Branding: Startups’ Next Frontier

overcoming their No.1 reason for failure

An often cited statistic taken from a 2019 CB Insights report is that of the top 20 reasons why startups fail, number one is due to a lack of market need.

Many entrepreneurs began their journey with a desire to make change but along the way, they harshly discovered that this was not the change their market wanted. Of the 101 post-mortem startups analysed for the report, 42% of them gave this as one of the reasons for their demise. The second highest reason was running out of money which 29% of these failed startups provided as one of theirs.

Enter the Lean Startup which set out to counter these challenges.

What is a Lean Startup?

In 2011 Eric Ries published The Lean Startup where he borrowed business development principles from Toyota Production System and applied them to startups. The focus was on improving efficiency in the interest of providing more value to customers. This meant a shift in entrepreneurs being risk takers to risk managers.

The lean methodology is guided by two principles: continuous improvement and respect for people. By virtue, startups that apply this philosophy begin with an assumption of what their customer wants, develop a barebones solution with limited features with the intention of collecting feedback before applying the learnings to a more refined iteration. The intention is to ensure no more time and money is spent on a solution that the customer doesn’t want. It advocates fast failure leading to quick learning with the aim of getting to market in as short of a time as possible.

What the critics say

There are few more outspoken about their skepticism of the lean methodology than Keith Rabois. Having previously held executive positions at PayPal and Square and leading early investments for DoorDash and Stripe, Rabois is currently a general partner of San Francisco based, Founders Fund. He believes the ambition of the founder should be “to paint a picture of a better world and then deliver that.” This sentiment mirrors a quote attributed to Henry Ford “If I had asked people what they wanted, they would have said faster horses.” Although they may be familiar with the challenge, the customer does not necessarily have the solution and turning to them in search of it stifles creativity and ambition.

**What does the customer really want?**

At the core, the customer is seeking transformation. A shift from a negative emotion attached to a challenge to a positive one served through a solution. Entrepreneurs endeavour to facilitate this change but can often be too concerned with discovering a practical solution rather than what the customer is really after. This is where a robust brand can help startups communicate to their audience what it is they’re really helping them with. Take for example, a startup developing workflow management software is actually providing time for their customer to do other, more enjoyable things while also alleviating stress. Whatever tangible form that comes in is arguably irrelevant. To borrow Ford’s quote, if the customer was asked what solution they would like, it wouldn’t be unreasonable for them to respond with a faster computer. If they were provided the superior software solution without the brand to communicate its value and to resonate with them on an emotional level, their immediate reaction would be that this isn’t what they asked for and therefore, have no need for it. Which brings us back to the number 1 reason why startups fail.

“At the core, the customer is seeking transformation. A shift from a negative emotion attached to a challenge to a positive one served through a solution.”

Empathetic branding

Your brand connects your startup to your customer through trust. This trust is built through understanding the challenge they really face and channelling this through your messaging. This requires startups to undergo a paradigm shift and to recognise their customer is the hero of their story and their solution is simply a tool to empower them to facilitate the transformation they seek.

The better you understand your customer, the more accurate you will be at identifying what their real challenge is and how they arrived there. By displaying empathy through your brand, you cut through the immense amount of noise they are bombarded with everyday and speak directly to them. Your message will resonate and when presented with your solution coupled with an aspirational outcome, it will lead them to their “aha!” moment.

To give your startup its best chance of success is to develop this trust from the beginning and to nurture the relationship with your customers along your journey. If your MVP is the functional solution and isn’t accompanied with an MVB - the Minimum Viable Brand - then you may have missed your opportunity to gain valuable insights as to how well your solution helped them overcome their challenge.

Adding branding fat to lean

An inherent trait of problem solving is creativity. It’s the craft of manufacturing something from nothing to overcome a problem. This is part of the entrepreneurial mindset but isn’t always ever present where it needs to be. The bigger the ambition, the more creativity needs to be brought into the fold, not necessarily into developing the tangible solution but always in the communication of it. This is the brand.

Having developed brands across multiple industries over the past 15 years and being involved in the startup ecosystem in the last 5 of those. Some of this time was spent as a founder where I took part in ACMI Xcel’s accelerator program which gave me the opportunity to participate in an immersive way and to truly embrace the challenges early stage founders encounter. Throughout all this time, I recognised a particular fervour that resides within startup entrepreneurs that is unmatched. However, the biggest challenge they face is in expressing it in a way that authentically represents what they set out to accomplish to an audience who are truly receptive. Because of this, through my combined experiences, I have created a brand creation framework that is unique and specific to the needs of startups at various stages to help them overcome this challenge so they can prepare for long-term growth.

From as early as your MVP through to securing funding and preparing to go to market, you need to ensure you are building for longevity and reach the right customer at every step along the journey by communicating a message that resonates with them through a brand they can connect with. This framework supports the growth of your business by helping you develop the tools and knowledge as you need them while being mindful of financial parameters - which will help with overcoming reason no. 2 for why startups fail, by ensuring value and immediate return on your investment. The requirements at every stage will be different so no matter where you’re at with your startup, I have prepared a branding solution to nurture your move to the next phase.

To find out more about how our Brand Creation Framework can help your startup overcome the no.1 reason for failure, click the button below.

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