a16z Podcast: Creating a Category, from Pricing to Positioning

The purpose of category creation, argue the guests in this episode of the podcast, isn’t just about making a dent in the way companies work and changing what people do every day… it’s about setting the price. And with that, comes creating the concept in people’s heads, defining the value, and setting the rules of the game. But when you’re going for a big change, you have to play by the current rules of the game, too.

And to make things even more complicated, theories about how “IT is dead” — or the conviction that companies and departments beyond IT will become empowered through software — are still very much in transition. Somehow we don’t talk about that enough. That means startups need to do everything in two phases: for the now, and for the later and towards two constituencies: both direct lines of businesses and IT. So what does that mean for startups trying to navigate a complex enterprise, including internal debates around build vs. buy? How do you move beyond a few internal champions only? And just how long can a company cash out on founder charisma? In fact, all of these things can give entrepreneurs very confusing, mixed signals about whether or not they have product-market fit yet. So what patterns reveal that it’s working?

In this episode of the a16z Podcast, general partner Martin Casado — who helped create the category of “software-defined networking” in the enterprise through Nicira and then VMware (and has also written about the mixed messages involved in going to market when no market exists) — and Michel Feaster, CEO and co-founder of Usermind, and who previously (as VP of products at Apptio) also defined the category and discipline of “technology business management” — share their insights, in conversation with Sonal Chokshi. It’s a long game, but if you can tease apart the signals, and nail some key moves early… you can win.