This article is based on Sean Falconer’s talk at the Developer Engagement Summit. DMA members can enjoy the complete recording here. 

Let’s start with a little pop quiz – what do Gong, Okta, Snowflake, Oracle, HubSpot, IBM, and Zuora have in common?

Well done if you answered, “They’re all category creators!” 

Each of these companies has played a leading role in defining new spaces, from virtualization and containerization to NoSQL databases and beyond. Some created entirely new categories, while others became dominant players in emerging ones.

But here’s the thing –  in their early days, these companies were incredibly hard to explain. Virtualization, containerization, identity as a service – none of these terms meant anything to most people when they first emerged.

That’s one of the biggest challenges of category creation. You’re not just introducing a new product; you’re also coining new terminology, defining new concepts, and trying to explain why they matter – and in the beginning, those explanations often make sense only to your own company.

So how do you successfully create and establish a new category? How do you convince the market that your solution is not just another product, but something fundamentally different?

In this article, we’ll explore:

  • What it means to create a category: Spoiler – it’s about solving a real problem in a fundamentally new way.
  • The challenges of category creation: From early struggles with sales, investors, and product-market fit to the long-term advantages of leading a new market.
  • How to successfully establish a category: With strategies for educating the market, building awareness, and leveraging developer relations.
  • Lessons from the pioneers: Insights on how companies like Apple, Microsoft, and MongoDB built and defended their categories.
  • My experience of category creation at Skyflow: A first-hand look at the strategies I’ve employed to help create the data privacy vault category.

By the end, you’ll have a clearer understanding of what it takes to create and own a market category – and why, despite the challenges, it’s one of the most powerful ways to build a lasting competitive advantage.

What does it mean to create a category?

To understand category creation, let’s go back to the early 1990s – the dawn of the internet. Companies were moving to the web, and web servers became essential. Terms like HTML and the “information superhighway” were thrown around as brand-new concepts.

Businesses quickly realized they needed more than just static web pages. They wanted interactivity and richer experiences. So what did they do? They bought databases and Cisco hardware. 

However, this didn’t solve their problem because the real issue wasn’t hardware – what they actually needed was multi-threading and a more sophisticated way to run server-side code.

That gap led to the birth of the application server in the mid-90s – a fundamental shift in web application architecture. Even though application servers today are far more advanced, the core architecture remains the same. The web as we know it is still built on that foundation.

This is the essence of category creation: solving a real problem in a fundamentally new way. It’s not about slapping a few extra features onto an existing solution. It’s about recognizing that the current options aren’t cutting it and rethinking the architecture entirely.

Living ahead of the market

Dave Kellogg, former SVP/GM at Salesforce and seasoned board member, put it best when he said:

“Companies don’t create categories, market forces do.”

In other words, a category isn’t something you just declare into existence. It emerges because the market demands it. Existing solutions fail to solve a problem, and something new – something structurally different – needs to take their place.

For that reason, when building a new category, you often feel like you’re living in the future – telling people that what they’re doing today is wrong and that your way is what’s next. It can feel like you’re a little crazy, pushing a vision that the market isn’t quite ready for.

The challenges of category creation

I won’t sugarcoat it – creating a new category is a grind. Sales teams hate it because it’s hard to explain, which makes it even harder to sell. And if it’s hard to sell, generating revenue is an uphill battle.

Investors? They’re often skeptical for the same reason. If they can’t map your company to an existing category or use a simple analogy – like “Uber for nurses delivering diapers in real time” – they get nervous. Without a clear comparison, it’s tough for them to evaluate potential success.

Product-market fit is another huge challenge. You’re not just introducing a product – you’re building an entirely new architecture. The problem? No one is actively searching for what you’re offering because they don’t yet realize it exists. Instead, customers are patching together solutions with existing tools, unaware that a fundamentally better approach is possible.

So, in the early days, you’re pushing a rock uphill. It often takes years before you finally reach that moment when the market shifts, and suddenly, you’re chasing that rock downhill instead.

Timing the market – before the market is ready

Take Okta, for example. In its early days, the company nearly failed to raise its Series B. CEO Todd McKinnon told Khosla Ventures they’d generate $250,000 in revenue for Q3 of that year – except they only hit $100,000. Not exactly a number that inspires investor confidence. Fortunately, Khosla still saw the vision and took the risk.

Okta went on to create the identity as a service category, but it struggled to gain traction at first. The real turning point came when enterprise companies started adopting cloud solutions at scale. Suddenly, identity became a major pain point, and when the demand for a solution arrived, Okta was already positioned as the leader.

Visionaries like McKinnon can spend years pushing a concept that no one else fully understands – until the market catches up and proves them right. But not every company survives long enough to see that moment. Silicon Valley is full of startups that bet big on a future that never arrived.

The trade-off: Early struggles vs. long-term dominance

Building a category is a long game, but the ceiling is sky-high. It’s greenfield territory – you’re not competing with existing players for market share; you’re defining the market itself.

Compare that to launching a commodity product. You can get to revenue faster because the playbook already exists. You can outcompete on features, pricing, or go-to-market execution, but ultimately, the potential is capped. The total addressable market (TAM) is already split among existing players, so success often means taking revenue from someone else.

With category creation, it’s different. No one cares about what you’re doing at first – but if the market catches up to your vision, you own it. And when that happens, you don’t just compete – you dominate.

How to succeed in category creation

So how do you go from being the person on the sidelines, shouting about the future, to actually owning the market?