How Brands Need To Adapt To A Changing Landscape – Forbes

Posted: February 21, 2020 at 12:43 pm


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Gautam Gupta, Partner at M13 Ventures and former CEO/founder of NatureBox

Gautam Gupta has seen both sides of the entrepreneurial landscape.He started his investing career at General Catalyst, investing in companies such as BigCommerce, GoodData, Honest Company and Grammarly.He then went on to be the founder/CEO of NatureBox, a digitally native brand of snacks. Last year, he returned to the investor side as a Partner at M13 Ventures.We sat down to discuss his view on the future of brands and how big companies need to be changing their approach to the future landscape.

Dave Knox:What do you believe to be the defining characteristics of the brands of the future?

Gautam Gupta:I think in terms of brands, some things will change and some things will never change. Starting with what will never change, consumers will always want a value proposition that is clear above all else. The brand and the product have to deliver a great value proposition. I think that's first and foremost. Second, successful brands will always be consumer focused. They will always be trying to figure out what are the problems that this brand can help a consumer solve.

What will change is brands have to become like people. Consumers want a relationship with the brand that extends well beyond the product. They want to understand what the values of that brand are. And that's why I think you're seeing brands become more vocal in the political arena. I think that's only going to continue. The other thing that I think will change is brands are going to be multichannel from day one. It just doesn't make sense to sell a product only in one place. The Internet has been a democratizing force where consumers can buy products online, offline, and from dozens of different retailers and different outlets.

I think the other thing that's going to change is if you think about the way brands were started 10 or 20 years ago, there was a constraint around the business model or the channel. If you were Procter & Gamble, thinking about starting a new product, you had to think about how to bring that product to market given the constraints of the retail environment and the margin requirements that a partner like Walmart might have. I think what has changed is now you can start products and brands that are unconstrained by those factors.That's pretty exciting because you're starting to see entrepreneurs innovate in areas that probably weren't possible 10 years ago.

Knox:In venture capital, you're not investing in the next trend of tomorrow but a much longer time horizon. How do you think about the ripple effects of consumer change and how that will play out over a decade

Gupta:One of the interesting things about technology right now is the pace of consumer change has only increased. If you think about the adoption of new technologies, it's pretty incredible to think about the number of smartphone devices that are out there in the world and just how quick that adoption has happened. Today the reality is technology is just being adopted so much faster. And so we do think a lot about these ripple effects with technology and what happens once a new technology is introduced.When smartphones came out, they came with cameras, with GPS and with other sensors that created the opportunity for things like Uber and Airbnb. If you think about technologies like autonomous driving, it is easy to think about subscription car services.But I think one of the interesting impacts that a technology like that may have is people will start to live further away from where they work because if you don't have to actually think about driving, you can be very productive sitting in the car getting work done.

That might enable you to live two hours away from your office. And that's pretty compelling because that could create interesting investment opportunities around real estate. Also think about voice recognition where voice is a fundamental technology shift. Kids are growing up learning how to interact with Alexa and Google Home long before they learn how to type. When you think about what applications that's going to enable vs a keyboard world, its pretty exciting.

Knox:Where should large brands be prioritizing their focus and resources given these coming shifts?

Gupta:One of the things large brands need to take stock of is where their core capabilities exist. Historically, large brands had incredible consumer insights, incredible R&D capabilities and their ability to get a product onto the shelf is unparalleled. No startup is going to compete with P&G in the ability to get a product onto the shelf. Large brands need to realize that one of the big core competencies that they have is actually around distribution.

If you think about the distribution muscle that a company like P&G or Kraft has, they can start to leverage that capability to jumpstart new brands. Whenever I talk to someone in a large brand, I ask them what if you weren't beholden to the brand portfolio that you had today? What if you viewed your business as test and learn? Get things into the market, see what works and then double down on that. And so that's what I'm personally very excited about in terms of where large brands could start to shift and spend their time and focus. I think in addition to that, the thing that I would tell any large brand is to really start to consider vertical integration opportunities and opportunities to be closer to the consumer.

Over time you're going to see brands move into different areas and different services like what Tide has done around dry cleaning and washing service they have.I feel like that's going to be commonplace in the future. Anything that can give you exposure to the consumer, where you have that direct relationship. And so that's one of the big things I encourage brands to think about is just don't be constrained by the current business model, the current set of distribution options, but just really think about the use cases for the consumer and be willing to do things that maybe don't look like they could scale.

Knox:What categories are you watching the most when it comes to looking for that next big game changing company?

Gupta:As it relates to e-commerce and direct to consumer brands, there are two spaces that I'm looking at.The first is high order value, highly considered purchases.For instance, I'm really interested in what the next generation of home appliances looks like. It's a little bit off the wall, but if you think about it, how much time did you spend thinking about the refrigerator and the dishwasher in your house? These are huge purchases. And so I actually think that there's a lot of that purchasing process today happening offline. There's no reason why it couldn't happen online. A lot of the research is happening online anyway.

The other thing that I'm always looking for is highly recurring, high frequency purchases. Think of that as the next Dollar Shave Club; anything that a consumer is thinking about on a daily basis. I personally like the supplement realm, personal care products and things like that. Consumers are thinking about it every single day because they are interacting with that product every day. That's pretty special.

Knox:Startups and venture capital are fast moving to say the least. How do you approach own personal development to stay ahead of things.

Gupta:I spend a lot of time talking to people who are naturally curious about technology and sort of through osmosis trying to understand what are they thinking about.But beyond that, I try to keep a very open mind. If I feel like I'm being dismissive about a certain idea, I'll try to actively stop myself and take the other side of the approach. The other thing is every year I focus on learning one new area of expertise. This year it's been really learning about Amazon and that entire ecosystem.So I talk to as many smart people as I can to understand what is going on with that company and the platform they have built.I want different perspectives.If you're a brand today, how do you think about Amazon?Are they a friend or foe? Every year I to try to pick one big thing and really spend some dedicated time figuring it out.

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How Brands Need To Adapt To A Changing Landscape - Forbes

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February 21st, 2020 at 12:43 pm