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Why Categories are Entrepreneur’s Best Friend

Category Design Image

Hand drawing geometry to categorize on chalkboard

Entrepreneurship and innovation go hand in hand with category definitions. To find out why, let’s start with a quick question:

What do ALL products have in common?

The answer is quite simple; whether it’s Slack, Milo or a Land Rover, every product on earth belongs to a specific category: a communication app, a cereal or an SUV. It’s always a part of something bigger.

Why?

Because that’s how our brain works. We classify things and keep them in order.

We mentally tag everything so we can think, recall and react faster. We have an entire filing system that’s always on, categorising everything for us.

Just think of yourself going to the supermarket with a shopping list. How would you usually orient yourself? by isles, or to put it in other words, categories of groceries: frozen food, dairy, confectionery, etc. Without this order and organisation, we humans would be lost in a world full of information like the one we live in.

What does this have to do with entrepreneurship?

Well, entrepreneurship is all about innovation, and innovative ideas can be hard to understand. 

How do you explain something that doesn’t exist without getting into a 30-minute pitch or a demo? If you’re like most founders, that’s exactly where you struggle.

But here’s the thing – Innovation, by definition, builds new categories – the idea for a new product/service often yields a whole new category, and when you help people categorise something, it’s easier (and quicker) for them to understand it whether they are your clients, partners and/or investors.

Explaining the concept of getting into a stranger’s car and paying them to take you somewhere was hard to grapple on its own, but we all got it pretty quickly when it was introduced under the category of ‘ride-hailing’. 

We all knew we wanted only the right type of customers come flowing through our doors, and we all thought we’re working towards that goal with our wide-spread generally-messaged campaigns. It’s only when the concept of “inbound marketing” was introduced (thanks HubSpot) that we realised we need to use specific methods to attract specific clients even though we already knew quite a bit about personalization and about the power of marketing CRM. We needed someone to coin it for us, to put a framework around it and to give us a safe way to approach it. When it’s categorised, it seems to be bigger, better and much more reliable.

Is ‘Category’ really that important?

No, unless of course you want to be able to dominate ~76% of your market cap, easily get more money from investors, or differentiate yourself and build a memorable brand with a loyal customer base.

There are a lot of benefits for coining a new category, but trust us when we say that life gets a lot easier for startups when it’s simple to understand what they’re doing, the environment they operate in, and how they do things differently (and not just better).

We’ve personally seen a B2B tech startup goes from 0/70 meetings conversion rate to people coming up to them in conferences asking to talk because their solution sounded very interesting on their website.  We also witnessed a growth of 350% in sales for an AgTech startup when the founders just got it right.

Often, the player who leads the category (the category king) even gets to have the brand name as the generic name of the whole category, like Rimmel and Jeep.

It’s a magic sauce, one you should consider adding to your go-to-market recipe as soon as possible. 

To build or not to build, that is the question?

Hopefully, by now, we were able to establish the fact that every entrepreneur needs a category to cling to so they can improve their chances at success. The question is, should this be a new one or can you stick to existing ones?

There are a few indications that will help you determine/identify if indeed you should create and design a new category.

In short, if what you’re doing is so different that you can’t explain it; if people keep comparing you to companies that might have some of the features you have but the problem you solve is much bigger; if you simply don’t want to be associated with your category because it has so many negative sentiments (think home loans…), or even if there are already a few of you out there but the category wasn’t created yet, it’s on you to design a new category – one that can explain what you do and talk to the pain points in max. 3-4 words (and no, saying you’re “the uber of…” doesn’t cut it).

Not sure where to start or if you even need to design your own category?  Let’s talk. Free 1 hour consultation on us!
Book yours here.

Yifat Shirben
Yifat Shirben
Yifat Shirben is an entrepreneurial marketer, with over a decade of international experience in marketing, branding, PR and business development within the innovation and entrepreneurial environment. As a former start-up founder herself, Yifat has developed a unique consumer-driven methodology to analyse and allow cost-effective, tailored made marketing strategies and solutions for start-ups and entrepreneurs. Yifat is also a director at Jayride (ASX:JAY)

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