Brand leadership has to change

A few years ago, shortly after the 2008 crash, American Express in the United States paid many of its less profitable customers to close their accounts and go away. The move garnered much attention and analysis then. It was seen as a de-leveraging move. Whatever hubbub surrounded the brand then has since died down and in an unscientific survey of my business-savvy friends, few remember that this happened at all.

It was a story of a brand choosing its customers, rather than the dominant narrative that conventionally goes the other way round. The latter powers the nascent GrabYourWallet movement.  Another campaign, Sleeping Giants, is similarly holding brands and companies to account if they continue to advertise on extremist websites.

These are interesting times, as the Chinese curse goes.

As consumers, we profess to love brands that are “authentic“, never mind that in many cases, contrived authenticity, not rooted in values embedded into the business’s value chain, is all we are getting excited about.

What happens when “authentic brands” meet programmatic advertising? Unfortunate, inadvertent outcomes, that is what. Brands are left scrambling to do damage control.

What happens when “authentic brands” take a stand that is vastly unpopular? What happens when the brand’s CEO tells a customer she is free to leave if she does not like their philosophy? Isn’t that just the brand being authentic?

What when all signs point to the emergent challenges being bigger than the more popular political bugbear of the time?

Is authenticity malleable? Should it be?

What if a brand never had cause to reveal some of its stances before and is now choosing to do it in a way that consumers find abhorrent?

And when that comes to pass, should consumers force the brand to comply with their idea of authenticity, or choose to walk away with their wallets?* After all, wisdom says, when facts change, changing our minds is no bad thing.

These growing disagreements and schisms are why, more than ever before, brands need values at their foundation, in their DNA, embedded in their value chain.

Real, defensible, explicit values that the brand is willing to stand up for.

Not convenient values that change with the times or fads du jour.

It is then that brand managers will truly be able to use programmatic advertising as a tool to help them rather be helplessly enslaved by it, while they operate in a haze, whether it be about their brand values or technology.

It is then that “customer choice” will come to mean both that the customer chooses, or rejects, the brand and that the brand chooses, or rejects, the customer.

[* Switching costs for small businesses on a shopping cart platform are not negligible but then that is an economic argument, not one about values.]

 

Helmsmanship of a modern luxury organisation

Change is afoot in the luxury industry. Fewer than 5 weeks into 2017 and several luxury firms’ CEOs have left or are leaving. It is just days since we heard that Chloe Creative Director Clare Wright Keller in Richemont was to quit and while I was writing this piece, Riccardo Tisci’s departure from Givenchy was announced.

While LVMH issued a warning, Ralph Lauren maintains its earnings guidance, even though the share price dropped on the news that Stefan Larsson is leaving.

These creative and corporate developments are taking place against the backdrop of geopolitical uncertainty and also markets behaving exuberantly as if the stock market is somehow decoupled from the economic and political sentiment.

This may well be the year of reckoning for the luxury sector.

Luxury brands have too long dithered between their exclusive image and the effect of the democratic nature of the web. The digital consumer expects luxury brands to navigate the fine line between customising the experience for the consumer, because she is known to them but without becoming too familiar and intrusive. As various privacy related issues rear their head, and cultural expectations diverge, the problem becomes more challenging for luxury brands.

As “things” became more accessible, the pendulum swung towards exclusive “experiences” although this year is seeing the rise of the tangible, as Rebecca Robins, author of Meta-Luxury, says highlighting the resurgence of print books as well as millennials choosing Smythson and Moleskine notebooks to start their 2017.

The intangible and the physical however must both make money, retaining the interest and loyalty of customers across the demographic especially as millennials aren’t as broke as previously assumed.

When Larsson joined Ralph Lauren, its eponymous founder became chief creative officer stepping away from his CEO role, signalling the separation of creative from corporate, as it were. Differences over strategy is the given reason for Larsson’s departure.

Frankly this really isn’t the time for corporate and creative to cleave.

This is the time for corporate and creative to coalesce and pore collaboratively over the information contained both in the yottabytes of “big data” coming in from the many social media channels and consumer created content, as well as the “small data” that the brand’s heritage has yielded over the years.

This is the time for finding meaning in both of those and layering it with the essence of the luxury brand, to remain relevant in these times of change.

This is the time for the luxury sector — corporate and creative — to finally reckon with technology and find a new narrative of relevance that brings the sector in step with the times.

This is the time for creative and corporate leadership to reject Draytonesque kissing and parting, and choose Donne-like commitment to rejuvenate luxury’s relevance.

 

Risk culture and your startup

This article is the tenth in the Startup Series on FirstPost’s Tech2 section and first appeared on January the 23rd, 2017.

A healthcare startup founder I know was in a dilemma. For a pretty sizeable chunk of the equity pie, she had agreed to take on as cofounder a tech development guy. He would in turn build the platform which would enable her business model. As delivered, the platform however was far from adequate. The tech cofounder however was not amenable to taking feedback. Lately he had gone completely quiet and was not responding to emails or picking up calls. Our healthcare founder was left with a platform that did not work as expected, with no access to the source code, and now a growing dread that the company was slipping away from her even before it was built. She had no more money left to bootstrap or to pay for legal advice to buy out his share so she could get the code and find another solution.

When I heard about it, I asked her if the equity was his outright or had a vesting schedule, whether there were ways of clawing back some of the equity as a BATNA, what checks and balances had been built into the agreement between them. What I found was not encouraging.

Through some wrangling, this particular situation somehow found a cobbled-up solution. It is, however, illustrative of why your company’s risk culture needs to be thought of right at the time of creating the startup.

Whenever I bring this up with founders, they ask if entrepreneurship is nothing but risk taking by any other name. It sure is! It is about taking those risks that advance your goals, not risks that destroy your dream. It helps to develop the ability to tell the two kinds of risks apart.

I am not recommending that instead of building your product and your customer base, you spend your time writing huge formal manuals or official policies. I am, however, strongly recommending that you give some thought to the values, beliefs, knowledge, attitudes and understanding about risk shared by a group of people with a common purpose, collectively the risk culture.

How to shape your risk culture in early days? Here are some tips to clarify your thinking.

First, ask if the risk advances your objectives, your dream. At what cost?

In early days of developing a product, building user communities for early testing of features and pricing, capturing feedback and using it to improve the product, all cofounders may use their own devices to write code, collect information and user feedback, keep essential documentation. This is a good move to avoid spending a lot of cash on buying hardware that belongs to the company, if indeed the company as a legal entity exists at all in the early days. There are of course several possible existential risks at this stage. How is the repository for what the cofounders are learning being built and accessed? Where is the essential information — source code, names of suppliers, passwords for services to name a few — kept? Can all cofounders access it? Can it be lost or tampered with easily? What is the backup plan?

Second, think of mitigation plans required, should the undesirable event you anticipated comes to pass.

What if cofounders fall out, someone wants to leave, or someone dies? Can one cofounder hold the entire venture to ransom? What if your only supplier decides not to work with you, and they have copies of your sketches which they could as easily manufacture and start selling? It goes without saying that this mitigation planning needs to happen when you are making key decisions about cofounder relationships, product development, suppliers etc. One can, of course, deal with undesirables as they arise but it is likely to cost more money and time to fix than to prevent or have other recourse.

Last but not the least, by thinking through, however uncomfortable it may be, what happens if it all goes to the wall.

This is the tricky bit. Our healthcare founder was on the verge of incurring a heavy cost for not thinking through the apocalypse scenarios regarding her cofounder. His contribution was essential to her startup but his temperament and working style could not be mitigated by writing tough contractual terms. We don’t like to imagine doomsday situations, sometimes rightly so as they can be paralysing and demotivating. But it is important to know at some level what you would do to salvage your startup if the worst things you had not planned for happened.

Our risk propensity is about that we are willing to accept for just returns. A clear framework for the risk culture makes it easier to identify, preempt, accept or reject those risks. It is wise to start early.

Pay for a good startup lawyer

This article is the eighth in the Startup Series on FirstPost’s Tech2 section and first appeared on Dec the 23rd, 2016.

I am aware this is controversial advice.

Especially since the last column said: “You pay for some things, you do not pay for some things; you should take your time to understand which is which.”

Especially since we all know free legal templates are available online, or a friend can send you their stuff, and you can take them and tweak them, and you are done. This is where I mention that I have seen startups in India working with documents that state their jurisdiction as England and Wales. They certainly found a template for free! But is it serving them and their purposes?

The ability to make sense of legal documents is not for everybody. The inability to make sense of legal documents could however be quite expensive. The advice of a competent, experienced startup lawyer is something founders would do well to pay for.

Here is why.

A good lawyer will not just write you legalese and lots of documentation but she will build you the scaffold for a future of success and high growth. It is something to plan for now, because let’s face it, when you are blazingly successful, you won’t have time to come back and re-do the paperwork assembled from a random assortment of templates.

One of the first decisions in a startup is about location and structure. A competent lawyer, equipped with adequate tax advice if necessary, will help set up the most optimal structure for future growth and in a location that works for you. “But I am incorporating in India,” you may say. Fair point, but a good lawyer, who understands the competing jurisdictions you could incorporate in, such as Singapore, will explain the options to you, thus helping you think more broadly and globally about your business right from the start. Tax is not the only consideration, of course. A location can often beat your default location on the entrepreneurial ecosystem, the ease of finding and hiring talent including from other countries, and most crucially, the ease of doing business.

With cofounders on board, you will need a watertight shareholding rights agreement everyone agrees to sign. A shareholding rights agreement outlines founder shares of equity, but more importantly, outlines important issues that may come up including cofounders wanting to leave, resolving matters in a going concern, potential conflicts arising and so on. I have lost count of how many founder conflicts could have just been avoided or resolved more easily, had someone thought of writing a sensible shareholding rights agreement up front.

As you build the business, you will need to think about several other contracts e.g. with service providers and partners. Service providers may send you their own contracts on which it would be wise to get legal eyes so you know what you are signing up to and what recourse is available to you if things don’t pan out as expected. Next come employees and their employment contracts, which for startups may be different from those offered by BigCo employers. A major difference, for instance, may be the inclusion of stock options in the employment contract, as well as termination clauses and what happens to unvested or unexercised options in different scenarios. Especially if your startup is a success, this is an important matter to not deal with in an amateurish manner.

Whether your website is transactional or not, it is an essential for business and brings responsibility. A good startup lawyer will help write the right policies governing the use of your website for the visitors, and policies disclosing how you will treat data you may collect on their visit, their interaction and their transactions with your business.

These considerations are common across startups. Some specific startups may need specialist advice.

For instance, if you are creating a startup in a regulated industry, such as FinTech, in which none of the founders has adequate deep experience, the importance of a lawyer with industry specialisation cannot be overstated. A competent lawyer can advise you on compliance and regulatory challenges arising from, say, your business model.

In case, you are creating a social enterprise or a non-profit, correct legal advice would save you much heartache. Can you set up a trading arm? Who can and cannot donate to your organisation? What tax benefits are and are not allowable? How do you ensure adequate transparency, disclosure and compliance?

And of course, if you are creating a startup with a patented product, you will have already dealt with a lawyer specialising in intellectual property, and the advice here would dovetail with your experience.

Ignorance of the law, in no jurisdiction, is an admissible excuse for violations or non-compliance. Ignorance is definitely an expensive indulgence should anyone, from your cofounders to your customers, bring about a lawsuit against your startup.

Be smart.

Startup on a shoestring: a heuristic for thinking

This article is the seventh in the Startup Series on FirstPost’s Tech2 section and first appeared on Dec the 1st, 2016.

A startup, while it works to make revenue with its product or service, incurs essential costs. A shoestring budget calls for resourcefulness and creativity in building the business.

An earlier column discussed building the MVP on a small to vanishing budget. The Tl; Dr for this column is as follows: You pay for some things, you do not pay for some things; you should take your time to understand which is which.

The advice applies whether you are bootstrapping or playing with someone else’s, i.e. an investor’s or a VC’s, money.

How to know which is which? There is a thumb rule for that too.

For all startup related decisions, ask yourself: “Is this expense helping me advance our startup’s objectives?”. If the answer is “yes” then go for it, provided the cash in your bank account allows for it. If the answer is “no”, just stop and reconsider.

If you fear this will take all the joy out of your life, there is a third possibility: re-purpose some of your treats and desirable experiences such that they serve both your startup and to enhance your personal joy. Founders, rightly or wrongly, are not often able to separate work and non-work in ways others can. The approaches that work often address this peculiarity of the founders’ existence. Some call it leveraging, I call it maximising several of your life’s purposes in one go.

But since life is less than black and white, this week we have some tips, gathered from the trenches, which will hopefully give you a spur to more creative ideas. Some of these tips may not be new to the more experienced founder.

First off, we cannot manage what we do not understand or measure. The very first thing to measure and track is your weekly spend. Tracking gives us data, and data can help us make smarter choices in many instances. I once asked a founder, with a professed love of a specific drink at Starbucks, to estimate how much money she spent on Starbucks annually. The number was eye-watering. She then chose a two-pronged strategy: she now makes her coffee at home using ground coffee and a cafetière, and she holds work meetings in Starbucks so she can occasionally treat herself, while writing off the expense as a legitimate business expense (check business expense rules in your country with your accountant before applying this blindly).

Second, get creative, and discover “free” or “freemium”. Identify the business costs that you can keep low. Do you really need that co-working office space, or can you work from your home or shed in early days? Communication costs can be reduced to quite low with generous free minutes on mobile plans but it may be wise to keep them for making those calls, where you cannot use Skype or WhatsApp-to-Whatsapp calling. Identity the business-critical stuff you cannot afford to lose and make backups. Some of the best established project management tools such as Asana and Basecamp get you started with a free account, sometimes with limited features and you can then upgrade to a paid plan for additional features and more projects. New tools come along with free offerings, but be alert to their data export policies in case they go bust and you need to move to a different platform. Did I say make backups?

Third, manage your costs of training, learning, and staying up to date with stuff essential to your business. Most publications these days tweet out their best pieces. The web gives access to a lot of materials on software skills to business news. This column series is a good example of such materials. Find libraries, ask friends to give you their subscription copies once they are done.

Fourth, in doing all this, do not be penny-wise and pound-foolish. Do not scrimp on coming across as a professional, whether it is how you dress when you meet a potential customer, advisor or financier, or whether you turn up on time. I can see some of you rolling your eyes at this. Perfectly fine, if you feel comfortable turning up to meetings with a customer, while not showered, wearing clothes that smell, and late! Remember in the early days, founders are always selling. Choose the impression you want people to take away.

Finally, get a grip on tax rules for business expenses. Ask your accountant. Write off every single legitimate expense. This should not be hard if you have paid attention to the point at the beginning. Getting a grip on what you are spending is essential to staying within a shoestring budget.

In the next column, I will address a question I hear very often, my advice on the issue, and the reasons for it.