(2023-09-17) Rachitsky How to become a category pirate

Lenny Rachitsky interviews Christopher Lochhead (author of Play Bigger, Niche Down, Category Pirates, more) on How to become a category pirate. Christopher is a 13-time number one bestselling co-author, including books like Play Bigger and Niche Down.

one of the things that is insidious about influencers, hustle porn stars, part of the business model is creating the perception of superiority, right?

that's the business model of a massive amount of people in the native digital world, and we reject that. And I know you do.

We all know who Pablo Picasso is. We don't know who the fifth greatest cubist artist is. And so wherever you look in life, whether it's in the business world, people who drive social change, artists, creators of any kind, the people that we tend to admire the most are the people who broke and took new ground

the category makes the product, the category makes the brand, the category makes the company.

In tech market categories, on average, one company earns two-thirds, 76% to be exact, of the total value created as measured by market cap and or valuation

So the aha here, Lenny, is when we make the unquestioned, unconsidered, undialogued decision that we didn't know that we made, to compete, we have unwittingly said,
"We're going to fight for the 24%."
And it's the distinction or delta between create demand and capture demand. So we prefer the term category design, and I can explain why design instead of creation.

category creation, category design, does not equal first to ship a product with a set of features. So what does it equal? Here's the aha. Just like you can design a product, just like you can design a company culture or business model, you can actually design a market.

If I could own any product in the world right now, I think I'd probably want to own Purell

This was 80 plus years ago. The company, by the way, is called Gojo Industries

Gojo Industries created a whole new category called liquid soap. And in most restaurants, most corporate bathrooms, most airport bathrooms, if you start paying attention, you'll see the Gojo logo on the squeezy thing that you pull when you go to get the soap.

you love the thing you're creating, of course. However, Gojo focused on the problem, not just the solution.

So they stay obsessed with the problem, and then they ask a different question, which is,
"How do I wash my hands in the absence of water?"
And of course, the answer to that question is a new category, [inaudible 00:20:44] hand sanitizer.

the aha here is the company that designs the space and gets it to tip at scale

when I say designs the space, what I mean is specifically gets a meaningful percentage of the world to agree with their definition of a problem set, which then leads to their definition of a solution set. (problem definition)

at its heart, category design is about the most radical kind of differentiation.

the legendary innovators over time, they did not compare their innovation to the past. They broke and took new ground.

Gong comes up as an example

they did something incredibly smart. So they were a little later in the space than some others

Clary, and a handful of others, in the beginning started to create the space that ultimately became RevOps. And the interesting thing that Gong did, very smart, was as RevOps started to emerge, they were smart enough to realize that revenue was going to be a big new important space

They were smart enough to realize that if they went for the whole enchilada, it's not credible from a startup that you're going to go build, that you're going to show up and say,
"We have a suite that's equivalent to that of SAP, just for this other area."
So they picked off a very tight part of a broader emerging category, and they executed incredibly, and they dominated that part.

But here's the mistake they made. In all new mega categories, they start like this. This is exactly what happened in CRM

as these mega spaces emerge over time, no one company can fulfill the needs of a customer. And so there's all these niches. The mistake that Gong made, as well as the vast majority of others in that space, is they stayed in their micro niche

when they didn't expand and set the agenda, the design for the big category, they got fucked. Because now they're niched.

If they become successful in the first five years or so, which is they realize their biggest barrier to growth going forward, is their current category, because you can only be as big and successful as your market category.

Clary's crushing everybody in this space right now, and the Gongs and all the other players are now in this horrible position

this concept of the Better trap, which is where most people go, where they try to be the better solution in an existing category.

Let's take a very current example,Threads.

All these places. Twitter killer, Twitter killer, Twitter killer, Twitter killer.

Threads comes out. What happens? Threads surpasses GPT as the fastest growing app ever.

Now the headlines, Lenny, are coming. This is it. Zuck's a genius. It's incredible

Threads had the greatest distribution advantage of any new piece of software ever launched.

Legendary brand, the greatest distribution advantage in history. What happened? It cratered. It's gone. It's still there, but nobody's there.

So here's what happened with Threads

They attacked an existing, well-known, well understood, incredibly well-defined problem with a direct copy

Problems create categories, and you either have to A, solve a new problem, or B, reframe, name and claim an existing problem in a, I'm going to use these words on purpose, very different way.

if you reframe the existing problem such that people see it in a different way, that's when they'll be open to a new solution

when the existing problem is well understood and the existing solution is well understood, there's no need for a new solution.

Venture capitalists in the next five years will blow at least half a trillion dollars in the GenAI space alone, on me too, demand chasing existing category competing startups that have a 10x better product, no one cares.

the first law of category design is thinking about thinking is the most important kind of thinking.

Roger Martin is considered to be the greatest management thinker, or certainly one of them alive today.

his most recent book came out, which if I'm remembering correctly, is called the New Way to think

What most people think is reflective thinking is actually reflexive thinking.

There's something in category design called languaging, which is the strategic use of language to change thinking. And a mistake that a lot of entrepreneurs make is they use old language to describe their new thing.

is the category queen of elevators. Well, here's why. Elisha Otis invented the elevator. Now, pre-Elisha, there were no skyscrapers. Because how could you get to the top floor?

He shows it at like fares and shit. Because the big problem with prior elevators was they would crash. And so he built this safety system to catch them if the wiring would crash. And the category name, he actually used, Lenny, he called it the safety elevator to address the current problem in the space, which is... I don't know. People still went,
"That's interesting, but why do I need a safety elevator?""
It's a solution with no problem.

in category design, one of the breakthroughs is this thing called a point of view, which helps you frame, claim and name a problem and educate the world on why they should move from the way it is

So what does Elisha call it? The vertical... Railway