From Palantir to Tonic: Lessons in Building a Category Around an Existing Problem

Great startup ideas often emerge not from flash insights, but from experiencing problems firsthand. For Tonic’s founding team, years of wrestling with sensitive data at Palantir revealed a critical gap in the enterprise software landscape – one they would eventually build a category around.

Recognizing the Universal Pain Point

In a recent episode of Category Visionaries, Tonic Co-CEO Ian Coe shared how his experience at Palantir shaped their approach to building Tonic. “If you were having an issue on site, you couldn’t just send that data over the wire back to Palo Alto, where maybe someone, a developer, was sitting,” he recalls. This seemingly simple problem – the inability to securely share production data for troubleshooting – was just the tip of the iceberg.

Turning Enterprise Experience into Product Strategy

The founding team’s background gave them unique insight into how large organizations handle sensitive data. “We saw what it looks like to solve data problems at very large organizations, at large scale,” Ian explains. This experience proved invaluable when developing their initial product strategy.

Rather than trying to solve every data privacy challenge at once, they focused on the most immediate pain point they’d experienced. “What we really thought about initially was preserving the graph of the data so that you can run your application on top of that data,” Ian notes. This laser focus on a specific technical challenge helped them gain early traction.

Building the Category Through Education

The team recognized that building a category around synthetic data would require significant market education. “There’s a big question around what is Synthetic Data? What is masked data?” Ian explains. Rather than getting bogged down in academic definitions, they focused on practical value: “We really like to do is actually talk more about the customer’s problems and what do they need, and what’s the bar for them to be productive and get value out of the data that we’re producing.”

Leveraging Enterprise Credibility

Their enterprise background proved crucial when working with large customers. “The most important thing you can do with a customer that’s significantly larger than you is do the things you say you’re going to do,” Ian emphasizes. “If you are a 50 or 100 person company and you’re working with a 10,000 person company, they’re going to have a lot more complexity.”

Building Trust Through Authenticity

Despite their enterprise experience, the team chose to build their brand with an authentic, developer-friendly voice. They even embraced the playful identity of “the fake data company.” This approach helped them stand out while maintaining technical credibility through “blog posts that attach to open source projects that we think are genuinely useful to the community.”

Expanding the Vision

As Tonic has grown, their vision has expanded beyond the initial problem they set out to solve. Success now means enabling technical teams to “focus entirely on the intellectual challenges of their work and not on the painful data privacy, data cleanliness, data portability, challenges that plague so much of work that touches data today.”

For founders looking to build new categories, Tonic’s journey offers valuable lessons. Enterprise experience can provide crucial insight into market problems, but solving them requires a delicate balance of focused execution, market education, and authentic engagement with users. Sometimes the best way to build a category is to start by solving one problem extremely well.