Be Un-substitutable

Posted by Jonathan Ehrlich

Imagine for a moment you need to take the 7 a.m. flight tomorrow from San Francisco to Seattle. You have three choices: United, American and Delta, all priced at $399 return. Which one do you choose?

I’ve asked this question to many audiences over the years and the answer usually comes down to the one who “pays” the most.  Sadly, it’s about loyalty points, not desire. Now, let’s add a fourth option: Virgin America. Now which one would you choose? Again, the choice is usually clear and un-ambiguous. You fly Virgin. Why? Because you just know it’s “better”. You might like the comfy leather seats or the funky disposition of the flights attendants. Or you might simply feel cooler flying Virgin.  Regardless of your rationale, your reaction was instantaneous and, hopefully for Virgin, infused with powerful emotion. You just knew.

That, in essence, is what a brand does. In a world of too much choice and sameness, a brand creates a powerful imprint in a person’s mind – a “promise” – thereby making the choice between multiple options a quick and easy one.

A brand isn’t a company’s product or what they it says it is.  It’s what you say it is. It’s your reaction.  And truly great brands elicit a reaction so powerful in their intended audience that they become “un-substitutable”: an experience for which there are no substitutes.

So, what are the common characteristics of great brands? In my view, it comes down the three things.

Great brands are user-informed, not user-led

Great consumer brands never ask their users what they want. They build the future, get it in people’s hands and listen. Facebook’s launch of Newsfeed offers an excellent illustration of this in action. When Mark Zuckerberg, Chris Cox and team launched Newsfeed back in 2006, Facebook users went bananas. Over one million users, representing more than 15 percent of their user base at the time, joined Newsfeed Protest groups on Facebook (oh, the irony). Some even organized in-person demonstrations in front of Facebook headquarters.

Yet Newsfeed, whether you prefer the Facebook or Twitter flavor, is arguably the most important consumer technology to emerge from Silicon Valley in the last 20 years. It has changed the way people communicate with and connect to each other. It has even brought down a government or two. Now, imagine if Facebook asked its users in advance if they wanted a Newsfeed-type product on their Facebook profiles. The world would be a colder, less informed and less connected place.

Feedback is important. But great brands don’t ask people to define their future. They lead them to it.

Great brands obsess about what is “core”

Great brands obsess about the user experience. Take Uber. Is there a more perfect mobile experience? Its elegance is a delight on every screen and it exceeds my expectation on every use. But great brands don’t stop there. They constantly push themselves to redefine what is “core”.

My personal favorite is Apple’s magnetized power cord, which stopped my long history of inadvertently dragging poor, innocent PCs to their death. Nest, born from that same Apple gene pool, is another Brand that obsesses about everything and constantly redefines what it means to be “core”. How delightfully surprised I was to find that little white perfectly weighted screwdriver in that magic box of goodies when my Nest arrived, saving me a 20-minute search through the garage for the right screwdriver. By changing what was perceived as “core”, it made the experience that much more awesome.

Great brands clearly stand for something 

The last – and arguably hardest – thing great brands do is to clearly stand for something. Standing for something is the only real way to build trust, particularly in markets dominated by large, deep pocket incumbents. Need proof? Just ask Netflix.

When Netflix launched in 1997, the entertainment world scoffed. Movies-by-mail? Queue the laugh track. Yet Reed Hastings had a simple insight that would eventually help drive Blockbuster Video – which at its peak had 9,000 stores, $6B in revenue and nearly $4B in profits – into bankruptcy. The insight? That customers absolutely loathed paying “late fees.” These fees often totaled 3-4 times the actual rental cost and left customers fuming with anger. Yet late fees were so prevalent and profitable that at one point they represented 16 percent of Blockbuster’s revenue.  Armed with this insight, Hastings went about building Netflix. First, he architected the core experience as an “all you can eat” subscription service. Ready for a new film? Simply drop the old one in the mail. Never pay a late fee again. Next, he adopted the “no late fee” message as the company’s manta and went about imprinting that singular message everywhere.  Netflix meant “no late fees”.  Full stop. By the time Blockbuster managed a response to the Netflix experience, it was too late. The game was over.

Netflix, now an entertainment juggernaut, owes in start in life and frankly, success, to clearly standing for and delivering against one promise and one promise only: no late fees.

A more recent example of a great brand that clearly stands for something is Y Combinator. It stands for founders. It’ll do whatever it takes to help founders win, even if it means disrupting decades old approaches to building and funding companies. Yet YC, by clearly standing for something, has created a brand so powerful to its global audience of hackers that today, getting accepted to YC is harder than getting into Harvard.

Building a great, sustaining brand takes time. And it can’t be done unless there is product/market fit. But when accomplished, it creates a magic for which there are no substitutes. And it’s that “un-substitutability” that customers – and investors – love.

 

* Special thanks to Ben Blumenfeld and Mark Bixby for helping to develop this.