web start-ups

Why venture capitalists should ask web startups about brand strategy

Photo by Jus' fi on Flickr

Should startups worry about brands?

This is the question that a venture capitalist from Silicon Valley, Larry Kubal, asks in his thought-provoking article. ((The article was published by The Venture Capital Journal in November 2005. You can download the full text from this page , scroll down to “November 2005”, it’s there!))

Kubal’s short answer is YES. According to him, venture capitalists should make sure that brand is taken care of by web startups before any investments are made, “For VCs currently paying far more attention to consumer facing Internet businesses than they have in quite some time, ‘word of mouth’ has taken on a whole new meaning.”

ELEMENTS OF BRANDING

The elements of branding that Kubal gives as important to consider by startups (and venture capitalists who assess them) boil down to:

  • viral marketing
  • intuitive messaging
  • word of mouth branding

But are these the only elements of brand that startups should worry about? In my experience of working with companies seeking market entry, the notion of brand goes much deeper than this.

DIG DEEPER!

Venture capitalists should dig much deeper into brand strategy when they do their due diligence on startups.

Especially when it comes to web startups, my experience is that techies may well think about going "viral", but what they are often not well equipped to think about is the consumer, as well as product design suited for the consumer! They often assume that consumers are as "geeky" as they are themselves!

So, it is not only a detailed plan of how a startup plans to be viral that venture capitalists should look for when they do their due diligence about brand.

They should dig much deeper than that. Good branding is not only about promotions and word of mouth. The key is to assess whether a startup thinks in terms of brand strategy or not.

WHAT IS BRAND STRATEGY?

A brand strategy begins with product design and consumer intelligence, and continues through the design and delivery of promotional materials, promotional strategy, customer dialogue, distribution…. All of which is important if you want to build a funky brand.

Importantly, a good brand strategy should be embedded within the company’s DNA. If you don’t get the DNA right from the start, it will be very hard to fix later - you simply can’t afford your company DNA, and with this, your brand strategy to be an afterthought!

WHY STARTUPS RARELY THINK ABOUT BRAND STRATEGY

Unfortunately, thinking in terms of brand strategy is very rare among web startups, for various reasons. I’ve touched upon some of them on several occasions. For instance, see SCHMOOZY FOX’s thoughts about web and mobile startups here or check our tips on how to craft a smart marketing strategy if you are a web startup.

Of course, VCs might themselves be more attentive to these aspects than the average techie. One would certainly hope so. Nonetheless, the fact remains that huge amounts of time and money – including VC money – are poured into web enterprises that have no chance of taking off because they have not thought through consumer needs, product design and communication.

SCHMOOZY FOX works with web startups to help them incorporate brand strategy early on into their recipe for future success.

True luxury: inclusivity vs exclusivity

I've just come across a series of thought-provoking posts on springwise. Their common theme is brands trying to build loyalty with online tools. Whereas some of them do it in a democratic and "inclusive" way, others opt for "exclusivity". Let's see how this might result in their brand positioning. One article describes a hotel in NYC which has set up an online forum for its guests. The Pod Hotel offers budget accommodation for young travelers, and the forum is a brilliant solution to help them connect to each other in real life, and have fun together in NYC. It clearly addresses the pain particularly of those who travel alone and don't know anybody in New York City.

Snapshot of Pod's online forum for registered guests

This is a brilliant idea, and The Pod Hotel is surely on the good track of creating some valuable loyalty with this simple online solution.  My advice is that it should definitely do a bit more to make this feature known on its website. As it stands now, the site fails to communicate it. I don't know if it's a planned move or not. If yes, I suppose that the reason might be that the hotel works at capacity most of the time, in which case the forum is only there to trigger repeat visits rather than recruit first-time customers.

Another idea featured on the same site is an online social network launched by the airline KLM. The online network is not targeted at all KLM's customers, but only frequent flyers.

For the moment, KLM has set up two online communities -- one for China, and another one for Africa. Essentially, the main target is entrepreneurs who all share the same challenges working in emerging markets.  They can discuss issues of common interest and network online, which triggers encounters offline.

KLM even organizes offline networking events for the online community members both in China and throughout Africa.  KLM says that its online social community is "exclusive" and by invitation only.  My guess is that this exclusivity is tied to KLM's reward program which actually makes sense.

Think of it: the more you fly, the more chances you get to meet like-minded entrepreneurs. And the better you should get rewarded by an airline company for your loyalty.  So, this kind of "exclusivity" achieves both goals -- it rewards frequent flyers whilst giving them a possibility to socialize.

A snapshot of KLM's online community for frequent flyers

I also want to address another kind of "exclusivity" which rarely does anything good if a brand seeks positioning in the luxury or affordable luxury segments.

I've come across many brands, especially various online shops, which try to create an aura of exclusivity out of .... well, pretty much nothing.  I find it amusing when some freshly launched site writes  me to become their member "by invitation only"and start shopping there.

In this respect, the example mentioned on springwise is Claseo, a recently launched "luxury" label. Unfortunately, it's not possible to have any idea about how luxurious its designs are because you can't enter their site. The reason is that the site is "exclusive" and by invitation only.

Snapshot of the invitation-only site of Claseo

I think it's counterproductive to seek positioning as a luxury brand through such self-limiting "exclusivity".  Whereas this might be feasible in instances when brand equity is already at its peak, this move is rarely a good solution for a start-up.  This is particularly true for web start-ups.  Building a user base is of ultimate importance for them, and certainly a key to creating a strong brand.  I have written and spoken about this on several occasions.

Looking at three examples above, the "inclusivity" of the budget hotel in New York in fact makes it truly exclusive. By solving the real need of its customers -- a simple human desire to socialize -- the hotel succeeds in occupying a very lucrative segment of affordable luxury.  The same refers to KLM's online social network for frequent flyers, which helps entrepreneurs connect and socialize in real life.

Funky brands are smart because they understand what true luxury is, and although it may sound counter-intuitive, in many cases being inclusive and democratic, rather than "exclusive", is what really helps build a great brand!

Brands do not take care of themselves

After a couple of weeks of silence due to my exciting vacation in Morocco, I am back with this short post in the category of Funky Schmoozing. Right before taking off on holidays, I presented SCHMOOZY FOX and its approach towards building funky brands to an audience of web start-ups at Beta Group in Brussels (to find out more about Beta Group, see this post).

My main message to the audience was this,

"Brands do not take care of themselves."

In practical terms, it means the following:

  • many start-ups, both in the online world or otherwise, may have a brilliant technology and a great business idea to kick off.
  • however, they rarely think about their business development in terms of B R A N D
  • which is a pity, because intuitively, pretty much everybody knows that a strong brand means more customers, repeat visits to your web site, and importantly, a profitable business.

Great brands do not happen due to pure magic and serendipity.  Although it may sound paradoxical, funky brands are not only all about fun and creativity -- there's a lot of nerdy, I may say, and rigorous framework that supports their success.

Funky brands do not happen by themselves, they get the nerdy stuff such as a solid brand strategy, sorted out, and then follow the set course with dedication.

This is quite a simple message, but you'd be surprised to find out that only few companies actually think in these terms.

Here's a video interview with me that was filmed by Freshup.tv after my talk. Enjoy!

Beta group meeting in Brussels: Ladies on Stage

Screenshot of Dell's web page I have just attended the European conference on web entrepreneurship, Plugg 2010, and here is another post in my Funky schmoozing category on the same topic.

The Beta group in Brussels was set up a year and a half ago, and its mission is to provide networking opportunities for Belgium-based entrepreneurs passionate about the web. An important part of each Beta group meeting is a series of short company pitches that web start-ups present to a usually sizeable audience of investors, geeks and other web folk.

And imagine this: over the past 18 months, 68 web start-ups have presented their projects on stage, and only two of them were represented by ladies! To address the situation, Jean Derely, the group's founder, came up with the brilliant idea of dedicating one of his Beta meetings exclusively to women entrepreneurs.

It will be on March 30th, and SCHMOOZY FOX is scheduled to be on stage too, with a presentation about specifics of branding for web start-ups. Register for the Ladies on Stage event on March 30th in Brussels here and see you soon!

Plugg 2010 conference in Brussels: March 11, 2010

Plugg2010

Last year, I attended the Plugg conference in Brussels for the first time, and I am happy I'll be going again this year. I found Plugg to be a great way to discover some promising web start-ups from around the world, and listen to venture capitalists and technology gurus talk about business opportunities on the web.

Given SCHMOOZY FOX'S brand and marketing strategy work for web start-ups, an event like Plugg is great chance to check out the fresh web talent out there. I guess this time around, Plugg will be a showcase of advanced technology and web apps. Will the participating start-ups be able to convince us of their commercial and marketing know-how as well? We'll find that out next week.

For those who are not familiar with this annual event, Plugg is a conference that brings together European web and technology start-ups and gives them a chance to pitch their business ideas to a panel of venture capitalists. It’s also an annual celebration of web entrepreneurship in Europe.

Check out the list of all the participating start-ups by visiting the Plugg site.

In order to get a sneak peak at this year's Plugg, I asked Robin Wauters (Plugg organizer, TechCrunch editor, serial

Robin Wauters, organizer of Plugg 2010

entrepreneur and simply an avid user of the web), to talk about the event.

SCHMOOZY FOX: Robin, is it still possible to register for Plugg 2010?

Robin Wauters: Yes, you can register until the day before the event, even. Readers of your blog can register with a 25% discount using the code plugg-25percent here: http://mijnevent.be/en/event/101/plugg-2010.

SCHMOOZY FOX:  How will Plugg 2010 differ from Plugg 2009? Obviously, there will be new start-ups and new speakers, but how else are you going to surprise us this year?

Robin Wauters: To be honest, it will be much of the same as last year. We think the formula works well, and we're really excited about the line-up of speakers and startups for this year. But always happy to receive suggestions from anyone who attends to see how we can improve the conference for next years.

SCHMOOZY FOX: Thanks for organizing this high-level event again this year, and I am looking forward to some schmoozing!

Robin Wauters: Likewise ;)

Smart marketing is key to success on the web

Photo by Jus' fi on Flickr

Let me ask you this question: how many successful web start-ups do you know? In the sense of actually known by sizeable audiences. Selling useful products and services. Providing great user interface. Encouraging people to come back to their sites time and again. And check this one out: p-r-o-f-i-t-a-b-l-e.

Yes, there are a few. But the truth is, thousands of software developers, engineers, web designers and other technically gifted folk spend lots of time and money every year to launch new businesses but are unable to connect with their target audience – or launched a service for which there is no real demand.

Many of these start-ups end up being simply web sites, with no valid business idea associated with them. And even if some do have a sound business model, they still don't make it because they don't have any skills in customer-oriented marketing.

Why does this happen?

Dave McClure, author of the blog "Master of 500 Hats", argues that the main reason for this is this: most web start-ups are designed, implemented and managed by techies and lack marketing talent.

The main arguments he puts forward here are:

-Addictive User Experience (aka Design) & Scalable Distribution Methods (aka Marketing) are the most critical for success in consumer internet startups, not pure Engineering talent

-If investors don't have operational backgrounds in design, development, or marketing from proven consumer internet companies, you probably don't want their money

Photo by jeffwilcox

I fully agree and this is in fact one of the reasons I decided to focus part of my brand strategy business precisely on web startups. Have a look at SCHMOOZY FOX'S thoughts about web and mobile start-ups .

It must be said that interface design and useability do sometimes get attention, as at least "enlightened" techies are aware of their importance. In my experience, though, product design and positioning, brand strategy and promotion are frequently an afterthought, implemented ineptly or forgotten about entirely.

However, it's an area where investments can pay huge dividends.

In fact, given the economics of the Internet, it can make all the difference between an out-and-out success story and complete failure. Some online businesses are figuring this one. But for now it's still very much the exception to the rule.

Technical skills and talent are very important in building an online business, but they are only one element. It takes two to tango: only a combination of technology and marketing can make all the difference and propel your online brand to success!

Photo by Kjunstorm