1. Transformation requires sustained
discipline
Yale Tech’s Annual Conference
New York City | April 2015
Organize around tech-enabled
analytics
Follow your customer
The power of social
Investing in transformation
Grail Research
FIELDNOTES

2. Grail Research recently attended
Yale Tech’s Annual Conference
on “Transforming Industries” to
gather the perspectives of top
executives across an array of fast-
evolving sectors such as media,
retail, legal and recruiting.
The major highlight of this year’s
conference was that it took a
holistic view on transformation.
Speakers included the big bang
disruptors such as Rent The
Runway, Quartz, TheLadders,
and LegalZoom, to name a few,
as well as the enablers of and
investors in disruption, including
Bessemer Venture Partners,
Launch Capital and SoftBank
Capital, among others.
TRANSFORMATION REQUIRES
SUSTAINED DISCIPLINE
If you are an incumbent who is being
disrupted, you have tough decisions to
make. From embracing the need for
change to actually implementing it, the
journey can be perilous. Any traditional
organization carries legacy costs –
physical assets and people that may no
longer be needed but are hard to
dispense.
Erin Pettigrew, Chief Strategy Officer at
Gawker Media, spoke about how she
knew Gawker’s agility would be a crucial
competitive advantage as the new-age
media company took on goliaths such as
the New York Times and the Wall Street
Journal. These publications had initially
struggled to find the right balance
between their online and offline offerings.
On the other hand, even if your company
is the disruptor, you are not shielded from
a transformative environment. Take
Priceline for example. Riding high on its
“name your own price” tactic in the late
1990s that disrupted the travel industry,
Priceline soon became the poster child for
the dot-com bust that cratered its stock
price from $974 to $7 in just over three
years.
As Bessemer Ventures’ Jeffrey Epstein,
who also serves on the board of Priceline,
explained, placing patient and deliberate
bets helped turn the company around on
the back of its strong brand recognition
and deep relationships with large hotel
chains such as Marriott and Starwood.
Whether you are facing disruption or
creating disruption, you need to be
persistent and nimble enough to
revector in the face of uncertain
market conditions and fickle customer
behavior.
Observations from Yale Tech 2015
“Technology is a positive
explosion…enabling
disruption.”
Marc Cenedella,
Founder,
TheLadders

3. ORGANIZE AROUND TECH-
ENABLED ANALYTICS
Data is undoubtedly the single-most
important non-human asset that can drive
competitive advantage. Yet many
managers mistrust big data-driven
models, leading them to shun such
strategies altogether. Companies need to
understand that leveraging big data
requires organizational change and a
radical shift in mindset.
Rent The Runway (RTR) is one of the few
companies that was quick to realize the
sheer impact of data insight, creating a
C-suite position for a Chief Analytics
Officer.
Making analytics core to its strategy has
helped the fashion retailer innovate new
ways to ease its customers’ pain points.
For example, take finding the right fit
when shopping online. Jennifer Fleiss of
RTR admitted that, “data on fit was a big
puzzle that RTR struggled with.” Even as
e-commerce retailers continue to search
for the magic solution that will drive more
customers to buy online, RTR mined its
data to uncover an important realization –
consumers cared more about whether the
dress would look good on them vs. how
well it would actually fit. A good fit in itself
was not enough to drive purchase.
RTR then created a shopping engine
where real women could share pictures of
the dress that they had rented, and
include measurements, body types, and
compliments received to give potential
renters more confidence. This led to such
a huge conversion boost for RTR that it
launched Our Runway, an offering that
exclusively focuses on shopping using
real photos.
Leveraging technology-enabled analytics
as a strategic asset can also help adapt
your delivery model to best meet
customer needs.
As Kevin Delaney, Editor-in-Chief of
Quartz observed, “Quartz is all about
visual journalism. Our readers want to
quickly digest short, visual, and sharable
content, versus those of The Atlantic, who
want to invest time in deep, topical
analyses.”
However, existing web platforms that were
available to Quartz and its competitors
restricted any strategic advantage.
Delaney wanted to rethink the way news
would be delivered in the digital age and
instituted the four-person Things Team,
where each member brought a
combination of journalism, technology and
analytics experience. One of their early
developments was the now famous open-
source Chartbuilder tool that led to this
being one of Quartz’s most popular posts
to date, and this being a finalist at the
SABEW awards.
Being data-informed is not enough,
however. To sustain true competitive
edge and maximize customer value,
you must organize around data in a
way that it becomes core to your
strategy.
Observations from Yale Tech 2015
“Technology knows no
borders. We should import
what’s working in other
countries.”
Eddie Hartman,
LegalZoom

4. FOLLOW YOUR CUSTOMER
Consumers are increasingly operating
from a variety of platforms and
demanding omnichannel availability of
products. A consumer now catches-up on
the latest news via her NYT iPad app, and
takes a cab down to Nordstrom to pick up
a cocktail dress while scouting potential
jobs on LinkedIn’s website.
As a result, businesses need to be
seamlessly omnichannel to be present
wherever and whenever the consumer
may need them.
Reacting to the threat from Facebook as it
increasingly hosts media content and
hoards readers, Kevin Delaney of Quartz
said, “We will be where our readers are. If
they are on Facebook, then that’s where
we need to be.” Delaney added that
instead of feeling threatened by content
streamers such as Facebook, publishers
need to think about how they can
monetize new channels.
This is of course not limited to media
alone. Delivering a unified omnichannel
experience is a problem with which
fashion and lifestyle retailers have long
contended.
Scarlett O’Sullivan, a partner at SoftBank
Capital, and a board director of Gilt and
Chloe + Isabel, urged brands to “keep it
simple.” Mobile, she added, is a great way
to do that.
“Mobile can blur the line between the
physical world and the online world by
literally arming consumers with more
personalization options.” They can
compare, research and rate products
online while they are shopping offline.
Jennifer Fleiss of RTR emphasized that,
“mobile development is part of our core
strategy. We started developing a mobile
offering even before we thought about our
online model.”
RTR is also the latest in an increasing
slew of pure-play online retailers that are
turning the online-offline debate on its
head and opening physical stores to
enhance their customers’ overall
shopping experience.
To businesses that are similarly trying to
follow their customers, Fleiss has a
crucial piece of advice, “Test a minimally
viable product. Crawl first, then run.”
In keeping with that philosophy, RTR
opened its first retail store in its office to
observe how the physical site interacted
with its online presence. Having now
expanded to cities such as New York,
Washington, DC, and Chicago, RTR has
been enjoying “halo marketing benefits”
from its stores, with online sales seeing a
huge boost. Fleiss concluded, “So in that
sense, retail is like a marketing expense
for us.”
Success will belong to businesses that
can reach their customers on any
device, through any channel and in
any ecosystem, irrespective of their core
delivery model.
Observations from Yale Tech 2015
“Retail is like a marketing
expense for us”
Jennifer Fleiss,
Rent The Runway

5. THE POWER OF SOCIAL
In the greater scheme of things,
businesses certainly cannot ignore social.
As O’Sullivan remarked, “Social is critical,
just like mobile.”
The explosion of social media has led
consumers to over-invest in building their
own brands. They are becoming more and
more obsessed with how others view
them, especially as more pictures are
shared and there is increasing access to
celebrity lifestyles.
These consumers are happy to share and
talk about their preferred brand with their
peers. The power of word-of-mouth has
been leveraged by prescient
companies to increase customer
engagement and acquisition at a reduced
cost.
Gamification is also gaining increasing
attention and Gilt is a great example of a
business that was built on referrals,
exclusivity, early access and scarcity.
Its VIP Program, Gilt Noir, identified the
top 1% of Gilt shoppers, based on total
value of past purchases and duration of
membership, to offer them special early-
access privileges not available to regular
members.
INVESTING IN
TRANSFORMATION
The biggest challenge that venture
companies face today is correctly
estimating whether a potential
investment opportunity will be truly
disruptive. Dorothy Jean Chang, a
Partner at the New York based Liberty
City Ventures admitted that she passed
on Pinterest because she didn’t think
anyone would use this “senseless
platform,” while Launch Capital regrettably
passed on Uber because of regulatory
worries.
So while shared economy businesses
create a headache for policy makers,
Jonathan Shambroom of Launch Capital
emphasized that venture capital firms
are changing the way they evaluate
transformational businesses to make
sure they don’t miss the boat.
For further information on the
themes raised in this article,
please contact:
info@grailresearch.com
Observations from Yale Tech 2015
@ 2015 Grail Research, a division of Integreon. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means —
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“Social is critical, just
like mobile.”
Scarlett O’Sullivan,
SoftBank Capital
Venture capital firms
are changing the way
they evaluate
transformational
businesses