Ride it & prove value on a wave

Welcome to the strategy section! This is where we’ll run through the four super positioning strategies — ride it, find it, own it, or combine it.

I’m going to keep throwing different positioning angles at you over the next few chapters along with more questions to get you thinking. Don’t get overwhelmed — the point isn’t that you need to know every angle or use every strategy, the point is that you need to find the one or two that can be a strategic specific for you that then power your narrative and messaging as you keep building out your super position.

In this chapter, we’re going to start with riding a wave and proving new value, and I’ll touch on Jobs to be Done and the niche vs reach dilemma, too.

I’ll also provide a little summary of the strategy at the start of each of these chapters, as well. Here’s the first:

Ride it in a nutshell:

• Goal: Find a way to be super relevant to your audience.
• Strategy: Prove your new value on a new wave, be that a new technology (AI), an emerging role (a new corporate function), a cultural movement (‘creators’) or an external development (e.g., new regulation).
• Attention: Active right-brain (looking out).
• Action: Prove it — lots of folks try catching a wave; the ones that succeed prove they offer new value.
• Position: You become the famous solution associated with the wave, often as much for your playbook as your product.

As I write, it’s hard to imagine there’s any other wave worth talking about than AI, so we’re going to talk about AI. And nothing shows the power of a wave creating insane relevance quite like AI either. I mean, how many barely working products were adopted and given a fair chance simply because the were LLM-powered?

While AI everything might be all the rage, AI is still a tech wave like all the others that have come before, and those previous waves — including B2B SaaS wave-riding success stories — have plenty we can learn from, too.

Waves drive success

As a founder or marketer, we want to believe the success of our product in the market is down to our genius and effort.

It’s a bit jarring, then, to reflect on just how fundamental wave riding is to the success of many great startups and B2B businesses.

Sometimes, timing really is everything. Waves of change are inherent to technology itself — each new wave of innovation drives a new wave of application, and in B2B SaaS, those applications can be worth anywhere up to, in Salesforce’s case, hundreds of billions of dollars.

To understand how that works, though, let’s first understand how technology waves and automation work and what the point of B2B tech fundamentally is.

Waves, automation, & productivity

Technology is a bit like sex in that every generation thinks they’re the first to invent it. With the AI wave, for example, our generation seems to think this is the first time a major technology might replace a lot of the work people do, but that’s been the case for every major generation of technology ever.

In 1900, for example, 40% of the U.S. population lived on farms. Now it’s closer to 1%. Why? Science and technology have allowed us to produce far more with far less labor. That trend of abundance from less work led influential British economist John Maynard Keynes to speculate in 1930 that we’d soon be a leisure society working 15 hours per week.

There’s been no shortage of AI leaders saying much the same thing — maybe this time will be different. Maybe this round of technology and innovation will finally Solve Work™ like mechanization, or electrification, or computers, or the internet before it. Maybe we can then finally embrace a capitalist leisure society, or fully automated luxury communism, or whatever else lies in wait in this technology-powered utopia.

Or maybe AI is, per Arvind Narayanan and Sayash Kapoor, just normal technology.

In any case, utopian dreams spring eternal, but I suspect we’ll be waiting a while for utopia to arrive.

But consider this from another, less messianic angle.

Maybe we are already well on the way to productivity utopia. After all, most of us don’t live on farms anymore. Technology does automate work, even if it doesn’t eliminate work. We’re extremely lucky to be able to work in relative comfort, on or off a farm, thanks to that fact.

That automation process will march on. There has been and will be substantial amounts of employment turbulence as managers test the waters to see what can (and can’t) be done with AI and whatever comes after. Maybe that will hit harder and faster than previous technology revolutions; maybe it’ll look just like them.

But life will go on, and to get there, a heck of a lot of B2B products will need to be built. Maybe you’re the one to build them. Maybe you already have. Maybe this AI revolution only takes us so far, and it’s back to AI winter before the next boom. But having models trained on almost all of humanity’s recorded knowledge available to anyone as an API call is an insane product opportunity, hallucinations and all.

Either way, technology automates. It gives us leverage. It helps us do more with less. Maybe one day we’ll finally determine we have enough and spend all our days making music or art or scrolling TikTok or whatever, but in the meantime, there’s a whole lot of B2B building to do, and hopefully, this chapter gives you some clues on what that might look like for you.

Energy waves

With each new wave, it’s up to us to prove — and I really mean prove — new value in a real way.

In theory, positioning on a wave is great because the wave does much of the heavy lifting for you. It’s the groundswell of energy that you can tap that can take you far.

And a wave is a great metaphor: go too early and there’s too little momentum there; wait too long and it will pass you by. Or, pretend it’s not there, and risk getting smashed by it. Waves are powerful things, after all.

Waves in B2B include:

• New general-purpose technologies: AI & LLMs, what blockchain hoped to be (but wasn’t), mobile before that, the internet (which enabled SaaS itself), and so on.
• New corporate disciplines and roles: Think about the rise of customer success (Gainsight), digital product design (Figma, Linear), digital marketing (HubSpot originally), or even ‘creators’ on the micro-business end (ConvertKit, Patreon). New roles require new tools.
• New playbooks and trends: There might be a move towards agile (Jira, originally), no-code tools (Webflow, Airtable, Notion), messaging (Intercom, Drift), the shift to remote work (Zoom, Loom), or ‘revenue ops’ to manage GTM complexity (Clari, Gong, et al).

Your turn

• We covered some of these when thinking through your strategic specifics. Are you also riding one of those waves?
• Are you getting the most out of it, hitting the new disciplines and playbooks that emerge, too? Or is there room to maximize the energy you’re getting from the wave?

Concept-wave

Those successful startups didn’t just ride a wave, they often sold new concepts enabled by the wave. I’ve got a little formula for this approach, and it’s:

New concept = new change + new playbook + new tool.

You might think of this as creating a category, but I find a lot of the talk about category creation involves folks getting a little too high on their own supply. I find thinking about change + playbook + tool much more concrete and prescriptive instead.

To sell your new concept, then, you need to:

• Have the vision: You pick the wave of change you want to ride based on what you see. The more unique your vision and the faster you can act on it, the less likely you’ll be fighting it out with 100 other competitors who all saw the same thing.
• Find the hook: Ideally that’s a change that’s happening in the world — one that’s separate from you and your company — which can be the foundation of your right-brain narrative.
• Build your super position: You talk about the change and playbook perhaps more than your actual tool, while building a tool that fits this new reality like a glove. This gives you a strong right-brain story 1, a prescriptive story 2 (the playbook and product), and a brand memory association you can own.

If you can ride a wave and build a super position in the market in this way, awesome. If you can’t, though, don’t fake it.

Don’t fake the wave

One of the worst strategic choices I’ve seen founders and marketing leaders make is trying to fake the wave, especially in the category creation sense.

The point of the wave is that the bottom-up energy carries you to fame and fortune. If there’s no energy there, though, what are you doing? What’s going to carry you?

This is classic cargo-cult behavior. It’s a bit like believing that if you splash around enough in a placid lake, a wave will suddenly materialize underneath you and everyone will be very impressed. I think most folks would just look at you like you’re slightly deranged.

This might sound a pedantic point in the 2020s, but in the late 2010s there was a real craze around coming up with made-up new categories of software. Perhaps it was just a symptom of the tail-end of the classic B2B SaaS ZIRP era, but many VCs really believed it — they bought into this approach entirely. Capital was abundant after all, so why not try? The problem was that fundamental shifts in technology were less so (crypto being a B2B dead end), and founders were left trying to wish new categories into existence without a wave to drive them.

Don’t get me wrong — new categories do happen, and maybe you’ll pioneer one. That’s great, and there’s nothing wrong with having a fresh concept (as we’ll see below) or picking an attribute (as we’ll see in the next chapter) and trying to be more about something than the competition.

But fake category creation — and fake narratives for that matter — are a killer because the ones who believe it the most are the ones who are talking about it the most: you and your company. This cuts you off from seeing what’s real, from meaningful learning, and from genuine market feedback because you’re too busy trying to splash around to make that wave in a lake happen. But if there’s no wave, it just ain’t gonna happen. You’re in a lake.

Don’t forget to prove it

The other failure mode is to believe a wave alone is enough. You still need to solve a problem. Lots of folks will try to catch the same wave — big waves aren’t secrets, hence the explosion of AI startup funding — but very few will prove their value in doing so.

That may seem painfully obvious, but it didn’t appear to be very obvious in the crypto cycle, for example, where almost no one proved any meaningful B2B value. (Unless your business was crime, that is.)

You have to use your full spectrum of attention — looking out at what’s new and down at what customers actually achieve — to develop the proof you can put back on folks’ right-brain radar.

But how do you actually do that? Let’s take a quick detour into the world of Jobs to be Done.

Proving it with Jobs to be Done

The tech industry is great because every day feels like day zero. Wake up, check Techmeme, scan the news, scan the feed, see a whole bunch of new products, AI models, funding announced, get breakfast.

But that day zero effect can distract us from the reality that SaaS alone is decades old now, with “high tech” going back several more decades, and there’s plenty we can learn from.

That includes founders who had the vision, rode the wave, and got the pot of gold at the end (and we’ll get to them, I promise).

But it also includes ideas from people who spent a lot of time wondering how to actually do the whole innovation thing in a more predictable, less random-walk kind of way.

The framework they landed on — and the startup world adopted — is called Jobs to be Done, or JTBD.

JTBD has gone through several hype cycles and comes in and out of fashion, but at its core are some very simple ideas that help us go from big vision on a wave to discrete, identifiable productivity improvements that we’re aiming for.

That is, it helps us go from that big right-brain change story down to the more micro left-brain story focused on specifics and tool use.

The simplest way to express that idea is contained in the name of the theory — focus on the job people are trying to get done.

That is, in B2B especially, very few people wake up in the morning wanting to play around with software, much less go through a months-long buying process. They don’t want to have to think about software at all. They just want to get a particular job done.

That job-to-be-done often gets described as a ‘use case’ or a ‘customer story’ and so on, and that’s fine. But the magic of JTBD is thinking about the job behind the job so to speak, as that’s fertile ground for innovation. Use cases tend to be very literal — what customers say they want. JTBD tends to be more about what they actually need.

For example, a customer might say their use case is that they “need to see certain data on a dashboard.” You can take that literally and give them what they want, and maybe that’s fine, but it’s not much of an innovation. A JTBD approach would be to investigate what the actual job the data and dashboard exist to serve. Maybe the user needs to take some action when the dashboard says so? Maybe an LLM-driven agent could now do that for them instead? Maybe there’s some broader workflow that could be automated, enhanced, or otherwise improved?

Or, to put it in simpler terms, imagine a person who wants to hang a painting on a wall. Their use case, in terms of the tools they need, might be to hammer a nail into the wall. But from a JTBD point of view, we might ask: how else could they hang a painting? How could we innovate there? What if we had detachable sticky hooks instead? That’s what 3M brought to market, and renters everywhere rejoiced because they solved the core JTBD in a whole new way.

You can see the different kinds of vision and left-brain/right-brain attention at work here. It’s easy to see customer needs in a very literal sense, and sometimes that’s all you need. Sometimes it makes sense to build exactly what they ask for because they know best. But once folks already have a proverbial hammer and nail, what comes next? What can you see, in terms of innovation, that could be ‘out there’ on the horizon instead? What’s your vision for the actual job they want to get done — one that’s stable over time — and not just the slight improvement to how they already do things?

(If you want to nerd out more about JTBD and positioning, I explore the topic more in Positioning Playbook, and we’ll touch on it in the next chapter, too. If you want to go further, I recommend the parents of the theory, and JTBD has several. Tony Ulwick gave us the original, more left-brain, engineering-driven, map-and-quantify approach. Bob Moesta developed a more right-brain, narrative-driven, change-over-time approach that involves deep interviews. Most famously, however, the late, great Clayton Christensen of ‘disruptive innovation’ fame put JTBD on the map in 2003’s The Innovator’s Solution.)

Wave riders — AI examples

Let’s look at how the AI wave is playing out in one particular area: legal tech. This is a world of masses of words — documents, cases, contracts, etc. — which makes it a juicy target for people making AI tools.

AI waves & legal tech moves

Let’s touch on three different legal tech startups with three different strategies to see how they’re trying to ride the AI wave, going from broad reach to narrow niche.

(Note that the funding amounts, positioning, and, heck, even existence of these companies may have changed by the time you read this. But it was an ideal time to take a snapshot of an emerging wave-driven market segment!)

Hebbia

Hebbia, targeting investment banks and legal firms (amongst others), raised $130M to be the “AI platform for knowledge work.” (This is a pivot after an initial search engine play.) Their homepage boasts of “1000+ live use cases, driving real business outcomes.”

This — at the time, at least — was a big-time brand-building move for reach. (A thousand use cases!) They were operating across two very potentially lucrative sectors (investment banking and law) with an apparently strong desire to expand beyond those verticals and become the horizontal platform for knowledge work.

Harvey

Taking a strictly vertical approach, on the other hand, is Harvey, which raised $100M calling itself the ’trusted legal AI platform.’ Its product page boasts of ‘a suite of products for all practice areas.’

In the vertical SaaS playbook, the vertical provides the niche, but the play is to then try and satisfy as many jobs-to-be-done as possible within that niche. A bit of niche — one specific vertical, and a bit of reach — products for ‘all practice areas.’

Spellbook

At the more niche end of the spectrum (and more under the umbrella of our ‘find it’ positioning choice) is Spellbook, which raised $30M. Their homepage lead with “Draft and review contracts 10x faster with AI” and they claimed they were the “most popular AI tool for transactional lawyers.”

As we touched on in our strategic specifics chapter, Spellbook had identified a specific job-to-be-done they can do 10x faster (“Draft and review contracts”) and picked out a target ICP this is most relevant for (“transactional lawyers”).

This is the classic wedge play for a point solution to get into the market and build momentum through extremely tight focus.

This is just one small slice of the world of legal tech, but we’ve got:

• Horizontal positioning (with target verticals) as a broad platform play.
• Vertical positioning, as a classic Vertical SaaS-style play.
• Wedge (or point solution) for a target ICP play.

All based on riding the AI wave and trying to prove out your value in those specific ways. Which is the right approach? Which should you follow?

No easy answers, but a few observations.

Who wins?

Note that Spellbook had, at the time of writing, only raised ~$30M total (last round $20M Series A) vs. $161M total for Hebbia (last round $130M Series B) and $206M total for Harvey (last round $100M Series C). Different rounds; different stages; different ambitions. But make no mistake — the race was on to be “the co-pilot for X,” i.e., the co-pilot for lawyers, and perhaps for knowledge workers more broadly, as Hebbia sees it.

But which company has the right positioning strategy? And when a market is in full land-grab mode, how should you position your company?

Well, to turn the question around, the thing to do to understand your positioning opportunity is to understand the market you’re in, the resources you need, and how markets — especially technology markets — evolve.

Let’s go on another quick detour, this time into the world of positioning as market strategy.

Segment & sell vs. cast & catch

We touched on this earlier, but what separates super positioning from a lot of popular positioning advice is that the classic advice leans pretty heavily on the left-brain laser beam mode of attention. Look down the y-axis to focus narrowly on what you’ve got today, how you compare to others today, and who you’re the best fit for today.

There’s good reason for this — buyers are usually buying what you can do for them today, not some fuzzy vision for the future, so it helps to be very clear about that. Sell what’s on the back of the truck, as they say.

I call this the segment & sell approach.

This is something B2C companies can’t do and the B2C brand academics don’t understand about B2B. In the B2C world, if you want to be a big brand, you have to use mass advertising. That’s your route to market. And that pushes you towards reach — you need more and more reach to build your business. This means mainstream, mass-market products advertised through mainstream, mass-market advertising.

Sometimes, at the SMB end of the B2B world, those tactics can work to build a very strong position in the mind of your buyers, as we’ll see in our own it chapter.

This is the “cast & catch” approach — you cast a big net and try and catch as many buyers as you can.

So we’ve got segment & sell, which is common for sales-led B2B companies, especially if they go outbound, and cast & catch where there’s a much more mass advertising, or inbound lead-generation approach.

What should you do when you’re trying to ride a wave?

People from the B2C brand world would say you should go for maximum reach — sell as much as you can to as many people as you can. That’s what big companies do after all — that’s why they’re big! They advertise broadly in an ‘always on’ way across as much of the market as they can. They do this to try and build and — more often — sustain brand memories at scale, so that when buyers are ready to buy, they recall their brand and are therefore more likely to choose their chocolate bar, beer, toilet paper, or whatever it might be.

The classic B2B tech advice, however, as popularized by Geoffrey Moore in 1991’s Crossing the Chasm, the tech industry’s original market strategy bible, was all about niche. Stay focused, zero in on a segment where you can be a big fish in a small pond, start with the early adopters and ‘user innovators’ (as we’ll touch on in the next chapter), develop unquestioned market leadership in your niche, and then pick off adjacent niches and more mainstream market segments as you grow.

Moore has a whole cinematic universe of metaphors for what can happen as markets develop, including chasms, bowling alleys, tornados, and gorillas, but for now, let’s just think about this as our niche segment & sell strategy.

Niche to reach

These two broad approaches represent the niche to reach dilemma. Yes, big companies sell more (reach), but small companies have to start somewhere (niche), and ideally over the lifetime of a B2B company you go from one to the other.

But when a market is white hot, with the AI revolution creating brand new market opportunities (no one was talking ‘co-pilot for lawyers’ or thinking about the ‘Excel for knowledge work’ previously), again, what’s the best approach?

This is where we need to think more along the right-brain x-axis and figure out how our positioning fits in a market that’s rapidly developing.

Diffusion

A technology market rapidly developing and maturing is a well-studied phenomenon. What’s happening is called “diffusion.” That is, an innovation ‘diffuses’ (spreads) in a market, as Everett Rogers described in his landmark Diffusion of Innovations, way back in 1962. That book gave us the classic tech adoption curve of:

• Innovators
• Early adopters
• Early and late majority
• Laggards

When an innovation like AI is diffusing in the legal tech market, or even broader white-collar knowledge-work market, segmentation within that market only makes sense if that’s all your resources allow.

For example, if you’re a small startup, you can only engage so much of the market, so you have to be very deliberate about where you apply your effort. That’s what Spellbook is doing with their tight positioning, focusing on a 10x solution for a very specific ICP (transactional lawyers).

But when there are insane levels of pull from the market and the wave is providing that all-important momentum, then if you have the resources it can absolutely make sense to go broader.

If you’re VC-backed, the end-point is always as much reach as possible, after all. And when these waves create an opportunity to cast a much bigger net — why not try and be the platform for knowledge work, for example? Why not try and be the ‘co-pilot for X’ for a specific role or industry, where you know the jobs-to-be-done and what LLMs (and perhaps your custom mix of models) can do for them?

For example, the enterprise-focused Glean, raised more than $600M (including a $260M Series E) for its “Work AI platform”.

Glean aims to provide a search and automation layer above a company’s existing docs and SaaS tools so workers can use AI to pull info from — and push info to — their CRM, their CS tools, or their company knowledge base, for example. “Work AI for all” is their tagline, and that’s the very opposite of niche — it’s maximum right-brain reach.

Either way, there’s so much opportunity for what these strange new co-intelligences can do — and so much demand from the market — that it’s worth thinking hard about your vision and how far you could go with foundational models and, say, $100M in your pocket (bless you!) to make your vision a reality.

(That doesn’t mean maximum reach will always work, of course. Hebbia, as a coda to the description above, has since dialed back their positioning to “The AI platform for finance” rather than all knowledge work or even legal knowledge work. Maybe Spellbook’s more orthodox, niche-focused approach will prove correct. We will see!)

Concept creators — CRM

AI wave-riding in B2B is generally about applying this new general-purpose technology to business workflows in new, innovative ways. The power of the AI wave is so strong that it, as we’ve discussed, does most of the narrative heavy lifting for you, at least as far as the ‘why now’ question goes. People know what AI is, know they need it, and want to see what you’ve got.

Eventually, however, categories mature, and it’s far more incumbent on your company to come up with a new narrative to explain why your technology is necessary.

Sometimes the companies that pull this off get referred to as category creators, but — to keep flogging a dead equine — I think that’s usually a bad metaphor for what’s going on.

I like thinking about concepts instead. We will look at some classic literal category creators in a moment, but first let’s think about concept creators who take a bite out of an existing category, like CRM, with our neat concept = new change + new playbook + new tool formula.

Let’s focus on Salesforce, HubSpot, and Drift, who all used an incredibly strong story 1 narrative to put their new concept on prospects’ radars in a big way.

Salesforce

The OG of SaaS rode the trend of SaaS itself — well before we called it “Software as a Service” — and started out as an ‘inexpensive web-based solution.’ Salesforce, who in the dot-com era once famously staged a ‘protest’ marketing stunt at a competitor’s conference with their “No software” campaign (as in, no on-prem software), rode the SaaS wave all the way to their current $200B+ market cap.

To use our new concept = new change + new playbook + new tool formula, Salesforce new concept was:

• Ride the new change of the internet itself.
• Launch a new playbook for software adoption — no more going through IT, you can sign up on the website (crazy!).
• Pave the way with a new tool that enabled all of this — remember, there’s little precedent for this at the time, so they had to be the ones to create it.

Salesforce’s journey is indicative of enterprise SaaS as a whole — it started as a plucky underdog with a freemium offer in a ‘crowded’ category, caught a wave, and was able to grow and grow and grow by selling and selling and selling.

That growth included moves into adjacencies (customer service, marketing, commerce), acquisitions (Tableau, Mulesoft, Slack), and attempts to catch new waves, betting heavily — with everyone else — on AI.

That little wave we call SaaS has taken them a long way, and it started with a vision for buying and using software in a way that seemed completely contrary to the wisdom of the time. I mean, who in their right mind would hand over their precious customer data to some random company on the internet?

Everyone, it turns out.

HubSpot

HubSpot actually started as LegalSpot, a niche solution for legal firms, but they pivoted, went horizontal, and rode the organic digital marketing wave with their “inbound marketing” concept instead. The actual category they would pioneer was marketing automation, before pivoting to CRM. Their market cap, as of writing, is about $30B.

To use our new concept = new change + new playbook + new tool formula for HubSpot, HubSpot’s new concept of inbound marketing was based on:

• The new change of organic digital marketing — initially blogs, SEO, and social.
• The new playbook for adapting to this change was to adopt an “inbound” marketing approach as opposed to the (supposedly) old “interruptive” approach of advertising and sales outreach.
• The suite of tools HubSpot built helped unify and automate much of the jobs-to-be-done around this work, hence they were seen as a ‘marketing automation’ platform.

HubSpot gets credited as a category creator, which is true in a concept sense, and they’re now an incumbent CRM player. But their early success was a product of their vision — their ability to see the organic digital marketing wave, wrap up the change in a catchy narrative and playbook (“inbound marketing”), and repeatedly prove their value with their customers through several pivots and expansions while truly owning their message in the broader market.

In the 2010s, HubSpot was inbound marketing, inbound marketing was HubSpot, and their innovative, partner-driven GTM approach ensured that everyone knew it.

Drift

Founded by ex-HubSpot exec David Cancel in 2015, Drift took an incredibly strategic approach to the CRM market, riding the messaging wave with their “conversational marketing” approach to the use of live chat. They were acquired at a valuation of approximately $1B despite competing in a category where Salesforce had a 16-year head start.

In terms of our new concept = new change + new playbook + new tool formula, in Drift’s case:

• The new change was messaging (in the chat sense). We’re messaging our friends and family all the time. We’re using chat for support. Why not chat with businesses when you want to buy, too?
• Drift’s playbook for this new era was “conversational marketing” which Drift evangelized far and wide.
• Naturally, Drift provided the freemium tools to get started with this approach, and those tools had to be good because competitors quickly started labeling their own stuff “conversational marketing,” too. (Narrative windows can close quickly.)

Cancel was, like HubSpot, incredibly deliberate with his strategy. He had the vision — he saw the impact messaging was having in society at large. He had the narrative — he wrapped that change up in a “conversational marketing” narrative Drift could own. And he had the product and execution chops, leading an incredibly effective team to execute on a product (website chat) that had seemingly already been done, especially by companies like Intercom, and used that as a wedge to try and get into the bigger CRM market.

These three examples — Salesforce, HubSpot, and Drift —were all ultimately CRM plays, which goes to show you that wave riding and category creation aren’t the exact same thing, given CRM was already an existing category. You don’t have to invent a category — or even be first in it — to achieve an incredible exit, and indeed most startups don’t.

Instead, one option is to ride a wave and take a very healthy bite out of an existing category. Salesforce thought they were entering a crowded market when they launched in 1999. HubSpot must have thought the same when they pivoted to CRM. And Drift entered the CRM market precisely because it was a crowded market, in a swim-for-the-red-ocean sense.

Big markets signal big demand, after all, and the CRM market continues to see innovative new players emerge and shake things up. The Notion-esque CRM Attio, for example, which has raised $56M over 2023 and 2024, is aiming to disrupt Salesforce, once the disruptee, as the startup circle of life of incumbents and disruptors continues unabated.

Category creators

AI-first startups have the luxury of insane demand for AI solutions — businesses know they need to put AI to work.

Concept creators riding a wave within a category can also rely on the fact that there’s strong, established demand for the parent category. Businesses know they need a CRM, for example.

Some startups, however, need to create — or at least pioneer — the new category itself. This is still about a new concept targeting right-brain attention per our change + playbook + tool formula, but the result really is a new category of software. (Category creation does happen!)

This is a high-risk, high-reward strategy — you have to cultivate demand from scratch, but that blue ocean (so to speak) of opportunity can prove very lucrative indeed.

Here’s a quick look at the classic category creation examples of Gainsight (customer success), Yammer (enterprise social networking), and Qualtrics (experience management).

Gainsight

Gainsight hitched their wagon to the emergence of customer success as a discipline and are credited as the customer success ‘category creators.’ In reality, they didn’t create the “customer success” category from scratch, but they did start riding the wave early and rode it all the way to a juicy $1.1B acquisition.

In change + playbook + tool terms, it was the SaaS wave itself that brought about the need for ‘customer success’. Mere customer support was no longer enough — customers needed proactive help to succeed with the tool, not just be reactively supported if and when they asked for it.

(Another reminder that in B2B, customers aren’t buying tools per se, they’re buying outcomes, and they often need, and will pay for, a lot of handholding to achieve those outcomes!)

SaaS companies themselves needed customers to succeed so they wouldn’t churn. The playbook, then, was a focus on churn. Having a specific metric to target is a very powerful thing, and Gainsight’s tools could, as their early homepage back in 2013 described it, “Reduce Churn, Increase Up-Sell and Drive Customer Success.” The change, playbook, and tool all went hand-in-hand.

Yammer

The OG category creator, Yammer, created the category “enterprise social networking,” or ESN. This was a true category in the literal category-of-software sense, a category that’s still with us today. But it wasn’t the category name that particularly mattered — they just put “enterprise” in front of “social networking” — it was the wave that mattered.

Founded by David Sacks (yes, of All-In Podcast fame) back in 2008, Yammer built social networking-style tools for the enterprise and, crucially, combined it with a ‘bottoms up’ (i.e., product-led) GTM motion and a sales force that eventually outcompeted their main competitor, Jive.

Founders can get hung up on the name for the new category or concept they’re trying to pioneer, but what’s interesting about Yammer is that “enterprise social networking” was self-explanatory. It provided instant clarity on how Yammer was different from the competition. It was social networking… for the enterprise.

In the change + playbook + tool sense, the broader social wave was of course B2C social networking (with Facebook and Twitter blowing up at the time), the playbook was bringing this new UX to the enterprise, and the tool was a matter of building a platform to match. That might sound like an obvious opportunity in hindsight, but the dominant social paradigm at the time was, as Sacks tells it, blogs and wikis, and Yammer had to forge their own new category to distinguish themselves from the ‘old school’ players they were competing against.

(The other lesson from Yammer is that PLG is great for building bottoms-up momentum, but you still need a sales team to close enterprise deals, a lesson startup founders will keep relearning until, one imagines, the end of time.)

Qualtrics

Qualtrics famously coined the term “XM,” or experience management, to help them transcend their software category of survey software. And it worked! But it happened when they were a very mature company, having spent more than a decade and a half riding the digital transformation wave, which put them in a position to launch a new concept, playbook, and brand.

The change was the “experience economy,” the playbook was experience management (XM), and the tool was their mature survey and analysis platform rebranded for a new era.

What’s remarkable about Qualtrics is the extent to which they were able to sell their own narrative of being a category creator. There was no AI-like wave to take them there; they did it themselves, and they started in an incredibly narrow niche, which brings us to the next super positioning strategy, ‘find it’.

Your turn — what’s your wave?

• What wave (if any) is driving demand in the segment you’re targeting? (If you answered “AI” — and I know 9 out of 10 of you did — think about what the wave is about. Is it specifically about automation, analysis, conversation, acting as a co-pilot, or something else?)
• Are you trying to ride that wave to create a new category, transcend a category, or carve out a new position in an existing parent category (like CRM)?
• Are you going for the horizontal platform play (Hebbia), the strict vertical play (Harvey), or the 10x point solution for a specific ICP (Spellbook)?
• What role does external change play in your current narrative or messaging? What role could it play?
• What does your concept = change + playbook + tool formula look like — especially the playbook part? What can you learn from the CRM players & category creators in terms of owning a playbook?
• Finally, how are you proving out the new value for a given set of jobs-to-be-done that this wave creates? Your ability to prove that value is what will make or break your startup.

Next, let’s look at finding value in a niche.