Welcome to the Play Bigger Newsletter. In this month’s edition, we’re going to:
Drink in some freshly squeezed insights from Category Creation Lab, the first and only Play Bigger podcast
Stick to the birthing theme with new evidence of an emerging category design nursery
Share Entrepreneur’s take on the top three issues facing start-ups today (hint, they’re all symptoms of Market Myopia)
Let's get into it...
1. Three Takeaways From Category Creation Labs' First Episode:
The results are in and the “Play Bigger Founders Workbook” is officially one of our top downloads of all time (thank you!). This week, partners Mike Bruno and Jason Wellcome discuss some of the book's key findings on “Category Creation Lab,” the Play Bigger podcast.
Here are the key takeaways:
If you’re not solving a different problem than the competitors, you probably matter a lot less to prospects than you think you do. Learn More >>
The signs of this are common in early-stage startups (low pipeline urgency, investor skepticism, resource misallocation, hiring challenges, difficulty in customer acquisition) Watch Here >>
Innovation is a powerful drug, but on its own, it usually ain’t enough? Learn More >>
The monumental upside of Category Potential and why it eats TAM for lunch Watch Here >>
2. The Return Of The Category Babies (Aww, Ain’t They Cute?!)
Last year we talked about the possible emergence of a category design nursery, but the bizarre and ongoingmarket conditions we see impacting funding trends today has made the category nursery effect even more pronounced. Last seen in 2020, which by the way gave rise to companies like Wiz, Island and Ramp to name a few, the category nursery effect occurs when early stage funding volume accounts for more than half of all funding volume.
And, well, that’s exactly what is happening now.
With growth stage returns flagging - for now anyway - it’s those higher risk early stage investment opportunities that investors seem to be embracing, while the rest of the market works out its kinks.
What does it mean?
Well, for early stage founders it’s an enormous opportunity to start framing and claiming the next trillion dollar category. If you haven’t yet, it’s worth taking a read through the Play Bigger Founder’s Workbook, and our How To Play Bigger When Your Smaller newsletter archive.
Category Nursery Effect
3.Entrepreneur Talks Up Market Myopia
Even if you’d prefer to go all Han Solo on the asteroid field that is start-up life (never tell me the odds), spoiler alert, the odds are not good: 3,720 to one for Han, and not so far off for early-stage start-ups.
So what do the successful, Millenium Falcons of business do? Well, according to
Entrepreneur, they take square aim at three major components of Market Myopia. Namely:
Struggles with customer acquisition and urgency: is there anything more disheartening as a pipeline full of excited prospects that never seem to convert? Entrepreneur doesn’t seem to think so, but lucky for us they outline several key strategies for overcoming it (hint: think Category Design).
Misallocated resources and scaling issues: failing fast is great, except when it’s applied without restriction and robs you of runway, and a core identity (your odds of successfully navigating the asteroid field just got worse!). The remedy: finding problem-market fit to help guide innovation while still allowing for agile development.
Investor skepticism: speaking of runway, if you can’t convince investors of your vision, you might never get to the asteroid field in the first place. As Tim Guleri of Sierra Ventures told us in The Play Bigger Founder’s Workbook: “We see startups with $1m in AAR but they just can’t answer the question of the category they are in and that’s holding back the partnership meeting.” There are so many startups out there trying to compete in the existing categories, but the odds of getting funded go way up when you can design a vision for what the future market will be. Do that, and you’ll capture the vast majority of its value, which is something investors are keenly aware of.
TL/DR: The rules of the status quo are stacked against startups - it’s really hard to win there - but when a company completely changes that status quo with a new category, that’s where the magic happens.
This month’s newsletter is all about company focus and changing the status quo. It’s an invitation to shift how you see the competition and the opportunity, to define something altogether different. We hope it will inspire you to do just that!