Last week at the International Builders Show (#IBS2019) I was privileged to host a conversation with Luke Sherwin, co-founder of Casper the online mattress company and Koda Wang, former Chief Customer Officer of Rent-the-Runway and COO of Huffington Post. Great brands, and humble, smart innovators who have set their sights on their next disruption – home renovations – with their new company Block Renovations. Our topic was initially supposed to be “Renovating Your Brand Strategy” but these two had much more to say. I learned a TON, and thought I’d share the highlights here.
Everyone seems to be talking about where to find ideas to drive innovation. And we keep writing and speaking about the homebuilding industry being ready for disruption. I just learned of one prominent thought-leader who held a session focused on the lack of innovative ideas at IBS, versus say what you see at the Consumer Electronics Show (CES).
I learned from Luke and Koda last week that to make innovation more than just an ungrounded cry to something tangible in your business, you need to figure out where innovation can have the most impact. Remember, you have one of three value propositions around which to organize your business strategy – product leadership (creating the best product/service, think Google, Rent-the-Runway), customer intimacy (creating the best service and relationship, think Amazon, Casper) or operational excellence (creating process productivity for the best price, think Wal-Mart, and most builder brands). This is a key decision, and you can’t be all three. We owe credit for this framework, developed years ago, to Micheal Treacy and Fred Wiersma and their book, The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market.
Back to Luke and Koda.
Casper was born because the experience of going to a store and laying down on 15-20 mattresses under bright lights, while a total stranger (who is also a commissioned sales agent) watches you try to describe the way you feel, was a crappy experience. So, they launched nap tours, took them on the road, opened a pop-up store in NYC and leaned into the fact that mattresses come in a box. Why not deliver them in a box, and surround them with other things to help customers get a great sleep (pillows; cool, airy weightless sheets; adjustable bed frames; and their new Glow Light that cues your body for bed, and gently wakes you up)? They arrive in a box the size of a wine fridge, get set up for no charge by delivery teams, who take a picture when they are finished, then take your old mattress away and you try it for 100 nights. In your own home. If you don’t like it, they come back and pick it up.
The simple insight that drove the disruption of big box mattress stores (and now has a number of copycats) is that laying on a bed with total strangers staring at you was not an enjoyable experience. From there, the team at Casper saw the opportunity to create their whole sleep ecosystem of related products.
Rent-the Runway (RTR) is not a fashion business, it’s a logistics company. As Koda explained, your wedding isn’t going to wait if the dress RTR delivers arrives a day late, or if the size you ordered doesn’t fit, or if it just doesn’t look right. Being a company vested in product leadership, they invested in their own dry-cleaning business and are now the largest in America. They invested in data science technology that uses customers’ product choice to send along a back-up dress in case the one they choose doesn’t look as good as they hoped. And they send along back-up sizes too, just in case. As the RTR customer base has grown they’ve started to notice new patterns. People are using the platform to experiment with fashion, renting new styles they never would have before. New is important in an Instagrammable world, where images of our most celebrated moments are posted for all to see.
The simple insight that drove the development of Rent-the-Runway was buying fashion for important life events (weddings, graduation, New Year’s Eve) is expensive and had grown into a wasteful “single use” purchase – because you can’t be seen on Instagram in the same dress you wore last year.
We got questions from the audience last week like, “What do you do first, develop your business model, the products you offer or your brand?” The answer to this is they are the same. Your brand is your business. And every decision you make, from product design, to distribution method, to what your story is and how you tell it should be relevant to your customer (fix a pain, amplify a gain), should perform (be observable and deliver) in ways that people connect with and are meaningful (they talk about it at Thanksgiving dinner).
But the quote of the conversation goes to Luke, in response to a question about how he finds businesses to disrupt. It should be the biggest, and only, inspiration we all need to inspire innovation. “You can see when things are broken. It’s not that hard. Look around. And set out to fix it.”
If this leaves you thinking he must have had some privileged opportunity that contributed to his success, think again. Casper started with initial inventory of 40 mattresses that was supposed to last six weeks. They sold out in one day. And when the wait for mattresses stretched to a month, they shipped Aerobeds purchased on Amazon to back-logged customers and included handwritten notes in every mattress box. You can see when things are broken. Talking about it is the easy part. Do you have the courage to fix it?