category design basics - different not better

Entering a marketspace with dominant Category Kings could end up being a harder feat than expected. Instead, look for the zero billion dollar market. In this section, you’ll learn how to think different, not just better, to find those new opportunities that can help build your business.

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


Another way to think is to "think different, not just better." If you're entering a space, a market space, with the idea of, well, okay I see that company is doing this already and we can go in there and just do it a little bit better. That's not gonna, that's a way to have to claw for market share, not a way to like really blow it out as a category king. And, and so thinking about things, you know you wanna be seen as something that's different, not just better.

And this has been going on in history forever in business, and you're laughing. You had one of these? Your family? But so this is the Chrysler Minivan, right? Little background story on the Chrysler Minivan. 1980s, and Chrysler was going bankrupt. This was the time when Japanese cars were on the rise and killing all the U.S. car makers. And Chrysler was suffering the worst, its back was against the wall. And the leadership at Chrysler, Lee Iacocca was the CEO at the time, was looking at demographic information and realizing that all these baby boomers, the surge in the population, we're having all these kids. So there was a big boom in families. And at the time, there were basically two choices if you had a bunch of kids. You can either buy a station wagon which was just kind of a long car and didn't have as much room as maybe you'd need or you could buy a regular big old van which didn't fit in your garage because it was too tall. And, and so they, they said, well can we design a car that's built for, you know, families can hold four or five kids and fit in the garage and appeal to that particular market?

And they came up with this thing called the Minivan. Importantly, think about category, right? They created a category of Minivan, not a product called the Minivan. They created a product called the Plymouth Voyager and the Dodge Caravan, but they established in our minds that you have a family, man, you need a Minivan. And then if you need a Minivan then the next thought is, well who makes the Minivan, who invented this thing? Well, it's, you know, Plymouth and Dodge and those are the people to go to. So this thing basically saved Chrysler in the 1980s. And it saved it by thinking differently from anybody else in the company.

And by the way category king status is a long-term thing because you think about the whole thing about biases in our brains, you establish that bias and it's hard to take away. And it's, you know, what is it like 40 years later and Chrysler still owns 50% of the global Minivan market. And this is one of my favorites.

This is our takeaway from a couple of our favorite Silicon Valley VCs who said their favorite kind of market is a zero billion dollar market. And a zero billion dollar market is a huge opportunity that only you can see and you have to, and it takes a whole lot of, whole lot of faith and guts because you have to be able to believe in it even if others don't. You have to be able to go and convince investors, convince customers that that thing actually exists. But if it's a zero billion dollar market you don't have anybody else chasing you yet because you're imagining this thing from the ground up. And so if you're not in a, if you can't, if you can't look and say I'm creating a zero billion dollar market you're probably on a path you need to think about. A couple of zero billion dollar markets, by the way.

I have a personal story about AWS. I seem to be constantly circling back to Jeff Bezos. But you know, I, as a journalist I had interviewed him many times from the time they were a small company. And I was, 2006, I was at a technology conference in San Francisco, wandering around the floor. I get a ring on my cellphone and it's a PR person from Amazon who says, "Can you call up the suite," whatever it was, and "Jeff Bezos wants to talk to you." And of course I said, "Great, I'll be there." And hopped in the elevator, went up. And so I see Bezos and we sit down and he said, "I wanna tell you about something we're thinking of doing at Amazon."

And he describes this whole thing about renting our computing power by the sip. That was the term he used at the time. And this was a very strange concept. I mean, nobody had done anything like this. And so he goes, he's explaining all of this to me, and you know, sort of stumbling over it for a long time, and he kind of finished, and I looked at him and I said, you know, "So how are you ever gonna explain this to the public?" And he said, "What do you think I called you up here for?" And he seriously was looking for me to write about it in a way that would help him figure out how to talk about it later.

But I tell that story in part because he had no idea what AWS was gonna become at the time. It was truly a zero billion market at the time. And he just was throwing it against the wall to try to see if he could create this thing that had never existed before.

And similarly, by the way, for this whole 5-hour Energy. I mean, it's not just about technology, right? I mean, the guy who started with 5-hour Energy was wandering around a health food convention. He saw that there were all these energy drinks that were big cans of liquid and they were being sold in the refrigerator next to Coke and Pepsi and all these other kinds of things. And, and he goes, well, he's walking around. He's going, "Well, okay I'm tired, I need a boost, but I'm not thirsty. I don't wanna drink all this stuff. There's gotta be a better way." And any created the idea of the energy shot.

And in fact made sure that it was something that was shelf-stable so that it didn't have to be sold in a refrigerator next to other drinks, he sold it by the cash register. So it looks like an entirely different category of product. It's not a drink, it's an energy shot. And 5-hour Energy now is a $5 billion business. So, you know, zero billion dollar market, think different find what's missing.