Why Launching Your Way to Growth Doesn’t Work
I wrote a whitepaper years ago about how using innovation to grow just doesn’t work. I want to refine my case here. It’s a problem that affects platform brands built around an attribute that easily crosses categories and the grocery store itself.
Often, I’ve seen this because the founder was obsessed with a specific ingredient. Or, they run a small pilot facility that makes something with a core ingredient.
As I write in Ramping Your Brand, the problem is consumers aren’t looking for ingredient experts or the next mega-brand that bridges the store. When we shop, we shop for categories. Plain and simple.
Next, our brain looks for the category attributes that matter to us. Brands can become a shortcut for an innovative attribute, but they never trump the power of category. And consumers want category experts if they want a premium price. So, your platform brand becomes fragmented into as many apparent brands as you have categories. Oops.
Only in one situation has a brand ever trumped category culturally in consumer goods: when the brand invents the entire category AND suppresses competition for decades (or kills it off like Oreo killed off Hydrox).
Unfortunately, that era is gone. There is simply too much money out there to chase new category ideas (that often start as segments). Multiple players jump on it before any original players know what’s happening.
This is why betting on brand trumping the power of focus on category innovation is a bet for the truly rich. And those willing to lose it all.
The more brilliant play is simply to triple-down on being early in the trend cycle and making the best possible set of UPCs narrowly focused. Then, work with the consumer to build an enviable fan base no promo program can replace.
This is what almond flour, platform brand Simple Mills didn’t do, which is why Vestar will most likely acquire it quietly at a very low multiple of revenue or EBITDA.
Don’t fall for the platform fallacy. Don’t launch your way to growth. Just like platform shoes, brands that grow via platforms are for fakers.