“Do consumer products really matter?”
A friend asked me this question after I shared the details of my new role at CircleUp Growth Partners, where I’m part of a small team that invests in high-growth consumer brands.
It’s a good question – one I’ve heard (and even asked) before. In answering it, I thought about how and why I ended up at CircleUp.
My Time As An Operator
Before CircleUp, I worked at La Colombe Coffee, where I was the Director of New Products/Incubator. During my time there, we launched a line of teas, ready-to-drink (RTD) lattes, chocolate bars, and several other products. I saw first-hand the challenges of creating new products that met the needs of a diverse and evolving customer base.
To start, the La Colombe cafe customer is very different from the Target shopper buying refrigerated lattes. A typical cafe customer lives in a dense, urban setting and drinks coffee as much for the experience as for the energy. A suburban customer shopping for lattes in the grocery section is looking for an easy, healthy grab-and-go product. In developing a new product, teams have to balance competing demands from different consumers (and of founders, loyalists and new enthusiasts). The product must be authentic to the core brand, while simultaneously pushing the boundaries of what customers expect. It’s very difficult to know which products will take-off and why.
Early-stage consumer startups frequently have to make decisions based on “gut-feel.” This product strategy may have helped establish the brand, but it becomes less of a sure thing when launching a product that will be sold across thousands of stores.
As an operator, I often wished for more data – not just data on sales or performance, but data that could help identify the next breakout product or flavor. Data that could help the team see how competitors and retailers defined success. I recall countless moments when our team struggled with a key decision or lost precious time iterating on a new concept because we lacked the data needed to make a decision quickly and effectively. What we needed in those moments was data that had a point of view.
Changing Consumer Preferences
Determining the next breakout product, flavor or brand is harder today than it ever was in the past. With a myriad of options available and an increasing focus on customization, it’s possible for individuals to have their specific needs met through a variety of products. Furthermore, changes in distribution (including direct-to-consumer models and “local” sections in many retail stores) have made product trial much easier today than it once was. For example, it’s easy to imagine a customer falling in love with a product that they discover/purchase via Instagram that meets their exact dietary needs – in fact, it happens all the time.
In today’s changing consumer landscape, hundreds of attributes matter when predicting product or company success. Breakout brands strike a cord that resonates, often in unexpected ways. A favorite industry example is Halo Top, a company that grew to $350M in sales in 5 years in a category that was growing only at 2-3% per year. As I asked why and how the company was successful, I realized that there wasn’t just one reason people could point to. Ingredients, formulation, taste, packaging, branding, marketing, social media, distribution – it all matters. In order to have a shot at predicting the consumer behavior, it is important to track and analyze hundreds of data points over time.
Why Data Matters?
Every company or investor I speak with today understands the value and challenges of data- I understand it as an operator and even as a consumer. Quality data allows us to make better decisions.
And, that’s what we do at CircleUp. We track billions of data points on over a million consumer brands to help us and our portfolio companies make data-driven decisions. Data is part of our DNA – we refer to the insights gathered through Helio, our proprietary machine learning platform, in almost every single meeting.
This data helps us find breakout brands earlier, and our conviction behind the products we invest in or even reach out to is informed by how they are resonating with the consumer. Analyzing the data gathered across hundreds of sources, we try to understand the “why” behind the success of a product or brand.
We also use this information to support our portfolio companies as they grow. We’ve helped companies think through topics similar to:
- Which ingredients will resonate most/least with consumers?
- How is the brand resonating with consumers?
- Which geographies and accounts are best to prioritize?
- What should performance look like at each stage?
- How does growth compare to competitors?
We also support the CircleUp family of brands in critical areas such as hiring, capital raising, strategic direction, introductions, etc.
Why I Joined CircleUp
Consumer entrepreneurs play a pivotal role in our lives – they create products that can make a significant difference in our day-to-day behavior. From the toothbrush we use in the morning, to the coffee we consume in the afternoon, to the food we cook for dinner, the products we use and the choices we make help shape who we are. These everyday moments are really special.
If I can be part of a company that supports the entrepreneurs making it easier for people to make better choices in their everyday lives, I consider that a success. If a product helps someone to live a better life, I consider that product disruptive.
So, yes, I think that consumer products do matter. These businesses will make a direct and tangible impact on the lives of millions of people. CircleUp’s challenge, opportunity and excitement lie in helping these companies in the most impactful way. Ultimately, I joined CircleUp because I fundamentally believe that using data is the best way to support the companies and entrepreneurs that are changing our world.