Dear Friend, Subscriber, and Pirate,
There are two kinds of companies in the world.
The first are the ones everyone can see.
These are companies that believe tomorrow will be no different than today. Cars will always be gas powered, groceries will always be bought at the store, cabs will always be hailed with a waving hand on the sidewalk, movies will always be rented at a store, and so on.
Their leaders tend to stick to strategies that make sense “on paper.” Fixated on yesterday’s profits, they spend the majority of their energy on cost-cutting and M&A on weaker competitors hoping to find “exponential synergies” that never quite seem to materialize. Wall Street knows exactly who these companies are, and values them accordingly (low).
In short, these are companies that compete with each other for a larger slice of the same pie.
The second kind of companies are invisible to the general public—unless you know what you’re looking for.
These are scrappy startups and innovation-obsessed high-growth companies with Big Hairy Audacious Goals (BHAGs). Their founders are called crazy, their investors delusional, because on a very fundamental level the company is not betting on the world being the same in the future.
They are betting on it being different.
These companies do not believe cars will always be gas powered. They believe, in their future, cars will be electric—and save the planet’s natural resources as a result. They believe, in their future, groceries won’t always need to be bought at the store—they can be delivered right to your doorstep, every week, with the cost automatically billed to your credit card. They believe, in their future, cabs won’t always be hailed with a waving hand—they’ll be hailed with a smartphone and GPS-pinged location. They believe, in their future, movies won’t always be rented at a store—they’ll be streamed from your living room, in an unlimited capacity, for the price of a burrito and a side of guacamole from Chipotle.
In short, these are companies that create that future.
They have no interest in competing.
EVERYONE LOVES BETTER, FASTER, CHEAPER, SMARTER—UNTIL A BETTER, FASTER, CHEAPER, SMARTER OPTION COMES ALONG
The world loves companies that are better, faster, cheaper, smarter companies because they are easy to understand.
You can see them.
You use toilet paper, and so the idea of an even-softer roll of toilet paper sounds nice. You like pop music, and so the idea of a little bit more up-tempo pop song seems like a newer version of the same thing you already like. And the reason you look for these types of companies and their products is because they don’t disrupt your world view. You believe movies are rented at a store, and so when a new store opens up and says, “Rent all the movies you like, for $0 late fees,” well, that’s a better, faster, cheaper, smarter version of what already exists.
You already know what you like, and so you look for better, faster, cheaper, smarter versions of the same thing.
Which is precisely the problem.
Entrepreneurs, investors, and big company executives notoriously chase the next-best version of what the market has already said they want. It’s a vacuum, but with three suction holes instead of one. It’s project management software, but with even more features. It’s a t-shirt, but with even softer fabric. Blah, blah, blah.
Which is what makes the concept of product-market fit such a dangerous idea.
Product-market fit is a theory that only holds true if you believe the world will be the same tomorrow as it is today. If that is your core belief, then yes, you should aim to “fit” a product into an existing category. You believe the category already knows what it wants, and your job is to find a way to be a better, faster, cheaper, smarter version of what’s already out there. Do that, and customers will gladly tell you, “Sure! I want this product!” Which is what most founders, VCs, and executives want to hear.
Category creators, who capture 76% of the financial upside, do the opposite.
What doesn’t make sense to a lot of people are products and companies that haven’t existed before.
If you’ve been eating pig bacon your whole life, the concept of plant-based bacon isn’t going to “fit” in your world view. Or, if you’ve been living in New York City hailing cabs on street corners for twenty years, the concept of a ride-hailing app on your smartphone isn’t going to “fit” in your world view—at least, not at first. It takes education. It takes showing you the way, and shifting your world view in a completely different direction.
As a result, when these types of companies appear in the world, people tend to look right past them. And if they do see them, they criticize them. They laugh at them. They can’t fathom a future in which this new idea, this new way of seeing things, becomes a widely accepted worldview—the basis of their argument being, “That’s not the way the world has been for however many years.”
No shit, Sherlock.
That’s the point.
Who Are The Category Pirates?
For the better part of two decades, we have been using the principles in this book to build, accelerate, invest in, and exit businesses by seeing the world through a category lens.
Pirate #1: Christopher Lochhead
A highly creative, dyslexic, high school dropout, in the late 90s Christopher Lochhead was the Head of Marketing at Vantive—a CRM pioneer that later merged with PeopleSoft (1999), and was eventually acquired by Oracle Corporation (2005). By his late 20s, and already experiencing his first successful exit, Christopher became one of the youngest Chief Marketing Officers in Silicon Valley, on the founding team at a company called Scient—an eruptive Internet consulting business that helped this new world of dot-com companies flourish in a digital-first society. Three years later, Scient had created, and established itself as “king” of this new “ebusiness” consulting category with thousands of employees and hundreds of millions of dollars in revenue prior to going public (right before the dot-com bubble burst, went bankrupt, and was later bought by SBI and Company. A wild ride.).
By his third CMO gig at Mercury Interactive, principles of category design were crystalized. Christopher began by “repositioning” the company and prosecuting “the magic triangle of category creation.” Mercury Interactive was ultimately acquired by Hewlett-Packard in 2006 for $4.5 billion. When Christopher first came on board, the company’s value was one fourth of that.
Since then, he has become a sort of legend around Silicon Valley: showing up to venture capital firms to give talks to partners and portfolio companies, advising over 50 different venture-backed startups, and launching two of the most popular dialogue and marketing podcasts in the world: Follow Your Different and Lochhead on Marketing. Christopher has also written two books on the subject of category creation. Niche Down for what he calls “small e” entrepreneurs (bootstrap founders), and Play Bigger for “big E” entrepreneurs (venture-backed founders).
But for all his personal accomplishments, Christopher will be the first to tell you what excites him the most is helping the world see life through a category lens. And nobody understands category creation as it relates to the Fortune 100 as well as Eddie Yoon.
Pirate #2: Eddie Yoon
Author of Superconsumers: A Simple, Speedy and Sustainable Path to Superior Growth, Eddie Yoon has been evangelizing category creation as a growth strategy long before these became industry buzzwords. Formerly one of the senior partners at The Cambridge Group, a strategy consulting firm, his work over the past two decades has been responsible for driving nearly $10 billion in annual revenue for its corporate clients—many of which doubled or even tripled their revenue by creating new categories. His philosophy can be boiled down to a single statement: don’t just grow your market share—grow the entire market.
Today, he is the founder of growth consulting firm, EddieWouldGrow, and works with companies to ensure they are not competing within existing categories, but catalyzing their growth by creating new categories for themselves.
Pirate #3: Katrina Kirsch
An editor who helps self-publishing entrepreneurs develop their books, Katrina Kirsch has worked behind the scenes for Silicon Valley founders and multi-million dollar tech startups. She has collaborated on 500+ articles and several books for B2B, B2C, and non-profit clients such as HubSpot, Photographers Without Borders, Digital Press, M1 Finance, and more.
Today, she’s helping run the Category Pirates Ship and the Category Design Academy.
This newsletter is dedicated to the art of category design and is intended to provide you with a new way of seeing the world.
It is our core belief that category creation is the secret to uncontainable, borderline incomprehensible business growth. But more importantly, it is the secret to feeling fulfilled and emotionally connected to your work.
Life is more fun when you’re creating.
And life is more rewarding when you’re a pirate.
Arrrrr,
Category Pirates
"Bosun, tie them brigands to the mast and give 'em a taste of the cat 'o nine tails"
"Aye, aye cap'n"
All aboard! Let's do this!!!