Every step you take: Euclid helps merchants follow your moves

Euclid Elements today is unveiling a product that lets storeowners know exactly how many people walk into--or even pass by--their shops on the sidewalk or in the parking lot.

The company, based in Palo Alto, Calif., also snagged $5.8 million in first-round of venture funding.

The idea, in short, is to give merchants the sort of visibility into customer behavior that's long been available for websites owners: How many people come in your store? How long do they stay? How many came by but didn't enter?

Call it innovative. Call it powerful. Just don't call it spying.

"I don't like that word at all," says founder and CEO Will Smith, who is understandably worried about potential consumer backlash and stresses that consumers can opt on Euclid's website. "I have no idea what anyone's doing. I have zero insight and zero interest into the individual."

What makes this possible is the ubiquity of smart phones. Euclid outfits a shop with a sensor--it looks like a tiny router that Apple would make--that picks up the signal of any smart phone within 60 yards. So long as your phone is Wi-Fi enabled--and whose isn't?--the sensor knows you're there.

The device takes the signal, scrambles it and shoots it to Euclid's servers, where the information is sliced and arranged so it's useful. The storeowner, who pays $200 a month for the service, can see the data trends on a simple dashboard accessed on a website. What the storeowner cannot see is any information about a specific customer.

Now that I'm not calling it spying, I'll let its first customer call it something else.

"This is the s**t!" says Jacob Jaber, president of Philz Coffee, a popular chain of small coffee houses in San Francisco and the surrounding area.

Philz is the preferred brew of many techies ("We're fueling the tech economy," says Jaber), so it's only fitting that it became Euclid's launch partner. Euclid installed sensors in all 12 Philz stores. After eight years in business, Jaber is learning things he never imagined. He knows, for instance, that customers on average spend 43 minutes in his store in Berkeley, yet only 15 minutes at the one in the SOMA neighborhood of San Francisco, something known as dwell time.

Armed with such data, Jaber says he can consider changes. Maybe he should pull a sofa from the San Francisco shop to make more room for customers in line. In Berkeley, he could add more food since people are lingering. He can even figure out the menu items since he knows what time of day people hang out the longest.

"This is knowledge that's important to understand," says Jaber, whose father, Phil, started the business with a single shop. Even more intriguing, he says, is the opportunity for "window conversion"--finding ways to lure passerby into the store.

It's easy to see how stores could do the equivalent of A/B testing. A clothing store might, for instance, switch its window display after discovering that only a tiny fraction of the people who walk by come in--just as e-commerce stores experiment with colors on the home page and track which ones do better.

In fact, Smith's pitch is that Euclid is the "Google Analytics for the physical world." The comparison comes with some strong cred: The company's COO, Scott Crosby, was a co-founder of Urchin, the company that Google bought and turned into Google Analytics, the tool many websites use to track traffic and user behavior.

But even more fitting is Smith's background. Smith, who is 27, grew up in Atlanta. His grandfather, John Smith, was a shopping center developer and a founder of the International Council of Shopping Centers.

The younger Smith grew up learning about things like tenant mix optimization. He also saw first hand the rudimentary ways his grandfather would figure out how long visitors were staying at his shopping centers. The two Smiths used to walk around parking lots feeling the hoods of cars. If many were still warm from the running engine, that meant people weren't staying long enough and likely only visiting one or two shops. That alone might lead to the decision to add a restaurant.

"He did it with no data," says Smith. "It was a lot of observation and gut."

The younger Smith is a data guy. He graduated from Stanford University in 2007 with a degree in economics and international relations, and then went into finance, where he was steeped in data and bored out of his mind. As he was mulling his next move, he often thought about the problems his grandfather faced.

A company called Shoppertrak, which has been around 18 years, measures and analyzes traffic inside stores using video cameras. And retailers began nearly a decade ago putting RFID tags on shopping carts and elsewhere to understand their stores.

But Smith believed there was an opportunity for something more sophisticated. He launched Euclid almost two years ago, raising $500,000. He just closed his first big venture round, the $5.8 million, which was led by New Enterprise Associates with Triple Point Capital and Harrison Metal, which also provided the seed funding.

The business now has 15 employees, and Smith just hired Euclid's first sales person. His aim of building out the team and land clients of all he sizes, from one the local bakery to the big, national chains.

"There's a real company here," says Smith, whose grandfather died just after he launched the startup. "I want to build something real."