The Wall Street Journal covers companies. Pirate Street Journal cover categories.
Each week, we pick three headlines worth paying attention to and break down the category underneath. Live every Tuesday at 7 am PST / 10 am EST. See the news through a different lens. Keep reading in the Deep Dive Reports.
Dear Friend, Subscriber, and Category Pirate,
Here’s what we covered in this episode:
1. Apple is seven years late to a shrinking category and takes 44% of the money
Apple’s first folding phone, the iPhone Duo, starts at $1,999 and ships October 23. Samsung has sold folding phones since 2019 and the category is going backwards, with shipments down 15% in the first half of this year. IDC still expects Apple to take 44% of every dollar spent on folding phones in 2026.
Memory chips cost five times what they did last fall, so every iPhone went up $100 and there is no base model this year.
That is price anchoring, where the first price you see decides what every other price feels like. How do you sell a $10,000 watch? Put it next to a $100,000 one. A $100 bump is nothing next to a $2,000 phone. Superconsumers, the people who care most and spend most, hate the water torture of small increases for the same old thing. They will pay a big jump for a different outcome.
Christensen said incumbents get eaten from below, so fight back cheap. Look how that goes:
United and Delta. Both built cheap airlines, TED and Song, to fight low fare rivals on price. Both gone.
Apple. Charged $500 for a phone carriers gave away free, and took the smartphone mainstream.
Corning. 175 years old, invented Gorilla Glass before anyone had a use for it, up 92% this year. A folding phone is twice the glass.
Apple is almost never first to create a category. It is first to cement one, and it does it by charging more.
2. Salesforce’s asset was never the software
Salesforce beat and raised. ServiceNow beat. Workday and Snowflake came in strong, and Salesforce jumped 22% in a single day on a deal to plug Anthropic’s Claude into its products. The stock still trades at 16 times earnings against a ten year average of 43.
Earlier this year investors decided AI coding tools meant nobody would pay for business software again. Salesforce fell about 30%. The internet called it the SaaSpocalypse.
What the incumbents own is the context layer, the meaning you wrap around data so the machine knows what it is looking at. AI slop is what you get without one. Salesforce sits on 25 to 40 years of intellectual capital, everything it learned about how customers really work. The code was never the asset.
3. Nike took the word category off its own org chart
Nike was worth more than $260 billion in November 2021. It is worth about $57 billion today, a 78% drop, and this month it leaves the S&P 100 after almost 18 years. Four tech companies take its seat.
In 2020 Nike hired John Donahoe out of ServiceNow. With McKinsey advising, running, basketball and soccer became men, women and kids. Category experts were let go, hundreds of retail partners were cut, and direct sales climbed from under 30% of the business to 44%. The categories came quietly back in 2023. This year direct sales fell 6% and wholesale grew 6%.
This is the consultant’s curse, hiring people whose real skill is cutting costs and letting them call it strategy. Going direct was never a plan to grow the category. Foot Locker has stores, salespeople and inventory, and it moves shoes.
B2B2C means selling through a partner and to the person wearing the product. Sixty percent of the 25 most valuable brands on earth do it. Ninety percent of the top ten.
Two categories can look identical and pay completely differently:
Sausage. Buy better beef and you lose money. Nobody pays up for Wagyu in a sausage. They want spice and bite.
Hot dogs. Ballpark went Angus and doubled the business in five years. Hebrew National charges a premium for kosher.
Nike. A marathon runner’s foot is not a point guard’s foot. Men, women and kids does not tell you that.
Phil Knight retired in 2016 and has been chairman emeritus ever since. Companies drift once the founder leaves. Nike spent forty years turning running and basketball into culture, then deleted the word from its own org chart.
3 conversations to have about the news with the Pirate Eddie Bot and Pirate Christopher Bot
The bots take this week’s moves and run them against your category, not somebody else’s. They come with the founding tier and they jam at 3am.
Anchor the price before you raise it. Give the bots your price list and ask them to design the premium offer that makes your increase feel small. Apple put a $2,000 phone on the table and a $100 bump disappeared.
Find your context layer. Hand the bots the things you know that nobody outside your building knows, and ask them where that turns into a product. Salesforce’s real asset is 25 years of customer knowledge.
Say your categories out loud. Ask the bots to split your customers by the problem they are solving, not by who they are. Nike swapped running and basketball for men and women and lost $200 billion.
Three companies, one lesson. The money is in the category you frame, not the thing you ship.
Not a founding member yet? You can join here.
Arrrrrrr,
Category Pirates 🏴☠️
Eddie Yoon
Christopher Lochhead
P.S. - Every story this week came down to the same move: find the problem before you go shopping for a solution.
The Category Design Academy is where you do that at the category level. You name the problem only you can name, then design the category around it, so you stop competing on terms somebody else set.
The next cohort starts in October. Apply now to save your seat before it sells out.
