Category Creation: How To Thrive in a Crowded Market


Matt Bertulli, Co-founder and CEO of Pela Case and Lomi

Matt Bertulli is the Co-founder and CEO of Pela Case and Lomi, certified B-corp brands operating at the intersection of waste innovation and consumer technology. Fueled by a mission to minimize global waste, Pela creates sustainable phone cases from eco-friendly materials, while Lomi transforms food waste into nutrient-rich plant food with its Smart Waste™ kitchen composter. Pela Case and Lomi have been named Top 10 in the Canadian Business Growth 500 ranking and #1 in Deloitte’s Fast 50 for cleantech businesses in Canada.

After over a decade as a software developer, Matt started his entrepreneurial journey by co-founding Demac Media, an award-winning ecommerce company, which he bootstrapped, grew to over 100 employees, and sold after 10 years. Matt also co-hosts The Operators, a podcast focused on running eight- and nine-figure ecommerce companies.

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Here’s a glimpse of what you’ll learn:

  • Matt Bertulli shares insight on creating a new category as a brand in a crowded market
  • How Pela Case differentiated itself in the phone case market
  • Product innovation and branding in the home goods space with Lomi
  • What are the challenges of educating customers on a new market category?
  • The importance of having a unique product or value proposition
  • Case studies: successful companies offering unique products or manufacturing processes
  • Focusing on solving specific problems to create a new category for an existing product
  • Advice for avoiding common mistakes in creating a new product category

In this episode…

If you’re trying to take your ecommerce business to new heights, then category creation should be on your radar. With new companies popping up daily offering similar products, only the brands that stand out will get the highest market share.

Having built two successful brands leveraging product differentiation, serial entrepreneur Matt Bertulli says it’s not about beating everyone else at the game but creating something your niche has never seen. This marketing strategy is known as category design. According to Matt, entrepreneurs must develop a unique mechanism for doing things everyone else won’t dare. However, before creating a category, it’s critical to have a value proposition and devise authentic brand stories that convince your customers you genuinely care about solving their pain points. What problem are you trying to solve, and how exactly is your product the solution? Learn how thriving ecommerce brands are winning the ecommerce game with category creation.

Join Raphael Paulin-Daigle in this new installment of the Minds of Ecommerce Podcast as he chats with Matt Bertulli, Co-founder and CEO of Pela Case and Lomi, on how brands can prosper by creating a new product category. Matt demystifies category creation strategies and how Pela Case and Lomi stay ahead of the competition with this marketing approach. He also highlights the importance of having a unique product or value proposition and the common mistakes to avoid when creating a new category.

Resources mentioned in this episode:

Sponsor for this episode…

This episode is brought to you by SplitBase.

At SplitBase, we design, test, and manage high-converting landing pages and on-site experiences for fashion, luxury, and lifestyle e-commerce brands. Our optimization program pinpoints exactly where your store is losing money most, and then we help you fix that.

The result? Increased conversions and profits for our clients.

With our team of conversion optimization specialists, performance marketers, and conversion-focused designers, we've got your back when it comes to testing and optimization.

Request a proposal on SplitBase.com today, and learn how we can help you get the most out of your marketing spend.

You can find us on LinkedIn, Twitter, and Facebook. Don’t miss out on our exclusive podcasts at Minds of Ecommerce.

Episode Transcript

Raphael Paulin-Daigle  0:06  

Welcome to the Minds of Ecommerce Podcast, where you'll learn one key strategy that made leading ecommerce companies grow exponentially. We cut the bullshit and keep the meat in a 15-minute episode, founders and executives take us through a deep dive of a strategy, so you'll get to learn and grow your online sales. In the last episode, you heard from Greg Schwartz from Household, who shared how DTC brands can win with TV advertising today on episode number 30. So get ready, Matt Bertulli is the CEO at Pela case that makes sustainable phone cases and also more recently, Lomi, which is a countertop composter that turns your food waste into dirt while you sleep. And I'm telling you everyone, this is pretty magical. I own one. It's pretty cool. Now we'll be chatting about how to create your own category as a brand when you're competing in a crowded space. I'm your host Raphael Paulin-Daigle, and I'm the Founder of Split Base. This is Minds of Ecommerce. Now this episode is brought to you by Split Base. Well, we help leading DTC brands such as Dr. Squatch, Hyper Ice and Amica, AB test, design, build, and manage high-converting landing pages and on-site experiences. Our optimization program pinpoints exactly where your store is losing money most and then we help you fix it. The result, increased conversions, and of course, improved marketing efficiency. Request a proposal on splitbase.com today to learn how we can help you get the most out of your marketing spend. All right, Matt, welcome to the show. Thank you so much for being here. Yeah, man,

Matt Bertulli  1:44  

This is gonna be fun. It's been a minute. Yeah. So

Raphael Paulin-Daigle  1:47  

I mean, I, I'm pretty familiar with your brands. And I've known you for a couple of years now. And every time I talk with you, you know, there's always really cool stuff that you guys have worked on. You always have a really cool angle, when when it comes to thinking around marketing and branding. So today, as you know, since this podcast is all about going deep, and dissecting one key growth strategy. Well, we're gonna talk about category creation, and we're gonna go as deep as we can in 15 minutes. Sure, just for context. You've had paella for a while and what are we low meat in total? About? How many years? Have you been working on those brands?

Matt Bertulli   2:28  

So pillowcase I think is like six and a bit six and a half? lomi? is we've been in market for two. I think we've been working on it, though, for like three and a half now. Like from when we started working on the product to like today? Yeah, yeah, awesome. Well,

Raphael Paulin-Daigle  2:44  

let's dive right in category creation. How do you define that? As a brand owner, CEO and marketer,

Matt Bertulli 2:52  

so the very simple way to look at it is, we're always trying to do something different, not better. In most brands, most products are just their positioning is basically we're better than something else. And they don't ever force a conversation or to in the consumer's mind around, oh, this is different. I'm going to force a choice now. So that's how I define it. I like to keep it like really simple for my team. So anytime we get into like, anytime we hear a conversation internally, where it's like better or talking about features, I'm just like, I want to throw up. And it's like, I don't know, how do we do something different?

Raphael Paulin-Daigle  3:30  

So what's that something when you started PLR? Yeah. Was that like a decision? Like on day one of like, let's create a new category. Or is it something that kind of came later on?

Matt Bertulli  1  3:44  

So when we started feel a case, like when I got involved, which was pre revenue, I was the first check writer in the business. I didn't realize that category creation was an actual thing, right? There's like, there's people that write about this, I had no clue. What I did know, was weed, like, you know, at that time, even today, when I tell people, I sell phone cases, they're like, What possible? What an awful category and a bloody ocean and it's so competitive. So like, you know, rewind the clock to 2017. And same, same thing, right? People like you're an idiot, don't go into such a competitive thing. It's a race to the bottom, there's no money, blah, blah, blah, you know, and at that time, I'm like, No, I actually like my co-founder, Jeremy. He had this material. I'm like, this material is awesome. Like, I've never seen anything like this before. And he had like, made the first case. And I'm like, this actually could be really interesting. Like, this is super different from anything that's out there. So we launched that brand under this like we're the world's first compostable foam case. And like that statement right there, right. Everybody's like, What the hell was that? There wasn't a word the most at that time that our position in our company, right. The thing that we would joke about is, I don't ever want to see an ad or a campaign that comes out of Phila about protect Active, everything was like looking at how high I can drop my phone case. Yeah, I can go on a helicopter and throw it out of that. Or every grant. It was every everybody knows those ads, right? It's all the same shit. And we were like, well, what's a completely different thing that nobody's ever seen before. And I'm like, we're going to make a compostable phone case. And we launched that, and like, scaled very, very quickly, over the first like, three, four years. Even today, like we're talking about a multi-eight-figure revenue business. That is great. And we created this whole category. Now, there's imitators and knockoffs. And like, that's how you know you created a category is when there's a bunch of other people, then they'll take that thing that makes you different. And then they try to rip it off. But never you own like 75% of the demand anyway. Right? That's category creation.

Raphael Paulin-Daigle  5:48

So I'm curious. So for Pela, you guys got into an already super, super crowded space. And category creation was a bit kind of like your Savior and really making space for yourself. Yeah. Now I'm curious about Lomi. Lomi is a pretty innovative product. I didn't know it was even a thing before you guys built that. So for a product that's already innovative, how are you defining or thinking around category creation?

Matt Bertulli   6:19

So with Lomi, it was about a new way to think about an existing problem. Hmm, right. pillowcase was like a new way to think about an existing thing that people knew like a solution. So with Lomi, we had to zoom up to the like, there. These are people that are like, they're problem aware, but they're not solution aware yet. Right? And whelming it's so innovative. Like, that's actually what makes me doing something like why me so difficult, is like, we have to educate the customer on what the hell alone he is. Right? With pillow case, you know, what a phone case is, this is just a way different way to look at it. You know, lomi? It's, it's the lift for something like lomi like, is a brand new invention? It's a new device in the home. I've never seen one of these before. What the hell is it? Why do I need that? Like, what problem? Is it solving for me? Is that even a problem? Do I care about like, there's so many more questions when you genuinely create something that world has never seen before. And I think that like 99% of brands don't do they don't ever get to that point. Nor should they, like, frankly, 99% of companies should not be trying to invent something new, like new new, right? So I think that like lomi is a very pure version of category design, and category creation. And I think pillowcases, the more approachable category creation brand, like, it's going to be the one that most people can look to and say, Okay, I can do something there. Right. And both were heavy R&D companies, though, right? Like we appeal a case like, we have material science that we invest in lomi is like device, the software, it's there's like heavy r&d components to both companies. I

Raphael Paulin-Daigle  8:01

love how you put it that way, though, category creation can be applied in different ways, right, like you said, about for Pela. It's really about the brand, whereas Lomi it's really about the problem. Now, you just mentioned r&d. So you did have something very unique and special about the product that obviously enabled you to create a category do you think, you know, brands that doesn't have that special thing can still create a category?

Matt Bertulli   8:32  

I think in physical goods, it's harder if your product isn't different, you know, and I think a lot of DTC brands, this is where a lot of the blood and the businesses in the streets is like, they basically innovated on packaging and branding, but not on the actual product. And I think that's a massive missed opportunity. It's harder to try to innovate on product but if you look at the biggest and most successful look at all the nine-figure DTC brands, they all innovated on product almost exclusively they put time and effort and energy and resources into the product. I'm sure there's exceptions to that statement. So somebody listen to this you can call me on that. But like the guys that I know that I talked to that are up at big scale all have something very different about their product. They didn't just order that crap off Alibaba and wrap a cool back cool box on it. Yep. Now

Raphael Paulin-Daigle  9:26  

I mean, that's such a good I'll make sure to take out that quote. Because I think it is something that we see in the DTC space quite a bit and people think we can just launch a sexy brand with new designs. Just like

Matt Bertulli   9:41  

yeah man look at the CO packing co packing or CO manufactures like that as a function right there tells you just how non innovative we are and consumer totally like the same same company is making the same shit and every bottle or every box is different packaging. Yeah, they're the only ones making money in the business. Do right? You know, whereas like, if you look at like the really profitable companies in consumer, they tend to do something very different, right? And I could rattle them off one by one and tell you what's different about each one. And I think that like, if you're new to consumer, or you're like trying to grow in consumer, the thing that you should be studying about from every brand out there is what's the thing that they do, that nobody else was willing to do in their category. And usually, it's that product, but like, in some cases, it's also in their manufacturing. You know, what, what makes pillowcase special is two things. One, we have proprietary material, that's super cool. And it's like, completely different from everybody else. It's the most efficacious material in the phone case business when it comes to like sustainability. And too, I actually manufacture locally here in British Columbia, Canada, and we make everything on demand, which means we have a perfectly negative cash conversion cycle. Incredible order, make ship, not order print ship, like most people think is just print on demand. No, no, we have a facility with injection molding machines, and like, we actually bring in raw resin, and we make the product on demand, build on demand, and Oh, buddy, and you know what, nobody is willing to do that. Matt, um,

Raphael Paulin-Daigle  11:17

let's talk about category creation as a marketing angle. You know, let's say people listening to this, a lot of them already have a brand. And I think, you know, a lot of them, a lot of people are testing and trying to figure out, you know, what about our product, or which features of our product actually sticks and resonates with people. And it's that never ending game of testing and trying to understand, you know, what people like to hear the most, you know, to get them to convert? So how do you go about creating a new category for any existing product? What, what should marketers and founders think about when they hear this?

Matt Bertulli   11:56  

I mean, I look at it. Okay, so I just go back to like, the easiest way to do this with an existing product and existing brand, is to actually focus on the customer. And the problem you're solving for that customer. And, you know, are there are there actually like small segments of customers out there that like that you already have, that have a completely different way of looking at your product. So like, your product solves a very specific problem for those people. It's sort of like the, you know, narrow and niche down thing, but looking at it more from okay, this set of customers has a different way to look at our product, then you take your brand, and your marketing and your messaging, and you oriented around what makes you very different from everything else. When you're with category creation, you're trying to force a choice in the consumer, how you can tell like, if you've got if you can do this thing called category creation, is when it gets difficult to sit your product next to anything else. Hmm. Right. And you see this in like, you know, conversion optimization land all the time. It's like, what's in it pisses me off. And I'm like, This is how you know you have terrible brand is when the number one thing on your page that performs is how you can how your product compares to the existing incumbent. Hmm, you are not creating a category, you are selling something better, right? And when all you're doing is like you're doing the Pepsi coke thing. So everybody that comes to your website, you're saying, Hey, this is like my widget dingdong thing. By the way, here's how it compares to the existing widget did nothing in the market. And I just told people that this existing thing exists. Geez, that's free. It's fun. So I buy all this traffic from paid media, only to tell people that there's a competitor out there. You're a genius. I will never You won't catch me dead. Putting that on a single landing page and any brand I'm involved in, like, shoot me if you ever see me do that RAF. Because that's like I spent all this money just to tell someone there's another protein powder.

Raphael Paulin-Daigle  13:50  

I'll make sure if I see you do that one day I'll just let you know.

Matt Bertulli  13:54  

Shoot me if I ever get into the this product compared to this product game on my on on on site. You know, you want to be like old way new way. Okay, life before your category life

Raphael Paulin-Daigle  14:08  

apps. Their transformation. See? Yeah, dude. Yes. Yeah.

Matt Bertulli  14:12  

I think man is so many examples where this has been done going back 100 years or 200 years.

Raphael Paulin-Daigle  14:19  

Because I'm thinking you know, like, a product like yours, right? The innovation is not going from a cheaper competing product that potentially no one knows about the innovation is going from having your garbage stink, you know, your compost full of insects and warms to not composting at all to just being able to do it, you know, on your countertop. And that's the contrast. That's the transformation you're selling.

Matt Bertulli   14:45  

Yeah, right. I don't compare me to like the other. Like, do we have knock offs now? Yeah, like there are competitive products. But never in a million years what I show there's against ours, and how ours is better. Like we talked about ourselves in the singular,

Raphael Paulin-Daigle  15:01

totally. You've tweeted a ton about category designing category creation. What do you think like one brand that that's not yours that you think has done a phenomenal job at that? Is there anything that comes to mind?

Matt Bertulli  15:16  

Oh, God, I'll give them to you and consider because like, I actually two of them are co hosts on my podcast. So hex clad, right? Totally, like different way to look at cookware, new material, new technology. Like, even from a brand perspective. It's like, set out to build the bad boy of cookware, got Gordon Ramsay, like, they built a new category of cookware, in cookware, which is like old and bloody, and like, you got some really big ask companies that they've totally worked out and said, like, No, we've got a new category. I think Sean and Dan Conner at Ridge, like they really went after material. So like, just like pillowcase, we went after sustainable materials. Rich said like, No, we're gonna go after like carbon fiber and titanium and things that you're just not usually seeing in wallets. It's like shittiest category ever to like to go into. So this stuff exists in consumer, if you just open your eyes and look, you know, the guys that run, like bamboo Earth dealer, and all those guys, like, that's a cool brand. They I think they even own their own manufacturing. So like they're doing category creation, this the thing with category, because it's not just a marketing thing, you actually have to look at, like, what are the ingredients in the business that make it unique, you know, and make it really stand out relative to like, the meta category that you're in 99% of us are going to be competing in an existing meta category. Shoes cookware, skincare. Like, there's only so many right now. And so I think like, if you just look around at the brands that are really winning, man, those are a few. And there's lots of ways to do it. Like, yeah, some people it's the it's like the bundling and unbundling thing. You know, like, every every category is always going through bundling unbundling, but I look at like, even Mike at simple modern, like they've gone into drinkware mega competitive. And then they basically built their brand around this, like, No, we're going to just be affordable. And we're going to go build local manufacturing and do print on demand and decoration and things that until they did that, yet he didn't do it.

Raphael Paulin-Daigle  17:30  

No one did. Nobody did it. I think the takeaway here right is at the end of the day, category creation is how you actually get people to choose you instead of competitors. But at the end of the day, you can't just be better, you have to be different. Different because better. Yes, yeah, it is it is what I like to call that unique mechanism, right? Like there has to be something unique and different. So that you can really talk about, it's not just about being a little better. And I think that is the one key thing to remember, do

Matt Bertulli 18:01  

totally. And you'll if you want to hack for how to find the thing that's like you can build something unique, is run towards the thing that scares the shit out of you, whatever. When you look at your business, and you look at that meta category, it's like, what's the thing that nobody else is willing to even look at? Because it's terrifying.

Raphael Paulin-Daigle  18:15  

I love that. I love that approach. Matt, what do you think are some of the biggest mistakes made by brands trying to do this? We've talked about comparing, you know, to competitors that shouldn't, you know, be seen as competitors. But is there anything else that you've seen that you're like, oh, man, they're doing wrong? Or they shouldn't do that, or mistakes that you guys have made in the past? Maybe? Look, I

Matt Bertulli   18:39  

think the big one is the comparison. By far, that's the most, like, that's the most common that I see. The other big one is like it's I'm gonna zoom in just on consumer here. Yeah. Right, because that's what we're talking about. It's like category creation applies across the board. But in consumer, I think that like right now, if I had to pick one thing, I would say, we buy into a lot of dogma in this space. So trying to create a category, you sort of also have to you kind of have to now buy your belief system needs to be something that you stand up from scratch. So like one thing like with Lommy, right, Metta as an ad platform is absolute dogshit Baloney, it's awful. You know, I'm happy you did an episode on television we love you know, Metis just terrible for new category creation is not good. Mehta is the ultimate in market demand capture platform ever invented, right? Well, if you're creating a new category, it's actually not going to be aware of who's in market for the new category. So I think like when you set out to build a new category, you also really have to look at like the go to market strategy, and how that's going to be different from what most other people are talking about in the space, you know, like, and a lot of our space is really focused on Facebook ads, right? and making that work and making that scale. And it's a frickin, I love it, we use it for pillowcase. It's amazing. But creating a category man, like, it may not be the right tool, you should question everything when you create a category, you know, and I think that that's why category creation is not for the faint of heart. Right? It's not easier. It's actually harder. But the value creation is probably a lot bigger. Well,

Raphael Paulin-Daigle  20:20

I was gonna say most great brands have created their own categories, almost all of them, right? Almost all depends what you want to achieve. Yeah,

Matt Bertulli  20:29  

Lululemon new category, you know, and then people would say, like, right now like, well, you know, nobody else has created them. I don't know. vre is basically created their own category within active wear athleisure, whatever you call it, you know, and so like, even new brands, the ones that are growing really fast, they all tend to be pulling levers from this sort of like category creation playbook.

Raphael Paulin-Daigle  20:52

I love it. Man, we're pretty much out of time. But one question I want, I always want to ask people who's built multiple successful businesses like you, is, if you were to start this all over, again, paella or lomi? What would you do differently? And I'm sure there's a ton, so apologies for the loaded question. But I was still so

Matt Bertulli   21:15

much. I'm lonely, I wouldn't lean so hard on consumer, like now that we know more about that business, like, DTC is actually not the best place to sell a product like that. But I didn't know that until I got going and met like a bunch of people like the CMO from Aruba. And you know, these and like, one of my advisors is the lady who was she was the president at Keurig. Right? So like, talk about category creation, like Keurig invented single cup coffee, like demo espresso, you know, like, great example of like, multimillion dollar category category Creators, I would really look and pay attention to my go to market a little more closely. So like when I built a, you know, I'm working on another, I've got, no, I'm not working on it. But I'm investing in another company right now, that is going to be creating a new category. And we're paying a lot of attention to go to market. And like not just saying like, well, this is how everybody else does it. It's like, well, how do we want to go to market that's going to be completely different from how everybody else has done it. And then that's going to be part of our category creation process. Interesting.

Raphael Paulin-Daigle  22:19

I feel like no one does that. Just Facebook, Instagram. Let's launch the brand influencers fire up some Facebook ads. Yeah. Yeah, the playbook. Matt, fantastic. Thank you so much for your time. Now, obviously, if people want to learn more about you blow me paella. Yeah, where should they go? You also have a podcast? Yeah,

Matt Bertull 22:40

I got a podcast called The operators. They do that with three other co hosts. They all run consumer brands. That's awesome. Shows like going great. People seem to like it. We just I don't know. It's hilarious. We basically just talk to each other because it's what we like to do. You know, Twitter, Ember Tooley. And then I read a weekly email for CEOs, called no competition. So just go to no competition dot media,

Raphael Paulin-Daigle  23:04  

or domain. Yep. Awesome. Matt, thank you so much, and excited for people to listen to this episode.

All right. Well, that's it for today's episode. And thank you so much for tuning in. Now, if you like what you've heard, and you don't want to miss any of the new episodes that are about to come out, make sure you subscribe to the podcast. And well bonus points if you also leave a review in the iTunes Store, or wherever you're listening to this. Now, if you're working on an e commerce Store that has over a million dollars in revenue, and you need help with conversion optimization, or landing pages, well, I've got some good news because there's a pretty good chance we can help with that. Go to split base.com To learn more, or even to request a proposal. If you have any guest requests, questions or comments, tweet me at our Apollon Daigle, and I'll be super happy to hear from you. And again, thanks again for listening. This is mines of ecommerce