products as mirrors
Consumer engagement can largely be deconstructed into two distinct forms of motivation. People tend to interact with, buy and share products that either 1) satisfy a tangible need they have, its functional value or 2) represent the people or ideas they care most about, its emotive value.
Thriving consumer businesses, both younger (Warby Parker, Sweetgreen) and more mature (Nike, Apple), have managed to nail each of these motivations well, effectively creating two different ways into a product or service experience. I may initially identify with a brand, and in getting to know the company ultimately make a purchase. Or, I may have a specific problem in need of solving which prompts a nearer-term purchase, and become captivated by what a company stands for over time. Creating a resonance along both of these dimensions is a powerful loyalty advantage over competing businesses who simply execute well on one.
Without question, there is always a baseline of functional value that’s required. To identify, design, and deliver practical value to a consumer in an efficient and cost-effective manner is hard. But increasingly it seems emotive benefits are driving an outsized role in initial consideration and longer-term loyalty within the consumer space. While there are a few drivers of this, one in particular that warrants closer attention is the role of identity.
The proliferation of new startups in the last several years has led to both a democratization and diversification of founders starting new businesses (by race, gender, sexual orientation, and so on), which has had the important consequence of also diversifying the focus of who these businesses primarily seek to serve. We laud technology for its ability to offer to the mainstream what was initially only available and affordable for the privileged — but this tends to happen in much longer cycles in a more evolutionary and organic way (eg Moore’s Law taking hold and bringing down the cost and price of products over time). Instead, many emergent businesses are admirably, and smartly, choosing to first design for minorities, sub-cultures and micro-communities over obvious, mainstream ones.
This is a profound shift. It’s on the one hand commendable in that it prioritizes largely underserved audiences, but it also importantly eschews the conventional wisdom which suggests accessing the largest, mainstream market with which to capture the largest possible share.
“The science of business is the things that scale, the art of business is the things that don’t.” — Scott Belsky
And what may look like too narrow a market opportunity is actually a highly resonant and emotionally charged set of constituents that have long been underserved. Within them are consumers who have awaited products to champion their unique needs. These communities don’t need to be small to be underserved; some of these audiences are significant in size but surprisingly haven’t found the companies willing to prioritize them. As these businesses are quickly learning, satisfying these distinct needs translates into a much more loyal following, and puts these business in a highly advantageous competitive position over a longer arc as these groups grow in financial purchasing power and influence over time. Some below that have stood out along age, gender, and racial divides—
- Gen Z financial literacy: We know Gen Z and millennials are a massively targeted age group growing in both influence and purchasing power. But many of our products, particularly in mature and regulated categories like financial services and insurance, have yet to specifically design for them in the formats and spaces that make them most comfortable. Millennials don’t identify with Chase or Wells Fargo or American Express. But they might with Stash, Digit or Lemonade.
- African Americans: The black community’s influence on mainstream culture is undeniable, from music to clothes to food. And yet, businesses have yet to truly and uniquely design products that serve their needs. Appreciating the significance of this dictated whether you thought the $3B acquisition value of Beats to Apple was either ridiculous or genius. Bevel’s sharp ascendancy within CPG is another excellent, recent example.
- Latino: there are >400mm people in the world whose primary language is Spanish (335 mm have English) and >50mm Hispanics in the US (18% of the total population and 25% of the Millennial population). By no means is this category small or niche, but nonetheless shockingly underserved by tech and consumer standards. I’m inspired by Mitu, Camino Financial, and Manos.
- Female professionals: Women control hundreds of millions of dollars of spend each year and are one of the largest targets for many brand advertisers for that reason. But while there has always been content produced specifically for women, it tends to silo its focus and their needs into oversimplified categories like beauty and fashion. Creating products and services that support them, in a professional context for example, is long overdue. I’m inspired by Levo, PowerToFly and theSkimm.
These businesses have surfaced the insight that large swaths of underrepresented audiences do not see their identity, culture, or core affinities expressed in many mainstream products (look at the communities a platform like Amino is working to seed and cultivate). Their products are not emphasizing or fore-fronting emotion at the expense of utility — they are largely staking their claim on the belief that there is inherent utility in solving for emotion and identity as an initial premise . Sure, many of these cos have upped the ante in terms of functional and simplified utility, but they recognize that their audiences don’t have true options for brands that reflect who they are, and have found ways to build products that first and foremost solve their users’ desire for expression, identity and culture. To me the best consumer businesses of the future will be those that authentically act as mirrors of their customers.
When you couple this dynamic of self-expression and identity with the fact that so much of discovery and adoption of new services today is being driven through social channels with a dizzying number of options, having clear positioning around identity does so much to help these products stand out and make a lasting impression. It isn’t a coincidence that we’re witnessing many young businesses with small budgets invest so heavily and so early into brand. A company today gets a very small window of time to make a compelling case to a new prospective user, which makes the effective use of emotion so critical.
The know-how of building a product and building a business are distinct and critical elements of growth for companies, young and old. Yet another distinct sensibility is the intuition around your audience’s identity, emotion and mindset. Teams who expend the energy to refine that understanding over time are positioned to garner true and lasting consumer loyalty over the long-term.
