To understand the relationship between startups, brands, and branding we will take a structured tour of the:

1. Interpretation of the startup concept

2. Failure and startups

3. Differences between startup development, business, marketing, and branding.

4. The evolution from startup to brand

5. Benefits and capabilities of brands

6. Examples

7. Why do startups neglect their brand?

8. Conclusions

Startup Branding

Interpreting the Startup concept

If we look for definitions of startup, as is almost always the case, we will find different concepts, interpretations, and points of view. Generally speaking, we may come across the idea that a startup is a newly created company that has significant growth potential and has a scalable business model, i.e. a business model that allows profits to grow without reinvesting in infrastructure at the same level as revenues increase and that can be internationalized.

In addition, it is common to find descriptions identifying characteristics about the very nature of startups, such as their relationship with the ICT world, innovative ideas, simplification of work processes/formulas, development costs, financing methods, employee profiles, etc.

One even gets to reflect and raise the confusion of whether a startup is really a traditional company, up to what year of life it is considered a startup, if it offers the same solutions to society and addresses the same problems as other organizations…

In order to understand and continue explaining the relationship between startups and branding, we will start from the concept shared by Steve Blank (academic and entrepreneur creator of the customer development methodology and the Lean Startup movement) in his book The Startup Owner’s Manual:

“A Startup is a temporary organization in search of a scalable, repeatable, and profitable business model.”

Francisco Rodríguez, founder of Modoemprendedor.com, indicates that “Steve Blank states that the big difference between a startup and a company is that the former focuses on doing research, while the latter dedicates mainly to execution”. Francisco comments that “an established company already has a proven business model, which is being executed and is being improved so that it lasts over time. On the contrary, a startup is in search of that business model”.

Therefore, a startup is based on a trial and error system where the product (Minimum Viable Product or MVP) and the business model itself are tested with the market and the consumer, in an agile way and receiving continuous feedback.. Once the model is built, the natural evolution is to apply it and improve it as a company.

Failure and Startups

According to the Why Startups Fail report, by The Startup Genome Project, only 1 in 12 startups manage to survive and become sustainable businesses. A study published in September 2012 by Shikhar Ghosh and reported in the Wall Street Journal states that 3 out of 4 startups financed by Venture Capital fail to return the money they borrowed..

Startups are born and grow in a high-risk environment and cannot resort to the traditional development model. The “fail fast and cheap” philosophy, sharing the reasons and learning from mistakes seems like the usual mantra for this type of project.

Xataka.com brings together in an interesting article the personal experiences of several Spanish entrepreneurs about the closure of their startups. In the report we find different reasons:

  • The moment: arriving late.
  • Need to reach agreements with a few large companies before funds run out: commercial agreements when necessary.
  • Commitment and defined responsibility of the partners.mpromiso y responsabilidad definida de los socios.
  • Flexible, lean and economical development.
  • Correctly test and validate the product.
  • Balance between development area and marketing area.
  • Business plan to monetize product/service.
  • Financing and investment, not as an objective, but as a mechanism to achieve growth objectives.

Paul Graham, founder of the Y Combinator accelerator, already shared 18 other reasons why a startup fails: a single founder, marginal niche, launching the product too early/late, not having a specific user in mind… For his part, Victor Rodado, CMO of Upplication, assures in Xataka’s own article that “the abyss is always marked by your bank account, especially if you have salaries to pay.”

If that’s not enough, CBinsights reflected in a report its 20 main reasons: the market does not need the product, lack of financing, excess competition…

The Why Startups Fail report itself shows that there are 2 reasons for a successful business.

  • A good product.
  • Big market for that product.

On the other hand, and understanding the first 4 phases and states of a startup’s growth (discovery, validation, efficiency and scaling), The Startup Genome Project indicates that it is always necessary to have a balance between 5 key dimensions:

  • Consumers
  • Product
  • Team
  • Business model
  • Financing

We observe, again, that the reasons for failure and/or success of startups can be shared with the rest and used to learn but they should not alone mark the path and decision-making of the rest of the projects. Each startup seeks its own model and, even having references, best and bad practices to rely on, the context of each one will be unique, complex and personalized.

There is no magic formula to control the causes and consequences of the success and failure of a startup model. However, there are some basic guidelines that, sustained over time, will allow the startup from the beginning to establish the path to become a consistent, coherent, differential, and relevant brand.

startupbranding_branderstand-cuerpo

Startup Branding: from a test model to a scalable brand

Differences between startup development, business development, marketing, and branding

As we have seen, the startup generally focuses from the beginning on developing a product/service (Minimum Viable Product or MVP) that provides a solution to a problem and that can become a scalable business model. Through the Lean Startup method: Build-Measure-Learn (discovery, validation, creation, and construction) the product is tested with the consumer, built, and commercialized.

Even so, during this process, we can fall into inefficient brand management. There is a trade-off between the search for a profitable business model (finance), the inclusion of the product/service in the market (marketing), and the management of perceptions, meanings, and experiences in the minds of the audience (branding).

It is not the same thing:

– Business development: to find a model that generates a balanced income statement and keeps investors comfortable with their shares.

– Marketing: getting a product/service known (communication), distributed (distribution), functioning in the short term in the market, and meeting current consumer needs (product/price).

– BrandingThe objective is to build a brand that is relevant to the audience over time (consistent), that generates differentiation from other brands (unique), that generates pride of belonging to all the experiences it generates daily and, therefore, translates into a sustainable and lasting preference (consumption and desire).

Each entrepreneur will decide what is the ultimate goal of his project and all the daily steps he takes will be conditioned to this objective. It is not the same to have as a main goal to build a business that is profitable and whose profits allow him and his team to live than to offer a product (regardless of the differentiation) that fits in the market temporarily, much less to create an authentic brand experience that lasts over time in which the audience not only seeks benefits and rational links but also (and above all) emotional ones.

De startup a marca

Each entrepreneur, we repeat, is the only one who must decide to know how far he/she wants to go. However, it is hard to believe that anyone starting a personal project does not have in mind BRANDS that were born as startups and have managed to lead the global market such as Google, Apple, Facebook, and Amazon.

It is not necessary to turn to the leaders of the “GAFA” to understand the real scope of having known how to create and manage a brand beyond a simple scalable startup model: Netflix, Pinterest, Spotify, Paypal or Uber are already in the top brands most relevant, according to the Brand Relevance Index™ from the consulting firm Prophet.

These brands go beyond a simple profitable business model or a product/service that meets the needs of today’s consumer. They have defined brand positioning that builds and strengthens the relationship with their audience and the environment. We are even facing a clear trend: big brands are building (in short, they are in themselves) information storage systems on consumer habits and audience profiles (Big Data) with which they are capable of collecting useful insights to generate new trade agreements, creating new products/services… but this specific topic will be discussed in another article.

Good news and bad news for startups. The good news: any startup can become a great brand. The bad news: with each daily action (controlled or not) the startup is already building its brand (audience perceptions) whether it wants to or not.

Therefore, startups are also brands but to a greater or lesser extent well or poorly managed.

Benefits and capabilities of brands

The effectively built brand will allow the startup (and any organization):

– Generate differentiation between products/services with similar attributes, facilitating the purchase decision.

– Build a pride of belonging (internal and external) that facilitates the preference, trust and loyalty of the audience in crisis situations.

– Generate new perceptions, experiences and meanings that allow the brand to change its niche, create a new one and, consequently, extend the brand and/or create new products/services (new business models).

Attract investors, partners and talent more easily.

Examples: startups vs brands

We are going to carry out a brief exercise to check how the brand can influence the audience’s perception. Below we list different brands with similar products/services.

We assume that all these business models allow (or will allow) them to be economically sustainable, the products/services work more or less in the same way (the user experience is optimal), they have similar prices, they are being distributed correctly (they have similar notoriety) and communicate to their target effectively (the message is received by the audience).

Next, we invite the reader to reflect on how each brand is knowing how to manage its capabilities to position itself in one way or another: does any of these brands stand out above the rest? Does it reflect your competitive advantages in the first instance? Is it generating a much more loyal and satisfied community? Are you starting or have you already offered new products different from the main one but within the same brand strategy? Due to your notoriety are you or have you achieved new investments and commercial agreements? Do you have your team aligned and demonstrate an internal brand culture that you communicate externally?

 

Seasonal room/apartment rental

Airbnb (airbnb.es)

Homestay (homestay.com/es)

My Twin Places (mytwinplaces.com/es)

Kid & Coe (kidandcoe.com)

9 Flats (9flats.com/es)

Homeaway (homeaway.es)

Flipkey, by Tripadvisor (flipkey.com)

Behomm (behomm.com)

Roomorama (roomorama.com)

Wimdu (wimdu.es)

Travelmob, by Familia HomeAway (es.travelmob.com)

 

Car transfer service

Cabify (cabify.com/es)

Uber (uber.com/es-Es)

Mytaxi (es.mytaxi.com)

 

Job vacancies

Infojobs (infojobs.net)

Jobandtalent (jobandtalent.com/es)

JobToday (jobtoday.com/es)

 

Social dating network

Tinder (gotinder.com)

Happn (happn.com/es)

Adoptauntio (adoptauntio.es)

 

Streaming music service

Spotify (spotify.com/es)

AppleMusic (apple.com/es/music)

Deezer (deezer.com)

 

Why do startups neglect their brand?

Once we know the advantages of having a consistent brand, why then do the owners of many startups not put special focus on the brand? There are different reasons why a startup may neglect its brand:

– The short-termism syndrome: the need to try and fail quickly causes short-term objectives and milestones to be established that make it difficult to build perceptions sustained over time, confusing the audience.

– Changes in the product and the business model: the evolution of the product/service itself and the business model shakes the very essence and purpose of the brand.

– Financing and commercial agreements: having as its main objective to finance the project and be able to comply with the scale phases leaves the values, attributes and personality in the background in favor of the decisions of the investors and the agreements with different agents .

– Flexibility and Lean mentality: plasticity in daily tactics can lead to acting in different ways at all touch points of the brand, creating a different image in each of them.

Conclusions

There are clear differences between a business model, a product/service and an effectively managed brand.

It is not so much about analyzing why not die and fail but rather why wanting to be unique and achieve a relevant, credible, achievable, sustainable, differential and focused brand positioning that allows the product/service and the business to continue growing, providing a benefit. real and relevant to society.

Brands have a purpose and utility that will generate an exchange and a satisfactory relationship with society and the environment, beyond functional decisions.

The good news is that any startup can build and become a great brand. The bad news is that you are already creating that brand without knowing what you really want to be.

“If you think about next year, plant corn. If you think about the next decade, plant a tree. But if you think about the next century, educate people.” Zygmunt Bauman

 

In future articles we will talk about tips for a startup to take care of and effectively manage its brand and what big brands can learn from the Lean Startup model.

 

Ruben Gonzalez-Roman Quignon

Brand Consultant at Branward®

Photos: Shutterstock