January 13, 2016
Foundation Capital
In the last 20 years, the Internet has changed just about everything—and marketing is no exception. One unfortunate byproduct of this (r)evolution is that it’s all too common to hear someone in the startup world say that “brand doesn’t matter anymore.” In my experience, that statement is only true until it isn’t—because at some point, all companies need to be able to articulate their brand, both to themselves and to the world.
This is why we invited Mark Barden, partner at eatbigfish and author of the book by the same name, to chat with our portfolio companies last month. At eatbigfish, Mark focuses on helping brands define themselves, and his firm specializes in brands that are challenging entrenched players or practices in their respective industries. The attendees got a lot from his talk, and so we decided to share a few of his key insights to a larger audience—because information this good shouldn’t be kept inside a conference room.
On Defining Challenger Brands . . .
What’s the common theme among challenger brands? They have interesting, compelling stories with some kind of conflict at the center. And in a lot of cases, they have an ambition to do more with less because their budgets are not very big or because they’re up against a huge player in their industry.
The challenger brand everybody loves to think about is Pepsi. Taking on Coca-Cola, Pepsi is what we call the feisty underdog or irreverent maverick—although often it’s not just about who you’re challenging but what. In fact, there are several kinds of challenger narratives you can use to tell your story.
There’s the real and human challenger, like Zappos, that elevates people in their story beyond what anybody else in the category has ever done before. Zappos sells shoes, obviously, but their founder, Tony Hsieh, talks all the time about being in the happiness business. “We could be starting an airline,” Barden said, when I interviewed him, “because what matters to us is elevating people—being real and human.”
Think about Whole Foods in the food world: it’s a visionary that presents a very different sense of what the category could look like. Then there’s thepeople’s champion, like Dunkin Donuts, that is trying to let some air out of the Starbucks narrative by saying, “Yeah, our coffee is $.99, and it’s not called some weird hybrid Fr-Italian kind of name.” And lastly, there’s themissionary, like Chipotle, that, despite recent setbacks, is trying to put ethical values back into the world of fast food.
“A lot of you here tonight probably see your brand as a game-changer, as a visionary or a people’s champion—and maybe crossing over into two or three of these categories, at least. But in the end, I think these buckets provide a really good device for helping you think about how you want to talk to your customers and what you as a company are trying to do,” said Barden.
On Listening to the Market . . .
Whether you’re a big or small company, one thing challengers have to do is look closely at what people on the fringes and in all the little niches of a category are saying is broken. This can give you some clues as to what kind of brand you need to be. Let’s look at a few examples of how challenger companies are using this tactic to compete in different industries.
Air Travel
Everyone is tired of being treated like self-loading freight, right? So JetBluereframed the conversation and said, “We’re going to put people first.” And aside from that one dreadful night where they left people on the runway for hours and hours, they are a great example of a real and human challenger.
Footwear
Reebok struggled to find an identity for years, but when they realized nobody was targeting fans of CrossFit or Spartan races, they decided to go to the margins, which is a classic challenger strategy. They’ve started creating some loyalty there, and they’re doing a really good job of talking to people who are into high-intensity fitness.
Apparel
American Giant is taking another angle, which is to blow up the model. Their philosophy is that people no longer want to go to a mall just to buy inferior products—the data proves they’re right, by the way. So they produce really well-made clothing, and by being able to take out all the costs associated with distribution, they create a massive amount of money that they put into marketing and treating customers really well.
On How to Build a Challenger Brand . . .
Braden talked us through the eight credos of a challenger brand. Here, I’ll zip through them, but hopefully you’ll be able to get an idea of how they might be able to work for your company.
1. Embrace intelligent naivety. The ability to see a category as if for the first time enables you identify a fresh approach. Find someone who can help you see from the outside-in.
2. Build a lighthouse identity. Tell the world with absolute clarity and great certainty what it is you believe and allow them to navigate by you—hence the metaphor of the lighthouse.
3. Be a thought leader. Take a few hours and a whiteboard and flip all the conventions of your category on their head one at a time. A lot of it won’t make sense, and a lot of it will be garbage. But you’ll get two or three ideas from the exercise and say, “This is how we should present ourselves as a challenger.”
4. Create symbols of re-evaluation. These help bring the freshness of your ideas to the forefront of people’s minds.
5. Enter popular culture. This is really the result of creating the symbols of re-evaluation—you want to get people talking about you without having to pay for it.
6. Sacrifice. Strip away anything that’s not absolutely essential. You probably know the story about how when Steve Jobs went back to Apple, there were 110 projects on the schedule. He cut all but three, emphasizing that they were the only ones that really communicated what Apple is about.
7. Overcommit. Another way to say this would be that, with regard to Jobs above, those three things better work or you’re hosed.
8. Be idea-centered as opposed to consumer-centered. Being idea-centric says this brand has an idea at its heart. This is the credo that usually gets me into trouble because everybody is obsessed with customer-centricity. Yes, you need to know what your customers want, but you also need to be intimate enough with your idea as a business to make sure you build it the way you want. That’s how challengers win.
“The critical thing to remember—and I thought I’d put it in a formula because I’m in Silicon Valley—is that if A, your ambition, significantly exceeds R, your resources, you must be prepared to accept the implications of that gap. If you act on the eight credos, stay hyper-focused, and understand your place in the market, you can create the kind of brand advocates you need to succeed as a challenger,” said Barden.
Thank you Mark for dropping this knowledge on us.