I am an Investment Partner at Andreessen Horowitz focused on the Consumer sector
1/ Kylie Cosmetics did $600m sales in its first 18 mos, driven by social media. But that’s just the beginning. To become an enduring, standalone
business, it’s necessary for all influencer brands to go beyond being tied to a single person, and create a “purpose brand.”
2/ To borrow Clayton Christensen’s concept, purpose brands are those that can powerfully drill into customers’ minds that their product/service is the best solution when they need to “hire” something to get a job done.
3/ E.g. IKEA exists to help me furnish my apartment quickly and cheaply. DryBar exists when I want to feel like I’m pampering and doing something for myself. Amazon exists when I need to purchase anything and want it to be priced competitively and delivered to me fast.
4/ Some of the strongest purpose brands even become verbs, inextricably linked with a specific job. It’s tough for brands to stick around without being tied to a specific job, and consumers’ jobs don’t often change.
5/ Martha Stewart Living Omnimedia can give a glimpse into the future for Kylie Cosmetics and other influencer brands.
6/ In the 90s, Stewart leveraged her prominence from books and TV to create a business with publishing, broadcasting, and merchandising segments, all centered around her persona as a homemaking goddess.
7/ Its valuation hit $1.8B after IPO, but 16 years later, MSLO was de-listed and worth a small fraction of that.
8/ In today’s digital world, with compressed hype cycles and without the
benefit of multi-year retail or broadcasting contracts, celeb-underpinned brands can fade even faster.
9/ There’s Preserve (Blake Lively), StyleMint (Mary-Kate & Ashley Olsen), and many other companies that may have gotten significant initial traction
as a result of celebrity involvement, but that most of us have forgotten.
10/ To build a sustainable brand, companies need to tap into a deeper
connection with consumers–whether that’s by creating a differentiated
product or a superior user experience, or attaching to a larger movement that has longer-term appeal after the underlying celebrity fades.
11/ Social media has made it easier than ever to attract an audience and build widespread influence, and the barriers to entry to starting a new brand are lower than ever.
12/ The result is an unprecedented number of new influencer-driven media/product companies–but with potentially shorter lifecycles and lower defensibility.
13/ To ensure sustainability of her company, Kylie could aim to create
cosmetics that deliver a real improvement from what else exists out there.
14/ Or, as is often the case in the beauty industry, she can align her brand with a broader shift in women’s attitudes: today, that could be makeup as self-expression and a celebration of individuality and diversity.
15/ This approach is in contrast to the outsourced R&D and manufacturing and heavy acquisition reliance on her own media channels today, the result of which is that her current customers purchase largely due to affinity with Kylie herself, not for the underlying products.
16/ Though she’s diversified her consumer touchpoints (reality show, social
profiles, her own app, etc.), the underlying focus of her company is still the same–it’s on her.
17/ Stated another way, the major job that her products help consumers do now is to feel like they’re accessing a piece of Kylie. There’s nothing wrong with that, and the consumer affinity she’s built is incredible, but what happens when individual popularity inevitably wanes?
18/ Modern companies that have done well in transitioning from hyper-centered around an individual to purpose brands are GOOP (Gwyneth Paltrow) and The Honest Company (Jessica Alba). For these companies, celebrity served as a powerful force for initial distribution and traction.
19/ Their famous names imparted a signal of credibility, but to scale and endure, they aligned themselves with broader movements & communities around wellness, self-care, and organic/natural products. These brands are no longer about a single person, but rather tied to a purpose.
Originally published as “Erom Influencer Brand to Sustainable Business"
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