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Today's newsletter is authored by my friend Sebastian Cuervo from 42 Agency. I'm excited for you to read their hot take on something that we all hear in startup-land. "In a liquid modern life there are no permanent bonds, and any that we take up for a time must be tied loosely so that they can be untied again, as quickly and as effortlessly as possible, when circumstances change." — Zygmunt Bauman Categories are the mental shortcuts or frameworks that allow our brain to understand the myriad of stimuli around us. We are prone to think in categories because rigid structures of similar patterns make sense and simplify the world around us. The brain works on mental models - when you see a door, you intuitively know how to open it because of your existing knowledge of how doors work. 1. Creating categories is expensive and very difficult: Drift created the Conversational Marketing and Revenue Accelerator categories, and they still have an intense uphill battle against Intercom & one could argue conversational marketing never became a thing - we all agreed forms are just more efficient & work just fine. They did however do a great job and convinced many of us that it made sense to purchase their product, but that does not mean creating your own category island equates success. 2. Creating a category means that you have to market the product and the category: In other words, it doubles the effort. For example, the reward might be great for the early stages of the tech adoption / early adopters curve. Yet, if you want to scale up and reach people who are not as tech-savvy with longer sales cycles, the amount of explaining you have to do is simply too expensive. 3. Category creation is not a one-size-fits-all strategy for growth: "The Ehrenberg-Bass Institute asserts that the recipe for growth is to build a brand's penetration by increasing its mental and physical availability.". As Kantar studied on the link above, brands need two things to grow: mental and physical availability. Given that digital products have no problem being physically available, being mentally available becomes the domain to conquer. However, this one is a quality many SaaS tend to overlook; being radically different and providing a poor experience with the product will not work (it will backfire). 4. By creating a category, you miss out on the intuitive associations people already have built: This one is self-explanatory, but just think that if you position yourself in a category, you can use the language, semiotics, symbols, etc. that others have already created before you. Just don't copy whatever your competitors say; keep it original and focus on your users and how your product helps them accomplish something. Here is an excellent example of how a bike company leveraged category positioning comparing itself with cars and public transport by Sam Grover. While there isn't an ultimately trustworthy and universal source of category creation, one thing is for sure: It is not as simple as we have been led to believe. Just because many marketers live in a digital bubble where terms like Revenue Intelligence/ Revenue Acceleration/ Conversational Marketing mean something does not mean actual buyers experience the same world. Nor should they go through the cognitive load to figure out what you are trying to sell. It is time to kill the buzzwords and start to leverage clarity over cleverness. It is time to tear apart the myth that "All happy companies are different; every unhappy company is doing the same as other unhappy companies." Thanks Mr. Thiel. You can be wildly successful belonging to an already established category providing a great product and experience for your customers. Your SaaS can thrive and succeed even if the ocean is red and the category is crowded. The key is to truly understand your customers and solve their problems. And, of course, to invest across the buyer lifecycle, being present and providing insightful solutions and insights even if they are not necessarily ready to buy. Only then will you be able to develop a revenue engine that is steady and that allows you to cross the chasm and get the traction startups need to survive in a highly competitive digital ecosystem. This is not a Tolstoy story, nor a Thiel binary tech world. It is a rich and saturated market with lots of opportunities for those who manage to solve people's problems. Note: Read the full article on Category Creation here. —Sebastian Thanks again to Sebastian for the great hot take. What did you think? —Corey
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Monday, March 24, 2025
📂 Hot take: The ugly truths of category creation
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