In the early 2000s, if you needed a ride in a city, you had two choices: hail a cab or call a taxi company and hope they showed up. Then, on a snowy evening in Paris, two frustrated entrepreneurs couldn’t get a cab and had an idea. What if, instead of chasing a taxi, a car came to you at the tap of a button?

That idea became Uber.

But Uber didn’t just make a better taxi service. It created something new: a category of transportation called “ride-hailing.” That’s what category creation is about.

Let’s break it down simply: Category creation is when a company or person defines a new way of solving a problem and builds a new space in people’s minds that didn’t exist before.

Not Just Better, But Different

Most companies compete by trying to be better. A slightly better price. A slightly better product. But that kind of thinking keeps them stuck in someone else’s race.

Pepsi is a great example. For years, Pepsi said it tasted better than Coke. It even ran blind taste tests, the famous "Pepsi Challenge." But what happened? Coke stayed number one. Pepsi was still seen as the second-best cola. Why? Because Coke already owned the category of cola.

Now compare that to Red Bull. When it launched, it didn’t say “we’re a better soda.” It said, “this is an energy drink.” A whole new category. Red Bull now sells more than 11 billion cans a year. It became the first in people’s minds in a space it defined itself.

Solving a Problem People Didn’t Know They Had

Think about Airbnb. Before it existed, most people stayed in hotels. The idea of sleeping in someone else’s home as a traveler was strange, even uncomfortable. But Airbnb made it normal.

They weren’t just a cheaper alternative to hotels. They redefined how people think about travel. Suddenly, travel wasn’t just about a place to sleep, it was about having a local experience. That’s a shift in mindset. That’s category creation.

And it worked. Today, Airbnb is valued at over $90 billion, more than most hotel chains.

A New Way to Look at the World

Category creators change how we see things.

Before the iPhone, phones were mostly for calling and texting. Apple didn’t just make a phone with better features. It created the smartphone category. A phone that was also a mini computer, camera, music player, and more. Apple made us see a phone as something totally different. That shift helped it become one of the most valuable companies in the world.

Another example? 5-hour Energy. It didn’t try to compete with Red Bull or coffee. It created a new space: the “energy shot.” A tiny drink that gives you a boost without the bloat. That simple idea turned into a billion-dollar business.