chapter 6
create the category

The dream for a business is to operate as a monopoly. If you operate as a monopoly within a category that enjoys healthy consumer awareness and demand, the business will thrive. One of the founders of PayPal, Peter Thiel, outlines this aspiration in Zero to One. The theme of the book (and the author's life) is that entrepreneurs should attempt to create an entirely new category rather than compete with an existing brand in a category. It should go from zero to one. If you are the one, you have created a category of one.

The ability to create a new category is rare, but the benefits are enormous. If you ever find yourself in this position, you need to ride it hard and fast because, without a doubt, competitors will come along and breathe down your neck. Let me describe the experience of my mate and former colleague, Rob Perkins, who managed to achieve this feat.

Making sex better

Before he became a Silicon Valley multimillionaire, Rob Perkins worked for me at Naked Communications. Rob is highly charismatic, creative and curious. Before becoming an entrepreneur, he produced some of the world's best-known and most successful advertising campaigns. Rob loves ideas, has a passion for pushing boundaries and is always willing to intellectually go where others do not. This predisposition may have been encouraged in childhood; he is the son of a psychiatrist, as it happens. Rob reckons interesting people have generally been in therapy. It means they're more comfortable talking about uncomfortable subjects.

One of Rob's observations was around sex and the degradation resulting from porn culture. Porn used to consist of a Playboy centrefold passed around the schoolyard, but now there's a cornucopia of content a click away on the internet. The volume of porn has exploded. Unfortunately for young people, pornography is used as a surrogate sex educator. Many believe their partners will want sex in the way it's depicted in porn. Most partners don't.

Rob observed that sex education hasn't kept up with modern mores and is rather embarrassing and irrelevant. Because it's taught in a classroom, an in-depth discussion is mostly absent.

Rob has always believed in Peter Thiel's advice about innovation at a category level rather than at a brand level. If you innovate at a category level, you can achieve something more profound and disruptive. Creating an entirely new category allows you to have significantly more influence and interest, whereas creating a new brand within a category is just a fight for market share.

So Rob created the website OMGyes.com — the Science of Women's Pleasure, a series of online interactive instructional videos to make sex education shameless, open and effective. Actress Emma Watson revealed she subscribes to the site. And after reading this, you might sign up as well.

Rather than risk misrepresenting Rob and his achievements, I went straight to the source and asked him to describe OMGyes.com in his own words. Here's my chat with Rob and a demonstration of his brilliant brain.

  • Adam: How did OMGyes.com start?

    Rob: It started as just a fun project — we'd ask our circle of friends to share their insights about specific techniques and the sexual pleasure discoveries they wish they'd known about sooner. And then we'd look for the patterns. You'd think this request to share would be met with raised eyebrows and different variations of ‘no thanks', but everyone wanted to be involved. The project grew fast, and we realised something in culture was changing. People were hungry to talk openly about this stuff and to understand it better. We did a bunch of thought experiments — and one was to imagine a future without the taboo, where this new openness and honesty we were seeing had grown and grown, breaking like a giant wave over all the cultures in the world. What would have to happen to get to that version of the future? And we realised these interviews, themselves, were transformative — not just for the person sharing, but for us, the interviewers. And if the world could see interviews just like these, this particular kind of openness would be contagious. After the initial giggles, with no-one cringing or uncomfortably changing the subject, it becomes obvious that hearing about the specific kinds of touch people like with their partners (or by themselves) is fascinating. And when you see it, from relatable people of widely different ages, it becomes clear: that's how it should be. The sky doesn't fall. No-one's trying to arouse anyone else in the conversation. There's laughter, but it's good, healthy, ‘I didn't know it, but I've been waiting for someone else to say that' laughter.

    In doing what turned into over a thousand interviews, we discovered not just the patterns in sexual pleasure techniques, but also a lot about the taboo. We learned about the rampant myths and misconceptions that are going unquestioned because of the silence surrounding the topic.

    Adam: Why does innovation best happen at a category level and why is it not generally born out of customer insight?

    Rob: We're big believers in the blue ocean strategy notion. That there are lots of red ocean areas where there are already lots of sharks (companies) competing and copying each other. And there are also lots of completely blue ocean areas — where no-one is yet. When building products in blue ocean, there aren't standard features or ways of behaving. You're making it up as you go along and picking and choosing some approaches from other categories. So we learned early on when we talked to potential customers that we couldn't rely on them to tell us what to build. Because their framework for what was out there and possible didn't include products like ours. When we showed them the product, that's when the light bulb went on, and they'd try to make sense of it. That was really valuable research — understanding how people would explain this new thing to their friends.

OMGyes is my favourite example of a brand creating the category. There's still nothing like it.

Bending an established category into a new shape

It's more common for a category to be disrupted and bent into a different shape than for a whole new category to be invented. As mentioned earlier, there's barely any brand differentiation between Australia's big four banks because the category has existed for a long time, as have the banks.

The eruption of financial technology (fin-tech) companies offering mobile-first banks is expected to challenge this. If one or two disruptive companies develop something completely new, it will bend the banking sector into a new shape. If my theory holds, they will also attract new customers. The bank that bends the category will attract attention and customers.

Using advertising to dent the category

I know Apple keeps on popping up in this book. Apologies if you're not into its ecosystem. But what's noteworthy about Apple is it didn't create a new category, it just put a considerable dent in a category that already existed. Before Apple came along, personal computers were marketed to nerds. Then along came Apple, the nerd barrier was knocked over and personal computing became cool. The company achieved this through slick product design and an advertising campaign that reinforced that story.

In 2010, Adweek declared ‘Get a Mac' to be the best advertising campaign during the first decade of the new century. Its evolution had Steve Jobs's fingerprints all over them. There were tantrums and rejections, with thousands of scripts tossed out for the smallest of reasons. More than 200 ads were made, but only 66 made it to air. The campaign ran from May 2006 to October 2009 and used two actors to represent a Macintosh computer and Microsoft Windows PC. Within these ads, the Mac and PC were friendly, but different. PC is nervous and fidgety, prone to breaking down and getting viruses. The actor wears an uncomfortable-looking business suit. Mac is cool and casual and seems much more relaxed in his jeans, sneakers and a comfy t-shirt.

This remarkably simple campaign helped Apple push the category in a new direction. Personal computing didn't need to be complicated, confusing and boring. Those who didn't view themselves as geeks but part of the creative class felt more comfortable with a Mac made by Apple. Even though the Mac and PC have similar functionality, this campaign focused on smart differentiation, which led to an attitudinal change towards the category because now a ‘cool' computer was available to purchase.

Taxi please

According to Uber, ‘On a snowy evening in Paris, Travis Kalanick and Garrett Camp can't get a cab — the idea for Uber is born'. As they wait in the cold, they wish there was an app that could order a chauffeur-driven car to pick them up. Fast forward not too many years later and Uber is ubiquitous. It married two categories — the accessible taxi and the high-end chauffeur. The idea didn't come from studying the behaviour of consumers. It happened because someone had the great idea of merging the convenience of taxis with the luxury of private hire cars. By securing the category and owning it, Uber could then focus on the customer experience.

It has clearly created the category of ride sharing. In many markets they are (or were) operating as a monopoly, so any customer insights were now not generic, but actually aimed at helping to build the Uber brand. Uber found several pain points for consumers and removed them such as booking the car (via the app), wondering if it will arrive (via driver ratings), wondering when it will arrive (via watching the car come to your home), wondering if it's your car (via number plate and colour matching), ensuring the driver knows where you're going (plugging in details before you get in the car), paying at the destination (via paying over the app). These are small yet significant changes that make it easier for the consumer to do their thing. However, Uber is now in a world of pain. A New York Times article, ‘How Uber Got Lost', describes how pushback against the exploitation of drivers, an inability to invest back into the company and negative corporate reputation are contributing to a company that is yet to make a profit.1 And at this stage, it looks like it never will.

The mandatory paragraphs on Tesla

In 2006, I watched a fantastic documentary about the fate of the battery electric vehicle in the United States. It's called Who Killed the Electric Car? and it argued that thanks to lobbying by the car industry, electric cars were unable to crack into the US car market. It was a captivating documentary, but unfortunately for them, it dated very quickly. Soon after the film screened at the Sundance Film Festival, director Chris Paine announced he was working on a new movie with the working title Who Saved the Electric Car? It was later called Revenge of the Electric Car, starring Tesla's Elon Musk. Tesla is an interesting organisation because, like Uber and Apple, it hasn't changed the product but still managed to put a dent in the category. Peter Thiel writes about it in detail in Zero to One (the two were business partners at PayPal). Musk has gone to great lengths to downplay the differences between his electric vehicles and traditional cars. The only difference is that Tesla is powered by a lithium-ion battery pack rather than a combustible engine.

Musk has packed the Tesla with car-like features. The vehicles can reach high speeds, going from zero to 100 quicker than any other passenger car in history, and the ‘falcon wing' doors look cool. These features make Tesla a viable alternative and negate the perceived risks that could be associated with the purchase of an electric car. Rather than establish electric cars as a category, Musk successfully put a dent in the car category with electric vehicles. Other Tesla innovations include owning the dealer network and selling directly to the consumer. And in creating electric cars with top line technology, other electric car manufacturers are benefitting. He's made electric cars look bloody cool. As other companies enter the category, Musk will hope his temporary monopoly has given him the competitive edge needed to win the race for the electric car.

Stretching a pre-existing brand

I've said it before, and I'll say it again: creating the category is hard. But if you're innovative, that's where you should put your focus. At their heart, brands are ‘emotional', and this emotion allows them to stretch into all sorts of areas. It's why several serial entrepreneurs take their brands from business to business. For example, Netflix shifted from a DVD postal service to a DVD and Blu-ray rental business, to a streaming business, and finally a content creation company — all called Netflix. Sir Richard Branson's Virgin brand has always positioned itself as ‘the consumer champion'. An emotive promise can be parlayed into categories as diverse as airlines, music, bridal wear, gyms, finance and even to mobile phone plans.

If you work with a sizable pre-existing brand, I suggest you stretch the brand into a new category rather than starting another brand to match the opportunity. Brands often have far more stretch in them than people believe.

Be the category

Where possible, be the category. But the next best thing is to put a dent in an existing category. My tip is this: you won't create a category by asking consumers what they want. As Rob Perkins explained, potential customers couldn't tell him what product or experience to create because their framework didn't include products like his. Peter Thiel believes there are still unchartered frontiers to explore and new inventions to create. And if you crack any of those nuts, enjoy the ride.

If you're out in front in a category of one - enjoy it for as long as you can. Others will mimmick, copy, and be derivitive off your success. However, if you're first you have the opportunity to scale and have complete market share — and that's a great place to start.

Note

  1. 1 Isaac, M. (2019). ‘How Uber got lost'. The New York Times. https://www.nytimes.com/2019/08/23/business/how-uber-got-lost.html
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