Lindon Gao of Caper: “Remove any friction in the purchase”

Continue to automate because that’s an inevitable future trend — in light of COVID, the cashier-less checkout trend will continue, and the demand from customers for a safer shopping experience will become table stakes for doing business in retail. As part of my series about the “How To Create A Fantastic Retail Experience That Keeps Bringing Customers Back […]

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Continue to automate because that’s an inevitable future trend — in light of COVID, the cashier-less checkout trend will continue, and the demand from customers for a safer shopping experience will become table stakes for doing business in retail.

As part of my series about the “How To Create A Fantastic Retail Experience That Keeps Bringing Customers Back For More”, I had the pleasure of interviewing Lindon Gao, Founder and CEO of Caper, a New York based retail technology company and creators of the world’s first AI-powered smart grocery cart. Prior to launching Caper, Lindon worked as an investment banker for Goldman Sachs and JP Morgan. Lindon holds a bachelor’s degree from New York University Stern School of Business. In 2020, he was recognized as one of “Forbes 30 under 30”.

Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?

My dad was an immigrant to the states, and I immigrated to the U.S. when I was 11 after my dad got his citizenship. My parents were always at work in a restaurant when I was growing up, so I was relatively independent. When I was 14, I started my first company in the gaming commerce space and sold it two years later. When I was 19, I started my second company, LPG Crafts, a supply chain management business for jewelry, and a multi-million dollar business.

After I graduated from NYU Stern undergrad, I joined Goldman Sachs. I worked in investment banking for 2.5 years before realizing that entrepreneurship was a better fit for me as a career path. So I left banking and started Caper because I feel that physical retail is severely under innovated, and many tasks, such as checkout, can be automated better with technology.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘takeaways’ you learned from that?

When we couldn’t raise money in the early stages of Caper, all of the cofounders and early employees were working and living out of the same house. We saved every penny so that we could stretch our runway of initial funding from YCombinator. One day, I was in a grocery store, and I splurged and bought a few orange juice boxes. My cofounder got mad at me and told me that we don’t have the luxury to drink O.J.; we should stick to water.

Lesson learned: save every penny because the company almost died twice along the way. Every penny counted.

None of us can achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?

Max Mullen, the cofounder of Instacart. When we first started fundraising, not too many people were willing to invest in us. But Max, who is in the same grocery space as us, saw the potential to innovate physical retail and took a chance on us. He subsequently introduced us to First Round Capital, and that’s how we ended up raising our first institutional check.

Is there a particular book, podcast, or film that made a significant impact on you? Can you share a story or explain why it resonated with you so much?

Meditations by Marcus Aurelius. This book is one of the critical books that conventionalized the philosophy of Stoicism in our modern world. Meditations was an aggregation of notes that the Roman Emperor, Marcus Aurelius, wrote for himself on his Stoic ideas and beliefs.

The book transformed my life because I read it during my entrepreneurial journey. At the time, we had gone on for almost two years without being paid, nobody wanted to fund us, and we were questioning whether we were doing the right things. The book helped me accept the difficulties as a part of the process because “you can’t change the world, you can only change your perception of the world.” It also gave me the strength to keep going because I was in control of our fate.

What do you think makes your company stand out? Can you share a story?

When we first launched, we thought our target demographic customers would be soccer moms. But one day, when I went to the store, I saw a 79-year-old grandma using our smart shopping cart. I spoke to her, and she raved about the product and told me that she’s one of our most loyal customers. It speaks to the simplicity and the seamlessness of the product that we were able to build.

Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?

My opinion here is quite contrarian — I don’t think taking more vacations and breaks is the solution because I get anxious while on vacation. I highly recommend living an extremely disciplined lifestyle because it reduces the amount of thinking you need to maintain a healthy lifestyle. So I’d wake up at 5 am, go to sleep by 10 pm, and have focus days (when I don’t take meetings) and manager days (when the entire day is meetings).

Ok super. Now let’s jump to the central questions of our interview. The so-called “Retail Apocalypse” has been going on for about a decade. The Pandemic only made things much worse for retailers in general. While many retailers are struggling, some retailers, like Lululemon, Kroger, and Costco are quite profitable. Can you share a few lessons that other retailers can learn from the success of profitable retailers?

1) Understand what customers want because their wants/needs have shifted. Traditionally, people used to go to stores because they have to. But now, e-commerce is doing a better job of fulfilling this necessity out of their homes. So instead, physical retailers should understand why are people still going to stores? And some simple answers are 1) they want to touch and feel their products; 2) shopping is usually an activity/experience that people do together as families and friends; 3) it fulfills their instant gratification/needs. If retailers prioritize improving the in-store experience and bring more delight into shopping, they’ll be here to stay.

2) People want a more digitized experience. Physical store innovations have stayed stagnant while eCommerce has continued to evolve. If physical stores cannot offer more tailored experiences, such as 1) personalized recommendations; 2) loyalty rewards, 3) store inventory search, etc., then they cannot keep up to customer’s expectations of a good shopping experience and would continue to lose customers to eCommerce.

3) Remove any friction in the purchase. Checkout is a big pain point — people want to get in and get out, especially now during the Pandemic. Retailers need to adopt technology to simplify and speed up the checkout process.

Amazon is going to exert pressure on all of retail for the foreseeable future. New Direct-To-Consumer companies based in China are emerging that offer prices that are much cheaper than U.S. and European brands. What would you advise retail companies and eCommerce companies, for them to be successful in the face of such strong competition?

  1. Reduce in-store operations and costs through automation. Increase labor efficiencies to help bring down the price of goods to stay competitive.
  2. Use local stores as a distribution node for eCommerce fulfillment. Instead of shipping from one main warehouse, have eCommerce products delivered and/or available for pickup at local stores. Keep an inventory on hand for quick fulfillment.
  3. Improve customer experience — appeal to customers and give them a reason to come to the stores. Offer a digital experience in-store similar to online shopping, so every touchpoint with the customer is a cohesive experience. Make it as frictionless to shop at the store as it is from your couch.

What are the most common mistakes you have seen CEOs & founders make when they start a retail business? What can be done to avoid those errors?

– Don’t talk to customers enough; they assume what shoppers want.

– Don’t think far enough into future competitiveness. For example, building an omnichannel business is critically important for retailers of this decade.

– Automation is an inevitable future trend of the world; embrace this earlier on so you don’t need to go through another infrastructure transformation in the distant future.

– Hyper-personalization is the key for future successful businesses.

This might be intuitive, but I think it’s helpful to specifically articulate it. In your words, can you share a few reasons why great customer service and a great customer experience is essential for success in business in general and for retail in particular?

There is no consumer loyalty in retail; we are bombarded with many options daily. At Caper, we believe that delivering excellent customer service is the most essential aspect of running a successful business. The former CEO of Zappos, Tony Hsieh, built a company culture on “delivering happiness,” and we have a similar belief here at Caper that we want to “make shopping magic.” The ONLY way to stand out is to be attentive to each and EVERY customer. People want to feel special, and if you can provide a uniquely memorable experience for every customer, they’ll always come back.

We have all had times either in a store, or online, when we’ve had a very poor experience as a customer or user. If the importance of a good customer experience is so intuitive, and apparent, where is the disconnect? How is it that so many companies do not make this a priority?

Companies don’t attend to EACH customer. They often pay the most attention to their highest-value customers or highest value demographic of customers, because that generates immediate ROI. But that also means that a significant portion of lower-revenue generating customers get ignored and don’t come back. Companies need to cultivate high value and lower value customers and think through how to convert low-value customers to higher values instead of abandoning them.

Can you share with us a story from your experience about a customer who was “Wowed” by the experience you provided?

Grandma’s experience that I mentioned above.

Did that Wow! experience have any long term ripple effects? Can you share the story?

The interaction with the grandmother using our cart opened our eyes to the implications of the pervasive demographics that we can reach with our technology.

A fantastic retail experience isn’t just one specific thing. It can be a composite of many different subtle elements fused together. Can you help us break down and identify the different ingredients that come together to create a “fantastic retail experience”?

– Remove friction for customers. Simplify checkout and enhance the shopping experience.

– Automate store back end and front end operations to cut overhead costs.

– Create personalized experiences tailored to the shopper (like Netflix customizes homepage). Offer unique recommendations, coupons, deals for each customer.

– Provide suggestions to upsell and increase basket size and introduce customers to new products.

– Evoke delight with every interaction with customers in-store or online.

Ok super. Here is the main question of our interview. Based on your experience and success, what are the five most important things one should know in order to create a fantastic retail experience that keeps bringing customers back for more? Please share a story or an example for each.

– Continue to automate because that’s an inevitable future trend — in light of COVID, the cashier-less checkout trend will continue, and the demand from customers for a safer shopping experience will become table stakes for doing business in retail.

– Use A.I. to understand shoppers — for example, leverage consumer in-store location data to give them recommendations based on where they are in the store and make suggestions on other items to add to their basket.

– Use A.I. to deliver personalized content in physical stores — for example, if the customer has put eggs in their basket, recommend a recipe for eggs or other items that go well with eggs. Figure out a way to upsell, which in turn delivers a great experience while delivering a better bottom line for your store.

– Similar to what I mentioned with building a cohesive experience in-store and online. Attend to every detail of a customer’s journey, make them feel special by understanding their likes based on past purchases, and offer suggestions that will delight them. Make them feel like every shopping journey is unique and personalized.

– Create an omnichannel presence so you can create opportunities to interact w/ customers — for example, if something is out of stock in-store, the customer can order it at the store and have it delivered to their homes. Leverage in-store and online data interchangeably so you have a full understanding of each customer and make relevant purchasing recommendations.

Thank you for all of that. We are nearly done. Here is our final ‘meaty’ question. You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

– An AI-powered consumption lifestyle, where A.I. would dictate everything you eat based on its knowledge of you. A product or service would tailor the healthiest options for you while satiating your cravings. The reason I suggest this is because dietary preferences are just another algorithm. If we understand it, we can optimize it and help everyone achieve a healthier lifestyle that would reduce obesity and healthcare costs in the U.S.

How can our readers further follow your work?

Linkedin and Caper Blog

This was very inspiring. Thank you so much for the time you spent with this!

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