Wolf&Grayson EditorialFor more than three decades, Rich McMahon has been at the intersection of retail and technology. From scaling Bed Bath & Beyond into a multi-brand, $12 billion powerhouse to advising early-stage technology companies through his firm, cda Ventures, McMahon has built a career on guiding transformation and creating measurable investor value.
“When I look at a retail technology venture, I always ask: does it solve a real pain point for a retailer and deliver measurable results?” McMahon says, reflecting an operator’s mindset shaped by decades of leading retail transformations. That experience has made him a trusted advisor for boards, executives, and investors, blending operational depth with a pragmatic view of what retailers truly need.
The Three Core Drivers of Investor Value
When McMahon evaluates retail technology ventures, he returns to three fundamentals: clarity, scalability, and execution discipline.
“The first is really kind of having a very clear problem to value proposition,” he explains. “You have to be able to connect between a real world problem that is facing the retailer and a solution that really is going to deliver a measurable and material impact.” Scalability is equally critical. As he points out, technology that only works in one environment will quickly run into limits. “What has the scalability that can scale not only as my business grows, but then what has the ability to scale as I think about strategic relationships, partnerships and adjacencies to the core business that I’m in?” he says.
The third factor is the team’s ability to execute. “Venture capitalists really invest in people,” McMahon notes. “There are a lot of great companies out there that have great ideas. They might even have great technology. But if they can’t execute, if they can’t understand how to deliver ROI quickly, it fades pretty quickly.”
Where Investors Should Place Their Bets
Retail technology is evolving rapidly, and McMahon is clear about the areas that hold the most promise. At the top of his list is artificial intelligence. But rather than being swept up by hype, he focuses on specific use cases. “AI solutions that address use case scenarios that address margin and efficiency, that to me is the number one area that I think is gaining the biggest traction now,” he says. Cost pressures and market volatility make automation, inventory optimization, and shrink reduction especially valuable to retailers.
He also highlights AI-driven personalization as a differentiator. Retailers that can tailor experiences through product recommendations, localized assortments, and contextualized customer interactions are more likely to earn loyalty and repeat business. The third major opportunity lies in frictionless commerce. From mobile ordering to checkout-free physical stores, removing barriers from the buying journey remains a high-value investment area. “You have to take the friction out of that experience,” McMahon stresses. “If you can create a really frictionless experience for checkout in a physical store, those are going to be significant wins.”
Aligning with Investor Expectations
Technology founders often fall in love with their own solutions. McMahon cautions that passion alone does not guarantee market traction. Instead, he encourages companies to start with their customers’ financial reality. “You really have to start with their P & L,” he advises. “What does my technology do to either help them reduce their costs, drive revenue, improve their loyalty with their customers? That’s critical.”
Another factor is speed to value. Lengthy pilots without clear metrics can drain resources and jeopardize investor confidence. “Proof of concept pilots are almost a kiss of death, unless they’re very clearly defined with a timetable, results, and next steps,” McMahon says. Finally, he underscores the importance of building stickiness into solutions. “If you’re just a simple point solution, it’s too easy to get knocked out,” he explains. The more deeply a product is embedded into a retailer’s operations, the harder it is to replace, making it more defensible from both a customer and investor perspective.
Shifting Toward Profitable Growth
McMahon observes that investors are increasingly prioritizing profitable growth over unchecked expansion. “This isn’t a bottomless pit for investments,” he says. “You have to understand what the value is, and then there has to be a pathway towards profitable growth.” Defensibility is also top of mind. Whether through proprietary data, unique AI capabilities, or integration within retail ecosystems, companies need to establish a moat that prevents competitors from easily replicating their success. For McMahon, the future of retail technology investment will belong to companies that can clearly demonstrate customer impact, scale effectively, and build defensible positions within the broader ecosystem.
To connect with Rich McMahon, visit his LinkedIn or visit this website.
