In 2012, G2’s software marketplace had a single category: CRM. Fast forward to today, and that number has exploded to over 2,100. This isn’t just growth; it’s a seismic shift in how we categorize and understand the SaaS landscape.

“When we started ten years ago, we only had one, which was CRM software,” reveals Godard Abel, G2’s co-founder and CEO. Today, G2 is adding roughly 300 new categories each year, fundamentally reshaping how businesses discover and evaluate software.

But how does a company go from defining one software category to over two thousand? More importantly, why should SaaS founders and marketers care?

The answer lies in G2’s unique approach to category creation – a process that’s part science, part art, and entirely focused on the evolving needs of software buyers and sellers.

The Myth of the Category of One

Many founders dream of creating a unique category for their product. But G2’s experience suggests this might be misguided. Abel explains, “One of the most basic rules, and some entrepreneurs are like, ‘Oh, I have this really special thing. I’m a category of one.’ And of course, that never works.”

This isn’t just G2 being difficult. It’s a reflection of how buyers think. “Buyers of software, you at least want, let’s say three choices, right? If not more,” Abel notes. In other words, a thriving category needs competition. For founders, this means that your “unique” product might actually benefit from being part of a larger, recognized category.

The 20 Feature Litmus Test

So how does G2 decide when a new category is born? It’s not just about having multiple players. There’s a specific methodology at play.

“For each category we define a unique feature set and we try to keep it somewhat high level. But let’s say there’s 20 key features for Conversational Intelligence that you really need,” Abel reveals.

This “20 feature” approach isn’t just classification – it’s a roadmap for product development. By understanding these core features, SaaS companies can ensure they’re building products that fit into recognizable categories, while also identifying opportunities for differentiation.

Human Intelligence in an AI World

In an era obsessed with AI, G2’s approach is refreshingly human-centric. “We have a research team, we have over 50 researchers that own different sets. We call it G2 taxonomy,” Abel shares.

These researchers work closely with vendors and entrepreneurs, using their expertise to identify emerging trends and potential new categories. It’s a reminder that in B2B SaaS, human insight still trumps pure algorithm-driven decisions.

That said, G2 isn’t ignoring AI’s potential. Abel notes, “AI does really help because AI can do a good initial scan of, hey, does this appear fake or real?” This hints at a future where AI and human expertise work in tandem to refine the category creation process.

The Unicorn Incubator

Perhaps the most compelling aspect of G2’s category creation process is its track record of success. Abel proudly states, “We’re really proud to have created many great categories. And then it’s always cool a few years later, conversational Intelligence, RPA, all of a sudden we’ve helped create five unicorns.”

This isn’t just a brag – it’s a testament to the power of category creation. By defining and validating new categories, G2 doesn’t just reflect the market; it shapes it. For startups, this means that aligning with (or influencing) G2’s categories can be a path to hypergrowth.

The Future of Category Creation

As the SaaS landscape continues to evolve at breakneck speed, so too will G2’s approach to categorization. With emerging technologies like AI and the continued fragmentation of software solutions, we can expect the pace of category creation to accelerate even further.

For SaaS founders and marketers, the implications are clear: understanding and leveraging G2’s category creation process isn’t just about getting listed in the right place. It’s about positioning your product at the forefront of emerging trends, aligning with buyer expectations, and potentially riding the wave to unicorn status.

In a world where new SaaS products emerge daily, G2’s approach to category creation offers a valuable lens through which to view the market. It’s not just about building a great product; it’s about understanding where that product fits in the broader ecosystem. And sometimes, that means embracing – even cultivating – competition.

As you build and market your SaaS products, remember: categories aren’t just classifications. They’re opportunities. And in the hands of companies like G2, they’re the building blocks of the future of software.

From one category to 2,100 and counting, G2’s journey is a microcosm of the explosive growth and evolution of the SaaS industry. By understanding how these categories are born and grow, savvy founders and marketers can position themselves at the forefront of the next wave of software innovation.

Listen to the full interview with Godard Abel: 

How B2B Market Categories Are Created with G2’s Godard Abel (Behind the Category)