Category Creation for Startup Entrepreneurs: How to stop competing and start creating
Let’s start with a painful truth: most startups never actually start something new.
They enter an existing market.
They build a slightly better product.
And then they drown in a sea of sameness.
That’s not entrepreneurship.
That’s incrementalism with a hoodie.
If you want to build something legendary—not just “fundable”—you have to stop playing the game others designed.
You have to create your own category.
1. The Startup Lie: “Build a Better Product and You’ll Win”
This is the oldest lie in Silicon Valley.
The myth that innovation is all about the product.
But here’s the real problem: better doesn’t win. Different does.
History is littered with companies that had better tech and still lost—because they tried to compete inside someone else’s frame. BlackBerry had the better keyboard. Apple built a better category (the smartphone). MySpace had more users. Facebook built a better category narrative (real identity). Zoom didn’t “out-feature” Webex. It reframed what “simple, reliable video” meant in a hybrid world.
Startups die not because their product sucks. They die because they fail to tell the world what game they’re actually playing.
2. What Category Creation Really Means
Category creation is not marketing spin.
It’s the business discipline of designing the space you own.
It’s what happens when you do three things with legendary precision:
- Frame the problem in a way no one else has.
(You teach the world to see what’s been invisible.) - Name the solution in language people can’t un-hear.
(You coin the phrase that organizes belief.) - Claim the position before anyone else knows it exists.
(You take the high ground while everyone else fights in the valley.)
That’s the magic triangle of category design:
Problem → Solution → POV.
And when you get those three aligned?
You don’t compete for demand. You create it.
3. Why Founders Fail at Category Creation
Because they’re trained to think like engineers, not evangelists.
Founders obsess over what they’re building.
Category designers obsess over what people believe.
The product says, “Here’s what we do.”
The category says, “Here’s why it matters.”
And belief beats features every time.
If your startup is struggling to get traction, the issue isn’t distribution—it’s definition. You haven’t defined the problem clearly enough for the world to care.
You’re trying to win a market instead of making one.
4. Category Design Is a Strategic Weapon
Think of it like this:
- Marketing tells the story.
- Sales converts the believer.
- Category design decides what the story means.
When you define the narrative, you define the economics.
That’s why Salesforce didn’t sell “CRM software.”
They named a new category—“cloud computing.”
That’s why HubSpot didn’t sell “marketing automation.”
They created “inbound marketing.”
That’s why Airbnb didn’t sell “cheap lodging.”
They reframed travel around belonging.
Each of those companies designed a new mental shelf in the minds of their customers. And whoever owns the shelf owns the category.
5. The Founder’s Checklist for Category Creation
If you want to stop blending in and start leading, start here:
- Name the Enemy.
Every category has a villain. What are you fighting against?
(Confusion? Waste? Bureaucracy? Invisibility?) - Design the Language.
What words will you own? If you don’t name it, someone else will—and you’ll lose the conversation. - Declare Your POV.
Don’t describe what you do. Tell the world what you believe.
Great categories start as acts of rebellion. - Concentrate Your Strike.
Don’t spread yourself thin across every marketing channel.
Create a Lightning Strike—a concentrated burst of attention that tips word of mouth in your favor. - Turn Customers Into Superconsumers.
Your early adopters are not “users.” They’re your missionaries.
Make them part of your story. Let them spread your belief faster than your ad budget ever could.
6. Category Creation Is a Leadership Act
Most startups are built to chase.
Category creators are built to lead.
Leadership means you go first.
You take the arrows. You carry the flag.
It’s risky. It’s lonely. It’s uncomfortable.
But it’s also where the leverage lives.
Because when you create the frame, everything inside it bends toward you: Pricing power. Press coverage. Investor interest. Talent magnetism.
The moment you define what matters—others fall into formation around it.
7. How to Know If You’re Building a Category (Not Just a Company)
Ask yourself three questions:
- Do people repeat your language when they describe their world?
If they’re quoting you, you’re shaping belief. - Do your competitors look outdated—even if their product works?
If yes, your POV has changed what “good” means. - Do your customers evangelize you without being asked?
If yes, your narrative is doing the heavy lifting.
That’s category momentum.
It’s the compounding interest of meaning.
8. The Future Belongs to Category Creators
The world doesn’t need more startups.
It needs more founders brave enough to reframe it.
AI is making “better” cheaper.
But “different” will always be priceless.
The founder who builds a new category doesn’t just win market share—they win mindshare. They stop chasing demand and start making it.
So if you’re a startup founder reading this, here’s your call to arms:
Stop tweaking your pitch deck.
Start writing your manifesto.
Stop marketing your product.
Start evangelizing your POV.
The goal isn’t to get people to buy.
The goal is to get people to believe.
Because once they believe—
The buying takes care of itself.
Final Thoughts:
The most dangerous place for a startup isn’t irrelevance—it’s invisibility.
Category creation is how you become seen, heard, and followed.
So go make your dent.
Frame it. Name it. Claim it.
Then light the damn fuse.
Learn more about category creation.
Subscribe to Category Pirates.
What is the number one thing a startup founder can do to ensure a seed stage investment?
Sell category potential.
Investors must believe they are getting in early, in an emerging market category.
Savvy investors seek potential, not performance.
They identify companies leveraging technology to create and dominate new market categories that show promise for significant growth.
Because elite tech investors know two things that others don’t:
First, the category makes the company. There is no such thing as a legendary company (brand) that does not dominate it’s niche.
And second, the technology business is a winner-take-all game, where companies that dominate specific markets in tech, such as Google, Facebook and Salesforce, often gain of 76% of the total value in the category.
“Smart investment choices require understanding the potential size and importance of the market category. We seek mission-driven founders who can build a great company and category at the same time,” Sequoia Capital partner Jim Goetz says.
He should know.
His early investment in WhatsApp turned into the $19 billion transactions heard around the world.
Facebook didn’t just buy WhatsApp’s revenue, technology or its 450 million active users. Facebook wanted WhatsApp’s leading position in a strategic, massively growing new market called mobile messaging. The transaction was reported to be the largest acquisition in venture history.
To gain investments from the greatest startup investors, you must get them to believe that you can create a legendary product, company AND category — while executing to earn 76% of the total value in the space.
Niche Down: Why Legends Are Different
By Christopher Lochhead & Heather Clancy
“There is one thing stronger than all the armies in the world, and that is an idea
whose time has come.”
-Victor Hugo
This comment raises a question: How do I make it “my time?”
Have you noticed? The most legendary people in the world are different.
They are original.
They stand out.
They do not fit in.
And the most legendary companies don’t just make stuff to sell us.
They are not incrementally improving on whatever came before.
They create massive new value by taking an exponential leap.
Here’s how most entrepreneurs think…
Tragically, too many companies seeking to find their place in the world fail to reach that destination.
U.S. government statistics show that roughly 20 percent of all new companies don’t make it through their first year.
Half make it through five years, and only one-third live to celebrate their tenth anniversary.
That’s a scary-high mortality rate.
This happens, in part, because most business owners and entrepreneurs focus on two things:
- Designing what they hope will be a legendary product and
- Designing the company (and business model) to deliver the product.
They launch their new company, product, service or innovation into the world, and they hope the world “gets it.” They subscribe to what might be the biggest single fallacy in business:
“Build it, and they will come.”
That’s a lie.
The common entrepreneur believes his or her product is so awesome that it will speak for itself. When the world hears how much better, faster or cheaper this new product or service is, people will flock to it!
Sometimes, this approach works. Most of the time, it doesn’t.
…and here’s how YOU need to think.
To increase the odds of winning, forward-leaning entrepreneurs are embracing a business discipline called category design.
Category design aims to tease out the intuitive approaches that the world’s greatest innovators use to create new market categories.
In doing so, we establish a replicable approach to designing (or re-imagining) market categories.
Category design is about establishing your own niche by getting people to think about a problem — and its solution — in exactly the way you want them to.
Sheryl O’Loughlin (our guest on episode #071)is the former CEO of Clif Bar who helped create Luna Bar, the first protein bar specifically formulated for women.
Protein bars were an emerging new category at the time, and Sheryl’s team recognized that women wanted something smaller and tastier, with fewer calories and nutrients particularly good for female body chemistry, like folic acid and calcium.
This was a risk: Clif worried that Luna would cannibalize sales of its flagship product. Marketing gurus scoffed at the potential for a snack for gals.
But by tying the product to a cause — the Breast Cancer Fund — and creating packaging that was decidedly more feminine than the competition, Sheryl and company defied the naysayers.
The original product generated sales of $10 million in its first year.
Sheryl is also the category designer behind Plum Organics (now owned by Campbell’s Soup), which pioneered the healthy baby food niche in a convenient, squeezable container.
That concept was a new niche at the time, too.
In each case, Sheryl niched down.
She created a new and different product, company and category.
As result, her companies became category queens, aka the company that dominates a category.
And it takes a certain finesse.
“You’re doing something that no one else has ever tried before, and you need to believe in it in your heart and soul, or else you’re never going to get anyone to come on this epic adventure,” Sheryl shared during our conversation.
“However, that has to be placed in concert with humility. Because humility is about learning. And the best startups are companies that learn.”
History proves that pulling a Niche Down works.
Many of the elements of category design have existed for over a century.
Over time, many of the greatest innovators instinctively knew that the path to success was in teaching the world to think a particular way, not just offering them a product and hoping they’d “get it.”
These legends made sure that the world understood why their businesses and products mattered.
For example, Henry Ford knew that the horseless carriage mattered to more people than just the wealthy.
Before his Model T debuted in 1908, automobiles were primarily a bespoke privilege — made to order for the nouveau riche.
His breakthrough was refining the model of mass production, which in turn allowed him to create and evangelize a new category of affordable transportation.
And Clarence Birdseye had to make the case that frozen food — versus fresh or canned food — solved a problem they didn’t realize they had: finding fresh-tasting vegetables in winter.
Clarence Birdseye realized that vegetables could be flash-frozen, a discovery we’re still eating up today.
Clarence created ads positioning frozen vegetables from Birds Eye as a fresher-tasting alternative to canned ones.
He created refrigerator rail cars so that freight train operators could transport his product.
And he helped grocers invest in freezers to keep the bags frozen.
Once the world agreed with Clarence’s problem, they fired up their horseless carriage, drove to the grocery store and demanded frozen food.
Spanx founder Sara Blakely established “shapeware” as a whole new space and was able to distinguish herself in the mega-crowded undergarment market and build a billion-dollar-plus- valued category king from nothing.
But women didn’t know they needed shapeware before Sarah came along. She had to tell them, with marketing.
And Salesforce.com founder Marc Benioff used his “no software” point of view to educate enterprise software buyers about the evils of “on-premise” software and the virtues of a new category called “cloud computing.”
They didn’t know how much they despised on-premise hassles… until Marc told them about another way.
This is how new niches get created. And the company who designs the niche is best positioned to dominate it.
And you can apply category design to any industry.
The greatest innovators and entrepreneurs are category designers who do three things:
- Design a legendary product.
- Design a company (and business model).
- Design (or redesign) a market category.
Category design involves creating a great product, a great company and a great category at the same time.
It is a broad, deep discipline that impacts every part of a company and its leadership team.
Category design is a strategy for aligning the whole company to become the leader in a giant new space that you’re the creator of.
Category design is about being original. Become known for a niche that you own.
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Christopher Lochhead is Host the hit “dialogue podcast” Legends & Losers and Co-Author of #1 Amazon Bestseller Niche Down: How To Become Legendary By Being Different and Harper Collins’ “instant classic” Play Bigger: How Pirates, Dreamers and Innovators Create and Dominate Markets.
Follow him on twitter.
Heather Clancy is an award-winning journalist specializing in coverage of transformative technology and innovation. She’s the editorial director for GreenBiz.com, and her work has appeared in Entrepreneur, Fortune, The International Herald Tribune and The New York Times.
Heather is CoAuthor of the #1 Amazon Bestseller “Niche Down: How to become legendary by being different.” See more of her work on her blog, Twitter and Facebook.
