Why Category Design Beats Product Market Fit with Kevin Maney

Welcome to the B2B Growth Blueprint podcast, where we talk with entrepreneurs, founders, and leaders at B2B services, tech, and SaaS companies to learn the systems and processes they've used to create success for their business. We'll also learn from marketing and sales experts to provide insights to help you grow your business. I'm your host, Mark Osborne, and the podcast is brought to you by Modern Revenue Strategies and their 10x ROI B2B Growth Guarantee. Schedule a free diagnostic call to learn the fastest path to double your B2B revenues in just 90 days. Hello and welcome to another episode of the B2B Growth Blueprint Podcast. I am your host, Mark Osborne. And today, I'm very excited to welcome my guest, Kevin Maney. Now, Kevin is a bestselling author, award-winning commentator, and founding partner of Category Design Advisors. He co-authored Play Bigger, which has influenced company strategy throughout the technology ecosystem and certainly influenced the way that I approach a lot of marketing and sales strategy. His past books include the New York Times bestseller, The 2-Second Advantage, How We Succeed by Anticipating the Future Just Enough, and the de facto history of IBM called The Maverick and His Machine: Thomas Watson Sr. and the Making of IBM. He's written for USA Today, Newsweek, Fortune, The Atlantic, and Wired, and often appears on radio and television. Today, he's nice enough to appear on my humble podcast from his home in New York. So, Kevin, welcome to the show.

Thanks, Mark. It's a pleasure.

Yeah, I'm super excited to have you on. As I referenced, having read, you know, Play Bigger and really incorporated a lot of those concepts into my approach at working with, you know, companies both where I was full-time and with clients. But for our audience that may not be as knowledgeable, give us your sort of background of, you know, how you got to where you are today and then talk about, you know, what is category design? What do you do there? Category design advisors.

How I got to where I am today. Well, so I mean, my background is as a journalist. I, you know, I've been going, going, I never took a technology or engineering course or anything in my life, but going back to my very first job in Binghamton, New York, where I grew up, I got offered a position as a business reporter. Um, at the news, local newspaper there. And it just so happened that the biggest company in town was IBM. That's where IBM grew up, essentially. It was, um, the core of it was founded in Endicott, New York, which is right next to Binghamton and still had an enormous presence there.

Uh-huh.

And so, if you're gonna be a business reporter in Binghamton, you cover IBM. And there was actually a bunch of other technology companies, uh, in the area. And I just fell in love with it and it, and it worked out, um, Serendipitously, it just right at the moment in time when the personal computer took off and people's, you know, individuals started being interested in computers and technology instead of just, you know, it being something that sat in the back room in a big corporation. And, you know, just kind of rode the wave as the next thing was, you know, here the internet came and everybody wanted to know about the internet. And now it's AI. It's just, you know, there's always something great to write about in tech circles. And along the way, I, I started writing, writing books that, you know, they kind of spun out of the journalism that I was doing at first. And, and then to make, to kind of make a long story short, which we can get back to previous things later maybe, but around 2000, it's been around 2014. I got a call from Al Ramadan. And Al, you know, long-term relationships, right? Al was somebody I wrote about in the 1990s when he had a company called Quokka Sports.

Mm-hmm.

And I always thought he was one of the smartest people I knew about the intersection of sports and the internet. So I'd always turn back to him and talk to him about these things. So Al calls me and he says, you know, I've been working with these other 2 guys, Christopher Lockhead and Dave Peterson, for the last few years. We've been— we have this firm called Play Bigger that we've been advising startups. And we have this theory that especially in the world of the internet, but it kind of applies throughout history, that in most market categories, the winner of a category takes most of the economics out of the category, right? You could toss all sorts of numbers around, but it basically works out if you like look at market categories over time. And there's others that have done studies about this. So if you kind of reverse engineer that and say like, well, if that's true, then if you were running a company or starting a company, why wouldn't you want to do everything you could to be the company that wins a market category? And, and so we just started talking about that over dinner in San Francisco one night, just that, basically that. And, and kind of came to the conclusion that there was something really interesting here. let's explore it more deeply and maybe there's a book involved. And the more we got into it and talked about it, the more excited we became about the idea. And again, we kind of reverse engineered, like, how would you do that? And how have the great companies in the past that have instinctively done it, the Steve Jobs of the world, the Jeff Bezos of the world? And So it's to answer your question about category design. What we came to realize is that instead of, you know, most, most companies have a strategy of let's, you know, let's build a product and try to find a place where it fits out there in the world and something that it solves. And at its most basic level, the idea behind category design is to first find the missing thing in the world. What is that? What, what is the problem that's going unsolved, or a new problem that's being created by technology today? Because every time we invent new things, we create new problems to solve. And so let's first identify the missing thing in the world. And if we can identify it and frame it so that everybody believes we know it better than everybody else, and set some rules around like what the solution should look like to that. And again, frame it so well that everybody thinks we know what we're talking about as the company that is creating this category. It actually puts you in a very advantageous position over time as the category evolves. And you know, a new market category isn't a category unless others come into it. If you find out you're a category of 1, you probably haven't done something very important. But what you want is to see— is to have others see what you're doing, say, that's really smart, that's going to be a big thing, let's go into that too, and essentially compete. But what they're really doing is validating the category. And what you— if you're really good at setting those rules, everybody else is going to come in and they're going to have to play by your rules. Which, which again kind of continues to put you in the driver's seat as the category develops over time. So at some point in time when what's called the dominant design of the category gets chosen, you're the one that the public or the market has picked and you are the one that's going to take away all those, those great economics. So that's kind of the thumbnail version.

Yeah. Well, and I love it and it resonated so much with me when I read it because it weaves together so many other you know, concepts that people may have heard of, which is, you know, in positioning, like the, you know, the number one rule of positioning is be number one. And if you can't be number one, find a place, find a new place or create a new place where you can be number one. Like, you know, Avis famously became number one at being number 2. We try harder. Like, they were the best in the world at being number 2. And I always, you know, sort of remembered that from the Owlrys and Jack Trout and And then also, you know, even in, you know, sort of Inside the Tornado, I think is the follow-up to, you know, Crossing the Chasm.

Mm-hmm.

And he talks about, you know, the gorillas, you know, take, you know, most of the market, but then there's enough left over for the chimpanzees. And there might be something left for the monkeys too, if you can come in and be really efficient. But it sort of captures this idea that most of the economics of a marketplace get taken out by a few big players. But that a lot of these sort of concepts fail to sort of describe, well, how do you engineer this? And this concept of category design is really like, how do you create this auspicious circumstance, the serendipity that actually leads you to dominate the economics of a category, which I think is so vital for companies to think about as they go to market.

Yeah, absolutely. And, you know, so there's a, there's an economist named Paul Goransky who in the book Play Bigger, there's like 2 paragraphs about him. And then in the years since, I really dove into his work. And in fact, in the new book that we just finished, it's coming out early next year, I dive much more deeply into his work. So this was a guy, who, an economist who studied market categories.

Mm-hmm.

And, and, you know, use data category after category, ends up, ends up coming up with this very elegant model, you know, just an overlap, 2 overlapping curves on a chart that describes the way most market categories end up working. And, and So there's a couple, couple of points. So one is that, so like day one, somebody invents something and you could call that the birth of a category, right? So this is this new thing. And so at that point in time, there's just one company, there's the inventor, that's all. There's just you in the category, right? And there's, and there's basically no users, you know, so that's day one. So 2 overlapping things happen. One is that as the first number of years of the category's existence go on, if it's a category that should exist, going back to a point I made earlier, the first thing you should see is that other companies say they're in that category. They're going to come in and say, and they'll come in with different versions of that thing, different designs. Maybe it works a little bit differently, but they're all basically following you into that category. So you want to see that happen, right? curve starts going up in the number of companies in. Interestingly, at the same time, over those same number of years, the number of users only increases by a little bit every year because this is the classic early adopters, right?

Mm-hmm.

So if you think about like probably a lot of things in your own life, when there's a lot of chaos and there's a lot of different versions of something out there, a lot of the— there'll be the early adopter people who will like want to try all those things, but the masses of the potential customers kind of sit on the sidelines and go, I'm gonna wait till that sorts itself out or until I know exactly what thing to buy, right?

Right.

And so what Groski identified is that there's this moment in time when the market chooses what he called the dominant design. Because we don't want all that chaos in a category, we as potential customers, right? We want to know there's one way this thing works. And so eventually we kind of settle on that. And as soon as we, as soon as that dominant design gets chosen, you see that other curve of the number of customers, users, whatever, start to skyrocket, right? So that's rocketing. And at the same time, the number of companies and competitors starts to fall away because they're not part of that dominant design. So the competitors fall away, number of customers rockets. That's where you are the, as a category winner, just to get to capture this enormous amount of, of the economics of the category. But what's really interesting about Goranski's work is he goes, understands all of this, he gets all this laid out, but then he ends up saying, but nobody knows why the dominant design gets chosen. I mean, here's the most important thing that could happen, right? And he could not identify any one single way that it happens. And what category design is about is trying to do everything possible in those years that the category is developing so that you become the dominant design. And that goes back to this idea of being the best at describing the category, being the best at describing how the solution should work, setting the rules that everybody else has to follow, putting you in the— So there's no guarantee that that's what's going to— the outcome is going to happen. As Gorowski would say, like, you could never tell exactly what's— but the best strategy you could have for your company is to do everything possible to put yourself in a position to be that dominant design when it gets chosen.

Well, and if I'm sort of interpreting this right, I think a lot of it is by really starting with the marketplace and the need that exists and really defining that need well. And then, and why it should be solved is a lot of what sort of helps shape why your design winds up being the one that's chosen, because you have a better understanding of the need of the marketplace. And so then you craft a better solution that solves the need of the marketplace, and then you enunciate that need better than others, and also why you solve that need better than others do. Which then sort of creates that gravity around, you know, sort of coalescing around, yeah, this really is the problem. And then if that's the problem, well, and the way that I describe category design to folks a lot is, you know, it's not about out there selling your products. You go out and you sell a worldview of, you know, this is wrong. And if you believe that this is wrong, and then here's a solution to it.

Yeah, yeah.

Believe that that's wrong and that there's a solution to it. Well, then you're the natural choice because you have addressed it through that worldview. Whereas if people are like, I don't think it's wrong, well, then they're not going to buy into the solution. Or if they don't agree with the way you describe that it's wrong, then they may not agree that your solution is the best way to solve it. But if you can sort of put this worldview out there strongly enough, you're the only choice. Because you described the situation.

Absolutely. And you touched on something that's really important too, which is, you know, some people hear about category design and they think it's— this is a marketing tactic or a positioning tactic, but it's actually the core of your strategy because it helps you see the product to build. And in fact, it helps you see even like what kind of company you need to build to address that particular market.

Yeah.

something else I've written about before, something else in this other book that's— so back in, you know, 15 years ago, whatever it was, maybe more, the concept of product market fit surfaced. There was actually a blog that Marc Andreessen wrote. He was the one who coined the phrase. And the piece that he wrote actually describes very, very well why category design is important, except there's one piece that I felt I've always felt was missing. And that if you're really thinking in terms of category design, it's not product market fit, it's market product fit. Because the, because what you're really doing, like product market fit to me suggests I'm gonna build this product and I'm gonna find a market where it, where it fits to be literal about it, right? Category design is the idea of first you're gonna find that market that needs something. And then you're gonna figure out what product to solve that and actually build a product to fit the market that you're after.

That's a really great sort of juxtapositioning. And it also reminds me of, and I can't remember who wrote this, but it has stuck with me of this idea of you don't sort of discover a niche, you carve a niche into, you know, the mountain that you're trying to climb up. You carve out that path. Not by just sort of finding something that's there because that's easy, but you actually sort of create it along the way. And that's what really sort of creates defensible niches and market positions that people can really own and dominate.

Yeah.

So you said, you mentioned something that I want to double-click on because the skeptics out there would say, well, this is just positioning. You're Avis and so you create the category of being number 2 in the—

Because you're not number 1.

Because you're not number one. Or it's just niche identification. You know, you can't serve the larger market because you're not big enough or your product's not good enough. And so you find a smaller market that you can, you know, that you can service better and that you're slightly unique for in some way. Maybe that's your background or whatever it is, your heritage. How would you address that, you know, sort of Positioning or that it's not just positioning, that it's really sort of creating a category?

Well, again, some of what we were just talking about. I mean, to me, positioning means I've got a product that I got to find a way to position it. Category design says how I'm going to find the market that needs something and build a product at a company that addresses it.

Yeah, starting with the need instead of with the product.

Right, right. And by the way, you know, back to, you know, you were just talking about, well, the way, you know, your style of marketing and selling and all, which I think is right on. that, you know, and especially guilty in technology, right? The first thing technology companies want to do is tell you what their product is, right? We make this thing that does this and it does it. And in fact, then they'll get into like, it does it this fast, twice as fast as somebody else or whatever else, right? If you tell people, the first thing you do is tell people what my product is, you're making them figure out why it's important. And so, you know, category design as a strategy, but also as a marketing and sales strategy says, first tell people about the problem that they have.

Right.

Which, you know, you just addressed a minute ago, which I think is right on, right? And if you can get my attention by saying, and I start to go, okay, you know, yeah, that's really true. And the next thing you can say is, Not like, here's my thing that's going to fix it, but let me tell you what a solution should look like.

Right.

And if, if you could, if, if you can make me feel like you're doing me a favor, you're not only telling me, like, helping me put my hands around a problem that I have, but also describing a solution that says, you know, like that in my head, I'm thinking, you know, that, that has to exist in the world. Like, I don't care who does it. Somebody's got to do that. And then the last thing you come in and say is like, oh, and here's what we have to offer and why we're best positioned to solve this problem for you. And that's a way more effective way to get in somebody's head than to start with, hey, let me tell you about this doodad that we created.

Right.

And if you go to, if you go to like, you know, I probably 95% of technology company websites, that's the first thing you see at the front of the website is we make this X, whatever it is. And then they go, well, okay, but why do I need that?

Yeah, yeah, that's totally true. So, you know, from an outsider's perspective, it's sort of like, well, gosh, everyone should be doing this. But, you know, as an expert, have you seen any You know, are there specific, you know, product verticals or industries where category design is not as important, or is it really sort of fundamental to the way everyone should be thinking about and approaching their marketplace?

And that's a, that's a, that's a really, a really good question because like, you know, of course, if you think about it, if every company created a category and all we'd have is like 6 million categories.

That's right.

That's right.

But the very nature of the dynamic means there have to be followers to it.

Right. There has to be followers. And you know what? Look, there are, there are many, many more businesses that are, that are follower businesses than are category creators and category winners.

Many of them quite successful.

And many of them are quite successful. And you know what? There's nothing terribly wrong with building a business that says, I'm gonna do what these guys are doing, but I think I can do it for 20% cheaper, or I could put some features on it that, that they don't, they don't have, or I could address, I could, I could do something to address a niche within their, that broader category that they're, that they're not addressing well enough. Lots of great businesses are built around that. Just saying that if, if you're the kind of founder or company leader who has the ambition to build something that really changes the way we work and live, and wants to build an enduring company that wins a, you know, an important category over time, then thinking this way, this category design way, is, you know, is the way to build your strategy.

Yeah, I love that explanation. And, you know, creates a very sort of clear juxtapositioning that you can be successful by, you know, adapting to a category that exists, but If you can come up, if you can identify that need in the marketplace that hasn't been addressed yet, that is ripe for category creation, then you have the opportunity to do so much more.

Yeah.

So you alluded to this a little bit before, but you said you've got a new book coming out. You've got a couple on the horizon. So tell us a little bit about what's coming out. Sure.

Well, they have some overlapping things a little bit.

Yeah.

So I've had, I've had a, actually ever since Play Bigger, I've had a wonderful writing collaboration relationship with Hemant Taneja, who's the CEO of General Catalyst.

Okay.

And we've published 3 books together. One was called Unscaled, which came out a little bit too early. It was actually about how AI is gonna affect a whole bunch of different industries. The second one was called Ung Healthcare, which actually broke out the healthcare chapter from that. Because General Catalyst, any of your listeners are very familiar with General Catalyst, a huge push for them is funding health tech companies and trying to change the nature of healthcare. And, and we're trying with that book actually tried to create or are creating a category that we've called health assurance, which is, you know, all about the things that probably everybody's reading about these days about using technology and AI and data to try to keep us healthy and out of hospitals and doctors' offices.

Right.

And so then healthcare, and then another one, last one was called Intended Consequences, which was about building responsible companies, most of which responsible AI, which has turned out to be pretty timely. But we have a book coming out in September. It actually just went up on as preorders on Amazon and Barnes Noble, those kinds of things called The Transformation Principles. And it is about how to build companies that both do something good for the world and are the most, have the best returns over the long term. And we started with the belief that especially today, the most successful companies generating the most enduring returns will go hand in hand with the companies that are doing something positive for the world. It's no longer, you know, there was a time when everybody thought, well, you're either a do-gooder company that's losing money or you're, you know, a rapacious capitalistic company that's, you know, ripping the, you know, the country apart. But those things have come together. And so we put together, there's 9 principles of how to think about building these kinds of companies based on our experiences and stories from, you know, companies that exist and all that. So it's, that comes out this coming September. Oh, and the other book, you'd be nice too. Yeah. So at the same time, it's been 10 years since, almost 10 years since Play Bigger came out through all this time. myself and my business partner, Mike Denphouse, have been practicing category design in the wild.

Yeah.

With our firm, Category Design Advisors. And, and we've learned so much, right? And, and we've not only learned from the companies we've worked with, but we've over time developed more and more concepts about category design thinking tools. And so we, we, we just basically Everything we know is in this book. And with the, you know, with the idea that, that any, hopefully anybody who has ambitions to create and win a market category could pick up this book and understand exactly how to do it from, you know, top to bottom and, you know, basically give all the secrets away.

That's fantastic. And when does that one come out?

Is that— that comes out in February of 2026. Yep.

And then I think you also told me that you've done a fiction work, right?

I did. Well, yeah, after a whole career of writing nonfiction books, the, the story behind it actually was that in the late '80s and early '90s, I was a journalist at USA Today, and that was— and I was covering the breakup of the Soviet Union. And not living stationed there, but traveling over there a lot and writing about what's going on. You know, this was this like once in a history moment when it was, you know, it was crazy.

Wow.

But it was like crazy chaos over there, right? It was, it was, they were trying, as people over there would tell me, they were trying to change from socialism to capitalism. It was kind of like trying to change from driving on the left side of the road to the right side gradually. And, and so it was, but, and the stories I had is, so basically, I set this novel in Moscow in 1991 and fictionalized a lot of the craziness that I witnessed over there and turned it into kind of a comic thriller.

Wow.

And, and it's, it's called Red Bottom Line. It came out last year.

Okay.

And, and yeah, it's done pretty well. People seem to really enjoy it.

So fun fact, my graduation present from high school was a summer in Moscow because I had studied Russian in high school. And at the time, I thought that I would do like international business or something along those lines. So I was living there during some of that craziness. Because that was '92.

Oh, wow. You could have been the main character in my book. That's right.

So I'll definitely have to pick up a copy of that and bring me some flashbacks.

How long did you stay?

I was there for 3 months. Right after, like, literally the day after high school graduation, I got on a plane and I went and I got a chance to, uh, really like live in Russia and speak Russian. Like, I lived with a family and, you know, we spoke Russian the whole time. And, um, I, I, I tell the joke that like I got, you know, mugged every day. Uh, it was just, it was like that was, you know, part of the de rigueur, uh, was that just expect that you're going to, so don't have anything too valuable.

Yeah.

But definitely, uh, gave you a really different sense of perspective. Like, I remember one of the guys that, you know, came up and tried to mug me, um, you know, the, the, the son of the family that I was staying with was around my age. He was like, hey, don't do that, you know, be respectful for our guests or whatever. And he was like— and, and I had like my mom's camera because this was before digital. And so to take, you know, nice pictures of, you know, some of these, uh, things— and it was a fairly nice camera, but nothing outrageous. Like, you know, she was just an artist and liked to take good pictures. And the guy made a statement like, you know, that camera around his neck is probably worth more than I'll ever make in my life.

Yeah.

And like, that was a very— like, that's a thing that I think about, you know, almost 40 years later that, you know, still sticks with just sort of the different perspectives that people have. And if you can Kind of put yourself in someone else's perspective at times, then it gives you a new understanding of their motivations and why they might do things that seem unreasonable to you. Yeah, which is very reasonable to them, given the context that they're operating within.

No, absolutely true. And the book does get it, you know, does touch on those kinds of aspects of life in Moscow at the time for the people who live there. And, you know, I get to know quite a few of them too. And It was rough. It was rough.

Yeah, I fell asleep to machine gunfire every night. Like, that was just—

that was— That's nice.

That was the way of life there. Like, you could hear it off in the distance. Somewhere there was always—

sorry about that, Mike.

Oh, you gestured a little too wildly.

There you go. Yeah, yeah. No, I was gonna say, actually, on that note, is that I think it was around 1993. The reason that I, I actually stopped going, um, was because one of my colleagues got so severely beaten. Oh my goodness. Mugged and so severely beaten that, I mean, it's to the edge of his life almost. You know, we had to, had to fly him out to a hospital in Finland. And basically at that point, I, I mean, I had encountered enough sort of weird circumstances at that point. I was like, I, I had 2 little kids. I was like, I'm not going back.

Yeah. Wow. Well, so you're obviously a wealth of knowledge about these super interesting topics.

That's a great term.

And we could, we could sort of chat about this all day, but I gotta be mindful of your time.

Yeah, yeah, yeah.

I thank you so much for coming on. But before I let you go, you know, for our audience that's been listening and maybe they weren't as familiar with category design or maybe they, you know, have heard of it but haven't really known how to implement it in their business. You know, give us the pitch. Who, what kind of companies do you work with? They're category design advisors and, you know, what are the types of things, the experiences and benefits that they get from working with you? Who should, who should reach out?

Well, I mean, most really, most anybody at any stage that has the ambition to do this. We've worked with huge companies. We've worked with a major division of LinkedIn. We worked with MicroStrategy, which has now changed its name to Strategy, which is a 30-year-old tech company that— and in both of those cases, obviously, these companies already existed. They were big companies. And in those situations, they needed a refresh. They realized that the category that they had been in was either kind of getting old or they were falling behind. And, but also had some ideas of like, well, we have this space that we could use to create something new and they just needed to get their arms around it. And so we, we've worked with, you know, really big companies to help them in that way. And, and we've worked with companies that were just a few people at a seed stage who we really believed in and to help them start a category and frame it and start to set those rules, the things we talked about. and everything in between. So, you know, it's a very helpful thing to do for a pre-IPO company that's trying to, as it's maybe going into a new funding round, because the way you can pitch investors after really understanding your category strategy is so much better and so different from what normal pitches are. We worked with a couple of companies just before their IPOs because the category creation and domination story in your S-1 can actually make a huge difference to the story that gets told in this, you know, the stock story that, that as, as you go public. So all those, you know, all those things can be valuable. And I think it's also important to, to say that we've developed this process that is kind of a sprint, a lightning version of category design, because we really came to understand that companies don't First of all, they don't have a lot of time, especially smaller companies, startups, right? And, and who wants a consultant like sort of hanging around for 6 months and, you know, and charging you by the hour?

Right.

So we've condensed this whole thing into usually from the times that we start working with somebody to the time we're done and they have a category strategy, a point of view, you know, concepts for how to roll this thing out. is about 4 weeks.

Wow.

With an intense 4 days sort of in the middle of that where we're, you know, live with the leadership team of the company. And so, yeah, it's a project-based thing. We charge just based on the project. And we also always try to, whenever we can, take both cash and equity in the companies we work with so that we are invested in the ultimate success.

Long-term success. Yeah, good alignment of incentives there. So, Kevin, thank you so much for joining us. Like I say, I could pick your brain all day, but I got to be respectful of your time. But I've really enjoyed our conversation. Thank you so much for coming on. I know our listeners have gotten a lot out of it.

Well, thanks, Mark. Great questions, great conversation. I really appreciate you having me on.

Awesome. Talk to you soon.

Okay, take care.

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