The default position of all early companies is to do nothing new. The pre-programmed setting is failure.
This is what Reid Hoffman is referring to when he compares running a startup to “throwing yourself off a cliff and assembling an airplane on the way down.”
The airplane isn't built yet. The only reality is you and the ground - an unpleasant meeting rapidly approaching.
Few businesses survive, and even fewer find a way to thrive.
In fact, 90% of startups fail, and less than 1% of VC-backed companies ever reach a valuation of $1B or more.
Why?
While companies fail for many reasons, one of the greatest root causes of failure largely goes unnoticed. It's called “category jail.”
Category jail is a concept framed up by my friend John Rougeux and the team at Category Design Advisors.
Essentially, category jail is when you are stuck competing in someone else’s market category with a “better” product or a “better” brand.
And no one cares.
💵 Investors feel they’ve heard this pitch before.
👥 Partners wonder why they should spend time working with you when you sound the same as everyone else.
👋 And customers figure that the cost of switching is too high.
It’s a painful spot to be in.
It was category jail that took Google Plus from “Facebook Killer” to technology bust.
It is category jail that has killed the undifferentiated drone and remote sensing market in #agriculture
It is the fact that Indigo has put themselves in 6-8 category jails over time that resulted in their recent valuation dive…and category jail is why everyone wonders when the very same thing will happen to Farmer's Business Network, Inc.
If you're running a startup, you've jumped off a cliff, and it’s your job to build the plane. If you want to build an airplane that flies, you have to teach people how to think differently about the problem you solve so that the solution you build is the only one that fulfills their needs.
You have to stop offering comparisons and start forcing a choice.
You have to break out of category jail.
Make something different. Make people care. Make fans, not followers.