On this episode of Christopher Lochhead: Follow Your Different, our Founder/CEO Al Ramadan talks about what’s at stake when it comes to category battles, how to spot category contenders who can become kings, and what they need to earn 76% of the economics.
There comes a time in every startup’s life, where they face an epic, typically 18-to-36-month category battle. As we reported in our first book Play Bigger, the company that wins that battle earns 76% of the total value created in the category as measured by the market caps for public companies and valuations for private companies. What that means is, in any space, one company earns two thirds of the economics, which makes that category battle, which is typically 18 to 36 months long, arguably the highest stakes game in business.
Play Bigger: Looking back, and its impact today
Al Ramadan comes into the conversation bearing data about the businesses and companies we’ve observed when writing Play Bigger, as well as some new players that have achieve the same feat since then.
To recap, Al Ramadan and Christopher Lochhead wrote a book back in 2014 called Play Bigger, which talks about category design and how it can make you become a category leader in your chosen space. One of the things they’ve found out in the course of their research is that Category Leaders tend to corner 76% of the value of said space.
Though when they wrote Play Bigger, the world was nowhere near as digitized as it is today. So a lot of the research was based on tech companies back then. But now, as more and more categories are behaving like tech categories due to digital scalability and digital reach, these findings are becoming true for every category.
Category Kings to Category Leaders
Al Ramadan shares that he and his team looked into the 35 Category Kings that they have observed back in Play Bigger, and check on their current situation in the market sphere.
In Play Bigger, we originally published a set of research and tracked 35 Category Kings in the tech space and their market caps at the time were 465 billion and those same companies today are now worth 1.9 trillion.
“If you track what happened to those 35 kings, as we call them back then, between the year of 2014 to the year of 2021. You want to know what the numbers are? At the time in 2014, the entire pool of the 35 category kings were valued at 465 billion. They are now valued at 1.9 trillion. That is, they’ve created more than $1,000,001.5 in market cap and the annual for those people who care about this stuff like Investors and Financial people. The compound interest growth rate of those kings. Market cap wise, is 22.46%.” – Al Ramadan
Given this data, it begs the question of how many understand that this is the new dynamic, and how many entrepreneurs and marketers still think that it’s a big leap of faith to follow.
To hear more from Al Ramadan and how Category Kings can become legendary Category Leaders, download and listen to this episode.