This episode features an interview with Bruce Cleveland, author of the best-seller “Traversing the Traction Gap" and CEO of Traction Gap Partners, a Market Engineering advisory firm.
Bruce outlines why most startups fail and explains market engineering, a term he coined to represent the ideas around category design. He shares insights into creating a category and what goes into startup success.
Key Takeaways:
- Market engineering involves the ideas around category design or redefinition thought leadership to create a category.
- There are distinct advantages to being a category leader; the category leader generates about 76% of all the profits from a category. While there is a first-mover advantage, there are also some associated challenges.
- Thought leadership is an essential component of creating a category. People want to be around peers they admire, so gathering the right people together leads to an eventual tipping point that makes it easier for a company to sell.
Quote:
- One of the reasons that you need to actively be involved in the thought leadership part of category creation is people wanna hang out with other people who they think are smart, who have some cool ideas. And that I think happens with companies as well. So eventually some companies kind of climb out of the morass, the cacophony of, fighting the marketing battle and begin to emerge as the thought leaders in those. And then they collectively gather more people and more people. And finally there's a tipping point where that company is perceived as the category leader. And so it becomes really easy for those companies to then sell more.
Episode Timestamps:
*(02:26) The Trust Tree: Traversing the Traction Gap
*(07:31) The importance of category design
*(26:05) Thought Leadership in category creation
*(35:39) How to evaluate startups
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