It seems that every shiny new start-up is trying to take a stab at category creation, but as haphazard in the way that new start-ups are being built and funded, new “categories” are being created.
Working for a category leader just feels good. You have stress, but it’s not too stressful. You may have late nights in the office, but it’s not too much. You’re celebrating more than you are losing. There’s a lot more to it, but more on that later.
These days it seems that everyone can have a start-up.*
There’s the company that connects you with strangers for a wake-up call, one that allows you to send messages on a potato, a dating app that flashes an image to a person you’re eyeing to see if they will reciprocate, and a “We Sell Gold!” exchange, but in a kiosk.
It’s easy to see why there’s going to be a generation of disillusioned youth thinking they are going to “hit it big” by working for peanuts at a startup.
*Maybe less so during this pandemic, but let’s pretend that isn’t happening right now and I’m still observing 2019.
So why did I write this post?
I wrote this post for the businesses that are (or believe they are) creating a new category. If you fit into this category, this post speaks to you. If you are cool with being #2 or #3*, etc (or are just in it to make a quick buck), that’s fine, but this isn’t going to tell you much.
This isn’t a post about HOW to build a category leader. I would never feign expertise in this area. I’ve seen it, been a part of it, but I’ve never led it.
I also wrote this post because I’ve been talking to a lot of people about their work, their businesses, and their challenges. And it’s become abundantly clear to me that some people are living in their own created la la land believing that they are going to be the start-up of the century (maybe, but likely not), or there are those who are just seeking a smart and strategic way to win (this should be everyone, but also not everyone, I’m looking at you custom desk company…). **
So I’m also addressing the dreamers so they can come back to reality and make some difficult decisions and at least try to come up with a strategy that will lead them down a path with a modicum of success.
Here’s my dose of reality: most startups don’t make it.
*If you are #2 or beyond in an established category, you are more than likely NOT going to become a category leader. Only if that leader missteps big time because category leaders are notoriously difficult to overthrow – even if your tech is better.
**Ok, there’s also a third category of people who are just in it for the experience and fun – less so about the being the best startup ever.
So if I want to make it, what do I do?
I’m assuming that if you have a plan for category creation, you do not need this post. You are probably a lot smarter than me and know what you need to do. But, don’t have a plan? Also, what about those dreamers?
Well, we have a problem, most dreamers probably don’t even realize they are dreamers. So, let’s talk about what it feels like to be losing a category. This may help in understanding that you have a problem:
What it feels like to be losing
Let’s just say bad and your gut will know if, even if your mind is convinced this is just “growing pains.”
There’s a lot of bad stuff out there and being at a category leader will be a rare opportunity. I have been at a category leader after a bubble burst, one that re-imagined old tech and bought out a 40-year-old behemoth of a business, and two that were first and created new categories.
Of the losers I’ve been at, you get in, you start talking to people, and you immediately know something is wrong. You brush it off thinking there’s no way it is bad, they just got funding. Or there’s no way because people are smart here… well let me tell you, follow your gut for a bit and ask yourself if that business has a *real* plan on how to win the category.
This quote from “Play Bigger: How Pirates, Dreamers, and Innovators Create and Dominate Markets” hit me hard. This is exactly how I feel when I’ve realized I’m at a category loser OR at a category leader that’s losing its lead.
“…when there was no category design in place—when no sense of meaning and direction lashed together all of a team’s work in a concerted effort to dent the universe. Maybe it’s happening in your company now. You feel it when the chief marketing officer presents new branding that looks like a bad face tattoo that you’ll regret in a year, or when the sales staff demands more case studies because they can’t figure out how to win deals, or engineers build product by adding every feature customers ask for—a sure and probably disastrous indication that a company is letting its customers design its category. (As Henry Ford famously-supposedly said: “If I had asked people what they wanted, they would have said faster horses.”) You feel the absence of category design when you hire McKinsey to do another study that will cost a gazillion fucking dollars or when investment bankers pitch acquisitions that make as much sense as adding chocolate syrup to beer. You feel it when a Gartner Magic Quadrant gets published and you’re lost in the bottom part of the chart, or when you get an RFP from a Fortune 500 company that was clearly written by one of your competitors. You feel it when you and a lot of smart people on your team are earnestly doing their jobs, putting in long hours and trying really hard, and little of it seems to get traction. At one time or another, each of us writing this book has experienced some or all of these things, and to put it bluntly: it feels like ass.”
– Play Bigger: How Pirates, Dreamers, and Innovators Create and Dominate Markets
If you are ok with this, that’s cool and totally fair. You’re likely in that third category of person that is not working for a startup for the startup to have world domination. You’re there for the experience, you’re there for the job (money, benefits, etc), you’re there for the people.
But, those businesses not winning their category may suffer from far too many dumpster fires that you’ll just need to be ok with.
Getting back on track
If you’re an exec who wants to create a category: You need to have a strategic plan. Not just an idea, not just some funding, but an actual plan. With goals that tie together. With a path forward. (You would think that this is common sense, but I assure you, at the number of start-ups I have been to, it is weirdly not).
If you’re an employee who wants to “hit it big”: That’s awesome that you want to be a part of something, but know your numbers and know what a category leader looks like. For you to “get rich” during an exit, you’d have to be an early employee or an executive to actually make some money (sorry to employee #476 in middle management who has .000000001% shares). Plus you’d have to have a big exit. (I have been in a sub 100 employee at a start-up that sold for $170M and only made enough to have an extra cup of coffee a day).
So what does being the category leader feel like?
It feels like you when you’re happy and healthy. You feel good. You aren’t stressed, you’re getting enough sleep, you’re safe. You aren’t too worried about gaining weight because you’re working out and eating right. You have a lot of trust in people. You’re not anxiously looking over your shoulder if you mess up, mistakes happen and it’s ok. You feel confident and supported by everyone.
When I worked at category leaders, I always felt clear that there was strong leadership with a plan that was smart and headed in the right direction. I felt like what I was doing supported the greater business and really meant something. I felt this way because I was told so by leadership, and I could plainly see that what I was doing made an impact.
I understood what our vision and mission was, I knew our value prop and why we were different. I knew what was in our product roadmap and why it would help our customers and how that tied back to our vision and mission. I felt confident that our business was doing the right things.
I was never paranoid about making mistakes (I rarely make them, but I didn’t feel like I would destroy the business if I made any). I had time to take vacations. My teammates seemed happy, the business seemed happy. No one ever cried (I worked at a place once where there was a room that was called “The Crying Room” because you’d walk by and you could always hear someone crying.)
I know, I buried the good feels at the bottom. This post was really a confession of how bad it felt to be at category losers and hoping that whoever reads this will recognize the signs early to either a) work to fix it or b) get out of there fast.
Life is too short to make bad bets or work so hard aimlessly.
Header Photo by Vonecia Carswell on Unsplash