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Brands, Strategy and Consumer Spend (Notes from March 11 – 17, 2019) April 3, 2019

Posted by Anthony in Digital, experience, finance, Founders, global, Hiring, questions, Strategy, Uncategorized, WomenInWork.
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For this week, I wanted to reach outside of my usual Wharton/Business XM channels and the typical 20min VC, so I dove into Discussions in Digital, which is a podcast done by McKinsey & Company, focused on sales and marketing in the digital space. What happened for the week, then, was a convergence on marketing strategy and the pull from physical stores to online media. We’ve seen considerable growth of digitalisation across a bunch of different industries, so the collection and reading through the notes helps to shed light on how different companies are engaging this through the 2010s and beyond.

However, we start with none of those, and I wanted to highlight her work. Christine Heckart, who recently became CEO of Scalyr, has been an expert in the technology space since her childhood around her father but more importantly, as a veteran of Microsoft, Juniper Networks, Cisco, and Netapp. She went into depth on what it means to be a master operator in the tech space as well as how she has managed being a new executive in an established company, which can often be a perilous position.

  • Christine Heckart, CEO of Scalyr (Bay Area Ventures, Wharton XM)
    scalyr

    • 2016 Woman of Influence by SV Business Journal
    • Talked about always being the lone woman in an industry of tech and general – always curious
    • Acts on BoDs for Lam Research and 6sense
    • Building the team at Scalyr, sitting and watching when she first replaced the founder to establish some trust
      • Not breaking things immediately, but gathering information and having the strategy
      • Her responsibility to have the vision, make the strategy and execute it all within the culture of the company
    • Previously with Microsoft, Juniper Networks, Cisco and NetApp
  • Discussion with the Marketing Matters professors
    • Talking about how Target and Walmart have been killing it again (Target french)
      • Physical locations, where they have operational excellence
    • DNVB (digital native vertical brand?) that opens a showroom/store to much success
      • Can have people try items, feel them and get a sense before placing an order online or in store
        • Have it delivered very quickly
    • Cannibalism of Gap / Old Navy on market
      • What’s the difference? Old Navy was hip and cool, initially.
      • Now, Gap is just more expensive Old Navy or vice versa
      • Releasing them as new brands (Gap/Old Navy / Banana Republic, etc…)
  • Reimagining CX in Mobile Age (Discussions in Digital, 6/28/2016)
    mckinsey-logo

    • McKinsey’s Brian Gregg, Michael Jones (RetailMeNot), Mahin Samadini (McK DL), Dianne Esber (McK), Mark Philips (McK)
    • Radio 38 years to reach 50mil people, tv – 13 yrs, twitter 9 months, Google+ 88 days
    • Mobile as a phone or what? Transforming experience and every industry – beauty, connectivity and in both B2B and B2C
      • Mark was at Candy Crush – how do you understand users? Not maximized yet.
        • How to construct the journey through the product – mapped out the customer journey
        • Did a lot of pre-curation depending on IP, time of device and other numbers for the apps (before even using)
    • Can start to see that people plan shopping earlier – if outside of geofence (home, elsewhere) and look where they want to shop
      • Partners can see – RetailMeNot – when they want to shop
      • “Snacking” – personalized commerce, faster and easier to buy – more you frequently purchase
        • Reiterated by Candy Crush (90sec, even, with female demographic – put kids to bed and on way to bed or wherever)
    • 80% of transactions by 2020 will still be in physical locations in the US – 80-90% will probably be researched prior to entering store
      • This number is a bit high – it’s closer to 70%?
      • Seamless vs “Elegant seams” – customer knows where the difference is between channels
      • Mobile is still conversion-based, whereas people are commitment-phobes, so they want an experience
    • Went to RetailWest in Palm Springs – a CEO had a kid who took a picture of shoes that he could make
      • Posted on Instagram, saw how many likes
      • Eventually bought the shoes, got likes, etc…
      • Friends asked him about where he got them and he ended up building that ecosystem (but it’s not just shoes, it’s everything)
    • Toothbrush industry – how do you tell people to get a new one?
      • In 1980s, created an indicator bristle to tell customers to buy a new one based on the data
      • “What’s your indicator bristle?”
    • Existing companies out there – reality for mobile being a thriving way out
      • No singular model anymore
    • Stepping stone to AI: messaging / chat – voice – AI
    • Enabled physical world with digital (gift card originally with Apple and could take a picture and get it into iTunes)
      • Talked about OpenTable reservations – expected to have it, otherwise painful
  • How Strategy is Evolving / Staying in the Hypergrowth Digital World (Discussion in Digital, 1/18/17)
    • B. Gregg, Jacques Pommeraud (fmr Salesforce), Jon Weinberg (Sephora), Dianne Esber
    • Still a role for 3 year vision?
      • Yes – any company, any phase for what you’re shooting for.
      • Strategy could be an annual process with execs getting together – not likely going to work. Needs to be more often.
    • Sometimes smaller companies don’t see the need – how do we get bigger companies to do the vision quicker?
      • Bigger/broader vision (eg geographic expansion) hard to get passed out to the company as you get larger
      • Value of strategy comes from mobilizing the strategy
    • Architecting the strategy – has to be crisp enough to make pivots without issues, consistent framework
    • At Salesforce, what matters is customer trust, then customer success
      • V2MOM – vision, values, methods, obstacles and measures
        • Vision helps define what to do, values establish the most important
          • Customer trust / success
        • Goes down all the way in the company via a memo, accessible for everyone
      • With Facebook, used example of Sheryl Sandberg’s “Have hard conversations.”
    • At Sephora, rapid expansion – how do you continue to fuel the growth? Client-centric ideas, but how do you support it?
    • Is there a role of strategy to recruit?
      • Culture of leadership – used example of sciences like data scientist / VR value and what talents can help any company
      • Need app developed, whether it’s Bird or GE or Sephora, have to bring in people to work
    • At Salesforce – Jeffrey Moore has the 2×2 matrix for 4 zones
      • Efficiency zone (non-core activities: SG&A, support), Performance zone (core biz: 80%, execution)
        Innovation (lab, test – few things to try – new biz, products), Transformation (performance hopefuls)
      • In tech – birth of AWS – complete leader and supply chain
        • Siemens – institution-based, machines/phones/manufacturing and now high-tech medical instruments and big data
          • Data lakes, analytics and data-providing
    • Ultimate investment in next 3-5 years: People, data curation (either over-investing in tools that don’t need) or army of people (same problem)
      • No difference between retailer and tech or other companies
      • Personalize experience, data, customers
  • David Zhao? Baidu (Mastering Innovation, WhartonXM) – same day as ThumbTack march 14
    1200px-baidu.svg_

    • Talked about AI in cars (from SF Bay Area)
    • Ford’s “Faster horses” comment compared to just building the cars
      • Infrastructure came next – roads, highways
    • Initial autonomous thought sensors would have to be everywhere, infrastructure improved
      • Autonomous and sensors started taking hold once prices came down and placed into cars
    • Didn’t have a great guess – but 10 years, and he wasn’t sure how
    • Said a confidence interval would place the number of miles needed at 4 billion miles (and they’re at 800k?), 5000x necessary for Autonomous ‘comfort’
  • Michele Gelfand, author of Rule Makers, Rule Breakers (Wharton XM)
    517hbyg5a6l._sx329_bo1204203200_

    • How tight and loose cultures wire our world
    • Establishing relationships based on being tight / loose – none of us are across the board
      • Different tendencies – clean / neat, on-time, etc…
      • Working looseness or tight
  • Allbirds Co-Founders Tim and Joey (Built Product, Wharton XM)
    allbirds-logo-fb

    • Talked about the business strategies they’ve had to employ, learn
    • Shoe laces that were excellent but cost too much
    • Having different soles that were 3x in cost, carbon 0
  • Adam Pritzker (@adampritzker), Chairman & CEO Assembled Brands (20min VC, 3/15/19)
    • Working capital and financial services, along with cofounder of General Assembly
      • Forbes 30 under 30, VF, amid others
    • Many in his family are entrepreneurs, so he felt it naturally
      • Empowering entrepreneurs – GA develop digital, and with Assembled Brands – products and goods
    • Optimistic about retail
      • Consumer spend much higher, and retail is closing faster – closes > openings
      • 90 of the top 100 brands lost market share (which means others are growing quickly, smaller / emerging brands)
      • Khait (partnered with a founder), and was able to look at the data in order to get a capital infusion for d2c side
    • Could map out the value chains
      • Incubated, operated emerging mobile-first, built distribution, developed creative content, financial p&a, benchmark and underwriting
      • Exists before vs exists today – as they re-platform retail, financing brands can be done differently
      • Traditional: purchase order would be collateral for bank but now buyers are individuals (banks and factories can’t underwrite this effectively)
    • One brand as brilliant vs another category not working
      • Very few SKUs and strategy can underprice incumbent by selling direct to consumers (mattresses, eyewear, razors, etc… as exception)
      • Adding channels adds complexity
        • Online/offline, direct/wholesale
        • Technologies for attending to business Shopify, Google Analytics, HubSpot
        • Creative/Quantitative marketing and product dev / manufacturing all to coordinate
    • Providing the network of founders and capital based on some of that data
    • Bigger problem isn’t price, it’s finding customer value wrong
      • Happens often where costs change or aren’t understood
        • Too many SKUs, optimization of prices around products
    • Saturation of marketing channels
      • Founders don’t realize that they can get to $30mln and cut growing to just get to profit
        • Safely growing, cutting can be analyzed – if costs remain the same but revenue squeezes, or dips
      • Instagram is the new QVC (best leveraging for social discovery)
        • Instagram empowers the content organically – ex of Halo Top
    • Fundraising infrastructure as broken – said it’s getting better
      • Old: Made samples, showed to stores, got purchase orders, use them as collateral for $ from bank, made goods and sold in store
      • New: Software and systems need to get streamlined to make it easier as the channels have gotten more complex
    • Niche exits more often than big ones
      • 70-80% ownership of the company vs multiple rounds and only 5% – can be similar exits if capitalized properly
    • Coddling of American Mind & Upside of Stress (Strive to be antifragile and to invite stress, fragility) as books
    • Design / brand that he likes: Uhuru Design, founded in 2004 in high-end furniture, contract division built out over time (d2c to enterprise)
    • Scarcity of financing and benchmarks, no IRL community for physical goods
    • Organic referral and repeat purchases (always delighting customers should be great way for a virtuous cycle)
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