Amid fears of the coronavirus, Zoom video conferencing and Purell hand sanitizer are showing the power of creating and dominating a category, particularly during a crisis time.
The most successful companies in today’s economy identify a new category that the world needs, define that category on the company’s terms, and then win the category for the long haul -- a process we call category design. Uber did that with on-demand transportation. Apple did it with the smartphone. Half a century ago, Chrysler did it with the minivan.
Category winners embed themselves in our brains. We tend to think first in terms of a category of something we need: “I just had a second child and need a minivan!” Then the next thought is, what kind of minivan? As brain scientists told us when researching the book Play Bigger, in decision-making mode our brains tend to latch on to the category winner. Need a minivan? You’ll likely find yourself at a Chrysler dealership.
But category winners have even more of an advantage in high-pressure situations. You don’t have time to evaluate a decision. You just know you need this thing. Which version of the thing? Your mind first lands on the category winner, and the easy decision is to just go with it.
We’re seeing that dynamic play out with Zoom and Purell.
Zoom, of course, didn’t invent video conferencing. Businesses have for years relied on WebEx and GoToMeeting, while consumers have used Skype or Google hangouts. Eric Yuan even worked for WebEx before founding Zoom in 2011. While at WebEx, he realized that videoconferencing offerings were too clunky and difficult to use, and were geared toward corporate business meetings. Skype and other consumer versions might have been easy to use, but the quality was iffy.
Yuan wanted to create a new category of video calling for all personal communication. His guiding principle was to make it so easy and so good that eventually everyone who thinks of talking to someone who’s not in the same room would default to doing so on Zoom -- whether in a business or a consumer at home. Yuan never labeled the category, but it’s something like personal video communication.
Over the past few years, Zoom increasingly displaced WebEx and other services at companies. Individuals started adopting it, too. Zoom had 4,500 users in 2013; 700,000 in 2017; and about 13 million today. The coronavirus scare is pumping up the momentum: the company has added more active users so far in 2020 than in all of 2019.
As the virus has spread around the world, companies have been telling employees to work from home, while suspending travel and canceling attendance at conferences. Apple, Google, Twitter, Microsoft and many other companies have done this. As people are forced to do business remotely, their minds look for the best way to keep in contact from afar. The default choice seems to have become Zoom, which defined and dominates this new version of the category.
"Video is the future of communication,” Yuan said on a call with analysts recently. “Given the coronavirus, I think overnight, almost everybody really understands they need a tool like this. This will dramatically change the landscape."
Zoom went public almost a year ago at $62 a share. It’s now double that.
Purell is a different story, but similarly a category creator and winner. An Akron, Ohio, private company called GOJO, founded in 1946, had long made industrial hand cleaners. In 1988, it developed a hand sanitizer it dubbed Purell, “creating a new way for employees, patrons, students, teachers, and everyone else to clean their hands away from the sink, reducing the spread of disease-causing germs,” the company’s website says.
Nothing like it had existed before. In a classic piece of category design, GOJO defined a problem we didn’t even realize we had: that we didn’t have a way to clean our hands when we’re not near a sink. But once we saw the problem, we couldn’t unsee it -- and we understood that Purell was the solution to that problem.
As the category of “hand sanitizer” made its way into the public’s awareness, Purell got embedded in our brains as the category creator and winner. So when the coronavirus crisis hit, our brains immediately went to the category winner.
Yes, of course, at this point we’ll take any hand sanitizer we can find. Go into a store and the hand sanitizer shelf is probably empty. Adobe Analytics estimated demand rocketed 1,400% from December to January. Still, ask anyone to name a hand sanitizer brand, and they’re likely to blurt out Purell. It is to hand sanitizers what Xerox is to copiers.
The bottom line: It pays to be the category winner at any point in time. But it pays off in a huge way when the chips are down.