play bigger book category design 101

It’s good to be a Category King and viewed as the leader in your space. In this section, you’ll learn the three reasons why it’s important to become a Category King and understand the benefits of owning the crown.

 

To complete the exercise for this module at the Techstars Entrepreneur's Toolkit, click here.

Transcript

So I wanna walk you through the basic ideas about what Category Design is all about and how to think that way and how to, you know, how to take your company in that direction if that's something you wanna do. So this is basically an overview but some behind the scenes stuff about the book too.

And I just want to start out with a few reasons why it's important to think this way. And so one is everybody in this room probably knows and feels that it's way easier to start a company today than it was 20 years ago. You know, grab a laptop, get a credit card, get on AWS. Join up with somebody like Techstars. You know, a couple of people can have a company up and running in no time that can compete with the giants of the world. But what that means is that if anybody has a really interesting idea and an interesting new space, it quickly looks like this, with, you know, 1000 other companies piling in to do what you're already trying to do.

So it becomes really hard to stand out unless you are established as, establish yourselves as some kind of a leader, a thought leader a category king in a particular space. And another reason to try to go for this idea of category king, category creation is that in any market that's digital, it's a winner take all kind of situation and you can measure that any way you want, you know, a market share, you look at on demand, transportation and Uber is the obvious category king in this space. It takes 73% of the market share, Lyft 23%.

And so market value is another way you could measure it and Airbnb and in particular space where three some billion dollars when HomeAway was sold it was worth about 4 billion. Whether it's you measure it by total usage and the space of online storage Dropbox kind of identified the category and came to dominate it. And even with Google's all of Google's power and capabilities it still only has 70% of the usage of, you know, this kind of online storage space.

And another interesting reason for wanting to be a category king is the category kings tend to attract the best people. And here's a way we know about this. About a year ago, LinkedIn decided to do a study using its data to try to figure out what were the 25 companies that the most talented people in the world want to work for. And when a little background story on this, when LinkedIn wanted to do this study, they ran the data, but they also brought in a woman named Suzy Welch to analyze the data and write about it. Now, Suzy Welch is a pretty famous business journalist. She used to be the editor of Harvard Business Review. She also happens to be married to Jack Welch who was the former CEO of General Electric and also kind of a business, you know, character in his own right. And so we didn't even really know about this project. And then one of my co-authors Al Ramadan got a call one day from Suzy Welch saying, we're doing this study. And I happened to have been reading your book. And I noticed that if you map the companies that are landing on that list of the ones people wanna work for to the idea of category kings, most of the companies on the list are identifiably category kings. And she wanted to talk to us about like the dynamics and why that was.

But after the, towards the end of the interview Al thought he'd asked, he says to Suzy Welch, "How did you end up running across our book?" And this was one of my favorite things I ever heard about the book was she said, "well, you know my husband's Jack Welch." And I was like, yeah, I know Jack Welch. And she says, well, Jeff Bezos gave your book to my husband and said, "you should read this." And then my husband gave it to me and said, "you should read this." So this apparently were floating around in some pretty high, you know, stratospheric circles there. But the bottom line here is that that is a also a really good reason to wanna identify yourself as this category king.