He’s worked in finance on Wall Street, as a software analyst at PricewaterhouseCoopers, and as founder of a dotcom funded in 1999 with $10 million. But Jason Richelson attributes his success today at the helm of a 10,000-customer, 100-employee software company to his experience running a wine shop in Brooklyn.

Richelson is co-founder and CEO of ShopKeep, a provider of cloud-based iPad point-of-sale and small business management software. He developed the product in 2008 in the back room of his store, the Greene Grape, to resolve his frustration with a Microsoft Windows point-of-sale system that he says contracted viruses and crashed often.

When most retail shop managers go in search of a POS system, they consider two choices, he explains: Buy a cash register for $300 and a credit card terminal for $200, or invest in a Microsoft or QuickBooks system for upwards of $5,000. ShopKeep users instead invest $1,200 for an iPad, stand, swiper, and software, and pay $50 a month to subscribe to ShopKeep’s data analytics and on-call customer service.

Richelson says his system reduces the hazards of accepting cash and credit cards on old-school registers that lack any customer tracking mechanism. And it eliminates the virus and crash issues that come with other operating systems. But more importantly, he says, ShopKeep adds value by accumulating a retailer’s data on the cloud and returning useful analysis via the ShopKeep dashboard on a smartphone or web browser.

He sees his business as being at the leading edge of a sea change in how the retail and restaurant industries transact. To be sure, ShopKeep is much more than an iPad cash register: “We’re about helping our customers run a better business—our software helps them manage inventory and employees, track customers, do e-mail marketing, and integrate with their accounting software,” he says. “And the power of cloud-based analytics gives them data to make smarter decisions.”

For instance, he says, “Say your wine store just got in a great Cabernet Sauvignon. ShopKeep can pull up the names and email address of every customer who has purchased a similar product and send them a heads up that the new wine is in stock.” Or, the tool can let a manager know how heavy sales are by the hour—crucial information for efficient staffing in restaurants and cafes.

The more data a business gathers, the more useful the analytics become, Richelson points out. And as new technology comes along, he says ShopKeep will change with the times. “When EMV chip and PIN comes to the U.S., we’ll enable it,” he says. “If a better way to do analytics comes along, we’ll employ that.”

Winning technology aside, Richelson says his company’s core values are what keep ShopKeep customers loyal. “Retail is a service business, and the best advice for any retailer is to make sure every customer has a great experience in your store. We treat our employees and customers the same way. We think of ourselves as a service business.”

In fact, Richelson says his management philosophy—some of which he shares in an online resource called Small Business 101—evolved from his retail experience. “Building a business is all about people, and about understanding how to make people happy and motivated,” he says. “The most important thing is to make sure our team is happy and loves to come to work every day. A lot of companies don’t think that way, and it took me a long time to learn that.” He gleaned many ideas, he says, from studying Warren Buffett and great companies such as In-N-Out Burger, Whole Foods, and Zingerman’s.

How does he keep employees motivated? “We have a big, open office environment, and I sit out on the floor with everyone else. It’s about them being able to talk to me and really understand our vision. It’s up to me to let employees know what a hard thing it is to open a retail business,” Richelson says. “When team members understand that ShopKeep exists to help small businesses and that customer care is super-important, they know it’s a worthy goal and then they’re really happy to come in.”

With revenues and customers tripling year-over-year since 2010, and a $25 million round of venture funding for a ShopKeep expansion raised just last week, the approach seems to be working.

Shopkeep, a New York-based startup that builds point-of-sale software for mobile devices, has raised $25 million in its third round of funding. The new capital thrusts the company to the forefront of a busy pack of upstarts looking to rethink the point-of-sale. It also sets the stage for a drawn-out fight between a handful of well-funded startups, the legacy point-of-sale providers who control much of the market, and a number of other tech giants looking in.

With the rapid growth of Shopkeep and competitors like Boston-based Leaf, which raised $20 million earlier this year, it’s clear that cloud computing is really making an impact on the business technology industry. By building software which runs remotely, rather than on a servers located in a store, these startups can dramatically reduce costs, opening up new markets and erasing much of the maintenance and service fees that drive a large portion of legacy firms’ revenue.

ShopKeep was founded in 2008 by Jason Richelson, who owned a independent grocery store and an accompanying wine shop in Brooklyn, serving the borough’s growing professional class. The store was a success, but the back office was a mess, he says, and he wanted to create a better way to manage the store’s inventory. So, in 2009, he left the grocery businesses, hired a developer and began to build his own POS system.

Fast forward three years, and the company’s software is now used by over 10,000 businesses across the U.S.. In January, the company rolled out a iPhone and iPod touch version of its application to help it serve food truck vendors and other more-mobile service providers, with whom Square has become synonymous.

To date, the company has focused on small, independent retailers with under $1 million in annual revenue — a market, which Richelsen says remains overlooked by some of the larger institutional players and underserved by existing resellers who peddle often outdated PC-based software.

“Shopkeep has built a big brand around customer service for smaller merchants, and that’s why we’ve been able to acquire these smaller business that (Micros and NCR) don’t want,” said Richelson.“[The small business market] has always been attacked by value-added resellers, but that’s really a broken model.”

The company plans to use the funding to expand its existing footprint internationally, and build out additional features unique to a cloud service. For instance, Richelsen says some of the capital will go toward building out an analytics products for merchants, which could algorithmically identify potential theft or missing inventory.

However, the company faces an increasingly crowded and complex competitive landscape, anchored by legacy point-of-sale companies such as Micros and NCR, which remain flush with cash and which are increasingly aware of the opportunity in these new markets, and the potential threat of the startups opening them. Both firms have invested heavily in cloud-based point-of-sale technology in an attempt to stem the tide of startups like Shopkeep and Square, and expand their products a previously unserved segment of very-small and mobile businesses.

“The difficulty cloud-based POS startups will have moving forward is that Micros and NCR have not been asleep at the wheel,” said Alan Hayman, a former Micros executive who now runs Hayman Consulting Group, about the shakeup in the industry. “Moving up market will be much harder for POS startups because operators are much more savvy, the competitors are extremely capable, and their solutions are very comprehensive”

What’s still unclear is whether these companies can fully themselves off of a business model, which traditionally relied on large upfront sales and large service and maintenance revenues. Cloud-based software reduces a lot of the hands-on service costs, removing potential complications with the hardware in-store and allowing the provider to maintain software remotely.

Meanwhile, another competitor, Square, faces challenges of its own. The mobile payments company, which has pressed its own software into more established retail environments, appears to be hemorrhaging cash and has shopped around for a potential buyer, according to a recent report by the Wall Street Journal. The article, which the company has denied, says the company recorded a loss of roughly $100 million dollars in 2013.

Square’s struggles appear to validate the decision by Shopkeep, and other tablet POS startups like Leaf, not to build a payment-processing business. The company works with a number of payment processors, and in doing so, has been able to not only avoid, but profit, on the price wars, which appear to be draining the capital of many in the industry.

Adding to the chaos, reports surfaced in January that Amazon planned to offer retailers a check-out system that uses the company’s Kindle tablets. The project remains in its early stages, but a potential entry of Amazon and Apple into mobile payments complicates what already is a confusing and fluid industry.

Square competitor ShopKeep POS has raised $25 million in new funding, led by Thayer Street Partners with participation from existing investors Canaan Partners, Tribeca Venture Partners, TTV Capital and Contour Venture Partners. It’s now raised a total of $37.2 million.

New York-based ShopKeep sells iPad point-of-sale and retail management software, but unlike Square, Shopify and other startups that are turning the tablet into register, ShopKeep isn’t processing payments. Instead it’s acting more like a traditional point-of-sale equipment vendor – just one that runs its services in the cloud. It’s selling small businesses the transaction tools to ring up sales, track inventory and manage staff. But it’s letting businesses pick their own financial partners to handle the actual card transactions, rather than stay locked down to another all-in-one provider’s set rates.

ShopKeep’s small business-facing iPad interface (Source: ShopKeep)

According to ShopKeep that model has proven popular to 10,000 businesses in the U.S. and Canada so far, tripling both its customer base and revenues between 2012 and 2013. It’s software is now managing $1.8 billion in transactions a year, the company said, compared to the $30 billion Square is processing annually.

Originally published on mashable.com. 

“I don’t have a credit card,” Jason Richelson’s roommate told him. “I can’t spend any money on this Internet thing.”

That thought helped pave the way for InternetCash, a financial technology company that offered prepaid cards for online shopping. InternetCash was a failure. The company launched in 1999, just before the Dot Com bubble burst. It hired too many people, purchased unnecessarily expensive software systems and invested “crazy amounts” in marketing that didn’t work.

“We made every mistake in the book,” Richelson, one of the company’s four co-founders, recalls. “InternetCash went out of business like everyone else back then.”

When Richelson decided to launch ShopKeep, another financial tech startup, nearly a decade later, he tried to apply many of the lessons he learned from the mistakes at InternetCash. Chief among those lessons: focus on growing “slowly and measured.”

Richelson started ShopKeep, a service that provides iPad point-of-sale systems to independent retailers and restaurants, in 2008 after struggling with the point-of-sale software available for the two wine shops and a grocery store in Brooklyn that he operated at the time. The startup was privately funded for the first two and a half years and was staffed with contractors. Then in late 2011, it pulled the trigger, raising outside funding for the first time and broadening its customer base.

On Thursday, ShopKeep announced that it raised a $25 million Series C round of funding. The round was led by Thayer Street Partners and brings the startup’s total funding to more than $37 million.

ShopKeep currently processes more than $1.8 billion in payments annually and is used by more than 10,000 businesses in the U.S. and Canada.

The goal, according to Richelson, is to use the latest round of funding to open up a new office on the West Coast, expand its presence in the U.S. this year through additional investments in marketing and its product teams, and later expand its operations in Europe.

Though the company is sometimes compared to Square, a mobile payments service, Richelson is quick to point out the difference.

“Square has done a really great job of making it easy to accept credit cards,” he says. “Our service is to support retailers and restaurants and help them run a better business.. Credit card processing is just one thing.”

With its latest $25 million financing, ShopKeep POS has come a long way from being the cobbled together point of sale software service for a single wine shop in Brooklyn’s leafy Ft. Greene neighborhood.

The company’s history began six years ago with Jason Richelson’s frustration over finding a good enough point of sales software to run his expanding empire of wine shops and high-end grocery stores.

From those humble beginnings the company has grown to become the software vendor managing point of sale transactions for over 10,000 stores with over $1.8 billion in receipts.

“We used the city’s resources to get started, and after building a prototype in my wine store we moved to a city-sponsored co-working space called The Hive to get on our feet,” Richelson said.

For the company’s first two-and-a-half years Shopkeep was backed by receipts from Richelson’s wine businesses and grocery stores, before raising a $2.2 million seed round from Tribeca Venture Partners, TTV Capital, and Contour Venture Partners. A $10 million Series A followed in 2012 led by Canaan Partners.

Now Thayer Street Partners has come on to lead the Series C, with participation from all of the company’s previous investors and additional support from individual investors Tom Glocer, the former chief executive of Thomson Reuters and a Thayer Street advisory board member, and Matt Coffin, the founder of LowerMyBills and a frequent Thayer Street collaborator.

The company has also expanded beyond its Brooklyn borders to fancy new digs in Manhattan’s SoHo neighborhood and even opened an office in Belfast to begin its international expansion. Richelson says a West Coast office is also in the cards, given the company’s most recent round of funding.

Beyond customer acquisition and geographic expansion, ShopKeep has also been busy with launching new products. In January it started selling its mobile point of sale software and released a new design interface for iPad point of sale software.

“What we’ve done with ShopKeep is we’ve moved all of your data into the cloud and in the cloud you have the ability to do a whole bunch of data analytics,” Richelson says. “An example of what we’re doing there is very simply our dashboard app. Now in the palm of your hand you can see how much you’ve rung up in sales, and how much is in your cash drawer. Storeowners understand in real time how their business is running.”

“In my store, if I wanted to understand my inventory turns I had to go down to my basement run a report and export it into excel.”

ShopKepp charges $49 per month for each register that uses its software and the company also sells all the point of sale equipment a small business would need to get off the ground including a stand, a swiper, a receipt printer. “We see it as a service,” says Richelson. “We just sell it to our customers and deliver it and help them set it up remotely.”

One of the biggest opportunities Richelson sees for ShopKeep and other point of sale software vendors going forward is the imminent demise of support for Windows XP. “There are millions and millions of transactions that run on Windows XP and are going to have to get replaced,” he says. “Small brick-and-mortar retailers are going to have to take some time to understand what’s going to happen with Windows XP,” since Microsoft ended its support for the operating system.

As ShopKeep continues to expand, Richelson has his eye firmly set on one prize. “I’m really happy to have been able to start this business in New York City,” he says. “There are no billion dollar software as a service businesses that have been born in NYC. That’s our goal.”

While Square Inc. is suffering losses and looking for a possible acquirer, venture investors are plowing more money into companies that offer point-of-sales (POS) and payment technology.

ShopKeep.com Inc. in New York has raised a fresh, $25 million in venture funding, says founder and Chief Executive Jason Richelson, to help independent merchants ditch their old-school cash registers and deliver an in-store experience that customers might expect from an Apple store.

Security is something you never really think about until something goes wrong – then it unceremoniously catapults to the top of your ‘to-do’ list! The trouble is that once that happens, the damage has already been done.

I’m talking about a security breach within your point of sale environment (where you’re swiping credit cards) which allows customer card details to be copied and stolen. The bad guys copy card details to create fake cards that they then use in stores, or online. If a fake card is used in your store, you could find yourself in a ‘chargeback’ situation that as a small business you may or may not win, resulting in revenue loss.

But that’s not the end of it. The biggest thing you stand to lose is your customer’s trust. According to a recent survey of 2,000 consumers, 60% blame merchants – not banks – for data theft. Secure credit card swiping is a service you provide to your customers and one they expect from you.

Aside from swiping cards, there are several other areas to think about to make sure your store data is secure. Here are five steps you can take to help keep your store safe.

1. Never use a Windows point of sale machine again

Windows point of sale environments are notoriously insecure and easy to hack. We all remember the Target disaster, when up to 70 million Target customers had their credit card details copied by Russian hackers. All this happened on Windows machines.

Even more worrying, if you are still using Windows XP, is that Microsoft no longer supports these machines.  As of April 8th this year, Microsoft stopped issuing security ‘patches’ to address vulnerabilities in its software, which means XP is now the ‘weakest link’ that is easiest for the bad guys to target. For more information on this and to weigh up your options, read our ‘Small Business Guide to Surviving XP End of Life.’

In addition to being insecure, Windows point of sale systems can also be extremely disruptive to maintain. I ran my wine and grocery stores on several Microsoft RMS machines back in 2008, and they made my life miserable. If they didn’t have a virus they were crashing or in need of expensive upgrades that I just didn’t have time to deal with. Take my advice – do yourself a favor and never use a Windows point of sale machine again!

2. Use an encrypted credit card swiper

The best way to keep your customer’s details secure is to keep them out of your store entirely. Using an encrypted swiper means that no card data is ever touched, stored or shared by your point of sale device. When you swipe a card, the information on that card is immediately encrypted into a secure code. The code is then what’s sent to process a payment, rather than card details which can easily be copied.

Let’s use the Target breach again as a recent example. Credit card details were copied because of a piece of malicious software which was placed in-between the point of sale terminal and Target’s servers. When a card was swiped and payment details were sent to the server, the malicious software simply intercepted and copied those details. With an encrypted credit card swiper, customer payment details are replaced with an encrypted code that can only be read by a secure financial institution that has the key. It’s a much safer way of doing business, and will help you sleep at night.

3. Make sure your data is kept off-site

If, God forbid, your shop were destroyed in a fire, flood or other disaster, would you be able to recover your customer information or sales records? Or are they sitting on a server in your basement? Keeping this information on-site is risky business, as if something did happen your entire store history would go down along with your shop.

There is also a big insurance risk. Did you know that you won’t get your business interruption insurance paid-out unless you can prove how much money you were making? If your records are kept on-site and are lost in the event of a disaster, you won’t get your money.

Either move your server off-site, backup your information onto an external device (like a hard drive) that you take home with you, or even better store your information in the cloud. This is by far the easiest option as it happens automatically so you will never miss a backup. You’ll also be able to access your data from anywhere on any device with a web browser.

Switching to the cloud to run my wine store literally changed my life. I never had to deal with a server again and I wasn’t tied to the shop anymore. I could see exactly what was going on and manage the store from wherever I was.

4. Keep your software up to date

Software providers release updates when they are fixing bugs (little glitches), addressing security vulnerabilities or adding new features. It’s important to make sure you are always running the latest version of your software so that you are benefiting from the improvements that have been made. Be sure to check for updates regularly and pay attention when your device alerts you that a new version is available.

5. Take care of your employees

Technology aside, your employees are your last line of defense against any suspicious activity. I don’t mean to pick on Target again, but evidence suggests that breach was an inside job.

Treat your employees and contractors well and they will take care of you too. As a rule I always paid my employees more than the average amount because their loyalty and willingness to go above and beyond was worth more to me than a few extra dollars of pay per hour.

Also, always hire people you trust. I’ve heard countless small business owners say that the biggest mistake they ever made was hiring the wrong people. If you hire people you trust and treat them well they will do the same to you. And ultimately, that’s the person you want dealing with your customers.

There’s no ‘silver bullet’ to mastering security – if there were, crime would no longer exist! But there are measures you can and should take to secure your small business, and keep the trust of your customers in-tact. The most important thing is to plan ahead and put those measures in place before disaster strikes, or you’ll be kicking yourself for not acting sooner.

New York City is filled with all kinds of neat bakeries and little shops to please your palette.

What separates those who succeed and those who don’t succeed are two things. First, an executive and team who has the vision and passion to make a great product and treat customers well. Second, is the strategic use of technology to boost efficiency, save money and ensure overall business operations are humming along effectively.

I took a visit to Brooklyn and visited with the team at One Girl Cookies. Check out our video interview here or further below.

When Joel Branson, a manager, started working at One Girl Cookies they were using old school cash registers. Joel knew that if he was going to take the company to the next level he needed technology that could help him mange One Girl Cookies locations from anywhere – not just in the store.

Joel was looking for a solution to give him analytics and intelligence about what the numbers MEANT – such as how were sales this quarter compared to last quarter or what baked goods are most profitable during the day and which ones are better at night and all sorts of other intelligence.

In his search for a solution, he found Shop Keep POS an iPad based point of sale system all manged online – no software to install.

Using Shop Keep Joel could now know, how many staff he should have in the store at certain times, how many customers could he expect on the weekends, which products were most profitable and other data points to help him drive more revenue and lower costs.

For example, during Valentines day Joel’s point of sale analytics enabled him to sell out of all of his Valentines Day inventory – this is every retailer’s dream. Joel used very granular analytics to make an educated estimation of how to best prepare his store for the holidays – which basked items to have and which ones to NOT have.

While other retailers might have to GUESS in how to run their store – and waste time and money – One Girl Cookies efficient use of technology is making them a well run operation.

The Shop Keep point of sales system is not the only tool in One Girl Cookies tool kit. Joel explained how they use Evernote to closely communicate with other managers.  The store also uses Sonos speakers to remotely control their customer entertainment from an iPhone.

Beyond technology, another lesson I learned while looking at One Girl Cookies is that not only does their store look great inside (well designed) but their web site is a delicious manifestation of One Girl Cookies attention to detail as well. (10WebSiteMusts.com is a great resource)

Finally their cookies and cupcakes taste great (make sure your product or service are awesome) and their customer service is simply splendid.

What does every retailer need to succeed

• Great product
• Great location
• Great customer service
• Great employees
• Great management with vision
• Awesome use of technology

PS – check out this image from ShopKeep which shows a sample screen of their analytics. Not only are analytics important for social media they’re also VERY important for retailers.