Category leaders usually capture 70-80 percent of the profits in their market, which is why venture funds need to find them to gain the outsized returns they must generate in order to return their fund. In our latest interview with Mike Maples, founding partner at Floodgate, we discover the characteristics of these category kings and how they change consumer behavior.
How we live
These category kings don’t just make something to sell to somebody, they introduce the world to a new category of product or service. For example, Maples argues that “Jobs’ greatest genius was his ability to invent three new categories: the digital music player, the smartphone and the tablet.” These products changed the way consumers live.
How we spend
Category leaders have the ability to change consumer spending habits. As Maples highlights, “Before Starbucks, I paid 50 cents a coffee, now I’m happy paying $3.50 for a latte in Starbucks.” In the opposite direction, the rise of AWS has caused consumers to have a fundamental mindset shift in how much cloud services should cost. Both changes allow for Amazon and Starbucks to assert their dominance in controlling consumer spending and ultimately controlling their category.
In the opposite direction, the rise of AWS has caused consumers to have a fundamental mindset shift in how much cloud services should cost. Both changes allow for Amazon and Starbucks to assert their dominance in controlling consumer spending and ultimately controlling their category.
Ultimately, the greatest category creators do not leave their leadership to chance. They push the boundaries to educate consumers to see the world from their perspective. They acknowledge that markets can only evolve as fast as human behavior can evolve. They time their product strategies, marketing and go-to-market in short bursts to maximize adoption.