The ultimate DIY guide to Category Design

Exactly one year ago, I published v1 of the blog post unpacking the Minimum Viable Category Design. It is an agile variant of the Category Design methodology, as described in the Play Bigger book, that I adjusted to fit the needs of early-stage startups. It combines the principles of designing a new category with iterative testing. I open-sourced the how-to guide to the workshop with the goal of providing product founders with a practical way to design their categories at the same time as they are designing their product.

🎉 To celebrate the special occasion, I publish the v.2.0 of the guide 🎉

https://www.notion.so/connectfoundernetwork/Minimum-Viable-Category-Design-3e95cace82bf467fbc40d36716b0d01b

What’s new

• It is built on Notion and no longer embedded in a Medium blogpost 😬
• Includes a set of downloadable documents to help founders and their teams do the workshop in a DIY fashion. These include a questionnaire with the developmental questions; a Keynote slide for the Category Canvas; a spreadsheet for visualizing the category ratio.
• The preliminary check-up tests for assessing symptoms of lack of Category are now part of the workshop. They are fun and easy (play with kings and knights and ghosts and frankensteins) and are a great warm-up into the category thinking mode.
• Introduces the concept of Product Category Fit Ratio to help calibrate the balance between Category potential and Product maturity.
• Ask for feedback via a typeform

Results and lesson learned

The guide is updated based on the feedback I received, the lessons I learned by running the workshop myself with twelve Connect portfolio companies, and by presenting it to more than 100 startups across several events (TheFamily Academy, Seed AI, Lisbon Investment Summit, SaaStock 2019).

• High ROI. I tested v1 of my MVCD workshop with twelve portfolio companies, ranging from Seed stage and Series A. SaaS and Consumer. Five discovered a convincing new category, and have actively embraced the new category creation as the company’s True North, and executed it in some form. I believe it is a very encouraging result.
• Gravity. The other seven engaged as well, but either dropped the category ball or just postponed it. The gravity forces that played out were the day-by-day urgency, other strategic priorities, lack of resources, lack of conviction, and unwillingness to go “all-in” with the process. We at Connect experienced this latter resistance when we wanted to eat our own dog food and did the workshop to design a new category in Seed Investing. Nonetheless, even when the final output was not finding and creating a new category, the workshop always succeeded in providing clarity about the long-term mission of the company, and, overall, the best way to maximize the value of the company.
• It is not branding! One confusing part for founders was understanding the difference between Category Design and Branding. I want to make it clear. Externally, the category narrative is the force that creates demand for your new product and drives the market pull. Internally, it is the True North of the company-wide strategy and therefore the Bible to the whole product development. As Christopher Lochhead puts it “branding in the absence of category creation is bullshit.”
• The Category name matters less than the category concept. Few founders got stuck with the naming part of the design process. Naming is a red herring. What is important is the category concept and its point of view, which becomes the company manifesto for the world. The verbalization of the Category is a “tattoo” and can come in a second phase.
• Category sizing. The most challenging part was to frame the new category in a balanced way with the existing product and the product roadmap. If we design the category too broadly, there is the risk of failing to deliver the category promise (Performance Gap). Vice versa, if we play too small, the company consistently delivers but will soon stall (Growth Gap). In an attempt to tackle this issue, I am now experimenting with a basic “fit test.” It is based on a simple heuristic that I call Product Category Fit Ratio. Scoring the category and the product, while is a gross simplification prone to subjectivity and biases, could help founders be directionally correct.
• Key takeaway. A new category and its max potential shouldn’t be something you can build 100% today, it is the True North to follow over the years. It takes 10 years to develop and dominate a market as king. At every stage of the category king journey, category and product must be developed in a harmonious and balanced way, and in sync with the company resources. Eventually, the value of your company depends on two parts: creating a category with a large potential and positioning the company in that category as king; and executing the product to deliver the category promise.

Creating the category of Category Design

At Connect, our intent is to give a small contribution in evangelizing category thinking and, can you guess, in creating a new category of Category Design. As part of this effort, Connect hosted the first European conference about Category Design last week. We had the privilege to join forces with Kevin Maney, co-author of the book Play Bigger, and his partner at Category Design Advisors, Mike Damphousse. Sitting in the panel next to Kevin and Mike as a “category designer” was fun and quite flattering for me, although it didn’t help me with my impostor syndrome 😎

Below the tl;dr of my key messages:

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• As products are orphans without a category, so founders and VCs are orphans without the category dimension. We have a problem we didn’t know we had: the lack of category thinking.
• Category thinking is the missing element in the toolbox of VCs and founders. The category layer is a fundamental component of the value stack of any large business. However, it is always overlooked at best, and ignored most of the time.
• The focus is on how to build the product and how to build the company but we never spend time discussing how to build the market category. We are all obsessed with market size, but we treat the market as if it was an independent variable that can not be influenced and developed. This is wrong, and Category Design is the discipline to fix it.

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Thanks to Dave Peterson and Christopher Lochhead, co-creators of Play Bigger book, who didn’t sue me for IP infringing 😇; loved my ideas ❤️ ; and even invited me to speak at their Category Design Summit next October in San Francisco 🙏🏻

Thanks to Kevin and Mike for being absolute stars in our Category Design webinar.

Thanks to my colleagues Keji and Eleanore for helping with the early, full of typos, versions of the guide.