It's about that time when your mom calls brands "disruptive." The word has reached that excruciating level of mainstream use and misuse. Alas, this presentation takes a look at some of those "disruptors" and focuses on the value they provide to other brands. Insights, not threats.

1. LEARNING FROM SMALL
COMPANIES WITH BIG
THINKING
May 2014
Kristin Mommers

2. “Disruption” is a business-buzzword.

4. Marketers and journalists throw around the term “disruption,”
applying it to every industry, every tech development. They
confuse “new” with “disruptive.”
!
Startups become threats.

5. That’s defensive.
!
We’re overlooking what drives these brands. Instead, let’s ask
what can we learn from them?
!

6. These “disruptors” are often well-vetted by VC’s. They:
• Indicate areas of growth
• Built upon consumer insights
• Highlight trends
• Demonstrate a younger generation’s thinking.
!
Those are key to staying relevant, for any brand.
GETTING TO INSIGHTS:

7. This report identifies “disruptions” within the banking, retail and
travel industries.
!
Each example will cover:
• The strategic opportunity
• The impact of business
• Insights for broader application

8. Banking “Disruption”

9. A recent study called out the banking industry as the most ripe for
disruption. Why?
• 53% of Millennials don’t think their bank offers anything different than
other banks.
• 68% believe the way we access money will be totally different in 5
years, and they’re counting on tech startups to deliver the future
• Underemployed, $1 trillion student debt, smartphones, life in flux
CULTURAL SHIFTS SPARK DISRUPTION
Source: Scratch, The Millennial Disruption Index 2014

10. The following three startups are using these changes to their
advantage.

11. 1. Simple
JANUARY 9, 2014
An online “bank replacement” that
makes managing your finances
easier. Simple gives users a debit
card, free access to ATM’s, and fine-
tuned smartphone app to help
manage their money. It removes the
label of traditional banks from the
process and builds trust by simplifying
otherwise complex exchanges.
!
Initial Success:
• 19,000 customers in 2013; 100,000
in 2014
• $1.7 billion in transactions in 2013
• Majority of growth through WOM,
not marketing
Source: DealBook New York Times 2014

12. SIMPLE
•Data for consumer benefit. Simple analyzes users’ transactions, providing
insight and transparency on spending patterns. Data for consumer-benefit
helps combat privacy concerns.
•Know how people will interact with the product. One of the most talked
about features of Simple isn’t actually a feature - it’s the slick app interface.
Brands don’t need to develop something new to stand out.

13. 2. Venmo
JANUARY 9, 2014
Source: Forbes, Venmo: The Future of Payments For You and Your Company
A simple and social approach to
mobile payments. Venmo helps
friends exchange money and settle
tabs from their phone contact list - a
common need otherwise unmet. The
company offers a simple and secure
way to make these peer-to-peer
payments.
!
Initial Success:
• Mobile payments predicted to
reach $90 billion by end of 2017
• Owned by Braintree, which has 40
million credit cards on file.
Acquired by Paypal in 2013.
• Plans to monetize through API
platform - working with brands

14. •Use social to show, not tell. Venmo uses social media to demonstrate how
people use the app, rather than a tutorial. The Venmo newsfeed is full of
user-generated descriptions of transactions.
•Brands are consumers, too. Brands can send payment with personal
messages to customers - a new form of customer service. Venmo gains
presence through these brand-exchanges.
VENMO

15. 3. Loop
JANUARY 9, 2014
A mobile wallet free of near
field communication (NFC) and
wireless carriers. Mobile wallets
are typically limited by cellphone
design - they don’t support NFC
activity. Loop bypassed this issue
by creating a fob that transmits a
signal, connecting to an app and
credit card terminals.
!
Initial Success:
• Loop works at 90% of credit
card machines in the US
• Kickstarter funded
Source: CNN Money Loop Review 2014

16. •Prototyping in public. Loop welcomed consumers into their design process.
The brand shared the fobs and listened to feedback, making the design an
ongoing, consumer-shared process.
•An alternative is not a solution. Loop lacks a single vision or message. The
multi-functioning product competes with several existing behaviors, rather
than solving one.
LOOP

17. Retail “Disruption”

18. Technology empowers consumers and changes behavior. In a
recent study among retail executives, 71% say social media has
a significant impact on their business, and 52% for mobile/
online shopping.
!
The following startups used these tech trends to build their
business.
Source: KPMG, Retail Industry Outlook, 2013
RETAILERS MUST ADAPT TO
TECHNOLOGY

19. 1. Warby Parker
JANUARY 9, 2014
From eCommerce to brick &
mortar. Retail experts debate the
future of standing stores. Major
retailers are reducing their
locations. Meanwhile, Warby
Parker found a way to run a
successful eCommerce site and
convert it into a growing brick &
mortar business.
!
Initial Success:
• Over half a million frames sold
• Raised over $100 million funding
in 2013
• Flagship store does $3,658 sales/
sq ft. - more than Tiffany & Co.
Source: Warby Parker Annual Report

20. • Emphasis of simplicity, beauty, and good design. Consistency made
Warby a trusted badge-brand.
• An experience primed for WOM. The site, the packaging, the try-on
system are worth talking about.
• Business as a consumer-solution. Warby Parker talks openly and frequently
about their reason for being.
WARBY PARKER

21. 2. Birchbox
JANUARY 9, 2014
Creating an online beauty
experience. Beauty brands struggle
to build an eCommerce platform as
the experience largely differs from an
in-store interaction. Birchbox took
advantage of this and created a new
experience - one that enables
consumers to try before they buy.
!
Initial Success:
• 800,000 customers in March 2014
• Over 9 million boxes shipped
• 50% of subscribers regularly
purchase a full-size item
• Expansions in France, Spain and UK
• Rise of subscription-based
companies:
Source: NY Times, Birchbox steps out with a store, March 2014

22. •Demonstrate expertise. BB gets credit for finding less popular but high
quality products, for their instructional videos, blog content and soon
makeup classes.
•A store is a brand experience. Like Apple, BB is designing its first store as
an experience - about interaction, not buying product.
BIRCHBOX

23. 3. Nasty Gal
JANUARY 9, 2014
Scrappy eCommerce with a cult-
like following. Nasty Gal positioned
itself as an independent style source,
not a mass retailer. It quickly
outgrew its eBay and MySpace
origins, expanding across social
platforms and developing a site. The
brand continues to grow through its
fans, absent of a marketing
department.
!
Initial Success:
•$128 million in sales in 2012
•$240 million company in 7 years
•60% gross margins
•25% of shoppers visit the site daily;
6 million visitors a month
Source: Forbes, Nasty Gal’s Sophia Amoruso: Fashion’s New Phenom; WSJ, Sophia Amoruso Expands Nasty Gal

24. •Identify existing tribes. When it first launched, Nasty Gal founder Sophia
Amoruso reached out to fans of Nylon - a magazine that shares her
aesthetic.
•Crowdsourcing is more than content creation. Nasty Gal hires models that
look like their shoppers. They recruit from their fans, and take their advice
on styling.
NASTY GAL

25. Travel “Disruption”

26. Worldwide, Millennials take more leisure and business trips than
any other age group. They are more interested in international
travel and rely on smartphones, reviews and experiences when
booking travel.
!
The competition for their attention will grow as this group comes
into greater discretionary income.
EXPERIENCE-HUNGRY MILLENNIALS
Source: BCG, Millennial Spending to Boom in the Coming Years, March 2013; Expedia, The Future of Travel,
October 2013

27. 1. Airbnb
JANUARY 9, 2014
Sharing economy as a business
model. Airbnb is the “cool”
alternative to hotels. The company
makes travel more affordable, turns
an overnight stay into more of an
experience, and, thanks to its
startup/tech community popularity,
it has social cache.
!
Initial Success:
• $632 million economic activity in
NYC alone
• Supported 4,580 jobs throughout
5 boroughs
• Over 150,000 guests every night
• $2.5 billion enterprise in 6 yrs
• Expect to become world’s largest
hotelier in 2014
!
Source: Poweredbysearch, Digital Marketing Success Story: Airbnb, January 2014; Skift 2013

28. •Telling your own story. Airbnb is continuously met with criticism - driving
up rent costs, stealing from hospitality taxes. The brand is controlling the
narrative through research and actively repositioning themselves in an
established category. They reach out to their members and ask for support.
•People trust people. Airbnb has optimized their site to improve the review
process and find ways to increase the review content.
AIRBNB

29. 2. Hipmunk
JANUARY 9, 2014
Redesigning the travel booking
experience. Hipmunk is tight-lipped
about their funding, success, and
revenue but experts compliment the
company for incorporating human
behavior into the platform. From a
design perspective, Hipmunk defeats
all competitors.
!
Initial Success:
• Leader in market love among OTA
sites
• Over 1 million Android app installs
• Over 1 million fans on Google
• Covered in Bloomberg, WSJ,
Forbes, NYT, Inc, FastCo., Wired,
Mashable, TechCrunch
Source: Skift, We Know We Can Be Bigger Than Kayak, May 2013

30. •Love your users. Hipmunk minimizes the ads they serve, finding revenue
elsewhere. The experience is designed around doing right by users. And the
company is very vocal about that.
•Don’t be the X of Y. Hipmunk doesn’t think of itself as “Kayak with better
visuals;” it’s “like Kayak, but better.”
HIPMUNK

31. 3. Uber
JANUARY 9, 2014
Bringing style, comfort and
convenience to commuting. Uber
has come a long way since its
“timeshare for limousines” launch.
It solves the widely plaguing issue
of hailing a cab.
!
Initial Success:
•20% revenue growth each month
•$3.5 billion valuation in 2013, up
from $330 million in 2011
•$125 million annual revenue in
2013
•Available in 65 cities, vs. just 12 a
year ago
•Rise of car-sharing competitors

32. •Marketing worth talking about. Delivering puppies, kittens, and ice cream
cones is a match made in social-media heaven.
•Mask promotions with events. Uber offers promotions without tarnishing
the brand by leveraging events - the status of the event makes up for the
discount. This relentless marketing also ensures Uber’s top of mind.
UBER

33. What disruptive
companies are
doing well

34. Four key themes emerge from these startups.

35. 1. Leveraging tribes/communities
These companies utilize social groups in two ways - targeting and
influence drivers. They understand the values and behaviors of
tribes, and adapt to them.

36. 2. Delivering simplicity
Transparency and minimizing the steps in a process - fewer clicks,
simple pricing structures - demonstrates respect for consumers.

37. 3. Empowering the consumer
It’s more substantial than inviting consumers into the brand.
These companies empower consumers, giving them control.

38. 4. Letting the product talk
The nature of the products and services - their innovation - drives
WOM. They’re not making it up through advertising.

39. The Challenge

40. Can we monitor our industries in a way that values “disruptors”?
Can we take note of what’s working for startups, and apply that
insight?

41. THANK YOU.