Branding in a Brandless and Tech Based Economy with Amit Mukherjee, Partner at New Enterprise Associates
Amit Mukherjee joined NEA in 2012, where he is currently a Partner focused on consumer technology investments. He is a Board Observer for Casper, MasterClass, Brandless, and The Players’ Tribune, and was previously a Board Observer for Jet.com (acquired by Wal-Mart). Amit has led a number of seed stage investments for NEA, including Aquabyte, Cake, Holloway, Yumi and PumpUp. As an Associate and Principal, Amit conducted diligence or assisted on more than two dozen companies on behalf of NEA, including Duolingo, Robinhood, Coursera, Snap, Uber, Appian, OnShape, Banjo, Moda Operandi, Care.com and Bridge International Academies. Amit was named to the 2016 Forbes 30 Under 30 in Venture Capital.
Having been born at Stanford Hospital and growing up in Mountain View, Amit has a deep appreciation for Silicon Valley’s impact—from the products produced by the ecosystem, to the lives of the individuals that move to the area for opportunities. Amit credits his consumer product DNA to his childhood obsessions with Napster and AOL Instant Messenger. He sees the VC / entrepreneur relationship as a melding of science and art– the entrepreneur has created something novel and special, and the VC helps apply tried and true best practices to maximize the chances of success.
Prior to joining NEA, Amit was a member of J.P. Morgan’s Internet & Digital Media investment banking team. While at J.P. Morgan, Amit performed in-depth valuation analysis, due diligence, and industry analysis for over $37 billion worth of transactions including TripAdvisor’s spin-off from Expedia, Netflix’s common stock and convertible notes financing, and the IPOs of Facebook and Zynga. Amit earned his AB in Economics (Magna Cum Laude) from Princeton University.
Business Today (Amy Wang): Given your extensive experience working with startups, what are shared qualities you see in early stage companies who have successfully built a brand and a customer base?
Amit Mukherjee: The brands that have connected [with their audience] out the gates, have strong resonance with their digital presence. I was an investor in Casper Sleep, and in a month, they got a million dollars in sales. The value proposition of what they were offering, the way they articulated it, the irreverence of it, was really strong and felt audacious at the time — selling mattresses online. The whole concept resonated, and the customer understood that this was a group of young people with consumers and customers and their best interests at heart. No matter what brand you go to, there is this concept of David versus Goliath for new brands that are coming out. Warby Parker, Hymns — these brands are taking a not great experience for customers and turning it into something that's more convenient and simple. The other powerful trend is that Millenials — and this is even more true of Generation Z — are very value oriented in choosing products to back. Most of the new products today have some value orientation to them, and people care about the ingredients with which the products were manufactured. If you take a step back and think about why that's the case, you can thank the way we research new products. If you think back to the 1970s when most of the products that Proctor & Gamble were created, they were advertising in print and television, and you would walk into your local department store and see product and be inclined to buy it. Now, people are quickly able to look up a review for the product and see from someone who has put the time into researching the product, whether or not it aligns with their values and whether or not it is a good product. The way that we are making decisions has changed dramatically since the invention of the internet.
“Being able to tell a compelling story to all of those groups is one of the foundational skills of a CEO.”
BT: At NEA, you’re constantly evaluating and working with founders. In your experience, how do founders successfully tell an engaging story about their brand and company to VCs? What advice would you give to a founder?*
AM: Something that founders underappreciate is how profoundly important storytelling is. When you’re thinking about starting a company from scratch, you almost always have to bridge some gaps, connect some dots, take some leaps across chasms … usually that means convincing people to join you before the proof is there. That could be employees, customers, suppliers, partners, and, certainly, investors. Being able to tell a compelling story to all of those groups is one of the foundational skills of a CEO. When we think about what makes for a great story, ambition is definitely one. Everyone is excited by the idea of being part of something that is really big. When we saw Marc Lore pitch Jet.com — when it was just an idea on paper — even then he said he wanted to create something that had the ability to take on Amazon. There were a lot of reasons to believe that was hard to do, but the fact he was willing to do it allowed him to collect tremendous talent and capital and scale it much faster than anyone could have predicted. You also need to have a tightly wound string of logic. If you’re going to tell a story, you can expect that someone who is listening to you has a sixth sense about whether there is substance behind what you’re saying. It's important to not be dismissive of certain elements that don’t fit within your narrative or over exaggerate — having a strong train of logic through your story is an important component. And world impact. At NEA, we talk about vital change — that companies trying to create vital change in the world are ones that are worth a lot. And by vital change, I don’t mean you have to be double bottom line focused, or have a philanthropic initiative, but in general, there is tremendous value associated with companies that create very significant change in the world. Uber is a great example of that. I don’t think anyone would say they’re a double bottom line company, but they've been transformative in the way that we transport ourselves; they’ve reduced the costs of transportation; they’ve created a job solution that simply didn’t exist before. That's a big part of any story as well.
“In many ways, it’s a continuation of Occupy Wall Street where there are a lot of emotions tied up in how these companies treat people because people feel like they’re bigger and more powerful than they are. And that’s important for brands to understand.”
BT: While on the Internet and Digital Media IB team at J.P. Morgan, you’ve been in the weeds of market analysis and worked on large deals, such as the IPO of Facebook and Zynga, to name a few. Can you share any insight on how large, established companies manage their brand, and how their strategy might differ from that of startups?
AM: With bigger companies, the biggest shift that we’re seeing is that no longer is there a narrative of David versus Goliath. When Uber was in series A, the Goliath was the taxi cab industry. Remarkably, over 9 years, Uber has become the Goliath. There’s a very kitschy quote from Spiderman — “With great power comes great responsibility.” For these larger tech companies, they do obtain a tremendous amount of responsibility very early on. Being able to manage that and being intentional is hard to navigate when you’re a high growth company trying to deliver your best returns to shareholders, but the impact of your company has massive societal and geographical implications for your surrounding community. That can be really challenging. Facebook, Uber, Google, have gone through a period of time where a lot of people were upset with them over how they handled information and how they manage their role of Goliath. There are companies out there that have done a great job. Walmart, banning gun sales, was really significant. Salesforce, and how committed their CEO and founder Marc Benioff, is to a better San Francisco is quite inspiring and a great demonstration of leadership. In many ways, it's a continuation of Occupy Wall Street where there are a lot of emotions tied up in how these companies treat people because people feel like they’re bigger and more powerful than they are. And that's important for brands to understand.
BT: Concerns over personal information and collected data are making the targeted ad space fraught with new legal challenges. How do you see this space changing? How will it affect businesses who’ve relied on targeted ads to draw customers?
AM: The reality is, there's this duopoly between Facebook and Google that is very strong. It's really hard to see other forms of advertising or other channels that are going to pop up. I certainly don’t know of alternative channels people use with significant success right now. There have been politicians who have cried for the break up of Facebook and articulate that Facebook and Instagram represent a monopoly in online advertising. There are regulatory risks that come with that, just as Microsoft dealt with being accused by the government of being a monopoly around 20 years ago … There aren’t that many signs that it will change, so we’ll have to see significant platform shifts over the next few years for that to really be broken up. Even if Facebook deals with questions of privacy, security, monopoly, it's not like there's a visible end to that now.
BT: Even more interesting, you serve as a board observer for Brandless, a company which, as the name suggests, wants to de-emphasize the brand and focus on the quality of products. What does the success of this company show about changing consumer receptivity to branding? How do you see the future of branding change?
AM: There's this paradox of choice, especially in Consumer Packaged Goods (CPG), where you can choose from a hundred kinds of cookies, a hundred kinds of laundry detergent, ten kinds of towels, and the reality is your life would be simpler if you didn’t have to make these choices. There's a lot of cost in terms of marketing and merchandising to get you to buy one good over another. So the concept of Brandless is to offer one company to create these products, really making sure that these products align with what consumers are looking for and to do that with a lower price across the board and create trust that transcends individual brands. For Brandless, maybe there's a Chip Ahoy cookies out there, but you’re actually inclined to take the Brandless cookie because we’re both delivering to you at good value and also you have a real sense of reliability of this brand. Another thing Brandless does is they’re values oriented in the way they make their products. In each case, they’ll make sure they’re producing the product responsibly. The concept we articulate when discussing Brandless is value and values. Value meaning a great return on what you pay for and values in terms of trusting that the product was responsibly created.
*Question submitted by Yashodip Poudel at Pokhara University in Nepal