I remember sitting across from a founder last month who was wrestling with this exact question. “We’ve got something special,” she told me, coffee growing cold as we debated the merits of pioneering a new category versus disrupting an existing one. “But I’m not sure if we should be redefining the market or just building a better mousetrap.”
It’s the billion-dollar question, isn’t it?
When You Create the Category, You Write the Rules
Think about what Salesforce accomplished back in 1999. While traditional software companies were shipping CDs and managing complex installations, Marc Benioff wasn’t interested in playing that game. He recognized something fundamental: businesses hated managing software almost as much as they needed what it could do for them.
By establishing the “no software” mantra and pioneering the Software-as-a-Service model for CRM, Salesforce didn’t just enter the market—they redefined it. Their category creation strategy positioned them as the natural leader in a space they effectively invented.
“I watch too many companies try to compete on features when they should be competing on vision,” a venture capitalist friend told me recently. “Category creation isn’t just about the product; it’s about painting a picture of a future that customers suddenly can’t imagine living without.”
That’s the psychological edge of category creation strategy. When you define the problem space, you naturally establish evaluation criteria that favor your particular solution. You’re not just selling a product; you’re selling a new way of thinking.
Market Disruption: The Art of Better
On the other hand, market disruption acknowledges existing needs but challenges how they’re being met. Netflix didn’t need to convince people they wanted to watch movies. They just needed to show them a dramatically better way to do it.
While Blockbuster was charging late fees and maintaining expensive retail locations, Netflix introduced a simple subscription model that eliminated the pain points customers had grudgingly accepted as unavoidable. Later, they’d disrupt themselves by pioneering streaming, recognizing that digital delivery solved fundamental limitations of physical media.
“Disruption works when you’ve identified something broken in an existing system that incumbents are either unwilling or unable to fix,” explained a product leader who’s navigated both strategies. “The bigger the pain point, the faster customers will jump ship when you solve it.”
Which Path Gets You There Faster?
Over drinks with founders who’ve tried both approaches, I’ve noticed a pattern in their experiences:
Revenue Realities
Category creation often means longer sales cycles. When HubSpot first started talking about inbound marketing, they weren’t just selling software—they were selling a philosophy. Prospects needed to buy into the concept before they’d consider the product.
“We spent years evangelizing before we saw hockey-stick growth,” admitted a marketing executive who was there in the early days. “But once the category was established, we were the obvious choice.”
By contrast, market disruptors can often capitalize on existing demand. When Zoom entered the video conferencing market, they didn’t need to convince people that virtual meetings were valuable—they just needed to show them a more reliable, user-friendly alternative to what they were already using.
Competitive Landscapes
The founder of a now-unicorn SaaS company shared something interesting about their category creation journey: “For the first three years, analysts didn’t even know what category to put us in. That was frustrating for partnerships and analyst relations, but it meant we had time to build without direct competition.”
Category creators often enjoy a period of limited competition, allowing them to establish strong market positions before imitators arrive. When Gainsight created the “Customer Success” category, they had years to establish thought leadership before meaningful competition emerged.
Disruptors, meanwhile, immediately face entrenched competitors. These incumbents typically have established customer bases, brand recognition, and resources to fight back. This competitive pressure can spur innovation but also increases the risk of expensive competitive battles.
Positioning Your SaaS Product: The Practical Stuff
Let’s get tactical about positioning SaaS products under either approach:
For category creation strategy to work, you need exceptional clarity about your unique value proposition. One founder I admire put it this way: “If you can’t explain in simple terms why the world needs this new category, you’re not ready to create one.”
Effective category creation typically involves:
First, developing language that frames customer challenges within your solution context. Drift didn’t just create a chat widget; they pioneered “conversational marketing” as a category.
Next, producing educational content that addresses fundamental questions about the new space. When done right, your blog posts, whitepapers, and speaking engagements establish you as the definitive voice in the emerging category.
Finally, building communities where practitioners can share experiences. These communities not only provide valuable product feedback but reinforce your leadership position.
For market disruptors, positioning emphasizes comparative advantage. When Slack entered the workplace communication space, they positioned themselves as an email alternative—directly challenging the established solution while highlighting its limitations.
Real-World Results: Two Paths to Growth
I’ve watched companies with similar founding timeframes but different strategic approaches experience remarkably different growth trajectories:
A video conferencing company launched in 2011 took the disruption route, focusing relentlessly on delivering a product that simply worked better than existing options. Their growth accelerated quickly as users experienced tangible benefits versus complex alternatives, reaching 10 million users within a few years.
Around the same time, another SaaS company pioneered a new operational framework for subscription businesses. Their growth was initially slower as they educated the market, but they established category leadership that proved incredibly durable. Today, their name is practically synonymous with the function they created.
Choosing Your Path
Over countless conversations with founders, I’ve found several factors that should influence which growth strategy makes sense for your business:
First, consider your innovation type. If you’re solving problems in fundamentally new ways or addressing previously unrecognized challenges, category creation deserves serious consideration. If you’re primarily improving existing solutions, market disruption offers a clearer path.
Next, assess market readiness. Category creation becomes more viable during significant market transitions. Cloud computing emergence created openings for numerous category creators as fundamental infrastructure assumptions shifted.
Finally, be honest about your resources. Market disruption often requires substantial investment to challenge entrenched competitors. Category creation demands significant educational investment but may allow more efficient resource allocation by avoiding direct competitive battles.
Clarity Above All
The biggest mistakes happen when companies try to straddle both approaches. A mentor who’s led marketing at several successful SaaS companies told me, “I’ve seen promising startups fail because they couldn’t decide whether they were creating a category or disrupting one. That confusion spreads to messaging, sales training, and ultimately customer perception.”
Successful category creation establishes clear boundaries around the new space. Effective market disruption requires precise articulation of incumbent weaknesses and how your approach fundamentally resolves these limitations.
What’s Right for You?
I’ve seen both strategies drive remarkable growth when executed with clarity and conviction. Category creation offers the advantage of limited initial competition and the opportunity to define evaluation criteria. Market disruption leverages existing demand but demands superior execution against established competitors.
The question isn’t which strategy is universally better, but which aligns with your specific innovation, market timing, and resources. The SaaS companies that thrive maintain ruthless clarity about their approach, avoiding the dangerous middle ground of strategic ambiguity.
As one successful founder put it to me, “The choice isn’t just about what’s faster—it’s about what’s sustainable for your specific vision.” I couldn’t agree more.