Christopher Lochhead | Category Design (Episode 681)

Christopher Lochhead (@lochhead) is a former entrepreneur, retired Silicon Valley three-time public company CMO, category designer, host of the Legends & Losers Podcast, and co-author of Play Bigger: How Pirates, Dreamers, and Innovators Create and Dominate Markets.

“People remember different in a way they don’t remember better.” -Christopher Lochhead

The Cheat Sheet:

  • Entrepreneurship is at an all-time low. Why?
  • Every legendary product, service, or brand exists because an innovator got product, company, and category right at the right time.
  • Why legends are different, not better.
  • Learn how to design and dominate your own category.
  • Learn how to design your own legendary life.
  • And so much more…

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At a time when entrepreneurship is at an all-time low in the United States, understanding why this is the case and how to remedy the situation are imperative. Category Design can help.

Category Design is a secret black art that has been practiced in Silicon Valley for years — and it changes the outcome for entrepreneurs. Christopher Lochhead, Legends and Losers host and co-author of Play Bigger: How Pirates, Dreamers, and Innovators Create and Dominate Markets explains what this is and how we can use it to better our entrepreneurial chances even in highly competitive fields. Listen, learn, and enjoy!

More About This Show

You might not know it, but the United States is currently experiencing an entrepreneurship crisis.

“More companies die every week in the USA than are started,” says Christopher Lochhead, host of Legends and Losers and co-author of Play Bigger: How Pirates, Dreamers, and Innovators Create and Dominate Markets.

Is it because not enough people are getting into the game, or are too many of the people who start businesses unprepared for how much work it actually takes to make them succeed?

There doesn’t seem to be one easy answer, but Christopher points out that college students are graduating with more debt than ever before, and often default to whatever jobs they can get to pay off their loans rather than focusing on creating new businesses.

But he also points out that the cost of starting a new business is cheaper than ever before thanks to technology helping scale overhead to supply only what’s required. Just 10 years ago, a business might have paid thousands of dollars per month just to have a website that wouldn’t crash if more than five people tried to look at it at the same time. Now, the same service probably costs closer to $15 a month.

Bad — But Common — Advice for Entrepreneurs

“A lot of the advice to entrepreneurs today is frankly wrong — and kind of bullshit,” says Christopher. “The two biggest ones that I hear are: 1) follow your passion, and 2) hustle, hustle, hustle. Telling entrepreneurs to follow their passion and to hustle, hustle, hustle is not only stupid, but almost criminal. Because first of all, your passion might not connect to solving any problem that anybody cares about…hustle, hustle, hustle is dumb advice…[because] if you’re hustling in a category that’s dominated by a category king that has 76% of the economics, at best, you’re playing for a quarter of what is available in that category.”

There’s something to be said for the possibility of spoiling your passion for something that makes a better hobby than a viable business.

“You could totally destroy your love of your passion,” says Christopher. “How many times have you heard the story of a great chef who opens a restaurant and the restaurant doesn’t work — and now she hates cooking and she’s got $350,000 worth of debt? There’s a lot of people who take their passion, turn it into their profession, and eff it up.”

And as far as hustling goes, we might go into it being happy with what we perceive as the odds in our chosen market. But there are problems with this way of thinking.

“The vast majority of entrepreneurs and innovators of any kind — and for that matter, people in their careers — we make an unconscious, unquestioned, unexamined, un-talked-about decision to do the following: ‘I am going to compete in an existing market category with a strategy called ‘I’m better than everyone else,'” says Christopher. “That’s what we’ve been taught. We’ve been taught whether it’s in life or in business that the way you win is you play a better strategy in an existing game. The key is to be the best. Well, it turns out that strategy is 180 degrees wrong if you want to build a legendary career or a legendary business.

Different, Not Better

“When you unpack what the legends did, what you discover is that legends are different, not better.”

Christopher uses Pablo Picasso as an example. He began his career by creating art that was pretty comparable to everyone else’s art at the time. It wasn’t until he started experimenting with what we now know as Cubism that he distinguished himself from the competition — he had invented a whole new category.

“He taught the world how to think about this new kind of art, Cubism, the way he did,” says Christopher. “And when the world accepted Cubism, he wasn’t another painter — he was the first Cubist painter.”

Who would you rather be: Pablo Picasso, or the 87th Cubist painter in the world?

So how do you know when you’re actually creating your own new category, or you’re just painting something that already exists in a slightly different shade?

“The answer is: does the market agree with you, ultimately, about what the difference is?”

Christopher gives the example of 5-Hour Energy selling itself as something new, not just a better Red Bull or Gatorade. Everything about it different, from the packaging to the pricing to the taste to the implied experience.

“By doing everything in a different way, they teach the world how to think about a problem called, ‘How do I pep myself up?’ in a very unique way,” says Christopher. “It’s all predicated on an insight that says, ‘Just because I’m tired doesn’t mean I’m thirsty.’ By teaching the world why an energy shot is different than an energy drink, they reframe the way the world thinks about a problem — ‘What do I take when I need a little pick-me-up?’ And as a result, they don’t ask customers to compare the product against a Red Bull or a Gatorade. They introduce it as a completely new thing. So everything that comes after that then gets compared to that.”

The bigger the problem you’re solving for people, the more time, money, and energy they’ll send your way.

Some business “experts” will tell you that the problem you face by creating something so unique is that you then have to go educate the market about how you’re solving a problem it didn’t even know existed. Christopher demonstrates how this is false by using the example of his favorite band: The Ramones.

When The Ramones hit the rock scene in the ’70s with their straight-ahead, three-chord, back-to-basics style, highly technical acts like Led Zeppelin, Yes, and Rush were all the rage. Someone making a direct comparison between The Ramones and these other bands might come to the conclusion that The Ramones were no good because their musicianship was driven by attitude and style over competence in technique.

“Ultimately what they said was, ‘That’s where you’re wrong. You can’t listen to The Ramones the same way you listen to Led Zeppelin. You need a different set of ears — because [The Ramones] are punk rock.’ And the minute the world gets punk rock, The Ramones become the grandfathers, the godfathers, the creators of punk.”

“It turns out the best companies and the best careers are the ones that create or meaningfully reframe categories.”

Christopher talks about how realtor Tim Rhode carved out a niche for himself by redefining types of realtors — and becoming the guy who people would choose if they wanted to sell their house in a hurry. A wacky marketing campaign followed by the tagline, “Call Tim Rhode and start packing!” got people to think differently about their criteria for choosing a realtor.

What’s the Difference between Brands and Categories?

For someone without kids, every dollar Chrysler spends trying to market a minivan to them is wasted. On the other hand, every dollar Ford spends trying to market a Mustang to a muscle car fanatic is a good investment.

“Categories are associated with problems that we think are important to solve,” says Christopher. “Categories make brands — not the other way around.”

This isn’t to say branding isn’t important, but the category is what’s going to hook people into paying attention to your brand in the first place.

Is there a way someone can use this concept even if they’re not an entrepreneur or business owner?

“I would assert if you don’t, you’re going to clip your wings unintentionally,” says Christopher. “Here’s the mistake that most people make: they scream features. ‘Oh, I can do this, I can do that, I’m good at this, I’m fast at that, I made this quota, etc.’ That’s the equivalent of an entrepreneur doing a product demo for people. What makes legendary careers is I get known for solving a big problem that matters in a very unique way. So what we want to do in our careers is ask ourselves the question, ‘What makes me different?’ as distinct from ‘What makes me better?’ It’s hard to say ‘I’m the best salesperson in the world,’ because even if you are, you’re probably not going to be quarter in and quarter out. And I’ve known some legendary salespeople. It’s about what makes you different, because people remember different in a way they don’t remember better.

“Legends want others to be compared to them, not them to be compared to others. That’s what sits at the core of different. If you can connect you’re different to a problem that matters, then you become incredibly valued to people with that problem. What legendary people do is they evangelize the problem and therefore they get positioned as the perfect person to solve that problem. Whether you’re a carpenter or you want to be the next Mark Zuckerberg, that’s true. And the mistake we make is we argue, ‘We’re the best pizza in town’ as opposed to, ‘We’re the thin crust pizza in town.’ Because if I say, ‘Hey, boys! Let’s go for pizza! What do you feel like? Thin crust or deep dish or…’ We start to have that conversation.”

Christopher mentions his tax accountant as someone who’s successfully carved out his own category in a market that seems pretty cut and dried. By specializing his skillset to address the tax needs of technology executives who had stock options, he became the guy to see for people in this very specific niche. A generalist in his field might be just as capable of catering to this need, but he’s going to be the first one they think of.

And Christopher says people seeking to differentiate themselves in a saturated market can get even more specific by “niching down.”

“If I’m the gal who’s the expert on throat cancer on the left side of your throat two hairs above your collarbone on Thursdays — and that’s what you’ve got — then [I’m] who [you] want.”

So casting a specific, rather than a wide, net will get better results — and you’ll be able to charge accordingly for cultivating such a rare combination of skills.

How to Niche Down

How do we niche down and dominate our own category? Ask these three questions:

  1. What problem do I solve in my job, in my world?
  2. What makes me different from everybody in my ability to solve this problem? (“Different, not better,” Christopher reminds us.)
  3. Can I explain it? (“Where’s your ‘Call Tim Rhode and start packing?'” asks Christopher. “Because the minute he says it, you understand if you’re not serious about selling your house, don’t call Tim!”)

By answering these questions, you’ll be better able to answer people who ask you what you do. Rather than saying you’re a tax accountant, you’ll say you’re a tax accountant who specializes in helping executives with stock options.

Frotos: From/Tos

Write From on one side. Draw a line down the middle and write To on the other side. Then you start to think about everything in your field that you don’t think is right and write it on the From side. In the To list, you write how you do it that’s different. The minute you can ground yourself in the way things are now and the way you want it to be and then you connect the problem you solve, what makes you different and your point of view to those frotos.

“What you’re trying to do is move the category from where it is to the way you want it to be,” says Christopher.

Don’t be the shoe salesman who visits a land where everyone walks barefoot and leaves because you don’t see your industry as relevant. Be the shoe salesman who visits and sees the potential for creating a category that doesn’t yet exist.

“When you…answer those three questions, you’ll be grounded in the change you want to see around the way people think about you, your differentiation, and ultimately — and this is probably the most important part — the value that you deliver.”

Designing a Legendary Life

Some people think life is “what happens to you” like the weather happens to you. Legendary people proactively design each and every component of their life.

“When I was a young man, at about 17-18 years old,” says Christopher, “and I first understood that you could design your life, that was a very big idea…I thought that most people didn’t feel like misfits. That most people grew up as kids, went to school, when into the workforce…and for the most part, they found a place in the world. That was not my experience — I had the opposite of that. As I’ve gotten older, I’ve learned that there’s a lot of people who feel like misfits like I do, and those people had to make their place in the world because there wasn’t a place for them to find, so to speak.

“And so this approach, it’s called category design to position yourself proactively like this, is really about making your place in the world. Deciding how you want the world to view you, what your real value is, what a fair exchange of value is — that is to say how much I should get paid for this stuff — and being proactive about designing the kind of career, the kind of life that you want to have.”

Mentor Bix Bickson once told Christopher, “Most people and most companies are living inside of other people’s thinking.”

This got Christopher to evaluate how much of his own thinking was influenced by others but accepted as his own, and how much of it actually originated in his own head.

“Once I understand that I can have my own thoughts, a demarcation point in thinking creates a demarcation point in language, which often leads to a demarcation point in action.”

THANKS, CHRISTOPHER LOCHHEAD!

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AJ Harbinger - author of 1048 posts on The Art of Charm

AJ Harbinger is one of the world’s top relationship development experts. His company, The Art of Charm, is a leading training facility for top performers that want to overcome social anxiety, develop social capital and build relationships of the highest quality. Raised by a single father, AJ felt a strong desire to learn about relationships and the elements that make them successful. However, this interest went largely untapped for many years. Following the path set out for him by his family, AJ studied biology in college and went on to pursue a Ph.D. in Cancer Biology at the University of Michigan. It was at this time that he began to feel immense pressure from the cancer lab he worked in and began to explore other outlets for expression. It was at this point that The Art of Charm Podcast was born.

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