Most new startups fail. That’s particularly true in the food and beverage space, where entrepreneurs often have great homemade products but lack the resources and business expertise to get their products to the next level. However, those skilled few that do succeed can be valuable bellwethers for how the industry will evolve. What’s more, the startups that take off often have important lessons for even the biggest consumer goods incumbents. That’s because those that succeed don’t do so based on luck. They thrive because they take a different view of the market – one that focuses on consumers’ jobs to be done.
The team at Mass Innovation Nights – an organization that helps local entrepreneurs promote their businesses – recently hosted an event to connect New England food startups with media members and innovation experts. Several of the companies featured at the event were already showing promise. Looking at how those businesses got their start and why they’re gaining so much traction, we’ve extracted three lessons that any consumer goods company would be wise to pay attention to. And in the process of learning from these young companies, we may well get a better idea of what’s coming down the road in the food and beverage realm.
Target Jobs-based trends to broaden appeal. Fads are particularly common when it comes to food. Every year, companies launch products hoping that the fad of the moment – whether it’s low-carb, vegan, or Paleo-friendly – will be the one that sticks. Rarely do these products appeal to a large enough crowd to become sustainable. Longer-term trends, on the other hand, are industry movements that are based on satisfying several jobs that are important to consumers. For example, the “natural” food trend has grown steadily in prominence precisely because it meets several under-satisfied jobs that consumers have. According to a December 2015 survey by the Consumer Reports National Research Center, 62% of shoppers usually buy foods labeled as natural, often to satisfy jobs related to removing potentially harmful chemicals and pesticides from their diets or minimizing the environmental impact of food production. Notably, 87% of shoppers said they would pay more for foods labeled as natural if the term met their expectations as to what natural means.
In December 2015, a chemistry professor at the University of New Hampshire launched CoffVee, a product designed to address several common and under-satisfied jobs of consumers. To start, CoffVee is infused with the same antioxidant that is known for making red wine a heart-healthy choice. CoffVee therefore allows consumers to take easy steps to potentially lower their risk of heart disease. Because the antioxidant – resveratrol – occurs naturally in the skin of grapes used to make red wine, the product is also positioned to satisfy some of the natural food jobs we mentioned earlier. Beyond just helping to satisfy these jobs, CoffVee has been successful because it does so in a way that fits with current consumer behaviors and drivers. Many consumers don’t like the idea of taking pills and supplements. Substantially increasing red wine consumption also isn’t generally a viable option – at least not as a daily habit. But the average coffee drinker already consumes about 3 cups of coffee per day. This means that without altering their routines, coffee drinkers can achieve the same health benefits as if they’d consumed the antioxidants from three glasses of red wine.
By targeting key jobs, CoffVee has already seen a number of indicators of success. Despite launching just two months ago, demand has soared nationwide, causing the company to increase its production capacity from 1,400 to 20,000 pounds per week. Over 25% of customers who have tried the coffee have reordered it, and it was voted as the fan favorite at the Mass Innovation Nights event. Perhaps most remarkably, the Baltimore Orioles – a Major League Baseball team – have already reached out to CoffVee to make it the official coffee used in their clubhouse, which the company hopes will lead to other teams following suit.
Compete beyond a traditional product category. One of the big benefits of taking a Jobs-based perspective is that it allows you to define the competition more broadly and position yourself accordingly. When Borders struggled in the late 2000s, it defined itself narrowly as a bookseller, doubled down on selling more of what its customers happened to be buying (books, CDs, and DVDs), and failed as a result. Instead of simply accepting industry norms, successful startups often find ways to position themselves against particular jobs that can be satisfied by a broader array of options. This is part of what makes space for new entrants even when a particular product space is already crowded or heavily commoditized.
Let’s consider the cupcake market. It was just back in 2014 that Crumbs – which was the world’s largest cupcake company at the time – filed for bankruptcy, ultimately being saved by a buyer that drastically reduced the number of Crumbs locations and expanded the bakery well beyond cupcakes. Yet even in a saturated cupcake market, ShotCakes is a startup that is finding a way to stand out. ShotCakes uses proprietary technology to fill freshly-baked cupcakes with soft serve ice cream. And as the company looks to expand, it has realized that it isn’t just a cupcake company. As the company’s founder put it, ShotCakes is just as much a tech company as it is a food company. By exploring ways to use and license its technology to solve for jobs of other businesses, ShotCakes is ensuring that it has multiple stable revenue streams even if the cupcake market goes into decline.
Create value with business model innovation, but ground that innovation in Jobs. When people think about innovation, they often jump to thoughts of new products. Beyond creating new products or services, however, businesses generally have several other opportunities to innovate, including innovation around policies, processes, and business models. One of the last lessons we can learn from the food startups we talked to is that a new business model needs to be carefully crafted, not copied. We hear about so many companies that want to be the Uber or Tinder or Airbnb of their industries, yet they often fail to give much thought as to how the model needs to be adapted to fit their circumstances. Certainly, bringing an on-demand element, an app, or a marketplace format might be one way to innovate. But countless companies have failed trying to force-fit consumers into what looks like – or elsewhere has proven to be – an attractive business model. Those that succeed are the ones that focus on how a new business model can more efficiently and effectively address under-satisfied jobs to be done.
TBD Foods is a good example of how a Jobs-based perspective can increase value for both sides. The company was started by a restaurant chef who wanted to transition to being a private chef. Specifically, he wanted to start offering multi-course farm-to-table dinner parties featuring local ingredients. So he did. But he didn’t just adopt the traditional private chef model, nor did he try to make his company some sort of Tinder-meets-private chef business. Realizing that most consumers can’t afford to hire private chefs with any sort of regularity, TBD Foods embraces a model that lowers the cost to the customer in a way that actually satisfies more jobs to be done. As you might expect, TBD dinner parties satisfy obvious jobs around adding variety, trying new cuisines, and supporting local businesses. But what makes the model more affordable is that customers become hosts, who open their dinner parties to other guests who can pay to reserve seats for themselves. Thus, the costs are spread out. At the same time, this gives all guests an opportunity to satisfy social jobs related to meeting new people.
From the business’s perspective, the model also makes sense. The traditional market for private chefs is rather small. It’s a luxury that many can’t afford. By focusing on dinner parties for slightly larger groups of people who don’t know each other – rather than, say, being a low-cost private chef for couples – the average profit from each dinner is higher. TBD can target a broader market (by offering lower costs) without having to prepare an impossibly high number of meals to stay in business.
A Jobs-based view of a market can give us a good perspective on what customers are trying to get done, what products they’ll consider to satisfy their jobs to be done, and how a company – whether it’s a startup or an incumbent – can create value by responding to those under-satisfied jobs. New offerings don’t succeed when they merely mimic products of close competitors or force-fit ideas from other industries. They succeed when they address important jobs that consumers are struggling to get done.
This post was orignally published by Dave Farber on Medium. Click here to see the original post and to read more of Dave's posts on Medium.