Ep. 9
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[00:00:00] Corey Quinn: Welcome to the Vertical Go-To-Market podcast. Well, you'll discover new opportunities to grow your business from seven figures to eight, from the world's most successful agency and B2B SaaS executives. I'm your host, Corey Quinn. Today I'm joined by John Rougeux. Welcome,
[00:00:21] John.
[00:00:22] John Rougeux: Hey Corey. Thanks for having, man.
[00:00:23] Corey Quinn: John, could you please introduce yourself for those listeners who may not be familiar with you and your back?
[00:00:29] John Rougeux: Sure. Well, I am John Rougeux and I'm an advisor at Category Design Advisors, where we help CEOs and founders, uh, identify and dominate categories and niches where they can be number one. I've spent most of my career as a marketer and the b2b, uh, SaaS space co-founded a company, uh, along the way. I spent the first few years of my career in a, in a boring, uh, kind of supply chain role, which we probably won't get into today, but that's where I started and here I am.
[00:00:59] Corey Quinn: [00:01:00] Category design may be a new concept for the audience for this show. Could you give us a high level
[00:01:06] overview of what category
[00:01:07] design is
[00:01:08] John Rougeux: category design is a framework for helping companies identify and dominate new categories, or you might use the word niches, but it's really a, it's a business strategy and it's, it's something that companies use when they are solving a new problem. You know, new problems crop up all the time in our world is technology and society changes, or they're solving an old problem in a radically new way.
[00:01:34] And we can get into specifics of that. But, uh, that's the, that the j the gist of it. Most of what we've, you know, if you went to business school or if you studied marketing, or if you've read most of the business literature, typically what people talk about is this idea of capturing market. And the, the category is kind of a given.
[00:01:54] So you're in x, y, Z category and your job is to grow market share from 10 to [00:02:00] 15% or 70 to 72% wherever you are. That's the mentality. And along with that, there's the, the approach there is. We have a better product than the the leader. We're, we're better, faster, cheaper, we have more, more features. It's, it's some sort of comparison metric where we're saying we're a, this is a better product and that can work in some contexts, but, Category design is a much different framework.
[00:02:25] Instead of saying that you've got a better product, what we talk about is forcing a choice in building something that's well categorically or, or fundamentally different from what exists in, uh, in the world today. And through that process, carving out that new niche or that new category, that that company can and own, own, and dominate.
[00:02:43] Corey Quinn: So on this show we talk a lot about focusing down on a specific niche or or a, a vertical, like you're saying, how does that rela, how does category design. Relate to, or how is it similar to,
[00:02:56] or different from nicheing down?
[00:02:57] John Rougeux: Yeah, I think we'll have a good discussion about this because [00:03:00] you, you have a, a very specific approach on nicheing down within a vertical, and I'm
[00:03:04] have a, I think, a related approach that might compliment, uh, nicheing down. So let me back up a little bit further though. Give you some broader context.
[00:03:13] We were talking about solving new problems or solving old problems with new ways. That's kind of the fundamental thesis behind category design. So maybe let's break that down a little bit further. We're, when we talk about problems, we're solving customer problems. Of course, now, Problems don't exist in a vacuum.
[00:03:31] They don't exist in a generic sense. They have to be experienced by someone or some group of people for them to be worth solving. Otherwise, they're just imaginary. Now, companies that tend to excel and you know you, there's plenty of other books that support this. They tend to be really good at solving a specific problem.
[00:03:51] And they do that one problem better than anyone else. You know, Jim Collins talks about this in Good to Great. It's like the, uh, hedgehog [00:04:00] principle. Uh, I'm probably getting it wrong. I'm probably gonna get the animals
[00:04:03] wrong. There's a principle where it's the hedgehog. Okay? Yeah. Hedgehog does one thing really, really well,
[00:04:07] and there's countless examples of companies who do that thing really well before they move on to some other thing. When you've identified a specific problem that you wanna solve better than anyone else, chances are there's a group of people who have something in common who experience that problem. So this is where the overlap is between what you just described with a niche approach and a category approach. That group of people.
[00:04:31] It could be an industry vertical. Uh, maybe it's airports, maybe it's, uh, chiropractors, uh, could be anything. But, um, it doesn't always have to be. Sometimes a problem can be experienced in a more horizontal sense, uh, maybe with a demographic group or a stage of a company, something along those lines. But many times that vertical
[00:04:52] Has unique problems that only it experiences or it experiences them in a different way or needs for them to be solved in a [00:05:00] different way than similar companies who have similar problems. So that's where kind of nicheing down into a vertical and category design overlap in my view, because, You're at, if you're pursuing that vertical, you're, you're looking at a group of people and you're understanding, you're trying to understand what problem do I need to solve for them, and how do I build a business and a product and a marketing strategy, and all the things that extend from that, that that's gonna solve that problem better than anything else.
[00:05:28] Corey Quinn: love that problem focus because it, it puts the. Energy and the effort and the investment of resources into the customer and the specific thing that they're looking to solve. from my experience, that's, that's the right place for a business to be, you know, spending their, their time. and I would agree in my experience, a vertical will have. problems that are unique to that vertical in that through the process of specialization, you become an expert in understanding that problem. And then more importantly, being able to [00:06:00] solve it in a unique way that a generalist wouldn't be able to really do as effectively because they don't have that level of,
[00:06:06] focus into that, that problem set.
[00:06:09] John Rougeux: That's right, and there's companies who
[00:06:11] are broad today, but they started off in a, in a niche approach and category. Designers love to talk about Salesforce because it's one of the like probably largest profile example out there. But Salesforce started selling to SMBs people who couldn't spend, tens of thousands dollars upfront on an on-premise CR R M product, but they could spend $29 a month on a crm.
[00:06:33] Corey Quinn: So, backing up a little bit, how did you get
[00:06:35] introduced to the concept of category design?
[00:06:38] John Rougeux: so let me give you the backstory. I told you earlier that I, uh, was the co-founder of a company and, uh, I wanna share that story because, It provides some good context for why I decided to research the things that led to category design. So this was back in, I think, 2015 or so when I was co-founding this company.
[00:06:57] We had built a, uh, a [00:07:00] product that helped local business owners, uh, generate a word of mouth referrals on social media. And we had a cause marketing component that went into it. Uh, the company is called Cosley, It was a great example of solving an old problem in a new way. Local businesses, they've always needed wor more word of mouth referrals.
[00:07:18] That's their, their bread and butter, but it's very difficult to scale it so that we had built this solution. Again, I won't get into the details, but it brought cause marketing and social media together to generate this very authentic, organic way of, of scaling referrals. So for the first few years of our.
[00:07:35] Of our growth, we relied really heavily on performance marketing, specifically paid social, and the math was really just lovely, Corey. Like, we knew exactly what it would cost us to get a demo. We knew what our customers were worth. And the mar the gap between the L T V and the cost of acquisition was really healthy.
[00:07:57] And so we just, we just ran that, you know, cranked [00:08:00] that machine as, as often as we could. At a certain point in time though, our growth started to plateau and there's more than one reason. Some of it had to do with Facebook's advertising economics changing. Some of it has to do with when you spend more the, you get diminishing returns.
[00:08:15] But the, the point is our, our growth started to slow and we started to feel like we were reaching kind of a, a cap on, on how big we could grow the company with the mechanisms and the resources we had in. So fast forward, we ended up getting acquired and I kind of moved on, but I started to think about what, what we were, what other things we were doing along that journey that fueled our growth.
[00:08:39] And one day it dawn on me that yes, we were. Doing really well on performance marketing, but we were doing something else in parallel with that, that was really important that we ended up slowing down later. And I didn't realize the importance of this at the time. What we were doing in parallel is we were, uh, speaking on podcasts.
[00:08:59] We were going to [00:09:00] events where we were speaking on stage, we were talking with customers. We were talking at customers events. And in every one of those situations we were sharing this new approach to the problem. And why not? Uh, being able to scale word of mouth was, was such a problem for local businesses.
[00:09:17] We were evangelizing the problem, we were selling the problem. And when we did that, The light bulb went off in customers' mind that, Hey, this company probably has a solution that can help me solve that. Now I will. I would call that that activity a point of view or a category pov. I didn't have the language for it at the time, but what I realized was, In all of those situations where we were, evangelizing our point of view about the problem we were creating demand for this new approach, our performance marketing in a large part was just capturing that demand that we had created.
[00:09:50] And again, I didn't have a framework for this at the time. I didn't have a lens, I didn't know what this was called. I later did some research, came across a book called Play Bigger, and I found out that that [00:10:00] process is called Category Design and it, it's, again, it's when you identify a problem and you evangelize that problem with a specific market or audience or niche.
[00:10:09] And then you, by extension, you create demand for the solution that, that you've built. So, long story longer as, uh, Christopher Lockhead likes to say, it, it was only in retrospect that I started to research. The topics that led me to category design. I actually started reading a bunch of old school marketing books because I was so curious, like how did companies scale before digital marketing, before like, CPC and, and all these very tangible metrics.
[00:10:35] So I came across, uh, some books by Al Reese and Jack Trout. Um, they talk about this idea of being number one in a category. Um, they talk about this concept of if you can't be first in the category, Set up a new category that you can be first in or a new niche. And from there, a friend of mine, uh, I was having a conversation with him.
[00:10:55] He recommended play bigger, which is now, it's about six or seven years old, but it's still kind of the blueprint [00:11:00] for category design thinking. And as soon as I read that book, all these light bulbs went off. I thought, oh my gosh, there are all these things I would've done differently had I had this framework in mind, you know, all those years ago.
[00:11:09] Corey Quinn: And so now this is a focus of your career. It's, it's, uh, it's not had that an early impact, but
[00:11:15] now it's something that you're bringing to other businesses.
[00:11:18] John Rougeux: yes. yes. Like the next company I joined, it was an Australian company. I was able to apply some principles there as we tried to move away from a commodity space into more of our own niche. I got recruited to join another company called BombBomb, and then, uh, blockchain company because of my category design background.
[00:11:35] And I started along the way. I started doing some consulting on the side, did a lot of writing, some podcasting, just creating content around the ideas. I learned more. And, you know, one day I just realized, hey, I'm, I'm able to add a lot more value focusing on this line of work than I am as a marketer. So I decided to shift in into this focus instead, and that's what I've been doing since.
[00:11:56] Corey Quinn: what is, what to you is so [00:12:00] powerful or beneficial about category design?
[00:12:02] John Rougeux: I think first of all, it's a lot more fun. But let me unpack that because I think that that's why, it gets to why it's powerful and not, not everyone is gonna agree with this statement, uh, and that's okay, but. When you think about that kind of traditional approach to, to marketing of let's capture market share, let's convince buyers we've got a, a better product.
[00:12:22] Uh, really what that comes down to is you're trying to outcompete competitors on better sales and marketing tactics. And maybe you have a better product that can help, right? It, it does help, but it really comes down to like hand-to-hand combat on sales and marketing tactics. And I, I know some marketers who just love that they, they love that idea of like, let's outrank so-and-so on seo.
[00:12:46] Let's try to get more reviews. Let's dial in our conversion rate optimization to, you know, by another 10th of a percent so we can get a few more leads over our competitors. That that's. That's where they thrive. And if [00:13:00] that's the game that someone wants to play, more power to them. I don't really like that game, and I think there's a lot of other people who don't, not just marketers, but CEOs.
[00:13:09] It's a, for me, it's a lot more exciting when you can say, we've thought deeply about a problem that that really needs to be solved in the world and work with a team who has conviction about. Why that problem matters and why it's worth solving Cause when you get so clear on that and you get, you get people who are.
[00:13:29] Who join you. And they're really like missionaries. They, they truly want that problem to be solved. And I feel like you're doing more meaningful work. You're contributing more, just to, to society, to the business world. When, when you are going out of your way and you're trying to, to solve hard problems and you're making a conscious effort to do that.
[00:13:47] a a guy I really respect, Eddie Yun, he. Lays out this contrast between missionaries and mercenaries and mercenaries are folks who try to, you know, they wanna make some money like everyone else, but they're not really bought into the [00:14:00] problem. They're not really bought into the cause. When you see a, a really, good c e o and and team using the category design lens, they're missionaries.
[00:14:08] They care about the problem. And for me, it's just exciting to work on that. And I think people do. Commit more and they are able to achieve more when they have that kind of, uh, challenge laid out in front of them.
[00:14:22] Corey Quinn: Yeah. For me, uh, as you're, as you were saying that I kept thinking about this concept of, uh, blue Ocean versus red ocean, right? In the sort of the, the world of better competing in, in the red ocean of trying to, capture a diminishing share of. Market based on someone else's game.
[00:14:40] Yeah, that's right.
[00:14:41] Some people hear about category design. Maybe the listeners based on this conversation are saying, you know, isn't this just a, a marketing strategy isn't like nicheing down or, focusing on the problem. Isn't this just a, like a,
[00:14:52] marketing plan? Or, or, or is it not?
[00:14:54] John Rougeux: That's one of the biggest misconceptions. I'm probably guilty of Overindexing on the category [00:15:00] design as a marketing strategy myself, cuz my background is as, as a marketer. But over time I learned the shortcomings of trying to approach it as a, as a peer marketing player or even just overindexing on marketing.
[00:15:11] it's really, category design is a business strategy at its core. And like when we work with clients, we only work when the CEO or the equivalent role is involved. and the reason I say that, Well, let's go back to what we talked about before about this idea of identifying the problem. Okay? So let's say Corey, you're the CEO of some company and you understand that problem better than anyone else, and your vision is to, to solve that.
[00:15:35] Okay? So what are the ramifications of that lens? Well, marketing is a piece of it, right? You obviously need to communicate that problem to your customers and explain the But that's just one slice of the, of the pie. your definition of the problem is going to inform your product roadmap. Uh, it's going to inform the kind of people that you hire.
[00:15:55] Uh, it's going to inform the way that you communicate with investors and your board. [00:16:00] It's going to inform the way that you structure your company, your organizational capabilities that you decide to invest in or not invest in. It's a lens for all of these strategic decisions throughout the company, uh, market.
[00:16:12] Ends up being the tip of the spear because they're the ones who are maybe writing the press releases or doing a marketing campaign that kind of unleashes all of this thinking to the world. But, at its core, it's, it's, it's a business strategy, right? So we've gotta, we've gotta go a little deeper than just the, the head of marketing.
[00:16:29] Corey Quinn: I've heard you say this term recently. category design is like radical differentiation. Could you talk about this concept of radical differentiation? What does that mean? How's that
[00:16:39] different or the same as category design?
[00:16:42] John Rougeux: Yeah. Okay. So I, I started using this term more often because it was, it came from one of the other misconceptions that I was hearing about category design a lot. The misconception was that, and this is, uh, this is really bad in the B2B space. I don't think BDC consumers have this [00:17:00] problem, but B2B marketers, we get so hung up on.
[00:17:03] Gartner, Forester, e g2, and these quote unquote official categories with that are, you know, proper nouns. And B2B marketers tend to conflate category design with having one of these official categories named by an analyst at a Gartner or a Forester. And sometimes both of those things happen, but that's kind of missing the point.
[00:17:26] I use that misconception to frame your question because category design can happen all the way from a, a public company trying to create that mega category, but it can al happen all the way down to a solopreneur who's trying to carve out a, a niche within a space. You can even apply it to your career.
[00:17:44] So when we, when I. I started to talk more about this idea of radical differentiation because wherever you are in that spectrum of business and or, or aspiration for what you wanna achieve, if, if you're thinking about how you can be radically [00:18:00] different, then you're thinking like a category designer. I, I come across a lot of people who think like category designers, but they've never heard of category design.
[00:18:09] They just understand it intuitively. And so you, you can, um, there's a great, uh, resource that category pirates put out. It's called the aid category levers. And they talk about like radically different profit model, radically different distribution, radically different marketing, um, radically different, uh, You know, distribution strategies, uh, maybe I mentioned that one already, but there's, uh, I don't have all, all eight of them, uh, on hand, but there's multiple ways you can, Force a choice between an existing company and yours by doing something radically different from what, what came before.
[00:18:44] Marketing is just one example, but there's plenty of other options as well.
[00:18:49] Corey Quinn: I would say for myself, just being a, a student of category design for several years now, and that's largely how we connected. I think, my experience of category design is that it can [00:19:00] feel for an existing company to be, Too radical to use the term,of a shift in that, from a formal perspective, at least how I have interpreted it, at least in the early days, was that, when you design a new category, you're, you're basically, you know, burning the ships on the old version, and now you have to kind of transform the business.
[00:19:21] And it's a big, it's a big shift, it's a big commitment, and it's hard, can be hard to mobilize a larger company to be able to really adopt this. And so when I heard this term radical differentiation, what I felt just to share with you is that it is much more approachable because I think differentiation is something that's easily.
[00:19:41] Understandable. And when you modify it with the word radical, which is category design, you're able to, at least, I felt like, ah, okay, this is a way for, I, I can, I can see how we can approach this in less of a, um, sort of a,
[00:19:57] binary perspective, [00:20:00]
[00:20:00] if that
[00:20:00] makes
[00:20:00] John Rougeux: Yeah, that's a good way of putting it. Less binary. When, when you talk to your clients about nicheing down, does that feel like too big of a leap or too extreme of a maneuver? And if so, do you, do you have to kind of, uh, I don't know, repackage it or reframe it so they understand why it's actually, I assume you're gonna tell 'em.
[00:20:19] It's, um, it's actually improves your odds of success, not, it's not risky at all, but how
[00:20:23] do you handle that?
[00:20:24] Corey Quinn: And, and you know what's interesting is a lot of the people I speak with know the benefits of nicheing down or, or choosing to focus or specialize, uh, in a vertical, even if it's for the near term. You know, it's not that they're gonna, you only do this one thing for the rest of the business, but I think the, the, the primary. There's a couple of objections to it, um, which is that, well, I'm just gonna get, uh, bored with this vertical by doing the same thing every day, all day. And of course that that's ne that's not necessarily true that that's, that that's the reality. But I think in, in from a real [00:21:00] practical perspective, businesses who have been successful by saying yes, by. Focusing by not verticalizing or by not, overcommitting to one customer type or the other, but instead have grown through being a generalist or being horizontal or just saying yes to a whole bunch of different, sizes and shapes of companies has, has led them to the point of being sort of quote unquote successful, have created seven figure businesses.
[00:21:23] And so to go from. The, the founder of someone who says yes a lot and has seen a lot of the benefits out of that, going to transforming into beginning to start to say no and focus the, the, the business in a specific direction. That's a hard transition. And so I think, you either, they're either
[00:21:43] ready to do it and they just need a, a guide to help,
[00:21:47] but majority of the time is that they know they should, but they're not ready yet because, It's just
[00:21:53] too much.
[00:21:54] It's too much of a shift from where they're at.
[00:21:56] John Rougeux: When you say they're not ready, do you
[00:21:57] mean like mentally they're not ready or [00:22:00] like capability-wise they're not ready? Or may, maybe it's something else.
[00:22:04] Corey Quinn: it's where their headspace is at, right?
[00:22:06] John Rougeux: Hmm.
[00:22:07] Corey Quinn: logically they know it's the right thing or that it could be a good thing for their business. They've seen other examples of companies like them who were generalists and moved into more of a specialty or a vertical focus and been wildly successful. However, they still resist it because they still think that they could do it. They continue to grow and get bigger, doing
[00:22:28] the same thing that they've always
[00:22:29] done.
[00:22:30] John Rougeux: Yeah, it's, uh, it's so interesting you said that. It just, it really shows how, like, how much people still make decisions emotionally, like you said, they know that it's logically the right thing to do, but their, their emotions, their, uh, the investment of things that have happened in
[00:22:49] Corey Quinn: Yeah. All the
[00:22:50] John Rougeux: sunk cost fallacy.
[00:22:52] Corey Quinn: Hmm. But, but what happens is the, um, and by the way, I can't change their mind for them. I can't convince them otherwise. Like they have to be ready to do that [00:23:00] change. I'm not gonna try. But, but the, the symptoms. That show up in a business that, that indicate that, hey, this, it's time to really, seriously think about specializing in business, there's three things.
[00:23:12] Number one, if the, New sales has slowed down. A lot of businesses I talk to have relied on inbounds. Right. And, for whatever reason that slowed this year or, or in general or, it's just harder to get inbounds. And the challenge, of course is that you don't control inbounds as a business. It's, it's not a marketing strategy, it's, it's, you know, you don't have any direct influence over that.
[00:23:34] And so imbalance have slowed. It's harder to close deals, it's harder to acquire a new business. So that's number one. Number two, they're losing customers. So any new business they bring in is offset by losing customers. So they're kind of flatlined. That's the second signal that they're, that they need to consider verticalizing.
[00:23:53] And the third one is that they've stopped innovating that they've. That they don't have the bandwidth [00:24:00] internally to be able to build their product, to improve their offering because they're too busy running around playing whack-a-mole, you know, trying to serve customers and of all shapes and sizes, it's just too busy of a business.
[00:24:14] Meanwhile, chat, G P T and AI have have arrived, and they have no time to figure that out for their business and for their customers, right? There's just no bandwidth. So if you, if you get to that point as a business owner and you, you're suffering from all. It may be time to
[00:24:29] really think about focusing your business in verticalizing.
[00:24:32] John Rougeux: Yeah, it's really interesting you mentioned that because those are, they sound like they sound like cousins to some of the, uh, symptoms we see present themselves when a company needs to be more intentional about their category strategy.
[00:24:46] Corey Quinn: I'd love to hear it. Like, yeah. say
[00:24:48] more.
[00:24:48] John Rougeux: One of 'em is
[00:24:51] when a company is, it finds itself in a commodity.
[00:24:55] And it doesn't have a way to separate itself from that [00:25:00] environment if they're competing on price or sales and marketing tactics, like I mentioned before. And what they need to do is think about how can they, well, how can they be radically different? How can they innovate? What, what does that look like?
[00:25:14] It could be a new product development. It could be r and d, it could be something else. The category design process gives them a lens for thinking through where they should point the ship.
[00:25:25] Corey Quinn: Mm-hmm.
[00:25:25] John Rougeux: that's one. Um, the second one is u usually the one that we encounter more often. Um, and it's when a company has already, they've built something that is innovative and it's a ra, it's some sort of radically different approach or solution.
[00:25:43] But buyer perception is the issue. They don't know how to talk about why they're different or why that difference matters. And as buyers, we all use, categories as kind of a mental shortcut for navigating the world and the
[00:25:57] thousands of products of of, how we [00:26:00] put things into,
[00:26:01] categories.
[00:26:02] Corey Quinn: Mm-hmm.
[00:26:03] John Rougeux: Yeah, I mean, like, let's pick a really easy one.
[00:26:05] Like what's your, what's your favorite soda
[00:26:09] Corey Quinn: Well,
[00:26:09] I
[00:26:09] just
[00:26:10] John Rougeux: or what, what's your, what's your favorite beer? Let's go with that.
[00:26:14] Corey Quinn: Uh, my favorite right now? Well, I'll tell you my favorite from college, cuz I haven't drank one in a while, but I want one is
[00:26:20] a, uh, Sierra Nevada Pale Ale.
[00:26:23] John Rougeux: Okay, so right there you said pale. Right? Now, let's say that's a category of beer or a
[00:26:31] Corey Quinn: Mm-hmm. Yeah.
[00:26:33] John Rougeux: Um, now let's say you came out with a new beer and it was kind of hoppy, but it had some other flavor profile into it, and it, that flavor profile was different from. Other types of beers that existed. Now, if I don't tell you, maybe it's closest to an IPA or to a pale ale.
[00:26:56] So I, so you, you tell me it's a pale ale and I drink it and I'm [00:27:00] like, gosh, Corey, I don't know. This really isn't a very good pale ale. It's kind of sucks, but, but what if you said, well, it's. I'm not gonna make up a new name for beer on the spot. It's a stout or a saison or, you know, uh, um, Belgian nail,
[00:27:18] even if I don't know what that means.
[00:27:21] Um, when I encounter that new term, then my brain is, uh, using a different algorithm. I'm not saying is this a good or a bad pay? I'm saying, Well, let me figure out what this thing even is. I have, I'm forced to evaluate it on its own merits, not in comparison sin or in reference to something else that already exists.
[00:27:42] So that's where a lot of startups, uh, have problems is they've built something and it's kind of similar to some other things, or it has some attributes or some features or maybe a little bit of an overlap with capabilities of some other products that exist. But they're really, it's not really [00:28:00] that thing.
[00:28:00] It's. Has some shared dna n and what buyers do when they encounter it is they're like, oh, well, it's just like this other thing. And they'll usually reference some sort of, uh, like category leader in this space. Oh, it's kind of like this, but a little different. And when that happens, you're dead. You're dead.
[00:28:19] Because let, let's say it's a C R M for just easy illustration. Immediately you're comparing it to Salesforce. Is it better than Salesforce?
[00:28:29] Corey Quinn: Right. Does it have the same capabilities, same features? Does it have the same
[00:28:33] plugins and, And,
[00:28:34] John Rougeux: Right, Right, and and pro and you. And if that's the real life situation, it's probably not actually a crm, but just maybe has some things that are similar.
[00:28:43] So what I need to do is I need to tell customers what this is, and I need to tell 'em what problem it solves and why this problem isn't solved by other things that exist. When I do that, then they're evaluating my thing on its own merits, and they're not worried about whether. Better or worse [00:29:00] than the sales force.
[00:29:01] It's, it's, I'm forcing a choice. I'm, I'm showing something that's fundamentally different. Um, so that's the, that's that second scenario is when a, a company's built something novel. They don't have a narrative, or we call it a p o V point of view. To make that easy for buyers to understand why it's different, why that difference matters, and they get hung up.
[00:29:22] They don't get traction, or they get customers buying for the wrong reasons because they're confused or they have to go through this lengthy, drawn at sales process to actually explain what it is and, and it's a mess.
[00:29:33] Corey Quinn: How do you address the concern, whether it's founded or not, that teaching an audience about a new category is expensive? It takes a lot of time. I'm a startup and I've got a 12 month runway to be able to get to a certain financial milestones. how do I, you know,
[00:29:50] how do I approach.
[00:29:51] John Rougeux: Well, the first thing I say is business in general is expensive, and business ex in general is a long-term game. And when you look at how [00:30:00] much companies waste on marketing and sales tactics, Are are using that old playbook of trying to capture market share that don't work, that's expensive and it's expensive when two years from now.
[00:30:16] You're another me too product and nobody cares, and you're not in a position to be acquired because you haven't done anything different. You're not, you haven't identified a niche or a vertical to go after, so you don't have a defensible moat and you're just fighting for scraps. To me, that's the most expensive strategy there is.
[00:30:34] It just doesn't show up right away. It's like
[00:30:36] cancer.
[00:30:37] Corey Quinn: yeah. So it's, in other words, it's a,
[00:30:39] it's a strategic investment
[00:30:41] in your business's long-term
[00:30:43] success.
[00:30:44] John Rougeux: Sure. Now, if, if you're a startup and you've got 12 months, you know, six months of runway, and you've gotta, you have to be profitable within that time, maybe there's fundamental things you are, are missing with the business. Maybe in that situation you, maybe you shouldn't be trying to do something. That [00:31:00] large, maybe your aspirations are larger than your resources and your timeframe. So those things do have to be kept in check. sometimes we do work with clients and they. E even like later stage, uh, startups, they'll tell us about the category they wanna build, and it's way far out on the horizon.
[00:31:18] It's, um, it's beyond what technology can deliver or it's beyond what buyers are willing to shift to. It's too much of a departure from what exists today. And we tell 'em, you, you've gotta reign this thing back, or, and you've gotta build kind of a path to that long-term vision. Otherwise you, you can't, um, You can't wait the market out for 3, 5, 7 years until technology and society is ready.
[00:31:45] You need to do something that's more pragmatic today to kind of work there incrementally. So it kind of cuts both ways.
[00:31:51] Corey Quinn: Would you take us through just a high level overview of how to do
[00:31:55] category design?
[00:31:56] John Rougeux: we always start with the problem, which [00:32:00] come as a surprise if you're listening, cuz I've. Probably, you know, beating that horse, uh, beyond, uh, death already. But we start, we start with the problem and we iden, we really focus on who we're solving the problem for. What the consequences of that problem are and what the what and what the ramifications of an unsolved problem are for a particular group of people.
[00:32:24] Almost all of the work at, on the front end is on the problem, understanding that problem better than anyone else and really, Dialing in why it's a problem, and what, again, what happens if that problem's not solved? What's really interesting is once you've clarified the problem, the solution starts to become self-evident.
[00:32:43] Like you can s, you can see it what was very, uh, blurry, starts to get some definition to it, and you can start to see what solution needs to exist to solve this problem. If you've got a. Broad problem, you're gonna have a broad solution and you're not gonna get very [00:33:00] far. So the first, um, exercise we take clients through is developing that problem and solution narrative, which we call a point of view or.
[00:33:09] A p o v so that's our first step in the process is building that p o v and that that point of view, it's a strategic, uh, document for the business that it's used externally to show customers, investors, partners, where the company's headed.
[00:33:25] It's just as equally used internally to set the direction for the product roadmap, for hiring, for investments and other things of that nature. So that's step one. Step two, uh, we think about internal mobilization. So if I'm the c e o and I've gone through this exercise I've just made, I've just put a big, flag, uh, in the.
[00:33:46] About where my company's gonna go and I, if I don't have my team on board, if they're not clear on what this is and how we're gonna get there, then. I'm not gonna get very far. So we do, um, some [00:34:00] exercises with the team to help them align on what this category means, what it means for their specific department, whether I'm in product or accounting or marketing.
[00:34:08] We've gotta get that aligned. Then we work on what's called the mobilization strategy. So how do we take this message, this point of view out to market and start educating our buyers on the problem and. Getting them to a place where they can understand the solution. Sometimes that's one big, huge event we call a lightning strike.
[00:34:27] Other times it's a series of smaller events. We call it rolling Thunderer, but we put an intentional plan in place to act to, uh, again, bring that message to market and start transforming, uh, the minds of buyers about what this company's all about.
[00:34:41] Corey Quinn: What are some resources that you could point our audience to to help them
[00:34:45] learn more about category design?
[00:34:47] John Rougeux: there's a few places that I would start. I'll start with a self-promotion to one cuz that's, uh, that's easiest. But we do office hours for anyone who's interested or curious about categories [00:35:00] design, whether they're an expert, whether they've just heard about it and wanna learn more. You can schedule often an office hours slot with our team.
[00:35:07] You just go to category designers, sorry, category design advisors.com, and you'll see a link for office hours and you can just schedule a time with us at your leisure. That's the easiest place to start if you just want to talk to somebody and, and have a conversation with, uh, you know, no strings attached.
[00:35:23] Uh, some other resources, um, There's a group of three guys called Category Pirates, Christopher Lockett at eu, Nicholas Cole. They have a newsletter and some, um, kind of, uh, mini books that they've published that are really thoughtful, really, uh, in-depth content. So I would, I would check category pirates out.
[00:35:46] Uh, reading play bigger is, is kind of a necessity. I almost skipped that over, but play bigger is really the blueprint on, on category design came out in 2016. Um, great place to
[00:35:58] Corey Quinn: I'll sec. Yeah, I'll [00:36:00] second that. I've read that book maybe three times and I've taught the content at the last company I worked at to the executive team. it is a very, very powerful book
[00:36:09] John Rougeux: Sure. Yeah. And you know, it's one of the co-authors, Kevin, Manny is a partner of mine at, at cda and you are thinking has evolved since the book. the, the book is amazing, but like any discipline, it evolves. You gain new insights. You make new connections. So that's one of the things we like to share in office hours is kind of what's.
[00:36:28] Evolved since the book, since a lot of the people we've spoken to in those sessions have, have read the book already. Uh, the last thing I'll mention, Corey, is um, I think you know about this already. We're putting together a community for people who are interested in furthering their category design journey, connecting with others who are interested in projecting the discipline.
[00:36:48] The community is gonna be called category thinkers. Now we haven't launched it yet cause we're recording this in, uh, early April, but the best way to find out about that. Actually just follow me on LinkedIn cuz I [00:37:00] post about this all the time. so look for, I don't know if you're gonna remember how to spell my last name, but, um, look for me on LinkedIn, follow me and then, um, you know, I'll keep you posted on, on the, on the launch of that and how to get involved with that community.
[00:37:14] Corey Quinn: I'll make sure to put your links to your LinkedIn profile, links to your website, uh, and some of these other resources in the show notes so people can get quick access
[00:37:23] to those. How do you want people to get in touch with you, John?
[00:37:27] John Rougeux: Uh, easiest way is, uh, email just
[00:37:29] John?
[00:37:30] category design advisors.com or LinkedIn, but link LinkedIn, uh, messages. I dunno for you, man. It's just a, it's a quagmire today, so odds of a odds of a reply are pretty, pretty low.
[00:37:43] Corey Quinn: It's pretty rough these days. Yeah.
[00:37:45] Anything else you'd like to cover on the topic
[00:37:48] of category design or the work that you're doing?
[00:37:50] John Rougeux: Well, I'm curious to ask you, like when you talk to your clients about
[00:37:54] this idea of nicheing down and owning a space, what are like, what are some of [00:38:00] the questions that you get asked and like what are some of the, the points you try to convey to really move people along that journey?
[00:38:07] Corey Quinn: So part of the process that I help my clients with is not only choosing the right vertical, which is typically based on some data that they have to support, that that's the right vertical. There's, there's a whole process there, but once they've identified, Hey, this is our best fit vertical for our business. Then it's going and doing sort of a mini version of your, of the p o v where it is taking a look at understanding the, the problem that the buyer has that this company is uniquely suited to solve. And the way we get there is we actually do customer interviews, do five to seven, maybe 10 customer interviews.
[00:38:45] And these are to uncover how and why they buy. What was the situation before. They bought this product, you know, of the, of the, of my clients. What were the conditions that caused them to look, you know, really trying to uncover the whole buying journey to [00:39:00] understand that problem and really be able to not only understand it, but also communicate it, articulate it in a, in a powerful way.
[00:39:08] And then the next step then is we do a competitive differentiation screen. Really we're trying to understand as from the buyer's perspective, Who else are they choosing from? Like who else, who else are they trying to buy from? It could be generalists, like businesses that serve, you know, all types of businesses.
[00:39:28] Also, it could be more specialists. So an example might be, let's say client of mine is, uh, they have a mobile app for, Restaurants as an example, and the restaurant, the, the mobile app does onboarding. So helping new employees like bartenders and, and servers and buss to be able to, um, to get onboarded to the restaurant and be able to understand the, the processes and the menu and all these things.
[00:39:54] It's a great mobile app and. The person who buys that is either gonna be the owner depending on the size of the [00:40:00] restaurant, the owner or someone in human resources or training, or people ops. And so there's going to be other competing platforms out there who are trying to, uh, sell them their version of the, their solution to this problem.
[00:40:14] And so understanding what companies are out there, how they're positioned, uh, in the marketplace, uh, is really sort of helps to inform how did position. my client. And so what we do is we take the takeaways about the problems that we solve and the competitive landscape to try to understand like where's the white space, where, where's everyone competing?
[00:40:34] And what's truly unique about our business and about our, our product and the problem we're solving that could help to differentiate in a, maybe in a radical way, the, the business so that the buyer, when they see the messaging, whether it's problem folk, whether it's evangelizing the problem like you mentioned, or, or, uh, our other types of content, that they recognize that, hey, this, this vendor, this company, this app maker, truly understands us [00:41:00] at a very deep level, which of course creates, a competitive advantage for that business because they're able to create that level of trust and rapport early as part of their go to market.
[00:41:09] And so, um, that's kind of insight into the process. But I think to answer your question, A lot of my clients are unfamiliar or they don't think about marketing based on the customer's problem. That's a new concept to them, and it's kind of like once you.
[00:41:24] Once you see that, once you do it, it's, it's like, it's the most obvious way to go to market is figuring out, okay, well what problem are we gonna be the expert at solving and be committed to becoming the expert.
[00:41:34] We may not be the expert today. they're much more focused on products and features and, and, and, and sort of surface benefits. And so that's really the biggest. Uh, learning that I have to help my clients to really see the world in a different way, really from the buyer, their buyer's,
[00:41:52] worldview.
[00:41:53] John Rougeux: It's all about like giving them clarity and then giving them the courage to act on that clarity, isn't it?
[00:41:58] Corey Quinn: Yeah, exactly.
[00:41:59] John Rougeux: Well, hey man, [00:42:00] thanks for having me on. It's uh,
[00:42:01] Corey Quinn: Absolutely.
[00:42:02] John Rougeux: fun to chat with you, man.
[00:42:04] Corey Quinn: Always, I mean, I, I think that, uh, you and I share a deep passion for this idea and this, this framework because I think it's, it is so powerful. So I really appreciated you coming on and sharing
[00:42:15] with the audience all your wisdom. So thank you so much for being
[00:42:18] here.
[00:42:19] John Rougeux: Yeah, you bet. And we'll have to have you on the Category Thinkers Podcast to kinda share your view on things and take it, uh, take it from
[00:42:26] there.
[00:42:26] Corey Quinn: That's awesome. All right folks. That's it for today. I'm Corey Quinn, and I hope you join me again next time for the Vertical Go-To-Market podcast. If you received value from the show, I would love a five star rating and review on Apple podcast. Thanks, and we'll see you soon.
