Category Creation

Category creation is the central theme of Todd McKinnon — Creating and Defining a New Market Category, the Patrick O’Shaughnessy interview with the Okta co-founder. The payoff of being the company that proves a new market exists is becoming the default — what host O’Shaughnessy calls the “cognitive referent,” “like Kleenex or Stripe,” the name people reach for by reflex when they think of the category. McKinnon’s claim is that this position can’t be bought, only earned by enduring doubt: “You have to go through that pain. You have to go through that uncertainty to define the market which leads to being that default choice.”

In Okta’s case there had “never been a big independent identity company” because identity management “wasn’t a big enough problem” until Okta proved otherwise — making it easy to integrate cloud applications and building a platform around that core. The transition is non-linear: “you go from convincing people that what you’re doing has not been done… to being, everyone obviously sees you as the standard in that space, and that happens fast.” A counterintuitive validator was Microsoft’s 2014 announcement of a competing “Okta killer” product, which paradoxically confirmed the category was real and big enough for the largest software company in the world to want in.

Context: “Category creation” (or category design) is a go-to-market strategy popularized in books like Play Bigger — rather than competing in an existing market, a company defines a new problem space and positions itself as the archetype, capturing outsized share of the category it names. The “cognitive referent” / default-brand status (Kleenex, Google as a verb) is the strategy’s end goal.

Where this appears

• Todd McKinnon — Creating and Defining a New Market Category — the titular theme: enduring doubt to define a market and become its “cognitive referent” default, illustrated by Okta in identity management.