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Entrepreneurial startups shaking things up

DISRUPTIVE BRANDS

Entrepreneurial startups shaking things up

 

There is a fast-growing crop of small and not-so-small businesses emerging in the UK that is gaining strong traction with consumers and rewriting the rules in many business sectors. These brands are usually still privately owned, so are ineligible for inclusion in the BrandZ Top 50 Most Valuable UK Brands, or they are simply too small to make the list, but their impact is too big to ignore.

 

Brands like Just Eat, Azimo, Atom Bank and Tails.com are combining their understanding of a latent consumer need with the ease of market access that digital technology provides, and offering a new take on existing categories – or launching entirely new categories from scratch.

 

OnTheMarket.com provides an alternative to traditional estate agents for house hunters, with a focus on providing a user-friendly online search service. In another case of taking a traditionally offline service into the digital space, Thread provides personal styling and suggests clothes from a range of retailers that would suit each user and their budget. And Eve Mattresses is cutting out the middleman in mattress sales, selling online only to reduce costs and waiting times.

 

Food delivery service Just Eat, now a relative veteran at 16 years old, is an intermediary between take-aways and customers and has expanded into 13 markets. Its young rival, Deliveroo, founded in 2013, is in 12 markets.

 

Other brands are using digital technology to carve out their own new category. LiveStyled is a service that allows music, sport, shopping and leisure venues to tailor their offering to individuals based on consumers’ behaviour on their mobile phone.

 

And there are entrepreneurs building big businesses from a fresh look at very traditional sectors. TangleTeezer, for instance, takes a category that one might have imagined would be difficult to disrupt – hairbrushes – with a growing range of brushes developed by a former hairdresser that go beyond battling knotty hair and have moved into styling. The brand is now sold in more than 70 countries.

 

These brands are taking off not just because they represent good ideas from passionate founders who have accessed the capital to bring them to life, but also because the UK is a sophisticated consumer market, where online and smartphone penetration is extremely high, and there is huge enthusiasm for services that simply make life better or free up time for other things.

 

What these brands have in common is that they are different to the competition, and they are disruptive. These are attributes that are also associated with some of the most influential and most valuable brands in the world – the likes of Google, Amazon and Facebook – so they are in good company.

 

 

What’s a disruptive brand?

 

Global BrandZ Research Director Martin Guerrieria defines a disruptive brand as "A new, unique and motivating proposition to challenge the established order, meet an emerging consumer need, or both.”

 

 

Disruption and difference are closely related, but they’re not the same thing. Snapchat is far more different than it is disruptive, for instance, and the same could be said for ASOS. Yet disruption and difference often go together, and brands that are both different and disruptive have a greater chance of success than those that have only one of these attributes, BrandZ data shows.

 

Large and successful brands that have built their success on difference and disruption include the discount supermarket chain Aldi, and the entertainment giant Netflix, which launched in the UK in 2012 and now counts a quarter of UK households as subscribers.

 

But not all startups – even those that meet a consumer need, are different and disruptive or get funding – are built to last. Brands like fitness tracker company Jawbone, juice company Juicero and local discussion platform Yik Yak attracted investor funding and consumer interest, but ultimately failed.

 

There are many reasons why those that don’t make it fall by the wayside. Some were simply not different enough to the competition – as in the case of Jawbone – to stand out and win a big enough share of the market. Jawbone peaked at 3 percent market share and ran into legal trouble with Fitbit over intellectual property. Or, they were not able to demonstrate their difference – and, crucially, their bigger purpose in improving people’s lives – effectively enough.

 

Starting up, sticking around

 

What these brands were lacking, and what successful and enduring brands have in spades, is meaningful difference. This is a key element of brand value, and its role in helping startups stick around came under the spotlight at a Kantar Millward Brown event in central London in September.

 

The “Keeping your cool” event brought together experts from across the Kantar Millward Brown network, along with senior executives from successful startups and a private equity investment company to discuss the role of brand in driving business success.

 

In a lively panel discussion, they talked about the dual pressures on new businesses: to make enough money to stay afloat in the short term, and at the same time invest in building a brand that will serve them well and set them apart from the competition in the long term.

 

 

Doreen Wang, Global Head of BrandZ at Kantar Millward Brown, described the role of brand – and establishing all-important meaningful difference – in such a fast-changing business world.

It took Facebook 15 years to acquire the first 25 million customers. It only took Netflix 15 months, and it took Angry Birds 15 days. That is the speed of growth,” she said.

Brand building and marketing is not a cost. It is the most important investment any company should make to ensure long-term, sustainable financial market performance.”

Charlie Cannell is Digital Director at Inflexion Private Equity, which looks at roughly 1,000 UK companies a year with a view to making multi-million-pound investments. Its past and current investments include holiday company On The Beach, luxury holiday brand Scott Dunn, the Medivet network of vets and Virgin Experience Days

There are a lot of companies in the UK within our target size and situation, which is extremely encouraging,” he said. “Britain is full of these extraordinary businesses that have high performance but low profile – they’re the next generation of brands.”

Cannell said disruptive brands were highly appealing to investors, but he also underscored the need to build scale through brand-building and carefully allocated advertising spend.

Jon Wood, Customer Research Manager at MoneySuperMarket, said brand building should start in the very first days of building a business.

Brand is a long-term play. Start thinking about it now, because if you leave it too late, it might bite you later,” he said.

You will get to scale, then scale will slow, other people will come in and say ‘me too’, and you’ll wake up one day and say ‘I need a point of meaningful difference’. Then you’ll say ‘oh no, that’s going to take five or 10 years.”

Establishing a strong, meaningfully different brand is also a way for startups to wean themselves off expensive pay-per-click advertising, by giving consumers a reason to choose a brand, Wood said.

The dilemma came for many startups, he said, when they compared how easy it was to measure the effectiveness of pay-per-click investment, and how to measure investment in branding building.

“He said it was much harder, by comparison, to measure the effect of investment in brand building.

At Atom Bank, an online-only bank still in its early stages of growth, Brand & Communication Manager Leigh Peacock-Goodwin explained the challenges of building a brand from the ground up. This involved looking at every detail of the customer’s interaction with the bank, and determining for each stage what the Atom brand experience should be – right down to the hold music on the customer helpline.

In a category that has no interest, we’re still finding our way in terms of what the brand is that we want to build and what’s going to resonate best with the people,” he said. This was defined to some extent by the services it currently offered – savings and mortgages – which give the business stability.

That doesn’t mean that at that point, we can suddenly start thinking about brand – it has to be something we did when we started off, because we knew that long-term relationship – because there’s such inertia in our industry – is a long play. We’re not going to be like Netflix or Uber, that suddenly comes in and everyone flocks to it straight away.”

The dynamism and brand attributes of a charismatic, high-profile founder can help a startup develop its brand, Ms Wang said. “Many startup brands’ CEOs see from day one that brand building is very important because they themselves are the brand ambassador – Elon Musk, Brian Cheskey, Mark Zuckerberg. They believe that brand is a magnet to attract the best talent, and that’s why they can grow at that speed.”

But while startups are using brand to help them achieve scale and longevity, some of the most well-established brands are seeking to inject something of the startup spirit into their own brands, to maintain their relevance – and their meaningful difference.

Peacock-Goodwin said: “There’s a quote on a presentation we give from Charles Darwin, and it says the ones that survive aren’t necessarily the strongest or most intelligent, they’re the ones who are most adaptable to change and who are willing to change quickest.”

 

 

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At the “Keeping your cool” event in London, hosted by Kantar Millward Brown for fast-growing brands, delegates were asked to nominate which of the names from our hand-picked list of 20 disruptive brands they felt were the strongest in key areas.

 

The results are in:

 

Best for driving awareness

Deliveroo

Shazam

Atom Bank

HelloFresh

Tangle Teezer

 

Best for ‘shaking things up’

Deliveroo

Shazam

Atom Bank

Hello Fresh

Gousto

 

Best for offering difference

Shazam

Deliveroo

Atom Bank

Perkbox

Flight Club

 

Best for setting trends

Deliveroo

Shazam

Atom Bank

HelloFresh

Eve Sleep

 

 

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Ones to watch

20 emerging entrepreneurial UK brands

 

Kantar Millward Brown experts in the UK have selected the 20 brands outlined in this section as exemplars of the highly differentiated and disruptive brands that are shaping the business landscape of the future.

 

HelloFresh

Company: HelloFresh SE and Rocket Internet

HQ city: London

Founders: Dominik Richter, Thomas Griesel, and Jessica Nilsson

Year formed: 2011

Website: www.hellofresh.co.uk

 

HelloFresh is a recipe box and grocery delivery service, which allows customers to choose recipes from a menu to be delivered to their door each week. The brand publicises their fresh food sources on their website, to ensure their customers know where their food comes from. Different dietary needs can be catered for, and orders are made via the website or app.

 

Azimo

Company: Azimo LTD (Privately owned)

HQ city: London

Founders: Michael Kent, Marta Krupinska, Ricky Knox and Marek Wawro.

Year formed: 2012

Website: https://azimo.com/en

 

Azimo is an international money transfer service that operates entirely online. It works with partners in over 195 countries, in over 60 currencies, and with some of the world’s largest payment companies. Azimo says it makes transfers quicker and cheaper than the alternatives, and it can send money to bank accounts, for cash collection, home delivery, mobile top-up or to any major mobile wallet. It has over one million customers.

 

Atom Bank

Company: Atom Bank Plc

HQ city: Durham

Founders: Anthony Thomson, Mark Mullen, Edward Twiddy, David McCarthy, Craig Iley and Paul Hanks

Year formed: 2013

Website: www.atombank.co.uk

 

Atom Bank is the first UK bank built exclusively for smartphone or tablet. Atom positions itself as more transparent, innovative, and economical than other banks, and aims to do banking differently. Through the app, which grants access through voice and face recognition, customers can access savings accounts and mortgages. Atom Bank has become one of the fastest-growing startup banks in Europe.

 

Gousto

Company: Gousto

HQ city: London

Founder: Timo Boldt and James Carter

Year formed: 2012

Website: www.gousto.co.uk

 

Gousto is a recipe grocery box delivery service, which sends fresh ingredients and recipes to customers across the country each week. Customers are sent everything they need to cook up to four meals from a choice of over 20 recipes per week. Gousto works as a subscription service, and caters to householders’ different dietary needs.

 

Cornerstone

Company: Cornerstone

HQ city: London

Founder: Oliver Bridge

Year formed: 2014

Website: www.cornerstone.co.uk

 

Cornerstone is an online subscription service for shaving products. The brand advertises the quality of its German-engineered razors and British-blended skincare products, which are delivered straight to customers’ doors, and offers first-time users a full refund if they are not happy with their experience. The brand was launched in 2014, and now reports having tens of thousands of subscribers.

 

Eve Sleep

Company: Eve Sleep PLC

HQ city: London

Founder: Jas Bagniewski, James Fryer, Kuba Wieczorek, Felix Lobkowicz and Abid Ismail

Year formed: 2014

Website: www.evemattress.co.uk

 

Eve Sleep was the first direct-to-consumer mattress company in the UK. It has cut out the traditional retail route to consumers, reducing costs and waiting times. Eve mattresses are only sold online, are delivered in three working days for free, and can be returned within 100 days if the customer is not satisfied. Eve sell mattresses primarily, but have now expanded to also offer bed frames, toppers, pillows, bedding, baby mattresses and their Folk Collection of bedding and nightwear.