Five reasons startups beat Big Food at innovation.
Here at Mission Ventures, we're lucky to work alongside some great entrepreneurs and innovators who play by a different set of rules. Having started and successfully exited our own food brands, we know just how hard it is to achieve a breakthrough at scale.
Some of us started our careers in big food and drink organisations and delivered innovation within the culture of the corporate. Frankly, most of these initiatives failed. When we migrated into doing it for ourselves without the safety net of a larger company, we were much more successful. We have learned a great deal on our journey about why smaller and more nimble brands seem to beat the well resourced corporations. Here are our top 5 lessons:
1. Fear of Failure
The culture of every larger branded corporation rewards success and penalises failure. The marketer that looks to pivot their proposition to better meet the customers needs following an initial lackluster launch is seen as a bit desperate. Founders of challenger brands, meanwhile, will take a pivot of their brand as a mark of honour and wear those stripes on their arm with pride. Roughly 90% of all of our startups pivot in the first 2 years, whereas a corporate will typically kill struggling initiatives.
2. Too Slow - Three Frogs on a Log
There are three frogs on a log. One decides to jump off. How many frogs are on the log? Answer: Three. Why? Because deciding is not the same as doing. Corporates make great plans and often underdeliver. Challenger brands often under plan and move straight to “doing”, working on the premise that if they keep moving forward they will get to the destination quicker, albeit some of the wheels may have fallen off in the process. The old adage of “failing to plan is planning to fail” is just not true if you are nimble enough to adapt quickly to changing market conditions.
3. Too many cooks
Most of our challenger brands are run by one or two founders. They make all the decisions. Boards of corporations appoint project leaders, and those leaders build a cross disciplined team to deliver the new brand to market. The vision for the brand is now immediately diluted as all team members have their say and departments seek to mitigate risks. Corporates hire team players. Challenger brands hire mavericks who are willing to stand their ground. Once the fight is done, you follow the founder’s vision.
4. No such thing as nine to five
Growing your own challenger brand is a 24 / 7 task. At no point can you stop thinking about the business. Founding and growing a challenger food brand is a vocation. It has to be, you don't earn enough to do anything else! The harder you work, the poorer you get. Entrepreneurs pay themselves very little and push everything into the business for exceptional returns later. This scarcity of money creates a behavioral change in entrepreneurs that is impossible for a corporation to replicate.
5. No cutting corners.
Speed of execution in a startup often forces corners to be cut. For example, decisions made without data support, shelf lifes agreed without shelf life tests, copy for packs that sails close to legality, or even selling into the trade with kitchen samples only. Corporates have a reputation to protect and have an army of custodians to safeguard that reputation. A founder will sacrifice their limited reputation for the sake of speed to get to market quicker.
We love the work that we do building better challenger brands, delivering impact through entrepreneurship and creating partnerships that help both founders and corporations to work collaboratively to fulfil a mission for consumers. Batch Ventures, our partnership with Warburtons, is a great example of how big guys can help the little guys. After all, every great business starts with an idea.