[X] Under Management
One of my favorite byproducts of working in different industries is the instinct to connect disparate dots — taking a device or conceit from one corner of commerce to another; giving a commonplace notion new life in a different context. It’s like sizing the right metaphor or composing a killer simile, but on steroids.
My current stint in financial services is rife with opportunities to do so. Usually it inflows, like bringing in user centricity to shine some light on the dust gathering in the living room. But today I want to export a common Wall Street term and use it to describe a wider shift in how I believe brands increasingly relate to individual consumers.¹ I’m talking about assets under management.
Assets under management (AUM) can be understood two ways: first, as a basic financial metric; second, as fuel for growth strategy. Let’s take these both in turn.
I know what you’re thinking. Isn’t it just… assets… under… management? Bingo! Gold star! By the book, AUM is a measure of the total market value of assets that a firm is managing on behalf of its clients — typically an investment company on behalf of investors.² Not rocket science. Even so, AUM matters for many reasons, not least of which is its starring role in the sleeper hit How Firms Calculate the Management Fees They Charge Clients (aka $$$$). A firm with high levels of AUM also benefits from the optics. It’s generally assumed they have greater operational capacity, more liquidity, and stronger relationships with the many clients who have entrusted them with their wealth.
This brings us to why pumping up AUM fuels growth. Rising AUM is always a healthy sign for any firm (increase in fee revenues, more trusted client relationships), but for new kids on the bank block it can be a game changer. If AUM is the name of the game, then metrics like Monthly Active Users (MAU) become a warranted fixation because of the assets these active users might bring with them. In today’s funding environment, it seems, you can be an unproven player and yet raise millions of dollars from just the slightest whiff of your future earnings: in this case, turning your skyrocketing MAU into potential AUM growth along some future projection. Trace the trajectory of the current fintech sweethearts (Acorns, Robinhood, Stash, etc.) and you can see how their command of user-centricity and frictionless digital interfaces is towards a single-minded end: to bring more and more users and their potential assets within their walls. As their numbers grow, so will their valuation and funding base.
Here’s why it’s worth paying attention: whichever corner of the financial ecosystem the sleek new entrant is trying to corner — brokerage, savings, 401k — the end game is to manage as many assets as possible, which means they’re coming for the whole hog. Save for a few embarrassing hiccups³ waiting to be easily sorted out through the classic hire-an-old-guy-who-cleans-up-shop move, they just might win. Watch out, incumbents.
I’m a U-M girl in a U-M world…
…life in plastic, it’s fantastic! Aqua reference aside, and with our newfound understanding of AUM, can you see what I see? A consumer world that is increasingly… under management?! We’ve entrusted entire facets of our lives to certain brands under the premise that they are operationally savvy, provide better service, and are already the choice of our peers. They, in turn, monetize their share of our lives under management and use it to fuel enviable valuations. Sound familiar? It’s basically life under management.
This would be a good time to disclaim: what I’m pointing out isn’t a new idea by any stretch. Instead, I’m applying a new metaphor for understanding forces currently at play. Most CEOs and brand marketers already understand that the burden of proof for their companies is not providing a functional product, but delivering an engaging experience. Savvy brands, however, have moved beyond producing single experiences to creating integrated platforms in which they serve as gatekeepers to an ecosystem of services — some [thing] under management.
Put another way, it’s the next in a series of shifts from brand as product to brand as experience, and now to brand as concierge.⁴
Brand as concierge combines two well-loved concepts — an intersection of Ben Thompson’s “owning the demand”⁵ and Clay Christensen’s “jobs to be done”⁶. Think about the best concierges you’ve encountered in your travels: that magical creature who takes complicated matters off your hands, who you might later thank with a handsome tip. You approach them in the hotel lobby, already flustered because you’re in a new and foreign place, and earnestly ask them for what seems impossible. Yet, with a few calls or calculated clicks by a good concierge, you’ve got that same-day reservation for the Michelin star restaurant in São Paulo. Boom.
In an “under management” paradigm, winning brands need to be just as compelling as that superstar concierge. Not only do they need to own but also actively manage demand, they also need to recognize that the job to be done is more complicated than before as modern and digital life grows more unwieldy. This is what will keep customers checked in at the metaphorical hotel. The effort required to master this is nontrivial, but the major upside is a sustained competitive advantage. Think the ultimate stickiness, in the best sense.
To trace how this dynamic is already at play, let’s take the [x]UM lens for a quick spin:
- [Attention] under management: Netflix CEO Reed Hastings recently framed their competitive set as (drumroll) Fortnite and Youtube.⁷ At first glance, it’s odd that Hastings positioned the company against these time-sucking forces instead of other streaming services — but content is only valuable if it keeps an audience watching. With a whopping estimated 10% of television screen time in the US already owned by their platform, you can bet that Netflix is scheming to bring even more of your spare attention under their management, one original baking competition at a time.
- [Movement] under management: If you’re old enough, you’ll remember 1) how hard it was to get a cab at 1am on the Lower East Side and 2) that brief period when it seemed that the ridesharing giants could go one of two ways: double down on owning the car ride, or expand their product line. Rather than bring cars under management, Uber and Lyft made the enlightened move into shared bikes and scooters to manage the way we literally move through life.
- [Inquiry] under management: Google set out to organize [read: manage] the world’s information, and its search function does so beautifully. Our brains now instinctively translate our burning questions into just the right string of words to produce the most precise results. Just me? Okay. The brand has also become a verb. ‘Nuff said.
- [Imagination] under management: For generations, Disney defined collective fantasy through the screen, in theme parks, and in your McDonald’s happy meal. What comes to mind when you hear the word “princess”? That the image I immediately jump to is one of their sparkly creations is a testament to how much of my imagination they still have under management — and I don’t believe I’m alone.
- [Almost everything] under management: Amazon, soon.
… and the list could go on. More brands are entering this specific race, with some building momentum and others losing their sheen. Airbnb could prove to be the portal that manages our PTO if they continue expanding in the same vein as experiences and restaurant reservations. Bumble, with its Bizz and BFF options, is trying to bring all of our new relationships under management (which might be a smidge beyond this user’s readiness). Facebook, for a hot minute, had our friendships under management… until it didn’t.
Here’s why it’s worth paying attention: once one victor has claimed the spoils, this strategy has a limit to its usefulness. If you’re second or third and aiming to cross this finish line, you’ve got a lot more to do to convince the consumer that switching costs aren’t prohibitive and that there’s a true reason to swap out an existing concierge.
So, the compelling question becomes: what part of consumer life are you bringing under your management, and how quickly can you get there?
[Life] Under Management
I deeply suspect that this is the next evolution of what brands signify in consumer lives: forces that solve our “adulting” problems, feed us the raw materials for our dreaming, and lead us to our next conclusions. If this sounds slightly dystopian, it’s because it could easily morph in that direction… but here are a few less dire implications that come to mind:
- Let’s stay physical: As far as I can tell, actual life will continue to be defined in both digital and physical realms. Until we go full on Matrix, concierge brands will have to design and execute for managing some [thing] across both. Brick and mortar can never really die, only reborn.
- User-centricity, maniacally: A good concierge and a strong brand both anticipate what users need, perhaps even before they realize they need it. To achieve this requires a little mania in the hunt for information and insights, to understand the contours of the complex “job to be done.”
- Fewer doors, more powerful doormen: As more of life comes under management by fewer brands, the chosen few will have a ton of power — something we’re already seeing play out. For this very reason, mechanisms for accountability and integrity will be crucial to protect consumer power and keep brands on their toes.
- Identity matters: If the idea of brands as concierge recognizes that “jobs to be done” have grown more complicated, then it should also recognize that the consumers “hiring” them are growing more diverse — and design and deliver against that. Let’s get intersectional, friends.
That’s all I’ve got for now, folks. Your turn! What brands do you think are hitting their concierge stride? What are some other implications you see coming out of a UM-world?
- Real talk moment: Can we agree the same John Doe you’re trying to hook onto your closet-in-a-box subscription service may also be the John Doe who is deciding whether his company gets hooked onto your cloud object storage service? The line between the consumers (aka decision makers) for B2B and B2C enterprise is faint, at best, so here I am referring to both.
- Investopedia on AUM
- Robinhood recently came under fire for launching free checking accounts that sounded too good to be true, and were also not insured… they soon backtracked and made nice with the SEC and other watchful eyes. Whoops.
- Merriam Webster defines concierge [noun] as a usually multilingual hotel staff member who handles luggage and mail, makes reservations, and arranges tours; or broadly: a person employed (as by a business) to make arrangements or run errands.
- Owning the demand is a pillar of Ben Thompson’s aggregation theory. Thompson argues that winning in the Internet era is through owning the customer relationship, which gives a brand power over suppliers — this disrupts business models previously based on controlling distribution.
- Jobs to Be Done is an idea popularized by Clay Christensen. It’s meant to help people better understand customer behavior, shifting the focus to the true why of customer choices. “People don’t simply buy products or services; they pull them into their lives to make progress. We call this progress the “job” they are trying to get done, and understanding this opens a world of innovation possibilities.”
- CNBC. “Netflix says it’s more scared of Fortnite and YouTube than Disney and Amazon”, Jan 17 2019.