Insights

Anyone who deals with startups in their early phase knows: They live on the stories about their founders and the founders' world-changing ideas, not on stories of already proven success. Many know the story of Mymuesli – but is it really clear how much their business success depends on their brand?

A similar development was seen in the last season of Die Höhle der Löwen, which brought the Vox network fantastic ratings: Modeled on the American original ("Shark Tank"), the show invites brave founders to introduce themselves and convince investors of themselves and their companies. Without the benefit of sales figures, they try to sell belief, or hope – for sometimes exorbitant company valuations; startups live on their founders' personalities and ideas.

Founders have the once-in-a-lifetime chance to build their brand from day one

The investors in the TV show like to use the buzz phrase: The founders need to "work on their brand". Further explanations, however, reveal that what they really mean is marketing – they simply don't like the logo or the packaging.

This could give viewers the wrong impression that brand management for startups is nothing more than dealing with the surface: communication and marketing tools like the brand name, logo, claim, or a pretty design. An attractive shell may get you attention, but without convincing performance, this construct collapses faster than you can say "corporate design".

One thing is clear: Investors and customers must be able to identify with the founders' convictions and business ideas. That will not happen if founders get lost in surface management.

This is why founders need to realize: Brands are much more! They are the strategic foundation of their company. Founders have the unique and irretrievable chance to define from the get-go what their company stands for. From the very beginning, they can develop a brand strategy, build their brand systematically, and manage it at all touchpoints.

Brands are crucial during the starting phase of a company, because they bundle and store the founders' attitude, all performances, and values. In fact, founders start working on their brand the moment they start their entrepreneurial activities – but without being aware of it. Simply because they cannot yet define the power of their brand.

For brand building, founders don't need marketing, but attitude and peak performances

The prerequisites for brand building are given when founders represent a clear attitude and are passionately committed to a vision they want to turn into a reality – as TrueFruits did. To become a brand, they develop the necessary performances.

Interpreted correctly, "working on the brand" therefore means delivering superior performances, recognizing the value behind them, and formulating and communicating them. To make that work, it is absolutely critical to answer the following questions to clearly position the brand on the basis of credible, attractive, and differentiating factors:

• What is the core of our brand, what do we stand for?
• What is it that only we can do, what makes us indispensable?
• Where are our boundaries, what do we focus on?

From a brand management perspective, these are the three most common pitfalls for startups:

Pitfall 1: Polishing the surface but neglecting the substance.

About 80 percent of the substance of an iceberg is under the water's surface. The same goes for brands: Only a small part of a brand is visible above the surface, but below the surface is where it grows. That is why the work has to start there, below the surface.

Strategic brand management begins below the surface.

This applies to established corporations as well as startups, because brands are always the condensed expression of specific peak performances – the difference being that startups usually don't have a lot of performances to show yet. In this case, they at least bundle the founders' personality, the (product) ideas, and their vision. During their starting phase, this is their whole brand capital that constitutes their good reputation and earns trust.

No question, startups need a meaningful brand name and a consistent logo design. But the greatest name, the prettiest logo, or the best claim will do no good if they do not pointedly express the core of the brand. As long as it has not been defined what the brand stands for, those measures are a complete waste of money.

Pitfall 2: Making increased awareness the top priority.

I have to dispel one of the most common misconceptions of brand management at this point: More awareness does not automatically result in more success. What is more awareness going to do when it is not clear what makes the brand attractive in the first place? More awareness is expensive, yet it is of no use if there is not already a certain attractiveness for a group of people who identify with the brand.

What good is it for a startup if everyone knows its brand, but nobody buys it? No young company will survive in a saturated market while there are brands out there that are more attractive in the eyes of potential buyers.

The currency of effective brand management is attractiveness, not awareness.

Pitfall 3: No clear and differentiating positioning.

It is amazing how many founders cannot describe what makes their brand special and what sets it apart from the competition. In a world of overabundance, a clear positioning is the critical survival factor.

Company founders have to carve out what performances make them credible, for whom they want to be attractive, and in which category they can beat their competition.

People strive for superlatives. Who is really ever content with second place? Founders must have the ambition to establish their brand as the No. 1 in a particular category – and they have to make it their goal to permanently defend this top position with consistent performance. That way, their No. 1 position will become established in the minds of people.
This kind of performance also means: Founders must focus on the core of their brand and omit everything that doesn't fit and doesn't contribute.

Knowing how to do few things – but doing them better than anyone else: This has to be the motto.

Brands have unimagined powers that founders should take advantage of

Systematically and consistently managed brands develop unimagined powers and help founders to get the most from their startup:

1. They are the strategic basis for the entire company management and orientation.
2. They create lasting attractiveness with the right customers and ensure sustained growth of the startup.
3. They provide the necessary clarity and focus to prevent founders from getting lost in too many new ideas, and keep them true to their core.

Founders are in a unique position, because they can create and build a strong brand without detours and obstacles. Their brand strategy is really nothing other than their business strategy, only from a different perspective.

Taking this new perspective should be easier for startups than for established market players:

• Unlike large companies with their often crusty structures and thought patterns, startups can start with a clean slate and consistently make their vision a new reality.
• What they might lack in terms of stability and reputation, they make up for with agility and courage. They are not afraid of grand, world-changing ideas – or of failing and getting right back up.
• Startups are the opposite of anonymous mega-corporations. Their founders are real personalities who stand for something. They bundle convictions, values, and ideas, and give the brand a face.

The sooner founders view their brand from this perspective, recognize it as their greatest value driver, and shape it with the help of a clear strategy, the sooner they can set a course for success.