Startup Brands Are Providing More Opportunities to Women, Minorities: IAB CEO

February 14, 2019

By Michelle Castillo

Advancements in logistics and distribution are making it easier for entrepreneurs, especially women and minorities, to get their ideas out into the market, according to Interactive Advertising Bureau CEO Randall Rothenberg.

"The supply chain is promiscuously available," Rothenberg to Cheddar. "You don’t need this large capital investment. If you kind of back off from there, basically what you’re looking at is something that is much, much more accessible: the opportunity to start companies. And it’s not just women. It’s people of color. It’s anybody with a good idea."

The IAB released its 250 Direct Brands to Watch list on Monday, which is made up of companies founded no earlier than 2010 that sell their products directly to customers. Companies were included based on their social footprint, revenue, economic efficiency, funding, valuation, and other factors.

Women executives led one-third of the companies on the list, compared with just 5 percent at Fortune 500 companies.

One reason why new companies that sell directly to customers are successful even against giants like Amazon ($AMZN) and Walmart ($WMT) is because they know more about their consumers. In the old model or even through online marketplaces, purchase information was often collected by the retailer.

"We call what used to be the indirect economy, where brands had to go through a complex series of third-party handoffs in order to reach the consumer and make money," he explained. "Those third party handoffs always, always ended in a physical retail store."

Selling direct gives first-hand knowledge to the brands. They can be more nimble about innovating their products, Rothenburg pointed out.

"If you look at a company like Away, they don't need to maintain a complicated supply chain like Samsonite or any other luggage brand might need," he said. "Away is able to be much, much, more flexible. Away can create products much much more quickly. It can react to consumer trends more quickly ... They know who their end consumers are. Their end customer is not a third-party retailer. It's you, it's me and millions of people who own Away luggage."

For full interview click here.