In the competitive world of SaaS, many founders dream of creating their own category. It’s seen as the ultimate differentiator, a way to carve out a unique space in the market. But Godard Abel, co-founder and CEO of G2, suggests a counterintuitive approach: collaboration with competitors.
The Perilous Path of Solo Category Creation
Godard speaks from experience. He recounts his journey with Big Machines, his first venture:
“We were actually creating CPQ. It didn’t exist yet. And honestly, we almost went bankrupt and that took like ten years.”
This sobering tale serves as a warning to founders eager to blaze new trails. Creating a category from scratch isn’t just difficult—it can be existentially risky for your business.
The Power of Drafting off Existing Categories
Instead of starting from scratch, Godard suggests a more pragmatic approach:
“Usually what I recommend to founders, one thing is usually it’s easier to first draft off an existing category,” Godard advises.
He illustrates this with his experience at Steel Brick:
“CPQ existed, lots of people were buying, right? So we just said, hey, we’re just next gen CPQ and drafted off existing demand in the existing category. And honestly, that’s just so much easier if you can do it.”
This strategy allows you to tap into existing demand while still differentiating your offering. It’s a way to balance innovation with market recognition.
The Collaborative Approach to Category Creation
But what if you’re convinced that your product truly doesn’t fit into any existing category? Godard has a surprising piece of advice: team up with your competitors.
“I think if you really want to build a category, I love that idea of actually recruit some of your competitors, especially the up and comers,” Godard says.
He shares a compelling example:
“I remember I was recently talking to Sangram, he was one of the co-founders of Terminus, and now he’s leading GTM partners that advise on go to market strategies. But when he’s building Terminus and they help create ABM, account based marketing. But I remember he went to a bunch of competitors, including Jon Miller, who’s now with Demandbase, he was starting his own ABM vendor, but he said he went to ten of his competitors and said this was like in 2015. He said, hey guys, let’s all call it ABM, let’s all call it account based marketing.”
The result of this collaborative approach?
“In hindsight, that was brilliant, right? Because now account based marketing has become huge. And now we have like six subcategories, like ABM Execution, ABM ads, et cetera.”
The Power of Collective Category Building
Godard emphasizes the counterintuitive nature of this approach:
“If you really want to do category building, you actually need some competitors. In some ways, you want to team with them to create the category, and that’s a bit counterintuitive.”
This collaborative approach serves multiple purposes:
- It creates a unified front that’s more likely to gain traction in the market.
- It allows for faster category recognition and adoption.
- It doesn’t preclude competition—you’re still vying to be the best within the category.
Godard shares a personal anecdote to illustrate this:
“When we’re building Steel brick, there was a competitor Apttus, and obviously they wanted to beat us, we wanted to beat them. But then we both helped popularize the terms of CPQ configure price, quote QTC, quote to cash. And we both had big dreams at Dreamforce, ultimately marketing quota, cash marketing, CPQ.”
The G2 Perspective on Category Creation
From G2’s standpoint as a software marketplace, this collaborative approach to category creation is not just beneficial—it’s often necessary. Godard explains:
“If you just come say category one, we’ll say, no, thank you. But if you come with five to ten well funded, cool competitors, we’ll say, hell yes.”
This insight is particularly valuable for founders hoping to establish a new category on G2’s platform. It’s not just about having a unique product; it’s about demonstrating that there’s a viable market with multiple players.
Key Takeaways for Founders
- Consider drafting off existing categories before trying to create your own.
- If you must create a new category, don’t go it alone. Reach out to potential competitors and collaborate on category definition.
- Remember that category creation is about market creation, not just product differentiation.
- Be prepared for the long haul. Category creation, even when collaborative, is a marathon, not a sprint.
Godard’s advice challenges the conventional wisdom of fierce competition in the SaaS world. By advocating for collaboration in category creation, he offers a fresh perspective on how to innovate and differentiate in a crowded market.
For founders grappling with category creation, this approach offers a potentially easier and more effective path forward. It’s not about being the lone wolf, but about being the convener, the collaborator, the one who brings competitors together for mutual benefit.
In the end, the path to category creation might not be about standing out from the crowd, but about creating the crowd itself. And in doing so, you might just find yourself at the forefront of the next big thing in SaaS.
Listen to the full interview with Godard Abel:
How B2B Market Categories Are Created with G2’s Godard Abel (Behind the Category)