While Silicon Valley and the rest of the tech world may not be in a bubble, it sure is quite a boisterous place. There are now millions of apps in the various app stores, and it seems that every day a dozen or more companies are founded. Yet, despite the deluge of funding announcements and product releases, few startups will capture the imagination of users and become breakout successes.
Some founders, though, have been able to build spirited and successful brands in just the last few years, such as Snapchat, Nest, and Uber. What is the cocktail behind the success of these companies, and how can we replicate that in other startups?
Some books age well, and “Different” is no exception. First published in paperback two years ago, the book is a lurid text that seems more applicable to startups today than during its actual publication. Youngme Moon delivers a stark assessment on the current state of product strategy and marketing. Moon, who chairs the MBA program at Harvard Business School, writes that marketing experts “[…] have gotten stuck in a self-defeating cycle of competition. Or, to put it more forcefully, our competitive competence is killing us.” She decries this “competitive herding,” in which companies rigorously and slavishly analyze their competitors to determine their next product improvements, while losing focus on the unique strengths their products bring to a category.
Moon argues that this competitive herding leads to two types of evolution within product categories. The first, augmentation-by-addition, is what happens when one-liter bottles become two-liter bottles, or more pertinently, when Apple adds a Touch ID sensor to its iPhones, or Samsung adds an NFC chip to its Galaxy smartphones. Every generation has to get smaller, slimmer, sleeker, lighter, and brighter as well as offer us more features than ever before.
The other story is augmentation-by-multiplication. Rather than producing one well-designed product for a market, companies try to compete by building dozens of products to target every small niche in the category as possible. Think about gaming apps like Angry Birds (there are 12 of them right now in the Apple App Store if you include free versions), or Samsung’s entire phone, phablet, and tablet line (Samsung lists 32 Android devices on their homepage). While this multiplication tends to be beneficial to a point, as a product category becomes mature, the number of products start to become a bit ridiculous.
The reality is, none of this should matter to startups, but founders often find it hard to completely ignore the contours of an existing product space. There is incredible pressure to focus — to find the MVP — that startups too often end up being part of the maturation of a product space rather than the driver of the next evolutionary step. While “Different” focuses on massive consumer brands, its first message can still be applied to fledgling companies: startups too often define themselves by comparison, hoping to find a small niche against an incumbent rather than to alter the underlying dynamics.
Unlike so many critical analyses though, Moon provides avenues to pursue to avoid the competitive herd. She bundles three types of brand strategies that she believes provide alternative ways to change the brand conversation. And while Moon is writing for an established brand audience — which is unfortunate, since the tech startup world is so rich with possible case studies — her lessons are just as appropriate to startups, if not more so.
Take “reversal brands” like IKEA and JetBlue, which build loyalty with customers by taking options and features away from us. It sounds almost repulsive to believe that consumers could love a company that removes choices, but that is precisely what these companies do. In the startup world, a great example of a reversal brand would be Snapchat.
For years, social networks have tried to amass large stores of data on us, allowing us to publish and discover relevant content. Then along comes an app that completely throws away that entire approach, and tells the customer that their data will be quickly deleted. It sounded ridiculous for months after its launch, but today, Snapchat is one of the fastest-growing companies in the history of venture capital.
The second type of company Moon analyzes is what she terms “breakaway brands,” which are products that are defined using vocabulary from a different product space than we expect.
Take a company like Nest, which was acquired by Google a few weeks ago for north of $3 billion. Thermostats have been in existence for decades, and yet their features have barely changed. Then all of a sudden, Tony Fadell and his team redefine the thermostat (and also the smoke detector) as a learning computer at the center of the home. Suddenly, the way we think about that device on the wall is not just as a useless box to adjust once after moving in, but potentially the way we command our whole house.
Hostile brands, Moon’s third and final category, are the most tricky marketing category. These brands actively polarize people into two groups, and they actively try to create a love-or-hate relationship with the company. The goal is not to be agreeable, and not to bother trying to make everyone your friend. It’s not just about gaining customers, but actively excluding customers who aren’t worth your time.
Among prominent startups today, Uber is a decent example of this strategy. With issues like surge pricing repeatedly flaring up, the company could change its stance on supply economics to satiate complaining customers. Instead, it tries to please those who agree with its strategies, and those customers extend a deep loyalty to the business.
To her credit, Moon doesn’t argue for a formulaic approach to marketing. Building great startups begins with defining difference with the companies already in a marketplace, but starting out different is not enough. Instead, the brands that break out are those that can maintain their products’ differences even under the most relentless criticism. The whole world wants you to become homogenous, and only an incredibly focused and formidable founder is going to be able to rebuff and harness that criticism while building something different – and fundamentally interesting.
If Moon leaves us with any message, it is that “[…] we are forgetting to be different.” Perhaps that is why so many consumer Internet companies receive such press attention. The stories of these companies are fundamentally at odds with our perception of how brands should operate. How can Uber keep growing when it surges prices? How can Nest succeed at making the thermostat engaging? How can Snapchat compete in a market like social networking without any data?
Yet, that disbelief is precisely what defines these great companies, and makes almost all of their mundane competitors less appealing. For a petite volume, “Different” has a valuable and important message that should not be missed by startup founders.
Different: Escaping the Competitive Herd by Youngme Moon. Crown Business, 2011, 288 pages.