Marketing that Matters 045: You Created the Category. Now What?

Hey there.

Last July, I wrote Issue #033 about one of those questions marketers love to debate: should you create a category or find a smarter way into one that already exists?

I came to the conclusion that, for most companies, the latter is the better fit. Category creation is expensive, slow, and requires a level of consistency and commitment that makes it nearly impossible for most startups to pull off. My advice was, and still is, to name the wedge, not the category, unless you’re prepared to spend years and dollars building and owning the narrative.

Nothing has changed over the past year in my approach to this topic, but some recent news got me thinking about a question I didn’t really address the first time:

What happens if you actually succeed in creating a category?

Earlier this summer, I read a Racket Business story about the Lawn Tennis Association, Britain’s national governing body for tennis, making a move into venture capital.

The LTA announced a partnership with Redrice Ventures to invest in sports technology and consumer businesses. Among the areas Racket Business identified: coaching platforms, performance data, nutrition and smart court technology.

Smart court technology.

A phrase I know pretty well.

Let’s get to it.

More than a decade ago, PlaySight started building what it called the SmartCourt: cameras, computer vision, automated video, analytics, instant replay and other technology integrated directly into a sports court. Tennis was the first major market.

PlaySight was my entry into the sports-tech startup world, back when Three Horizons was just me, so I got to watch a lot of this happen up close as one of their early employees.

The name itself wasn’t particularly clever, which is part of what makes the example useful. “Smart” had already become the technology industry’s preferred adjective for taking an ordinary object and adding software to it. Court was, well, a court.

The hard part wasn’t inventing the two words, but getting the market to use them.

For the first few years, even as PlaySight installed dozens, and eventually hundreds, of SmartCourts at universities, academies, clubs and federations, customers often referred to the technology simply as “PlaySight,” not “SmartCourt.”

That was one of the lessons I took from the experience: pay attention to what your customers call you. You don’t get to decide on your own what language sticks.

Over time, though, SmartCourt did stick.

Today, PlaySight says its technology is installed across thousands of tennis, padel and pickleball courts around the world, along with hundreds of professional and collegiate sports organizations.

We haven’t worked with the company for several years, but its ambition appears much the same as it was more than a decade ago: Turn ordinary sports courts and fields into smart courts using connected cameras, software and cloud-based technology.

By any reasonable standard, PlaySight helped establish the idea. Eventually, the market learned the language.

Competitors started selling smart courts. Industry publications started comparing smart-court systems. And now, a story about Britain’s national governing body entering venture capital can casually identify “smart court technology” as an investment area without explaining what the phrase means, or mentioning PlaySight at all.

Read that another way:

A term PlaySight spent years attaching to its product has become a way of describing the market around it.

That isn’t necessarily a failure. In one sense, it is proof that the category-creation effort worked.

The research I cited in #033 makes category creation look attractive. Harvard Business Review pointed to a study showing that a small group of category creators among Fortune’s fastest-growing companies captured a wildly disproportionate share of incremental revenue growth and market-cap growth.

That’s the dream, but I think there are actually two separate accomplishments hiding inside the phrase “category creation.”

The first is creating the language.

The second is capturing the value.

They are not the same thing.

You can successfully teach buyers that a new kind of product should exist without permanently convincing them that they need to buy yours.

In fact, success here creates a unique problem. The better you do the first job, the easier you make life for everyone who comes after you.

The category creator who moves first pays the market education tax. You explain the problem, invent the vocabulary, persuade customers to try something unfamiliar, build the early proof points and convince the press that there’s a story worth covering.

Then a competitor walks into a market that already understands the noun.

They don’t have to explain what a smart court is anymore, hey just have to explain why their smart court is better.

That is a very different marketing job.

Here’s what I’d add to my thinking on category creation today:

If category creation works, your differentiation eventually becomes the market’s vocabulary.

In Three Horizons terms, your Horizon 3 vision becomes someone else’s Horizon 1 or Horizon 2 go-to-market strategy.

At the beginning, saying “we’re building a SmartCourt” separated PlaySight from an ordinary camera system.

Years later, if everyone can credibly describe themselves as a smart court company, the term no longer answers the buyer’s most important question:

Why you?

The category has done its job. It has given buyers a frame of reference.

But a frame of reference isn’t a competitive moat.

Going first can give you an installed base, partnerships, customer relationships, data, credibility and years of product learning.

It can also mean spending more than a decade developing a market that later entrants get to attack with cheaper technology, different business models and customers who no longer need to be convinced that the category should exist.

Which effect wins?

That’s where strategy comes in.

There is no universal law saying the inventor wins, the category creator wins or the fast follower wins.

Being first matters only if you turn the head start into an advantage that lasts.

This is where I’d modify the checklist from Issue #033.

If you’re going to create a category, don’t only ask whether you can afford to spend years creating it.

Ask what advantage you’ll still have when everyone else agrees with you.

Do you own:

• The distribution?

• The most important customer relationships?

• Proprietary data?

• The ecosystem?

• A product advantage built on years of learning?

• The standard everyone else integrates with?

• Enough installed infrastructure that replacing you is painful?

• A brand buyers still request after competitors adopt the same language?

Those things are harder to copy than a noun.

And you have to keep going.

Category leadership isn’t something you declare in year three and then coast on. The category keeps moving. Competitors keep entering. Technology gets cheaper.

Whatever once made you novel eventually becomes standard.

Which brings me back to where I ended last year’s newsletter.

For most startups, I’d still recommend naming the wedge, not the category. It’s cheaper and clearer, and it leaves you with far less market education to fund.

But if you choose to enter uncharted waters, add one more question:

If you’re going to name the category, what will you own when everyone else starts using the name?

Because if you’re lucky, they will.

Yours in marketing,

Jeff