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13 Apr

Corinthian Leather and the Marketing Resource Curse

In 1974, some smart marketer at an advertising agency invented a luxurious upholstery material called “Corinthian leather.” It sounded so exotic, so opulent, so Corinthian!

Meant to sound like a premium product, “Corinthian leather” was actually nothing but a marketing ploy the agency created to sell the leather upholstery used in certain Chrysler luxury vehicles. In truth, it was the same garden-variety leather that was also being used in other cars at the time!

Corinthian leather serves as a great parable for the issue I wish to discuss in today's essay.

The Marketing Resource Curse

For those who do not know, the resource curse is a fascinating economic paradox that afflicts nations blessed with abundant natural resources. You'd think countries sitting on vast reserves of oil, gold, or diamonds would be rolling in dough and prosperity, right? Well, some of them might be, but in the long run, at the expense of many other things.

You see, when a country stumbles upon a treasure trove of natural resources, it should, in theory, lead to a booming economy and happier citizens. But often, these resource-rich nations experience slower economic growth, rampant corruption, and political instability in the long run.

Why does this happen? Well, the resource curse — be it oil, gold, or diamonds — makes non-resource exports less competitive and cripples other industries. The nation starts over-relying on the resource to strengthen its currency, at the expense of real technological innovation in other domains. Over time, this means that the nation slowly starts turning into a car that is driving on one wheel.

For many startups today, strong marketing chops can be that resource curse.

When your marketing is excellent, it may become a reason to not focus on the product. But in the long run, it is only a good product, a strong supply chain, and other technological infrastructure that can create a lasting moat.

Trust me, as a marketer myself, no one realizes this more than me.

Today, a lot of marketing is fad-driven. In a social media-driven world, startups often feel pressure to optimize for low-hanging fruit like attention-grabbing ads rather than doing the hard thing: engineering a truly better product. Distribution is all the rage. But if you only rely on marketing, one day, the market will be clamoring for your product, and the next, demand will plummet as the novelty fades, leaving your business an empty husk.

“Show, don't tell” is an adage as old as storytelling itself, and for good reason — it's hard to fake.

When a brand demonstrates the job its product or service does, customers speak for the company.

Take Starbucks, for instance. They don't just slap bean-to-cup stories on their packaging; they hold coffee seminars, complete with passionate ‘coffee communication specialists’ who educate customers on coffee varietals and pairings. Starbucks treats coffee like fine wine and shares that passion with its patrons. It demonstrates expertise in coffee that is hard to fake, much like other Gourmet brands.

Another example is community newsletters like the Stoa Digest. They document the accomplishments and journeys of community members, creating a living, breathing archive. Instead of simply telling people about the community's nurturing environment, the newsletter provides tangible proof.

Then there are actual engineering marvels like Dyson — the vacuum cleaner equivalent of a sports car-robot lovechild. Dyson doesn't just tell you about its revolutionary centrifugal force technology; it shows you. Transparent plastic moulds reveal the inner workings of the machines, and their ads emphasize how each component contributes to the overall experience. Dyson isn't just selling vacuums; it's selling innovation and pride in engineering.

Even Tesla and SpaceX, led by the ever-controversial Elon Musk, combines attention-grabbing marketing (courtesy of Elon himself) with genuine innovation in terms of manufacturing, engineering, and user experience. Its self-driving electric cars promise a greener planet and its rockets land back on the earth, ready to be reused — a first for humanity. Tesla and SpaceX don't just sell cars or rockets; they sell a vision for a better, greener future.

I guess what I'm trying to say is: innovation and expertise are costly signals, hopping on the latest trendy bandwagon, a cheap one. And in the long run, only costly signals and strong moats survive in a competitive market. Ads aren't a moat. They will be enjoyed and talked about for a week max, and then forgotten.

So, what happens when companies lean on marketing without offering any real substance?

A marketing resource curse of the worst kind often shows up in the form of grifting: milking the market for short-term gains and riding the wave till it lasts. Many AI and Crypto startups today fit this bucket.

But to give you a funnier example, I recently saw a reel of a guy who opened up a tea stall called “Graduate KTM Chaiwala.”

As the story goes — narrated by the founder Harsh Rathod himself — the fella bought an expensive KTM bike. Naturally, his parents were quite disappointed with his lavish purchase and rebuked him. “You could have invested this money somewhere for your personal growth,” they said. Our guy Harsh took this to heart and started selling tea using the KTM bike as a tea stall, just to show the metaphorical finger to his family and prove how he's using the bike towards profitable ends!

As hilarious as it might sound, to me, it doesn't feel much different than many other startups popping up today that are selling a mere commodity good under fancy branding.

Now, what will happen is the novelty of having chai made on a KTM bike will last for a short while, after which the reality of it just being the same old chai will make itself evident and Graduate KTM Chaiwala will be reduced to the status of any other tea stall.

I'm also reminded of another gentleman, laden with gold chains and bracelets, who opened up a kulfi stall that served kulfi wrapped in pure gold sheets. Some of you might have seen it.

For all such businesses, the consumers will initially flock due to novelty. But in the absence of a truly Delta-4 product, they will soon leave when the novelty and coolness factor fades.

See, flashy marketing may grab attention, but without real innovation, it's nothing more than a passing fad.

Not very long ago, I wrote about how more marketing communication will have to move towards honesty. I think the “Show, Don’t Tell” strategy will sit at the heart of this, simply because it's really hard to fake.

Especially with the rise of AI like GPT-4 aiding marketing communications worldwide, the need for real, costly differentiation will be even more pronounced. All brands, massy or otherwise, will have to make a concerted effort to brand their products and services to enable recall. And the only way to do it will be to do the hard thing.

My advice would be to tread cautiously and avoid falling prey to the marketing resource curse and selling Corinthian leather. Remember, it's the hard work of engineering a truly better product that will stand the test of time and create lasting value.

I’m hoping you have something much more impressive to show than simply naming yourself a Graduate KTM Chaiwala.

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