In this episode we dive into category creation and what it takes to win in a new category. Many startups are building products unlike anything that has existed before, but how do you build a category around it? How do you let people know it even exists? We are here to help! In this episode we answer questions including:
- What is category creation?
- How do you anticipate the need for a new category?
- How do you educate the market that your new category exists?
- How do you maintain a competitive advantage as your category grows?
Sean Byrnes has co-founded, scaled, and sold multiple startups and has invested in and advised countless others. "Category creation" has been central to Sean's ability to go from 0 to 1 and beyond. Ash and Nic put Sean on the hot seat to unlock winning strategies around category creation.
All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!
Your hosts:
- Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
- Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
- Nic Meliones: CEO, Navi www.heynavi.com
Reminder: this is not legal advice or investment advice.
Q0: What is category creation?
If you are selling something where there was nothing like it before, it’s category creation. This differs from a "replacement": selling a product that replaces something else (a product, person, role).
Q1: How do you anticipate the need for a new category?
Category creation starts with problems. You may observe old problems that go from small to huge (SaaS). Another way for opportunities to emerge is from problems that arise through new technologies, markets, or changes (mobile apps).
“What kinds of problems are increasing in pain but now may be solvable given this shift?” These opportunities all start with inflection points: something needs to change to disrupt the status quo.
Creating new categories is usually not the best approach. Even if it is, it often takes years before people recognize that the category exists.
Q2: How do you educate the market that your new category exists?
While replacement products are all about competitive advantages, category creation is all about education.
Most of the education is not about your product. Instead, educate your prospective customers that it’s possible to solve the problem! You just want everyone to know that solutions exist. Teach people what to look for in solutions: give them criteria and teach them how to evaluate.
With “education” as a central component of your strategy, you still need to stay true to your classic startup principles: validate that people have a need, show them a clear use case, and generate proof that prospective customers want it badly.
Q3: How do you maintain a competitive advantage as your category grows?
First mover advantage is a fantasy. You would much rather be second or third. If you do create a category, there are a few advantages you can build up:
- Premium customer logos.
- Create your own conferences.
- Prime positioning with analysts/industry coverage.
- Defining the industry standard.
Treat customers like co-researchers on this emerging frontier. Earned and owned media builds trust and buy-in.
Lightning Round
How do you validate demand for this type of startup? Is it different in any way than the classic methods that startups should take?
What’s more important: a crystal ball type of ability to anticipate a new category of opportunity or the ability to iterate quickly when an opportunity
