Al Ramadan: How to Be a Category King [Entire Talk]

Thanks so much, Tina. It's a real pleasure and an honor to be back here at Stanford. I spent a wonderful summer here in 1995, perhaps before a number of you were born. And I really do consider sort of Stanford as my alma mater. So thanks for having us. Me, I'm Al, that's Dave, and the good looking ball guy here is Christopher and he's the third partner of Play Bigger. And we are category designers. And we're going to talk a lot about category design today as a discipline. But our hunch is that in this room today there's a number of category designers. Many of you as entrepreneurs are probably category designers. You just don't know it just yet. And so we want to start with sort of a simple thought, which is that essentially every product or company that we really love exists because of one thing. And that one thing is a legendary entrepreneur created a great product, a great company and a great category all at the same time. And we call this the magic triangle. It's this thing that enduring companies really do, which is to have a product design capability and discipline. A company design piece and a category design piece. They're the three pillars of what we call enduring companies. And many of you are already studying a number of these particular disciplines right now, especially in the computer science faculty. So agile development is very much something that plays in the product design side of the house. Growth hacking is something that happens definitely on the company design side in the sense of sales and marketing, distribution. And so you're already sort of learning capabilities in those two buckets. But we're here to talk to you about the third pillar of building an enduring company, which is called category design. And one of our favorite category designers is a fellow by the name of Clarence Birdseye. And Clarence was born in the twenties in the United States and in his earlier years he spent time up in the northern states. And he had this observation which was the Eskimos would fish. They would bring the fish out of the water, drop it onto the ice, ice water, bond, flash freezes the fish, and then they would take those fish back to their homes and they would consume those fish over a period of a week, a month or a year, so long as it stayed frozen. When you defrosted, if you like that fish, it was as fresh as it was when it started. So that was his insight, that was the thing that he kind of figured out. And of course in the twenties there wasn't the plethora of opportunity you have to have fresh foods, as we do today. If you live Near a farm, you probably went to a market and that was cool. You got fresh foods. If you didn't, you probably ate canned foods. And so Clarence kind of railed this whole point of view around fresh. And he got out and started to talk about the value of fresh foods. And if you think about it, that was the product side. That was the product design piece. He invented flash freezing. It was related to vegetables in that particular case. And he then had to convince all the trucking companies in the United States that that they needed to take this frozen food from the farms essentially to the supermarkets. And then he also had to convince the supermarkets that they should put freezers in. And of course, we walk into the supermarkets today and this is what we see. This is called a frozen food aisle. In it, you have frozen vegetables, which is what Birds Eye is famous for, but you've got pretty much everything else. And so he was a genius at creating, doing product design, company design, and category design to the extent that we all now experience it basically 100 years later. And there's a plethora of foods that are available. And if you look at. You probably can't read the numbers, but I just tell you, this is the lifetime value of this category is probably about a trillion dollars already. And so that when you become the leader in a particular category, you do create a ton of value. And so one of the things that we did, and when I say we, it was more me than Dave was to really. And that's because I do math, and Dave doesn't do math. He does the genius. On the marketing side, we did a bunch of research here around this whole notion of category. It's new and it's something that's really topical at the moment. And we invested quite a lot of time and energy. And Clarence was one of the examples. On the qualitative side of the research, we interviewed more than 100 of the great leaders of technology companies in the United States. We did a whole bunch of reviews around that, which led to what Dave's going to talk about in a little bit, which is what we call the category design playbook, which is, how do you do category design? If it's a new discipline, what are the things that you need to do to ultimately become what we call the category king? And then on the other side, we did a bunch of quantitative research. And this quantitative research looked at every single company founded since 2000, US based with VC backing. And if you do that, you'll find that there's about 8,000 companies that fall into that bucket of which about 850 plus or minus are involved in an M and a transaction. That's their exit, if you like. That's the way they create the value. 75 of them actually make it to being public companies. And, and so these are the two aspects we want to talk to you today is sort of some of our findings related to this research. And we want to start by giving you sort of what we would call is the cliff notes of category design. And there's five things we want to talk to you about. The first one is this is very much the technology industry is very much a winner take all industry. And in fact, in our research which we did, it was called the time to market research. It's available on playwright.com research if you want to have a look at it. It was about 18 months ago that we first sort of discovered this, that if you take a look at the market cap of the category kings relative to everybody else in that field of 8,000 companies, there are 35 category kings and they represent 76% of the market cap of the tech space. And if you're the category king, that is the one that leads in the space, you, you take 76% of the market cap of the category. Think frozen foods, lifetime value 100 years. It's not market share market cap. So 76% goes to the winner. And in this particular research might be a little difficult to see, but there are three cohorts, three eras as we call them, and it's pretty much between 71, 72 and 79. In the middle cohort Facebook existed and so it distorts it a little bit, but 76%. So remember that the winner takes all at 76%. The second thing is, is that we discovered that categories themselves actually have a natural life cycle. And the natural life cycle looks like this. We call it the category life cycle model. And on the x axis, the horizontal axis here you've got time. And what you're looking at in that graphic there is about 15 years plus or minus. And I'll show you some little bit more detail on the timing here, but it's plus or minus 15 years. And on the Y axis, the vertical axis, it's the market cap of that entire category. So think every single company in the CRM category, for example, add up the market caps of all of those companies. That is the category value. And what happens is categories in the first phase, kind of this is probably duh. But it starts out really slow and it takes a while for a category to really pick Up. Then in the middle phase, it accelerates really quickly, and then it'll drop off towards once the category becomes really mature. Nothing super exciting in that graphic. You've probably seen something like that before in the form of a bell curve. But if you relate it over time, it looks like this. The exciting thing was a guy called Paul Gorowski wrote a book and he talks about the number of what he calls providers, explodes in the early phase of a category and then ultimately drops off over time. And if you think about what's happening here, it makes sense that in the early stage, lots of competition, not a lot of value in the category itself. In the middle phase, competitors are dropping off, the category's really taking off. And in the end phase, one company takes 76% of the market share. That's what we call the category lifecycle model. The third thing we wanted to do was we looked at those 75 companies that did go public, and we wanted to know, was there something related to age in those public companies? And it turns out that companies that go public when they're somewhere between 6 and 10 years of age are the ones that create all of the value. This is the cohort from 2000 onwards. And we've looked back already, started to look back back through to the 80s, and it seems to hold. And Harvard Business Review just ran a big study on this, actually, based off of our research. It's in the latest version of the Harvard Business Review. And here's what we found. This is what we call the 610 law. And it is on the x axis again, you've got the years. And then we've binned all of the companies into years. So all of the companies at, for example, age 7 created that amount of value in billions. And the way that we measured that was the day after they went public. We looked at what their price was, we looked at it what it is today. So the value created since public offering is what you're looking at. And so you can see that companies that go public too early pretty much crater. Companies that go public too late are kind of yawners, right? That there's nothing really happening out there. But this middle swat, this sweet spot, as we called it in the Harvard Business Review, is where all of the action is. And it started getting us to think, well, okay, so if age is the determinant, we also did something else, you'll see in Harvard Business Review, which is we tried to look at it based on the amount of money that a company had raised, and there is no correlation. So it's fascinating. There's no correlation as it relates to the amount of money you raise as a company. Yet there is a relation as it relates to age. And it started us thinking about, well, what could possibly be driving that phenomenon. And it turns out that the phenomenon is when you lay these two charts over the top of each other, what you see is that the middle section, this developed phase of the category lifecycle curve is where all of the value gets created and it makes sense. These are all of the actual companies underneath that graphic you can see and it makes sense. And George Lee, who's from Goldman Sachs, sat down with us one time, took a look at this. For those of you who don't know George, he's the head investment banker there, so he does this for a living. And he said, that makes complete sense. That makes complete sense. And the reason is because, you know, public investors are looking for two things. They're looking for growth and they're looking for margin expansion or profitability. And if you think about it, during that middle phase, what's happening? Companies are growing really fast. The category is kind of exploding. And what else is happening? Number of competitors is disappearing, is dropping. So pricing pressure goes off. You can then increase your prices, ultimately increase your margins. So that's why this is happening. And the final thing is on just on category science is that categories aren't static. They have these tend to have these technology cliffs that companies can fall off. In this particular case, this axis at the bottom is about 35 years that you're looking at. It's the CRM category, which stands for Customer Relationship Management. It's a very well known category in technology. And the current king of the CRM category is, right, Salesforce. But it didn't start out like that. It actually started out as contact management. You folks weren't alive when this started. Many of you weren't, at least. We used to write paper cards. They were called Filofaxes. I can see some of the folks in the audience smiling already. But we used to take these paper cards and we'd write your name and address on them and we put them in a file that was a circular file. And when I wanted to call you, I would look up your name in the file. I would call you on a landline. That's how it went. Now I know that's ridiculous for most of you in the room right now, but that's how it started. And then when the PC revolution came, what happened was a couple of companies act was one of them. And Goldmine Was the other essentially automated your contacts. I know this doesn't sound dramatic for you folks in the room because you do it every day, naturally, on your iPhones, but they automated it. You then took all your Filofax, put it into your PC. They were your contacts. That was the contact management category. Relatively small, but it was the start of this journey. What then happened was people said, well, gee, if I've got my contacts in the computer, whenever I talk to somebody, why don't I just put notes associated with that so they know what's going on with my customers? And ultimately the Salesforce automation phase of this story started to develop. And then ultimately customer relationship management as a function took that, plus a number of other things that you had to do with your customer. Customer support, field support, all of those sorts of things bundled it all together. Guy called Siebel, Tom Siebel. Put your hands up if you heard Tom Siebel's name. All right, so he was the guy in the middle of this pot and he drove this thing. His problem was. Anyone know what Tom Siebel's problem was? I'll tell you what his problem was. They had on premise software. It meant that the installations took a long time and were really hard to do. And actually most of them actually never even happened. So along comes this guy called Marc Benioff and says, well, hey, we're going to do all that in the cloud. And he took. He ate their lunch completely. And so CRM in the cloud, as we think of it today, does not have on prem software. And you may not believe this, but on prem software was not even a term that anyone invented. You know who invented that? Marc Benioff. Why? Because that was the bad thing over there. Called on prem software. Cloud software was the good thing. And that you'll find as part of the category design things that Dave's going to be talking about. That's a lot of what you've got to do. You've got to position yourself. And of course, we think there's another era of innovation coming here, which we call mobile CRM. And there's kind of an irony also here in the history of Microsoft and Apple, if you think about it, in the early 90s and the late 80s, Gates was the greatest category designer of all time. He created this PC operating system category, blew up, did an incredible job with the Wintel consortium, took over the world basically. And then he invented something called front office. There wasn't a front office until he invented it and created a set of software tools that you needed as a person, quote in the front office. And that was called Microsoft Office. And then if you've got a front office, what else have you got? A back office. And so he created software for the back office. And this blue line represents the value that investors had in the categories that they developed. Gates went away and Microsoft went nigh nigh. Along comes Apple 98, the quote second coming of Jobs. And he introduces digital music, completely revolutionizes that industry. IPhones and iPads. And you know that story. And again, the yellow line up here represents what's happened with Apple stocks still. So it shows you that when you're a great category designer, when you build product, company and category together, you can create immense value. And if you're not creating these categories and you're not in tune with how this plays out over time, you're going to end up like the blue line. Okay, so that's the category science. I'm going to quickly take you through some brain science. This is some really advanced stuff that's been done in this part of the world about why we make the decisions we do when we're making purchase decisions. Because in the end, businesses ultimately get driven by purchasing purchase decisions or choices to use something. In the case of Facebook, its usage and its first thing to know is that you might think this is not true, but it is, which is, companies don't live in space. They don't live over there or down the road. They actually live here, in between your ears. They live in your mind. And we've only got certain capacity inside of this CPU up here. And so we need ways to organize all of these companies. And that's called a container. And that container is actually a category. And so, you know, my friend rang me the other day and said, hey, listen, I know there's some snow coming to Tahoe. I'm flying in from Australia. I need to get from San Francisco to Tahoe. What should I do? My answer was go rent an suv. What's an suv? It's a category, right? I didn't tell him which particular type of car. I just gave him a bucket and said, go get one of those. Go ask for one of those. And categories work because it's kind of the way our brain works. We like to have a filing system. We want to put all of the different brands and products and companies into that filing system. And ultimately it's the way people discover products and services is via this concept of a category. And categories actually manifest everywhere. You just, you may not have thought about it like this. When you walk into a supermarket, that's what you see. What is the sign above the aisle? The category definitions? It's all of the soaps, detergents, right? So it's a way of organizing. And if you think for one second that this is a random assortment of products on shelves and that the store's not organized for a particular way, you're crazy. The milk's always at the back of these places. Right. Why you got to move past all the other categories to get there? Because they know that's one of the things you're coming in. So categories have been an organizing principle time immemorial, and they also true in the tech space. This is a famous Luma chart for big data landscape in 2015. It makes my head hurt just looking at it. But what are those boxes? Those boxes are categories. Someone has gone through all of the companies in the big data space and said, hey, that's one of these companies. That's one of those companies. And when people start to think about, well, what do I need for my business? They start to think about, okay, I need one of those boxes. And then they'll start to choose underneath that the company. And so let's talk about what happens in our natural world today. We get more than 10,000 marketing messages every single day. We are swamped with stuff coming at us, and we're very much in an overstimulated society right now. And so you can't make a decision about any one of those boxes quickly. You just can't. And so what happens is our brain uses a shortcut system. It starts narrowing down and speeding up the way in which we make these decisions. And the research here calls them cognitive biases. Many of you have probably already heard of them. But it's not about logic. It's actually about instincts. And I want to talk to you about three really important biases that you should know as a category designer. And the first one is the anchoring effect. If I said to you, hey, listen, you want to buy my car? And you said, sure. And I said, well, it's $5,000. That's an anchoring statement. It's not 50, it's not 2, it's 5. And now we're negotiating on the margin. That's what great category designers do. They get out into the market. They anchor the conversation around what we call their point of view, right? The world now comes to you. It's a $5,000 thing. It's not a 50 or a million dollar thing. The second thing is groupthink. You folks live in this world every day. When you turn on your social machines, what's happening? You're getting groupthink back to you. If Dave likes a certain beer or he likes a certain type of snowboard, it's more than likely I'm going to like that snowboard or that beer too, because just because he's a buddy of mine and I respect him. And that's why Facebook and advertising on Facebook is going off the charts, right? It's because groupthink and the ability to influence those people in your circle is actually more powerful than anything else other than word of mouth in person. Then the final thing is once you make a decision to purchase something, it's called choice supportive bias. Once I buy a particular brand, I end up kind of loving that brand forever. And even though it might not be better and someone markets me a better feature, I don't care. I'm in love with this thing. And so these things play a very important role as you go to market. And category designers actually use these brain shortcuts as part of the category design process to lead people to purchase decisions or usage. So it turns out if you go back to that slide, which had the 610 law, it turns out that the category growth actually is determined by how fast our brains can change. And if you peel back underneath that 610 law and you said, hey, what do the consumer companies do compared to the enterprise companies? The answer is the consumer companies are all down the six year old, six year end of the spectrum, the enterprise companies at the 10. Because it's one thing to say, hey, would you like to learn how to use Pinterest or Facebook? It's not a huge decision for you. It's an incredible capability. It's another thing if I'm the IT director of Wells Fargo and you said, hey, I've got a new computer, you want to try it out and run your system? This just takes longer. And so how quickly we can convince someone that they should use this or buy that is actually the determinant of how fast these companies grow, especially in this uncertain world and in our belief. That's why conditioning the mind is actually your number one priority as an entrepreneur and as a CEO. This is your job in addition to product design. Yep, that's hard. You got to get the product market fit and there's a whole bunch of techniques you're using to do that. In addition to company design, sales, distribution, culture, and all of the other things that you need to build a great company, you also have to Build a great category, because if you don't and you're not the category king, you'll be fighting over the scraps, you'll be fighting over the 26% that's left for number two through number 10. So with that in mind, I'd like to invite my partner Dave up, who's going to start to talk to you about conditioning the mind and the new discipline of what we call category design.

All right. Thanks, Al. I'm Dave. Thank you for having us today. So, Al mentioned, we have done the research and we created a playbook. And I'd say we didn't really create the playbook. This playbook is something that we have been researching and studying through our 20 year careers as operators. This playbook emerged from all, certainly all the research and the hundreds of companies we've spoke with for many of the different things that we're working on, and obviously all the clients we've ever worked with. And it was sort of, we thought it'd be fun today if we could sort of unlock some of the secrets that these category kings were using to become the kings of their category in these enduring companies that we all read about. So one of the most common things when you think about these categories kings and the development of categories we all enjoy today is these designers take us on a journey. And one of the things, it's kind of a trick. I think most of the time you don't hear about the king or the leader of the category until it springs on you. First time you see Pinterest, millions of people are using it. First time you hear about Uber, there's Uber vehicles all over the city. So you kind of hear about it late and you feel it late. But the reality, these journeys are hard. They don't happen overnight. There's teams of people working very, very hard to kind of bring what they see in their heads and turn it into a great product and a great company. And one of the companies that we did a lot of research on, we wanted to kind of unlock the. The kings. What happened? What's the story behind the story? This is not our graphic, but it's a great thing. You can Google the Airbnb story, hear what happened. One of the big aha's for me. And I didn't realize this is. Did anybody know where the air and Airbnb came from? Air mattress. Yeah, three of them. Right. And they rented them for 80 bucks. And what else? Where did the breakfast come from? Bed and breakfast. Right. And they advertised three beds and breakfast for 80 bucks. And three people showed up. And that insight led to a very long path to what we now consider a brand new alternative in our life. That alternative is another thing, as Al said, another place to go, another choice when you go visit, or actually now when you go live in another city, in somebody else's home or somebody else's room, and that's Airbnb. And they created this category of private hospitality. It started with three air mattresses. Long journey. So what we wanted to do is share a little bit about that journey. Again, we'll try to pull all this into the next 20 minutes. But believe me, if you're an entrepreneur and you ever walk down this path, it could take years, in some cases decades, to really see the fruits of all this labor. So when you look at categories, the one thing, again, they all have in common is they start with an insight that aha moment. And I'm guessing many of you have already had that aha moment, and you're staying up late at night or talking to your friends or maybe not telling any of your friends you don't want them to know. And that aha moment. Actually, Ann Miraco, our partner over at Floodgate, she calls that the technology or market insight. And it starts there. And once you have that aha, and you basically haven't slept and you've been kind of using all your classwork to fill in all the blanks and how to create a great company or a great product, one of the toughest things to do is answer one of the most simple questions, which is this insight I have, what problem does it solve? And can I explain this problem and have people understand it like I was explaining it to a 5 year old? And it's an interesting question. We have seen companies and worked with companies that have been wrestling with this question for years. The problem with answering this question is a whole bunch of other questions come up if I have this insight. Is my insight solving a problem that's an existing problem with a really crappy answer, which is in this case, if you think about Uber, you know, taxis could get you from point A to point B, but they kind of smelled funny and they were unreliable and unsafe. Or am I trying to convince people of a brand new problem they didn't even know they had? I think Airbnb is a good example. I don't think anybody thought there was a crisis in the hospitality industry and we needed to stay in somebody else's home. I don't think there's a big dilemma there. But they convinced us, they conditioned us to understand there's another alternative. And the list of problems go on and on and on and on. And these can keep entrepreneurs up at night. But understanding the problem is the first step because as soon as you ask what the problem is, the second question is, what is your secret sauce for solving that problem? What is the answer? And again, is it a market insight? Did something happen? Broadband back in the day opened up social media and, and today marketplaces can be literally invented overnight, connecting supply and demand. Did something happen in the market that allowed you to take advantage and capitalize and create a new company or a new product? Or again, as that tech insight, we did a lot of work around Diane Green and what happened at VMware. And she's very humble. She would say, oh, we just accidentally created the whole virtualization category. I don't believe that they're way too smart, but there was a technology there. They didn't understand what problem it was solving. And so my guess is if you're in this room, there's probably a lot of plutonium creators, a lot of answers, a lot of products get created without a full understanding of where the problem is. There's old cliche technology looking for a problem. And the only. I'd say this, if you don't remember anything else that Alan and I talk about and you're running around with your new product, your new tech insight, take one second, slow down and think about the problem you're trying to solve with that technology. And believe me, people will understand what you see a lot better and understand the value of your product if you just slow down and understand that problem statement first. So we thought we'd have a little fun. Again, we do a lot of research and I'm kind of a category geek, so I'm always thinking about whenever I see a company. I saw a new company today, it was called, it was on demand gasoline, what was it called? Fillet or something like that. And I was like filled. Is there really a category where people need gas delivered? That's the first question I asked. And what problem is that? I know I'm out of gas or low on gas, but how big could that possibly be? But anyway, every time I look at a company, I think about the problem they're solving. So here's a couple of well known insights, well known problems and they were solved. And the people who solved them are also extremely well known. They built legendary, enduring companies in huge categories and you probably recognize some of them. Louder guitar that was Les Paul. I want to surf in cold water longer that was Jack o', Neill, man in the Wetsuit, which turned into a lifestyle brand. I already talked about stinky taxis. The bottom one though here, this one sort of emerged. It was right in front of my face every time I went shopping and kind of was driving in my car. And I didn't even realize it was a problem being solved. Which is. Just because I'm tired doesn't mean I'm thirsty. Anybody have a guess what company's behind that? Five Hour Energy. Just because I'm tired doesn't mean I'm thirsty. And if you read the story about how five Hour Energy emerged, it was pretty classic. I'm tired. I don't want to drink coffee. I don't want to drink a giant can of yuck, right? Red Bull or nitrous powered Gatorade or any of that crap that you don't even know what you're drinking. In fact, I don't know what's in this Five Hour Energy either. Actually I had one right before I stepped up here, so that explains a lot. But it's a pretty amazing product insight. But it also led to a new category. And how do you know it's a new category? One of the tells is it's not stocked next to energy drinks. It's called the Energy Shot and they put it at point of sale right before you leave Safeway. And they put it right next to the cigarettes in gas stations. It's a new category, doesn't live next to energy drinks. Coca Cola and coffee. A lot of insights there. I hope those questions maybe help you see the world through a different lens. But once you understand the problem and your answer, you got to think of your name, right? And one of our favorite questions to ask is if you solve the problem that's been keeping you up at night perfectly, what category are you in? Are you a sea panda? Are you a killer whale? I would rather be a killer whale. But if you think about category names, I think category naming has got a bad name. Lot of three letter acronyms, right? And about sections inside of press releases. Nobody even knows where they come from. Random BS generators, all that kind of stuff. But there is a science and a psychology behind this name. I'll mention the name of the game as this cognitive bias. How can you create a new space, a new drawer in the kitchen, a new. A new file in the file server in your head to go to to understand the value or what problem I'm solving with a particular product? That's what this category naming world does. It gives you A new place, an energy shot. There's a lot of intuitive work going around the name and why it's important. It needs to be functionally intuitive for users so they know exactly how often they're going to use your product every day. It has to be functionally intuitive for budgeting for CFOs. If it looks like something that lives in a budget, that's a good thing, especially in the B2B. But naming is a lot of art and a lot of science. And Al mentioned earlier on the CRM curves, these evolutions and Marc Benioff is a master. He truly was. And I was around. I'm going to date myself too, when Marc Benioff and Salesforce came out and started talking about something called an asp. And I remember I was working at Mercury Interactive and we were making a lot of money testing failed Siebel implementations. That was our business. It was great. Siebel7 is coming. You're going to buy a lot of Mercury because you had to test that stuff and it didn't really work that well. And Mark came out and he didn't say, I have a better Salesforce automation tool than Tom Siebel. And if you have seen CRM as sort of like a funnel and a database. Right. There's not a lot of depth in it. Instead he said, I have something new. It's called an application service provider aspect. It didn't even say cloud. It was a new delivery mechanism for software. And then he also had to do the hard talking about clearance bird's eye. He was out there convincing Wall street about something called software as a service. People are going to buy software differently. Before, you had to buy software in a perpetual license. So a perpetual license to Siebel could cost you $25 million up front US cash. Where Marc Benioff came out with salesforce.com and it was almost coin operated. Put some money in and out comes your CRM. So think about that. He went from ASP, a new delivery category, SaaS, a new model, a new revenue model. And then ultimately that led to the cloud. And we'll talk more about what Mark did to really, really stick it to all the folks in this world called On Premise, which he did invent that term. It was not called On Premise before, before Benioff came out and started sharing with the world a new alternative to software. And you can't talk about category design without mentioning Steve Jobs. And again, if you remember Al's chart, we saw what happened when Microsoft took their foot off the pedal and what happened when Steve came back to work? And one of the great case studies we admire is what happened when Apple, and in particular Steve Jobs launched the iPad. And I don't know if you remember, do you remember when Microsoft had that PC tablet thing? Didn't work that well. Newton's were early, right? They were a lot of failed attempts at this kind of thing in between a phone and a computer. But when Steve Jobs launched the iPad, he stood on stage and he said, there's a new category, a new place. Something that's not a phone and something that's not a computer and it needs to be in your life, creates more engagement than your Mac, your computer, and it does a lot, has a lot more horsepower than your phone. He put that in our heads and made it okay to buy four or five billion dollars worth that stuff. It was not a coincidence. He didn't say, I got a brand new device and it's so much better than anything you've seen before. So you got your name, you got your problem, you got your plutonium. Now how do you share with the world? Who else is participating in your category? One of the most common questions we hear, is there ever such thing as a category of one doesn't exist because there's always an ecosystem, there's always a supply chain, there's always people, processes and technologies required beyond your capabilities in your own company to fulfill the category promise to solve the problem. No one company can solve that problem. And so a blueprint in ecosystem is a way, call it your mall map. It tells you everything inside the category you need to solve and where we fit within that answer. And one of the best examples of this was what happened. I think it was last month at F8, where Mark Zuckerberg released the new ecosystem and blueprint for Facebook in the world of social media and communications. And what this blueprint does is a psychological. It has a huge psychological impact. Remember Al mentioned all those biases, anchoring effect. This is the new world, right? And he led us inside his head. We didn't have to guess where we're going anymore. He said, this is exactly where we're going. We're here now. There's a whole bunch of new stuff in Facebook that you're going to enjoy five years from now. You're going to see enhancements to all the stuff you're already enjoying today through video and messaging. And in the future, reach under your chairs and you're going to find your new virtual reality set. We're going to live in a virtual world, augmented reality. He shared the world, his vision, his category, and now he's going to shepherd us along. And the feeling you have when you see this is enlistment. And that's what category designers do. They enlist you in a cause. So every category designer, specifically the category kings that we know and those entrepreneurs are kind of locked in our minds, has a point of view. And a point of view is often mistaken for messaging or marketing or even positioning. And it's all of those. But it's more and it's bigger than that. A point of view establishes what you stand for. It establishes what you stand against. It attracts the people you want to attract into your business, into your ecosystem, into your category, and it repels the people you don't want to do business with. And the point of view is built around a framework that's been around for a long, long time, framing the problem, painting clear ramifications for not solving that problem, sharing the vision for the future and outlining the business outcomes and what to do now. So has anybody ever stayed up late and seen an infomercial, like the Zumba, that thing that crawls around on your floor and sweeps up everything? Have you ever noticed how infomercials start black and white? Like, right. It's always the problem. They frame the problem up front, and then it turns to vibrant colors. The vision for the future. And then operators are standing by. This framework is also, and I would say it used to be used in politics. Now they just yell at each other. But it used to be used really well in politics, and I admired it. And we've all experienced people could truly frame problems and own the agenda. And many of you may.