Thread by @ryan_caldbeck

1/ I loved this from @pmarca and @eladgil:

“We are in a product cycle business. Which is to say that every product in tech becomes obsolete, and they become obsolete pretty quickly.....

2/.....If all you do is take your current product to market and win the market, and you don’t do anything else — if you don’t keep innovating — your product will go stale. And somebody will come out with a better product and displace you.”

a16z.com/2018/07/20/aft…

3/ CPG didn't have that dynamic from ~1800 to 2010. During that period there were big barriers to entry that made it hard for “winners” to lose their space.

4/ It’s why when you were growing up you drank the same bottle of @cocacola (1886), ate same @Cheerios (1941) and brushed your teeth with the same @Colgate toothpaste (1873) that your grandparents grew up with 60+ yrs prior.

5/ Declining Barriers: distribution costs (fixed to variable; decline), mkt costs (fixed to variable, declined), consumers want to try new products (Personalization of the Consumer- consumers searching or products that meet their needs. They didn’t do this in the prior 204 years)

6/ Boards and CEOs joined CPG when those barriers existed. Everyone they have ever met only knew an industry where those barriers existed. Imagine if in 2-4 yrs no one in tech needed to code anymore in order to build product. How would landscape change?

https://twitter.com/ryan_caldbeck/status/1008105157987467264

7/ Now those CPG barriers are gone, @pmarca's pt about tech is true in CPG too. The leadership is terrified and lost. More fear than I’ve ever seen in any industry ever. Fear that you are the captain of the Titanic and you know already what will happen.

https://twitter.com/ryan_caldbeck/status/1010654318456782848

8/ Fear leads to defensive action. Fear prevents offense- prevents proactive actions which fuel growth.

9/ Fear leads to cost cutting.
mediapost.com/publications/a…

10/ Fear leads to firing the CEO, even if she is one of the best. Because you’re panicked.

Dear Cambell’s board: You made a mistake. It was out of fear.

usatoday.com/story/money/20…

11/ Fear leads to massive M&A where “synergies” is your core reason (read: more cost cutting).
investors.pinnaclefoods.com/investor-cente…

12/ Fear leads to weak sauce product line extensions that make consumers smirk (or think “that’s cute”). Fear prevents the R&D team from actually developing real innovation. Fear is soul crushing for the team.
bustle.com/p/snickers-has…

13/ Fear leads to being paralyzed and not being able to respond year after year to the known threat.

cnbc.com/2017/07/17/bil…

14/ CPG is now a product cycle business. The incumbents don’t know how to effectively develop innovative products. The emerging brands are exploiting the fear.