Startups Care More About Consumers Than Established Brands Do

I just returned from San Francisco, where I attended Jason Calacanis’ LAUNCH conference, a place where a whole host of startups get on a highly visible stage in front of tech’s mover and shaker elite and… LAUNCH themselves.

I also got to hear from Uber’s CEO Travis Kalanick, Coin’s Founder Kanishk Parashar, and a real highlight, Stuart Williams, from the University of Louisville’s Cardiovascular Innovation Institute, who exhibited 3D-printed ventricles of an infant’s heart!

However, it was the Consumer VC panel that delivered my moment of Zen, when VCs talked about what they looked for in successful entrepreneurs, founders and startups.

The litmus test question they posed was about learning via “hypothesis testing.” Like Satmetrix’s Net Promoter Score, which has an “Ultimate Question” ("How likely would you be to recommend Brand X to a friend?"), the VCs spoke about the question that they ask entrepreneurs -- and, indeed, what startup founders ask of each other: “How many experiments did you do last week?”



I was struck by a realization that startups care more about consumer behavior than big corporations and their brands do. I’m basing this sweeping judgment on startups’ explicit prioritization of curiosity and active commitment to executing on that curiosity.

Contrast this approach with brands’ lethargic -- and, quite frankly, old-fashioned -- approach, with focus groups behind one-way mirrors, survey-based questionnaires and mail intercepts, and research-heavy quant studies.  There’s also brands’ inability to try out new approaches and deviate from “tried and tested” best practices.

Here’s the thing. There are no more “best practices” without the ability to innovate, evolve and adapt. Instead, consider “different practices” or “new practices” that integrate technology, change, risk and/or “hacks” to the “brand guidelines API.”

I don’t believe a single brand out there feels too comfortable about keeping up with the times, trends, new platforms and closeness to their consumers.

How about you? Do you feel like you’re leading your consumers? Or keeping pace with them? Or, in fact, do you feel like you’re continually playing catch-up -- not only with them, but your competitors (past, present and future)?

Perhaps we can learn from the Dropboxes, Ubers, GroupOns and Mints of the world, many of whom launched at LAUNCH, about what it takes to grow and be successful in today’s digitally, socially, and mobilely infused world.

Perhaps we can take a leaf out of their book with a learning-by-doing approach that involves continual testing -- and ultimately, continual learning.

Perhaps if we framed this as a consumer behavior and insights exercise, we might be able to position it better internally -- and with that, secure the funds, buy-in and support necessary to move from the treading water, holding pattern of status quo to a much more dynamic environment of marketing innovation.

Yes, of course this includes actual partnership with startups. Who better than early stage startups to co-create and partner up on a quest that pivots around “pivoting” and does not recognize the word “failure” at all? In the world of the startup, failure is just a clear to course-correct and incorporate learnings to come back better, stronger and smarter.

So if you are a true marketer and thus believe in the importance of consumer insights as an integral fossil fuel in the engine that powers brands and brand-building, isn’t it time  you put these principles into practice and get in the game once and for all?

7 comments about "Startups Care More About Consumers Than Established Brands Do ".
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  1. Pete Austin from Fresh Relevance, March 3, 2014 at 12:20 p.m.

    Do startups care more about customers than leading brands do? Of course, and one of the secrets of success is to keep this focus as your company grows. But note that a pivot can be directly contrary to customer care, as customers who joined you because they liked your original product are likely to be unimpressed if you pivot to something different.

  2. peter leeds from Marsh, March 3, 2014 at 12:25 p.m.

    Good read, Joe. But I think you're confusing startups' small size and ability to be more nimble than large organizations with caring about customer insights. The fact is that big brands care as well, and many are using very sophisticated — dare I say innovative — approaches to gleaning said insights. But the nature of their organizations (read some combination of siloed, matrixed, global, huge, Byzantine) prevents them from acting on those insights and adjusting the business accordingly.

    That may sound like an excuse, but it's unfair to say that non-startups are less concerned with customer insights.

  3. Joseph Jaffe from Alpha Collective, March 4, 2014 at 2:38 a.m.

    @pete - really great point and a watchout for startups (especially as they grow big...and take their eye off the prize by focusing on VC wishes vs consumer priorities)

  4. Joseph Jaffe from Alpha Collective, March 4, 2014 at 2:43 a.m.

    @peter - not confusing at all. I was being intentionally provocative here with an extreme leap and possibly unfair comparison...BUT as you correctly pointed out, this is about ACTION and ultimately, if big brands obsess over consumer insights but don't act on them, how is this in any way indicative of a customer-centric culture and/or commitment? The inability to change and/or experiment with new approaches ultimately hurts a brand - especially a large incumbent one...and so in this department, startups do have a leg up on their 800-pound gorilla counterparts. Perhaps that's why the likes of WhatsApp fetch $19bn, whereas Washington Posts gets acquired by Jeff.

  5. Doug Garnett from Protonik, LLC, March 4, 2014 at 7:37 p.m.

    It's a smart provocation in the post. But I also disagree thoroughly. You've quoted the successful startups. But as someone who has worked with quite a number...the truth is that successful companies care more about the consumer than unsuccessful ones. There are at lest 10 to 100 failed startups who didn't care about the consumer for every one that succeeds. But if you look at big companies, they all care about the consumer - just some do it better than others. I think Peter also makes an excellent point that the small companies can have the appearance of more care because they are inherently more nimble. Regardless, a fun provocative read.

  6. Joseph Jaffe from Alpha Collective, March 6, 2014 at 11:15 a.m.

    @doug - well, I disagree with your disagreement...which means we essentially agree with one another, right? :) Yes, it's a provocation but it is grounded in truth and I can prove it! Lean Startup MVP for example is the opposite of big brand Super Bowl commercials that take so long, spend so much and underwhelm and insult. I don't think it's as much a function of startups being too small, but moreso corporations being too big. They are insular, a proof point: consider how lousy customer service is. Is that a commitment and care about their customer? Clearly my comparison is grossly OVERsimplified, but a) I think big companies can learn a lot from startups and b) I think they need to move quicker and experiment more in order to keep up with their consumer. Thanks so much for *your* provocation!

  7. Doug Garnett from Protonik, LLC, March 7, 2014 at 4:52 p.m.

    @joseph --- we can agree to disagree in a way that is, in fact, agreement. :-) Absolutely no question that big companies can learn a lot from startup. Bureaucracy inherently tends toward safety & focus on the consumer inherently means a need for taking some risk. I suppose my point is that I work with a lot of startups (esp in tech) who struggle to have any customer focus. Had one CEO challenge even the idea - his theory being that all that mattered was what his team could build. Cheers... If you're interested, I wrote this post recently about "improvisation" and how big companies struggle because improvisation is critical to success but involves risk.

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