Lessons On Category Creation

Posted: 2 Jul 2020

Product and company are fundamental layers that any investor or entrepreneur must assess and pay attention to. But a third layer exists, and it may be the most important of all: category.

Category design thinking has been the driving force behind some of the biggest business successes in modern history, whether it’s Apple dominating the tablet and smartphone industry or Chrysler dominating the minivan market.

The premise is relatively simple: if you are entering an established market, all you’re really doing is trying to argue with the category leader. The pioneers who become household names do so by first highlighting the problem the consumer has, before ever offering the solution.

At Connect, we invest in the best product companies. However we know that products are orphans without a category and that’s why we’re such big fans of Category Design. We want to help the founders we back embrace the category thinking so that they can create the space in the market for their product.

We decided to take things a step further, so last month we joined forces with Kevin Maney, Mike Damphousse and Elie Kanaan from Category Design Advisors, who are focused on helping companies identify, define and win new categories. Over the course of a few hours, we gave the audience a brief overview of how to think like a category designer, discussing how startups can incorporate category design thinking early on in their journey. We then wrapped up the event by evaluating and dissecting three selected companies in a live forum.

Three brave participants — Lauren Evans, CMO of Spirable, Dan Garrett, CEO and founder of Farewill and Sammi Adhami, CEO and founder of Fiit — got real time feedback from the CDA team to help them understand what they needed to work on to become category leaders.

Here are some of the pearls of wisdom generated from the discussion:

Smart Video Advertising w/ Spirable…

Spirable, Lauren Evans, CMO

Spirable is a creative automation platform which helps brands and agencies create and optimise their marketing channels in a scalable way. Users can create thousands of data-driven videos in minutes, tailored to the individual.

Going back to basics

The seeds of category design thinking began to flower in the organisation after looking at their product road map last year. Lauren and the team saw that they were creating a comprehensive end-to-end platform which handled everything from creation to optimisation to distribution. “We came to realise we didn’t really have a competitor in this space,” says Lauren.

These are the perfect conditions to create an entirely new market and dominate it. “Sure, there’s a market for things that already exist,” says Kevin, “but technically speaking, there’s no obvious market for something people don’t yet know they need.”

“If you can get people on board [and create your own category] then you’re in the best position possible.” Of course this means you have a leg up on any competitors that may come into the space further down the line, but for Kevin it goes deeper than that. It’s about securing real estate in your consumer’s mind. “There’s an important psychology component,” Kevin continues. “When someone can describe to you an entirely new problem that you have, you automatically associate that person with the solution.”

This speaks to a fundamental pillar of category design: don’t solely focus on the solution, instead focus on the problem. Look for what’s missing in the marketplace — if you can identify a market that already exists, you simply won’t scale in a way that meets your ambitions.

Theory provides a great foundation, but execution is essential

It’s a lot easier when the internal category design champion is the CEO. Luckily for Lauren, the co-founders and CEO were bought in, but as CMO, she still needs to make sure the executive team is onboard and investing in the process.

Consistency is king. “We take a couple of hours a week [to focus on category design thinking], every week. Even when the world is falling apart, you need to keep the ball rolling,” says Lauren.

Dealing With Death Simply w/ Farewill…

Farewill, Dan Garrett, CEO & founder

Farewill is modernising our relationship with death, and is the first tech-driven consumer brand in the market. The company aims to alleviate some of the psychological damage and financial burdens that come with the passing of a loved one.

Delivering meaningful change in an uncomfortable sector

While there is a traditional industry addressing some of these problems and mechanisms in place to deal with specifics, they are not fit-for-purpose. This is where Farewill stepped in. “Within 18-months we became the biggest will writer in the UK, and then moved into probate,” says Dan. Following early successes, Farewill launched a nationwide funeral business in December 2019, and within just 40 days became the third largest funeral provider in the UK.

The sad truth is that everyone you know someday will pass on. This is one of, if not the hardest emotional challenge we will face in our lives. But, according to Dan, there are other factors that come into play here that add to the grief. “This is [also] the biggest financial event of your life, it outstrips mortgages and pensions,” but because of our uneasy relationship with the subject matter, “it gets none of the attention,” says Dan.

Category creation through assembly

The problem Farewill is solving is that the existing solutions and processes we have to deal with the associated logistical and financial burdens for these life events are not fit-for-purpose.

“We now have all these amazing experiences through technology that solve old problems in brand new ways, and there’s no way in the world that it should not exist in [this industry either],” says Dan.

In short, according to Mike Damphousse, what Farewill is doing is “taking multiple categories such as traditional estate planning, probate and funerals, and bringing them all together into one category that helps somebody through that experience.”

Bringing The Gym Home w/ Fiit…

Fiit, Sammi Adhami, COO & co-founder

Fiit is a fitness app which helps people train harder and workout smarter. The experience focuses on the gamification of fitness, using points, tracking reps and creating leaderboards to instil better exercise habits and help people reach their fitness goals.

As Sammi explains, Fiit “started in the home, similar to Peloton, but for habit formation you need things that are easy. For us it’s all about multichannel. That means exercising at home, outdoors, in the gym, at the office and even on holiday.” This has driven Fiit’s evolution into an app that allows users to exercise and engage in interactive fitness sessions in multiple locations.

Brand vs category

Mike highlighted that this was the perfect moment to discuss what the real difference is between category and positioning. The brand is Sammi, it’s Fiit, it’s the logo and what Fiit stands for. However, the category, multichannel fitness, is about Fiit’s point of view. Category is the foundation of telling any company’s story; it leads with the problem, and helps the market emotionally understand and connect with what the problem actually is.

“Brain science is similar to fitness,” says Mike. “it shapes our habits and category design shapes how people view your company.”

Mike left Sammi with one final piece of advice that is not only relevant to Fiit, but to every single person on that call who dreams of being a category leader:

“Don’t be better, be different.”