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You can count on in many of the categories that we as a company can play in, it actually turns into an automated decision. I don’t have to worry about it. I trust Brand X to deliver on the promise that comes from P&G in this case or any other brand or any other company that you might be thinking of, which then to you as a human being frees up or turns that part of decision making into a system one decision making.
Jay Clouse 0:27
The startup investment landscape is changing, and world class companies are being built outside of Silicon Valley. We find them, talk with them and discuss the upside of investing in them. Welcome to Upside.
Hello, hello, hello and welcome to the Upside podcast. The first podcast finding upside of Silicon Valley, I’m Jay Clouse, and I’m accompanied, as always by my co host, Mr. Aging at home himself. Eric Hornung.
Eric Hornung 1:08
It’s been over a 100 days, Jay and I have not left.
Jay Clouse 1:11
Do you have a count on your wall kind of Castaway style, just like how many days we’ve been locked at home now.
Eric Hornung 1:16
I have a rusty nail that I keep on my desk and I every day I turn to the side and I just carve. Very slowly. It takes me about 25 minutes, a very large number one roman numeral style. Sometimes I do a slash and that’s about a 35 minute experience, but into my wood door that I rent for a house that I rent.
Jay Clouse 1:37
Sometimes you forget that you’ve already got four tallies, and you do a fifth tally instead of a slash.
Eric Hornung 1:42
It’s a mess when that happens.
Jay Clouse 1:44
God I hate that.
Eric Hornung 1:45
Yeah, then you got to scratch it out. And that’s a large process and I have a I went to picked up a curbside pickup wood color marker from Home Depot for those exact moments.
Jay Clouse 1:57
You know, real talk. I’ve been doing a lot running outside lately because it’s kind of my only excuse to get out of the house for an extended period of time. Not that I’m trying to escape anything. I just need to be out of the house sometimes. And my body hurts. I feel like I feel the aging happening, Eric.
Eric Hornung 2:13
I think we’re both getting older faster, maybe everybody’s getting older, faster on quarantine because my knee hurts and all I do is go on two mile walks.
Jay Clouse 2:22
Really? What other kind of exercise are you doing? Because used to go to the gym a lot.
Eric Hornung 2:25
Yeah, I miss the gym. I like lifting weights and all that but no, I’m I’ve just been doing these little 30 minute high intensity interval training workouts and you sweat a lot. It’s mostly just maintaining here. You know? I don’t know. There’s really nothing going on special over here, Jay. I’m just getting old getting old fast.
Jay Clouse 2:47
Sounds like you could use some new consumer products that would keep you feeling young and fit and active while you’re aging at home.
Eric Hornung 2:53
Is this an advertisement? Is this a live read?
Jay Clouse 2:55
No. But today our guest is Chetan Parekh. He is the Associate brand director and innovation portfolio leader at Procter and Gamble ventures startup studio. Eric, we’re talking about a startup studio within Procter and Gamble ventures, which is based right there in Cincinnati, Ohio with you. He has been on the leadership team at P&G ventures for years now charged with building new verticals in the next billion dollar brands for Procter and Gamble.
Eric Hornung 3:20
We got introduced to Jaden, we were at CES and Jay for a while now has been into the anti aging or aging or death tech space. And we saw that he was speaking on the future of aging from Procter gamble perspective. So we reached out and he was really excited about doing the interview. Didn’t hook up at CES, but we did get a chance to hop on the mics here in Cincinnati.
Jay Clouse 3:46
I can’t think def tech is actually a thing def tech.
Eric Hornung 3:49
It sounds pretty like metal.
Jay Clouse 3:51
Sounds pretty metal. Procter and Gamble’s venture studio is focused on creating these new brands and businesses that improve how people care for their families, clean their homes. and elevate their well being. On their website. They actually put out some of their focus areas for new consumer brands. And they’re focused on chronic conditions, sleep, non toxic home and garden. Women’s wellness, personal performance, active aging, male wellness and menopause.
Eric Hornung 4:18
It’s quite a lot of health related areas.
Jay Clouse 4:21
Procter and Gamble, if you’re not located in Ohio or Cincinnati, you may not be aware that they are huge in the consumer packaged goods space. Definitely one of the biggest, if not the biggest, a ton of the brands that you see in your own home, come right out of Procter and Gamble things like Tide and Swiffer and Puffs,
Eric Hornung 4:41
NyQuil, man, how many Procter and Gamble brands could we name Jay? That would be the question, Gillette.
Jay Clouse 4:46
Oh, because here’s the thing, and this is why it’s hard to actually name them sometimes. They’re so good at brand building that you know the name of the company but you don’t know that Procter and Gamble is behind it. So I’m excited about this interview because not only are we going into something that’s close to corporate venture capital. But we’re talking to one of the biggest brand building companies in the world. And branding is something I’m interested in as well.
Eric Hornung 5:09
And dear listener, if you are interested in branding or this interview, send us a note on twitter @UpsideFM or if you have something a little longer reach out at email@example.com. And we’ll get to that interview right after this.
Jay Clouse 5:27
Hey, listener, have you ever wanted to get a message in front of the Upside audience but weren’t sure how to sponsor the show or weren’t able to do a long term sponsorship? Well, now you can just go to upside.fm/classifieds. And let our audience know anything that’s going on in your world, whether it’s an event, an application, a special coupon, or deal, or just letting them know who you are, what your company does, all you have to do is go to upside.fm/classifieds. And you can place an ad on this show. That’s upside.fm/classifieds.
Chetan, welcome to the show.
Chetan Parekh 6:08
Thank you. Thank you, Eric and Jay for having me on the show.
Eric Hornung 6:11
On Upside like to start with a background of the guests, but you’ve spent some significant time at Procter and Gamble. Can you take us through your P&G history?
Chetan Parekh 6:21
Uh, sure. So I’ve been with P&G for I think 13 years at this point in time. And I have meandered through some amazing roles of both upstream and downstream. And I started off in our healthcare sector all the time within the function of marketing, as we call it. And then from healthcare. I worked on both our Actonel business which is pharmaceutical brand and Vicks, which I’m sure you’re familiar with, before spending a couple of years on the Walmart customer team on our oral care, fam care and health care businesses all accumulated together in what we call as our health and wellness businesses. Spend a little bit of time after that in our global oral care, creating, you know, a global framework and marketing campaign for Creston, OralB around the world, before heading into the world of beauty and Olay skincare, where I lead the North America Olay skincare business, at which point in time, I got this amazing phone call from my current manager, saying we have a crazy opportunity for you creating this new organization called P&G ventures, and we’d love to have you jump into that world with us. Are you interested? And here I am, you know, two and a half years later.
Eric Hornung 7:09
So often on this podcast we speak with, like, a big company is 25 to 30 people and you’re sitting at P&G, which is the largest CPG company in the world, I believe. What’s it like, operating in what some entrepreneurs would consider the belly of the beast?
Chetan Parekh 7:52
So the short answer to that question is it’s really amazing. And it’s amazing because you know, having interacted both with with, you know, bootstrapped entrepreneurs and startups, as well as obviously being privy to, and having had the opportunity of having some amazing experts and resources. I think the idea of P&G ventures is really melding the best of both worlds, right, what we, as a company know and have done, and the expertise and scale and the heft that we can bring to bear with the agility and ideation ability more than anything else of the startups. And can we combine the two together to create some magical combinations, which is really foundationally, if you were to strip everything away, is really the investment pieces of P&G ventures, which again, is a very small group within this big Procter and Gamble company.
Jay Clouse 8:48
My guess is that you didn’t anticipate this ventures arm of the company opening in you stepping into a leadership role within it. So when you receive that opportunity, did you immediately jump at it and say yes absolutely, this is what I wanted to do, or did you have to think about it for a little bit?
Chetan Parekh 9:04
My first reaction was absolutely no. And because again, you know, you don’t know what you don’t know. So my first gut reaction is no, what are they talking about? And that’s where, again, you know, kudos to all of our leaders, who I had the opportunity to really sit down and understand, what is their vision in building something like this? And what role does an organization like this play in a big company like P&G? And it was very clear that, you know, as you know, recently, obviously, as you know, we’ve any big company, but we have been disrupted by several startups around along multiple angles. And it is less about emulating what startups are doing. But it’s more about learning from where are the ideas coming from and harnessing that energy and bringing it into a company like P&G, and specifically focusing on areas that we don’t currently play in. So we have amazing brands, we have amazing categories. Where they have a really good understanding of what their innovation pipeline is, the charter or the remit of P&G ventures is really creating new brands in new categories for P&G, which is really positioning the company out five to 10 years from now to see where is the consumption going to come from? And how do we position the company to win in that environment? So, you know, once I had a deeper appreciation and understanding of that, you know, at that point in time, it became a no brainer to say, you know, this is a perfect almost like a capstone opportunity to synthesize everything that I’ve learned across, you know, how to run an end to end business to bring that ability to bear and then obviously, the whole proposition of the learning that such an opportunity would provide, working with startups working with technologies and working in a very different context and environment that probably nothing within the Procter and Gamble company would have given me the opportunity to.
Jay Clouse 11:00
I want to share an assumption that I have, but I want you to tell me if I’m right, or if I’m wrong. And if I’m wrong, how I’m wrong. In a lot of industries that get disrupted by startups, there’s a lot of there’s a ton of r&d, or maybe there’s a change in the actual infrastructure that allows a new startup to come and do things a different way. In a world where so much value is placed in your brand. It seems like you guys are more at risk to have one of your brands disrupted at any given time, just by someone that’s somehow exceptionally good at marketing, branding, storytelling. Am I incorrect?
Chetan Parekh 11:35
No, I think that’s a that’s absolutely right. And, you know, further precipitated by the fact that as you know, barriers to entry have come down dramatically. And while the barriers to entry have come down dramatically, what remains true which is where I have a lot of confidence in the company, is the fact that foundationally we are about creating big, sustainable brands that are built on the shoulders of superior technology. Because no matter what, ultimately, you need to have something that can weather the storm of somebody that’s launching something that’s $2 cheaper, for example, than what you have in the marketplace with roughly the same proposition. But the categories that we operate in the, the products that we have, do have that inherent superiority from a performance perspective. And that’s really the lens that we bring to table even within our venture as well. So I’ll give you a very specific example of a of a startup founder that I interacted with a year or so ago, where his analogy was, look as a startup, if I have an idea, it’s it’s in today’s world, it’s not difficult to set up a website a very amazing lineup, and I have contract manufacturers that I can source from to suddenly create a what feels like an incredibly compelling proposition that I can launch with, you know, a whole bunch of platforms that are now available right. Shopify is the world for example. However, It’s like drinking a smoothie, where the first five sips of the smoothie are easy, but then you start hitting the ice. And then the sixth and the seventh sip is harder and harder still. And that’s where this whole idea of can the proposition that I’m giving to my consumer, the product performance, can that stand to test, you know, times test. In other words.
Jay Clouse 14:00
Can you talk to me about what it means to be a sustainable brand? Like what does P&G know and do so well around branding? That gives you guys a leg up?
Chetan Parekh 14:02
So I think it is founded in it starts with the consumer insight, right, a deep, powerful consumer insight, which is around what is the consumers pain and being very deliberate about articulating that pain point. So that we are crystal clear on what would the painkiller have to be. Once you have that foundation, you then translate that foundational consumer need or desire into what we call as a technological challenge or a technology challenge. And now that you’re clear on what you need to deliver, now you can start assembling your technology building blocks that actually help deliver on that need. The two then when they just come together, that’s really where the magic happens. Because now you understand what the consumer wants. Now you have something that delivers that need and therefore creating a story crafting a story, creating a brand around it, and on top of it can only be amplified. But again, you know, if you if you approach it from the other direction, that’s that’s not sustainable because you have a beautiful story. You have a beautiful brand, but you know, you don’t have that solid foundation. And that’s, again, the difference between something that lasts for a little bit versus something that endures for a longer amount of time.
Jay Clouse 14:56
Can you talk to me a little bit about the P&G venture studio model, and how you guys get started creating new brands? Are you bubbling up some of these pin points that are coming directly from your other lines? And starting from there? Or are you going out and finding people who have the nut of an idea? just interested to hear your approach?
Chetan Parekh 15:15
Sure. So so I think, you know, it’s it’s really this whole idea of starting with a solid framework that is grounded in what we call as macro shifts, again, thinking of five to 10 years ahead, where is the consumption shifting? How is the consumption shifting, and based on that solid consumer understanding, then deriving our investment thesis or our where to play choices right in terms of here are some areas that are interesting for us to play in. The beauty then is not to be so dogmatic and define those areas down to the four decimal place so that we closed ourselves to interesting ideas that might be at the scene. All at the periphery that, you know, we call it serendipity, right? We all love serendipity where, you know, it’s this jigsaw puzzle, beautiful, two categories coming together to create a new category that consumers aren’t really even thinking about. So I think it turns into a very deliberate strategy to be able to define your where to play areas, and then creating an organization that is and networks honestly in in in our world, to be able to scout and to be able to find interesting startups and entrepreneur entrepreneurs around the world who can deliver it. And then once we have a potential lead or a potential startup that we are interested in, then we really turn into a little early incubation studio, right where we are proving out the technology. We are doing early product market fit, and really starting to build a brand around it to build our gut that yup, there is something in here that merits either further investment, obviously from a money and resources perspective, and then obviously, that’s a great problem to have, because now you have a brand well on its way.
Jay Clouse 17:09
This is going to sound like a very broad question that might be hard to answer succinctly. So I apologize. But given that you’re thinking about where consumption is shifting, how people are shifting their own patterns of behavior, what are some of the macro trends that you’re seeing in consumer behavior and consumption that everyone should be aware of any any consumer products should be aware of?
Chetan Parekh 17:33
I think that’s a very interesting question. And right now we are in the midst of it, right? Going through this pandemic, where I think the whole idea of what we call this hyper versatile home this home as a place where a lot of different things are happening. It’s your office, it’s my office today, you know, it’s our kids is school right now, right? So all of this home, whereas originally, you know, a lot of it was thought about in the context of urban areas right where it’s not unusual for an apartment in Manhattan, for example, or Mumbai to be able to serve multiple purposes. And now we are in a world where our suburban dwellings are kind of being put to the same level of test. At the same time, there is a heightened awareness about your vulnerability to different healthcare conditions. And therefore the need to build resiliency in various different ways to then be able to withstand all of these external shocks that are coming your way. In this case, obviously, the virus. So that’s where some of these trends as we are seeing are emerging is redefining the role of the home, which again, P&G as a company that’s in your home, and into places that you probably aren’t even aware of belongs to P&G many of the brands that you use, I’m sure, and at the same time, this amazing collision with the world of health and wellness with heightened awareness on both fronts. So what when those two forces collide, what we call is can the home colliding with The body if you will, then that can create some really interesting possibilities. Everything from the mundane, which again, yesterday’s mundane is suddenly, you know, today’s oh my God, I’m aware of everything that I’m doing. You know, walking into your home with your shoes on right is something that people would do in many parts of the world without even thinking about it. And now you’re suddenly aware of what are the things from the outside that I’m bringing in? Is that desirable? Is that not, which then suddenly elevates the mundane activity of cleaning, for example, to a completely new level? Right. So again, you could talk at a very high level from a healthcare and some of the real healthcare conditions. That’s not where P&G as a company plays, we are a consumer goods company. But if you think about the continuum and what the consumer cares about, then there are so many rich fertile areas where again, the the sensibilities have been heightened so much, which is kind of where a lot of the consumption you will see will shift and will go to companies and products and propositions that actually help consumers survive in this new normal, or thrive in this new normal.
Eric Hornung 20:11
How much of that is new, better products versus new or repurposed business models?
Chetan Parekh 20:20
I think it has to be a combination of both. Again, the the world swings, like the pendulum swings quite a lot in terms of, you know, business models are going to eat products and business model without a superior good product is nothing and vice versa. So I think both are going to shift you know, as probably, personally, I haven’t set foot in a grocery store in past several weeks, and we are all getting used to, you know, deliveries, etc. Right? So we are again, living in this new world, which is really kind of foreshadowing of what is to come. So that’s kind of, and I’m using this example, to illustrate business models and changes in business models. So I think They need to accompany. And from a proposition perspective, you know, the favorite word that people like to use is disruption, right? We are all in the business of disruption and disrupting everything that’s around us. And disruption itself has has a very different and nuance to meaning as far as we are concerned, because from our perspective, it’s disruption. If it meaningfully addresses a pain point in your life, it could be an evolution of an existing or a feature of an existing product that you hadn’t thought about or has now become important. Or it could be a completely different technology or our way of thinking about solving a problem that you have. So I think it can be both as long as it’s rooted again in the consumer pin point, because that’s truly where the magic happens.
Jay Clouse 21:48
It looks like you spend a good amount of time serving the aging consumer in their caregiving ecosystem.
Chetan Parekh 21:54
Jay Clouse 21:55
Can you give us a primer? Because a lot of people listen to show probably have very little experience with that ecosystem. So talk to us about the caregiving ecosystem, and get us to a level of understanding so we can go a little bit deeper.
Chetan Parekh 22:07
Absolutely. So connecting it back to the idea of where is future consumption coming from? Obviously, it’s no surprise that from a macro shift perspective, we are all living longer, and the world is aging rapidly. And if you have, you know, at least in my previous world, my media plans somehow magically stopped at the age 55. And there was kind of an abyss beyond that. So we as a society, it turns out, and again, you know, it was a hypothesis when I started working on it a couple of years ago, where we did a small cross functional team, we literally started with a blank sheet of paper, to say, maybe there’s something in here, we don’t know what, let’s go figure it out. Whether A there is an opportunity, and B, what are again, some of the some of the big pin points and what we found was absolutely amazing, which is that from an innovation perspective from a product new product development perspective, despite the fact that almost 97% of consumers 65 and older, live and want to live in their home, almost 90% of innovation in the age tech category is being dedicated towards consumers in institutional care. That’s 3% of consumers. Consumers want to age at home, consumers want to thrive at home. But what we found is that the entire category was about a small portion of the society and of the world. That really, that was a big disconnect. For me, personally, and that was a big disconnect for us where this entire category again is we had to flip the narrative we had to flip the narrative from being taken care of to thriving and that’s where as a consumer you have needs as you grow old within the context of your own home. And the only brand that comes to mind consumer facing brand that comes to mind is depends right when it comes to older consumers. So again, a huge opportunity to serve a consumer that has been significantly underserved. And all of the innovation dollars going into, you know, serving the the business to business space, if you will, leaving the consumer to be hung dry. So again, we sense this early opportunity, which is really what started a whole process around diving deeper, we spent hours and hours with, with with the older consumer and their ecosystem of caregivers to start understanding what some of their unmet needs are, what some of their pin points are. And that itself has turned into some amazing insights and areas that we have our teams working with some incredible startups with.
Eric Hornung 24:56
Help me understand that a little bit more in a consumer products context. Like what is Old Spice for elders or Gillette for elders look like? And these is that even the right way to think about this.
Chetan Parekh 25:08
Let me tell you a better way of thinking about this.
Eric Hornung 25:10
Chetan Parekh 25:11
So you know, the fact that the opportunity exists with the older consumer is not rocket science. However, if you put your category specific lens on it, say skincare or health care or body wash, for example, then that leads you to questions like, what’s the Old Spice for older consumers? With the construct of P&G ventures that we have we had this we have this amazing opportunity to take a step back to holistically understand the consumer to say, what are your pain points as a consumer and maybe body wash isn’t one of them, which it turns out is not as much right there are in the hierarchy of needs and pain points that they have. There are so many so many other pain points that we could be thinking about solving. But then what it does, again, it gives you freedom, it gives you freedom to take a step back and say, Where are the problems? And are there solutions? So in the context of your, you know, consumer packaged, good question, again, starting with pain point, for example, you start thinking very logically, okay, you want to stay at home longer, yes. Okay, what causes you to leave your home and be institutionalized? And then you do the research and you understand what are the different factors? Well, it turns out that, you know, outside of some of the acute medical issues, suffering a fall inside your home is a very big reason, probably the number one reason why someone needs to be institutionalized or hospitalized, but then that leads to, you know, a whole spectrum of undesirable events that that succeed that. So now you have a locus to focus on, which is fall prevention. And then you start looking at all the areas within home within the home that falls occur, then you start thinking about all the other factors and contexts within which falls can occur. And then you land up with the area of and I’m gonna, I’m going to connect it with what you just said, the area of bathroom. Turns out that a quarter of the falls occurred in the bathroom and falls in the bathroom are two and a half times more dangerous than falls anywhere else in the house. So this whole idea of, well what happens in the bathroom when the process of showering happens in the bathroom? Then how do we think about the idea of de risking showering? So you see, starting from a pain point, starting with the inherent motivation, just following the logic and link along with the consumer, you can suddenly land with something that is extremely tangible. And therefore going back to your question extremely CBG like.
Jay Clouse 27:46
How much do you guys have to look at a cross section of geography? You know, I would imagine that the elder care issues of or even the percentage of people who go into care institutions is higher in United States than ever would be in India, you know? So how much do you guys have to look at a cross section of country by country? How does this problem look?
Chetan Parekh 28:08
Yeah, I think, you know, this is where the another beauty of P&G ventures comes into play, right? I can afford to start small, I can afford to fail quickly, before I put any big global ambition on top of it, you know, so in that spirit, truly in the startup spirit, our initial focus tends to be US or China, because again, from a side surprise perspective, and from, you know, at least having the critical mass from a business building potential perspective, those two tend to be our lead markets. But then obviously, in the world of aging, there are many, many other markets that we have gained inspiration from, you know, Japan, Italy, Brazil, all of them have aging societies that we can learn from and start applying some of the learnings from those markets into building our propositions.
Eric Hornung 28:55
How does P&G’s global business change if not accidental death is solved.
Chetan Parekh 29:00
That that is I hadn’t really thought about that? That’s that’s a really interesting question. I think it’s again, it’s to the extent that we can serve that consumer to prevent those types of things happening, then obviously, it’s it’s it’s a huge benefit to the society, and it’s a huge benefit to us as a company. And this is also where, you know, connecting this question with the one that you had mentioned earlier, in terms of, you know, different geographies. One of the most interesting things that we are finding is that, that there are immense opportunities at the seams of different categories that you would think are completely unrelated. So for example, you know, going back to the idea of fall prevention, you know, you’re talking about muscles and you’re talking about muscles trends, and what is the category whose entire focus is on building your muscle strength, the world of sports, and the world of sports management, and that’s also where we are finding amazing technologies and startups that are thinking about You know, faster muscle recovery, for example, or strengthening your muscles in new and unique ways? And how can we take inspiration from a seemingly unrelated field, to bring that inspiration to bring that technology to bear in the context of the consumer that we are talking about? So again, it turns into this fascinating puzzle, where the more you understand about the consumer and their context, the more you can start thinking about the different opportunities that exist. And right now, honestly, within that space, there’s enormous more opportunities than we can get our hands around. So that’s a really exciting place for us to be in.
Jay Clouse 30:39
I love on the website that you guys have where you show the focus areas, you even have within the categories, these specific descriptions of, here’s what we know, here’s what we’re looking for. Here’s what an ideal solution could look like. How do you think about dividing your own team’s limited time for incubating in house versus seeking out companies that might be able to solve This brief are already attempting to solve this brief.
Chetan Parekh 31:02
Yeah, and I think, you know, do many, it might come as a surprise that we are basically laying bare our investment thesis there. And, and what we have figured out again, the macro shifts that we are finding and some of these consumption opportunities. That’s not rocket science, right? So figuring out what to do is not difficult, but really figuring out how to do it, what sequence to do it and what timeframe to do it in is really where the magic comes into play. So from that particular perspective, it’s it’s really a transparent way to invite the startup community to participate in this experiment with us. So that’s one. And the second aspect of this is around organizing, right, as you said, which, which is absolutely not trivial, and that’s something that occupies a whole lot of my time, right now as I lead our entire early discovery effort within p&g ventures. And that’s where you have to start making some prioritization calls and And all of that, again goes to the magnitude of the opportunity. And we kind of principally think about it in three very simple questions. So the first question that we think about it is that do we see a long term opportunity to serve the consumer? The second one is, can we do it better than others? Because I think that’s really where the superiority and and the the potential of building big brands that end or come into play. And the third one is, do we see a brand? Or do we see a category or a market that will grow over time? So we turn it into a very criteria based discussion. And And honestly, again, leveraging many of the startup frameworks is expecting the internal teams who are working on it to create their own pitches. Right and and they we literally have internal pitches with the teams who in many instances are partnering with the startups or startup technologies in very early, small way to then come to the management team and pitch for resources. And and that’s really where at the ventures level, it turns into a portfolio discussion. And when you talk about portfolio obviously you’re you’re you are balancing risk and reward time to market and a whole bunch of other criteria to make sure that you are putting the right emphasis on the right seedlings for them to grow, and you’re providing and nurturing them in the right way. Having said that, it’s not an easy solution, right? We and and, and it’s honestly a good problem to have where you have several good ideas that are fighting for finite resources. So, you know, again, some of the tension that we create is intentional, because again, that’s where a bigger idea will hopefully win out, and we’ll get disproportionate resourcing and having said that, that’s again, where it’s hugely beneficial to be part of a bigger company where you have the backing and that we have a direct line of sight to both our CEO and the P&G innovation. board, where we can have these discussions on why we believe in a particular opportunity and why it needs to be funded. But again, making it very criteria based and putting it in all of our right frameworks to make sure the right things get funded at the right point in time.
Jay Clouse 34:15
With the capabilities that P&G has to brand market distribute brands themselves. It seems like something that really hits the market and takes could pay off really big for P&G out of P&G ventures, which would also make you think that maybe there’s a long time horizon to really get one of those hits big. How do you think about measuring your own progress and what is successful or is not successful from the studio?
Chetan Parekh 34:43
Yeah, so I think that that is again, a really interesting differentiation between a classical VC and an organization like bng ventures, where our time horizons and our patience is a little Bit more, our bar obviously is also higher, because now we are finding for things that last again versus things that flip within a, you know, a three to five year time horizon. My goal and our goal is to create kind of a productive paranoia within that system. So yes, there is patience, you know, yes, there is a willingness to incubate something a little bit longer than what otherwise we would have. But the upfront selection and filtering criteria are very stringent. And there’s a very high bar again, on the technology that needs to pass through that, to give us the confidence that not only is this a superior technology, but it’s something that’s ownable because again, that’s where from a value creation perspective, you know, that’s, that’s truly where value comes from over over time, and which also then allows us to reinvest into making that very technology better that allows us To serve the consumer that much better. So it is it is an essential part of creating the positive spin wheel, if you will, which has really been the foundation of the big brands here at P&G, over 187 audience now.
Jay Clouse 36:14
Something else that might be kind of related to the eldercare or caregiving aspect of your work. The boomers are a giant piece of the US population. They’re also a big part of the US spending and they are finite, just like any one of us. What does that mean for P&G as a whole? If a large number of your consumers are nearing the end of their lives and going into eldercare, I know it’s a heavy question.
Chetan Parekh 36:43
I think I would I would bring the answer to this question back to serving the consumer needs and being very clear on areas that we are going to play in and areas that we are not. So look, we are not a medical company. We are not a pharmaceutical company. We exited the pharmaceutical business you know in I think 2006 or 2007, and having those very clear boundaries on focusing on things that require daily consumption playing in categories where superiority matters. So again, very grounded in really clear strategic choices is important. And then the ability and the willingness to follow the consumer needs to be paired up with that, so that you’re always following the consumer, you’re always following the pain point, everything that you do is centered around the consumer. And then that that is that as constricting as it sounds, it takes you away from you know, investing in technology for technology’s sake, or something sounds new and unique and cool. Let’s incubated and we’ll reverse engineer or figure out what need does it serve so that we can have our advertising starting with Did you know that you needed this you didn’t until now, let me tell you why you need this. Those are typically more difficult businesses to build and monetize. And our approach is completely the opposite of that. Some short answer your question, I’m not as worried about that, because I have faith in, you know, the brain trust that surrounds me and us to be able to figure a way out of that problem to turn a crisis into an opportunity.
Jay Clouse 38:19
But aren’t consumers frustrating? I mean, I just want everything faster and cheaper and higher quality. You know, how do you keep up with this? This treadmill of expectations we have of I want everything now. I want it to be cheaper, and I want it to be better.
Chetan Parekh 38:33
Yes, yeah, I think you’re right. But that’s honestly where the value of a brand comes into play. Right. So you know, the more contemporary context in which brands are discussed is from a value perspective. And if something costs half as much you know, to buy and provides the same benefit, why should somebody spend the money to buy a branded product, right. The flip side of that, though, is with with the right product, not all rounded products, of course, but with the right brand that you’re putting your trust in, it comes with a promise of delivering on a specific need, that you can count on. And when you can count on in many of the categories that we as a company can play in, it actually turns into an automated decision. I don’t have to worry about it, I trust Brand X to deliver on the promise that comes from P&G in this case or any other brand or any other company that you might be thinking of which then to you as a human being frees up or turns that part of decision making into a system one decision making, which is really the role of the brand, right is how can I get the decision to buy a detergent in this case or a toothpaste or a coke off cold flu medicine or whatever it might be, turn that into a system on decision recognizing that the brand is always going to deliver on it. So that now I’m free to focus on whatever I consider our mind. second order or higher order issues or problems that I should be devoting my system to thinking to. Right. So again, that’s kind of the the beauty of brands that are embedded in consumer needs and superior technology is beautiful in terms of what it does to, you know, our everyday lives.
Jay Clouse 40:18
That’s one of the most unique and insightful explanations of brands that I’ve ever heard. Which makes me want to ask, what else have you learned at P&G, about brand that you think people don’t spend enough time talking about or flat out get wrong?
Chetan Parekh 40:33
I think I would, I would somewhat bring it back to what I have already spoken about this, which is, in a lot of the context, a brand is about creating something that looks slick, something that looks modern, something that looks beautiful, something that looks aesthetically pleasing, and that consumers want to touch and buy, and none of that is wrong, right? It has to be all of that. And at the same time it needs to live up to promise because brand at the end of the day is a promise that you are giving to your customers and you need to be able to deliver on it. And that’s where paring it and creating the brand and focusing on the product attributes that truly matter to the consumer. Right become become really important. So I mean, you know, it’s kind of really important to are really easy rather to come up with decent solutions to problems that nobody cares about. And that’s what we see, I personally see a lot of the manifestation of the word brand in this world. It’s just new, unique, slick way business model. Again, none of that is immaterial or something that we should not be learning from. But fundamentally, are you solving a problem that matters? Are you actually delivering on the promise that you are making that is the core of brands that sustain you know, pandemics, that sustained wars that sustained all kinds of economic upheavals, etc.
Jay Clouse 42:00
It’s so interesting because when you solve a problem so well, that it no longer feels like a problem. Like I’ve never thought about the fact that I need to brush my teeth as a problem, but it very much is. It’s just one of these first order problems that is now solved because I know exactly where to get my toothpaste and what to use. So that’s an interesting take on brand as well.
Eric Hornung 42:20
Yeah, it just reminds me of a phrase I heard the other week, which is that in the short run brand is like marketing benesch. And in the long run brand is reputation. So this has been a awesome conversation. If people want to learn more about you or P&G ventures, where should they go?
Chetan Parekh 42:38
I think our website is pgventuresstudio.com or just google P&G ventures. And and personally I can be found on LinkedIn on mine, my first name and last name and there’s I think there’s a hyphen in between so it’s Chetan-Parekh.
All right Jay. We just spoke with Chetan of Procter and Gamble ventures, the big dogs on the podcast, Jay.
Jay Clouse 43:08
Kind of big dogs on the podcast.
Eric Hornung 43:09
I mean, hey, look that they’re a fortune 50 company. They’re huge.
Jay Clouse 43:14
Huge, huge, huge. Chetan has been there for more than 13 years. He said he has meandered through some amazing roles, did not necessarily jump at this startup studio role immediately, but obviously is there and really, really enjoying it and has a lot to say about it. I really enjoyed hearing about his perspective on brand in this interview. I know we went into this thinking I was going to get excited about aging. But one of the things you mentioned about brand that I think is so true about Procter and Gamble and why they’re so good at this. They want to build brands that have so much trust that it makes decision making easy for consumers. They want to make your cognitive load simpler. By saying, I don’t need to think about which branded t shirt detergent to get because I have so much trust in Tide that I’m just going to go to Tide, making it almost automated that you pick their brands because you’ve built so much trust with them. I think that’s really powerful. And that’s not something that I’ve ever heard anyone in brand talk about.
Eric Hornung 44:16
Yeah, I thought he had some good philosophies on brand in general. And I think if you’re jumping around Procter and Gamble, you’re going to have a lot of experience with a lot of different brands to build that philosophy. So it’s pretty cool that he gets to use that now with smaller companies and helping them understand brand from a maybe less academic background.
Jay Clouse 44:35
And to the point of the website that we brought up in the intro, where they literally talk about the types of companies that are looking to fund and create, they are not afraid to put that information out there publicly because they’re so confident in their ability to make a sticky consumer brand that solves a real problem for somebody that they’re just looking to get somebody who can show that they have, you know, the actual tech or physical solution thought through. And they can kind of take that zero to one from a brand perspective.
Eric Hornung 45:06
Well, how often are they actually taking it from zero to one, though, I feel like Procter and Gamble has been buying more brands lately than it has been creating brands, which maybe just shows how hard it really is to create a brand from that 0 to .25. Right? They could take it from point .25 to 1 fairly quickly. And that’s why I think in the entire consumer packaged goods space, you see rx bar when it had 100 million dollars of revenue, get bought for $600 million, because who bought them Kellogg I think? So Kellogg has the distribution in every grocery store every everywhere to ramp them up from 100 million to a billion dollars of revenue practically overnight.
Jay Clouse 45:49
So Eric, I want to hear your perspective. comparing this to our recent conversation with Jason Illian of Koch Disruptive Technologies. This is similarly a little bit of a corporate venture capital model, what stuck out to you as it relates to Procter and Gamble doing corporate venture capital here?
Eric Hornung 46:06
Yeah. So when we talked with Koch, Koch has a different type of mandate than Procter and Gamble, a different business structure. So Koch has small businesses that they own that are, you know, they’re all looking at profitability, and they have massive businesses like Georgia Pacific or, I mean, just some of the largest businesses that all have different business models and have different business needs. So really, when you look at Koch, you’re looking at a collection of companies. When you look at Procter and Gamble, they have I believe, it’s either a stated goal or it’s talked about regularly, this idea that you want to build a billion dollar brand. You want to have billion dollar brands, so Gillette, that’s a billion dollar brand. Tide that’s a billion dollar brand, right? Like this is big enough. So now we have a collection of brands that are worth a billion dollars, or I don’t know if $2 billion in revenue or billion dollars in profit or whatever. They’re going To make that number stick, but that’s the goal in CPG. And then you paste together a bunch of these billion dollar brands and you have yourself a portfolio of brands that essentially share back office functions. When I think about corporate venture capital at P&G, it makes a lot of sense because what a venture capitalists do, they invest in a bunch of companies and make a portfolio of those companies. And there’s very limited shared back office, I guess. But Procter and Gamble is doing the same thing. They are finding companies that they think can be worth a billion dollars, and they’re going for it. So I guess just summarizing, because Procter and Gamble has this portfolio of brands, it makes a lot of sense for them to have venture type bets on individual brands, whereas it might not make sense for some types of companies that are a more cohesive system, one singular offering and not a collection of individual companies.
Jay Clouse 47:56
One last thought that stuck out to me is looking through my notes here. When a company is as big as Procter and Gamble is, you almost expect some sort of wizardry or like, super deep new insight on some questions. So at one point I asked, you know, how they think about new opportunities. And Chetan just kept repeating this line over and over again, which is basically, we need to solve actual problems that people have. And so it just kind of rings true. No matter how many times you hear it, you kind of need to keep hearing it. At the end of the day, you need to be creating something that is solving a real problem for people and nothing else really matters.
Eric Hornung 48:36
Yeah, it’s like the is your product, a vitamin or a medicine analogy, right? Like you want to be a medicine because you want to be solving a problem that people feel.
Jay Clouse 48:46
We love to hear your thoughts on this interview with chayton of Procter and Gamble venture startup studio. You can tweet at us @UpsideFM or email us firstname.lastname@example.org. Otherwise, I’ll talk to you next week. That’s all for this week. Thanks for listening. We’d love to hear your thoughts on today’s guest. So shoot us an email at email@example.com or find us on Twitter @upsideFM. We’ll be back here next week at the same time talking to another founder and our quest to find upside outside of Silicon Valley. If you or someone you know would make a good guest for our show, please email us or find us on Twitter and let us know. And if you love our show, please leave us a review on iTunes. It goes a long way in helping us spread the word and continue to help bring high quality guests to the show. Eric and I decided there were a couple things we wanted to share with you at the end of the podcast. And so here we go. Eric Hornung and Jay Clouse are the founding parties have the Upside podcast. At the time of this recording? We do not own equity or other financial interest in the companies which appear on this show. All opinions expressed by podcast participants are solely their own opinion and do not reflect the opinions of Duffin Phelps LLC and its affiliates on your collective LLC and its affiliates or any entity which employ us. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions, we have not considered your specific financial situation nor provided any investment advice on this show. Thanks for listening and we’ll talk to you next week.
Interview begins: 6:08
Debrief begins: 42:55
- Working for a large CPG company (7:52)
- What is means to be a sustainable brand? (14:00)
- P&G Ventures studio model (15:15)
- Caregiving ecosystem (21:55)
- Consume Products context (24:56)
- How they measure progress? (34:15)
- Keeping up with fast-paced consumers (38:19)
Learn more about Procter & Gamble Ventures Startup Studio: https://pgventuresstudio.com/
Follow Chetan Parekh on Linkedin: https://www.linkedin.com/in/chetan-parekh/
Follow upside on Twitter: https://twitter.com/upsidefm
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