Sugru’s failure to reach the mainstream –and its subsequent sale to Tesa this week– shows how crucial the investment in branding and marketing is in order for impact driven companies reach scale.
Today was a sad day. As a tiny investor and longtime fan of Sugru (a mouldable glue company on a mission to beat throwaway culture) I received an email from the company’s management with the news that they have sold the company to Tesa, one of the worlds leading adhesive manufacturers.
Sugru in use to fix a cup or protect a smart phone. Image courtesy of Sugru.
The sale was made at a price per share that means an almost full loss for everyone involved, including the founders, early investors and on a far smaller scale, myself*.
As I read the rationale behind the company’s decision, I realised I had made the one mistake that I always warn clients and students against. As a brand developer specialised in branding for social and environmental change, I always tell people hope is not a brand strategy. Yet hope was what drove my own investment decision: hope that this product would catch on in the future, big time.
A brand new material to fix the future
Sugru is a unique mouldable glue that turns into rubber, allowing you to fix and enhance everyday objects in your life. The product offers an alternative to throwaway culture, one of the biggest challenges of our time. Sugru is the perfect David versus Goliath/entrepreneur does the impossible, story: it grew from design student Jane Ni Dhulchaointig’s research project into a product on the shelves at Target over the course of a decade stained in blood, sweat and tears.
I used the Sugru case as a branding success story for my book Brand the Change, and was so impressed by Ni Dhulchaointig, the product, the team and their brand strategy, that when the second crowdfunding investment round was announced, I opened my wallet without hesitation.
What is Sugru? Good question. Here is how the company itself explains it.
So it was with sadness as well as surprise that I read that a main cause of the sale is a failure to reach a mainstream audience (and all the financial consequences that come with it). In essence: a branding/marketing fail.
From the email Sugru sent to its Crowdcube shareholders on May 17th 2018:
By the end of 2017, it became increasingly clear that what was needed was not another funding round, but a more long-term solution with the means to steadily invest in brand awareness and distribution.
Our mission, to beat throwaway culture with imagination, creativity and practical action, as you know, has reached millions of people around the world. Sugru fixing stories are shared every day by ingenious fixers from Brooklyn to Berlin to Brazil and Bangkok.
However, despite significant commercial achievements such as a thriving online sales model that includes a growing presence on Amazon globally, along with solid flagship retail accounts like Target and B&Q, we have struggled to realise our commercial ambitions and grow the business in line with our targets. To build mainstream awareness for Sugru, along with mass retail distribution, is taking much longer, and requires more investment than any of us imagined.
With Sugru being an example of good branding practices in the impact sphere, one is left to imagine how much more would have been needed.
2016: A benchmark for quality branding
Two years ago, Jane Ni Dhulchaointigh personally took the time to help me build a case study on the Sugru brand. In our interview, she was open about the learning process the company went through in helping people understand what the product is, and what they could do with it, and how they could convert them to users and long term customers.
Sugru was doing more branding and marketing than most in the impact space, and was great at it: with events, good point of sale materials in stores, a thriving online community, successful crowdfunding investment campaigns and engaging online video tutorials, the brand seemed a true benchmark for branding in the social enterprise world. With two highly experienced practitioners in marketing and design on their leadership team (Laure de Brauer, previously global marketing roles at Reckitt Benckiser including Airwick, Veet & Clearasil and Simon Campbell, previously Creative Director at Target and Johnson & Johnson), they had a lot of brain power in their corner.
And yet, it was not enough.
2018: A brand challenge that can’t be fixed?
For smaller, purpose driven companies like Sugru, to find a traction strategy that works and is cost effective, is a herculean task.
As anyone that has ever created an entirely new product or service will tell you: being the first is mighty hard work. For ‘first movers’ it takes an incredible amount of effort (read: time, talent, money!) to get a sizeable body of customers to consider, let alone adopt, your product or service. Sugru has to solve even more complexity, because the product requires a creative mindset (something is broken, how can I fix it? Or: what could I fix or enhance with this cool new material?) as well as behaviour change from consumers who are used to discard stuff when it is broken, and for whom it’s become the norm just to buy something new.
Compared to the kind of investment other first movers like Uber would have had at their disposal for branding and marketing, Sugru’s crowdfunded investment rounds amounting to 5 million pounds were peanuts — and probably most of that money did not go to expanding their customer base.
From Sugru’s email:
The key assumption that proved unreliable to scale was how many people we could drive into retail stores and how cost effectively we could reach them. It will need significantly more investment than we anticipated to make enough people aware of Sugru, and while we have fuelled spikes in our growth by launching in big store chains, maintaining the necessary levels of ongoing sales through retail has proven to be much harder than we expected.
Following the news that their investments have evaporated, some people are upset, calling for Sugru and Crowdcube –the organisation that supported the last crowdfunded investment round of 1.89 million pounds– to be investigated. I understand the emotion, but based on the current disclosure of information, I don’t share it. I invested knowing crowdfunding and investing are risky endeavours. Their reasons to sell, though sad and a little too soon after the crowdfunded investment round for comfort, are understandable. I invested in Sugru as a sign of my belief in the company and its mission. And my belief has not changed with the loss of my money.
Everyday objects like toys, skiboots, tools and household goods can be fixed and enhanced, instead of ending up on a landfill.
Because money aside, there are lots of positives here. The company will survive, and with the help of Tesa’s marketing power, perhaps a wider audience than the fixing community will be reached. We’ve lost money, but have a chance to grow impact.
We need people to throw away less of the stuff they buy, and fix more, and whether it is Tesa or Sugru who delivers on that mission should not matter if we are in it for the right reasons.
The only thing I do want is one more interview with Jane, to document exactly what it is that was, and was not working. I have good hope she will grant it to me, as she was willing to open up before.
We lost, now let’s not lose the lesson
Because of course I have lots of questions. How much investment would have been needed? What were the channels that performed most efficiently? What was a waste of time? And not unimportantly, is the lack of sales indeed the result of a branding/marketing fail or is it a case of a product simply being too advanced or complex that even the best marketing in the world can’t crack it?Is all our hope that this should work and all the love we feel towards those who are trying to make a change, actually blinding us to the reality that this is a product that just doesn’t address a real consumer need beyond a niche audience?
In a year or two, I also hope to build a new case study with Tesa, the company that will now take on the challenge of marketing Sugru to the mainstream public. I hope they will find a way to reach the mainstream customer, so we have more people fixing their stuff. I can only hope that they will allow us to document how they did it, including the investment (time, talent, money) it took to get there. I would be surprised if they would: few companies (impact driven or otherwise) are willing to bare it all.
We desperately need more social enterprises to open up their doors and share their lessons learned, and bare all, numbers included.
What is all the talk of ‘daring to fail’ worth, if we are not sharing the nitty gritty and dirty realities of that failure, so others might truly benefit?
We also need the academic community to come in and provide solid research on effective branding and marketing practices for change. It is time that we investigate and open up about what exactly it takes to sell the change that we want to see in the world.
We could do with less talk of communities, crowdfunding and storytelling and all the other soft, acceptable marketing methods that social enterprise is hedging all its bets on, and lots more talk about strategy, numbers and efficiency.
We need to stop hoping that people will get what we are trying to change, want what we offer, and that they will tell their friends and family all about it.
Hope is not a brand strategy.
In the mean time, I’m left with nothing but respect for Jane and the company and wish them all the best on the new leg of their journey. They made big financial sacrifices in order to keep the mission alive, exactly what we hope for in leaders of change. Their own hope may have received a severe blow, but I suspect they will give it their all to fix it.
*Full disclosure: I had invested an amount the equivalent of half a month’s pay, and did so knowing there was a high chance I would not see the money ever again. No homes lost, and no pity parties here.