4 guests 4 episodes 2,389 words

The Question

Should you create a new category or position in an existing one?

Should you invest in creating a new market category (defining the game), or should you position brilliantly within an existing one (winning the game)?

The 4 Positions

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Create Your Own Category -- Nobody Legendary Competed in Someone Else's

Christopher Lochhead

Christopher Lochhead -- a 13-time bestselling co-author of Play Bigger and Niche Down, co-creator of Category Pirates, advisor to 50+ venture-backed startups, and former three-time public company CMO -- is the most prolific advocate for category creation. His argument is economic, not just philosophical. Category kings and queens capture a disproportionate share of total market value.

"Do I want to compete for 24% of an existing market category? Or do I want to create my own where if I can execute, I will earn two-thirds of the economics? That's the decision that most entrepreneurs make, that they don't know that they made."
Christopher Lochhead
▶ 00:20:49

"Nobody legendary ever did that. Not a one. We all know who Bob Marley is. We don't know who the 17th greatest reggae musician or band in the world is."
Christopher Lochhead
▶ 00:13:53

Lochhead's framework treats category creation as a design discipline -- not just naming, but deliberately shaping how the market thinks about a problem space. His three-step process is: frame it (define the problem in a new way), name it (create the language for the category), claim it (become synonymous with the solution). He introduces the concept of "languaging" -- the strategic use of language to change thinking:

"There's something in category design called languaging, which is the strategic use of language to change thinking. And a mistake that a lot of entrepreneurs make is they use old language to describe their new thing."
Christopher Lochhead
▶ 00:49:09

Lochhead's 76% statistic is powerful but requires context. It measures the eventual distribution of economics in mature categories. In the early years of a new category, there are no economics to distribute -- just education costs, market confusion, and missionary selling. Purell created the hand sanitizer category by framing the question "How do I wash my hands in the absence of water?" -- but the market for smart home composters when a company like Lomi launched was, as Lochhead put it, "fucking zero." Category creation is an investment with a long payoff horizon. Companies that lack the patience and resources to educate a market for years before capturing value will burn through capital before the category materializes.

When This Applies

(Netflix vs. Blockbuster, Amazon vs. brick-and-mortar): Counter-position using Helmer's framework. The category creation is a strategic consequence, not a marketing initiative.

Position Brilliantly First -- Most Companies Have Positioning Problems, Not Category Problems

April Dunford

April Dunford -- bestselling author of Obviously Awesome (widely considered the definitive book on product positioning), former VP Marketing at seven B2B startups (six acquired), and consultant to over 200 companies -- offers the sharpest counterargument. Most companies jumping to category creation are doing so because they cannot answer basic positioning questions.

"Positioning defines how your product is the best in the world, delivering some value that a well-defined set of companies care a lot about."
April Dunford
▶ 00:11:30

Dunford's five-step positioning process -- competitive alternatives, unique attributes, value, best-fit customers, market category -- forces clarity before ambition. The market category step comes last, not first. You might discover that your best positioning puts you in an existing category where you can win immediately, rather than a new one that requires years of market education.

In her guest post on Lenny's newsletter -- still one of the most popular posts of all time -- Dunford explicitly warns against premature category creation. She calls it Trap 3: "assuming that you have to create a new market category to grow." Her empirical insight from 200+ engagements is that most "failed category creation" attempts are actually failed positioning attempts in disguise. The company could not articulate its value in an existing category, so it tried to create a new one where it would not have to compete. That is not category creation. That is avoidance.

As Lenny's newsletter on differentiation reinforces, drawing on Michael Porter: "Competing to be unique is ultimately more sustainable than competing to be the best." But the path to uniqueness does not require creating a new category -- it requires understanding where you are genuinely different and positioning yourself where that difference matters most.

When This Applies

(Dunford's 200+ client engagements): Position in the existing category. Work through Dunford's five steps -- competitive alternatives first, market category last. Do not waste years on category creation when you can win now.

Counter-Positioning Is Category Creation with Strategic Teeth

Hamilton Helmer

Hamilton Helmer -- author of 7 Powers (credited by Patrick Collison, Peter Thiel, Reed Hastings, and Daniel Ek as foundational to their strategic thinking) and founder of Strategy Capital -- reframes the entire debate through the lens of structural advantage.

"Almost every startup that you want to deal with starts with counter positioning because remember what product market fit is primarily is a substitution. You are coming up with a way to satisfy a more or less existing need in a novel way that creates more value."
Hamilton Helmer
▶ 00:18:13

"If you don't have counter positioning at that point you're pretty high risk from an incumbent who already has the capabilities necessary to do that. They just have to extend their product or do this or that, but counter positioning is the refuge from that."
Hamilton Helmer
▶ 00:19:19

Helmer's insight resolves the Lochhead-Dunford tension. The question is not "should I create a category or position in one?" It is "can I build something that incumbents structurally cannot copy?" If yes, you have counter-positioning -- and the category will emerge as a consequence. If no, you are competing on operational excellence, which Helmer explicitly dismisses:

"You're on a treadmill and if you stop running on that treadmill, you get creamed, but it's not power. The things that drive operational excellence can be mimicked."
Hamilton Helmer
▶ 00:00:20

Netflix did not just create the "streaming" category. It counter-positioned against Blockbuster with a model Blockbuster could not copy without cannibalizing its store revenue and late fees. Then it layered on scale economies -- spreading the fixed cost of content (roughly 50% of cost structure) across more subscribers than any competitor could match. The category creation was a consequence of the strategic positioning, not the cause.

When This Applies

(Gong, Zuora): Lead with Raskin's narrative approach. Frame the world shift from the old game to the new game. Let the category emerge from the story. Investors and employees want to join a movement, not evaluate a vendor.

Frame the Narrative Around a World Shift -- Let the Category Emerge

Andy Raskin

Andy Raskin -- strategic narrative consultant whose blog post "The Greatest Sales Deck I've Ever Seen" (about Zuora) became one of the most shared articles in startup strategy, and who has worked with companies including Gong on their core narratives -- offers the most practical unifying approach.

"The way I learned how to pitch in business school, and I think the way most people did is what I call the arrogant doctor. So you have a problem, a pain, I have a solution, a treatment, and I'm going to tell you why it's better than all the other treatments."
Andy Raskin
▶ 00:00:00

"Every movie starts with some kind of shift in the world, and I call this shift the shift from the old game to a new game. The archetypal example of this, I think in the business world, is what Benioff did with Salesforce."
Andy Raskin
▶ 00:00:00

Raskin's framework replaces both "what category should we create?" and "how should we position?" with a different starting question: what shift in the world makes our approach inevitable? When Salesforce declared that software was over and the cloud was the new game, that was category creation -- but it felt like naming an undeniable change. When Zuora (founded by Salesforce employee #11, Tien Tzuo) declared the shift from transactions to the "subscription economy," the category of subscription management became self-evident. When Gong declared the shift from "opinions" to "reality" in sales management, their category emerged naturally.

"This structure really is about defining a movement, and that's very different from, 'Hey, I'm going to solve your problem.'"
Andy Raskin
▶ 00:00:00

When This Applies

(Salesforce, Purell, Zuora): Create the category. Use Lochhead's frame-it-name-it-claim-it discipline. But validate the problem with early adopters first, not just with your own conviction.

Evidence from the Archive

Category Pirates / Play Bigger

Otis: became the category queen of elevators by reframing the problem, not just building a better product

Purell: created the 'hand sanitizer' category by framing the question 'How do I wash my hands in the absence of water?'

Christopher Lochhead · Author, Category Design Expert, former three-time public company CMO ▶ 00:20:49

Strategy Capital

Google vs. Yahoo: product-market fit as substitution, satisfying the search need in a fundamentally novel way

Netflix vs. Blockbuster: Netflix's streaming model counter-positioned against Blockbuster's store-based model -- Blockbuster could not cannibalize store revenue and late fees to respond

Hamilton Helmer · Author of 7 Powers, strategy advisor ▶ 00:18:13

Independent Consultant (strategic narrative)

Salesforce: Benioff declared 'software is over' and the cloud is the new game -- the 'no software' narrative created...

Salesforce: Benioff declared 'software is over' and the cloud is the new game -- the 'no software' narrative created the cloud CRM category

Andy Raskin · Strategic Narrative Expert

Independent Consultant (formerly seven B2B startups)

Dunford's own career: repositioned a failed 'Microsoft Access killer' (200 copies sold) as an 'embeddable SQL...

Dunford's own career: repositioned a failed 'Microsoft Access killer' (200 copies sold) as an 'embeddable SQL database' -- same product, different positioning, massive success

April Dunford · Positioning Expert, Author of Obviously Awesome and Sales Pitch ▶ 00:11:30

The Synthesis

The category-creation-vs-positioning debate has a hidden variable that determines the right answer: whether your innovation is in the problem or the solution.

Problem vs. Solution Innovation

When should you create a category versus position in an existing one?

Counter-Positioning Gate

What structural condition must exist for category creation to pay off?

Technology Discontinuity Window

Why is category creation most effective during technology shifts?

If you have identified a genuinely new problem or reframed an existing problem in a way no one has before, category creation is the right move. If you have built a better solution to a well-understood problem, positioning in an existing category is almost always better.

If incumbents cannot respond to your approach without cannibalizing their own business, invest in category creation -- you have counter-positioning and the category will become your moat. If incumbents can simply copy your feature, position within the existing category and win on execution.

Category creation has historically been most effective during technology discontinuities when market rules are being rewritten. The current AI discontinuity is creating similar opportunities, but winners will identify genuinely new problems AI makes solvable -- not just rebrand existing products as AI-powered.

Which Approach Fits You?

Answer 3 questions about your situation. We'll match you to the right approach.

Question 1

Is your innovation in the problem or the solution?

Question 2

What are your resources for market education?

Question 3

Can incumbents easily respond to your approach?

Notable Absences

The Bottom Line

There is also a timing dimension the evidence reveals. Category creation has historically been most effective during technology discontinuities -- moments when the rules of a market are being rewritten. Salesforce launched during the shift to cloud. Netflix launched during the shift to digital delivery. The current AI discontinuity is creating similar category creation opportunities. But the companies that succeed will not be the ones who simply rebrand existing products as "AI-powered." They will be the ones who identify genuinely new problems that AI makes solvable for the first time -- and frame those problems in a way that makes the category feel inevitable.

The conditional, courtesy of Helmer: **if incumbents cannot respond to your approach without cannibalizing their own business, invest in category creation.** You have counter-positioning, and the category will become your moat. **If incumbents can simply copy your feature, position within the existing category and win on execution.** Category creation without counter-positioning is just expensive marketing with no structural advantage.

Sources

Christopher Lochhead — "How to become a category pirate" — Sep 17, 2023
April Dunford — "A step-by-step guide to crafting a sales pitch that wins" — Jun 9, 2022
Hamilton Helmer — "Business strategy with Hamilton Helmer (author of 7 Powers)" — May 5, 2024
Andy Raskin — "The power of strategic narrative" — May 28, 2023