Predicting a brand's success: signals to look for
Predicting a brand's success: signals to look for
I write weekly newsletter about how the new forms of social, cultural, and environmental capital change brand strategy. This newsletter has been selected as one of the best single-operator newsletters on the Internet. If you enjoy this issue, you can order my book, share this newsletter with anyone you think may find it useful, and subscribe below:For those who are new to The Sociology of Business and also for those who missed last week’s edition on K-shaped aspiration, you can check it out here.A few weeks ago, Tayler Haney, the founder of Outdoor Voices, opened up about the things she learned. By now, these sort of confessionals have become a business genre that has more to do with specific VC-powered growth dynamics than with the founders themselves. The high failure rate and mediocre median returns of this growth dynamic ask for a new approach in decoding the signals of a company’s potential. In this new approach, a rapid short-term success is a fake signal of a company’s long-term value and cultural relevance. The real signals are grouped into four categories: culture, consumer, category and company.A brand has a cult object. iPhone, Tesla (and Tesla tequila, apparently), Birkin, Peloton, White Claw, original Vejas are all aesthetic totems. They elevate commodities to the level of ritual objects: “there ain’t no laws when you are drinking Claws” and nurture a taste regime around them. Tesla tequila, which started as a joke in 2018, recently launched as a very real $250-per-bottle premium spirit, already out of stock on Tesla’s website (the rumor is that the demand for it was such that people started selling their empty bottles).A brand is attractive to collaborators. Brands that are in dialogue with other brands, art and culture, influencers, communities and social institutions are able to communicate their values in the cultural language. They also organically expand their footprint. Chobani is known for its work with local farmers and paying off lunch debt in schools across states. Banana Republic recently made the iconic RBG dissent collar, all the proceeds of which will be donated to the International Center for Research on Women. GANNI recently collaborated with Levi’s on a recycled denim collection. Supreme collaborations are now a matter of cultural lore, and span from Colgate to Louis Vuitton. Brand growth is a network effect.A brand’s cultural presence is correlated with its sales. A brand buzz is directly reflected in its financial performance (this is where Outdoor Voices, Everlane or Brandless didn’t deliver). They all had awareness without profitability. In contrast, lesser known and more organically-growing brands like Caskata, Atoms, Tracksmith or 12.29 are powered by their strong economics. A brand has empathy for a particular group of people. A good number of brand founders - Atoms, DÔEN, Caskata, East Fork, Monocle, Fly by Jing, GOOP - are part of their target audience, and they respond to the gap that exists between what this audience looks for and what the market is offering. The outcome is that the audience feels like there’s nothing like it out there.