In the early 2020s, it was easy to mistake category design for a marketing exercise. A new name, a sharper narrative, a brand refresh, and job done.

But as we enter a post-SaaS world, that thinking no longer holds. Category leadership isn’t built by fast-following or ripping off existing winners. It’s earned by defining the future problem space before competitors even realise it’s emerging.

Today, we explore what it really takes to lead a category in 2026.

Also in this episode: We’ll dig down into all the things that can go wrong on your category journey, and we’ll be reviewing the relationship status of Category creation and VCs

What to look forward to:

00:33 Category creation in a post-SaaS, post-SEO tech world

17:51 So you’re on a category journey - what can possibly go wrong?

43:30 The “Dead in the Water” Trap - the new relationship between VC and Category

There is more information on how to design your category on our blog

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Paul Maher

Jonathan Simnett

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We'll dig into all the things that can go wrong on your company journey and hopefully give you the tools to avoid them.

Um, you want a new CRM for your niche? Try us. Or, we are better at sales pipelines tools than everybody else and even the market leaders. There was no need for new categories, just rip off an existing one. Um, but we think it's not just about anymore describing the problem you solve, it's how you define the entire future problem space before even competitors.

Think about it. And that's what it's always been, really. Right?

Um, you know, we are clear. It's always a been about strategy.

Uh, and of course, in this AI world, that means, um, you know, AI driven discovery layers. Uh, and in 26 what we think is if you need to succeed, you can't define a category. What, without thinking about how both the people. The machines will find and engage with your category online. We'll be talking a little bit about that.

And in fact, we believe the vast majority of the AI platforms, which will succeed, uh, will be the ones that are looking at redefining actual processes. Again, different, not better. And leaving aside some of the B2C use cases, um, like gr, let's not go there right now, which are very self-serve. What we've seen is the most productive b business to business.

They actually reflect emergent buyer behaviors. And those behaviors are being driven by AI automation and dynamic workflows in restructured enterprises.

Continuous category innovation will be the way forward if you wanna maintain your leadership.

Um, they've got a whole world of pain. You know, they've got people to manage. They've got AI risk to consider. They've got compliance, uh, to figure out. They've got of course, cost pressures all at once. In a world of volatility, uncertainty, complexity, and ambiguity. It's a lot.

So how do you see enterprise software? Adjusting to this new category. Design playbook?

I can hire people and get them productive very quickly. Or predictive business continuity. I'm not going to suffer the sort of outages that we saw in in last year. Um, you know, really, uh, crunching, um, downtime as we said in the world of ai. This may mean a blend of software and services, um, meaning that the reports of the death of McKinsey may be somewhat exaggerated.

Yeah, there's a big role here for advisors and for guard railing.

You know, this is perhaps the biggest challenge facing enterprises because they literally need to rethink the career trajectory and training for all of these brand new AI assisted professionals that are now in their workforce. Um, just like accountants, uh, had to move from, from Excel spreadsheets to zero when everything moved to the cloud, it is actually fascinating times.

Uh, you know, that's what building a category is all about. And that used to mean, um, let's talk about it, SEO. Um, and that's just because Google adds in a tiny, tiny little bit of bing, uh, used to have the monopoly or duopoly on search, which was traditionally what marketing folks at least were obsessed with, uh, for the last few decades.

What does this move away from SEO mean for categories, in your view?

Focus on ranking links for human users.

Call it what you will, chatbot citations. And it's funny that after all these years, amusing to me that slinging, uh, two keywords together is finally found out to be not as trustworthy as giving those, searching the net actually what they want. Um, and that often involves, and again, I irony upon irony, the humble human edited story,

Yeah. It, it won't return a list for consideration. It'll do the thinking and position a category and specific vendors. As an integrated solution. This is hugely important as it changes SEO from ranking for keywords to shaping the semantic space around your category.

It

You know, this has been a boon to those who own authoritative review sites. You know, the ones that list the pros and cons of everything from coffee makers to graph databases. I mean, everybody loves a good list.

Think about the integrations you'll need. Think about the developer communities you'll need to bring with you. And remember how AI assistance, or AI powered workforces will help your company develop and use that, uh, to consider who you're gonna hire and when you're gonna hire them.

And that is one that influences AI recommendations.

And AI systems perhaps differently will reference it when they're looking to solve their problems.

And that's the real moats and just like moats that used to surround castles. One worth constantly maintaining.

Both things change and you may need to focus. On new things. So here we go. Here's a list of things you really, really need to think about, preferably before you even go on the category journey, nevermind look behind you and wonder what the hell's gone wrong. So let's start with the big picture. You know, category design fails most often, not because the idea is wrong, but because the company conditions and occasionally the market we have to admit, aren't really ready for it.

Um, and that in a way is, is almost a good reason to undertake the exercise. Um, but it's definitely a mixture of therapy and surgery.

One way to think about it, one way to think about your own culture is, you know, are you deeply product centric as a company? Do, do you know, do the product developer, do the product managers hold sway? Or are you a real listening company? Are, are you problem centric? And if you are, you've probably got an advantage.

Um, and that could be a problem that hasn't emerged yet as a problem. It could be one that customers have, but don't realize in many tech companies, however, the ones we deal with, certainly established ones, the dominant mindset is how do we ship the next feature? Um. And I've just read the, the Mike Lynch book, how do we Hit the Next Quarter's Numbers?

And way too often, by the time you've figured that out, the problem's moved on. Uh, and you're solving perfectly for a limited number of yesterday's customers. That to me is satisfying, not designing the future,

If leaders are rewarded for protecting existing products and revenue streams, guess what? They'll resist defining the category. Even if they really know and deep in their hearts it's the right thing to do. Uh, we call these people zeds and often they hide until the very last minute sabotaging the process, um, very efficiently.

And in a way you could sort of say that's very obvious they're gonna do that sort of stuff, um, because most of us are resistant to change. Uh, but that ignores the fact that, as we know, and you said change is inevitable, especially in tech.

And critically to this day, the Microsoft server business, uh, still, you know, hanging in, throwing off cash, uh, even in its as your version. And, um, each one of those seems to divide and rule, uh, and defend its own. Turf.

Um, you know, the company defended inside existing categories rather than redefining them, which given its market higgly it should have done. And of course, they just fought against themselves while Google and everybody else were making hate.

Good grief. Talk about, uh, not making a category, right? So it very understandable, right? The office suite, Microsoft's office suite for instance, captured almost every single morsel of value in end user computing for decades with a few misses. Um, you know, how did they miss Adobe's, uh, rise. Um, but you contrast that with Microsoft's later shift towards cloud productivity and intelligent cloud.

Hmm. They sound like C categories to me. This is a, a major cultural reset, um, driven by, uh, Nadella who's, uh, you know, widely liked, uh, and widely thought to be very visionary. And it led to the reassertion of Microsoft's leadership that we see today.

And par success can create category blindness. Uh, teams assume the old category definition is fixed. Um, they, they may have, they may have made a significant, uh, purchase, maybe a house as a result of all this history tells us, and especially in tech, this is anything but a fixed world.

Legacy customers can also be a constraint here. You know, if the company, your company, um, and I've heard this in so many conversations, is afraid to confuse or alienate, um, its installed base, it won't fully commit to a new category narrative.

Don't call my baby ugly. My code is gorgeous. That often means multiple conflicting category stories.

And, um, what's nice about that book is it has real life management examples of let's say, how to be paranoid and how to adapt to, uh, market changes.

Fortunately, the customer base was starting to move.

Those guys have their own little almost accidental breakthroughs, which in retrospect looked like genius, but were big risk-taking, category defining moves,

Um, but it does undermine the long-term category story.

You have to fight against that whole, um, attitude.

And, and oversimplifying, uh, vastly, um, they say no one got slack sack for buying IBM, but nobody in Europe, no CFO in Europe got sat for buying SAP. And you could say Oracle did the same, uh, in the us but these broader categories like intelligent, intelligent enterprise, brand new categories do require mopping up all of that, that problem.

Um, because otherwise you get regional sales teams who revert to the legacy ERP positioning. Well, I've sold it to all the CFOs. I know. Let's do some more of that. Yeah,

Your actual technology and architectures, um, ironically. We hate to say this because it shouldn't be true, but it is strong technology can work against category design.

Not just the gloss you, you put on this. Um, that said, if the platform is overly complex or presented as overly complex and often built through incremental evolution, you know, some tactical acquisitions here, et cetera, et cetera, it may not map cleanly to a simple, simple compel compelling country. That's just the way it is.

Uh, not PowerPoint slides.

That's the, that's the issue. So, um, do write in listeners and tell us what you think. Um, you know, I, I, I, I sort of think. And this is part of their success, but from a category point of view, they've become the new IBM. You know, they're, they're big, they're clearly important, but so what, you know, maybe it's time to think of something else.

Perhaps they are post category, um, ultimately exposed at many points across their portfolio.

And they have been for years. Right. This problem is currently being felt by, um, you know, waves of digital market marketers who for. Hmm, let's say a decade. Were hooked on SEO as as their prime lead market, and they're missing the current move to A-I-O-G-O AI visibility. Call it what you will. Um, yeah. They need to adapt to.

But that would be to the exclusion of category defining differentiation.

That's a classic

Do

Um, and one of the GA greatest ca categories might not have had Salesforce at its helm. Um, but as we've also noticed in episode 66, another goodie, that era could be coming to an end for the mighty Salesforce.

Uh, Amai rats on, uh, CEO uh, work there at Panera has personified building an automated security validation category leader a unicorn with over a hundred million dollars in a RR. And, um, you know, well done those guys.

So everybody gets confused. You know, you are not, you are not moving forward, you're not staying still. You're actually going backwards because you're actually destroying your existing proposition. Nevermind moving to a new one.

And that's something that category design helps with a lot. If you do treat category design as a marketing exercise rather than a company-wide strategy, it just won't stick.

I mean, the services pivot was absolutely gung-ho and focused on and achieved with alacrity. The problem was there were weaker governance periods, which diluted category. Clarity, I think particularly in hardware and application.

Um, and I do mean reality. Um, it, it is a feature of the technology business that many people live in imagined states. And what can happen is, you know, we're just, our brains are going round here thinking of all the people we know that are living in some sort of imagined state about what's going on in in tech.

You know, but you know, sometimes you might find yourself in a place where you think everything's going swimmingly because all the internal conditions are aligned. But the market isn't ready.

Did they really try it in reality? Um, the timing and the readiness were part of the issue. And I think the willingness to go all in was, was, you know, the majority of the problem.

Um, and you've really gotta be, you know, I think humble is possibly the word here. Uh, just be, just because a bunch of tech pioneers get it, it doesn't mean the rest of the world will or is even ready to,

Um, this category, consumer augmented reality was introduced before. The social norms adjusted, uh, and got 'em into a lot of trouble. Um, you know, peaking, et cetera, and buyer readiness, uh, wasn't there, there's something here, but it, but it ain't there yet. That's a common problem, right?

It that, that that failure of Google Glass is, is, is more of a market timing glitch than the technology failure. But the problem is, if if this happens, you, you can, um, generate a whole load of sort of told you so, um, internal skepticism, um, which can really hold you back when it comes to future category design efforts.

Um, and to be honest, it confirms what we think the data's been whispering for the last couple of years. Um, we don't have a broad based tech recovery. Going on, what we're actually seeing, it's a winner take most of the market land grab at the category level. And we haven't seen this before. Oh,

So, um, the headline says, VC is, is, is back. And, um, question is in a khap market, is it when two thirds of the capital into goes into $500 million plus, half a billion dollar mega deals? Um, what that really means is VC is back. For the few of those category defining platforms,

Now, that's basically flat at pre pandemic levels. Now, from a category point standpoint, that tells me investors believe most categories are already spoken for and from our viewpoint and from the long-term health of the industry and economy. New ones definitely need to be created, but we have to ask ourselves, are the conditions there currently to make things happen or is something fundamentally changed?

Um, you notice the, uh, grok with a q uh, acquisition recently, which is. Sort of m and a, but getting around US regulations, uh, and they do that by dressing up what is an acquihire with licensing agreements. One could argue Microsoft did something similar with OpenAI, basically gaining control of all the tech without actually buying the company for reasons that the tube scored to go into.

Um, so do we actually need VCs to power m and a at all? If we can engineer these weird acquihires, we just grow a small company and flirt like crazy with big tech and take the VCs out of it. No,

That's a massive category signal. It means AI hasn't been funded as a productivity level. It's been funded as a speculative land grab,

Who would bet on that, that's not accidental, right? It's exactly what happens when the market believes, uh, category ownership, uh, is, uh, valuable at all costs. Uh, and this new paradigm matters much more than unit economics. That's bubbly stuff, right?

Uh, 'cause they can misread the narrative of where they need their nascent company to go. Um. For instance, believing that, uh, ar ai companies by their nature are lean, cheap to set up and rough to scale. They're just not. Um, this is true at the tooling level. Uh, as we know, uh, those credits need to be paid for and it's payback time for some of these investors.

But it's not true at the category level if you are trying to, uh, win a foundational AI category. The models, the data layers, the agent platforms are so you are expected to burn aggressively to shape the future. And that's. That's, that's an issue.

Some of them quite brutal.

Um, so 10 years on average. Now to go from C to series D, you know, that isn't just a capital problem, that's a category maturity problem. And fewer companies are making it because fewer categories are expanding fast enough to support multiple scale players. Now this is what we call category compression.

You need to be sufficiently different. Um, and I believe you, you're also seeing that bridge funding is becoming more normal, even with the top quartile companies. Uh, then that obviously signals that, uh, category timelines are elongated. Um, or that expectations on the time to category dominance are perhaps unrealistic.

Uh, founders invest and investors it seems. Need to assume they'll be early in the category for much longer than before, which is sort of ironic.

Um, it's really harsh, but it's really important. Around 20% of VC-backed companies are neither growing nor profitable right now. Now, from a category lens. That's usually not a team problem, it's a category. Missier.

Um, they've gone for overs, segmented, massively mature SaaS categories. Um, putting an AI wrapper which has no durable differentiation markets that turned out to be features not markets. Um, and easily deployable inside large platforms who will just either adapt your, um, you create your, a version of your product, which is a feature of theirs or acquihire.

Isn't naturally cyclical enough anymore, um, as it might have been in the past to save those who are effectively dead in the water. So here's a really bad news. If your category isn't structurally attractive right now, there's no rebound coming to save you. If you can, uh, just only hang on.

They're, they, you know, they're chicken. They're saying, we don't believe in optionality anymore. You, you have to have a meaningful share of a real market. Or we're walking away. It makes you wonder what is the point of VCs if they're so risk averse.

Now it appears the category story has to be validated by revenue density.

AI valuations are almost certainly in a bubble no share show look,

The top five AI unicorns are worth more than every.com IPO, uh, combined, uh, from back in the day. That's not about fundamentals. It's about belief that only a handful of Plat platforms will matter. And that's sort of a, a moral, um, question.

I

But if immigration slows, uh, you don't see the impact immediately for just five to 10 years down the line when, um, fewer of these innovators create new categories, right? The ecosystem becomes incremental instead of expansive. And the new, uh, royalty of tech bros. Um, and I wouldn't say they're new anymore.

I'd say that the royalty of aging tech bros solidify, solidify their grip and the regenerative power. Creative destruction and tech-based capitalism breaks down,

Right? So if we look at it, the IPO window reopening is interesting. Of course it is. It's what we've all been waiting for. 'cause it drags the whole market through. But the average growth that IPO is now 9%. Not 28% as it was when it was previously measured.

Um, it appears, uh, and maybe it has 'em for a while here in Europe, that um, you don't go public on to prove the category more. You go public once the category is already consolidated. And some would say mature.

Um, but their, um, conservatism and, um, risk aversion reshapes categories when LPs need cash back, bcs push for it. Uh, that means earlier exits, that means more secondaries before we get to IPO, uh, which means faster consolidation, category compression, if you will. And that favors a. Acquire firms in existing categories, not, you know, moonshots that have a long horizon, uh, of building a new category.

And if you just look at that wind, you know, the windsurf style deal, um, you know, you're buying leadership but not the company. I would argue that's a dis we, I think we're agreed on this. That's a destructive warning sign.

You know, capital has become brutally selective.

Uh, every, everything else is being starved, consolidated, or quietly shut down right now.