How To DAM The Demand: Redesign Your Category, Take 76% Of The Market, And Leave Your Competition Wondering What Happened

“I thought I wanted X, but maybe what I really need is Y?”

Dear Friend, Subscriber, and fellow Category Pirate,

Most businesses fight for demand.

There is no finer example than the $80 billion-dollar industry dedicated to Search Engine Optimization. Here, companies and solopreneurs compete for the same handful of keywords and search terms, hoping to convince customers to click and purchase from them instead of one of their competitors. This is akin to kids jumping up and down yelling, “Pick me! Pick me!” Or muscle men walking around on stage in front of judges with numbers on their teeny-tiny mankinis, hoping they’ll get picked for the trophy.

From early in life, we’re taught to compete in a pre-existing game of comparison designed by someone else (read this sentence 3x). 

In doing so, we unconsciously submit to someone else’s rules.

In business, this seems smart. Buy Google Ads for the keywords that indicate someone is already shopping and yell, “Pick me! Pick me!” 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.

There’s just one problem.

Businesses that compete for demand fall into product comparison conversations—often in categories with existing leaders. 

They walk into these existing markets saying, “We do the thing the already established Category Queen does, just better/faster/smarter/stronger/cheaper.” The founders, investors, and well-educated executives who champion this business strategy believe they are doing the smart thing, de-risking their efforts by bringing an improvement to a proven market.

These people are not Pirates.

Here’s why:

In order to become a Fortune 100 fastest-growing company, you have to have $50M in revenue and $10M in net income for the prior four quarters. You must also have grown revenues 20% per year for the previous three years. Through our research, we have found that 21% of the 600 or so companies that have held spots on the Fortune 100 fastest-growing list are, without question, category creators. 

For 79% of fast-growing companies, $1.00 of revenue growth = $1.77 in market cap growth.

But compare that to the 21% that are category creators, and $1.00 of revenue growth = $4.82 of market cap growth—nearly 3x higher.

When you are the creator and designer of the category, you are Queen/King—and the industry or market you create becomes your kingdom. You write the rules. You define its measures for success. And most importantly, you benefit the most from the category’s growth.

You “win.”

So, how do you capitalize on existing demand without falling into the product-comparison race to the bottom? 

You DAM the demand.

Often when we introduce newcomers to the concept of category design, the response we hear is, “How do we create something out of nothing? Creating demand out of thin air sounds hard and risky.”

You’re right.

Which is why a “DAM the demand” strategy is so powerful. It’s about interrupting customers when they are shopping, and then educating them on the advantages of heading in a new and different direction. (“You think you want that, but you really need this!)

This is the Aikido (Japanese martial arts) move of category design, using the momentum of the legacy category to your advantage. When you’ve successfully DAMed the demand, you have raised an urgent question in the customer’s mind:

“I thought I wanted X, but maybe what I really need is Y?”

And it’s in this question, this gap between what they thought they wanted and what they didn’t know they needed, where you have the opportunity to educate customers on the differences between the old category and the new one you are creating/designing. DAMing the demand is not a product-to-product comparison. It is a category vs category debate, and involves telling the truth about the existing category and using the enemy’s strengths (acknowledged by them and everyone in the category) against them. 

There is no sales pitch, no shouting match, no “Pick me! Pick me!”

Just a cool, calm, and collected education on “The Gap” between what the market considers to be the best (or sometimes, the only) solution, and what they should now consider as a new and different way forward. And it’s this truth-telling that stops customers in their tracks—because beholden as they might be to the legacy category, they are also painfully aware of its limitations. Further, this truth-telling permanently disables the Category Queen and all the competitors chasing “existing demand” in the old category.

Because when you DAM the demand, you’re moving buyers in the category FROM the old TO the new. (We call these FROTOS.)

Here’s how you DAM the demand:

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