How disruptive innovation gave Scandit its superpowers
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Currently serving more than 1,700 customers globally, some of the verticals where Scandit’s technology is used range from retail, manufacturing, and logistics to transportation and healthcare.
Having announced a Series D funding round at a $1b valuation in February 2022 – subsequently becoming the latest European unicorn – we sat down to talk to Christian Floerkemeier, CTO and co-founder of Scandit. Christian explained Scandit's origin story, how they followed a disruptive innovation strategy to scale their company, and his views on retaining talent in a competitive market.
Tell us a bit about yourself and how you met your co-founders?
You could say the origins of Scandit can be traced back to my Ph.D. time in Zurich. Within the first week of my Ph.D., I was offered to take part in a research collaboration between Walmart and MIT around automatic identification and working on the next-generation barcode at the time.
After finishing my studies, I was then offered a job as Associate Director at a lab in MIT, and it was around this time that I met my other co-founders: Samuel Mueller and Christof Roduner.
What was the original inspiration behind Scandit? What pain points were you trying to solve?
As a company, we are driven by how we can make the lives of the consumer and worker easier.
There are a lot of tedious tasks out there that technology doesn’t solve in a good way. With our solution, instead of the user manually aiming at individual packages and scanning one by one, they hold up their phone and our solution looks for all the backward labels and superimposes information on them. We call this ‘giving superpowers’ to the workers and consumers.
We effectively extend the Internet of Things (IoT) paradigm to everyday objects by developing a highly specialized computer vision platform for camera-equipped smart devices. Leveraging the technical advances of smartphone cameras with their ability to connect to familiar objects by reading a barcode, text, ID or the object itself.
I got into the concept of barcode scanning through the Ph.D. research but then realized what we were looking into was not easily applicable. We needed special devices to read them. Then, when the first smartphones came into the market, we tried using them to scan barcodes, but that did not work either – although it was an interesting idea.
At the same time, I was getting tired of doing research and publishing in academic publications, reaching the point that I wanted to build something that created real-world value. In some way, I think Christof and Samuel felt the same, and that is how Scandit was born.
You’re three co-founders – how did you decide who owns what? What did the decision process look like?
While we all have a computer science Ph.D., we leaned into our different interests. I always joke that all the people that report to me now – at some point, I did their job. I consider that as a useful learning experience because we learned a lot in the early days to understand what it takes to do these jobs.
Samuel, our CEO, has a degree in finance, therefore, he looked after the marketing and sales function. While Christof, who has many talents, in addition to doing all the cloud work, wore our COO hat. I’m CTO and VP of Product today, but in the early days, I did all the work on the product side, the algorithmic work, the computer vision work. From a leadership and management perspective, this helped us build our team.
What was the cornerstone moment you realized that you were onto something big?
I don’t think there was this 'one moment’. We bootstrapped the company at first, only raising three and a half years into it in 2013. Those were rough times…with a lot of sacrifices! So, you could say the first moment was when we raised our first round.
However, most of our breakout moments are due to our strategy. We executed on the concept of disruptive innovation in which, as the new entrants, we targeted a market that the established incumbents did not want to address.
We recognized that consumers would never buy purpose-built scanners to look up product information, scan loyalty points, or do self-checkouts, so we started working with other start-ups with mobile apps and provided them with our barcode scanning tech.
Then, the retailers adopted our solution via the start-ups we were working with, and when the gig economy emerged, it opened a whole new market for us in the last mile.
The final cornerstone moment was when large brands started using Scandit in key retail processes such as their mobile point-of-sale systems. Anecdotally, this was a personal highlight for me as we had spent years hearing incumbents say to us ‘it won’t work’.
What was the main growth driver(s) that led to your new unicorn status?
At the end of the day, our customers are happy with our products. We provide outstanding enterprise support and performance. I think that is a key element - our technology just works. On the commercial side, we have an outstanding engineering team and have built our sales engine well.
…And were there any external factors that propelled your growth?
With Covid, more businesses realized digital transformation was crucial. However, they had to view it beyond giving digital tools to the 20% of employees sitting in offices.
True digital transformation means giving the right tools to the 80% of employees and workers who previously shared one scanner or one PC to access product information about supply chain, prices, or promotions.
Can you recall a challenge in your founder journey and what key lessons you learned from that experience?
Having good people helps. That is one thing we’ve seen over the years.
I can see several examples where we struggled because we didn’t have the right person and then we would bring someone who knew what they were doing, and it would change everything.
At the same time, this meant as founders we needed to accept that for the right talent, we had to invest and build good culture around them.
Talking about talent, at a time when talent acquisition and retention are top of mind for all companies, how do you attract and retain top talent to Scandit’s mission?
Talent acquisition is difficult if you don’t have the right foundation. For us, we’ve worked on our culture and values from the start and that has helped us in attracting people who share the same values as us.
That said, where we have been fortunate is on the product engineering side whereby several of the people who joined us at the start are still with us holding leadership roles today.
You have an office in Tampere, Finland, tell us more about that?
The Tampere office is a huge success for us. The opportunity was introduced to us by NGP Capital who connected us to a former Intel engineering team looking for a new opportunity.
So, we brought this experienced engineering team on board with 5 or 6 people first in 2019, and now it’s 20+ strong. If you had asked me at the beginning when we opened this office, I would not have predicted its success.
How do you see the company evolving in the next 5-10 years – any big plans on the horizon?
We have focused on building smart data capture technology, so the plan is to build on that further by offering more end-to-end value. For example, we have recently launched a product called ShelfView that digitalizes retail shelves.
One anchor in the next decade is to build more integrated solutions. While our focus has been on mobile devices, we have moved to autonomous solutions by providing computer vision solutions for robots, drones, wearables. To an extent, we have already started this work: we power the largest retail robotics deployment in the world.
We always look at how to solve common business problems with a top-performing computer vision solution, and that’s what we will continue doing in the coming years.