In this episode we dive into category creation and what it takes to win in a new category. Many startups are building products unlike anything that has existed before, but how do you build a category around it? How do you let people know it even exists? We are here to help! In this episode we answer questions including:

• What is category creation?
• How do you anticipate the need for a new category?
• How do you educate the market that your new category exists?
• How do you maintain a competitive advantage as your category grows?

Sean Byrnes has co-founded, scaled, and sold multiple startups and has invested in and advised countless others. "Category creation" has been central to Sean's ability to go from 0 to 1 and beyond. Ash and Nic put Sean on the hot seat to unlock winning strategies around category creation.

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Q0: What is category creation?
If you are selling something where there was nothing like it before, it’s category creation. This differs from scenarios where you are selling a product that replaces something else (a product, a person/role). In those cases, it’s a replacement.

Q1: How do you anticipate the need for a new category?
Category creation starts with problems. For example, you may observe old problems that go from small to huge (SaaS). Another way for opportunities to emerge is from problems that arise through new technologies, markets, or changes (mobile apps).

“What kinds of problems are increasing in pain but now may be solvable given this shift?” These opportunities all start with inflection points: something needs to change to disrupt the status quo.

Creating new categories is usually not the best approach. Even if it is, it often takes years before people recognize that the category exists.

Q2: How do you educate the market that your new category exists?
While replacement products are all about competitive advantages, category creation is all about education.

Most of the education is not about your product. Instead, educate your prospective customers that it’s possible to solve the problem! You just want everyone to know that solutions exist. Teach people what to look for in solutions: give them criteria and teach them how to evaluate.

With “education” as a central component of your strategy, you still need to stay true to your classic startup principles: validate that people have a need, show them a clear use case, and generate proof that prospective customers want it badly.

Q3: How do you maintain a competitive advantage as your category grows?
First mover advantage is a fantasy. You would much rather be second or third. If you do create a category, there are a few advantages you can build up:
- Premium customer logos.
- Create your own conferences.
- Prime positioning with analysts/industry coverage.
- Defining the industry standard.

Treat customers like co-researchers on this emerging frontier. Earned and owned media builds trust and buy-in.

Lightning Round
How do you validate demand for this type of startup? Is it different in any way than the classic methods that startups should take?

What’s more important: a crystal ball type of ability to anticipate a new category of opportunity or the ability to iterate quickly when an opportunity presents itsel

In this episode we dive into new kinds of Venture Capital firms and what they offer startups. Many startups seek venture funding, but most funds look the same. What can new types of funds offer? When are they a good fit for you? We are here to help! In this episode we answer questions including:

• How involved should a typical VC be?
• What’s more important the founders or the market?
• What are examples of an “unfair advantage” that a startup can have?

We also hear details on Sterling Road and Near Horizon, two new kinds of venture firms started by our own Ash and Sean!

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Q1: How involved should a typical VC be?

For a typical investor, ideally they should not be involved much at all. Many VCs don’t have experience operating a startup, thus, their advice can be distracting. Nonetheless, it is still important to keep them regularly tuned in via monthly status updates.

For investors that have built and led startups, their help can be significantly more meaningful. With Sterling Road, Ash provides regular cadence coaching to help your startup at the earliest stages. This also includes hiring intros, customer intros, community access, and fundraising help.

Sean explains that Near Horizon gets as involved as possible, but they aren’t the CEO. You need a CEO with vision and deep knowledge of the space; Near Horizon is the booster rocket to make them better. They support the CEO with a wide range of founder-centric efforts, but fundraising and hiring remain the CEO’s responsibility.

Q2: What’s more important the founders or the market?

You need both! Let’s talk about the table stakes for a startup:

1: The market: it needs to be a huge problem with a lot of potential buyers.

2: The founders: impressive founder with a history of success and resilience is key. The founder will make or break the company.

3: Proof: then you need a great idea, evidence that it might work, a demo, and a bunch of customer discovery.

Great founders can build businesses in small markets, but not venture-backable businesses. Weak founders can show traction in big markets but will struggle to scale. Investors are looking for a unicorn, and that is very rare. Most investors review hundreds if not thousands of startups for every one investment.

Q3: What are examples of an “unfair advantage” that a startup can have?

Ash explained that Sterling Road prizes advantages in tech, network effects, and user experience (usually based on tech, otherwise a competitor could easily copy it).

Sean emphasized that Near Horizon looks for founders with unfair advantages in distribution. You need a way to reach your customers that isn’t paid advertising.

Other nice-to-haves include:

Hiring - having a network of amazing people who want to join your team.

Customer rolodex - knowing the first dozen or so buyers.

Lightning Round

• Do founders make the best investors?
• What’s a clear signal or indicator from a startup that can make it interesting to potentially invest?
• After three months of receiving the Near Horizon or Sterling Road golden touch, what’s the change that a startup should experience – what can they now do differently?

In this episode we answer questions about growth. Specifically, what do you do if your growth has stalled? How do you find a new growth engine? We are here to help! In this episode we answer questions including:

• How do I break out of a flat sales slump?
• How do I avoid spending all my time fighting with competitors for deals?
• How do I stand out in a crowded market?

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Reminder: this is not legal advice or investment advice.

Q1: How do I break out of a flat sales slump?
Start by reviewing some of your growth fundamentals to make sure your key pillars are in a good spot. Your ICP: do you know your Ideal Customer Profile, and do you have evidence that this customer category has demand for a solution? Proof: do you have proof that your product is generating great value for customers (and have you created assets based on that proof)? Referrals: are you making it easy to get referrals? Make sure these pillars are in a healthy spot first.

Then, investigate which growth levers need more attention. Your sales funnel is one such lever that is critical to this process. Conduct a sales funnel analysis:
- Are we doing enough initial calls or getting enough signups?
- Are enough people getting excited or engaged when they see the product? 10-20% is a good baseline.
- Are enough people becoming paying customers after they try it out? Converting 30% of trials is a good baseline.
- Look for the chokepoints: where are the easiest places to improve?

Q2: How do I avoid spending all my time fighting with competitors for deals?
Listen to your customers. It’s likely both products fail in some way for the customer. You may be able to find an opportunity to differentiate that value you provide by addressing this unmet need. Furthermore, you may unearth a subset of customers whose needs are going unmet. Don’t be afraid to take a risk and test new ideas and features.

Much of this is a function of changing how you – as the founder – frame the strategy. Spend less time talking about the competitor and more time talking about how the world should look. Seeking parity is what turned Blackberry from a global force in cellphones into what it is today. You want to build an iPhone, and that’s not going to come from matching the competition.

Consider how you can change the game through radical product changes, radical pricing changes, and radical strategic moves.

Another avenue to consider: this can be a great opportunity for a merger! There are many notable examples (include Sean with Flurry) where two high growth startups merge, with one brand leading the charge moving forward.

Q3: How do I stand out in a crowded market?
You never win by playing the same game as everyone else. Look at where the market is going and try to get there first. Understand the pain better and find a new way to fix it. Find a new crowd!

A common mistake is to differentiate by highlighting the features you have compared to the competition. Instead, differentiate through storytelling – what opportunity is emerging in the world, and how can your startup be the engine that makes it possible for your customers to participate in that opportunity? That's what people care about.