I like the concept of product-market-fit but @lochhead has a point about category design:
Those who define the category usually win the category.
An example of this...
Those who define the category usually win the category.
An example of this...
When we launched Yammer a decade ago, the official category was “Social Software in the Workplace”. That was the name of Gartner’s Magic Quadrant. IBM and Jive won every year. We would not have fared well.
Gartner had a long list of feature requirements (like blogs and wikis) that we didn’t have. So instead of fighting for inclusion like most startups did, we fought to stay out of it.
Instead we defined our own category: Enterprise Social Networking (“ESN”). We believed that’s what users wanted — a private secure social network for internal company use.
We defined the key features around ease of use, signup and deployment resulting from our cloud freemium model. Our message was that without employee engagement, long feature checklists didn’t matter.
Our category definition caught on with the press. It was crisper and easier to understand. Soon our competitors were calling themselves Enterprise Social Networks.
But they had the wrong architectures. They weren’t born cloud. They didn’t know how to engineer virality. Their offerings were clunky.
Category leadership helped confer legitimacy. We closed contracts with dozens of Fortune 500 companies. $25k pilots that we begged to close in Year 1 turned into $3M company-wide deployments in Year 3.
Yammer was acquired for $1.2B less than 4 years after launch. Meanwhile, leading “Social Software in the Workplace” products that had beat us to market by over 5 years fell by the wayside.
Defining our own category, rather than playing by the incumbent’s rules, made all the difference. More often than not, those who define the category win the category.
