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For Startups, the Most Important Question Is Why? What the San Francisco Tech Market Taught a Swiss Brand Consultant

04/29/2015 09:40 am ET | Updated Jun 27, 2015

The numbers don't lie: more than 75% of venture-backed startups fail. The most common reason? Failure to understand target-audience motivations and to communicate effectively to them.

Many times, startup executives are so busy fine-tuning their offer that they lose sight of why their product or service matters to consumers. Or in other words, why consumers would want it. Understanding the why and communicating it clearly--and uniquely--to the world is critical to startup success. Without communicating the why, there is a gap between the startup and the consumer that usually leads to failure.

Branding closes this gap.

Branding Helps Define Why Your Product Matters

Branding is every experience a consumer has with a product. It's a conversation. It evolves. It's alive. Branding is also one of the most widely misunderstood and underutilized tools. But when it's used correctly, it can drastically increase growth, profitability, marketability, and ultimately success of the new businesses.

Imagine that you're part of a startup that's launching a new product in a new category. You will find that it's not enough to simply sell product features. You need to communicate your offering and why it matters to consumers. In fact, startups need branding more than an established company. Why? Startups frequently deliver new offers. A startup's biggest burden is to get attention not only for the brand but also for the offer. Branding helps explain why your product is better and why it matters to the consumer.

Recent startups that have exploded onto the marketplace bear this out.

Nest Labs, launched in 2010 and later bought by Google for $3.2 billion dollars, clearly communicates in its branding why a homeowner would want a Learning Thermostat that understands the homeowner and is better than a traditional thermostat. Uber, founded in 2009 and now up to $2.8 billion in total funding, takes the time to communicate why using an app that sends the nearest available driver to you is better than hailing a taxi or calling a traditional car service. 23andMe, which has raised over $111 million in funding and was named Invention of the Year by Time magazine, humanized the experience of using at-home DNA test kits by creating a brand that was scientific but personal, using a bright color palette and distinctive shapes. What these successful startups have in common is that they recognized the importance of branding at the outset, and this helped pave their way to success.

What I Learned from the SF Tech Market

I became entrenched in the startup world when I moved to San Francisco from Switzerland. In Switzerland, I worked with large international organizations where the power of branding was clear. Aligning organizations with multiple businesses, cultures, and languages around the globe is impossible without a solid brand platform. The startup world in San Francisco was different. The emphasis was on getting technology to market fast, without much thought to branding or audience needs.

The first startup I worked with in San Francisco was Inkling, a company that helped reinvent the way people learn and communicate. They have since expanded to helping businesses bring digital content to life, and have been named one of FastCo's Most Innovative Companies. The co-founder and CEO, Matt MacInnis, knew from the beginning that branding was a cornerstone in his strategy and a key investment.

I remember Matt telling me that he could have invested the money he was spending on branding into buying his team new computers and office equipment, but that he felt the fastest way to ensure Inkling was set up for success was in defining who they were as a brand. We ended up creating a brand that represented Inkling's concept of revelation by using visual imagery and messaging to awaken curiosity for learning.

This collaboration with the smart people at Inkling taught me a few key lessons that help define what matters most when branding a startup.

The Tenets of Branding Your Startup

Develop a clear understanding of why your audience needs you. When communicating with your audience, begin by understanding where they are, not where you are. A problem we often see is that there is a fantastic service but little understanding of real need. Think of your audience as your friends, and try to build an empathetic understanding of their desires. Learn to become as close as possible to the people who are using your product. They aren't just users. They are people with needs.

Define who you are. Most startups are more tightknit than typical organizations. Sometimes they are university friends or have worked together before, so there's a shared understating of who they are and where they're going. It's important to take the time and clarify your brand vision. Being a startup is tough, and every decision you make will be challenged each day. Being clear about your identity creates flexibility for moving ahead, but you need to make the time to define who you are and who you are not. This sets you up for future growth.

Make the brand experience part of the why. Who you are and why you connect to audiences should be expressed through a unique voice and tone and design experience. These elements need to be crafted carefully. How you present yourself to the outside world is how you are perceived. I have witnessed many startups constantly trying to fix their brand presence--they chose a poor name, have undifferentiated design and unclear messaging. Changing all of these elements once you are established brand is hard. You only have one chance for a first impression. Take the necessary time to craft your visual and verbal presence to the outside world.

Make your employees love your brand. Be very clear that if you become successful, you will need people to defend the brand on your behalf. Create an environment that makes employees love your brand. Teach them about the thinking behind the brand and how to use it, and create a culture that inspires creativity and growth.

If you want your startup to succeed, consider devoting efforts to branding at the earliest stage of your venture. Branding is the bridge to close the gap between your startup and your audiences ... so you can be a part of the 25% that succeed.