Founders in Enterprise SaaS face a pivotal decision early: will you pave new paths as a category creator, or will you challenge established players with an innovative product?

Category Creators are trailblazers developing new solutions for unaddressed problems or needs, thereby establishing a new market category.

Category Challengers, on the other hand, enter a market with established players, aiming to offer superior products or value.

Recognizing whether you’re a category creator or a challenger is crucial, as it dictates very distinct go-to-market strategies.

For category creators, early demand gen revolves around customer education. They must experiment to discover the best channels to connect with the target audience, and may find success with events, webinars, PR, and even analyst relations relatively early. Pricing requires careful iteration since there may not be established reference points. But the willingness to pay can be high if you solve a meaningful customer problem. With category creation, things can take a while to take off, and it’s crucial to stay lean and nimble in the early days.

For category challengers, once a beachhead is established, speed becomes paramount. Category challengers can often see strong results early on from established channels such as SEO, paid search, outbound, and review sites. Innovative and efficient execution with these channels is key. Pricing structures may already be established, so the focus may be on providing better value or bundling.

Sales dynamics for these modes can be very different.

Category creators initially face longer sales cycles due to the lack of established budgets and prior purchase intent. Creating a wide top of the funnel, consultative selling, and broad evangelization within prospective organizations are paramount. For category creators, creating buyer urgency can be a major challenge. Qualification criteria may need to be adapted for the nuances of category creation. POCs and land-and-expand may be crucial, allowing customers to start small and see value before making a bigger investment.

For category challengers, sales cycles can be shorter, thanks to established budgets and customer intent, but competition may lower win rates. Customers often have RFP processes. Lengthy POCs may not be needed. A clear understanding and articulation of differentiation, especially in unmet customer needs, is essential. Once traction is gained with a differentiated offering, incumbents will take note and may replicate your messaging, and eventually, features. Creating network and community effects, continuous innovation, and sharp execution can be key.

Many startups find themselves on a spectrum between these two modes, requiring a blend of strategies. And after successful category creation, you may see more competition and formal buying processes as the market matures, necessitating a strategic pivot in product and GTM efforts.

What are your experiences with this?

(Anupam is an early-stage VC at Emergent Ventures and is passionate about deeply supporting SaaS, Enterprise AI and Cloud Infra founders in their 0->1 and 1->N journeys)