5 Things You Need to Do to Create a Category (and What Makes Them Super Hard) with Gainsight

Welcome gainsight CEO nick mehta and gainsight cmo anthony kanata.

All right.

Hi, I'm Nick.

Hi, I'm Anthony.

And we're here to talk to you about how category creation isn't something that you find.

Category creation finds you.

I see what you did there.

I like.

So category creation found me outside a 24 Hour Fitness in Sunnyvale, strangely enough, when I got a call from an investor who was about to invest in a new tiny little startup, that really got my attention.

Category creation found me driving up the 5 freeway from Los Angeles to San Francisco when I got a call from Nick late one night saying that, hey, there's this new company I'm thinking about joining. What do you think? And the company was called JBARA Software. It was based in St. Louis, and it was focused on solving the business challenge that we now know as customer success.

And customer success was something I was super excited about. Before running now gainsight, before Jbara, I'd run another SaaS company. And so I felt this pain firsthand. I was like, this could be a new category. This is six years ago. I was like, wow, let's dive in. But interesting name. Jbarra. Two consonants at the beginning. That's always interesting. So what am I going to do with that name? I was thinking, well, the first thing we can do is we could dominate SEO. If we're going to be a category creator, we got to be able to dominate SEO. So I typed in J. Barra into Google and I found celebrity B list actor Gregory J. Barra, Hallmark movies. He's now the patron saint of Gainsight. And I figured out we can't dominate SEO totally.

And as a marketer, I clicked on the website and this was something like a squarespace meets wix.com thing. I think the font was like, slightly better than Comic Sans, I'll admit. My first thought was, I don't think this is a category leader.

But luckily, Anthony and I dug in with an amazing team. And it's been about six years in the journey. And as many of you know now customer success is a real category, Obviously. Our company is called Gainsight now, and it's been an amazing journey, which we think we're just on the beginning of. But what we want to do is share some of the stories on that journey of creating not just a company, but. But trying to create a category as well. And hopefully these are lessons you can all benefit from.

Yeah. And we woke up five years later and we saw this article called what It Takes to be a Category King. And as we scroll down, we saw our name alongside brands like Slack and Salesforce and Marketo and HubSpot.

Crazy.

Crazy, right? We were like, this is awesome. Something might have gone wrong here, but we were pretty proud to be in that company.

But then we scrolled a little further, I clicked down, I found the byline, and I realized this article was actually written by my mom.

Right.

So it made it a little bit less of a proud moment. I was happy, my mom was happy with me and she thought I was a category creator. But, you know, a little bit of joke, obviously, but we do think that category creation is something we hear all the time about. You know, it's something people would like to do. We get asked about it a lot. And the goal here is to have a conversation, share some of our learnings.

Yeah. And I think the reason is it's both really important but also uncommon. You don't actually hear a lot of like, tried and true best practices on how to do this.

That's right, exactly. In category creation, if you think about it, there's a lot of really interesting, attractive things about it. First of all, if you're in a new category, if you're defining a category the right way, you often don't have a lot of competitors. That's exciting. In the early days. You can define it yourself. You also don't have a lot of noise. One of the things that's good in category creation is you're not trying to sort out from a thousand different companies. You're trying to create your own space. You also don't have pre existing notions. It's been cool to be able to define what customer success is. The bummer is you don't have any customers because category creators usually start with no customers. Right. So we'll talk a lot about how you get that flywheel going from the beginning.

Yeah.

And one of the things we'll also talk about is the fact that not every category creator is a category winner. You can think of a lot of examples throughout history where one company created a category, another fast follower kind of upended that company and took the category. Think of the first computer that wasn't a Mac or a PC. Think of the first MP3 player that wasn't an ipod. Or think of the first search engine that wasn't Google. And Anthony, I'm guessing you have no idea what these pictures are.

No clue at all.

All the young people in the audience have no idea. But these were the people that didn't reap the category benefits.

That's right. But I think that's actually a really good point, Nick. It's not just about creating a new category. It's about being able to actually dominate the category that you're creating, because there's a ton of shareholder value at stake for category winners. In fact, HBR had this article that cited 53% incremental revenue growth and 74% incremental market cap growth to companies that are able to both create and dominate a category.

But, you know, we talk a lot about the great things of category creation. In this talk, we're also going to talk about some of the challenges, because if you're doing category creation and if we're honest, you know, it's really hard. There's actually an article that just came out as we're preparing for the talk on how to create a category. An article came out said, don't create a category. So we said, okay, we better read this one. And the reality is there's a big dark side to creating category. It's actually really hard because you're trying to create something that didn't exist before. Educate people on the new way to do things. Some of you know that expression fighting with your arms tied behind your back? It's kind of like doing that, but underwater, blindfolded, and surrounded by sharks with lasers. That's literally sometimes what category creation feels like.

Big metaphor.

Big metaphor. Yeah, exactly. Some of the best companies, I'd argue, including many in this room, probably didn't create categories. You found a technology that can replace an existing category, and some of the best businesses out there were basically technologies solving an existing problem. And Workday is a great example. Many of you know Workday, a company that solved HR technology problems that have existed forever, but did it in the cloud. And it's amazing. Business really built a great business. Only challenge with starting Workday is the job requirement is you had to start PeopleSoft previously. Some of you know, Workday founders started the previous company. So if you're not fortunate enough to have started another company in the same category and you have to jump off the pier of creating your own category. Want to talk about what we've learned in that process?

Yeah. If you take anything away from today in this session, it's this. Don't create a new category.

Don't. Just don't do it.

Don't do it.

That it's not worth it.

Yeah. So thank you, everyone.

Appreciate it.

Appreciate it.

All right, I think they're still here.

Still here.

Okay, well, they stayed.

Okay, we'll keep going.

For some reason, they Want to hear more?

That's right. Well, I think the audience wants to take the red pill in this case. And so let's. Let's follow the white rabbit. Let's see how deep the rabbit hole goes.

20Th year anniversary of Matrix. Let's do it.

Pop. Culturally relevant.

Awesome. So what we want to do is share five must do things, at least from our perspective. If you're going down the crazy path of category creation, five things to think about, at least for us that have worked and hopefully work for you as well. And then five demons that kind of come with those activities.

Yep. And so the first one is ignore analysts. At least initially, there's been a widely accepted belief in B2B that analysts are the defining voice for new categories. They're two by twos. They're expert analysis. These firms have built very successful businesses offering up advice to companies who are looking for validation, validation on how to navigate categories of products and services and who the leading brands were. And that's exactly the position we found ourselves in. What, two weeks into the job, I think Nick signed agreements with Gartner and Forrester.

I signed them all.

Echo sign gone. And we briefed the analysts and we got them on the phone with our customers and gave them demos of the product and all of their feedback surprisingly aligned to existing research areas that they covered. They said, you are the proactive customer support company. And we're like kind of, I think there's a little bit there. Or you are the next generation account management software. And we're like, yeah, maybe, but there's still something missing. And for us, the piece that was missing was that there was a job that existed called the customer success Manager. And I think Salesforce gets the credit for creating this role, naming it. And at the time, this role was a little under resourced, maybe a little underappreciated. And this is a group that would meet online on LinkedIn to kind of share, compare notes. They would meet in person in offices around the Bay Area. And whenever we would go and sort of observe, we would see that there was a ton of passion and excitement around this group. And I think this almost cathartic sense of finally, I'm around other people that are thinking about what I'm thinking about that are going through the pains and struggles that we are.

And that's a good lesson, by the way, in the audience, if you have customer bases that are doing meetups on their own, peer to peer, there's a sign you might be creating a category.

Totally. And so we found ourselves in this kind of decision, right. We could either go down the path of listening to the analysts position jbera Software as the proactive customer support company, or pivot and say, like, hey, there's something about serving the customer here, the customer success manager Persona, really trying to resource them. And that's exactly what we did. And I was very fortunate, actually, to be on the Saster stage here in 2016, I believe, with Aaron Levy at Box, and we were talking about a similar topic and he had this quote that I thought was so powerful. Our job is to find a demographic that no company is paying attention to in a meaningful way and make them heroes, celebrate them, be the company that's out there resourcing them. So that's what we did. And ultimately what we discovered was at the end of the day, it's not the analysts that create the category, it's the customers. And this is without any disrespect to the analyst community. But the world is changing. Customers have more voice. Technology such as G2 Crowd and TrustRadius has enabled companies and customers, excuse me, to take online and to help validate categories and the different brands that are leading them. So for us, fortunately, I think we picked the right job. As we look backwards, customer success has become one of the most promising jobs globally, according to LinkedIn data, which is a great sign that a lot of the early bets and kind of the continued effort has worked.

But one of the hard things about kind of deciding to create your own category name versus just embracing something the analysts all agree with is in the early days, nobody's going to tell you it's the right idea. And some of you in the audience can probably feel this when you've got a new category name and you're telling people about it and they're like, they're smiling politely and they'll say, have you thought about X, Y and Z? I bet some. I see some people nodding in the audience here. I think a lot of people have dealt with this in my early days in Anthony's, I'd go around to CEO friends in 2013 to VCs, and they say, customer success, that's cool. I don't really know what that means, but have you thought about customer analytics and be like, yeah, great. Have you thought about customer machine learning? Have you thought about customer business intelligence? Have you thought about customer insights? Just like buzzword bingo. Any technology, things you can add in. Have you thought about customer artificial intelligence? Literally, these are things people said you should do this, not customer success. If we were doing it in 2018, they would have said, have you thought about customer autonomous scooters?

Clearly.

Which I think is actually a really good business idea, by the way. I want to, if anyone starts that. But the point is you're not going to get any validation from your VCs or your friends or other companies. It's going to feel super lonely and it's going to feel like you're doing something dumb initially.

Yeah.

And I think one of the things that kind of keeps people going and at least kept us going is even though all of the peers and companies and CEOs and VCs thought this was dumb, the people in our community didn't. And I think many of you probably have people in your community who think you're onto something. And I think that's what keeps us motivating. So the second lesson we want to talk a little bit about is how you can focus category creation not just on your product and your software, but actually on the people in your customer base and really make it a people centric model. That's kind of what we very much focused on at Gainsight.

That's right.

So the way we did that, actually going back to the beginning, so 2013, we're just getting started. We're in a Regis in San Jose. Regis, if you don't know, is like a really lame version of WeWork. So we're in this tiny little office and we're thinking, how do we create this category of customer success? And we'd seen some, obviously seen Dreamforce and things like that. We're like, we should throw an event. In fact, I think I told you we should throw an event. This is you on the floor there.

It's an actual photo after planning it. Well, when I heard event, I thought Nick meant, hey, this is a launch event, right? Like, let's get a startup T shirt, like some bar in Soma, put a credit card down and announce the brand. But what he really meant was host a conference.

A conference. Conferences are easy.

Yeah, apparently. And this is only a couple of months on the job. Right. Two, three months in. And we were. He was tasking me and the team, the early team, to build a conference around the job of customer success. This wasn't a customer conference. We didn't have that many customers at the time and nothing about our products or services. And so since we were actually still in the process of rebranding from JBARA software to Gainsight, we needed a name. And so we decided to call the conference Pulse. And that's a micro brand that we still operate today and it's become sort of synonymous with the customer success community or at least Gainsight's thought leadership arm.

I think this is one big tactic which is consider if you do an event, don't name it after your company, aim it after something bigger.

Totally. And even in the early days we looked to infuse our somewhat weird sense of humor, which of can't.

Likeably awkward.

Likably awkward. My wife says. Yeah. And so this is Nick in 2013 posing for what I think is the Heisman. And the amazing thing is even from our first year, that same energy that we observed from the meetups that we were attending, sort of being the flies on the wall, translated into the energy in the room at Pulse. And so over 300 people showed up, which for a company that had, like I said, very few customers and still are in the process of rebranding, felt like a good sign of validation that there was something to this community. And we've seen a ton of growth in that conference overall. And so this year we'll draw over 6,000 people to Moscone. And the growth isn't just in the US but it spawned consistor events in the UK and Australia and over 50 chapters of what we call Pulse Local, which are communities self managed and they're folks that get together every quarter to learn to grow and network in customer success.

And if you talk to people come to these events, the thing they love is it's not about Gainsight. So again, if you're going to do events or marketing, how do you make it about the people, not about your company?

That's right. And we sort of draw inspiration from taking it as a conference brand and evolving it into something else. And it's a word that we don't actually use a lot in B2B. It's building a lifestyle brand. Lifestyle brand for the people that are in the job of customer success. We want to be career companions, we want to do life with them. And the notion of taking content that might have been expressed through an event event channel similar to this into things like digital. So our blog posts were all about the job of customer success. We started a podcast series, we do live video workshops, we've even done online certification process for those that are just wanting to be career certified. And we have job matching programs. Sometimes we I think feel like a recruiting arm too. Just in some of the.

We want to help our customers no matter what it's. What it is, whether it's software or in their careers.

That's right, yeah.

And on that note, one of the things, I think if you're trying to create a category, one of the big things is content. And it's really about content that's authentic to that job. Lots of times I see people saying, I'm creating a category. Here's my blog post. And the blog post is like 10 things to look for in this kind of software, Right? And that's not content marketing. That's not authentic content. That's just marketing. What we really focused on, what I encourage you to do as well, is get into the Persona, the person in that category, and think about what makes them tick. How do they get paid, how do they get promoted, how do they find new jobs? You know, the types of stuff we write is all about the Persona.

That's right.

And it all ends up being about really owning that your experience in creating the category is just as important as experience in creating the product. We actually, we run our conference and we're super obsessed, just like Jason is about every detail in this event, because the experience in the conference is just as important as the experience and the product. So we send a survey afterwards every time. And actually. Fun story. Our last conference afterwards, I was in the hospital for unrelated reasons, and I was actually just in the recovery room, and I literally was going through NPS responses and writing back to customers and thanking them for their feedback. And that's the kind of thing you really need to do, is embrace that you own this community and you're the steward of the community, so you have to do a great job with it. So summarizing this part of kind of focusing on the people and building the community, couple lessons to take away in this part. Number one, if you've ever worked in open source before, open source software, this is just like open source. You create this open source world. You don't make any money off of it, but you have to care and feed and really genuinely care about it. But it'll build your business. Number two, think about making the brand for your community different than the brand for your company. Number three, it's important to show the momentum. We showed that graph of the growth of Pulse, and that shows the growth of our community. So think about what that graph looks like for your business. Number four, if people want to connect to other people in your community, these meetups, these get togethers really matter. And then number five, treat this just like your product. If you're going to create a category, treat the category creation just like you treat your product.

Yeah, that's right. And I think one reason this is really hard is that CFOs or investors may not get it. This is as a marketer, at least one of the folks spending a lot of the money at the company. It's tough, right? It's tough to justify and get incremental spend for some, some of these ideas. But I think the important part is ensuring that what you're doing is actually aligning the brand with the movement you're trying to create, but also fueling your funnel. And so it has to be able to contribute to bookings and pipeline building and all these sorts of things that end up obviously mattering to the shareholder value. Now, I've tried quoting Einstein in board meetings. I'm not always successful in saying that not all things worth counting are countable, but at the end of the day, figuring out attribution for a lot of this stuff, it's complicated.

It's going to be super hard to just say that spending and category creation, how does it immediately tie to revenue? If you're used to a model where you generate an SQL turns into a booking or whatever terminology you use, that model's not going to work in a category creation complex. It's great. So this third concept is really about the idea that you got to get out and evangelize if you want to create a category, because eventually you become the spokesperson for that category. And I think at Gainsight, we've become some of the spokespeople for customer success. So the biggest problem with this third point is it involves a lot of flights on United Airlines, which totally sucks no matter what you're doing. But you're on the road and you're the face of this movement. And if you follow customer success, we've kind of become one of the faces, not the only one, for this movement. And so I'd encourage you to say, how much can you lean into getting out there? In our case, we get invited to speak at Company All Hands and kickoffs and conferences about customer success. One of the things we did early on, which was great, is we hired one of our early customers to be one of our evangelists. His name's Dan Steinman. He actually co wrote the book with me and Lincoln Murphy on customer success. So Dan became kind of a voice of the customer. Allison Pickens, on the bottom of that photo is our chief operating officer, ran our customer success team. She became a voice of our customers. So who are those voices of your customers that are in your company that are going to get out there in front of your customers and then eventually you get to the point where you have so much knowledge about this category that you write a book. I remember when we got an email from Wiley about writing a book, the publisher and I was like, why should we write a book? First of all, does anyone read a business book anymore? And like, isn't that kind of dated? I got to tell you, almost nothing we've ever done has been better than writing a business book on customer success. It just carries you into so many different places you would have never been before. Into boardrooms, into investors. It's really, really remarkable. Highly recommend it if you have something interesting to say.

Yeah, right.

So on this third, this area of kind of evangelism, authentically get into the mindset of your community. Don't just focus on your product, focus on content about the community. One thing tactically is really focus on getting the message out there. So in a traditional kind of lead context, you might be focused on gating your content and not letting it all be free. I'd encourage you to say get all the content out there. LinkedIn Ungated Blog Post podcasts have worked super well for us. So tactically, that's something to consider. And like I said, the book, tons of effort, but huge home run. Very much consider it.

That's right.

And I think the hard thing is, as you've seen, is how do you scale this? Because you need those voices of the customer inside your company. And you know, we've wrestled with that a lot.

Yeah, totally. All right, number four, being authentic at scale. So, you know, people really like doing business with people they trust, people they admire, people they like. And your executive team really ought to be the public expression of what the company's purpose and what the company's values are. And marketers, you know, we play a pretty key role here in sort of capturing and amplifying who our executives are and what they stand for. So, you know, we've been pretty transparent about our purpose at Gainsight to be living proof that you can win in business while also being human first, as well as our values that are listed here. It's become the rudder of who we are and how we choose to show up and work with each other, with our customers and with our community.

And it's interesting thing is our customers all know our values now. Our values of our company are kind of the values of the community. So there's real huge opportunity there.

Totally. And so I was actually reminded of a quote from Keith Kroc. He's the former chairman at Docusign and actually a four time category Creator in his own right. And it's that time is the only currency in business. And so my job on the marketing front was to come up a way to really scale a lot of this authenticity, to shine a light on our purpose, our values, and to the point Nick made as an expression not just of us, but about the community. And so we've run a number of campaigns over the years in an attempt to do this. Some ideas have been crazier than others, like recording and filming a acapella version of Taylor Swift's Blank Space featuring our customers, chief customer officers. And we change all the words to make it about customer success. What is likely the only customer success? Musical theater performance inspired by Broadway and Disney. A live action lost episode of Friends where we finally learned that Chandler's job all along was a customer success manager. And by the way, pro tip, there's a big difference for the marketers in the room between impersonators and actors. Terrible performance. But we'll leave that aside. We had Vanilla Ice, the real Vanilla.

Ice, which had nothing to do with customer success.

We were just cool.

That was awesome.

Open up a 90s themed conference. And to really kind of invest in the experience, there's filmed a carpool karaoke video with Aaron Levy and Nick. And we even recorded and distributed a hip hop single at Capitol Records. I am not kidding. We actually did this. And so if you go to Spotify or Apple Music, you'll find that there.

And all these things are interesting because they're all crazy, but they resonate so much with our community. And this first point is exactly what I'm talking about, where you want to blur the lines between your company and your customers. I'll give you the craziest example, which is we made this crazy music video about customer success. Hip hop. I mean, that couldn't be more out of the Silicon Valley TV show if I came up with any idea. Right? But then one of our customers, Slack, who we love dearly, made their own version of that same video for their customer success team. Right? And that's when you get to the flywheel going where your community and your category and your culture are all blending together. Obviously, one thing that really brings it all together is conferences. So really investing in the different physical in person meetings. You've got be authentic to who you are and then have no shame, which is a big part of it.

Yeah. The tough part about having no shame is being vulnerable.

Right. Fundamentally, you gotta be willing to put yourself out there and do some things that are kind of ridiculous because it really helps you connect with that community in that category, at least for us. I even wrote a whole blog post about this. Just about like embracing vulnerability in a way to get closer to your customers and to your team as well. Well, so feel free to check that out. So final thing, final thought. As you're building a category, one of the things that happens is it, it just doesn't take place overnight. It's a really, really long term endeavor in most category creations. Sequoia Capital is a big investor. They have a great expression I love called being long term greedy, not short term greedy. So question is, are you really after that super long term prize or you just focused on what you're going to do this quarter? If you're focused on what you're going to do this quarter, honestly, don't do category creation. It's super bumpy. It takes a very long time. But if you focus on the long term, which we've tried to do, I think you can build something pretty special. Go to the next chart. This is the chart that we look at all the time, which is basically like the number of CSMs in the world according to LinkedIn. We're going to be publishing a report on this and we're just like, look, this is going to be a huge category and we're going to ride that category. We become the kind of dominant player in that category. So what's that chart that your business looks at? Right. And then the other thing we look at all the time, time is the influencers that keep talking about customer success. In our world, it's the McKinsey's and Gartners and whatever. So now we've got the mainstream where they're talking about it. So who are those influencers that are making you feel like you're on the right path?

Yeah.

Now one of the things you'll run into is customer success for us was just the start of what we thought of as our category. At some point you'll even think about how do you redefine that category? It never ends. Right. You want to create an even bigger category. We're in that process now. We, we got into the product experience space. We're thinking about a bigger category now. So category creation is emotion you can just keep using over and over again.

Yeah, that's right. Yeah.

And so fundamentally this fifth lesson is that you have to really be long term greedy. But the truth is that makes short term planning really hard. Being super vulnerable, like it's really hard to plan sales quarters and marketing leads and give people a formula of how it's all going to work out. You need patient investors. It's going to be super bumpy along the way, but in the long term, you can build something really substantial. And I hope you all get that same experience as well. But if you're in that bumpy part and you're like, is it just me? It's not just you. I think everyone that's going through category creation has the same experience.

So there you have it. We've chosen the red pill. We think we're in a room potentially for others that either have chosen it or are thinking about it. And what we actually really want you to take away is that you're not alone and it's okay to make some mistakes. And if you remove the pressure, that there are experts out there that have really figured this out, that there's like a tried and true playbook, I think that will help us all collectively get better at figuring out how to do this and at gainsight. We're still learning. We're still learning.

We're still learning. We don't have all the answers. I mean, every day we're like, God, is this working? Are we thinking about the category right way? Do we need to expand it? You might think of us, we're 600 people in the company. You might say, oh, you figured it all out. We have not figured it all out, but we are very, very long term ambitious. We think we're going to do something big. So if you're in the audience and you're at some part of that journey, you're not sure if you're on the right path, I'd say there's a lot of people in the same struggle right alongside you. And if nothing else, if the category creation stuff doesn't get you excited, if creating this big opportunity doesn't, well, hopefully something happens like what happened for us, which is Google SEO replaced that B list actor in the beginning, Gregory J. Barra, with now gainsight showing up as a hip hop musical artist artist when you googled Gainsight. So kind of cool way to end the story. Thanks, everyone.

Really appreciate it, Appreciate it.