The Brand Brothers #11 – Christmas Special: Catagory Is King

Bill Schley: Are we ready to go?

Lorenzo Gomez: Let’s do it.

Bill Schley: All right. Hey, welcome to another session of the Brand Brothers, I’m here with brother Lorenzo Gomez author of –

Lorenzo Gomez: Hello there Bill.

Bill Schley: Well … You know you stepped on your own book line here.

Lorenzo Gomez: I’m sorry.

Bill Schley: How are you going to promote your author of the amazing Cilantro Diaries: Business Lessons From the Most Unlikely Places.

Lorenzo Gomez: That’s right, that’s right. And brother Bill, author of Why Johnny Can’t Brand and the amazing Micro-Script Rules.

Bill Schley: Yep.

Lorenzo Gomez: The only branding book you’ll ever need.

Bill Schley: Yeah, and other classics like … I don’t know, I’ve written so many books I have no idea what they are. Yeah, and the writer of Once Upon a Time of Animal House too. That’s a whole other story.

Lorenzo Gomez: That’s for the outtakes.

Bill Schley: It is, but here we are. We’re here on a mission from God to fight the evil forces of fake branding.

Lorenzo Gomez: So that we can make branding great again.

Bill Schley: That’s right. The Brand Brothers is the show that answers the question, “How can I know more about branding in 20 minutes than professionals on Madison Avenue in New York making over $650,000 a year?”. You know how? Just listen to one session of The Brand Brothers, kids. Guaranteed. Okay well we’re here to talk today, this is, Lorenzo also, isn’t this our Christmas special?

Lorenzo Gomez: It’s New Years, it’s Hanukkah, it’s everything. This is the big one.

Bill Schley: Yeah I know, we figure all great shows have a Christmas special, don’t they? And then they have greatest hits, so I don’t know, what’s today? Today is actually, the actual date of today is sometime in July, isn’t it, I don’t know?

Lorenzo Gomez: It’s March, yeah.

Bill Schley: I don’t even know what year it is. Yeah, it’s March I guess, but we’re doing a Christmas special, so it’s a special. And we’ve got to talk about a very, very important subject –

Lorenzo Gomez: One of my favorites. Today’s episode is called The Category Kings and we’re going to be talking about owning your category, maybe even creating a new category, but really how to be number one.

Bill Schley: Yeah, yeah, and before we go there we … But we’re gonna tell people, first of all, we have to tell ’em what it is.

Lorenzo Gomez: That’s right.

Bill Schley: We’ve gotta tell ’em why do they care. Why is a category so important, because you hear people talk about category, what is it … But, like a lot of things in branding, nobody really knows what it is and have different opinions, so we’re gonna give the definitive opinion on what it is and why you need it, right?

Lorenzo Gomez: Right.

Bill Schley: Can I tell a little story before … Just to bring –

Lorenzo Gomez: Please. Please.

Bill Schley: Just to bring us in to the subject gracefully and –

Lorenzo Gomez: Absolutely.

Bill Schley: Just sort of waft us in like a wonderful breath of fresh air.

Lorenzo Gomez: Waft us.

Bill Schley: Yes, I wafted your way. Well, you know we said, we promised our listeners out there, the brothers and sisters, that we were gonna, you know, when we actually find something we like –

Lorenzo Gomez: Yeah.

Bill Schley: You know, I hate, you know … I’m pretty –

Lorenzo Gomez: It’s to be encouraged.

Bill Schley: Everything bothers me, you know that. Everything bothers me, but it’s like–

Lorenzo Gomez: But they are people out there that are doing it right, and doing it well.

Bill Schley: Believe it or not, we see people that are still doing it well, doing amazingly and we’re…brands like UNTUCKit and brands like YETI and brands that are really doing a great job.

Lorenzo Gomez: We salute them.

Bill Schley: One Dollar Shave Club, their doing a great job.

Lorenzo Gomez: Absolutely.

Bill Schley: But someone introduced me the other day to a brand, and we’re happy to name them, they’re not paying us to say this, we hope they’ll listen and they will pay us, but we hope they’ll send us some swag, as a matter of fact I’m going to contact them after this and say, “Guess what? We just talked about you.”

Lorenzo Gomez: Yeah, where’s my free T-shirt?

Bill Schley: Right, but in the meantime we’re going to talk about it anyway. So these are called Goodr Sunglasses, now G-O-O-D-R, Goodr. Now, it’s easy to say, it doesn’t fit exactly into our naming, we did a show on naming, it’s not the most descriptive, it’s a little more of a it’s own–

Lorenzo Gomez: Yeah, but it’s the fisherman’s– it sets the hook.

Bill Schley: Yeah and it sounds good, at least their saying good, but what they do is, which we do prescribe is you can give yourself…name a company after you or after something that they might be proprietary, but then you put the descriptive word or two on that name so it’s called Goodr Running Sunglasses. Now I know exactly, that’s their name, and I know exactly what they do.

Lorenzo Gomez: Yeah, and run forward too.

Bill Schley: Right, and Goodr’s just– Now, what happened was because these people are so good at branding, because they focused on one category and because they said, “We’re going to be the best in the world and we’re going to show you why.” And they gave a little micro-scripts and told, basically their customers, why these were so good, and then customers bought them and loved them and what do people do when they love them? They tell their friends, they use word of mouth to tell their friends, still the most powerful marketing meeting ever invented. 50,000 year old medium, the cavemen did this, now we have cell phones and all cell phones are is word of mouth machines; so they talk to you, they tell you about this.

So I was sitting have dinner, I was sitting up at the bar because I was traveling and I sit at the bar I talk to the bartender and things, and there was a lady sitting next to me and we chit chatted a little bit, it was very friendly, and she had these sunglasses and I said, “Those are nice,” and she said, “You like them? They’re Goodr’s.” And then she could not- she said, “They are amazing, you’re not going to believe how great these sunglasses are,” and I realized I’m about to get an unsolicited testimonial.

Lorenzo Gomez: That’s right.

Bill Schley: I’m about to get an elevator pitch from someone that this company never paid, never solicited, never hired.

Lorenzo Gomez: But they gave her the story.

Bill Schley: But these people are out there talking about your brand and basically selling your brand for you and it’s the most powerful sell there is because I know I trust her.

Lorenzo Gomez: She’s not going to [inaudible 00:05:56].

Bill Schley: Absolutely. And she pulls them out, first thing is, and she is very careful, she takes it out of her purse and it’s in a little holder, a little– what do you call them?

Lorenzo Gomez: The bag.

Bill Schley: Baggy that protects it, so you can tell she really values these things, and she says, “Try on them on,” and I go, “okay.” I put them on, and they’re comfortable, she says, “Now, shake your head as hard as you can.” I shake my head back and forth.

Lorenzo Gomez: That’s so great.

Bill Schley: She says, “No shake it hard,” [inaudible 00:06:23] What put my head in a paint mixing machine? “No, shake your head,” she goes, “Turn your head upside-down, just put it down and shake them. Try to get them to fall your face.”

Lorenzo Gomez: Smash your head into that wall.

Bill Schley: You can’t do it. She’s giving me the torture test, this is like the demo in a commercial she’s saying, “Do them demo of the commercial.”

I’ve shaken them and I said, “You’re right, I can’t make them fall off.” And she said, “Well that’s the way they are, they’re amazing.”

Lorenzo Gomez: So that when you’re running in a tornado they’re not leaving.

Bill Schley: Now she’s giving me a testimonial, she says, “I’m a runner, I always had these glasses that flopped up and down of my face, they fell off, they broke, I lost them. These things will never fall off your face, I don’t know what it is, but it’s magic plastic.”

Now she’s telling me this, she said, “You’re not going to believe, they come in all these great colors,” and I said, “How much? They must be $300.” She says, “That’s the best thing, they’re only $25 piece.”

Lorenzo Gomez: But wait, there’s more.

Bill Schley: But wait, that was enough, it’s amazing.

Well wait, so now I can’t believe this amazing commercial I’ve just heard from someone that doesn’t even work for this company, and she said, “I’ve ordered three pairs because they’re so wonderful.”

So I look at the website, I say, “We can look at the website.”

Lorenzo Gomez: She pulls it out yeah.

Bill Schley: Look there’s the website. Website comes up and it says, “Goodr,” it’s kind of bright and cheery and stuff and it says, “Goodr’s Running Sunglasses,” so you know we specialize, this is what we do, it’s all we do.

Then you scroll down it says, “There used to be a problem with sunglasses–” Wait a minute I wrote this thing down because it was pretty good. Wait a minute.

“There used to be a problem with sunglasses,” it says. Remembering when we were talking about story problem/solution? They started telling me a little story, it says, “There used to be a problem,” he said, “Running glasses were too expensive, they were ugly, and they were over-designed.” Isn’t that great? They were too expensive, they were ugly, one two three, and they were over-designed, “over-engineered” they said.

And then they said, “But it didn’t have to be that way.” They were doing a brand story, they said along came Goodr’s; they’re affordable, they’re stylish, and they said, “It’s all run, no bullshit.” What a great–

Lorenzo Gomez: That’s great.

Bill Schley: Okay now, because they gave me the facts of the difference, because they told me they were King of their category.

Lorenzo Gomez: Right.

Bill Schley: Because they told me they were the specialists now, they can surround me with fun. [inaudible 00:08:49] Pull up the website and see what I’m saying.

Lorenzo Gomez: Yeah, I’m looking right here they got Bigfoot fur knit, sweats, grass fed babe steaks, Major Tom Space Oddity.

Bill Schley: Yeah, yeah.

Lorenzo Gomez: I mean this is good stuff.

Bill Schley: So it surrounds them with fun and a feeling and kind of an atmospheric that gives the brand a tone and a personality, that’s great.

Lorenzo Gomez: Yeah

Bill Schley: But the fake-branders will tell you that your brand has to have a personality, you’re brand has to have a relationship, it has to have a tone before it has an idea or anything to sell you. It’s the opposite, so they’re doing it the right way.

So we love it. The reason why this figures into what we’re talking about it because categories because look what they did: First they told you we’re a Sunglasses company.

Lorenzo Gomez: Right.

Bill Schley: Most websites don’t even tell you that.

Lorenzo Gomez: Right, right.

Bill Schley: Sunglasses is a giant category, you really can’t own that category.

Lorenzo Gomez: Yeah, we’ll talk about it, but it’s a master category.

Bill Schley: Yeah it’s a master. So then they decide let’s just pivot a little to the right and say here’s a category that we can own, “running sunglasses”, they didn’t even say “sports” they said “running sunglasses.” Now that’s a category, it’s a specialized category and they can say, “In the category there’s no one better than Goodr.”

Lorenzo Gomez: Right. We’re number one.

Bill Schley: We’re number one in the category.

Lorenzo Gomez: Actually in, I believe it was in the Johnny Can’t Brand, you had a line in it that said, “The greatest number of all is number one,” and to me the end result of a good category is you stepping up and claiming your crown, being number one in the thing that you do.

Bill Schley: Well and partly that’s because no one who ever had a need never decided to buy the second or third best thing.

Lorenzo Gomez: It’s true, yeah.

Bill Schley: They always wanted to buy the number one thing, the best thing.

Lorenzo Gomez: Yes that’s right. Human nature.

Bill Schley: One of the rules was now I think, I’m going to attribute this to Jack Trout now [inaudible 00:10:46] who wrote Positioning. Positioning is a word that a lot of people talk about in marketing and branding, but all positioning is, is putting yourself in a category of one.

Lorenzo Gomez: Right.

Bill Schley: Now, listeners out there you can write that one down, because positioning is putting yourself in a category of one. And the rule was, you needed to be in a category; if you look around you and you see competitors that already own that position, all you do is shirt a little bit to the right and find that one thing, that category you can be number one in because being number one in a category is the shortest way to extreme differentiation.

Lorenzo Gomez: Right, right.

Bill Schley: Yeah.

Lorenzo Gomez: And that’s one of the goals, is to seek extreme differentiation. What I love about the sunglass master category is that we’re talking about it and you’d think you know if I gave you a million dollars to go compete with RayBan you’d go, “Good luck buddy.” Right, but all of a sudden, a runner says, “No I have real pain and I’m going to create something for me and my community.”

There’s another company that I was introduced to the founder, name is Dean, same concept in the master category of sunglasses, but he had a problem which was all sunglasses that pilots had to wear weer painful. So he created some shades that you can wear with a helmet and the company’s called Flying Eyes, and it’s–

Bill Schley: Whoa, that’s a great name.

Lorenzo Gomez: Great name. Hey, look at that.

Bill Schley: Flying eyes? Two things I liked on one show, that’s a record.

Lorenzo Gomez: Both in the sunglass category.

Bill Schley: Oh man.

Lorenzo Gomez: So these entrepreneurs are deploying without even knowing it, now once they listen to the Brand Brothers they’ll sell a million pairs easily.

Bill Schley: Yeah no, if they want to. Flying Eyes, that fits the category now it’s a little bit of a coin name, they put the things together, but you see– and that gets back to our naming discussion but that’s an excellent name.

The thing is that we talk about categories though, in a question that first of all, we want to say what is it but why is it important for us to talk about categories.

Lorenzo Gomez: Right, right.

Bill Schley: I think the reason is because, there’s a theme that’s running through all of these shows which is branding and creating great brands is about understanding the way the brain loves to think, and the way the brain, the way it thinks, the way it identifies, the way it remembers, and the way it makes choices.

Lorenzo Gomez: That’s right.

Bill Schley: Because that’s what you’re asking a brand to do, it’s to make someone aware of something and decide that that’s their first choice in whatever they need.

Lorenzo Gomez: Well and I think that one of the big pitfalls of category marketing is that the entrepreneur or the business person sometimes skips the category and jumps straight into their sales pitch and starts giving you benefits and features, and I’ll tell you a quick story.

The first time I volunteered to be a mentor of Techstars, which is a big tech accelerator, I had thirty minutes with ten companies. So thirty minutes chunks, and I had to walk in and give these guys some mentoring and I realized that all these guys would walk in and be like, “Okay so were the UBER for AI,” and I’m like, “Whoa, whoa. What are you? Everyone just back up a little bit; are you a website? Are you an application? Are you a mobile app?” Because I didn’t know anything about their business, I was really asking them what is your master category?

Let’s just start there and as a laymen let’s drill down.

Bill Schley: And let’s ask ourselves why that would be true.

Lorenzo Gomez: Right.

Bill Schley: Because people talk about brand, brand, brand, brand, brand, brand, brand. Except for one thing, when you think of a brand you can’t think about a brand, or want a brand, until you have a need. The first thing you look for when you need is a category. Let’s give you an example.

Hospital, is a category. Supermarket, is a category of business. Kindergarten, right?

Lorenzo Gomez: That’s right. Cars?

Bill Schley: You name it. Resort hotel, cars, glasses. I have a need. How about power saw.

Lorenzo Gomez: Yeah, yeah.

Bill Schley: I need a power saw.

So the first thing when you have a need, or you have a want or a need, you say, “Okay, what do I need?” And that’s the “what”, which is — as a business you have to say, “What business am I in?”

Lorenzo Gomez: Right.

Bill Schley: Right? Am I a medical clinic? Am I a dance studio? No right.

Lorenzo Gomez: Right.

Bill Schley: This is how basic it is.

We talked about the three W’s remember? The first one is “What is it?” Because until they say, “Okay, I need a supermarket,” now they can say, “Alright, which brand is best?”

Lorenzo Gomez: Yes. Well, which one do I want?

Bill Schley: Well that’s right, based on what they know. Do I want to go to HEB? Do I want to go to Wholefoods? Do I want to go to mom and pop?

Lorenzo Gomez: Right.

Bill Schley: So the brand doesn’t matter until they have a need. So the first thing is what’s the category? Then, what’s the brand?

Lorenzo Gomez: Yeah, one of the examples that you used in Johnny Can’t Brand, which I loved was, you really redefined how I looked at the master category of car. Right? Because you go, Henry Ford, he’s such a titan, he’s such a legend and you go, “Well how did anyone work up the courage to compete with him?” Well, when you use category correctly someone said, “Hey you know what? Now that there’s this car master category, how about I just be the cheapest one?”

Bill Schley: Sure.

Lorenzo Gomez: Boom. Right or in Henry Ford’s day, you could of just offered two different colors and you would of differentiated yourself. What was his favorite line?

Bill Schley: His favorite line was, “We have a thousand different colors, all black.”

Lorenzo Gomez: As long as it’s black you can say whatever you want.

Bill Schley: Yeah exactly right.

Lorenzo Gomez: But fast forward to today, the categories and the extreme differentiation is there. Someone created a whole new category of the sports utility car, and even within that category, you’ve got people slugging it out for domination.

Bill Schley: Right.

Lorenzo Gomez: But it shows you how achievable it is.

Bill Schley: Well what’s happening is, and now Reese who’s a great brand teacher and a great writer, philosopher, he wrote a book on, I think it was about the brand tree, he called it “the Category Tree”, and basically you think about categories, the master is a trunk.

Lorenzo Gomez: Right.

Bill Schley: Okay? There’s always an original category, like an automobile.

Lorenzo Gomez: Right.

Bill Schley: Somebody made automobiles, that’s all there was and they all were automobiles.

Lorenzo Gomez: The British called it the horseless carriage.

Bill Schley: The horseless carriage and the Americans [inaudible 00:17:11] you got an automobile. In Mexico, they called is the [inaudible 00:17:19]. See it’s all about the way you put it in context.

Lorenzo Gomez: You just change the frame.

Bill Schley: Then some people hooked up the carriage up to their cats, they didn’t sell very many of those, the cat carriage.

Lorenzo Gomez: So the category tree–

Bill Schley: Category! Cat-egory. Well there you go that’s what that was; it was a cat-egory. Oh geez, I’m making myself sick with my own jokes

Lorenzo Gomez: We’re here all day.

Bill Schley: But the thing is, there was an original category and then, as people came and they said, “Listen, I want to differentiate, I want to build an automobile that’s especially tough and sturdy for people to work on a farm.”

Lorenzo Gomez: Right.

Bill Schley: Okay? So what do they do? All they did was put a flat bed in the back of it, right?

Lorenzo Gomez: Yeah.

Bill Schley: Then they cut the body in half and put a flat bed, first pickup truck. You know what they said? It’s a truck.

Lorenzo Gomez: It’s a truck.

Bill Schley: All a truck was is a new category.

Lorenzo Gomez: That’s right.

Bill Schley: And the first trucks, that was a master category. But see, the truck split off into a branch.

Lorenzo Gomez: Yes.

Bill Schley: And it was cars and these are truck-cars.

Lorenzo Gomez: Right.

Bill Schley: And then what happened to trucks? How many different trucks are there?

So every time someone wanted to specialize, they create a new category. So then you got pickup truck and you got dump trucks and you got cement trucks and you every kind of truck there was.

Lorenzo Gomez: Well I always love the example of if, I don’t recommend anybody do this, I mean you can do this but the example is, okay if I need to own it quickly I could just drop my price and be the cheapest guy and you technically could own the category of affordability. Right?

Bill Schley: It’s the hardest one.

Lorenzo Gomez: It’s the hardest one yeah.

Bill Schley: The hardest one, it’s the one you’re destined to fail.

Lorenzo Gomez: Yeah.

Bill Schley: The only people who can do it is Walmart because they’re so massively big that they can undercut everybody, but–

Lorenzo Gomez: But also on the polar end of it, you can say, “I will be the most expensive.”

Bill Schley: You can.

Lorenzo Gomez: That’s the luxury category.

Bill Schley: Well you see, anyway that you differentiate in a way where you create a new class of products, where you got a set of customers that specifically want that class of products you’ve created a category. There has to be enough customers that want a, for example, sports watch, if you’re going to be a sports watch company, I has to be definitively different, so that they can be–just like names. You have to be able have a category and name the category because customers need to know what it’s called.

Lorenzo Gomez: That’s right.

Bill Schley: I want a sports watch, I want a luxury watch, I want something.

Lorenzo Gomez: Right

Bill Schley: I want a divers watch; I’m a scuba diver.

Lorenzo Gomez: Right.

Bill Schley: And then, you have to enough people who want that so that there’s a market for it, the specifics. So that’s kind of what a category needs to be, to be a real business category, otherwise it’s just–

Lorenzo Gomez: Well I think that what has been the most useful for me, when I was CEO of Geekdom and I started to have a lot of competition because co-working became the hot thing, and I had to go back to Johnny Can’t Brand and the Micro-Script Rules and redeploy this, and what I realized is I think there’s almost a long Latin. When I wrote down what Geekdom did, it was a collaborative–the mast category was co-working, and underneath that was collaborative co-working; I wanted people to talk to each other and not be in a library.

Bill Schley: Right.

Lorenzo Gomez: And then under that I said I’m only in San Antonio, and then subcategories, I’m only really here for tech start-ups.

Bill Schley: Yeah.

Lorenzo Gomez: And so when the music scene people came and they said, “Hey what about us?” Actually you’re not in my category, but I would never tell people what is Geekdom; I’m the number one collaborative co-working space in San Antonio for tech start-ups. Instead I just said, “Well it’s a gym membership for geeks.” Right? I had to reframe it, but most companies don’t know what their long Latin is. The first W: what is it?

Bill Schley: The number one thing, you get companies that have websites or advertising, you can say look you want to be 90% better than you are and you competition? Just tell me what it is.

Lorenzo Gomez: Exactly.

Bill Schley: Very, very quickly and very clearly and you’re immediately 90% better.

Lorenzo Gomez: A lot of our brand family out there, need to go to the exercise of writing down what it is, what am I?

Bill Schley: What business are you really `in?

Lorenzo Gomez: Exactly. Even if it’s ten descriptive terms, as long as you can identify it, because it helps everyone; when you’re most senior employee to your least [inaudible 00:21:30], when you can describe it everything starts off on the same page.

Bill Schley: Right, right. That’s a critical part, there’s a reason why brands are important, categories are important because it’s not just for customers to buy it, it’s also for your employees and the people that make these products to understand and care about it and know why they come to work everyday and to be inspired. We keep coming up with new shows as we’re doing these shows, that’s a huge, huge show.

Lorenzo Gomez: Yeah.

Bill Schley: But the thing is, so this thing about the category, so the idea is, ideally, you want to decided what your category is, what’s the master category, and then if you can’t own that you really want to say okay, I’m going to a subcategory, let’s call it– a branch, that I am specialized in and I’m the best at that.

Lorenzo Gomez: Yes.

Bill Schley: And so if I’m going to be the best running sunglass company, when you become number one in something the magic of that is, and this is one of our great rules and we talk about this, this is the positioning paradox. The positioning paradox says that the narrower you focus, the deeper and wider your brand goes. The narrow focus, the paradox, so the simplest sharper and sharper, now you’re focused, the more penetrating and wider it spreads, and that’s why it’s so difficult for people to cast off all of the things they think they can do and focus on one choice, not on standing for five or six or seven or eight things; the magic is to have the courage to stand for one thing which is the hardest thing to do in business and the hardest thing to do in branding. And a lot of times it’s a pick-that-category.

Lorenzo Gomez: Which, by the way, I know we’ve mentioned them before but I think the best practitioners of this are our favorite companies of the online dating category. Those guys, you want to talk about courage, boom you’ve got JDate, you’ve got Christian Mingle, and, my personal favorite of former customer reminder on Rackspace, Equestrian Singles.

Bill Schley: Yes.

Lorenzo Gomez: Equestriansingles.com right? And they were way before all these other guys, these other Johnny’s came up into category, but you’re right. These people have chosen, they’ve said no to a whole other shloo of categories and said, “Nope, we only focus on these guys.”

Bill Schley: Well that’s right. One of our famous little, we’re going to tribute it to Mr. Grey and Weston, there’s riches and niches.

Lorenzo Gomez: There’s riches and niches, absolutely.

Bill Schley: The more you specialize today, as long as that specialty’s big enough to have a big enough market.

Lorenzo Gomez: That’s right.

Bill Schley: That’s the ticket to success. So, Lorenzo said JDate and Equestrian– and I don’t think anyone knows what that means.

Lorenzo Gomez: It’s horses.

Bill Schley: It’s horses right?

Lorenzo Gomez: Horses.

Bill Schley: I was thinking about, you can also questioning singles.

Lorenzo Gomez: Questioning singles?

Bill Schley: Singles that just like to ask a lot of questions.

Lorenzo Gomez: I’m a skeptical. Skeptical singles?

Bill Schley: No, they’re going to go, “How much money are you going to make? What do you do? Where do live?”

Lorenzo Gomez: Those are one of the Brand Brothers, we’re the most famous show on–

Bill Schley: Do you have a job?

Questioning singles, you see?

Lorenzo Gomez: I love it no, I’ll give you $30 a month right now.

Bill Schley: Eharmony was the one that gets you married; they were the marriage one right?

Lorenzo Gomez: That’s right.

Bill Schley: 29 areas of compatibility to prove that you get married. What’s another one?

Lorenzo Gomez: Some of the ones I get, I don’t know what they are.

Bill Schley: Christian Mingle right? Christian Mingle? Wow.

Lorenzo Gomez: So think about it, the master category is online dating and then the sub is religion.

Bill Schley: Sure. You can specialize anywhere. Now the thing is, when we talked about framing, see when you re-categorize something you reframe. So what category says, “I’m going to put this, there’s all these retail stores, this group of stores in a mental box; I’m going to call them clothing stores.”

Lorenzo Gomez: Right.

Bill Schley: That’s kind of like I’m framing it; I’m putting it into box and that’s what the category does. Remember when we talked about how important framing was?

Lorenzo Gomez: Yeah.

Bill Schley: So, here’s the thing, an example, and this works for the littlest companies in the world or the biggest global companies in the world too, and we have examples we’ve done both.

Lorenzo Gomez: Right.

Bill Schley: So, and all the principles come together at one point here.

Lorenzo Gomez: Well let’s talk about a principle that could be a pitfall. Someone listening, one of our entrepreneurs listening, is going to try and create a new category, and we commend them for it, but one of the pitfalls is that you wrote about eloquently in your book is, nothing hastens your demise faster than making a false claim.

Bill Schley: Yeah.

Lorenzo Gomez: And the principle is the facts of the difference.

Bill Schley: Well right.

Lorenzo Gomez: Once you say you’re going to own Horse Singles, you better back it up buddy with some facts.

Bill Schley: Well no that’s right. So what happens when you say this is my category and my specialty then people have an expectation.

Lorenzo Gomez: Right.

Bill Schley: They think you have the most experience.

Lorenzo Gomez: Right.

Bill Schley: They think you have– you learn the most about it, you’re the most innovative in those things and all you think about everyday is just making–it’s like the low cost airline; everything we do everyday makes it a low coast airline.

Lorenzo Gomez: Right.

Bill Schley: The thing about that category thing is you see, let’s look at HBO. There was television, master category, HBO came out, and that was a long time ago but they came out and they said, “It’s not TV,” this was their tagline, still is, “It’s not TV, it’s HBO.” And what they meant was, sure it’s TV, I mean you see it on you TV screen.

Lorenzo Gomez: Right.

Bill Schley: But they said, “You know what?” and they tell you the reasons to believe they said, “It’s a new category of TV you’ve never seen before.” You see what they’re doing? They want you to say, “I don’t think of this as TV, think of it as something else.”

And here’s why, they said “Well, first of all, you say the F-word.

Lorenzo Gomez: That’s right.

Bill Schley: Second of all, it’s on cable. There’s no commercials, see this was revolutionary. Third of all, you can see the butts, you can see nudity. And forth of all, you can see the whole movie as you would see it in the movie theater, uncut, not sanitized by the networks.

Lorenzo Gomez: Right, right.

Bill Schley: So they just said, “Watch it, it’s different, you’ll see.” Now when people watch it they saw all those things.

Lorenzo Gomez: Actually this is what’s so exciting–

Bill Schley: By the way, HBO hasn’t done so bad have they?

Lorenzo Gomez: No, are you kidding me? They’re–Game of Thrones?

Bill Schley: They’re the king of everything.

Lorenzo Gomez: Come on.

Bill Schley: What they did, extreme differentiation.

Lorenzo Gomez: Right.

Bill Schley: When they said, “We’re not this, we’re something else.”

Lorenzo Gomez: Yeah, one of the exciting parts about when you create a new category like HBO is, it becomes a wild west; the rules are really unwritten.

Bill Schley: Yeah you can make it up.

Lorenzo Gomez: When they released the Sopranos they just said, “You know what? We’ll do it however we want. We’ll do an hour long show.”

Bill Schley: Anything they want yeah.

Lorenzo Gomez: It’s the length of a movie but we’re going to do ten of these.

Bill Schley: Right.

Lorenzo Gomez: They just flipped everything on it’s head.

Bill Schley: Right.

Lorenzo Gomez: And it’s because they could, because they said, “We’re not TV.”

Bill Schley: Alright, I mean look at McDonald’s; what did McDonald’s do? There were restaurants. And then maybe they were coffee shops and things and casual restaurants, but this is a whole different thing; this is a restaurant you’ve never seen before and they, “well what do you mean?” And they said, “Well first of all, it’s so inexpensive; you can feature whole family here for a bout a buck.” And they proved it, in those days, they had three products. Didn’t matter.

Lorenzo Gomez: That’s right.

Bill Schley: They had hamburgers, they had cheeseburgers, they had a filet-O-fish. I can remember back then, they had french fries and they and milkshakes. Oh and you could get a Coke, but that was it. And they just said, I don’t know if they called it fast food then, see that’s the name of the category.

Lorenzo Gomez: Right.

Bill Schley: It might’ve been named later on, but it didn’t matter; they were the only ones. The only ones that you knew. So you’ve got $0.19 hamburgers, and it came out in seconds.

Lorenzo Gomez: Right.

Bill Schley: So they said, “Every other restaurant is a sit down restaurant.” There was no such thing imagined as anything but a sit down restaurant.

Lorenzo Gomez: Right.

Bill Schley: You sat at a table, or you sat on a stool at the coffee shop. So that was a different category, now I’m not sure they named it, but what it was, was fast food. So, they created that category and it made people think about it but it was completely differentiated; there was McDonald’s and everything else.

Lorenzo Gomez: Well I think that one of the potential pitfalls is you might create a category like fast food, but then you might have to do it again because everybody will adopt it. We saw this with RackSpace with managing hosting, when they said they did managing hosting they immediately said that they did it as well.

Bill Schley: Yup.

Lorenzo Gomez: Then it was, I’ll never forget, when the CEO and our chairman said actually our subcategory is going to be customer service.

Bill Schley: Right.

Lorenzo Gomez: Which was so radical back then because– actually I remember the day they did it, they said, “Hey raise your hand anybody,” the whole company, “if you’ve called Time Warner?” And every one raised their hands and they said, “Keep your hands up if you’ve had good experience?” And all the hands went down.

Bill Schley: Yeah.

Lorenzo Gomez: And they said, “We’re actually going to answer to phone, every time, first ring.” And it was so revolutionary that we went, “we can own this category, we can actually kick everybody’s booty by deploying the facts of the difference.”

Bill Schley: Well you would of said as a category though it would of been because no one else provided service you would be, if I was going to name the category I would say it was the only full service hosting company.

Lorenzo Gomez: Right.

Bill Schley: Because all the other’s had was no service.

Lorenzo Gomez: Yeah, the Great [inaudible 00:30:27] coined it the denial of service.

Bill Schley: Right.

Lorenzo Gomez: The denial of service category.

Bill Schley: But the thing is, in a category you might find– So if you’re in a category, you can differentiate on an attribute.

Lorenzo Gomez: Yes.

Bill Schley: This gets into how you differentiate.

Lorenzo Gomez: Yes.

Bill Schley: But there was a much bigger thing that had to happen later on, can we talk about that?

Lorenzo Gomez: Yes.

Bill Schley: And some people are saying, “Well wait a second, do I have to invent a whole new invention to be a new category?” Yeah but HBO, they were cable TV, but what the other stations do and McDonald’s created a whole new kind of industry but, believe me, they are lots and lots of companies out there that don’t create an entire new innovation. But there’s always something that you do, that you can say is a difference that’s big enough, and then if you focus enough on difference you can say, “We’re the best in this.”

Lorenzo Gomez: Right.

Bill Schley: Well so years later, when RackSpace was competing with the Cloud, and they were hosting company that had computers on racks, you can walk into a data center and say, “See those five computers? Those are the computers for Fleetwood,” or whatever the company was. Then the Cloud came along and all that went away and all of a sudden Amazon, who invented this kind of technology.

Lorenzo Gomez: Yeah they invented the master category.

Bill Schley: Yeah and the Cloud gets to be so big, so fast that all of a sudden they were 100 times bigger. Rack’s was a huge global company, and Amazon was 100 times bigger. And Wall street said, “Hey you guys are great at what you do and you have a lot of customers but, you’re the horse and buggy guys, all of a sudden you’re on the wrong side of history here,” and it really was a crisis. This was the days when Brother Bill was actually working to help that company–

Lorenzo Gomez: Yeah, yeah deployed.

Bill Schley: But what do we do? We decided that we had to differentiate ourselves, or Racks had to differentiated self, they sit there on the Cloud business, and everyone in computing had to be in the Cloud business or you weren’t going to compete.

Lorenzo Gomez: Right.

Bill Schley: The problem was, there was the Cloud [inaudible 00:32:25] Amazon and Amazon was a giant thing and what we finally realize is that, we were actually in a different category. What we said was, “You know something? There’s this thing called the Cloud.” But people didn’t differentiate, there’s just this Cloud, the huge public Cloud, one size fits all, but we said, “But the Cloud has a problem.” When you buy that Cloud and it’s wonderful, we didn’t knock it, we said it changed history except what they do they give you hundreds and hundreds of services and parts it’s like they dump it all on your driveway, and you have to put it together.

Lorenzo Gomez: Right.

Bill Schley: We said for thousands and thousands of companies around the world, they need someone help them put that thing together. It’s kind of like sometimes you need a supermarket, that’s a category, food category, sometimes you need a restaurant.

Lorenzo Gomez: That’s right.

Bill Schley: One’s not better, they’re just different. See the difference? Not better, different.

Lorenzo Gomez: Right.

Bill Schley: Facts of the difference, you can decide. So we said, when you want a supermarket, there’s Amazon, but when you need restaurant, because let’s say you only have twenty people in your company and they all want to focus on your products and they don’t want to become Cloud experts.

Lorenzo Gomez: That’s right.

Bill Schley: Then you need a restaurant or you need a service, and we named the category. That day we said, “we’re not competing with Amazon anymore,” this was the whole change, we’re going to split the category now, we’re going to change everyone’s frame.

We said, “There called the commodity cloud,” see we framed them. No one had ever called them that before, we called them that. That’s the commodity cloud, it’s okay, it’s the public cloud, and we are the managed cloud. So there’s the managed cloud on one side, there’s the commodity cloud on the other, and sometimes the commodity that’s the [inaudible 00:34:24] but when you need a managed cloud, come to us because we’re number one in the managed cloud business. And on that day, things began to change.

Lorenzo Gomez: The game changed.

Bill Schley: It did. Did my microphone just…maybe…

Lorenzo Gomez: Yeah, turn up the volume.

Bill Schley: Okay, we’re still–

But the game changed, all we did, we didn’t change anything that was going on, we just changed that frame in one second. The most powerful way to change a frame–[inaudible 00:34:51] two categories.

Lorenzo Gomez: Created a new category.

Bill Schley: It’s a vehicle for doing that. We call one the commodity cloud, and here’s another thing, we start talking about the commodity cloud, the press started using our language. They did, they said, “The commodity cloud makers.” And we were laughing because we made that up, but it was true, and we watched them pick up those little scripted words.

Lorenzo Gomez: It gave them the right story.

Bill Schley: And that’s what we’re talking about, framing both sides.

Lorenzo Gomez: Yes.

Bill Schley: Right? So we were framing to make that difference even clearer. And RackSpace, it’s gone on to do quite well, eventually it was sold, it went private, but for billions and billions [inaudible 00:35:30].

Lorenzo Gomez: Oh yeah.

Bill Schley: But that was a global company. But the fact is you can do the same thing, I mean the on-time plumber is…

Lorenzo Gomez: Absolutely.

Bill Schley: So in some ways–

Lorenzo Gomez: The principles are the same.

Bill Schley: The principles are the same right, right.

Lorenzo Gomez: What I love is that it’s so achievable. Right? But you have to look at yourself and you have to know what you are, and you got to be able to prove it.

Bill Schley: You have to, yes.

Lorenzo Gomez: The facts of the difference are so important. I remember the first time I saw Equestrian Singles website, I’ll never forget it.

Bill Schley: You’re walking around with a saddle. I don’t know [inaudible 00:36:08] and now I know why. He’s got a big ‘ole saddle he walks around with, you must be–

Lorenzo Gomez: You’ve never met a bigger city slicker than me.

But I remember I went to their website and I thought these guys were geniuses. Even the advertisements on their website, it was like bail buddy hay feeders, I don’t even know what that is, but I went, “Man whoever goes on that site, they know what that is.” And then right next to it was the Great American Western novel.

Bill Schley: Sure.

Lorenzo Gomez: And I went, “I have no idea what that is either, but I bet that audience does.”

Bill Schley: Oh yeah.

Lorenzo Gomez: They really proved that they knew who they were marketing to, and they weren’t going to let some weird shiny Chrome guy advertise on their site, because it would of actually deteriorated their brand.

Bill Schley: Yeah, we should open up some dating sites. How about singles who are in the Witness Protection Program? I mean come on, you got a bond there.

Lorenzo Gomez: Start your fresh start.

Bill Schley: Sure yeah.

Lorenzo Gomez: Start your fresh start with us.

Bill Schley: I like that, I like it.

Here’s another little example, Netflix verses a blockbuster video.

Lorenzo Gomez: Oh great yeah, because actually that one was really cool because it started in the renting movies category right? It was in the rental– and then, once blockbuster–

Bill Schley: That’s what is was, okay master category, movie rentals.

Lorenzo Gomez: Movie rentals, and then, they shifted and created a new category, which everyone is in now which is streaming, online streaming.

Bill Schley: Okay now a little bit before that, remember I’m older than you so I remember…

Lorenzo Gomez: Yeah, of course.

Bill Schley: A little bit before that, there was only one category, people didn’t think about there were two. You wanted to rent videos, you went to a video store.

Lorenzo Gomez: Yes, yes.

Bill Schley: So that was like the committed cloud, that’s what it was, they didn’t think about videos stores–

Lorenzo Gomez: Yeah, you get it in the mail…

Bill Schley: You went to the store.

Lorenzo Gomez: Right.

Bill Schley: All of a sudden they said, “We have a new thing called videos in the mail.

Lorenzo Gomez: Right.

Bill Schley: So now there’s two: videos in the mail, that’s us, video’s in the store, that’s them.

Lorenzo Gomez: Yes.

Bill Schley: And again they said, there’s time…this is what’s so great, you don’t have to knock the opposition. Show the difference and then let the costumers decide.

Lorenzo Gomez: That’s right.

Bill Schley: When you show the facts of the difference right? Put two different categories, so what’s their category? Well it’s videos in the store, you go in but there’s also late fees– we all know there’s late fees, we’ve all paid them.

Lorenzo Gomez: Keep it as long as you want.

Bill Schley: We don’t like them that much, that’s right. The other thing is, they say they’ve got all the new releases but they’re never in.

Lorenzo Gomez: That’s right, they’re always sold out.

Bill Schley: But hey, when you want to go down there with your date, and say let’s go watch a movie, you jump in the car. Now where videos in the mail, you have to make a little bit of a sacrifice, you might have to wait a couple of days, but you ask them for a reasonable little sacrifice.

Lorenzo Gomez: Right.

Bill Schley: But look at this, the new releases are always in, because we got a big warehouse somewhere, and you know what? No late fees. Keep it as long as you want.

Lorenzo Gomez: And then it became streaming. By the way, guess who’s gone?

Bill Schley: Who didn’t survive?

Lorenzo Gomez: Blockbuster.

Bill Schley: Sure.

Lorenzo Gomez: And now, everyone is in the streaming category, ESPN’s jumping in, HBO, I mean they really were the pioneers of streaming, and now we’re going to watch as all these companies differentiate and create subcategories.

Bill Schley: Look at what people do, your local pizza place.

Lorenzo Gomez: Right.

Bill Schley: Right? Everybody’s got pizza around New Haven, Connecticut where I come from. So then you see a place that comes by–wait a second, they’ll always say they’re in the opposite city so if you’re in New York you’ll see place that’s Chicago style. That’s extreme differentiation.

Lorenzo Gomez: But they do! In Chicago they got New York style.

Bill Schley: In Los Angeles you have, I don’t know Roman style. Then there’s brick oven pizza, then there’s Greek pizza, see they’re different categories.

Lorenzo Gomez: Thin crust, deep dish.

Bill Schley: Some people like one, but they differentiating and they’ll tell you Greek pizza’s great because we use these wonderful ingredients and fresh olive oil and all these kinds of things, and it comes in a pan and we also speak Greek like this. We have lemon soup, you can’t get lemon soup at [inaudible 00:40:26] you can get lemon drop soup. Right you get spanakopita.

Lorenzo Gomez: Let’s I want to–

Bill Schley: By the way, what’s spanakopita?

Lorenzo Gomez: I have no idea.

Bill Schley: You’ve never had it?

Lorenzo Gomez: No. What is it?

Bill Schley: Oh my god.

Lorenzo Gomez: I feel like you’re making that up.

Bill Schley: No it’s Greek…it’s Greek to me.

Boy oh boy this is really a comedy show, we’re changing categories now, it’s a branding show, now it’s actually, it’s really I don’t know–

Lorenzo Gomez: I want to talk about one more category that I think has changed society.

It used to be that you called the taxi to pick you up.

Bill Schley: The taxi, yeah.

Lorenzo Gomez: That was the category and then boom, along came UBER and LYFT and created a whole new category which was ride share. And I think they’re Netflix to Blockbuster; they’re turning it upside down, but I actually think this story is unwritten, because you cannot tell me the difference in category between UBER and LYFT, and I have struggled with their marketing because I actually think that both companies are suffering from fake branding.

Bill Schley: Why?

Lorenzo Gomez: I actually think that LYFT should come out and say, “We’re the guys that have the best drivers,” and I don’t know if that’s true, but they could create a category where they say, “We do all these things to show that our drivers are better, and we pay minimum wage.”

Bill Schley: You want to differentiate on something.

Lorenzo Gomez: You want to differentiate on something.

Bill Schley: But here’s another thing that I got, so sometimes you’re not changing the category, what you’re doing is differentiating on an attribute.

Lorenzo Gomez: Right.

Bill Schley: You’re saying we’re a ride share company but we got the best drivers, it’s not the best driver category; it’s an attribute.

Lorenzo Gomez: Yes.

Bill Schley: So sometimes the attribute is important enough.

Lorenzo Gomez: Right.

Bill Schley: When you really want to have a big change in the mind, you would do something else. I don’t want our brothers and sisters out there to think, “If I don’t invent a new product I can’t do this.”

Lorenzo Gomez: Right, most of you already have it.

Bill Schley: Right, so a lot of times what it is, is to find that category is to say, “Look, we’re going to specialize in this.”

Lorenzo Gomez: Right.

Bill Schley: We’re going to specialize so much that we’re really going to be specialists in–and this thing, it’s big enough to be a category, it’s kind of a subcategory or specialty but, for all intents, let’s just call it a category. Pingboard is a wonderful company, it’s small company but it’s growing like crazy up in Austin Texas. Pingboard, what they did is for a co-working space in Austin they invented an electronic sign in iPad App that let people sign in and then people could see who was signed in, it was like an address book. And they thought they were going to build an address book for companies that was nice to have, but they didn’t have a must-have.

Lorenzo Gomez: Right.

Bill Schley: They knew they could do all kinds of things, they wanted to make it easier for people in big companies to know who was working there, to know something about their coworkers, to understand that there might be someone three desks down from them that had some amazing expertise, but they weren’t even putting the finger on what they were going to do, what they were going to stand for.

Lorenzo Gomez: Right.

Bill Schley: This is the thing, what do you stand for? But, a lot of people were inquiring, asking, “Hey, what about organization-charts?” And they listened, because a lot of people came in, “Hey we need an organization-chart.” Now, organization-chart is the most old fashioned, static thing that every company has one, the bigger the companies the more they talk about organization-charts, it was a tool of management, it was a static thing, it starts at the CEO and branches off into all these things. You couldn’t do that much, but management used it…and it was very tedious to remake them, so people made them on something called Visio and they made them on PowerPoint.

Lorenzo Gomez: Yup, I remember those days.

Bill Schley: But these guys realize, with our technology we offer an organization-chart, but it’s better than any other organization-chart because it actually works in real time. You actually can change it on the fly, you actually can see it; it’s like a living organization-chart, where it’s so amazing that you can actually plan your organization on it with it and people down the organization can use it too, to find out who’s working where and they can see who’s working on what projects, and they realized, we really have this thing that if we concentrate on making the world’s best organization-chart focused, that one thing- the world’s best, the first life organization-chart that works in real time, that’s three-dimensional. Right? They called it the organization-chart with superpowers. You see how creative you get when you have an idea?

They realized that was the category we were going to be number one in, we were going to be the organization-chart company, but it was big enough and we could tell such a great story. Do you know that they went from, I think when we started that it was less than a million dollars, now they’re up to two million in revenue, and they’re supposedly going to double the revenue in the next year.

Lorenzo Gomez: That’s awesome, if you use it correctly.

Bill Schley: It’s awesome, but that’s the power of understanding what your category is; defining it, naming it, and then going for it. So the more you know about categories, it’s absolutely doable and it’s done every day.

Lorenzo Gomez: And you can do it too.

Bill Schley: And you can do it too, especially–I want to ask some of you sisters out there: Lorenzo, I don’t know I kind of think that if you really read between the lines, he’s talking a lot about these dating services…I happen to know [inaudible 00:46:15], there’s JDate, how about L-Date?

Lorenzo Gomez: How about Lorenzo Date?

Bill Schley: How about Lorenzo Date which is a service that’s only for dating Lorenzo.

Lorenzo Gomez: Oh man.

Bill Schley: So if you’re out there, I don’t know just an idea for a category.

Lorenzo Gomez: That’s the desperate category, nobody’s going to call me up for a date.

Bill Schley: I don’t know think so. You mean D-Date? D-Date? Wasn’t that when they landed in Europe.

Lorenzo Gomez: That’s D-Day I’m here to ruin lives one date at a time.

Bill Schley: That was pretty much it, D-Date boy your date’s are going to be [inaudible 00:46:45].

Okay, I think this is a good enough introduction.

Lorenzo Gomez: Absolutely, we’ll get more into detail but–

Bill Schley: We want you to think about this, before you can even think about a brand, your customer first decides what category it is and you’ve got to let them know you’re a supermarket.

Lorenzo Gomez: That’s right.

Bill Schley: Or you’re Greek supermarket or a Chinese supermarket or an organic supermarket. You’ve got to let them know.

Lorenzo Gomez: And that, Brother Bill, is what we call the takeaway-of-the-day.

Bill Schley: Gee, it’s the TOTD, takeaway-of-the-day, yes siree.

Lorenzo Gomez: Until next time.

Bill Schley: Are we signing off?

Lorenzo Gomez: We’re signing off.

Bill Schley: Okay goodnight all you brand brothers and sisters out there.

Lorenzo Gomez: Until next time.

Bill Schley: Until next time, we’re fighting the evil forces. Okay so we’re signing off.

Lorenzo Gomez: Yes.