How to become a category pirate | Christopher Lochhead (author of Play Bigger, Niche Down, Category Pirates, more)

29:52And everyone, quote unquote, everybody's leaving Twitter. All right. So threads comes out. What happens? Threads surpasses GPT is the fastest growing app ever. Now the headlines line here and coming, this is it, Zuck's a genius, it's incredible. And oh, by the way, this sits inside one of the newer or stupid axioms in Silicon Valley. So this is a side note. But when somebody says something in Silicon Valley that enough people think, oh, yes, that's smart. They just parod it. They don't actually think about it. So there's a there's a current thinking in Silicon Valley. And this was real loud as threads was coming out.

30:41This was the reason why threads was the Twitter killer. What you need Lenny is brand and distribution. That's what you need. Especially distribution. Well, I would assert to you that threads had the greatest distribution advantage of any new piece of software ever launched. If there's another one that has a greater distribution advantage, I'd like to know what it is. Things right. Okay. So massive distribution. Incredible. Easy up and on. Incredible. Free product, not even premium. Free. Awesome. And Facebook meta. You tell me one of the 10 most powerful brands in tech. Absolutely. How many how many users does Facebook have today Lenny?

31:35Do you know? Over a billion. Might be okay. So how many billion person apps have there been in history of apps? None. Right. I think legendary brand. The greatest distribution advantage in history. What happened? It cratered. It's gone. I mean, it's still there. But nobody's there. They're launching their rope climb soon. So they have another shot. Oh, yeah. Now why? Why did that happen? Why did one of the richest people in the history of the world, who's potentially one of the smartest people in the history of entrepreneurship and tech fail so miserably when the entire world said he was going to kill quote unquote Twitter.

32:20And after the initial quote success of threads, everybody said that's exactly what was going to happen. And now all those experts are surprisingly quiet. So the legendary Kevin Manning said that category design is a new lens on business. It's a different lens. It sits next to the product lens. It sits next to the competition lens. But it is equally important. So here's what happened with threads.

32:53They attacked an existing well -known, well -understood, incredibly well -defined problem. With a direct copy, they even were celebrating that it was Twitter just better. I mean, they said virtually those words. So known existing problem with a known existing solution that was quote unquote better and integrated with the rest of the meta -shit. Quote everybody checked it out and everybody went away. Why? Here's the aha. Problems create categories. And you either have to a, solve a new problem, or b, reframe name and claim an existing problem in a, and I'm going to use these words on purpose, very different way.

33:57And if you reframe the existing problem such that people see it in a different way, that's when they'll be open to a new solution. But the mistake is the impossess is on the wrong slab. The impossess is on the product because we live in a world where just like the availability of oxygen, we believe the best product wins. Zuckerberg is going to blow in excess of a billion dollars on threads and it will fail. It already has failed because you can't take an existing problem with an existing solution, launch exactly the same shit, tell the world it's better, and have the world embrace it. Because the problem makes the solution the other way around.

34:51So classic advice on these lines is if you're say 10 times better than the existing product, you have a good chance at getting people to care and having success, is there a line of just like it's the same thing but 10 times better or do you have to in your experience reframe? And I want to talk about that, but let's just look at the evidence. So we could agree that Jeff Bezos is not a dumb person. Yes. Yes. So do you have an Amazon fire phone? I don't. Neither do I. Why not? I'm very happy with my iPhone. Right. And so Bezos launched a better product and nobody bought it. And the reason nobody bought it is the problem and therefore the solution that you think you're solving with your iPhone is solved with your iPhone.

35:43When was the last time you enjoyed a Red Bull Cola? No, not once. Yeah. So Red Bull made exactly the same mistake that Zuck just made with threads. What Red Bull believed was we built one of the greatest brands in the world, which they have, but they didn't understand why the category made the brand not the other way around. Energy drink made the category. Right. So they go, oh great. We can put our brand on anything and it'll fail. So let's make Cola. They lost a bazillion dollars. It's reported that Microsoft lost somewhere between 400 and a billion dollars in Microsoft stores. Did you ever go to Microsoft store, Lenny?

36:28I've walked by them in the mall and I don't think I've ever entered. Well, they look exactly if you remember, they look exactly like an Apple store. Yeah. And Bomber famously told the team when the Apple stores took off, he famously told the team, go to the Apple stores, study everything they're doing and let's copy it exactly. It's Google that shit. It's out there. Well, it didn't work. Why? Because you can't attack an incumbent category queen unless you frame name and claim a new or different problem because when the existing problem is well understood and the existing solution is well understood, there's no need for a new solution.

37:18Even if people, quote, unquote, hate Twitter. Didn't do anything to Twitter. And now Zuck's going to have to write off probably over a billion dollars on threads. And the funny thing is Lenny, this just keeps happening over and over and over venture capitalists in the next five years will blow at least half a trillion dollars in the AI space alone on me to demand chasing, existing category competing startups that have a 10X better product. No one cares. And we're all got it. Look, we're all going to sit here and watch them do it. And we category pirates and those of us in the category design world will say, told you, and they're just going to keep doing it.

38:16More importantly, you know, because the big companies in many cases can afford to continue to fail and make this mistake. The tragedy in this is how many legendary innovative products never got to see the light of day. Because the inventor, the creator, the entrepreneur believed in the product, but didn't know that every solution has to fit into a problem of value for people. And so their innovation went nowhere. Let's talk about how to actually go about designing a category. You've used this phrase a few times and that may be the best lens to approach it. If not, we can go edit from a different direction, but this idea of framing, naming, and claiming.

39:04How do you do that? What's that process like? Great question. So it starts somewhere where most people don't want to start. And that is the first law of category design is thinking about thinking is the most important kind of thinking. Thinking about thinking is the most important kind of thinking. So if you're going to think about thinking, we have to sort of define thinking. Now the minute I start down this path, there's a meaningful percentage of people whose eyes roll and going, here comes some bullshit, right? Just tell me how to do the SEO Lenny. Where's the SEO or where's the whatever the fucking tactical thing is, right?

39:45Okay. So the first thing we have to do is break down thinking. So Roger Martin is considered to be the greatest management thinker or certainly one of them alive today. We were lucky enough to have him on the podcast when his last most recent book came out, which if I'm remembering correctly, is called the new way to think. People call him the new Peter Drucker. And here he describes it as effectively as anyone I've ever heard. And he at a high level, and this is me paraphrasing, so give me some license, but he's the source. At a high level, there's two kinds of thinking, reflective and reflective.

40:23And now this is my editorializing. What most people think is reflective thinking is actually reflective thinking. So what's reflex versus reflective reflex is simple. You go for an annual checkup, yes? I should be. Well, have you ever had a doctor whack your knee with the little pink? Oh, yeah. And your knee goes, and she's testing your reflexes. And that's an involuntary thing. When you're sitting on the doctor's table and your legs are hanging like a little kid and she goes, whack, your knee just, your leg just does this twitch, right? So that's a reflex. And reflexive thinking is very, very powerful.

41:08You have a driver's license, I'm guessing. I do. And when was the last time you were in a vehicle driving? Uh, yesterday. And if you're out on the road driving and somebody cuts you off, what are you likely to do? I get a little, a little upset, and then I, I keep driving. But I would assert Lenny, you do something before you get to. Oh, I guess I tried to avoid, I tried to avoid hitting this car. Yes. And maybe you swerve, maybe you hit the brakes, maybe you do both. Yeah. My point is this, the car cuts you off. And we, instantly, no thinking, react in order to save our lives, not damage our vehicles, not hurt anybody else.

41:54We didn't think about that. We literally just reacted. Well, that's the way people think about most things. So I say to you, hey, Lenny, let's talk about guns and abortion and immigration rights in America. Now, you have opinions about those things, right? As do I. Most people don't challenge their own thinking. Most people say don't to go. Now, why do I think what I think about abortion? Where did I learn that? What do I really think about abortion? What do others think about abortion? Are there smart people in the world that I, that I admire who are more educated and experienced in this field that have meaningfully different opinions in my own?

42:44Oh, there are. Okay. Well, why is that? Et cetera, et cetera, et cetera, we don't fucking do that. We say our opinion on abortion is the opinion on abortion. And in the United States of America, in the political domain, we say, and anybody who thinks differently is trying to kill America, right? That's not thinking. So reflexive thinking is, hmm, what do I really think? Why do I think that? And in the business world, most people unconsciously assume the future is a continuation of the past. That's not what legendary entrepreneurs do. Legendary entrepreneurs don't just think they know the future is going to be different because they're designing that different future.

43:41And the problem they are focused on matters to them so much that the fact that the problem continues to persist makes them batshit crazy. Right? RJ at, or is it RJ or J .R., I can't remember now at the founder of Rivian, obviously Musk at Tesla. These guys are obsessed. They're, it drives them insane. They don't understand why we're not all in EVs already. And so my friend Mike Maples, the legendary venture capitalist from floodgate says, the greatest entrepreneurs are visitors from the future telling us how it's going to be. And the reason many of them are so erasible is because the fact that the present is not already at the future that they see makes them insane.

44:33And so the point being, legendary entrepreneurs and creators make the future different. They literally are in the design different futures business. So can I tell you a story? Please. So we're friends and we've done some work with the guys who created LoMe. And LoMe is the first kitchen appliance in 20 years to earn a spot on the kitchen counter. So, hey, it's one of the fastest growing new consumer items in the last 20 years. And B, if you think about your kitchen counter, give a toaster. Yep. Coffee maker. Yeah, I don't drink too much coffee, but we do have any other devices on the kitchen counter.

45:27We got a rice cooker. Okay. And the rest is hidden away. Perfect. So what's LoMe? LoMe is the category designer of the smart home compost, composter. So imagine a device that's sort of one and a half or twice the size of a good sized toaster. And what LoMe does is you take your food scraps and it turns out that depending on whose numbers you want to believe in America, we throw away somewhere between 40 to 60 % of our food. And it turns out that food garbage, food waste, is some of the most damaging to the environment. Okay. So what does LoMe do? You take your food scraps, you dump it into LoMe, you fill that shit up.

46:17LoMe has got a button on the front, you press that button. And what used to take three to six months to compost gets composted in three to six hours. And it even, this is weird, it smells good to me.

46:34Okay. So LoMe did not say that we're better garbage, that we're different garbage, that we're better recycling. What they said was we are a different way of solving this huge problem. And they use both personal motivation. Nobody likes throwing out garbage. Nobody likes a big mess in their kitchen, etc. And an altruistic vision, which is an oh, by the way, if we do this, we will do something that governments here to for have not been able to do, which is take a massive amount of environment, hurting gases out of the atmosphere. And it turns out because of global climate change, that we're creating more and more sand and we have a dirt traces.

47:30Well, LoMe dirt has been shown to be amongst the most nutrient rich dirt in the world. So here is a company with a breakthrough technology that truly makes a difference in the world with a business model that allows them to build a highly profitable high growth business. And the way they got there was by designing a new category and showing the world why by making room in your tight kitchen for this new device, you'll make a difference for your family and the world. And if all they had done was what by way of example Dean came and did when he launched the Segway, which is, isn't this cool? Nothing would have.

48:16So my point is the LoMe guys designed a product, a company, and a new market category. They created demand out of nothing for I think the average price is around 400 bucks. The sum total of the market for smart home composers when they launched was fucking zero. And their vision for the new category was so compelling. Jay Z was one of their first investors. Wow. Okay, so I have their side up. So thinking about this framework of frame it name it claim it, they framed the problem in this unique way of like, is it the framing of the problem or framing of a solution? How do you, the framing step? What's the best way to think about that?

49:08So there's something in category design called languaging, which is the strategic use of language to change thinking. And a mistake that a lot of entrepreneurs make is they use old language to describe their new thing. And we can't use so much new language that nobody knows what the fuck we're talking about. So we have to meet the category where it is and bring them forward. But we have to create new language. And can I share with you one of my favorite most recent favorite category design stories in this regard? Please. So you've been on an elevator, yes? Yes. Have you ever looked at the floor and seen a logo on the floor of the elevator?

49:53I can't recall. I imagine it. Well, if you do, you will more than likely see this name Otis. Yeah. Otis elevator. Most people don't know why Otis is the category queen of elevators. Well, here's why. Alicia Otis invented the elevator. Now, pre -Alicia, there were no skyscrapers. Because how could you get to the top floor? How could you build the top floor? Et cetera, et cetera, et cetera. So when he creates the elevator, there's no known problem for it to solve. So he demonstrates it. People think it's cool. He shows it at like fairs and shit because the big problem with prior elevators was they would crash.

50:46And so he built this safety system to catch them if the wiring would crash. And the category name actually used Lenny, he called it the safety elevator to address the current problem in the space, which is, I don't know. People still went, okay, that's interesting, but like, why do I need a safety elevator? It's a solution with no problem. So what does he do? Languaging. And in category design, one of the breakthroughs is this thing called a point of view, which helps you frame, claim, and name a problem and educate the world on why they should move from the way it is. Two, we call them photos from two and new in different way.

51:34So Alicia has to make the market. There's zero demand. It's what many of our smart VC friends call a zero billion dollar market. Right, which is what you want. So what does Alicia call it? The vertical railway.

51:56Beautiful. And people understand what a railway does. It moves people in shit this way. And he said, well, great. We've now got a vertical elevator that moves people in shit this way. And if you have a vertical elevator, vertical railway, a vertical railway, thank you. You can have a new category of building. This is no different than anybody today, for example, in the technology space, who's building a new part of the technology stack for AI. So if you've got a new important security layer for AI, that enables a new kind of highly secure AI application. From a languaging perspective, if you just use existing languaging, you'll be like Alicia in the beginning where people go, that's really cool, man.

52:49Fuckin' A, didn't think that was technically possible. What? It's like you're broken gravity, dude. Incredible. And don't know why we'd ever need this. See ya. And he goes, wait a minute, wait a minute. What if it was a vertical railway? Oh, what could we do with a vertical railway? And so, this is why thinking matters. The way you think about the problem, the way you frame, claim, and name the problem. One of the core tenants, Lenny, and category design is listen to the words. Listen to the words. And when you listen to the words, you will hear things that you don't normally. And so, he created new languaging, what in category design is called a point of view, to frame, claim, and name a problem, which is how do I move shit up and down versus across land.

53:46And in so doing, open people's, the aperture of people's minds created what you could think of as new mental scaffolding for a whole new kind of innovation. And thanks to Alicia Otis, we have tall buildings. I really like this idea of languaging. Are there any other examples, come to mind of awesome examples of languaging in action that worked out? I got a bazillion of them. Okay, another one of my favorites. When Starbucks first starts, a coffee is ten cents. So you sit there and you go, well, we can't make money at ten cents. That doesn't make sense, right? Unity economics don't work for what we're trying to get done.

54:26If the ASP and the industry is ten cents, we want to have an ASP of three bucks. Fuck. Well, here's the aha. It's very hard to charge three bucks for a thing that everybody currently pays a quarter for. If you call it the same thing. So they create new languaging. They teach, they literally teach consumers new language. That's why you and I walk into Starbucks and say, I'd like a double grande la tape, please. Well, 25 years ago, that was not languaging that you and I used and they use it as a mechanism for radical differentiation and radical value slash price differentiation. And they made up the fucking word.

55:26It sounds kind of Italian, venté, you know, but the truth is, by the way, it's a milkshake, but that's a whole other conversation. They're the number one milk seller in the country. They're a milk company, not a coffee company, but that's again, a whole other conversation. The point being, if you want to charge three bucks for something that here to four has been ten cents or a quarter, change the language. And you know it's Starbucks language. If you like where I live, those are shit ton of new hipster independent coffee shop type places where they, you know, paint the Mona Lisa and your latte before they give it to you and all that shit.

56:05If you walk into one of those hipster places and ask for a double grande la tape, the super hipster galor guy behind the counter with the nose ring and shit is going to give you a bit of a drizzle because you're using Starbucks language in their location. And that's the other breakthrough. And this is really important in technology industry. The company that creates the languaging for the category wins.

56:38Oh, you see that today? Open AI. Not that long ago, you did not hear the term large language model. Correct? Correct. That was not a term we were talking about. That's right. And today, the entire industry is talking about LLMs. Now, here's another thing that they created. Training data. Well, those of us who've been around for a long time, we understand what data is. We know what a database is. We know what data in motion is. We know what data at rest is. We know what structure data is. We know what unstructured data is, etc. etc. etc. We know even if I'm not a data expert by any stretch, but I've been in the industry for 37 years.

57:23I know some shit about data. We've never heard the term training data. And I'm still frankly looking for a breakthrough in languaging to describe it to people because I think when most people realize the difference between data slash content and training data, there's a massive breakthrough that can occur there. The languaging is still not sufficient, but we're getting there. New languaging creates new thinking. And a demarcation point in language creates a demarcation point in thinking, which can create a demarcation point in perceived value. And she who changes and or creates net new value perceptions wins.

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58:59Building and managing your network doesn't have to feel like networking. Join Round to surround yourself with leaders from tech's most innovative companies. Build relationships, be inspired, take action, visit round .tech slash apply, and use promo code Lenny to skip the waitlist. That's round .tech slash apply. I think you've made a very compelling case for why people should design a new category. To give people one more tactical tool for coming up with and figuring out the category they want to go after and framing it and even naming it, you mentioned this idea of having a point of view. Maybe that's the best way to approach this question or maybe there's another framework of just like how can people best think through and spend time thinking about what this new category they should be creating ends up being.

59:50Great question, Lenny. So two things, at least. So first, spend more time on the problem than the solution. So there's a very early stage security startup I'm working with right now in the AI space that's doing absolutely mind -boggling things and the founders have incredible backgrounds with large transaction systems and deep security and just incredible company. I had a call yesterday with the founder and some folks on the product team just getting an update on where they're at and this and then the other. And we're sort of starting to want to talk to people externally. We raised a seed round.

1:00:35VCs are coming. They're very interesting. So anyway, we're sort of slowly starting to want to come into the world and begin to have a conversation. So the founder CEO sends me a text yesterday and says I'd like you to, if you're open to it, have a call with so -and -so. And he's a very important person. He knows a lot about our space. He's beloved and known for a long time. Right? And so I said, well, what's the purpose of my, it sounds wonderful. Why? What's the purpose of my conversation with so -and -so? And the founder literally said to me, I would love it if you would be willing to invest some time in listening to some of our customers to hear from their perspective what the problem is and what the solution could be, not just from me and our team.

1:01:26That is a founder who's obsessed with the problem. So that's the first piece. The second piece of advice, I'll give you comes, I mentioned Mike Maples. So he's got a very powerful way of kind of framing this. He calls it backcasting as distinct from forecasting. You're nodding your head. You're familiar with this. Yeah, I've read this and willing to end the show notes. It's amazing. Yeah. So here's the idea. What most people do is you and I are entrepreneurs. We have this idea for a product. This problem we can solve. We think we're going to be bazillionaires. We think we're going to help a lot of people.

1:02:11We think we're going to have a lot of fun. And so we have at it. And whether we realize it or not, the mental scaffolding we use goes like this. Lenny and Christopher are sitting here now. We have these big dreams. We think let's say five years out into the future. Why would you want to? We want to. We want to. Most of this is subconscious. And then it shows up in business plans and other things. What do we need to do to get from here? To there? Right? Have you ever done any backcountry hiking, Lenny? Yeah, I have. Yeah. So if you and I were going to go on a four or five day trip in the Sierra's, we would have a start point, right?

1:03:00Yeah, absolutely. And we'd know where we were coming out, right? And we'd have way points along the way, yes. Yeah. And we, we, because we knew we were going to be out four days or six days or whatever, we would try to plan our food appropriately. Absolutely. And the whole plan would be predicated on we're going to start here. And we're going to end here. And what do we need to do to get from where we start to where we end? Yes. Now when going on a backcountry hike, that's a very smart fucking thing to do. Because if you've ever been on a backcountry hike and you're four days in, only to realize you don't have enough food, that's an experience you don't want to recreate.

1:03:38Okay. Turns out that while that's highly effective for a hike, it is intergalactic disaster for a startup. Here's why your point of reference is everything. Thinking about thinking is the most important kind of thinking. So when we do it that way, mentally we are standing in the present, which is an extension of the past. And we're saying, what do we need to do to go from this present to the different future we want? And what are the obstacles in the way? Here's the mental scaffolding. So that's forecasting. Here's backcasting. We do an exercise. We abandon everything. In category design, you get taught to what's called reject the premise.

1:04:35So I reject everything about the way that it is. All of it. You and I now envision this future five years out and everything's gone incredibly. It's exceeded our expectations. We make that true in our minds. We write out, we brainstorm out, what's it going to be like? What kind of technology are we selling? What are we doing for customers? How big is our company? How many people? And then we say, okay, standing in that future five years out, looking back to the present, what did we do to make this different future happen? That's category design. That's how you unshackle yourself from the past.

1:05:22So you're one of the biggest disservices in our industries. This word disrupts. And then we're going to go disrupt the adherence industry. Well, if you're disrupting something, by definition, your reference point is the something. And when your reference point is an existing thing, your reference point is the past. If we want to be able to think in unconstrained ways about a radically different future, the more we drag the past forward, the worse off we are. So what reject the premise teaches us is, let's forget everything we know and start fresh. My friend, the legendary designer, John Bielinberg, does this course on innovation and design with kids in university.

1:06:09And it's a, it does this multi -week exercise. And the objective of the exercise, Lenny, is design a bicycle. That's the objective. And there's only one design point. It cannot be writable. And the reason John makes them do that, his philosophy calls it thinking wrong. That's his sort of version, if you will, of reject the premise. The reason for it is when you take away the premise, it must be writable. You open up the aperture for legendary new thinking, radically different possibilities, radically different futures. And so this is the mistake that many, many entrepreneurs make, is whether they realize it or not what they're doing is incremental better.

1:06:59And they're fighting for market share, fighting for existing demand with something that's incrementally better. And the reality is, that's why most entrepreneurs fail. Now, you can fail doing the exponentially different. It sounds medically insane to say what you want is a zero billion dollar market. However, as crazy as it sounds, it's the only thing that leads to meaningful success. And the proof is in the data. Yeah, you talk about this in your writing that on the surface, it feels very hard and expensive to design a category, build a category, convince everyone this is a new problem. But your point is there's no other option really if you want to build a large business, is that right?

1:07:49Correct. And the other thing is people say, it's really expensive and it takes an out of time. As compared to what? So you've lived a lot of your life in the product world. Yes. As have I. Well, if you ask smart VCs, if you ask Brian Roberts at Van Rock, the number one healthcare tech investor in the world, I believe he says it's 8 to 10 years for a product to really have, have some maturity and be really stable and dead of it. I don't know whether he's right or not, but he's a super smart guy. Right? We know how long does it take to create a legendary culture? How long does it take to get a legendary innovative business model or really hum?

1:08:35So it's really hard. Well, so is building a product, so is building a company, so is raising VC, so is doing sales, so is doing marketing, so is doing HR, so if you want to be easy, go work at the fucking DMV. That's kind of point A. Point B is the reality, Lenny. When you look at it, the vast majority of innovation comes from startups, so people say only big companies can do this. Listen, my collaborator, partner Eddie Yoon is the Obi -Wan Kenobi of category design in the global 2000 arena and particularly on the consumer side, and he will tell you that most of these major companies, and he's worked for, you name a big food company, you name a big beverage company, he's worked for many of them.

1:09:28They fail miserably, and so the reality is six people with a small investment from a rich uncle can stand something up that has the potential to be worth $3 trillion, because that's what Apple is. And I sat there with Don Valentine and asked him about why he signed the check to Steve and Steve. And he said it was the stupidest use case he ever saw. The use case was a stay -at -home mom keeping track of her recipes on the Apple personal computer. It's the stupidest use case ever. However, Don could see the potential in the category and in the guy's willingness to go get after it. And so for a VC, if you're going to raise money, the VC's who invest in early stage mass potential companies are the ones who see your different future.

1:10:39Kind of along those lines, I had this note that you have this quote around product market fit. And it's kind of this hot take, that product market fit is a very dangerous idea. I'd love for you to speak to that because I think most people are in the opposite camp, that it's the only thing that matters. Why do you think it's such a dangerous idea? So, and there's a bunch of these product myths, product -led growth is another one. But let's go to product market fit. And God bless Mark Andreessen, he's the guy that framed it. And Kevin just wrote a really super thoughtful piece on why it's backwards.

1:11:18And I happened to send that to you if you want. Kevin, Mayne, genius. Here's the aha. Again, category design principles. Listen to the words, product, market fit, product, market fit. Now, let's think. Okay, so what there is for me to do is find a way to fit my product into a market.

1:11:49Pretty simple way to determine or to distill product market fit, right? And what product market fit has come to mean is we're going to, we're a brew pub. You and I want to start a craft beer place, like everybody else on the west coast. And we're going to make a bunch of samples and shit. And we're going to feed those samples to our friends and to our ideal customer profile that I learned from Lenny. Right? And if enough people amongst my friend group and my ideal customer group, say, that's a yummy IPA. I like it. Then we're going to build it. And then if people start buying that IPA, we have quote unquote, and these are the term, these are the words people use achieved product market fit.

1:12:42Okay, well, threads achieve product market fit faster than any product in history of the world. Here's the aha. Categories make products, not the other way around. And so what you want is you want to design a market category for your product, not fit your product into a market category. And the problem is our industry, like many others, but the tech industry is full of product bigots because they really, really, really, really, really believe like they believe in the availability of oxygen, the best product wins. They really believe it. And they believe, what marketing's job is, could you go put a demo on our website and get a demo?

1:13:36Can we get a viral video that's a demo? Because when people see how much better faster, cheaper, smaller, bigger, whatever our thing is, they're going to buy it and they don't. What they buy is a new insight around a problem slash opportunity that requires a different solution. That's what they buy. Here's another simple example. I don't want to hear right now a lot. What we need now is the drawing. We need a drawing brand. We need a, we need a, the number one thing you can do in marketing is to share your startup founder, Jamie. Share your journey. This is all the shit we're hearing, right? We've been hearing this bullshit for a while.

1:14:20Well, guess what? No one gives a fuck about your journey. They really don't. You know what they care about? They're not themselves. They're problems. They're needs. They're opportunities. For our books, no leopard, we did the first ever comprehensive data science research ever done using Nielsen data to study nonfiction books. And we know that because that's what Nielsen told us. And we had to sign an NDA that will take a, choke a horse in terms of what we can't say and can't say about the data. But one of the things we want to understand is what categories of business books sold and which categories didn't and why.

1:15:05We can get into all that if you want, but here's the, uh, guess what the number one category of business books, nonfiction books is by a mile. Now my god sales marketing, marketing sales. No personal growth. Okay, that makes them self help. And self help. And number two, personal finance. Um, biographies are like way down on the list. So the point being no one cares about our product. No one cares that it's 25 mega flips, faster, cheaper, whatever than the net. They don't care. You know what they care about them. Their needs, their wants, their problems and categories are about customers and their wants, needs, problems and opportunities.

1:15:53Branding and marketing is about our product. And the greatest innovators in the world don't stop at innovating product or technology. They design a new innovative market category where they stand alone. We're definitely going along which I expected. And we've actually gone through most of the questions I had, but I have just a few more to kind of close out the conversation. One is positioning. That's something you hear a lot about. How do you think about positioning versus category? Are they essentially the same thing? This positioning just a way to phrase and describe your category? How should people think about that?

1:16:31What positioning today is or has become is essentially how do I tell a story about my shit in a unique way, in a compelling way? That's really what people mean when they say position. The part they never stop to consider, again, listen to the words positioning as it relates to what? Because you quote unquote, again, listen to the words and fucking think. You position against competitors, right? How do we position against the competitors? That's a phrase people use. So the question is what are you positioning against? And the answer to that question, almost all of the time is competition. And so if you're doing positioning in that context, you just decided you're fighting for 24 % of the demand designed by somebody else.

1:17:45And we think in the text space where one company earns two thirds of the economics, if that's your starting point, you fuck yourself from the start. And so to put it simply positioning in the modern context is for losers. That is to say people who are fighting over the 24 %.

1:18:12So that's positioning. I love again spicy over here. Well, it's factually correct. People go, oh, and then he's like, okay, so are you mean to tell me that in tech one company doesn't take two thirds of the economics? Okay, believe that. And you can believe gravity doesn't exist. It does. But you can believe whatever, you can believe that big -foot are installing misters on 5G towers to make us all sick if you want. You can believe anything you want. It doesn't make it true. Right? What's true is one company wins and everybody else gets fucked. That's what's true. Look at any space you want. You want to go back to your list?

1:18:58We can go through the list. Right? And so positioning has become sort of category design for the cowards. Right? It's like, well, I don't know that we could really be as radical as to create our own space. So let's just see if we can carve off our little niche over here. Okay, great. A big part of positioning, just to kind of expand on this a little bit, is differentiation, differentiating yourself. People always talk about the importance of differentiation. Do you see that as the same kind of potential pitfall or is that also or how do you think about differentiation? Okay, so this is really, really powerful.

1:19:36So in category design, we don't compete period full stop at the brand, the brand or product to product level. Category designers do compete, but not against the product, not against the company, not against the brand. Category designers compete against the status quo. So here, let me be specific. There's a category called cycling. You look like you might be a biker, Lenny, are you? Very, very casually with it. Mostly an e -bike. Those are really fun, aren't they? They're so fun. Mountain bike, yeah. So, but you've been on a mountain bike, you've been on a road bike, you've gone out with friends, done this, right?

1:20:20Yeah. Anybody who bikes on any kind of regular basis has been in an accident. And if you bike on a real regular basis, you've been in an accident with a vehicle that was not caused by you. That's true for every person I know that rides a bike on any kind of regular basis, myself included. So all of a sudden, a new category shows up. And that new category is called indoor biking classes. And the category designer is a company called spinning. And they say, hey, biking's great. It's an incredible source of exercise, but you don't want to get killed doing it. So come take a class. And what they're doing when they do that, they're competing category to category, not brand or product to brand.

1:21:13And that's a strategy that's called damning the demand. So what does a damn do? There's a bunch of water running in the direction. A damn takes that water, stops it and moves it, does something to it interrupts it and changes it. So here's what spinning does. They say, why risk your life on a bike when you can take a wonderful class and not have to worry about it and get your exercise. So what damn the demand Lenny is is you thought you wanted this, but what you really need is that. Then what happens? The next iteration in that space comes from peloton. Again, when peloton launches, they don't say, hey, our bikes are better than spinning bikes.

1:22:05Our bikes are 12 mega flips faster cheaper. They don't do any of that shit. They don't shit on spinning. They don't attack spinning. They don't attack road biking. Mountain, they don't do any of that stuff. They say, why drive to the gym when you could do it at home? They dam the demand for spinning. They don't compete against it. And they reframe the problem called, how do I get a great workout in a group environment without getting killed?

1:22:40And they achieve that competing directly product to product. The enemy is the status quo. That is to say the way it is now. So if you go back to Lomi, the enemy, the way it is now, the status quo is a nasty garbage in your kitchen that stinks and smells and gets all over the floor that you have to drag to the green bin and then and then the squirrels and the fucking raccoons eat it. That's the personal upset. And the environmental one is we're destroying the planet. No, by the way, rather than destroy the planet, why not create this super awesome compost dirt, right? And that's in category design.

1:23:18We call that a from too, a photo. And so category designers are leading the world from the way it is to a new and different way. They're not saying my carbonyngulators better than their carbonyngulator. Here's a simple example. This is another reason the word disrupt doesn't work. So Les Paul is the acoustic guitar players have an electric guitar and an acoustic guitar. Matter of fact, most guitar players have more than one. Very few guitar players, some but very few said, oh, now that the electric guitar is invented, fuck the acoustic guitar. Very, very rare. So the net new category called electric guitar as opposed to the prior category acoustic guitar actually increases the overall guitar.

1:24:11Tam doesn't disrupt shit. So in that case, you're actually creating net new demand in the peloton example. You're both creating net new demand and you're getting your start. And this is where I think a lot of the discussion that you have and a lot of your worklinny around growth is really powerful because what's really going on when growth works is effective digital damning of demand. That's what's really going on when it works. I think somewhere maybe wrote this down the tam. This is awesome phrase. If you have it, that's a you should use that damning the tam, adding, increasing the tam. So you have a number of books you put out.

1:24:51I won't link to all these play bigger. I think was your first niche down is the other and your newest book, I believe, is your newest book is the 22 laws of category design. So maybe just as a last question, can you just share a few of these laws, maybe two or three of your favorite laws from the book just to give people a sense of the book? I think we talked about law number one, which in a lot of ways is probably the most important. Another one to think about is something we call the magic triangle, which we've touched on, but maybe not explicitly, which is in order to build a legendary company, you got a product company and category right at the right time.

1:25:29So some people hear the category design discussion and they think it's somehow pejorative to product as if product doesn't matter. The reason for category design is because we love the products. Products fail because they don't get category designed. So I think the aha of the equally important. And so getting that right, I think, is very powerful. Another, and I'm just riffing off the top of my head. I don't have it in front of me. Another example is lightning strikes versus peanut butter. Right? So what most marketers do is they take their marketing budget for the year, they quarterize it. And maybe there's slight variance in the quarters, but essentially it's a similar amount of spin.

1:26:25And they do campaigns and they do quote unquote keep the lights on. And maybe they launch a product and maybe they have a big push around the product and they're trying to drive the funnel and they're trying to deliver sales or deliver leads or what you know, be to be your beauty, doesn't matter. And that's what they do. And what they don't realize Lenny is that approach, that peanut butter approach is predicated on a almost 100 year old mental scaffolding and marketing called a reach and frequency. And what reach and frequency was about, which is was I want to get my shit in front of the most amount of people, the most often possible.

1:27:06And if you listen to sort of a lot of the shisters and hustle porn stars, the Gary V .Ds and this is the worth. I again, I release 400 pieces of content today on every platform in all this stupidity, right? That's just a reswizzle of reach and frequency from over 50 years ago in the new medium, right? Well, it turns out reach and frequency doesn't work. And so because the number of marketing messages we get is massive, there's their experts who say we get up to 60 ,000 a day, whether it's, you know, logos on coffee cups or ads on the internet and everything in between. And so it's virtually impossible to stand out in a reach and frequency mode.

1:27:49Now, I'm not saying you shouldn't be doing keep the lights on marketing. Of course, you need to keep the lights on marketing. But here's what the lightning strike model and category design teaches us. I'd rather matter for one week a year than be irrelevant for the rest of the year. And so what we did, candidly Lenny, was we ripped off Hollywood's model for launching movies. We said, hmm, what if you did that as a software company? What if you launched a thing, be it a product or something else, the way Hollywood launches a movie? And so what a lightning strike is about is getting very, very clear to go back to your IPC thing or ICP thing.

1:28:33Who's our ideal customer? Where is that customer? Where does she hang out? Ideally in the digital world, world first, one of your recent episodes I was listening to your the growth hacker gal or how she went on to read it and stuff. You know, that's a well -known strategy. And I love that strategy. Go hang out where they are, put something provocative and engaging in front of them and matter in that moment. So the idea of a lightning strike is if you're in our target audience for that day or that two days, we're going to be all over you. We're going to be undeniable. And so we put a disproportionate amount of our effort.

1:29:16If we're in B2B, probably one to two lightning strikes a year. If we're in B2C, two to three, one a quarter, if you're like a really big company, it's hard to pull off one a quarter if you're a smaller company. And much more than that, if not a lightning strike, it starts to blur back into peanut butter. But that is a very powerful concept on the execution side for marketers that's different. The other thing I'd say and probably should have started here. So I'm a three -time public company CMO. I've advised over 50 venture -back companies in category design and marketing. Guess what I've never seen in a marketing plant ever.

1:29:58What's that? Word of mouth. This boggles our minds, those of us in category design, because warm is was and always will be the most powerful form of marketing. And in the native digital world, warm can spread in a way that was never possible on the analog world for all the reasons we all understand. So if you take the concept of a lightning strike, then you take the concept of a category point of view that is all about frame naming and claiming a problem. And then there's one other concept I'll introduce. It sits next to your ideal customer profile. It's what in category design we call super consumers.

1:30:38So it turns out that in most categories, roughly 8 to 10 % of the buyers are responsible for the vast majority of the profits. And more importantly, they are the zeitgeist. They are the thought leaders in the industry. They are the customers, the users, the purveyors of whatever the thing is that others look up to as sort of being the ones to admire, the ones to aspire to, the best practices etc. That's a super consumer. Okay. So in category design, when you understand who your supers are, ID, your ideal customer profile, you understand where they are, primarily in the native digital world. How do we go hang out and remind me what that calls name was?

1:31:21I thought she was awesome. Melton, Melton, Quran, Berkowitz. Melton? Melton, MLTM. What a name. That's a great name. Anyway, I thought Melton was awesome. She's absolutely on point. So we know who our ideal customer aka super consumers are. We know where they hang out in the native digital world. We have a radically compelling different point of view about framing, claiming, and naming a problem that if we do effectively, we'll resonate with them. That's why we spend time crafting that POV. So we evangelize the problem. We participate in a native digital community where they already are, and we do it from the perspective of not a marketer, not a seller, an educator.

1:32:07We're teaching people about a new and different way to think about an existing problem or a problem they hadn't thought of that when they have in a hum moment because we articulate it well with our point of view, they go, oh, tell me more about that problem. As they do that, we take an education standpoint, mental kind of framework to it. We open them up. We participate and sooner later, somebody says, huh, tell me again what you do and bam, away that we go. And here's the aha. When you understand supers, you understand the targeting, you understand a radically different point of view, reframing the problem, presenting a radically different solution.

1:32:51Well, guess what? It's the ultimate growth engine. And you can grow for a very small amount of money. You could send email to 300 people and drive a breakthrough in sales. Why? Because when you take this approach, you're not just driving near -term revenue, very, very important. You're driving warm. A big part of why you want to have a point of view that can be articulated very quickly is marketing's job is to put the right words in the right mouths and to get that warm to scale. And so when we have a category POV that's about them, not us. Remember brands are about us. Categories are about customers, right?

1:33:40We care about what they care about. And so when you have a powerful category POV, that drives warm. And when you do that in the native digital world, you get a tremendous amount of uplift from native digital viral warm. And category design is the only business strategy whose primary execution focus starts with warm. What an awesome way to wrap up our conversations, basically a very tight go -to -market strategy is what kind of what you just shared. For folks that want to dig further, I'll just share a few of the places they could learn more. And you'll at the end I'll ask you where to point people.

1:34:20But you have an awesome substack category pirates .substack .com. If you have your books, which I think maybe the best way to, I guess you tell me is to find them as good at your last name .com, lockhead .com, L -O -C -H, head .com. Is that right? Yeah, and of course you can go to category pirates .com. Okay, you've been easier. Amazing. So we have the lightning round coming up. Is there anything else you want to share as closing words or advice before we get to our very exciting lightning round? Yes, I do. Okay, let's do it. So I'm 55 years old, Lenny. I started my first company when I was 18.

1:34:54I got thrown out of school. I don't have a GD. And I've been in the tech industry the whole time. And the first thing I would share is anything's possible. Don't listen to anybody who shits on you. I have a chat on as much as you could possibly imagine. I have four or five different learning differences, ADHD, dyslexia, dyscalculia, blah, blah, blah, blah. I was told I couldn't read. I certainly told I couldn't write. I've written 14 number one fucking bestsellers, et cetera, et cetera. And so my point is if you're somebody for whom you want to spend your professional time working on the exponential difference as opposed to the incremental better, which I got to believe is a meaningful percentage of the people who consume your shit.

1:35:48If you want to work on the incremental better incremental better is important. I want the Boeing engineers working on the incremental better. I don't want the air traffic control system that's the exponential different. No, and a lot of incremental improvement over time can be exponential. So I don't you know, if you're if you're a product manager and you're running a highly successful product with a massive install base and you're looking at your next rev and you're trying to figure out of the 472 features that you could build, you know, what are the 26 that really matter? And you want to go talk to your customers to find out what those incremental improvements are and the stack rank them and do all that good.

1:36:28You know, PRD, MRD, IUD, all that shit. There's a big place in the world for all of that. It's incredibly important. That's not category design. So with that said, I think Lenny, we're at the greatest time in history for our industry. I think all the indicators show that the amount of innovation that is going to happen in the next five years will eclipse the amount of innovation that happened in the last 20 years. It's accelerating. AI is insanely exciting, dangerous, concerning. Do we need to focus on the downside? Do we need to be smart? Do we need to be thoughtful? Do we need to learn?

1:37:17Do we need that's always true. AI feels a little bit different, but it's always true and for the record, the Luddites are always wrong. The point being now is the greatest time in history to be a crater, to be an entrepreneur, to be a marketer. I've been a marketer for my entire adult life. It's never been greater than it is right now. And so here's sort of the big thing that I would share. If you're somebody for whom you want to make an exponential difference, you want to innovate, you want to create new value where there wasn't. You want to have a legendary career where you can look back on your career and go, you know what?

1:37:56I was part of this and that and I was on this team and now is the greatest time in history. And what I would say to you is the future needs you. Most people are not working on the exponential different. And so the future of our world requires that the innovative people, that the entrepreneurial people stand up, take advantage of these incredible technologies. And a lot of people, particularly in age group, Lenny, shit on millennials, Gen Z, what are lovingly referred to as native digitals. Absolutely not. I'm inspired by them. And I think the next generation of our entrepreneurs will be our greatest generation of entrepreneurs.

1:38:45So my point is now's the time the future needs you. Don't listen to any of the bullshit. I don't care what the boobard say. Absolutely go for it because there's never been a greater time to design and dominate new categories of innovation than right now. I love that message. You're just passion and energy for creating and inspiring. It comes through really clearly and all you're writing. And so I love hearing it in person. With that, we reached our very exciting lightning round. What are two or three books you recommended most to other people?

1:39:21Richard Bach allusions. And then in terms of business books, I'll share with you one because I know people recommend all the same shit. I'll share with you one that I think it's may still be in print, but if not, it's easy to get Mark McCormick's what they don't teach you at Harvard Business School. So on the personal side, Richard Bach allusions. And for one that you may not have heard of, Mark McCormick, what they don't teach you at the Harvard Business School. What is a favorite recent movie or TV show that you really enjoyed? Oh right now we're watching Designing Anna or Inventing Anna or whatever that's called.

1:40:04So that's been fascinating to watch. I think it's been incredibly well done. What a wild story that one. What is a favorite? Any of you question you'd like to ask candidates when you're hiring people? So there's actually two. And I'll start with the second most important interview question, which I think is the most important question, but in a job interview setting for me, it's the second most important. And that is, is there anything else? And you know this is a podcaster. I end up, you say, well, what am I podcast with? Is there anything else? And the interesting thing about that question, you can spend three hours with somebody talking about very important shit.

1:40:47You can think you got all the detail. You could have asked all the questions about the technical architecture and the campaign and the distribution. I don't know what, right? At the very end, you say, hey, Susan, you know, before you wrap, is there anything else? And often, Lenny, the most important thing for that person to communicate comes out then. Like it happens so often, it's bizarre. I use that in medical situations. Family members in the hospital going for an operation. Okay, Doc, tell me, I tell you all the shit. Is there anything else? I will tell you that eight times out of 10, the most important thing about the surgery with your loved one will come after that question.

1:41:32I will even use it during a conversation as we transition from various different points. So in an interview situation, maybe you're asking somebody about their background, you might say, well, no, is there anything else about your background? I think you think I should know. It's the most powerful open question. But in an interview, a job interview situation, it's my second favorite. My first favorite is, so Lenny, are you legendary?

1:42:01You want me to answer that? You can if you like or not. No, I will. But the answer to that question, how are you looking for it is always radically illustrative. I'm not looking for anything. I'm looking for your answer. Some people will say, yes, and they'll tell you why. Some people will say, well, that's a big word. Whatever they're going to say. But it is a purposely provocative question with one of, I think, the most powerful words in the English language because I want to get a read on that person and how they respond to a purposely provocative question about themselves. Amazing. Just a couple more questions.

1:42:44What's a favorite life motto that you like to repeat to yourself or share with other people? If you're lucky enough to make it to the top of a mountain, throw down a fucking rope. And for me, on that, Lenny, I'm somebody who has had and continues to have a radical amount of love and support in my life. When I was young, I started with nothing and I got thrown out of school. I didn't know until I was 21 because when I was young, learning differences weren't a thing. And by the way, the way most of the world and education system deals with learning differences is completely fucked. But that's a different conversation.

1:43:27It's definitely improved, but it's nowhere near what it needs to be. And so I just think that we should never be held back by those views of others. And so we need to be unencumbered. I love it. Final question. It's kind of a dumb question. Maybe they'll lead to something fun. You're a category pirate. Do you have a favorite real pirate? I have actually a lot of favorite pirates. I'll tell you about one of them. His name is Tony Eatherington, but virtually nobody calls him Tony. Virtually everybody calls him Doris. And Doris is a legendary surfer and surf explorer from the Gold Coast of Australia.

1:44:15And I went on my first ever boat tour surf adventure in Indonesia with Tony. And there's a horrible story I'm thinking of telling you. Anyway, you haven't been with a real pirate until you've been in Stormy Seas at night with Doris, Smoking Sigger, Drinking Jack Daniels in the bridge, thinking maybe we're going to die, but this guy's probably not going to let that happen. And so Doris, Eatherington, would be one of my top pirates of all time. And he's got the voice and he's got the attitude. When I was having problems surfing, he would say to me, All right, it's always smoking a cigarette. He's like, I smoke a lot of water.

1:45:10He's got a cigarette that he goes, you battle out. What for the biggest way? I'm going to do it and get right out. And so in our world, get right up on it as become an expression for, you know, kind of go for it. So I think we can all heed the words of Doris and get right up on it. I love that this question lets us something fun and interesting. Chris, thank you so much for being here. This conversation was entertaining and insightful, spicy, fun, funny, everything I hope to be. Two final questions working folks find you online if they want to learn more and keep reading. And then two, how can listeners be useful to you?

1:45:54Probably category pirates .com is the simplest, simplest spot to go. And how listeners can be useful to me. Yeah. It's what we talked about a moment ago. The future needs you. And the future needs the people that have the courage to make a difference because the people who are different are the ones who have made the biggest difference every time. And we live in a world where we are rewarded for our sameness, for fitting in. Our education system teaches us what we're trying to do is find our place in the world. And listen, some of us do. I know people who wanted to be a vet from the time they were kids.

1:46:42And that's the path they chose. And they became vets. And they love it. And they're wonderful people. And they have great careers. And they make a giant difference. And they've always known. And fucking a. And so if you're somebody for whom you have found your place in the world, congratulations. That's awesome. And we also know, particularly in the innovator, entrepreneur, creator, marketer world, many of us. There was no place. And so my hope is that you either find your place. Or if you realize there's no place for you that you further realize that you can make your place in the world. And fundamentally, that's what category design is about.

1:47:31It's about making a distinct, unique place in the world for yourself, for your product, and for your company, because the people who are different make the biggest difference. And so the great thing that people can do for me is to go into the world and make a different place for themselves in a way that delivers massive value to others. Beautiful. Chris, thank you again so much for being here. Lenny, bless you. I love all things Lenny. Thank you. Thanks Chris. Bye everyone. Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple podcasts, Spotify, or your favorite podcast app.

1:48:18Also, please consider giving us a rating or leaving a review, as that really helps other listeners find the podcast. You can find all past episodes or learn more about the show at Lenny's podcast .com. See you in the next episode.