Category Creation: What it Means to Build Something Truly New
An interview with Marco Witzmann of Valispace
Founded in 2016, Valispace is enabling agile hardware development by offering a digital productivity tool for hardware engineers. As category creators in Engineering Information Management (EIM), the company is educating a new generation of hardware engineers about digitizing their day-to-day toolkits. We sat down with Co-founder and CEO Marco Witzmann to discuss the process of creating a category as a startup and how it’s different from building other types of companies.
Be sure to check out Iteration ’22 conference this September in Lisbon, organized by Valispace. The event brings together hardware engineers and experts across industries to share best practices about tools, processes and organization. Find more information and apply for an invite here.
First things first: What exactly is category creation, and why does it matter?
So, think about when you are first starting a company. There are two different approaches. Either you see a certain kind of product and you think it can be done better. You make it cheaper, more accessible, faster, whatever it is. You might have to reinvent methods and business models around it, but it’s very easy to tell people what it is you’re doing. Think of the iPod. When it came out, you could tell people it’s a portable music player. People would understand what that means, right?
But then there is another case where you look at a problem, and the only way to solve that problem today involves many workarounds. There’s no agreed upon single way to solve it yet. That is where category creation comes in. On the one hand, it’s an amazing opportunity. Instead of competing directly with big market players, you have a unique insight into an entire market that has been overlooked and underserved. Oftentimes, to build a solution for this, multiple disciplines come together in one place.
Undoubtedly that also brings some challenges. What might those look like?
The first is that in the beginning, when you talk about the solution, no one will understand what you’re saying. One example in Germany is Celonis. No one knew what process mining was before they arrived. But not only were they able to explain the value proposition and create this category of software, they’re now leading that category.
How can companies overcome this initial hurdle?
First, you need a good way of explaining the problem. Then you need to have a way to make that solution visible. Most of the time when you ask people about the problems they are having, they don’t even think those problems can be solved. They have just assumed that reality is as it is.
In our case, our customers thought that in order to build complex hardware, they had to send documents back and forth and keep track of complexity in Excel spreadsheets. They found workarounds for small problems here and there. But they didn’t even think that there was a solution to do data-driven engineering. The moment you come to them with this concept, you need to show that the value creation is there, because decisionmakers haven’t already budgeted for the solution.
What are some other examples of category creators that are particularly inspiring to you?
Netflix, for example, is a category creator. In their first decks, when they described who they’re competing with, they said they compete with people meeting friends and having conversations — not with cable TV. It’s a different way of consuming. It’s something that hasn’t been around.
Another one is Salesforce as a CRM tool. Although there were other CRM tools out there at the time, Salesforce had stickers that said “no software”. That was their way of describing SaaS. In these cases, a lot of education had to happen.
What is the category that Valispace is creating right now?
It’s called EIM, or Engineering Information Management. What we find is that there are companies out there that have what’s called Product Lifecycle Management Tools. That might sound like something you can use to develop a full product, but in reality, it’s not. The reality is that these kinds of tools help people with the physical part of their product — the shape of that product. For example, if you think of a car, it will have all the information about each physical part. But what if you want to know how far an electric vehicle can drive? The power consumption? The charging time? The maximum speed? These are properties that lie in spreadsheets and in documents.
So we thought, what is a good way to describe a place that stores that kind of information centrally, and that allows the whole engineering team to collaborate on that data and to digitize their manual workflows? We found that Engineering Information Management is exactly that. It’s about information that engineers use and need, and it’s about working with that kind of data. This is how the category is becoming a reality.
How does one create a category successfully? What is your process looking like right now?
I think the first thing is to realize that you’re a category creating company. It almost sounds trivial, but for me, it was a necessary realization. I started to read about category creating startups, and received advice that fit us much better than advice for other startups. Because it’s all about educating customers — the market — and potential investors. You have to explain why there is such a big potential in something that doesn’t even have a name yet. You have to get very clear and convincing data points, either in numbers or in references from people who have been suffering from the problems you’re solving.
You also have to really distinguish what makes you different. Like, how is Netflix different from CNN? You can watch stuff with both, yes, but there are very concrete, very important differences.
We made a short, funny YouTube video that was very effective in educating people right away about what we do. Whenever we showed this video in the past, be it to investors, be it to an audience full of engineers, people would be nodding. It was immediately clear what the benefit was.
What’s coming next in the process for you?
In the past few years, we’ve learned a lot about how engineering departments and different companies work. Now, we’re condensing all that information into a clearer view so that everyone can see what good engineering and agile engineering can look like. We position Engineering Information Management as an important part of the engineering tool landscape that allows digitizing workflows, reducing our customer’s time-to-market and reducing their technical risks.
On the other hand, we’re hosting Iteration ’22, a conference to bring together the leads of the best engineering companies that are digitizing and that are using different processes and toolings. We want to create conversations around how the best engineering teams in the world organize themselves to develop products at 10x the speed of others and allow leaders in this space to share their best practices. That way, people who are building companies or working at existing companies can get an idea of what fully digital engineering means.
What is Valispace going to be five years down the road, when EIM is already created as a category?
We believe Valispace is going to be a fundamental part of any engineering tool stack — a collaborative single source of truth that helps develop complex products faster and more reliably. Using EIM to collaborate on engineering data will be as common as today’s use of CAD tools to draw physical parts.
Do you have any additional advice for founders who are category creators?
It’s important for new category creators to build social proof and visibility of their idea.
One thing we’ve learned is to work with the next generation of people. For example, university students. We’re actually sponsoring all kinds of student projects. When they build, they can use Valispace on their projects for free. We’re seeing that these students are very happy to use Valispace. We’re educating a whole generation of people to have the expectation that our product is an essential part of their toolkit. When they enter the workforce, we believe they’ll take us with them.
Next, we learned that you need to work with market leaders. So we chose customers that develop things that have never been built before: electric self-driving trucks, private space stations, hovering boats, electrified airplanes, etc. These teams cannot afford to work the old way; they need to use the best methods and tools available to succeed, and big companies are looking at them to get inspired.
We’re now seeing people putting Valispace as a skill on their LinkedIn profiles. I think when you’re experiencing this kind of pull from the market, you’re onto a category that will define how people work in the future.