Welcome to another edition of the Play Bigger Newsletter.
Today we’re going deep on the *actual* mechanics of growth, and the mindset shifts any company can use to increase their odds of finding it. So buckle up as we:
Take aim at golden rules and expose them for the Copper-plated Zinc Alloy they really are
Share a fresh batch of data on the power of Q4 in Category Design
Go on a journey with a couple of our companies that just closed big rounds to solve big problems
Let's get into it...
1. Golden Shmolden - why the golden rules of business are meant to be broken
Who doesn’t love a golden rule and having nice things done unto them? In life, and in business, golden rules feel solid. Real. Immutable. The products of thousands of years of industry giants upon whose shiny shoulders we are now honored to stand upon!
But they’re also often dead wrong. Take these rules, for instance:
You Have To Compete To Win: The best business, best product, fiercest competitor has the greatest chance at success. Tell that to Slack and the millions of other companies whose market share has been decimated by an inferior product with an entrenched advantage. Competition is a losing game for everyone but the category leader.
Fish Where The Fish Are: Most entrepreneurs think of total addressable market (TAM) as a function of the existing market. Except, in reality 76% of that existing market is going to go to the Category King. Your actual TAM is about a quarter of what you think it is. Hard to haul up your share of the catch when someone’s driving a thousand foot trawler off the port bow.
You Can’t Make A Category: Most of us think of categories as these things that have always existed or were bestowed by an invisible force … or a Gartner analyst. The reality is, every single category that exists, exists because somebody created it.
"Learning to classify the world into categories is fundamental to human cognition” - Nature Reviews Psychology
Categories work because they’re the way our brains work. If you don’t believe us, let’s examine the modern miracle that is making your Grandma’s famous meatballs.
There are 40,000 products in the average Whole Foods
And ten ingredients in your Nona’s famous meatball recipe
And you’ve got ten minutes before school pickup
No problem! Because everything in that store is organized into categories, so you can quickly navigate it, get what you need, and get out. This is how category design works in a supermarket, and is the exact same mechanism in all other marketplaces.
In summary: (1) Competition is a cult and not that useful; (2) Fishing where the fish are means the one with the biggest net - not you - wins; (3) Categories are collective fictions that can be created.
2. Making Category Magic in Q4
Here’s a question we get all the time at Play Bigger: does it matter when I do Category Design?
Actually, the answer to that turns out to be a two-parter: Part one: What stage should I do it? Part two: Which quarter should I kick it all off?
After 20 years of doing this, we have some answers:
What stage is Category Design for? Category designers blow up status quos by solving problems others can’t, giving companies that do it right an unfair advantage at every stage. But the advantage it confers differs at various stages. For instance:
Early stage companies looking for product market fit often find themselves pitching investors and customers something they’ve both heard before. You might have a better idea, but better doesn’t sell the way you think it will. Finding problem market fit and then sizing category potential as a function of how much people will pay to solve it, that’s where the real opportunity is.
Growth stage companies are constantly being typecast as a “one of those things the current market has been trained to get.” It's like Qualtrics being called Survey Monkey on steroids when they were really so much more. But if you play by the market’s rules, the market is going to define, restrain, and force you into a procurement battle that’s destined for a “selling the most for the least” race to the bottom. Instead, by creating a new market, you get to position yourself and define the rules others will have to play by.
Hypergrowth, late stage, and public companies often find themselves riding a rocket ship that *might* be headed back to Earth. They may still be in the driver’s seat, but it isn’t a great place to be. Or they might have been diligently designing products to fit customer demand, and in the process, lost the thread. They have a bag of doorknobs to sell, but no cogent whole. Evolving, redefining or creating an entirely new category becomes the oxygen these waning kings need to reach another era of growth.
When should I actually do Category Design? You’re looking at it. While there’s no hard and fast rule on calendar kick-off dates, over the past twenty years most of the Category Design value created is tied to efforts that began in Q4. Why is that? Many reasons, but key among them: aligning fiscal year strategy with Category Design gives companies a different level of focus, opportunity and story-telling for the coming year. This leads to better, more organized and connected innovation, sales, marketing and fundraising cycles, all of which contribute to stronger returns.
*Introducing the Play Bigger Q4 Problem Workout*
We want to get you in shape for 2025, and the best way to start is to get clear on the problem you solve. As readers of this newsletter know, the problem is the first and most important step in defining and dominating a new category - but capturing that problem in a clear and powerful way is hard. It takes lateral thinking, difficult decision making and a leap of market-defining faith.
Our problem workout is built around our proven methodology, in which we hold up mirrors, push for insights and force decisions on the way to identifying a massive unsolved problem.
We are offering a limited number of spots to promising early stage companies - if you think you fit the bill, apply here and tell us why! Spots are open to Pre-Seed, Seed and Series A companies with a valuation below $50,000,000 only.
3.Big Problems, Massive Category Potential
TAKING AIM AT THE CLINICAL INSIGHTS GAP WITH REGARD
Speaking of problems, our friends at Regard are taking aim at BIG ONE and it’s making waves with investors and customers.
The thing is, and brace yourself for this one, health care is not awesome.
But not only is it not awesome, it’s sitting on an enormous cache of data capable of making it actually work - for patients, for clinicians, for hospitals and for the insurers who pay for it all. So much data - 50,000 data points per patient to be precise - and yet so little time. Clinicians have on average 3 minutes to review it all. Which is laughably impossible.
As a result, all of that data and its life saving, condition improving, complete picture defining potential gets lost in a clinical insights gap. Diagnoses that are clear in the data, are lost to the gap. Which is why Regard created an entirely new category of Clinical Insights, with an AI powered Clinical Intelligence Engine capable of combing through millions of data points, surface potential conditions and diagnoses, enhance patient safety, hospital reimbursement rates and the overall wellbeing of everyone involved.
Thanks to Regard and the Clinical Insights System, healthcare can now be (at least a little) more awesome.
You can read more here about Regad’s new category and the $61M investment round they just closed to close the Clinical Insights Gap.
NURTURE SETS ITS SIGHTS ON CLOSING THE LIFE PREPAREDNESS GAP IN EARLY CHILDHOOD EDUCATION
What do you teach children when nobody knows what jobs and skills will be relevant in 20 years?
A question plaguing parents everywhere. And a massive problem that Roger Egan, co-founder and CEO of Nurture became acutely aware of during the pandemic. His experience during lockdown, educating his two sons, revealed the gap between traditional education and the needs of a world increasingly shaped by AI. Existing alternatives like homeschooling, educational apps, and TV fell short, leading him to gather a team, including co-founders Danny Limanseta, Scott and Julie Stewart, and Sally Doherty, to tackle what we now call theLife Preparedness Gap.
The solution? A new category of media called "Immersive Learning Media" (ILM). It blends elements of children’s TV and gaming to create story-based adventures where kids learn enduring life skills like critical thinking and creativity through interactive play.
Initially conceived as a unique dual-screen experience that offers age-appropriate, educational, and engaging content, designed to be as appealing as popular shows or games. The vision for Nurture includes expanding into mixed reality experiences and an increasingly rich portal for deeper parent-child engagement. Additionally, a creator platform will allow children’s content creators to build immersive learning adventures using their unique IP.
Investors have taken note of the category-defining potential and early user validation, awarding them pre-seed funding of $2.8M. You can learn more about their story via this TechCrunch piece and if you’re a parent of a 4-7 year-old, they’re looking for participants to join their closed beta and help shape the future of early childhood education.
Share Bigger
Category Design isn’t for everyone, but if you know someone with a penchant for thinking bigger, why not invite them to the Play Bigger newsletter?
Another month, another Category Creation Labs coming for your ear holes. This week Mike and Jason discuss why “troughs of disillusionment” line up so nicely with the Develop stage of category design. And why artificial intelligence - Gen AI in particular - is sitting smack dab in the middle of all that opportunity. Key takeaway: when you hear Gartner screaming that the sky is falling out of the hype cycle, that’s your cue to go define a problem ‘cause no one else has yet!
There are always rules, but the only true golden rule in our book is you should break ‘em all. Or at least consider what breaking them could mean, and how showing up differently by solving a different problem can create the most value. And while company stage might influence category design objectives, blowing up existing market norms leads to outsized value creation no matter what stage a company is. Whether that’s Regard taking aim at the Clinical Insights Gap, Nurture closing the Life Preparedness Gap or your enterprise finding and solving a hidden problem, the evidence is clear - breaking rules and making new ones is always better than following the crowds.