Imagine being so down on your luck that you had to sell your dog just to make ends meet.
Before winning 3 out of 9 Oscar nominations and writing the Rocky script in days, Sylvester Stallone did just that. When offered $360,000 for the script with the condition he wouldn’t star as Rocky, Stallone stood firm even with only $106 in the bank.
Stallone’s persistence and determination paid off. We can’t help but love a good underdog story—whether in movies, business, or life.
The power of the underdog story has strong roots in the consumer world. Before J.K. Rowling became the first author to earn a net worth of $1 billion, her Harry Potter pitch was rejected 12 times. Born into poverty, Oprah Winfrey became the first African-American billionaire in 2003. Without ever declaring bankruptcy unlike its U.S. competitors, barely two-decades-old Tesla surpasses century-old General Motors as the most valuable U.S. automaker.
Brands have become masters in storytelling and using the mighty “us against the world” tale in the way they market and build a following. Whether it’s incorporated into the product, brand, or the founder themselves, the underdog effect has become an effective tool in shaping consumer perception.
To understand the psychology behind why we admire underdogs and how brands successfully use the narrative to influence consumer behavior, let’s dive into the science and business of the underdog.
The Psychology of the Underdog Effect
Brands in the business of telling their origin story know the basics of human nature. If there’s one thing we’ve learned and naturally passed down to future generations from our ancestors, it’s our love for gossiping and telling stories. But why are we so drawn to brands that use underdog stories specifically?
When we are led to believe that a company succeeded against external disadvantages (like an economic recession, for instance), we identify with the situation. The more we identify and internalize the gravity of the story, the more we root for it. There’s evidence indicating that brands with an underdog story can increase the intention to purchase and influence brand loyalty. And what’s even more interesting: This effect is more pronounced to consumers who personally identify as underdogs.
It’s no surprise then that companies like Nantucket Nectars famously describe their humble origins as “starting out with a blender and a dream.” American beer Samuel Adams, despite being a large, established name, constantly compares itself to the behemoths of Budweiser and Coors, neglecting the fact they are all massive in comparison to craft breweries.
Brands love the tales of humble beginnings because we’re drawn to them. Why so? When you add movies, literature, and the American dream to the mix, the plot thickens.
The underdog story is one of the most classic storylines with a universal appeal, reliably driving feelings of empathy. They tap into the qualities we like best about ourselves and find most admirable in others. We love underdog stories because we feel like they need us. It creates that gravitational bond between us and the underdog because we love to feel needed as social creatures.
Studies have shown that the literal act of witnessing an underdog story gives us hope. If we walk out of the cinema after watching classic underdog tales like Rocky, Karate Kid, or The Pursuit of Happyness, the impact of experiencing the protagonists’ ascendance fills us with a newfound sense of hope. And this isn’t a fleeting feeling. We carry this feeling with us several days after it’s over.
The underdog story is also deeply rooted in the American dream. Economically or socially “moving up” in the world is paramount in the context of American culture. It’s not just where you wind up, but how far you’ve climbed to get there.
And the beauty of the underdog story is that its overall success will always be judged relative to the starting point. In short, there is no rags-to-riches story if it doesn’t start in the rags. Similarly, when there’s an underdog, there must always be a top dog. Let’s look at how this plays out in business, particularly in technology.
The Psychology of the Underdog Effect in Business
When there’s a David, a Goliath naturally follows. For Tesla, Goliath was the big bad auto industry. For Apple, it was the clunky, unfriendly interface and design. For Airbnb, it was the expensive, old-fashioned hotel industry.
Startups in the tech industry have a historical fondness for the underdog lore. A field dominated by "nerds," "geeks," and "misfits" traditionally counted out, picked on, and doubted has risen to the occasion.
Despite being arguably the most dominant industry in the global economy, tech companies still go to great lengths to preserve and emphasize their underdog status. When you think of the success of Apple, one of only $2 trillion companies in the history of the world, the word underdog is one of the last words that come to mind.
Amazon, the other trillion-dollar company with a market cap larger than the GDP of most countries, is also fond of its humble beginnings. In fact, its CTO Werner Vogels still considers it a start-up even with 750,000 employees worldwide. Amazon founder and the world’s richest man Jeff Bezos famously created a makeshift desk by hammering four legs into a wooden door back when he was just starting in 1994 and still keeps the famous “door desk” in his office today. If there’s one thing Bezos has in common (aside from billions of dollars in net worth) with many tech founders, it’s the garage.
The startup garage is the symbol of the underdog nature of the tech industry synonymous with underdog tenacity. In 2016, Business Insider still lists HP, Google, and Steve Jobs’ garages as some of the “19 Silicon Valley landmarks you must visit on your next trip” alongside museums and tech headquarters. Today, HP still emphasizes its humble beginnings, deeming its garage the “birthplace of Silicon Valley.” It’s not just the startup garage that has yet to lose its charm. Even when a business outlives its founder, the underdog story remains woven into the company's culture.
At the Milwaukee-based insurance giant Northwestern Mutual Life Insurance, for instance, employees still learn about a train accident that occurred near Johnson Creek, Wisconsin in 1859, shortly after the company was founded. Fourteen people were killed, including two Northwestern Mutual policyholders, whose claims totaled $3,500. The young company had only $2,000 on hand, but its leaders took out loans to pay the claims in full immediately. Whether they tell it or not, every founder is a story.
The Psychology of Underdog CEOs
Many brands add a hint of narrative to their founders’ story, but brands who bring their A-game tell an underdog story. Underdog founder stories are so compelling that several companies have leveraged them.
Dwayne “The Rock” Johnson: Before the age of 17, Johnson was arrested multiple times for fighting, theft, and check fraud. Now, he’s one of the highest-grossing actors of his generation with a net worth of $320 million. Calling back to his roots, he named his production company Seven Bucks Productions because he only had $7 to his name at his lowest point. That’s a successful underdog founder story in constant action, inspiring and winning the hearts of many.
Sir Richard Branson: Perhaps the best example of an underdog CEO is Branson. He bounced around between schools for low grades. Diagnosed with dyslexia, he couldn’t read at the age of 11. On his final day of school, his headmaster reportedly told him that he would “either end up in prison or become a millionaire.” For many years, it looked certain that it would be the former, but the rest is history.
Through it all, his launching of Virgin Records was a success. Branson, valued at over $4 billion, is one of the most recognizable business celebrities in the world. And is Virgin still selling records? Yes, but they have sold us more—from airfare, mobile internet, and so much more. The common thread between diversified Virgin businesses is Branson. Regardless of what ultimately bears the Virgin logo, what it really sells is Branson’s underdog, rebellious story.
After standing firm on playing Rocky Balboa, the producers finally came around and gave Stallone a shot with a miserly $1 million budget. Stallone, defying the odds, pulled it off under budget with the help of friends and family in the cast.
After selling the script of one of the greatest rags-to-riches American dream stories ever told, Stallone bought his dog back for $15,000. All in all, this brings a whole new meaning to the term "underdog."
This post also appears on the consumer psychology blog, MattJohnsonIsMe.
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Neeru Paharia, Anat Keinan, Jill Avery, Juliet B. Schor; The Underdog Effect: The Marketing of Disadvantage and Determination through Brand Biography, Journal of Consumer Research, Volume 37, Issue 5, 1 February 2011, Pages 775–790, https://doi.org/10.1086/656219
Evon, D. (Dec, 2011) Snopes: Did a Struggling Sylvester Stallone Sell His Dog for $25?
Paharia, N., Keinan, A., Avery, J., & Schor, J. B. (2011). The underdog effect: The marketing of disadvantage and determination through brand biography. Journal of Consumer Research, 37(5), 775-790.
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