The concept of brand can be something of a mystery, particularly for tech entrepreneurs. It’s one of those things that’s hard to measure and show ROI. Yet, when we look at some of the biggest brands in the world - CocaCola, Nike, Amazon - there’s clearly something they have that others don’t. Something that goes beyond just hitting the numbers.
I recently caught up with Inés Ures, former CMO at incredible tech companies such as Deliveroo and Treatwell, and now Partner at Iris Ventures. Ines shared some incredible insights around brand building. So I thought I’d share parts of our conversation in the second edition of our 'Great Thinkers' series.
This series is supported by my friends at the Luxembourg School of Business (LSB), where I am a Guest Lecturer on Venture Capital. LSB is Luxembourg's leading graduate business school and regularly invites world-class guest speakers in technology. If you are thinking of doing an MBA, definitely check it out here.
First off, how do you define what makes a brand?I think you can find a billion definitions of what a brand should be. But, I think many people define it incorrectly. They focus on visual or emotional attributes - what a brand looks like or its tone of voice. These are important elements but, ultimately, the brand is a manifestation of the strategic vision and mission of the company.
If you don’t have a clear vision and mission, you’re not going to be able to build a strong brand. Because a strong brand is an abstract entity that people are going to want to be part of. Something that’s almost like a religion - you don’t care how it looks or what it feels like, you care about the purpose, the values, and the true beliefs that entity has. So when I think about branding, I think about common sense basic principles. And they need to come from the leader - from the CEO. It can’t just be the marketing team saying 'this is truly what our company is here to achieve, or what it’s going to do for society.' It has to come from the top.
And the mission can be as simple as 'we are bringing the cheapest groceries to you.' But whatever you choose you have to truly deliver on that promise. Then, once you have that vision and mission that everyone talks about, you can start developing all the different brand components - the look, the voice, the communication pillars, the channels etc. But it’s the strong foundation that, once you dress it up, it becomes a brand. Because if you try and dress up something that’s ugly, it will always be ugly.
Ok, so your brand needs to have a clear mission that is led from the top. But, how do you actually go about turning that mission into a brand?Let’s go back to the example of a mission to deliver the cheapest groceries. If that’s truly your promise, you’ll develop a series of programs that will help you deliver on that promise. For example, you’ll have price comparison tools, you’ll offer money-back price guarantees and so if they can buy it cheaper somewhere else, you’ll refund them the difference and so on. And once you start delivering these programs, people will start to believe that you are the ‘religion’ of cheapest products.
Many people believe that to have a purpose you must do something around sustainability or community. And I believe that every company should give back to their communities - but there are ways of doing this that don’t cost the company any money and still feed into the mission. So in the example of our imaginary grocery store, in high-density communities, you can have stations which give away products that are about to expire.
And, again, the brand is not just about how it looks and feels, it’s about what it actually does. Otherwise people don’t trust your brand. So, if you promise that 'when you come to brand ABC, you will always have the cheapest products, because we have a team of researchers who are always researching the prices. We negotiate the best prices from suppliers. We offer a money back guarantee,' you need to deliver on it. Then I, as a consumer, after hearing and experiencing this message multiple times, will start believing that promise. Because it is true. And there is no other option than going to that supermarket to get the best prices.
Of course, you have companies that are focused on changing the world - focusing on education, health, etc - and you can create amazing communities and brands around this. But actually, if you think about the brands that people love, you’ll see brands like Amazon and Google trending. Why do people like Amazon? They love them because of the convenience. The promise of Amazon is convenience, and they always deliver on that. They don’t pretend to be what they’re not, and there’s something magical about sticking with your promise.
That’s really powerful. And why do you think tech executives struggle with the idea of a brand? How can you measure the value of a brand?Simply, if you had the most valuable brand in the world - B2B or B2C - you wouldn’t have to spend any money on marketing, and you wouldn’t need a sales team... Because your brand would be so loved (i.e. people will always buy your product) and famous (i.e. instantly recognised) that all your demand would be inbound. That is the most valuable thing that a company can create, but it’s the most expensive thing to build. Look at brands, like Coca-Cola and Nike. They have so much goodwill that investors are willing to pay up much for it, of course. But when the brand deteriorates, the goodwill disappears and has to be written off. It’s basic investment theory.
Often, when tech executives build brands they are really good at thinking about the product and who the customer is. That's where they can find product-market fit. At the beginning, brand is less important for them because they are either challenging an incumbent or they are creating a market. When you're creating a market, you have the early adopters first and then you have word of mouth and that ball starts growing. And when you're challenging an incumbent, you're stealing market share from someone else.
The problem comes when growth needs to accelerate and you can't continue to put money into the company to hire more people or spend more on marketing. But, if the founder had focused on brand building from day one, they wouldn’t have this issue. Instead, they would have a lot of people who love their brand, who have seen it around, are talking about it, are subscribed to the newsletter, and follow them on social media.
This could be another way of measuring the value - look at how much you’re saving in marketing and sales. If you have a strong brand reputation, 80% of your leads might be inbound. If you imagine it the other way - 80% are outbound - think about how many sales and marketing people you would need, and the cost of that. Five million dollars a year?
So is branding a way to generate organic growth?Branding shouldn’t be confused with organic growth. It’s possible to build an organic growth engine that has no branding. You can write the best SEO content that people will consume and maybe even request information, but they might know nothing about the company. A brand, however, needs to build relationships. It goes beyond that transactional content.
Many people in the early days of SEO used to build huge revenue-generating businesses just based on SEO with zero branding... I did that at Treatwell where SEO was a huge focus. We were able to generate tons of free demand that is still there - if you search for anything about manicures and pedicures in Europe, Treatwell will be in the top three results. But that didn't create branding. Branding is created through experience.
Ok, going back to the value of a brand. If I’m a CEO who has invested in brand marketing, how can I measure the impact of this? What would ROI look like?You will of course see an increased conversion rate, perhaps an increase in the percentage of organic leads, or customer referrals. But it is very difficult to measure. The thing with brand is that you either believe in it or you don’t.
Look at Brian Chesky [Airbnb]. He's a tech entrepreneur, he believed in brands and he built a brand. That's the end of it. Look at their marketing strategy, they barely spent anything on performance marketing initially, only PR, content, and community events. So I think it's as simple as that - either you believe in it or you don’t.
And that was difficult for me at first. I came from a technical perspective and thought everything could be solved with numbers. I couldn’t have been more wrong. And now, if I had to build my own business, I would be obsessed with the brand from day zero. It’s also very practical when you’re raising capital, because funds will pay more if you have a beautiful brand - it creates the feeling of a more expensive product. So as an investor, you’re investing in something that is well designed, well built, and thought through, not just an MVP that no one knows what it does.
Can you share some examples of brands who have done this very well then? Red Bull is a great example. It’s an unhealthy energy drink, but they've been able to develop a brand that people love based around extreme sports. They have the best teams in Formula One, they cover bungee jumping, skydiving from space…anywhere there are extreme sports, you’ll find Red Bull. And they make you feel that because you drink Red Bull, you're extreme, and you belong to that gang.
I also think Deliveroo in the UK did a fantastic job at the beginning - before I joined - because everybody just thought that Deliveroo was cool. No one wanted to order JustEat anymore. This is because they became culturally relevant - Deliveroo riders’ jackets became so famous that people were buying them on eBay! That's when you know you’re part of the culture. Now, even though Deliveroo might not be the most used delivery brand, it’s the most loved delivery brand in the UK.
Another example is Spotify. You have a lot of music streaming brands, but Spotify is THE brand in this space. That’s because they made every single person a DJ. Initially, they just targeted music experts, but soon pivoted, realising that everyone can be a DJ in their own home. It was super innovative - you could connect to communities, you could see what your friends were listening to if you were connected to Facebook, you could create playlists. And this way, again, you become part of the culture. You’re part of people’s day-to-day lives.
If we look at how B2B brands can do this, it’s interesting. You have to think about what creates relevancy. I’ve found that connecting your community of B2B users to each other works, because that helps generate new clients which creates that sense of belonging. For example, Facebook has big clients which they connect through these 'European Tech Marketing Expert' groups. Joining those makes you feel part of something. And it’s that sense of belonging that people are looking for.
So, as a company grows, from the early days to EUR 10-30M+ revenues and beyond, how should founders think about acquiring customers?There’s no magic formula, but I’ve always been a fan of ‘the more channels the merrier,’ because you need diversification. For companies that rely on one or two channels, particularly paid social, what happens if that collapses? We’ve seen this happen with Instagram in 2021.
So I like diversified marketing strategies - part paid, part organic. With paid, you can work with all types of channels from traditional ones like TV (including broadcast and on-demand) through to performance marketing channels which continue to change and evolve over time - TikTok, Pinterest, etc. There are so many new things that people are testing - some work, some don't. So I think you have to start by tracking a few channels but quickly expand to a multichannel approach. Because if you hire experts in paid social, what would happen if the next day, Facebook decides to change the algorithm?
And finally, when should a founder start thinking about the brand element of their business, and actually start investing in it?I think it's from day one. If from day one you have a brand marketing budget in your P&L - around 5% of the 20-30% that’s usually dedicated to marketing - the day you get to 100 million in revenue, you can continue spending on the brand without any questions asked. And then over time, you’ll spend a lot less on marketing, because you’ve created a brand which leads to more leads and more organic growth.
If you wait until you become a company with 100 million or 500 million in revenue and then decide to invest in brand marketing activities, the board is going to ask why. What is the ROI of TV? What is the ROI of creating a ten-person brand team now?
And it’s very difficult to calculate that ROI, and justify creating a brand once a company becomes very big. Because the brand has to be rooted in the foundations of the company. You can’t try to find your legacy when you’ve been operating for ten years.
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This conversation with Inés was truly fascinating. She has a special and unique way to articulate and view the power of a brand.
Here are my key takeaways from the conversation: 1. Branding isn’t about the look and feel of a company. You don’t need to get hung up on creating a cool logo or finding your brand voice. Instead, focus on actions. Think about what you are promising your customers, and consistently deliver on it.
2. There’s a difference between being famous and being loved. Being famous doesn’t mean people will buy your product. Ideally, you want a combination of both to become successful, but it’s important to be loved. Being loved means you can spend less on your marketing, because your customers will sell your brand for you.
3. When you look to invest in brand marketing, focus on one or two channels initially, then diversify as early as possible. That means if one channel - particularly one you have little control over - closes down, you still have other ways to reach your audience.
4. And don’t wait to start building your brand. Start on day one! Because a strong brand is built from the foundations of a company, it’s not something you can just tack on later. And that is what will help grow your business organically.
Two weeks ago I was in Vilnius. Some friends invited me to participate in the local annual tech conference. I left with one thought in mind: Energy. What I like about the Baltics is that, as these countries are so young still, much has yet to be built. Entrepreneurs are hungry, but humble. I have a good feeling about the future of the region and its venture outlook. I will certainly be back soon.
This week I am in Paris and Brussels. Hit me up if you are around...
Life is awesome,
Yannick
European VC Europe