No one ignores phone calls at 9:00 p.m. on a Sunday.

That’s what I thought, anyway, driving up the I-5 from Los Angeles to San Francisco. The name displayed on the phone (now on its second ring) was Nick Mehta, my former CEO who almost never called—certainly not this late and not this out of the blue. Before the third ring, I played the entire conversation through in my head. Having sold our last company to Symantec, perhaps Nick figured out the next chapter of his career and would offer me an opportunity to join him. Before the fourth ring, I knew I would say yes to this hypothetical job offer should it be extended, even before hello—that’s just the caliber of leader in Nick Mehta.

Looking back, I sure am glad I picked up.

■ ■ ■

Maybe you can relate to my position in that story—getting the phone call for the career opportunity that could, just maybe, change your life. Perhaps as an entrepreneur or executive, you can relate to making the call and closing that dream candidate. From either point of view, something about that moment transcends our professional lives and makes an impression deep within our humanity—the prospect of being part of something great, leaving a dent in the universe, and maybe creating some personal wealth along the way.

The energy behind original ideas is electrifying. You find that you’re spending hours of time (maybe even your free time) infatuated with the problem that you’re looking to solve in the market, researching the competitive landscape, and filling your iPhone Notes app with ideas to bring your concept to life. But the deeper you delve into your research, you begin to make a few observations that are different about this concept relative to others you’ve had in the past:

• There are no (or very few) competitors in the space. That’s ok though, right? You’ve discovered how to solve a complex problem before others have.
• There are no analysts or media covering the space. If you squint your eyes, one of those 2x2 quadrants could make sense for your concept, but doesn’t really paint the full picture of the vision.
• There exists a small and early cohort of people who believe deeply in the idea. Well that’s reassuring—but why isn’t any company paying attention to them in a meaningful way?

Your excitement turns into curiosity as you turn to Google in search of best practices on how to position the company given these nuances. Clearly someone must have done this before! However, your curiosity quickly becomes a moment of panic as you realize that you are floating alone in a vast blue ocean on a pool float—that while there are some examples of companies that have done this before, there is no universally accepted playbook for how to launch your marketing strategy without a market to launch into. My friends, you may be in a position to create a category.

I’m here to say that this book is written for you, and that no, you’re not alone on your journey. As the founding chief marketing officer at Gainsight, I found myself in the exact situation that you’re in right now. My team and I have spoken to (literally) thousands of companies on our journey in building the Customer Success category, and the recurring theme from those conversations is that we are indeed in uncharted territory and are all figuring this out together. There’s comfort in that camaraderie, but I felt that it was important to capture everything that we as an industry have learned to date on paper to help empower the next generation of marketers, founders, and executives to learn from our stories—the good, the bad, and everything in between. The result is the very book that you’re holding right now, the first and only playbook on category creation written by operators for operators.

Category creation has become one of the hottest topics in marketing, and for good reason, as there’s no strategy quite like it that can result in both commanding market leadership for the company on top, and incredible personal fulfillment for customers, employees, and investors who are along for the journey. In a world where private enterprise can often be mischaracterized as an at-all-cost pursuit of profit, category creation seeks to reinforce a belief that companies can both win at business while also being human first. Customers of category creators benefit from a company in the marketplace seeking to help them solve complex problems, get promoted, and self-actualize in their own lives and career journeys. Employees at category creators have a unique opportunity to unleash their creativity in the workplace, participate in an incredible corporate culture, and launch a movement behind a new product or service. Investors of category creators are typically in it for the long game, as the market will reward companies able to create and dominate new categories exponentially more than traditional disruptors.

The playbook I’ve compiled in this book will be primarily influenced by a business-to-business (B2B) perspective; however the tactics and strategies discussed will have broad application in the business-to-consumer (B2C) context as well. One of the main reasons for this approach is a deep belief I have that the B2B and B2C worlds are in fact merging, ushering in a new era for business that’s focused on marketing, selling, and supporting the humans behind the logos that we target—otherwise known as business-to-human (B2H). I’ll go into more detail on B2H in the next chapter and on how brand has moved from a deprioritized expense and distraction from growth in most businesses to becoming the heart of their business strategy.

The good news is that anyone can participate in category creation—even companies that are in their infancy or are in the early innings of bringing a product to market. While developing a 10x product is an incredible advantage (see Slack, Uber, or Airbnb as examples), it’s not a prerequisite. Category creation will typically be a marketing-led exercise focused on an exciting new approach to brand positioning, content marketing, community building, and several other levers that we’ll explore in detail. With that being the case, I wrote this book with two specific audiences in mind:

• Startup Marketers or Founders in High Tech Interested in Creating a Category. Whether or not you live in Silicon Valley, or at least subscribe to the belief that software is eating the world, you can appreciate the unique opportunity for startups to create a better future. You may be a founder or entrepreneur with a “change the world” idea that seems bigger than a single company, but the beginnings of an entirely new industry. You may be a marketer who joined a hot startup and are tasked with building a strategy to articulate your founding team’s vision. This book will help shape your thinking and offer practical strategies that you can leverage to launch your company and product into a brand new market category, rather than disrupt an existing one.
• Enterprise Marketers or Executives Operating in Commoditized Markets. The natural course for products in established markets is toward commoditization. Consider the file sharing industry as an example: if you need to store a file online to send to a friend or colleague, there are currently 285 file storage and sharing vendors (according to G2) available to choose from. That’s a great thing for consumers; however, what’s good for customers is not always good for vendors operating in crowded markets. Marketers or executives tasked with standing out in these industries may consider building, buying, or partnering their way into new product categories to expand their positioning and break away from the noise. Whether category creation is an option for this audience or not, the underlying tactics behind the strategy will give enterprise marketers the tools they need to differentiate their brands in the marketplace by focusing on the humans behind the campaigns they’re driving.

Whichever camp you may be in, or even if you’re someone entirely different who’s interested in learning, the lessons and case studies we’ll explore in this book will radically challenge conventional wisdom on how to win in business by taking the road less traveled. But before we get any further, let’s define what we mean by category creation and set some context on the emerging business practice.

What Is Category Creation?

Category creation is a business strategy that focuses on positioning and evangelizing a brand new problem observed in the marketplace, in addition to the solution for that very problem. The output is an entirely new industry of products and services—distinct and differentiated from anything that had ever come before—with a single “category defining” company positioned as the winner in the new market. Category creation will typically refer to market categories that are aligned to a company’s master brand, but for established companies, there are also cases of creating product categories that are aligned to a specific business unit or product line. Marketing’s job in both cases, which we’ll dive into at a tactical level throughout the book, will be to start and grow a conversation that doesn’t yet exist—a much harder strategy that requires creativity, conviction, and a whole lot of patience.

There’s been renewed excitement about category creation in recent years—likely due to the accelerating pace of commoditization in technology—although companies have been creating categories since the beginning of industry. Table 1.1 showcases just a few examples of new categories and which companies are widely identified as their creators (although in some cases there may be debate).

One of the best examples of category creation in B2B is HubSpot, who in 2005 observed that the way consumers were interacting with marketing was fundamentally changing. Customers were increasingly doing research online to choose companies and products that would meet their needs, while outbound marketing tactics like cold calls had become interruptive and less effective. HubSpot had also been operating adjacent to two somewhat established categories—CRM with Salesforce as the incumbent, and Marketing Automation with the likes of Eloqua, Silverpop, and Infusionsoft.

The early team at HubSpot could very well have taken a challenger position against any one of the vendors within these existing categories, but made a historic decision to think about the problem in a different way. In 2009, co-founders Brian Halligan and Dharmesh Shah coined the term Inbound Marketing by publishing the category-defining book of the same name. The positioning was an instant hit with HubSpot’s early and loyal community of customers and agency partners, but it took years (and a lot of evangelism) for the market at large to make the cognitive reference of Inbound Marketing as a proven category. One of the tactics that HubSpot deployed to win both the hearts and minds of the community was to create a catalyzing and compelling event now known as INBOUND to bring the industry together. This conference (which today hosts more than 24,000 attendees) has become the annual destination for the category, and a powerful platform for HubSpot to educate and empower everyone in the company and community on how to be great at Inbound Marketing. Ten years later, HubSpot is now worth over $6.6B, with 56,500 customers in over 100 countries around the world. It pays to be the category winner, but I’ll get to that in a second.

Another way to define category creation is by setting context for what it is not. For years, Silicon Valley has been obsessed with the word disruption. The term shows up in pitch decks, conference brands, even in job titles. There’s no better source for understanding disruptive technologies than Clayton Christensen’s iconic bestseller, The Innovator’s Dilemma. “Disruptive technologies bring to market a very different value proposition than had been available previously. Products based on disruptive technologies are typically cheaper, simpler, smaller, and, frequently, more convenient to use” (Christensen, 2000, p. xv). A disruption-based business strategy is antithetical to a category creation strategy, as it will typically identify an incumbent vendor in the marketplace and position a “better mousetrap” solution to the problem they solve. There are many proven best practices, books, and blogs written on how to run that play.

Disruptors will typically take a challenger position against an incumbent industry leader in order to challenge their market share. We see disruption everywhere—whether that’s Zoom challenging video conference vendors such as Cisco WebEx and Citrix GoToMeeting, Box challenging establishment content management vendors such as Microsoft SharePoint and OpenText Documentum, or Salesforce’s Quip challenging traditional document vendors such as Google Docs and the Microsoft Office suite.

On the other hand, category creation typically has no incumbent vendor in the market, and no single company articulating the problem in a way that’s currently addressable by a product. The value proposition is not just different, it’s brand new. So how can you tell whether to bet on a category disruption or category creation strategy? It all starts with the problem that you want to solve.

How to Tell Whether You’re Creating a Category

The truth is that most entrepreneurs, executives, and marketers don’t set out to create a category from the onset, but rather, see patterns in the journey of planning the business that signal there’s a category to be created. These signals are observations of a unique problem in the market that no one is paying attention to in a meaningful way. It’s important to note that identifying unmet need is merely the first signal of category creation (albeit an important one). Further research may suggest an entire industry already exists that’s attempting to solve the problem you’ve identified. Table 1.2 will serve as a useful framework for understanding the six signals of category creation to determine if it’s the right strategy for your business.

If the above points resonate—even a few—then category creation may be a winning strategy for your business. However, the checklist in Table 1.2 seems anything but optimistic, right? Could there really be opportunity on the other end of those signals, and if so, why not run a disruption marketing playbook instead? Doesn’t that seem easier? The answer is an unquestionable yes; however, there’s a bigger prize waiting for companies able to create and dominate new markets.

Why Create a Category?

Creating a category is a worthy challenge in and of itself, but in reality, the true value belongs to the company able to go on and dominate the category that they’ve built. However, not every category creator is the category winner—sometimes the company that creates the category is upended by a fast follower who runs away with the market. In fact, there are several cautionary tales of category creators who ended up losing control of the markets they created—let’s take a look at a few examples.

Do you remember the Altair 8800? This microcomputer was designed in 1974 and is widely recognized as the spark that ignited the microcomputer revolution as the first commercially successful personal computer. Its parent company MITS had virtually no competition in 1975, that is, until Steve Jobs and Steve Wozniak sold the Apple I one year later and introduced the world to the personal computer and ran away with the category as we know it today.

Do you remember the Rio PMP300? This device was one of the first portable consumer MP3 digital audio players, and certainly the first commercially successful one. The Rio was first introduced in 1998 by Diamond Multimedia and had the capability to hold approximately 10 songs at a bitrate of 128 kbit/s. Less than three years later, Apple was back as a fast follower and introduced the iPod, a revolutionary portable consumer MP3 player that could play 1000 songs (10x the capability of the Rio PMP300) at an even better bitrate.

How about search engines? Before “Google” became a verb and back when “Alexa” was just a name, the early 1990s sparked innovation in web search engine with services like Archie, Veronica, and Jughead. By the late 1990s, five players had emerged as leaders in the gold rush of commercialized online search, including Yahoo!, Magellan, Lycos, Infoseek, and Excite. The Search Engine category was one of the brightest stars of the IPO frenzy of the late 1990s, with many winners emerging in the space. That was until 2000, when a relatively unknown fast follower called Google introduced an iterative algorithm technology called PageRank that was able to accurately measure the importance of web pages. Today, Google Search is the most used search engine on the World Wide Web across all platforms, with 92.92% market share as of February 2019,¹ handling more than 3.5 billion searches each day. Sorry, Archie.

We’ve established that creating a category doesn’t necessarily mean dominating the category—so why take on the challenge at all? The truth is that companies who are able to successfully do both realize faster growth, higher valuations, and dominant market leadership positions. According to Harvard Business Review, companies that were instrumental in creating their categories accounted for 53% of incremental revenue growth and 74% of incremental market capitalization growth² than their peer set. For startups creating categories, the value of dominating a market while scaling can lead to operational benefits as well. Nakul Mandan, Partner at Lightspeed Venture Partners said that “if you establish early leadership in a category, you have more access to funding, more resources to attract the best product, engineering, sales and marketing talent, and as a result, you will have a better chance of winning more market share over time. Accordingly, the perception of leadership definitely gets you a higher valuation multiple than your competitors.”³ From our experience at Gainsight, Nakul is absolutely right. I wish I could tell you that creating the Customer Success category was our intention all along—but that wouldn’t be the real story.

Creating the Customer Success Category

No one sets out to create a category from day one—there are a series of observations that can signal that you and your company may already be on the journey.

That’s what happened to me back in 2013, when I answered Nick Mehta’s phone call late that Sunday night on I-5. Nick had just agreed to join a company called JBara Software as CEO, a company based in both St. Louis, Missouri, and Hyderabad, India, with about a dozen employees split between the two offices. Although the beginnings were humble, Nick resonated deeply with the vision for JBara painted by co-founders Jim Eberlin and Sreedhar Peddineni—that as more and more technology businesses have started selling through subscriptions, instead of regular, packaged software, companies have to focus more on keeping and growing customers over time, and not just acquiring new ones. The company had developed a SaaS product to operationalize that process across the business and had won over a handful of early adopters.

I joined about one month later as the founding “head of marketing,” although title didn’t really mean much when there were only a few of us at the company. My background was primarily in business development and product management, having been an early employee at Box in 2009 and leading a product team at security titan Symantec. Whether I intended to or not, I brought with me a healthy degree of first principles thinking as to how we would achieve our ambition for JBara. Eager to make an early impact, I got to work, sharing a desk with Nick at our Regus office space in San Jose.

One of our first acts as a team was to reach out to tier-one industry analysts to get some feedback on how the “experts” viewed our opportunity. We gave them demos of our product, organized briefings with our customers, and shared with them our vision for managing customers in a subscription world. When the firms shared their perspectives with us, we were surprised to see that they had completely misunderstood our vision—or at least didn’t agree with the way we viewed our opportunity. Instead, they recommended we align JBara’s positioning to their research disciplines—had we followed their advice, we would have taken a challenger position in categories such as:

• Customer Support. Typically defined as the group that does “break/fix” and often characterized as always-on-call and the people behind the 800 number. That’s all well and good, but it doesn’t necessarily help your customer or internal folks to whom this doesn’t matter. Not to mention the dominant positions that Zendesk and Salesforce Service Cloud play in this existing category.
• Customer Relationship Management (CRM). CRM tools are typically recognized as solutions that impact customer acquisition—helping companies close new business rather than the renewals and expansion revenue outcomes that we help drive. Forget for a moment that Salesforce leads the pack of (literally) hundreds of vendors in the $120B market.
• Recurring Revenue Management (RRM). Aligned to enterprise resource planning (ERP), configure-price-quote (CPQ), and billing systems with the intention of capturing the entire workflow from creating a quote to recognizing the revenue. Sure, there’s a positioning opportunity here for JBara, but our vision was more focused on the customer than on the business model itself.

None of those options felt right. We recognized, however, that one of the early users of the JBara platform was a persona with the job title of Customer Success Managers (CSMs)—a role created (and named) by Marc Benioff and the team at Salesforce almost 15 years ago. The role had been slowly picking up momentum in the eight years before Nick and I joined JBara, and those in the young community were filled with passion and energy when gathered together. We observed that digitally in an active LinkedIn group where CSMs would look to each other for peer-to-peer advice and best practices on business challenges. We observed that in person attending monthly meetups in various office parks around Silicon Valley.

This was a group who, at the time, was rather under-resourced and perhaps maybe even a little under-appreciated across the organization. They yearned to connect with each other, learn from each other’s experiences, and develop a common language for how to do the job of Customer Success.

We recognized that there was clearly something here we couldn’t ignore—an intuition that flew in the face of what the analyst community was telling us, but felt authentic to our interpretation of the problem in the market. This group of Customer Success Managers understood more than anyone else the devastating impact that churn could have on a subscription business—their careers literally depended on preventing it! We knew we had found our tribe, and by championing their success and making them feel like heroes, perhaps we could build a great company along the way.

So we rebranded the company from JBara Software to Gainsight, and decided that we would devote our marketing energy to spreading broad awareness that churn was the massive problem for subscription businesses that no one was talking about, that Customer Success was the business discipline with the charter to own it, and Gainsight was the technology platform to operationalize it. We made an early bet to focus less on positioning our solution, but to put forth more effort to advance the interests of the Customer Success profession by facilitating the exchange of best practices, building community, and ultimately creating industry around the profession that Salesforce is credited with establishing. Fast forward six and a half years later, Gainsight has become one of the fastest growing private companies in high tech, and LinkedIn has recognized Customer Success Managers as one of the most promising jobs in the United States for the second year in a row.⁴

It wasn’t until about halfway into our journey at Gainsight that we recognized we had been creating a category all along. We started to see our name listed alongside companies like HubSpot, Marketo, Salesforce and Slack. We were asked to speak at conferences, sales kick-offs, meetups, and events all on the topic of category creation. We were humbled that entrepreneurs, marketers, and investors were interested in hearing our story, but also recognized that this hunger for best practices around category creation was a signal all its own. Nobody had written the playbook for how to create a category—so we figured we would document our learning, interview some of the most innovative category creators that we know, and empower the next set of entrepreneurs, marketers, and executives to take the road less traveled.

I appreciate that as you read this, the concept of creating a category doesn’t feel very easy—in fact, maybe it’s even more intimidating now that you have more context. Despite that feeling, I want to encourage you to take the leap. Beyond any and all quantitative measures of success—financial or otherwise—there is undoubtedly a higher calling of category creation for customers in the community and employees who are enrolled in the mission. Solving a problem in the world is so much bigger than just selling stuff—it creates opportunity on a global scale, reduces complexity, and impacts lives whether directly or indirectly. You would be hard pressed to find a deeper sense of fulfillment for the individuals who are contributing to category leadership and culture within a company, or are the beneficiaries of that value creation within the community. Unlike any other marketing strategy, creating a category often feels like starting a movement, as you’ll typically find a strong emotive component deep within its fabric.

At the heart of category creation are people—real humans who don’t turn their humanity off when they show up to work every day. Understanding how to authentically build a brand that taps into the humanity of your market is a critical (and often misunderstood) part of the journey, and one that in a business-to-human (B2H) context will make all the difference between good and great companies. If you’re going to learn how to create a category, the first thing you’ll have to understand is why brand matters again.