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min read

“We eat our dog food” - What it takes to become a challenger brand

Written by
Mia Sturt
Published on
28.6.2024

Most companies fancy themselves as innovators. The word ‘game changer’ is regularly thrown around boardrooms and LinkedIn posts - however, the reality is very few companies truly deserve the label ‘challenger brand’. 

This was made clear during ‘Playing to Win’, a panel held by Turo earlier this month and facilitated by AfterWork Ventures's Jessy Wu. Wu was joined by leaders from scale-ups building market leading brands, some of which compete directly with the companies they used to work at. These leaders proved there is definitely something special about the brands that choose to push the norms, just that bit more than their traditional rivals. 

Ruffling feathers and raising eyebrows

Challenger brands share a desire to set themselves apart from their incumbents, and often they do this through clever campaigns designed to change consumer behaviour.  

You’re unlikely to find a better example of this than Lyka employees eating their human-grade dog food. This claim from the pet wellness startup, who raised $55 million last year in their Series B, was the subject of a recent skit on the ABC’s advertising-focused panel show, Gruen - but founder and CEO Anna Podolsky claims it is more than just a clever marketing ploy. 

Lyka’s real mission is to extend the life of our furry friends, who they see as being part of the family. The days of feeding dogs table scraps are gone, however pet food hasn’t evolved. It isn’t regulated in the Australian market, with products designed to sit on shelves for months. Instead, Lyka offers a subscription service for fresh dog food, containing human-grade meat and ethically sourced ingredients. They want customers to rethink the way they feed their pets, and shift more focus to their wellbeing and longevity.

Lyka eating dog food on TikTok, captioned "POV you find out why your friend eats their dog's food'
"We eat our dog food" - Lyka’s claims across social media were so impactful that they made an appearance on the ABC’s Gruen this month.

In a vastly different industry, fintech Superhero are also trying to change consumer behaviour, by making superannuation and personal trading more transparent, accessible and flexible. 

Like Lyka, they launched their personal trading platform with a clever tagline that appeared on billboards and public transport across Australia -  ‘We’re giving trading a kick up the ASX’. This major communications campaign from creative agency Hardhat, caught the attention of the ASX board, who didn’t quite know what to make of the newcomers who were trying to crash Wall Street’s party. ​​

Now, 4 years later, they have almost $2bn invested with 300,000 Aussie customers, with backing from fintech heavyweights like Zip and Afterpay. 

More than just clever marketing

Podolsky and Winters, both panellists at this month’s event,  have more in common than their clever slogans. They are finding new ways to create value for customers and by doing so, they are beating incumbents at their own game. 

As well as their trading interface, Superhero’s fresh take on superannuation includes a highly intuitive, sleek app, designed for a tech-savvy audience who want more autonomy and input in the way they build their super portfolio. This is worlds apart from the superfund titans who, Superhero’s CEO and co-founder John Winters suggests, have been training us to not know, or care, where our super is invested. “It’s like someone buying you a Ferrari, putting it in your garage, but not letting you see it or use it”, says Winters.

Superhero ad poster that reads "We're giving trading a kick up the ASX"
Superhero launched their personal trading platform with a clever tagline from creative agency, Hardhat

Customers aren’t happy, and challenger brands know this

Challengers know their customers are unhappy with the status quo, and they compete by positioning themselves so that they don't short-change customers in the same way. They do what market leaders have never done, in industries that have been resistant to change for years.

Amongst panellists was Tim Rossanis, ex-Uber and VP of Turo , a car sharing app who offer an alternative to rental car companies. Positioned as the Airbnb for cars, Turo is a marketplace that uses trusted, local hosts rather than a traditional rental car model with a fleet owned and leased out by the one company. 

Turo knows customers are tired of the cost and frustration that comes with renting a car at an airport and want more control over their rental experience. Their value proposition is that you can see exactly what you are renting, rather than the vague “midsize sedan” category you might get from your typical rental. “With traditional car rental, it’s no secret that the service is poor and experience is poor…It’s core to our product that people expect to get what they pay for. You book a specific car, you get a specific car" says Rossanis.

Out with the old 

David Eismann, who previously led subscriptions and growth at Fairfax and Nine Media, co-founded Capital Brief, a business and politics focused publication. Their mission is to change the Australian media landscape and compete with incumbents like the Financial Review. “For companies trying to do things differently, and even for policy makers, the fact there is one group of people determining the narrative has implications across the economy”. Launched in 2023, Capital Brief are doing things differently, and are taking a “reader-revenue-first and journalism-first” approach, which includes not collecting personal data for advertisement targeting. They also choose to showcase work from competing publications alongside their own, which is something that major publications would typically never do.  "We recognise our audience is intelligent and they want information from different sources" says Eisman. 

Part of covering the so-called ‘new Australian economy’ includes spotlighting news on VC and startups which may not be covered in papers like the AFR, meaning these headlines often never land on the desks of leaders and operators in corporate Australia; by combining new from across the political, big business and emerging startup sectors all in one place, they hope to reach decision makers across these sectors with a more ‘modern’ perspective. 

Building a position requires making tradeoffs

While these brands are busy disrupting the status quo in their industries, this isn’t enough. These brands must also build a strong market position, and doing this requires making tough decisions.

So how have they navigated this?

At Capital Brief, they needed enough journalists to make it worth people getting out their credit card. “From day one, the tradeoff has been to hire great talent, and keep everything else super lean”. His advice to other challenger brands? “Be clear and targeted about where to invest, because as a new entrant you have the possibility of making decisions you couldn’t make as an incumbent". 

Winter’s philosophy for Superhero is that “you can break the market to make an impact, but then you need to pivot and start building off that brand recognition". They made decisions to allocate capital to ensure they could compete on the two things customers actually care about  - low fees, and performance. “We’ve pushed ourselves to pull back on advertising to focus on experience and value”, says Winters. This is something they have delivered on. In April this year, the share trading platform announced the most significant changes to their pricing since inception in 2020, cutting their brokerage to a flat $2 fee for ASX trades up to $20,000.

For their dog food, Lyka’s secret sauce has been in finding the sweet spot between price, quality and palatability. “Price is only one side of the equation, value is the other side…how do we make it clear that in this tradeoff, the value wins?”. According to Podolsky, the best way to do this is to get the product in the customer’s hands and let them see for themselves. Clearly, this is working. Lyka’s online site is filled with five-star reviews from happy customers who have noticed a renewed shine in their dog's fur and immediate health benefits.

Remaining a ‘challenger’ as they grow

The biggest takeaway from the Playing to Win panel was that building and leading a challenger brand is not easy —but the rewards can be well worth it. While they may have started as a crew of rebels, breaking things and disrupting markets, these leaders are now in charge of large organisations that have the potential to grow exponentially. 

After all, Netflix, Uber and AirBnb are all prime examples of how mammoth challenger brands can become - they too started with modest beginnings and clever campaigns, before becoming part of our daily lives and lexicon. The trick for these new challenger brands will be to continue to shake things up while scaling. As they evolve, they must continue to meet customers’ needs while pushing the envelope and creating cut-through; they must keep eating their own dog food.

About the Author

Mia Sturt is a Guest Writer for Overnight Success, including our monthly newsletter Pulse Check. She's also the Chief of Staff at Aussie scale-up, Hatch.

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