NewCo Shift Forum
There are plenty of reasons to avoid taking on the big players in slow growth categories like beverages or CPG. But purpose isn’t one of them.
At the NewCo Shift Forum earlier this year, Bill Kanarick, CMO, SapientRazorfish, hosted a conversation with Kara Goldin, Founder & CEO, hint, Inc., and Tina Sharkey Co-Founder & CEO, Brandless. Goldin and Sharkey had just delivered overviews of their companies, which you can find here (Hint) and here (Brandless). In the ensuing conversation, Kanarick focused his questioning on how best to be a startup in a massive category like beverages or consumer packaged goods. Their answer? Start with a clean slate. More in the video and transcript below.
Bill Kanarick: We just had a conversation about disruption and transformation. We at Sapient and Publicis deal an awful lot with both startups as well as incumbents. I’d be interested to get each of your perspectives on, as a startup, your advantages relative to the incumbents attacking the same space.
What are those advantages? What do you think really gives you an edge over those that might be trying to reinvent themselves, like, say, Proctor & Gamble, Tina, to use your example?
Tina Sharkey: I would say that when I talk about the brand tax, the reason I wouldn’t say it’s easy for us to do what we do, but we don’t have any installed crud that we have to deal with. We’re not like trying to put a social media campaign on the back of an installed five-year media commitment. We’re not trying to retool our factories. We can start from clear. We don’t have to pay all those distribution fees. We don’t have to be distributed by others. We can distribute ourselves.
I would say that the challenge with the large industrials is that they’ve got a hundred years of best practices that don’t work anymore. In order to tear that down, they have to tear that down. But it’s very hard to tear something down that has that kind of an installed base.
But I know from the big industrials — J&J and others — all the innovation is actually moving overseas. It’s not even here. These are heritage brands now. These aren’t even growth brands. They’re looking at AsiaPac and Southeast Asia and the BRIC countries to actually find growth, because there’s no growth in this market anymore. They’re just trying to hold on to share because it doesn’t work anymore here.
We have the privilege as a startup to take a blank sheet of paper and say, “If we could design it our way that was fast, nimble, and iterative, how would we do that?” We have the privilege to just do it a different way because we’re starting with a clean slate. We don’t have to protect a going concern.
Bill: And Kara…
Kara Goldin: Adding on to that, I think it’s just we start with a clean slate and we define very easily, “This is the problem that we’re solving, and with a product or multiple products.” I think that the challenge that the large companies have, particularly ones in my industry, in the soda industry, is that they have to look too closely at the companies that are actually bringing home the bacon or bringing home the soda sales. Or not.
What are those products that are really defining their company? It’s very difficult for a company — a soda company, for example — to say, “Drink water, not sugar.” Because they’re always looking at “Why are we here? What defines us?” They get really messed up with that. I think to your point, clean slate.
Bill: And to your “what defines us” point just here, and in a lot of conversations with startups versus incumbents I notice that startups talk a lot about purpose and incumbents talk a lot about strategy. What’s the difference in your view, and which is better?
Tina: The difference between purpose and strategy? Oh my gosh. That’s like an orange and a banana. Being at a large CPG as I was, I can tell you that, you’re not, as a manager at a certain level — this didn’t apply to Baby Center, but I also sat on the consumer board, so I saw how the main machine worked. When you get a director or above job, if you are not out of that job and promoted within 18 months, there’s something wrong with you.
Because it’s all about moving the talent around the campus and giving the talent new opportunities. The challenge with that means that the strat plan, as you refer to it, was set by somebody who sat in the seat before you and you’re executing their plan, which you don’t get any credit for.
You have to come up with something very quickly to actually set you up for your next rotation. Which has nothing to do with the business, has nothing to do with the consumer, has nothing to do with profitability. It’s usually SKU proliferation.
But you can actually put it on your review, so in your top talent chart it says, “OK, they launched 17 new SKUs of Neutrogena skin care in the summer collection for CVS in a private-label deal.” You’re like “OK, whatever.”
That strategy, which is like, “Gain more share. Do all of that.” Purpose has to be at the soul of a company. It has to be not something that is a campaign, not something that is part of an employee incentive plan, not something that is part of a product execution, like “If we sell this many we’ll give back,” or “We sell bonds for a marathon.” It has to be the meaning that you show up for.
With what Kara’s doing at Hint the purpose is so clear. It was motivated by a personal story, but it was really about taking something away. These big industrial companies can’t strip themselves down to redefine purpose.
Or it’s so high up at the CEO level and so far away from the people that are actually doing the work every day that it’s something that this corporate social responsibility team deals with, but it’s not actually baked into the brands and into the profitability, because the incentives aren’t there for the people and how they get paid and compensated.
Bill: Kara, if you were talking to a big company and you were going to try to give them some advice about how they might transform or evolve their businesses on this dimension, would you ask them to confront the question of what their purpose is? Do you think they could actually get at that? Or what do you think the relationship between an incumbent’s success and a conversation about its purpose is?
Kara: I think a lot of companies get messed up with that. To your point, they actually confuse purpose with strategy. Maybe they start out thinking, “OK, this is our purpose. Let’s get everyone in the room. We have a mission statement,” all of that. But at the end of the day, is it really why you exist? Or is it “Here’s our strategy and what we’re selling to the consumers in order to get them to think that we’re actually purposeful?”
I think it really starts with being authentic and the customer sniffs through the stuff — if not immediately, eventually. I think it’s really important and really an advantage for a startup to be able to start with that purpose and with that mission, if that’s what you’re about. There’s a lot of companies that are not mission-driven, purpose-driven, don’t have founder backstory as a reason for doing what they’re doing.
Bill: In a lot of our experience, one of the things that we see on this dynamic is purpose creates a lot of agility. Because you don’t get fixed on a strategy that by its very definition has a shelf life. We’re existing in markets, of course, that are changing so rapidly — that agility is obviously important.
I’m just interested to get your perspective on that dimension. Obviously startups have got a big agility advantage, but how important is agility as a creator of success in your view?
Tina: Critical. It’s everything. Because you have to be able to move fast. You have to be able to understand that as a startup — and this wouldn’t for a large company — that anything worth doing is worth doing badly. Because you’ve just got to get out there and you have to start. You have to test and you have to learn and you have to iterate and you have to build it and you have to continue to iterate on that until you get it right.
Big companies tend to want to get it perfect and then bring it to the market. But by the time they’ve done that, the market’s moved on. Getting it out there in the market, iterating on it as it goes, understanding that you’re only going to learn if you learn along with other people, because this idea of friends tell friends how they feel about stuff.
Focus groups are not going to give you the real truth. People will give you the real truth. Agility is very much tied to courage — not being afraid to fail, knowing that failure is actually an opportunity to iterate, as opposed to remove. It’s just a very different mindset.
Bill: One last question, quickly. If you could give the audience obviously who are contemplating transformation in their lives and their businesses one piece of advice, each of you, what would that piece of advice be?
Kara: To do something that makes you happy getting up to every single day.
Tina: One piece of advice that you could do differently. It’s hard not to look at your next speaker (Stanford professor Jennifer Aaker), who’s one of my best friends, and what she would suggest is that you set out some personal goals for yourself within a time frame and you make a commitment to yourself — your strat plan — what you’re going to execute in a time frame that actually has meaning to you, whether it’s in your personal life or your professional life.
She does this for our friend group and then she holds us accountable, like if we did it. There’s something about not just setting a goal but actually bringing people you love into that commitment and going for it, whether it’s planning a trip, whether that’s taking on a new habit, whether that’s stopping something — whatever it is, connecting with a group of people who can support you in that makes it all that much more worth doing.