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Category Design Tip: Don’t Fight Over Existing Demand, Create Net-New Demand
If your reference is the competition, you’re done before you’ve begun.
Dear Friend, Subscriber, and Category Pirate,
This week’s Category Design Tip is about removing yourself from the race to the bottom.
Most businesses fight for demand.
They walk into existing markets saying, “We do the thing the already established Category Queen does, just better/faster/smarter/stronger/cheaper.”
These people are not Pirates.
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Pirates Don’t Fight Over Existing Demand—They Create Net-New Demand
In business, the unquestioned rationale is: demand exists. And if our business can tap into that existing demand, we will find customers—and customers lead to profits.
But what is “demand” really about?
Demand is fighting over scarce resources. Land. Oil. Gold. Water. It’s a scarcity mindset played out.
And the reality is, only idiots fight over scarce resources.
Think about it: Apple stores are not jammed with customers because “demand for technology retail is on the rise.” If that was true, Microsoft Stores would be jammed too. Demand does not just happen.
It gets created.
Legendary entrepreneurs, creators, and leaders find ways to create net-new resources for everyone.
Instead of acting like a bunch of monkeys on an island fighting over bananas, they work to grow enough banana trees for everyone—and then some.
This is no different than how today’s NFT boom isn’t “disrupting” the legacy art world, but creating a radically new and different world of art. Much of this net-new world is populated with consumers who previously a) didn’t own “professional art,” b) weren’t interested in collecting or learning about art, and c) couldn’t afford to step foot in the category, even if they wanted to. So NFTs are not taking market share away from Sotheby’s.
They’re creating net-new category potential in a new category of collectibles.
We Call This The No Ocean Strategy
The No Ocean Strategy is where you take someone who says, “Never in a million years would I ever be interested in doing a thing like that,” and you convert them into your category.
You turn them into Superconsumers of the new and different. As a result, you change which way the wind blows. And you do it by inventing something that did not exist before you came along and made it so.
Once you begin creating net-new demand, the next step is to take a No Ocean Strategy approach to unit economics.
For example, how do you get someone to buy an NFT more than one time?
You make it so they’re not buying the NFT—they’re buying an item, a product, or access to some feature connected to the NFT. For example, the NFT collection Bored Ape Yacht Club didn’t “discover” a way to sell more art to art collectors. They invented net-new “demand” for net-new consumers, resulting in a net-new business model, which created massive net-new value.
Creation. Not discovery.
You may be thinking, “Creating demand out of thin air sounds hard and risky.”
Because if you conceive of a world many people believe is impossible (to invent something that doesn’t yet exist) you create net-new demand.
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