Thread by @Nicolascole77

In The Creator Economy, so much emphasis gets placed on Product Design.

But Category Kings don't just have "better, faster, cheaper, smarter" products.

They have breakthrough products + breakthrough business models WITHIN NEW CATEGORIES.

Here's “The Magic Triangle”👇

The Magic Triangle is the combination of

- Product design
- Company/business model design
- And category design

Each side has equal importance, ideally executed at the same time.

Finally, the elite Category Kings & Queens recognize that each area of The Magic Triangle generates data about the future of the category.

- Data to improve the product
- Data to improve the company/business model
- Data to improve + anticipate the future of the category

1/ Product Design

Great products, alone, rarely become category queens.

Companies that believe in mantras like “the only thing that matters is having the best product” are often the ones that fall into category comparisons.

They compete in existing market categories.

Example:

The most consequential product ever invented was the wheel.

What most people don’t realize is that it took over 300 years for somebody to tilt the thing on its side and use the wheel for transportation.

Before that, the wheel was only used for pottery.

So, if the greatest product ever could not speak for itself, then what makes today’s entrepreneurs think their product (in and of itself) will drive its own growth?

More importantly, why leave it to chance?

The best product *does not* always win.

2/ Company/Business Model Design

In addition to building a breakthrough product, there also has to be some sort of innovation on the company/business model side that allows the product to remain separate from any direct competition.

Here’s a good way to think about whether or not you’re innovating on the company/business model side of The Magic Triangle:

› Do you make money when good things happen to your customers/consumers/users?

› Or do you make money when bad things happen to your customers/users?

› Netflix charging per month versus Blockbuster charging per rental was a business model innovation.

› Salesforce charging companies a subscription fee instead of selling higher-ticket, one-time products (which was the status quo in the late ‘90s and early 2000s) was another.

3/ Category Design

The third and most important side of The Magic Triangle is the foundation upon which breakthrough product innovation and breakthrough company/business model innovation stand.

Your company needs a category to market itself within.

This idea has become terribly misunderstood over the years, so to clarify:

You DO NOT want to market within an EXISTING market.

Instead, you want to create a NEW and DIFFERENT category/market, which you now have free reign to market WITHIN.

For market-share-chasing private equity investors, this sounds terrifying (“We’re going to waste a bunch of money creating something we don’t even know if people will want!”).

But for trailblazing venture capitalists and angel investors, this is music to their ears.

Now, of the 3 sides of The Magic Triangle, there is 1 single point of failure.

› You can get the product wrong and tweak it over time.
› You can get the company/team/business model wrong and tweak it over time.
› But if you get the category wrong, you’re finished.

Here's the full breakdown of how to prosecute The Magic Triangle in your own business, career, and life.

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categorypirates.substack.com/p/the-magic-tr…

People I follow who I think will enjoy this letter:

@TrungTPhan / @ShaanVP / @theSamParr / @jackbutcher / @craigclemens / @BrianDEvans / @businessbarista / @paigefinnn / @austin_rief / @garrytan / @colezuck / @balajis / @JustinSaaS / @jmikolay / @derekhalpern / @VivasVK7

Written w/ my fellow pirates, @lochhead & @EddieWouldGrow

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