Brand Strategy Is Key to Your Startup's Success

Pop quiz: Name a successful tech founder who comes from a marketing or brand background.

It’s harder than it should be, right? One of the few is Whitney Wolfe Herd, founder and CEO of Bumble, previously vp of marketing and co-founder at Tinder.

There are more if we think more broadly about nontechnical backgrounds, whether design (Brian Chesky, Airbnb) or even architecture (Evan Sharp, Pinterest). But the vast majority of founders come from an engineering, developer or finance background. 

A 2019 analysis of founder backgrounds found that computer science was the most prevalent undergraduate major, more than double the next two majors of business and electrical engineering. As humans, we naturally tend to feel most comfortable and confident in what we know best, which leads to a sacrosanct belief in Silicon Valley that product is king.

On the other hand, because few founders come from a brand background, they tend to avoid it, dismiss its importance or believe anyone can hash it out in a couple hours around a kitchen table.

Suddenly, Retailers Are the New Venture Capitalists

This mindset is further perpetuated when we consider who founders turn to for guidance: venture capitalists. Again, the vast majority of VCs don’t have a marketing background, they typically come from finance or operations.

Not surprisingly, most VCs tend to place more importance on finance- and product-related actions in their guidance to portfolio company founders. This creates a mutually reinforcing mindset, where VCs minimize the value of brand to technical founders, who in turn become VCs who pass that same belief to the next generation of founders. 

Don’t mistake brand for a brand strategy

When startup leaders hear “brand,” many automatically think of logo, colors, swag, perhaps splashing dollars on endorsements or sponsorships. If this is how brand is defined, then it’s 100% accurate that startups shouldn’t spend much time or money on it. Building the product, scaling the team, securing financial runway, getting to product-market fit—all of these must be higher priority to ensure the startup has a chance to survive. 

But brand strategy can and should play a foundational role in ensuring a company is set up to succeed. Whereas brand is an outcome, brand strategy defines the choices that any startup must make in order to achieve its business ambition. A rigorous and comprehensive brand strategy will accelerate business performance by helping the startup to decide:

• What is our product value proposition?
• How do we differentiate our product or service in a crowded competitive landscape? 
• Who are the primary audiences to win with first—and who are the growth audiences that will enable us to scale? 
• Where should the leadership team focus more (or less) time and attention?
• Why does the world really need another “Uber for x” or “Stripe for y”?

Even at the earliest stage of a startup, an understanding of brand strategy is not just a useful asset, it can be a competitive advantage for a founder willing to invest a bit of time in understanding the fundamentals. 

Why brand matters

The reality is that there’s substantial evidence that investment in brand yields impactful and measurable returns on four dimensions.

Financial: Influential brands are an asset in their own right, and research demonstrates that there is a strong correlation between brand strength and stock market performance.

Even for startups that are nowhere close to IPO, a coherent brand strategy can inform an investor narrative that breaks through in a funding environment where the power has flipped from founders to VCs in the past year. 

Community: Brand drives incremental value by creating strong emotional resonance with its community, creating loyalty beyond reason.

As Zoe Scaman states, this creates a flywheel between audience, product and brand that powers business growth, which was instrumental to fueling early success for companies like Peloton and Amazon. 

Employee: An influential brand is a beacon to attract (and retain) top-tier talent in a tight labor marketplace. According to Deloitte, purpose-driven companies report 30% higher levels of innovation and 40% higher levels of workforce retention.

While total compensation is key, a clearly articulated brand purpose can be the invaluable decision-maker.

Cultural: Influential brands also create cultural advantage that contributes directly to business success by delivering a disproportionate share of voice, driving the PR narrative and attracting partners. For example, while celebrity endorsements cost tens of millions, Airbnb was able to get Beyoncé on board for a much lower fee because she was so aligned with the company’s brand purpose.

When brand matters

At what key moments can brand accelerate startup performance? If the answer is “yes” to any of these questions, then it’s worth an honest self-assessment to see if your startup has confident alignment on its brand strategy:

• Has the ROI on performance marketing become less efficient?
• Are you about to embark on a big hiring push?
• Is there an imminent funding round or IPO?
• Have you found traction with a core audience but now need to “cross the chasm” to the mainstream?
• Are you expanding your product into new verticals and markets?
• Has your early success spawned a wave of “copycats” that talk and look like you?

Do Brands Need a New Trade Group to Realize DEI Goals?

For startups, brand is too often viewed as an unnecessary cost center, but when its impact is fully understood, brand can actually be a core business driver. While it’s harder to directly track the ROI on each individual dollar of brand investment, we all recognize the risk of failure in its absence.

No one regrets understanding brand too soon, but even the most successful startups wish they had defined their brand strategy earlier in their trajectory.