In the dynamic and ever-evolving business landscape, a new breed of companies has emerged, aptly coined as "new age companies" or "digitally-native vertical brands." These entities, born in the digital age, have disrupted traditional sectors by leveraging technology, data analytics, and innovative business models. To identify and understand these trailblazers, investors, analysts, and strategists require a robust screener that sieves through the vast pool of companies to pinpoint these new age territories. Let's delve into the intricacies of new age companies and explore how to screen for these digital disruptors.
New age companies, also known as D2C (Direct-to-Consumer) brands, are characterized by their online-first approach, vertical integration, and extensive use of technology. They've quantified customer acquisition, retention, and lifetime value, enabling them to make data-driven decisions that have often left their legacy competitors bewildered. But what are the key traits to look for when screening these companies?
Digital indigeneity and online presence
New age companies' roots are firmly planted in the digital soil. They are born online, with their first and primary touchpoint with customers occurring digitally. Thus, the first indicator to look for is a strong online presence - a robust, user-friendly website, and active social media profiles.
Moreover, these companies often utilize platforms like Shopify, BigCommerce, or Salesforce Commerce Cloud, which are equipped with powerful analytics tools. This platform dependence implies that you may not find traditional, bricks-and-mortar store information on their 10-K or annual reports.
E-commerce enablement
E-commerce is the lifeblood of new age companies. They invest heavily in platforms and technologies that enable seamless, user-friendly online shopping experiences. Software solutions like Magento, SAP Hybris, and WordPress WooCommerce are commonly employed. Screening tools can look for domain names with online store functions (e.g., 'shop' in the URL) and third-party service integrations to identify e-commerce functionality.
For instance, e-commerce analytics platforms like Google Analytics and social media analytics tools like Hootsuite are popular among new age companies. These tools provide valuable insights into customer behavior, allowing these companies to personalize their marketing strategies and optimize their online stores.
SEO optimization
To drive organic traffic, new age companies prioritize search engine optimization (SEO). Their websites typically have clean, well-structured URLs, incorporate relevant keywords, and employ XML sitemaps, robots.txt, and canonical tags. Additionally, they often maintain high-quality, evergreen content to maintain search rankings and drive long-term traffic.
Screening for SEO-enabling factors can involve checking if the company's website is mobile-friendly (responsive design), has fast loading speeds, and features secure (HTTPS) connections. These factors not only improve search visibility but also enhance the user experience.
Data-driven decision making and analytics-first culture
New age companies aren't just digital-first; they're data-first. They continuously gather, analyze, and leverage customer and market data to inform their strategies. This analytical orientation permeates their operations, from product development to pricing, inventory management, and marketing.
Tools like Mixpanel, Amplitude, or Hotjar are commonly used by new age companies to track customer behavior and app usage. They also employ data visualization tools like Tableau or Power BI for data exploration and reporting. Screening can involve looking for mentions of these tools in the company's tech stack or job listings.
Customer relationship management (CRM) and marketing automation
To maximize customer lifetime value and engagement, new age companies employ marketing automation tools and CRMs. These tools help them manage customer interactions, anticipate needs, and personalize communications. Platforms like HubSpot, Zoho CRM, or Salesforce are popular among new age companies.
Screening for CRM and marketing automation use involves looking for marketing automation integrations on the company's website and checking job listings for roles like marketing automation specialist or growth marketer. Additionally, you can look for the company's use of congruent analytics tools like Google Analytics or Mixpanel.
Technological and data infrastructure investment
New age companies understand that capturing, storing, and analyzing data at scale requires substantial investment in their technological and data infrastructure. They often use cloud platforms like AWS, Google Cloud, or Microsoft Azure to store and manage data, and employ big data tools like Hadoop or Spark for processing.
Screening can involve checking if the company lists these technology providers in their tech stack or job listings. Furthermore, tracking their investment in R&D, as indicated in their financial statements, can provide insights into their commitment to data-driven innovation.
In an increasingly competitive landscape, the advantage lies with those who can navigate this new age effectively. By understanding the hallmarks of new age companies and leveraging well-structured screeners, investors, analysts, and strategists can gain a strategic edge. As the business ecosystem continues to evolve, staying ahead means continuous learning and adaptation - a process that begins with identifying and understanding these digital disruptors.