“We’re like Uber, but for dog walking.” I hear variations of this positioning every week from startup founders. While comparison-based positioning feels safe, it’s actually the kiss of death for achieving unicorn status.

After building brands for 150+ startups and watching the winners from Idealab to New Relic’s IPO, I’ve learned that unicorns don’t compete in existing categories—they create new ones. Here’s how to position your startup for category creation instead of category competition.

The Unicorn Positioning Pattern

Every billion-dollar startup follows the same positioning pattern:

Tesla: Not “a better car company” but “sustainable transport company” Airbnb: Not “budget hotels” but “belong anywhere” Slack: Not “email replacement” but “team communication platform” Salesforce: Not “better CRM” but “customer success platform”

These companies didn’t fight for market share—they created new markets.

Why Category Competition Kills Unicorn Potential

When you position as “like X but better,” you’re accepting three critical limitations:

Limited Market Size You’re competing for existing demand instead of creating new demand. The market size is fixed by the existing category.

Commoditization Pressure You’ll compete on features and price instead of unique value. This leads to shrinking margins and defensive positioning.

Investor Skepticism VCs don’t fund incremental improvements—they fund category creators. “Better” isn’t enough for unicorn valuations.

The Category Creation Framework

Through my experience at companies like Microsoft and Adobe, plus working with portfolio companies, I’ve developed a systematic approach to category creation:

Step 1: Identify the Unmet Need Don’t start with your solution—start with a problem that existing categories don’t address.

Step 2: Name the New Category Create language that describes the problem and solution space you’re pioneering.

Step 3: Define the Category Requirements Establish what capabilities and characteristics define success in this new category.

Step 4: Position as Category Leader Demonstrate why you’re uniquely positioned to lead this new category.

Case Study: From Competitor to Category Creator

A portfolio company came to me positioned as “affordable project management for small teams.” They were competing against established players like Asana and Monday.com in a crowded market.

The Competitive Positioning Problems:

• Generic value proposition that applied to dozens of competitors
• Price-based differentiation that wasn’t sustainable
• Limited market opportunity based on existing category size
• Difficulty articulating unique value to investors

The Category Creation Process: We spent time understanding their actual differentiator: they’d built workflow automation that required no technical setup. This wasn’t just better project management—it was a new category.

The New Category Positioning:

• Category: “No-Code Workflow Automation”
• Problem: Technical workflow tools require IT resources that small teams don’t have
• Solution: Automated workflows that business users can create and manage
• Differentiation: Combines project management with workflow automation without technical complexity

The Results:

• 300% increase in qualified leads
• Successful Series A with category creation narrative
• Market leadership position in emerging category
• Sustainable competitive advantages

The Category Naming Challenge

Creating a new category requires thoughtful naming that:

Describes the Problem The category name should immediately communicate what problem you’re solving.

Implies the Solution People should understand what the category does without explanation.

Avoids Jargon Use language that your target audience naturally uses.

Has Growth Potential The category should be large enough to support multiple companies and continued innovation.

Building Category Credibility

Category creation isn’t just about positioning—it’s about building evidence that your category is real and valuable:

Thought Leadership Become the expert voice defining and explaining your category.

Industry Validation Get analysts, press, and industry experts to adopt and use your category language.

Customer Success Stories Demonstrate clear value and differentiation through customer outcomes.

Ecosystem Development Build partnerships and integrations that validate your category’s importance.

The Category Maturity Lifecycle

Understanding where your category sits in the maturity cycle is crucial for positioning strategy:

Emergence (0-2 years)

• Focus on problem education
• Define category requirements
• Build initial market validation

Growth (2-5 years)

• Establish market leadership
• Expand category definition
• Build competitive differentiation

Maturity (5+ years)

• Optimize for market share
• Develop platform strategies
• Consider category expansion

Common Category Creation Mistakes

Mistake 1: Category Too Narrow Creating a category that can only support one company limits growth potential.

Mistake 2: Category Too Broad Making your category so broad that it becomes meaningless or overlaps with existing categories.

Mistake 3: Technology-Focused Categories Focusing on how you solve problems instead of what problems you solve.

Mistake 4: Premature Category Claims Claiming category leadership before establishing market validation.

The Investor Category Creation Pitch

VCs fund category creators because they offer:

Larger Market Opportunity New categories can grow to billion-dollar markets instead of fighting for share in existing markets.

Sustainable Competitive Advantages Category creators build moats through network effects, switching costs, and ecosystem lock-in.

Platform Potential New categories often become platforms that other companies build upon.

Exit Opportunities Category leaders command premium valuations in acquisitions and IPOs.

Measuring Category Creation Success

Track these metrics to validate your category creation strategy:

Market Adoption

• Industry usage of your category language
• Analyst recognition and reports
• Press coverage using your category terminology

Competitive Positioning

• Frequency of comparison-based positioning by competitors
• Adoption of your category framing by competitors
• Industry acceptance of your category definition

Business Performance

• Lead quality improvements
• Sales cycle acceleration
• Pricing power increases

The Technical Founder’s Category Challenge

Technical founders often struggle with category creation because they focus on technical differentiation instead of market problems. Remember:

• Customers don’t buy technology—they buy solutions to problems
• Categories are defined by problems, not solutions
• Technical superiority doesn’t automatically create new categories

Building for Category Leadership

Category creation isn’t just about positioning—it’s about building a business that can lead and define a new market:

Invest in Thought Leadership Become the voice that defines your category through content, speaking, and industry participation.

Build for Ecosystem Create partnerships and integrations that validate your category’s importance.

Scale for Market Creation Build operations that can handle the market you’re creating, not just the market that exists today.

Don’t compete for existing demand—create new demand. That’s how you build a unicorn.