I talk to founders every week who are stuck on the same question: “What category are we in?”
They treat it like the most important decision in their positioning. They argue about it in strategy offsites. They bring in advisors to weigh in. Some decide they need to create an entirely new category, and they spend years trying to make that stick.
Almost all of them are thinking about it wrong.
Market category is an important component of positioning. It is not the starting point. And choosing it first, before working out the other components, produces positioning that either confuses your prospects or actively works against you.
Here is what market category actually does.
The opening scene of a movie
Think about how a great movie opens. In the first two minutes, you know where you are, what era it is, who the main characters are, and roughly how you should feel. You have not been told the plot yet. But you have been oriented. You can now pay attention to the details.
That is the job of a market category. It orients a prospect who knows nothing about your product. It tells them what assumptions to carry into the rest of the conversation. If you say “CRM,” they immediately know: Salesforce is the benchmark, the sales team probably uses this, pricing is in a certain range, and they can assume table-stakes functionality without asking about it.
If those assumptions are correct, your category has done real work for you. You have saved your sales team a lot of explaining.
If those assumptions are wrong, your category has done real damage. Now your sales team spends the first twenty minutes of every call unwinding incorrect expectations before they can even get to the value you deliver.
Why starting with the category fails
The mistake founders make is trying to pick the category before understanding what the category needs to do.
You cannot evaluate whether “CRM” or “revenue intelligence platform” or “workflow automation tool” is the right frame for your product until you know two things with precision: what value you deliver that no alternative can match, and who cares about that value enough to buy.
Without those two things, you are guessing. And the category you guess on shapes every downstream decision: your messaging, your sales pitch, your ICP, your content. Getting it wrong early is expensive.
I have worked with companies that spent two or three years positioning themselves in a category they invented from scratch, only to see pipeline slow to a trickle. When we worked through their positioning properly, the problem was obvious. The category made sense to the founder. It made no sense to the buyers. The opening scene of their movie confused the audience, and the audience left before the story started.
The sequence that actually works
Start here: “What would our best customers do if we did not exist?”
Not “what problem do we solve.” What would they do. Specifically.
The answer is almost always one of three things. They would keep doing it manually. They would use a spreadsheet. They would get it done with a tool that was built for something adjacent.
Those answers are your competitive alternatives. Not your competitors. The actual alternatives your buyers are choosing between right now.
Once you have those, you can ask: what can we do that those alternatives cannot? List the capabilities that are genuinely distinct. Not better versions of the same thing. Things the alternatives simply do not have.
From there, translate those capabilities into value. Revenue impact. Time saved. Risk eliminated. That translation is your differentiated value.
Now ask: who cares about that value more than anyone else? What is it about their situation, their company size, their stack, their moment of growth, that makes them feel the gap acutely?
That is your best-fit customer.
Now, and only now, ask: which market category points those customers directly at the value we deliver?
Sometimes the answer is an existing category you fit comfortably inside. Most of the time, that is the right move. Google launched as a search engine. Salesforce launched as a CRM. They did not create new categories until they had dominated underserved segments of existing ones.
Sometimes the answer is a subsegment of an existing category. You are not a CRM, you are a CRM for product-led growth companies. That framing points exactly the right buyers toward exactly the right value.
Occasionally, the answer is a new category. But that should follow from the work, not precede it. And in my experience, fewer than one in ten companies actually need that answer.
Where this leaves the 0-1 founder
You have fewer than fifty customers. You do not have clean positioning yet. That is fine. Here is where to start.
Call five of your best customers. Ask each one: “Before you found us, how were you solving this? What would you go back to if we disappeared tomorrow?”
Their answers tell you more about your competitive alternatives than any market map ever will. They will also give you, in language you will want to steal, a clear picture of the value they are actually buying.
That is the raw material. Once you have it, the category question has a real answer.
Without it, you are decorating a house before you have built the foundation.