April 14, 2012

Startup Success Step #14

Grab that category.

We often talk about owning a category, a very desirable if ambitious goal for a startup, particularly if you can create a Blue Ocean category where you are the only participant.

More often, your startup will resemble other alternatives in an existing category. So the relevant question becomes, if you can’t own the category, do you at least have the opportunity to be number one or number two?

Remember the GE rule of thumb for its subsidiaries: if you’re number one in your category, we’ll support you; if you’re number two, we’ll help you advance to become number one; if you’re number three, we’ll sell you.

Assuming you’re not setting sail on that blue ocean, you still have two paths to winning in your category. First, if you have plenty of capital for messaging, you can sometimes sweep into a leading position by moving aggressively to grab as much market share as possible before competitors have the opportunity to imitate. They will react furiously, of course, making your best protection a loyal audience, a substantial installed user base of people persuaded by your brand narrative.

The second path to being perceived as the leader of your category is – to change the category. You must have a credible differentiation, naturally, so that you can say, “we’re not a law firm, we’re the first law firm that …” or “we’re not a social media site, we’re the only site that combines …” or “ordinary chicken sandwiches lack pizzazz, but our gluten-free sourdough ….”

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