Samurai Startups (Staffing for Category Creation)
“New eras don’t come about because of swords, they’re created by the people who wield them ” Watsuki Nobuhiro
Category creation precedes innovation. It’s based on a higher risk business model, dissimilar economics, and a markedly different mentality.
I’ve worked in the embryonic phase; unique technology and/or business model searching passionately for market insertion (vs. missionary position plan execution). Founders, and investors race the clock, course correcting on a dime until reaching that key inflection point where you knew it was just a matter of gutting it out. They stayed the course, and cracked the code – these kind of people are so great to work with!
I first heard the phrase “category creation” many years ago while executing a Series B venture capital funded CEO search. It went like this…
A very credible candidate asked to be excused from a forthcoming interview (after agreeing to meet my client), when he heard that I was also conducting a CEO search for an extremely early stage (Angel funded Defense IPR Commercialization) company.
This raw, high intensity risk/reward profile really blew his hair back – suddenly the more established Series B play looked too tame for him.
He said “Jeff, I like your Series B client, but they’re an innovator, not a category creation opportunity. I’d rather interview for the riskier one, because they have a shot at creating a whole new category, and I want to do a category creation gig before I retire”.
My Series B client and I concurred that this guy’s heart was no longer in it, so we freed him up to meet my Angel stage client. This experience helped me early on to grasp the subtle, but noteworthy differences in how startup candidates parse the risk/reward universe (and which behaviors telegraph a basis for concern).
I’ve been fortunate to participate several times in recruiting for clients during the earliest moments of creating new categories of technology, and/or new business models. I remain friends with, and grateful to all of them!