Categories
Back in 2007 I’d just graduated from college and was working a soul sucking job in finance. I wanted to use a different term for “soul sucking” because that sounds like something ChatGPT would write and that’s my writing arch nemesis these days, but that’s exactly what it felt like. I copied numbers from one Excel doc to another for 12 hours a day with the occasional break for a Fage yogurt with the little strawberry dip compartment. It was bleak.
Anyway, I’d just spent the previous ~10 years with basketball as my life’s main focus and I missed it. Also, I needed money and… something else. So, I started waking up early on Saturdays and Sundays to run drills with 11 year olds on the outdoor basketball courts of the Upper East Side.
These drills weren’t any different from the drills the guy giving private lessons on the court next to me was running. The only difference was that I charged 4x what he did. Because I, totally accidentally, had put my service in a different category.
I’d decided that I only wanted to give lessons to the kids who loved basketball. And, for some reason, I assumed that meant they’d pay more for lessons. So, while everyone else charged $60 / hr, I charged $250 / hr (and eventually more). To validate this price on my first set of fliers, I wrote this:
Tuition for students at a private university: $50k / year
Tuition at the same private university for basketball players: $0/ year
I played college basketball, so I know how to position your kid to get a college scholarship
(Talented, driven players only)
I’d fallen ass backwards into a great category.
Every other coach was lumped into the category of “helping your kid get better.” This makes it nearly impossible to differentiate and the “success state” isn’t clear. You’re in the weeds saying that your drills are better than someone else’s, or that you’re friendlier or easier to work with or available on off hours. You’re competing with what Seth Godin calls the “narcissism of minor differences” - you’re requiring your customer to have a PhD in coaching style to choose you.
But I was in a different category - the “potentially save $200k on college tuition” category - competing with things like “get a tutor” or “go to a really prestigious private high school” or “be the valedictorian.” My “success state” was obvious.
My competition in the category was also really expensive. I was way cheaper than a prestigious private school or what it’d take for their kid to be valedictorian.
The Step Before Contrast
Startups, and life, are about creating contrast. The obvious difference between you and not you.
But the step before contrast is choosing the basket of options you’d like to be compared against.
We’ve had dozens of companies in Tacklebox move the same exact product from one category to another and increase their price, and overall customer satisfaction, by 10x.
One of my favorite (non-Tacklebox) examples is the Perfect Bar. A delicious, filling bar you find in the refrigerated section of the grocery store.
But the fun thing about Perfect Bars are that they… don’t need to be refrigerated. This was a conscious choice to change their category. A non-refrigerated Perfect Bar would sit in the protein bar aisle of the grocery store, stacked up against Cliff Bars and RX Bars and a bunch of other stiff competition. In the refrigerated section, they’re now up against yogurt and vegetables. There are no other bars.
And, the truly wonderful thing about categories is that once you’re in a category the customer will assign all the characteristics they have in their head about that category to you. So, if they think that the refrigerated section of the grocery store is healthy, they’ll assume you are, too. And they’ll choose a Perfect Bar over yogurt because it tastes better.
How to Know Your Category
Step one of choosing a category is understanding what categories are out there.
Next time you run a customer interview, after you tell a customer at the end what you plan to build, ask them what the other options to solve that problem are. The basket of competitors they think you're in.
If they list you with a bunch of software that costs $9 bucks a month, you know you need to get the hell out of that category. Do some digging to understand what they spend more money on. If it’s a b2b opportunity, go to a different person in the decision making unit. Understand the “tuition costs $200k” potential, and pick and choose what you’d like to compete against. What characteristics you’d like automatically assigned to you.
If you’re selling personal training services to get in shape, you’re up against every other personal trainer and eating healthy and going for a run.
If you’re selling personal training services to get in the best shape of your life for your wedding that’s in 6 months, you’re now lumped into the “plan for the wedding” category, where customers are spending way more.
Become aware of all the categories that exist
Choose the one that'll work best for you
Make sure you position your product so customers put you in that category
And, if you get people to pay you $250 an hour for basketball lessons, maybe do it for more than six months? C'mon, 22 year old Brian.