The Very Rad Consumer

11.07.17

Blog, Community, News, Thoughts

By Anna Whiteman

Many people have been asking me lately what makes one tech-enabled consumer company distinguishable, i.e. investable, from another. My answer? Whether you’re speaking of consumer in the context of marketplaces/ecommerce, mobile, devices or products, my preference is to see a brand that is, in short, very rad. Let’s break this down:

V – vertically integrated model

  • Simplifies supply chain dynamics for more efficient production
  • Allows brand to retain control/ownership of manufacturing processes and IP
  • Turns executives into operators who intimately know each angle of their business

E – Evangelist early adopters

  • Consumers willing to defend brand/product passionately
  • Provides free and organic word-of-mouth marketing
  • Gives strong foundation to weather inevitable bumps in the road

R – Removes friction in consumer journey

  • Provides simple, seamless transaction experience that leaves consumer feeling fulfilled rather than cheated, frustrated, or tricked

Y – Younger consumer age group

  • This one is a bit of a stretch (Y is a hard letter!) but with a booming millennial generation that has grown up transacting through PayPal and Venmo on their smartphones, market opportunity is vast in this consumer segment
  • With millennials earning 20% less than boomers did during the same stage of life, consumers in this age group are voting with their wallets; traction with this consumer correlates with strong brand affinity

R – Repeatable consumer usage patterns

  • Asset heavy consumer is a tricky business because purchases tend to be fewer and more far between (Peloton is a great example of a company bucking this assumption)
  • High velocity usage patterns smooth out supply/demand dynamics which translates to a more predictable cash flow model; cash flow = reinvestment

A – Automates the routine and tedious

  • Routine and tedious are easy-to-solve problems – note-taking automation is one field in which there have been some great machine learning advances (with a simple backend, repeatable usage patterns, and younger consumers, to boot)

D – Data driven

  • Data is king – I love to see brands that can inherently collect user preference data to provide an even better user experience with each iteration of use
  • Data collection also provides a brand with stickiness leverage – consumers are less likely to abandon brands that have gotten to know them over time

I will say up front that none of these are a hard and fast mandate for a tech-enabled consumer brand to be successful and some characteristics carry more weight than others depending on the subsector of consumer-tech that you’re dealing with. Qualifications aside, these characteristics have been pretty consistent in the more successful breakout brands that we’ve seen in the ecosystem in the last few years. I challenge readers to run a few brands that they might think of investing in through this litmus test – how do they stack up? What matters to you?

More content here: https://medium.com/@whianna

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