Pod Insights Michael Covel's Trend Following Ep. 1352: Laura Ries with Michael Covel on Trend Following Radio About this episode My guest today is Laura Ries. Laura is the chairwoman of Ries Positioning Pioneer, and a world-famous positioning consultant. For three decades, she has helped clients to position their brands in the mind of consumers for business growth. The topic is her book The Strategic Enemy: How to Build and Position a Brand Worth Fighting For. In this episode of Trend Following Radio we discuss: Essence and history of positioning Role of the strategic enemy in branding Impact of AI on personal branding Risks and rewards of brand extensions Case studies of successful and failed brand strategies Jump in! --- I’m MICHAEL COVEL, the host of TREND FOLLOWING RADIO, and I’m proud to have delivered 10+ million podcast listens since 2012. Investments, economics, psychology, politics, decision-making, human behavior, entrepreneurship and trend following are all passionately explored and debated on my show. To start? I’d like to give you a great piece of advice you can use in your life and trading journey… cut your losses! You will find much more about that philosophy here: https://www.trendfollowing.com/trend/ You can watch a free video here: https://www.trendfollowing.com/video/ Can’t get enough of this episode? You can choose from my thousand plus episodes here: https://www.trendfollowing.com/podcast My social media platforms: Twitter: @covel Facebook: @trendfollowing LinkedIn: @covel Instagram: @mikecovel Hope you enjoy my never-ending podcast conversation!
Transcript 0:00 Speaker 00 My guest today is Laura Reese. She has a book, The Strategic Enemy: How to Build and Position a Brand Worth Fighting For. Her father, a very well-known guy in the field and history of marketing and positioning, Al Reese. I have several of his books from back in the day. There will never go by a day where I don't think about, how can I better present myself? How can I better present my brand? Laura, as you will hear, has lots of thoughts, lots of insights, and a terrible amount of experience. Without any further delay from me, let's jump right into my conversation today with Laura Reese and talk some brands, some positioning, and finding our strategic enemy. I hope you enjoy.
1:00 Speaker 00 I remember when I first got into business in the 90s, seeing your father's name when it came to marketing. Because if you were getting into business and you were going to get into marketing, branding, your last name was everywhere. Really? You know this, right?
1:13 Speaker 01 I do, yeah. I'm trying to bring it back.
1:16 Speaker 00 To take it to something very simple, you do this great in just opening up your new book, The Strategic Enemy, but the very simple idea of positioning. And we might hear this, and we might think we know what it means, but for you, you've got the audience right now. You're going to bring them into the most basics of basics, positioning. And it actually starts with a rock. So let me let you bring the audience into this idea of positioning.
1:42 Speaker 01 It came back to my father was a young guy on Madison Avenue with a very small B2B advertising agency, and he wanted to differentiate himself, actually. But also, he wanted to do the best work for the clients. And his thought was, all the agencies are focused on just creative advertising, just to make something that would get attention. When there's little competition, stuff like that can work. But as things became over-communicated, he called it, back then, can you imagine, the 70s? But the idea was if we had every advertisement should have in essence a rock, an indisputable concept that the consumer would instantly believe. And that's the essence of positioning. Unfortunately, most people use that word, but not correctly. Right. They just write whatever they want to be is their positioning.
2:27 Speaker 01 That's not it at all. Positioning starts within the mind and what the mind is willing to accept. And that rock concept was the essence of it. And then they later, he and his partner, Jack, they found the word positioning was better because you could own a position in the mind, positioning. But it is in essence, that rock, that indisputable truth. They did an ad campaign for Uniroil. And like most companies, they could have said, you know, Uniroil makes the best rubber on the road. Unbelievable. If you say that, the consumer is like, it's puffery. It's what you're saying. It's a claim that you're better. And that's not believable. Instead, they had Uniroil has more patents than any other tire company. Now that's an indisputable truth. People believe you can't totally lie in advertising.
3:11 Speaker 01 They have some standards these days, right? But that was an indisputable truth that what that drove in the perception of leadership into the mind. And that's the essence of positioning, that position in that mind that the consumer is willing to believe.
3:25 Speaker 00 Give me some more examples that people can instantly grab on to. Cause like if we use the patent example, my gosh, how many patents does Apple have? How many patents does Microsoft have? If they started using that example, then eventually that would be blasé. So what are some other ways that you can get people to see this notion, this concrete positioning and other examples they can immediately grasp on to?
3:47 Speaker 01 Another classic example from back in the day is what Avis did to position itself against Hertz, right? Hertz was the leader. What did Avis do? We're number two. We try harder, right? It was instantly understood that they were number two. And if you're number two, you do try, have to try harder. Then they put buttons on the employees and lo and behold, they all tried harder. The idea of understanding, again, here's important part of positioning. It's not just about what you are or what rock you have, but how does it? And who is the enemy? And how can you relate your positioning to them? So you had. Seven Up, the uncola, classic positioning case of positioning against the enemy, which was the cola category. Or you have Pepsi was the choice of a new generation, right?
4:31 Speaker 01 Coke was the leader around forever. So Pepsi said, we're for the younger people, even though the numbers didn't prove that out, meaning the Pepsi and Coke drinkers were about the same age, right? But it was in the mind that they felt that they were younger, Pepsi being a sweeter drink. And the initial launch of Pepsi-Cola was twice as much for a nickel too. Pepsi-Cola is the choice for you. You look back in history and most companies have this concept of they narrowed the focus to a strong position that was against something else that made them memorable in the mind. Today, you have companies like Apple, right? They've been around forever. You're not trying to reintroduce them with your positioning and your messaging. You're trying to reinforce that leadership. And why Think Different was a very effective campaign for them.
5:16 Speaker 00 New Coke was something half the audience probably will have no awareness of, but introduced when I was in high school. And I remember going out and like trying to buy cases of the original Coke before they got rid of it. An amazing thing that now, obviously they left the New Coke idea and have become quite successful and Pepsi has become a laggard to some degree. Let me let you dig in a little bit more though, because I don't want to gloss over it. The idea of why the rock then coming to the term positioning, why this was so unique and why it had not been done before. I mean, okay, there's always an innovation. Someone always comes up with a great idea, your father and his partner. But why was this so different at the time?
5:59 Speaker 01 At the time and the launch of positioning itself identified, I briefly mentioned the strategic enemy, which was creativity. It was the famous David Ogilvy, who was absolutely brilliant, but it was the creativity of the ad that was going to drive success. They took a strong stance against that, not because they disliked creativity, honestly. It was because they needed to set up a contrast between what positioning was and what, you know, the status quo was, and that was creativity building brands. It was in fact, the positioning of the brand is what built the brand. That you had to find that open hole and then position your brand so that it could fill it. So you had, for example, what did BMW do? For many years, they advertised all sorts of attributes until they focused on one, driving. Most people don't want to focus.
6:44 Speaker 01 And that's, again, one of the enemies of positioning is if you don't have a focus, you don't have a brand. Because the focus is the way to get in the mind. You can't get in the mind with a long, complicated message. It has to be oversimplified. It's another essence of the rock in positioning. And so what BMW did, you have a lot of things you want in a car, but they narrowed it down to driving. It has that, we call the halo effect. So it's not like you don't believe it has good gas mileage. Owning one idea is the most powerful thing to do. And the driving also was very good because it went against their strategic enemy, which was Mercedes-Benz. Mercedes was the pioneer. The best position to be in is leadership in a category. That is ultimate positioning, right? When you're
7:27 Speaker 01 the pioneer and you're not just first in the market, but first in the mind, that's incredibly powerful. So Mercedes, very hard to compete with, right? But by going on driving, that was something that every leader has a weakness. You've got to find that weakness and go against it. Now, Mercedes are very comfortable. The floating sedans, the idea of the ultimate sitting machine versus the ultimate driving machine, which was one of the classic ads they used. And not only that, with positioning, and when you have that narrow idea and focus, like the ultimate driving machine, it's not just a one-off. It's not just six months. It's not just six years. It's decades. It's the decades that
8:07 Speaker 01 really drives in the power of positioning over time and makes you very strong against the many enemies that you're going to face.
8:15 Speaker 00 Before we get into, which is something that I'm really curious about, because I really want to get into the nitty gritty of the idea of the strategic enemy, I want to open it up to something that is perhaps not directly related to your new book, but it's right in the headspace of brand. And AI is making me realize, as I get more and more used to it, as an author of many books and a podcast and whatnot,
8:43 Speaker 01 I'm not used to it because every time I see AI, it looks like my father's name, Al.
8:48 Speaker 00 But here's where I want to go with it, though, in the sense that it does feel like it's giving the average human the ability to do so much.
8:57 Speaker 01 Yeah.
8:58 Speaker 00 And then, once the average human has the ability to do so much, okay, now I want to do so much. But then there becomes a problem because you and I being Mercedes and Coke, it's just Laura and Mike. But in essence, the way AI is unfolding, the power it gives the individual, it feels like the individual brand, the human brand, me, you, is going to become so important in the future. I don't know if enough people are seeing or understanding the way these tools are allowing individual power to flourish. But in a way, and I guess this is where I'm going, in a way, I feel sorry for folks that are not understanding their human brand,
9:42 Speaker 00 their personal brand, before we even get into the more nitty gritty of the strategic enemy.
9:47 Speaker 01 It's fascinating, actually, because anytime there's a new category that comes in, the other sides have to rejigger, refocus, redefine themselves, right? It used to be you needed people to go out and do research and get data. When I was a kid, to get information, I'd go to the library with my dad to check out books. When I was in college, we had to look up microfiche to get articles. And with the internet, suddenly, we had Google to look things up. And now we have AI that can even explain it and write our papers for us. So the access to information has changed.
10:20 Speaker 00 You can have AI do your podcast for you with me, probably within one year.
10:25 Speaker 01 But it's not going to be the same.
10:27 Speaker 00 I'm not convinced. This is where I'm trying to go. And this is not even related directly to your new book. But the idea that these tools are probably going to allow you, and maybe even me, to say, hey, let's schedule a podcast conversation, and there will be enough of an AI robot of me, and enough of an AI robot of you, to where the two AIs can talk and have a podcast, and you and I are sipping coffee somewhere, and the conversation will be good enough.
10:57 Speaker 01 Yeah, it can be good enough, but can it take us to the next level? I mean, the AI is very good at summarizing what has already happened, the information that is already out there. But the really big ideas are those that are taking on and building new categories. Could the AI have thought liquid death would be a good idea? Right? You know, how many water brands are out there? And we're going to do something totally radically different. We're going to forget the cheap plastic aluminum cans and market it like a heavy metal energy drink or beer product. The really true breakthrough ideas, I think, are critically important to have that human touch, the human understanding, the strategy, right? Some of the execution, I think, can be done, but the real success is determined by the strategy.
11:42 Speaker 01 And not only that, it is about discipline, right? Because not doing too many things. AI will allow you to put out too much garbage. You need to discipline yourself as to that one message and repeat it. Because, listen, computers don't need you to repeat. You tell it one time, you know, what my name is, it's going to remember it forever. Not so with people. Actually, if you want to get in the minds of people, you have to take a very different approach. You need repetition. You need visuals. You need simple words that are easy to spell and say and understand. All of these things are a very different approach. And I think without people, company is going to get led astray. Pepsi is a good example. What has Pepsi done? They kept changing, right? They changed their logo, they changed their colors, they changed their message.
12:27 Speaker 01 All that change eroded the brand over time in the mind. And that's a terrible danger we need to be very wary of.
12:34 Speaker 00 It is really interesting with Pepsi. I've never been a huge fan of Pepsi, but if it was the only alternative, okay. But it definitely, in terms of the imagery and the way you see it in the store, even when they keep trying new refreshes of whatever, it just looks and feels tired to this day.
12:55 Speaker 01 It loses its authenticity. What does it stand for? I don't know. Just being an alternative to Coke is just not enough anymore because really now the true alternative to Coke is not other colas, it's other categories, right? The rise of the energy drinks and all of these other iced teas, all the alternatives. Water, as a matter of fact, is a big competitor. And now we've got prebiotic soda, which is the healthier soda, which is interesting because how many times has Coke, for example, tried to do this category? And they always did it with a line extension and was always a big loser. Maybe timing is part of it, but more importantly, it was the confusion of C2 was the first, right? Half the carbs.
13:40 Speaker 01 And more recently, we had Coca-Cola Life. You remember that one?
13:45 Speaker 00 Life or Light?
13:46 Speaker 01 L-I-F-E.
13:48 Speaker 00 Was it going to give me more life if I drank more sugar?
13:51 Speaker 01 It had stevia and it had real cane sugar. And to me, it instantly positioned their core brand as Coca-Cola Death. Whenever you present an alternative to your product, it says something about the original and you have to be very careful about what that says because it will lead people into the wrong direction. And listen, was the product itself? Maybe, but it was the brand and the positioning of it was absolutely wrong because today these healthier sodas, yeah, they got the prebiotics, but in essence, it's about the same thing, right? It's got a little sugar, it's got the natural sweeteners, 30, 40 calories. It tastes pretty good. It's not the full on artificial zero side. And this poppy and Ollie Pop taking off like crazy, but it's new brands for new categories. Why?
14:36 Speaker 01 Because the mind of the consumer.
14:38 Speaker 00 When I hear stevia, I think of Breaking Bad and Walter White spiking stevia with drugs to kill people. Anyways, let me shift it into something more happy and what I'm really interested in, which is the strategic enemy. And I think this is really building on the idea that we talked earlier, The Rock positioning, that you really need an enemy. Okay, for me, for example, I've written a bunch of books about a particular trading strategy that you would refer to. It as a technical trading strategy. And generally, I've been doing this for a long time. There's certain enemies that I have, for example, buy and hold stocks, that kind of thing. Or listening to CNBC, these would be my enemies. And I've talked about these enemies over the decades.
15:22 Speaker 00 When I look through your world, I don't think I have focused on my enemies enough.
15:27 Speaker 01 Probably not.
15:28 Speaker 00 Let me let you explain the concept of why an enemy can be so important for a business and its success.
15:35 Speaker 01 Take one step back in that it's all about, remember, in the mind of the consumer. And one thing in the mind is that we don't just haphazardly store brands in our minds. That's the thought of most companies. Yeah, like we've got the Toyota brand in the mind, so we just have to tap into that. Make people want to buy Toyota. And when they want to buy a car, they'll just go to their Toyota folder in the mind to see what Toyotas are available. It's not the way people think. People think, and the most important thing, brands really don't matter. It's categories that matter because people think category first. And then they look in the mind, they say, what brands are associated? So if you want to buy a car, you think EV, you go, huh, my EV, you know, folder is Tesla, right? The dominant brand in that category folder. So when it comes to the mind is so critical.
16:19 Speaker 01 If you just talk about your brand, it's isolated and nobody makes the decision by thinking just about one brand. They want alternatives, they want to compare and contrast. And the contrast is the biggest thing. So if you set up what your brand is and then contrast it to something else, it makes your brand more easy to understand and then more easy to make the decision to go for it. So it's not just we're better, it's we're different and why we're different, right? So if you think, for example, the Oatly, the first oat milk, they could just go say, why you should buy oat milk? No, the whole campaign is wow, no cow. Now, listen, for any company, there's multiple enemies you can have. I'm sure you're competing about lots of things.
17:00 Speaker 01 A strategic enemy is one that you've identified as the most and clearest contrast to yours, to make yours more understandable and that enemy less appealing to your customers. So people that don't want to have cow's milk, right? But we have the taste of it and it's wow, no cow. Now, it didn't go against soy milk. There's lots of alternatives, but that clear contrast with the cow made them very strong. But it does require a narrow focus, as I mentioned. For Chick-fil-A, they have, here in the US, they have cows saying, eat more chicken. Why? Because they don't sell hamburgers. That's their enemy, right? Don't buy hamburgers. Come to Chick-fil-A for chicken. As that chicken category has grown, Chick-fil-A has greatly benefited. All the goodness of what your strategy is, but when you compare
17:45 Speaker 01 it to somebody watching, and I do watch a lot of CNBC, but I don't trade on that info because I'm like, everybody's watching it, right?
17:52 Speaker 00 Smart lady.
17:53 Speaker 01 If I'm watching it, right? I mean, he just told a billion people, they're all going to do what he does. So I want to do the opposite.
17:59 Speaker 00 Let me give you an example, though, here. For example, this is in your world, Colgate, and as a father who is a dentist, Colgate, the first toothpaste in tubes, the enemy, tooth powder. Now, however, you just were talking about Tesla and the soy milk, but those alternatives aren't, gas cars aren't going anywhere as of right now. Regular cow milk's not going anywhere as of right now. But tooth powder did go by the way of the dinosaur. So speak to this idea of having an enemy that perhaps you're trying to make go away versus having an enemy that isn't probably going to go away.
18:36 Speaker 01 That was an outdated category. So you had Kodak was in film photography.
18:41 Speaker 00 But we could find other examples.
18:43 Speaker 01 No, of course. That's the history of innovation. But in essence, it's very unlikely that your strategic enemy will ever go away. And most important is you're fighting against something that is plausible. You're not saying that the other guy is terrible, they're going right out of business, and we're the only choice. No, there's always alternatives in life. And it's like, there's Amazon and there's Shopify. There's hotels and there's Airbnb. There's Uber and there's still are taxis. Maybe that will go away. There's always a space and time for where that does make sense. And that's okay. You want to give it to them. It's not about putting them down and rubbing their nose in it. It's about setting up a contrast. So it's crystal clear what you stand for and to rally people against.
19:25 Speaker 01 Against something because nothing beats to try to fight against something as opposed to fighting for something. It's much easier for Salesforce to say no software, but down to software, the end of software. That's what built the brand. Now, long term, they're talking about leadership as the CRM cloud global leader. As I said, leadership is the best place to be, but it's the contrast of what, you know, is out there versus what you are. And again, the biggest danger is not being focused enough to set up any contrast. When you line it extend into anything, everything, you have no position to fully stand on to make that distinction really clear in the marketplace and most importantly, in the mind.
20:06 Speaker 00 Let me keep it to the word brand for a moment and I'm sitting here at my desk looking at, I don't know how many Apple products, a lot. And everyone uses Apple as an example, but it's such a great example, the history of it. I had the chance to randomly bump into and chit chat with Steve Wozniak at the Saigon airport.
20:23 Speaker 01 Ooh, the Woz.
20:25 Speaker 00 Yeah. When I think of Apple, okay, we've got the word, Apple. We've got the logo. We've got the innovative products. We've got Steve Jobs. What beyond that goes into a brand? Take the floor and explain, connect all that together, because we could look at a million different examples about brand. And from your perspective, what is brand? This is why I brought up the idea of the AI earlier. It wasn't really to get into the debates, whether or not AI could replace me and you. It was more about how I see AI as forcing everyone to accept the fact that if I don't become a brand, the world's going to forget about me, that I have to become something in the mind's eye, out there in the ether, or I will be run over. There will be nothing left.
21:10 Speaker 00 So speak to this idea of brand.
21:13 Speaker 01 Think about where branding came from. You put a hot iron on your cattle.
21:17 Speaker 00 Assume I know nothing. I know about branding cattle, though.
21:20 Speaker 01 That's right. It's the same process. You branded your cattle, so you knew who it was owned by and you put your cattle name on it. You want to burn your brand in the mind of the consumer, so that it's not just the name, though, but it owns a position. And here's the thing, the brand name, I said earlier, if you people remember, the category is more important than the brand. Yet, in the end, the category is verbalized by the brand itself. So if you give yourself a terrible brand name, that really hinders you. And Apple has a fantastic brand name. And brand names always have to be judged by the categories they're in. Now, there's some truths about you can't say it and spell it and it's 18 letters long. It's not going to be a good brand name. But when your brand can be distinctive within the category.
22:04 Speaker 01 If you remember, when Apple came out, it was the trash 80s and the pet Commodores and all sort of techie names. And Apple, the first home computer with that simple name and iconic visual, was a very strong differentiator, not just in the hardware, but also in the branding of it itself. And of course, Steve Jobs being a master of that. And then going into when they launched the new product, it was the Apple II and the Apple IIe. They didn't come out with the Apple III. That big leap, they gave it a new name, the Macintosh, right? Apple-y name, great strategic move. And those concepts are incredibly important for companies to understand. And as well, Apple did have some rough patches when Steve Jobs left
22:48 Speaker 01 and they expanded the lines and it got messy and they almost went bankrupt. Jobs came back, he simplified everything. He stopped selling so many things, make it very simple, one, two, three, four, and we're going to do this. But what really brought the company back was new brands that pioneered new categories. As a company today, Apple would not be where they are unless they did that. They have a relatively small market in computers, but those new categories that they pioneered is what has made it a trillion dollar business. The iPod, they didn't even invent the thing. It came from creative technologies in Singapore, but Steve Jobs branded it better, right? He gave it a clear name with a clear positioning, a thousand songs in your pocket.
23:30 Speaker 01 Time, if you followed the trends, if you asked AI, everyone came out with the cheap MP3 players. And that was flooding the market and everyone loved it. Everyone bought it. He went in the totally opposite direction that is just is counterintuitive. But that's what it takes to build a brand and a category. And then to solidify it, he had to communicate it in a way we could understand. A thousand songs in your pocket. And of course, they went on to the most revolutionary idea. And one of the greatest examples of positioning yourself and repositioning the competition was the iPhone. We all loved our crackberry and the keyboard. He said, get rid of it. He said, no. Saying no is a big, important principle in business for her discipline, for focus, for building a brand.
24:15 Speaker 01 And smartphone, he called it the smartphone, right? What did that instantly do? That perfect category name instantly said Nokia was the dumb phone. Brilliant strategy. And it took time to build that thing. It didn't take off overnight. That's the other thing. Patience and courage is required. You don't want it to take off immediately because that's usually a fad, not a trend, right? So he had the patience, the courage to watch that thing. And of course, today has revolutionized the market.
24:43 Speaker 00 If I was to go back in time when Apple was getting rolling, there was also a guy out there in Seattle getting rolling with his Microsoft business. And to this day, and I've never been a DOS or a Windows user. Of course, they innovate in some abstract way, but they don't innovate in a way to where you can instantly grab hold of it and understand it. Microsoft, to me, feels more like, okay, the personal computer is being launched. IBM made one of the biggest mistakes in the history of the planet by licensing the operating system off to Gates. And then Gates has just delivered these similar products or consistent products forever.
25:26 Speaker 00 The operating systems, Excel, Word, et cetera. But it's a completely different type of, I don't think anyone wakes up and says, oh, I'm so excited about Microsoft today. There's a lot of people that love their Xbox, but it's completely different in terms of the branding and reaching an audience. I give all the credit to Gates. He was in that position. He made the moves. But it's one of the biggest cash cows ever. And it's not the same kind of innovation if we were to try to look at it like we look at Apple.
25:56 Speaker 01 No, because that's Apple's position. The way to go against Apple is not to be like them, is not to copy them, not to be innovative and try to be cool like them. It's to do the exact opposite.
26:08 Speaker 00 Boring.
26:09 Speaker 01 To be boring, right? To be business boring. We're not going to take crazy risks. We're not going to do anything. Don't worry. We got you. That's the strategy. That's the essence of positioning. It's not all sexy and fun. Like, sometimes the best idea is always to be the opposite, but sometimes the opposite is that basic and boring.
26:29 Speaker 00 What are some of your favorite new brands in the last 10, 15 years that have entered? You mentioned Liquid Death earlier, but that have entered and have just taken over. And feel free to open the floor up to a little more case study. I might as well pick your brain as long as I've got you here.
26:46 Speaker 01 Yeah, no, I love case stories. I mean, that's the essence of my positioning. Education is obviously working with clients, but studying the cases, reading about them, doing all the research for books and articles and all of that. And I love learning about brands.
27:00 Speaker 00 I don't know about Dude Wipes, but apparently... I don't know if I want to know about Dude Wipes. That doesn't sound like something I want to know about.
27:08 Speaker 01 You need to know about that. I gift these all the time. I'm going to have to ship you some. Unbelievable. A bunch of dudes living in an apartment, out of college, doing partying, drinking, eating lots of burritos. They found that baby wipes was a nice way to clean up in the bathroom. And he said, why is there not something for dudes? For me and my friends that has the branding that appeals to us? Because here's the thing. They call them moist toilet paper. That sounds really appealing, right? That Cottonelle and Charmin had these products on the shelves for years, and it really wasn't gaining traction because they didn't know how to promote them because they had a line extension name. They couldn't strongly suggest that these were better than toilet paper because that's 99% of their business. So they kind of languished until Dude Wipes came along
27:50 Speaker 01 and took a strong positioning strategy, making toilet paper the enemy. We're going to put toilet paper back to the stonages. They're flushable, they're plant-based, all the great things, but they're called Dude Wipes. And he drives around in a little mini pooper. He's got a Mini Cooper and he has a big poop emoji on it. And he drives around promoting this thing, but he takes a very strong stance why toilet paper just doesn't cut it when you poop. Taboo subject for many people, but listen, we all poop. Let's put it out there. They're almost at $400 million. This is a tremendous opportunity of creating a new brand and strongly going against an enemy.
28:25 Speaker 00 First time I was in Asia, 2006. I was in Hong Kong, I was giving a speech. And some cameraman, we were talking while somebody else was speaking and I told him I was going to Tokyo next. I'd never been. And he looked at me and he said, Japan, the masters of toilet technology. And at that moment, I'd never been to Japan, so I had no freaking idea what he was talking about. Okay, I learned soon enough in 2006. Now, I moved to Asia in 2013, so I've been in Asia for over 10 years. And I've had a Japanese Toto toilet in my residence the entire time. So, when you start talking about dude wipes, I start thinking about all these cavemen people over in America that the best they can do is a wet wipe.
29:07 Speaker 00 But here in Asia, and all my Asian friends are appreciating this, here in Asia, we are light years ahead. Another category that makes the idea of dude wipes feel, I don't want to describe what it makes me feel.
29:19 Speaker 01 Yes, you're right. The Toto is slowly coming in. This is a powerful brand that should take over the world, because I have used these things.
29:26 Speaker 00 It really should. It's amazing.
29:27 Speaker 01 Unbelievable. And they do have a little setup now in Costco, of course, at Costco.
29:31 Speaker 00 In America now, to show people.
29:32 Speaker 01 Yes, that's a revolutionary idea.
29:35 Speaker 00 Why did they take so long to come to America? That's really interesting.
29:39 Speaker 01 They have a few at the high, it's very expensive. Listen, who's putting in a $10,000 toilet?
29:44 Speaker 00 Wow, damn, okay.
29:45 Speaker 01 Right? They're not cheap.
29:47 Speaker 00 But you can never go back once you use them.
29:49 Speaker 01 No, no, I don't think so. And you do see that we step up in many ways of our lives. Who thought we would have these cell phones for more than our laptops in some cases?
29:58 Speaker 00 True enough. You were gonna give another example before I added my Toto.
30:01 Speaker 01 You're gonna be distracted by the Toto. But yes, if Toto takes off, dude wipes may have to worry. But the dude wipes, a very affordable alternative to getting your butt sprayed with the Toto.
30:10 Speaker 00 It is an alternative. I'm not sure what else it is, though.
30:13 Speaker 01 Well, listen, there's always an alternative.
30:15 Speaker 00 I could go dig a hole, too.
30:16 Speaker 01 Oh, I've been to India. I've seen this. I took a walk one morning and I was like, what are they doing? Oh my gosh, they're digging holes in the beach. But yes, this happens. I've gone camping. That's what you do. Anyway, there is one thing interesting about, I say, talk about competition or enemies. If you're launching a new category, you could, you can only pray and hope you have competition. Why? Because those followers makes the category more important. If nobody else launched an EV, where would Tesla be? Growing the category is the ultimate job of the leader. Now, you know, your share, you've got to maintain that dominance. You want to and you should expect followers and in fact, welcome them because it brings more
31:01 Speaker 01 attention, excitement. When Coca-Cola actually launched, there were hundreds of competitors. When Red Bull launched, hundreds of competitors that come in and flood the market. As long as you have well established in the mind as the leader, that will benefit you.
31:14 Speaker 00 I've got an example for you. I want to throw across your plate and you can run with it in any way you want. But I think it's very important company these days. Essentially, it sure looks like it came out of nowhere, almost in less than 10 years. Been around longer than that, but Nvidia is a hell of a story. To this day, I'm sure the average person doesn't really have a handle on what they are doing. Back to the AI conversation, but what is your perspective when you look at a company like Nvidia? And why they've had such fantastic brand penetration and brand success and just overall success?
31:46 Speaker 01 Oh, it's an incredible story. I am just so enamored with the case study. There's so many things. One, they are very devoted or devout to actually positioning. I think they've done many things along the way. I've had no play in it, but definitely have been watching from the sidelines and studying and researching them for many years. But leadership from the very top, Jensen Huang is a master of setting the course, maintaining the focus of the company and making critical, a very critical pivot to AI as we now know. You go back and look in time as they wanted to build a brand of the first 3D graphics chips for PCs. Back at that time, you couldn't play video games with lots of difficult graphics.
32:31 Speaker 01 It was on workstations, not PCs. And so they wanted to build that. Had a couple of critical no's, which I think is very interesting for them. One, the team was from Sun Microsystems, the three founders. And initially, Sun Microsystems said, hey, the products and patents are working. We'll let you have those patents, but you have to say that you will design chips not just for PCs, but also workstations. What kind of young entrepreneur wouldn't say yes to that? Right? And they said no. Why? Because they wanted to focus. And they knew that they needed all their time, attention and resources focused on the PC chips. And then we'd get distracted and lose their focus if they also had to do compatibility with the workstations. Very critical thing. The next no that they said no to, which was interesting.
33:16 Speaker 01 Now, at that time, most chipmakers did manufacturing and design, right? That's Intel strategy. When one of the investors said, hey, we love your idea. We also want you to manufacture it. They said, no way. No, thanks. That's not our specialty. We don't have any expertise in that. We don't want to do that. Then they said no to money. Another thing that many people would not do. Those critically set them up for success. And they also learned from their mistakes. One of their first chips, the NV1, they said it was going to be multimedia. In fact, graphics and audio. Well, it was a big disaster. The feedback was, yeah, the graphics are good, but if you can get rid of that audio, come back and talk to us. And they learned from that. And they doubled down on their focus in the future and did, in fact, have a chip
34:00 Speaker 01 that was superior, only focused on graphics. And they continued along that vein. And one of the really things that put them on the map was their focus and definition of a new category. And they called it the GPU. And why is that important? Very hard to explain new, very exciting technology to people, to make it simple to understand. This is a bigger chip. It was going to be able to do more things and they were going to be able to charge more money for it. Just saying, just buy our big expensive chip. Why don't we make a comparison to the CPU, the central processor? This is going to be the graphical central processor. That was a brilliant idea that came from them. And I've talked to Dan Vavoli, the VP at the company that had that brilliant idea. He said it was so remarkable, the ability for this one word. And he knew it was successful.
34:45 Speaker 01 When Intel started using the word as well, but pioneering that new category is what set them up for what would ultimately be the Nvidia we did, we see today. But it was not easy. That GPU set the course of a more powerful graphical processor and they came along with the CUDA and some other technological things. But it was early on that everyone said they were crazy in like around 2012, right? That they were spending all this money on the GPU and the CUDA. But Jensen was the one that had the leadership and the foresight. He said, they had seen, I don't know if you remember, but Google had trained a neural network to identify videos of cats and it required 16,000 CPUs.
35:26 Speaker 01 And it was, oh my gosh, two people in Toronto with two Nvidia GPUs did it in their bedroom. And Jensen saw that and said, oh my gosh. And he, in one day, one fell swoop, 2013, said, we are no longer a graphics company. We are an AI company. Now, it took a few more years to achieve that goal, but it was that pivot of focus. Now, listen, they didn't get rid of the graphics cards. They just didn't promote them, promote the company as their focus. They still do it. They still have it. They still kill in video game cards. But today, and they position themselves to be that pioneer. When you're first, it's incredibly powerful. Today, everyone's looking like followers, but they are positioned as the pioneer and
36:09 Speaker 01 has great success as a result of that.
36:12 Speaker 00 Something you brought up earlier, and I want to shift into it. You brought up the idea of Coca-Cola Life, a brand extension of Coke. And I was thinking about this the other day. I will fully admit to, I guess there's probably some other chocolate I might like, but my favorite piece of 7-Eleven candy is probably a Reese's Peanut Butter Cup. And it's been that way forever. Leave some in the freezer if they're around and wham-bam, thank you, ma'am. And again, I don't see it as much in Asia, but if I walk into a Costco or a Walmart when I'm in America, I see it. They have gone nutso on brand extension, like everywhere. And I'm fairly certain, I saw an article recently, that it's been quite successful. However, and I've actually tried a bunch of these things. Some of these things I don't care for, some I'm like, wow, they did a great job there. I'll eat. That regularly if I see it.
36:56 Speaker 00 As we mentioned with Coca-Cola Life and many other things, Gatorade, water. Speak to this idea of brand extension. You get really successful. Apple keeps extending and so far, so good. They've get some failures here and there. They got that VR headset that might not have caught on exactly. And perhaps how companies think too highly of themselves when they want to go to brand. Is that a good way to phrase it?
37:20 Speaker 01 Yes. It's exactly. I say they fall in love with their brand. The old Dale Carnegie, you know, how to influence people. You just keep repeating their name and your name is the most beautiful sound in the language. And so repeating it makes people feel good. I think inside companies, the use of the brand name makes the company leaders feel good. And they think anything with that name is going to be just as successful. That the magic is in the name and you can put it and do whatever you want. They just look for opportunities and that's the dangerous thing because it isn't magic. The name, when it is most powerful is when it dominates a category like Reese's, you know, peanut butter and chocolate. That's what they own, that Reese's Peanut Butter Cup.
38:03 Speaker 00 You just made an interesting point. Are they finding out that perhaps their real brand is chocolate and peanut butter combined? And now we're going to try and experiment on every different piece of food that we can imagine and see what sells. Obviously that got them to the table. That brought them to the game, but I think they have successfully extended the brand. Now, look, that's just one example.
38:27 Speaker 01 These are, we call them the immutable laws. This is not like the laws of physics where you find one example that disproves gravity and the whole thing goes kapui. There are examples, but here's the thing. Reese's Peanut Butter is that peanut butter cup, right? That's the brand in the mind. Now I call it the anchor, right? That's what holds the brand in the mind. Now, if you do these things, you have to realize that you can weaken that anchor. And what you put it on, in many cases, it's really an ingredient, right? They're putting Reese's Peanut Butter Cups into ice cream. Delicious. That's just an ingredient. When you get into some of the other, making them look like Twix or Kit Kat or something else, that becomes more dangerous. Their real power is in the peanut butter cup itself and they can't forget that.
39:10 Speaker 01 But they're a company, I like to say it like flying an airplane at 30,000 feet. Can you make a few bumbles? Sure, you're not going to crash the plane. You'll be up there and it depends on if there's any other planes around you that you might hit. But for the most cases, most companies are trying to get off the runway. And when you're trying to get off the runway, you don't have the ability to make those kinds of mistakes. You're going to dilute yourself if you're going to get into too many things. And many times they're not at 30,000 feet and they lose sight of that. And then the whole thing goes kapui. Now, back to my Dude Wipes. Listen, Dude Wipes got into this thing. They were taking off 100 million or so. This is a place a lot of companies are in and they think like they're Apple. They think they're Reese's. They're not.
39:55 Speaker 01 And that's the danger. Now Dude fell in love. He got really excited and here's the thing, they listened to the customers. My customers are telling me how terrific I am. My customers are asking me for more Dude stuff. That you should be the Dude Nation. And they got very excited. Oh Dude Nation, that's right. They got into production. We're going to have Dude Deodorant. We're going to have Dude Soap. We're going to own the whole Dude Nation bathroom. That's danger. Very dangerous. Luckily, I called up Sean because they got out of that and I said, Sean, how are you so smart to do that? He said he read the 22 Immutable Laws of Marketing by my dad and he got to the chapter online extension. And I quote, oh shit. We're in trouble. This is dangerous. Is this the direction I want to do?
40:39 Speaker 01 Do I want to have to fight Dr. Squatch and all the other natural soap products and deodorant? Or do I want to focus on my opportunity to grow and dominate in the wet toilet paper? So he did in 2019. He got out of the deodorant. He got out of the soap, sold it off, ended the whole production. And it just so happened the pandemic hit right then in 2020. And he was able to use all of his time and resources to generate into that one category against that one enemy, the toilet paper. And that's where it really accelerated and took off. Had he been diversified, I don't think he would have had as much success. And listen, I said diversified, but line extended because the ultimate case for companies is multiple brands that could even compete against themselves.
41:23 Speaker 01 That's a good direction, long-term for companies. But for entrepreneurs, growing a couple hundred million, you've got to stay as focused as possible. And it helps a lot.
41:32 Speaker 00 Give me a good generic brand, perhaps famous, without a great enemy. Like, one that comes to mind where maybe we know this brand, it's a little too generic, and they don't have the enemy. Perhaps they're still doing well, or perhaps they faded because of being a little generic and not having a good enemy. Does any particular example or case come to mind that you might want to share?
41:55 Speaker 01 Chevrolet. Chevrolet doesn't stand for anything, right? Or IBM. I mean, line extended, they've come back. But it's General Electrics, right? The general companies that are into anything without any one strong brand, one strong focus, or dominating one category. But we haven't talked about this. When it comes to brand names, when you mentioned generic, think about here, we have the power of Uber, which is a great name. And initially, it was called Uber Cab. They dropped the cab, which is very powerful to set up the enemy. You can always go against the leader, but you have to have a good name and a better strategy. Lyft. What's a Lyft? The generic name is a very weak position in to try to get into the mind, because the mind doesn't see the uppercase.
42:39 Speaker 01 They don't get the alternative spelling, which looks cute in the boardroom, and they have pink mustaches. But where's the strategy? How are they differentiating between themselves and Uber? And when you have a weak name, it becomes very challenging.
42:52 Speaker 00 There's a sound to it, too. As you kept saying the word Uber, and I was thinking here in Asia, and specifically in Ho Chi Minh City in Singapore, Grab, which is the alternative to Uber in Asia. Both Grab and Uber, when you say them, they're almost impossible to forget. I'm taking a Grab. I'm taking an Uber. I'm taking a Lyft. What?
43:12 Speaker 01 It's a very interesting thing, because most times when companies evaluate brand names, they look at them on the screen. They're looking, and they're very concerned about the font. And of course, colors matter. Of course, that stuff. Of course, the visual hammer matters. But the sound, the mind thinks in sounds. The sound is the most critical thing to get right. Uber, Grab. Evaluating on the sound is critically important. And having it be easily different and distinct. Too often, trying to get the generic... Narric into the name is the wrong direction. Right? We have a company here. It's Fresh Pet.
43:46 Speaker 00 Fresh Pet?
43:47 Speaker 01 That doesn't sound like a brand name. It's Fresh Pet. Do food for cats and dogs and they sell it in the supermarket.
43:54 Speaker 00 It almost sounds like a deodorant for pets or something. You don't know what it is necessarily.
43:58 Speaker 01 No, you have no idea. That's the thing. If someone says it to you. Now instantly, you didn't know what an Uber was. You didn't know what a Google was. But those in the long term are very strong names because they pioneered categories. That's what drove them for people to remember them because they're excited about the category. That's the thing. They're excited about the category, not the sound of your name, but if you can combine an exciting category with a great brand name. That's the be all, end all. And coming back to that and building a global brand. The names become challenging because as Asia, the languages are very different and the brands that sound great in China, Japan. And Korea are not always good for the English speakers. And I like to say that English is really the second language of the world and
44:42 Speaker 01 we usually when evaluating global brand names, does it sound right in English? But now as China's come up, it's very hard and we do a lot of work in China. And when we talk to the companies. If you're trying to go out of China, having in some cases, a second brand name is a good strategy. One that's for the global market. And then of course, they don't use the letters like we do. They use character. One of the biggest successes, we got Dojin and TikTok. One brand, one company, but two different brand names. One for the Chinese market and one for the global market. They picked a great brand name, TikTok for the global market.
45:19 Speaker 00 TikTok is great. Even if people don't know what it is by now, they seemingly know what it is somehow or another. TikTok is just the penetration is amazing.
45:27 Speaker 01 They did it differently. They started with a very narrow focus, 15 second lip syncing songs and the teenagers went nuts over it. You don't start by going after everyone, even if that's the end all goal and it is for most companies. But you don't start by going where the store for everybody or the video site for everybody. They started very small. And the other thing I think is so interesting, nobody talks about is when the internet first came, we watched on computers and then we got. Our smartphones and video and movies, they're meant for the widescreen. That's how everyone shoots everything that looks best. It fits the two eyes, the whole thing. When we went to the phone, we were just, oh, we'll just flip the phone and we'll watch it that way. Not TikTok. They only did vertical videos, which were, are they better videos?
46:08 Speaker 01 No, but they're much easier to watch on the phone because you're holding the screen that way. And you flip, flip, flip. And today TikTok is for everyone. There's 94 year old grandma on there looking for dating advice. So you've got pretty much everybody on TikTok now.
46:21 Speaker 00 I'm a little too young for her, but I wish her all the luck. I can't go there yet. I gotta come a few more years before I'm gonna date granny.
46:28 Speaker 01 Maybe your dad.
46:29 Speaker 00 That's still too old for him.
46:31 Speaker 01 But starting narrow, even when the end all goal is everyone, everyone uses Amazon as the example, right?
46:38 Speaker 00 How many people on the planet know that Amazon started with only books? Of course, in the 1990s, everybody knew that. But today, I don't know how many people know that.
46:47 Speaker 01 And that's why you have to study history. Don't just look at what Nvidia is doing today, right? You really get a full appreciation for where they are today by looking at the history of what they did along the way. Amazon, another great example. Facebook, another great example. They didn't start with everybody. They started with people in college at Harvard, and then they went to the other Ivy Leagues. I still remember, because I had graduated college, I had to go back to my college to get an email just so I could sign up for Facebook. Today, of course, it's everyone. Initially, it was a very narrow focus. And think about it, it was that because it was college educated or college students that it had premium type of appeal, not because they said it was premium, but because that focus led the perception that it was for.
47:31 Speaker 00 Laura, great stuff. We could keep this conversation going on for a very long time. And hopefully we can do it again in the future. I'd love to because I could surely just pick your mind on all kinds of topics. And I'm sure a lot of people like this kind of just digging in. And for someone like you, you've dedicated your life to understanding brand and positioning and whatnot. And it's so important for all of us. And even if my big picture example of how AI, I believe, is going to make every one of us a brand and we have to fight for ourselves as our brand in this world out there. The book, The Strategic Enemy, How to Build and Position a Brand Worth Fighting For. People should check out this book. They should check out your father's books, all the books that have come from the last name Reese. There's a lot of them. And if people are into marketing and branding, they perhaps already have some of them. Long-winded there. But Laura, where can we send people? Where would you like to direct people to?
48:16 Speaker 01 Sure. Just hit me up on the social channels. Our general website is rees, R-I-E-S, dot com. And you can get all the links there to the books. I'm on Substack, so you can sign up for our free newsletter at rees.news. If you're interested in branding, I've got tons of case examples through the books. It's just very fascinating. And just to leave you, personal brand is incredibly important. And there's definitely tools you can use in terms of positioning, including like, say, a visual hammer. So what does Jensen wear at every interview? A black leather jacket. If we were on video, I'd be in red because that's my color. So you've got to think of yourself as a brand, absolutely, from just not what you stand for, but also what you look like.
48:57 Speaker 00 So you have the four letters, R-I-E-S, dot com?
48:59 Speaker 01 I do. I was early on there.
49:01 Speaker 00 I have my last name, Covel, which is five letters. Bought that from a Russian guy for 600 bucks, I don't know, 20 years ago. So I got lucky on that one as well.
49:08 Speaker 01 Super lucky on that one. Yeah, absolutely. But yeah, no, it's super fun.
49:13 Speaker 00 Laura, great stuff. Again, people can check you out, R-I-E-S, dot com, and check out your book.
49:18 Speaker 01 Thanks so much.
49:25 Speaker 00 I see a time when those awake will understand how to make money in up, down, and surprise markets. Whether new trader or experienced, college student or financial advisor, protecting against a crash, or just trying to make a lot of money, trend following offers everyone an answer in uncertain times. To get started immediately, send me an email, [email protected] . I will send you the right trend following steps to take, along with my free video. But if you want to buy and hold, trust the government, and trust Wall Street, this is absolutely not for you.
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