation at the Lions
Munich Startup: With your solution and first partners you will be in November 2019 “Lion’s Den” went, but you didn't get an investment. How did you experience the show?
Scanning: We were there for just over an hour, of which a net 20 minutes were shown, including preliminary banter and follow-up discussion. The lions only showed maybe a quarter of an hour of the segment, so there was obviously a lot missing. I think they conveyed the general mood well. The lions ask very specific questions, but they don't always wait for answers. Especially with each other, so when one person asks a question and starts to answer, the next one immediately follows up. And then they don't go into it any further later. In principle, I think we should have moderated it a bit more.
Munich Startup: In contrast to normal pitches, the “Lion’s Den” also has an entertaining aspect.
Scanning: And you have to keep that in mind. We did get a few comments from the Lions, and that's good, because it ensured that we were broadcast at all. There's a certain amount of overproduction, so not everything that's filmed actually gets broadcast. We managed that, and at least we got this platform and achieved this level of recognition—unfortunately, it wasn't enough for a deal. But on the other hand, of course, these are comments that would simply never come up in a normal investor meeting.
The weeks after
Munich Startup: So how were the weeks after the broadcast for you, without the deal you were hoping for?
Scanning: We received an enormous number of emails in which people simply told us that the Lions were wrong and that we should please continue. A lot of market suggestions came through our website, and there was also a lot of positive feedback on Facebook. We also received contact from people who wanted to work with us on IT projects, or from sales professionals who wanted to do something with us. I think we responded to everyone; we really put in the effort and took the time. We're still in discussions with some potential partners in various fields.
Munich Startup: Were you disappointed by the Lions' verdict?
Scanning: We knew from the start that with our numbers it would be difficult to get an investor. But nothing ventured, nothing gained. We might have had better luck with a different lion. But even though we left the show without a deal, the appearance wasn't in vain: Almost three million viewers saw us, plus the coverage with various interviews we gave, the follow-up coverage, and all the blogs dealing with it. An investor would have been the icing on the cake. But we're not naive; we know ourselves that with two markets in three years, it's going to be hard to lure a lion out from behind the couch.
Munich Startup: And how did this affect your strategic plan for the company? You wanted to gain not only the money, but also the know-how of the lions to strengthen your sales.
Scanning: In principle, we're now there thanks to the partnerships mentioned. We have a few meetings with retailers where these potential distribution partners will be coming along. We'll see how it all works together and how we can monetize it appropriately for both sides.
Self-scanning in times of the Corona crisis
Munich Startup: You recently grouped the tools you offer retailers under the name 'Retail Suite'. Is this rebranding a lesson you learned after the Lion's Den, or was it already an issue before?
Scanning: We were always aware that we needed a collective term for the various tools we now offer. And self-scanning only creates a small amount of value for the retailer themselves. Ultimately, what is valuable to them is the data they can work with. And here it's always about finding a really good compromise on how to use it as anonymously as possible so that user data is really protected. And in this area we asked ourselves how we could present the whole thing in such a way that it becomes clear that retailers can really do better marketing with it - because that is what we ultimately offer. And we knew before the cave that we had to do it, but we only actually did it afterwards.
Munich Startup: How are you experiencing the Corona crisis?
Scansation: Of course, we follow the news in our private lives and try to follow the recommendations as much as possible. But for Scansation, the crisis does indeed present opportunities – our solution is contactless: Consumers scan the products themselves, so they don't have to pass through the hands of staff at the checkout or be placed on the checkout belt, which is already full of all the other items from a variety of customers. We essentially provide a "touchless checkout process." To be honest, we ourselves had neglected this hygiene aspect before the coronavirus pandemic, but it will likely remain an important aspect in brick-and-mortar retail even after the pandemic. We are happy to support retailers – even in the short term – and thus contribute to the protection of their employees and customers.
Munich Startup: Finally, a final question: Do you have any advice for future founders? What should they absolutely pay attention to?
Scansation: We've learned that it's often the little things that cause the most headaches. For example, Pantone colors in logos. Yes, it may look nice, but without them, you'll save yourself so much trouble when producing roll-ups, flyers, goodies, and so on.
