The Carob Problem

When I was growing up, carob was having a moment. I don’t remember exactly why chocolate was considered bad, but suddenly carob was everywhere, marketed as a chocolate replacement.

There was only one problem. If your mind is thinking chocolate, carob tastes terrible.

I see the carob-positioning problem frequently with startups. It can happen anytime a company is challenging an entrenched and dominant competitor. The problem is particularly pervasive with AI startups (humans being the “competitor”), so it’s a good time to highlight and resolve this issue.

What opened my eyes to this was a recent project with an AI startup whose chatbot understands emotions and feelings. I’ll be honest, when I heard this pitch my first thought was that we should talk about how this technology has finally enabled human-level chat. Time to brag, right?

The founder quickly changed my mind. She had talked to enough potential corporate customers to know what features got people excited. “What impresses them is that there are aspects of our product that are clearly better than human counselors,” she said. “Things like sensitivity to emotions but without judgment, highly accurate conversation summaries, and 24/7 availability.”

The key is to highlight these superior aspects and describe how they can deftly handle the bulk of chat volume for a company—but while clearly defining the chatbot’s limitations and defining where human chat agents can still excel. In this case, in handling high-value, complicated, and delicate conversations.

I loved that. Compare the chatbot to a human and you lose. Instead, define vast new territory next door to the status quo, own that, and corral the incumbent off on an adjacent hill.

I quickly realized how common this problem is. And how broadly applicable the solution.

This approach not only inoculates your company against claims of exaggeration, it also allows you to define how the conventional solution (in this case, the human counselors) will fit into the new world dominated by your new product instead of simply vanishing (I cover the sales aspect of this challenge here.)

Once I started looking for it, I saw the carob problem all over. Time and again the initial (and losing) comparison is to the category owner. The challenger doesn’t take over until the conversation shifts:

• At first, digital cameras were poor imitations of film cameras. Then the comparison shifted from image quality to features like filters and instant shareability. Film was relegated to art.
• Electric cars are still in transition, but the conversation is shifting from a 1-1 comparison with internal combustion vehicles because of new form factors, better acceleration, and autonomous driving. Soon, electric mobility will be in a different league from a gas car—as far as your phone’s digital camera is from a film SLR.
• Email now replaces handwritten letters for 99% of human interaction. This didn’t happen because of a direct challenge to pen and paper, but because it defined a new category of communication.

Fake meat is still struggling with this problem—and that will continue until meat alternatives can change the conversation to new benefits like flavors, textures, or cooking techniques. (Sadly, the environmental advantages simply aren’t visceral enough of a benefit.)

I see the carob problem every day in current tech startups.

Automated-video provider Synthesia would have a more powerful pitch if it clearly positioned their AI-generated videos in comparison to human-made ones. Instead of breathlessly talking about how their automated videos are better, the pitch needs to be: Custom-crafted videos still have a clear role, but here is the vast opportunity that automated videos create.

Eightfold might be a wonderful AI-automated HR platform, but is this really a “platform that does it all”? Their products may be “designed to deliver greatness” but human HR still has a clear role to play. By creating a new category that it can own because of powerful features and automations and then strategically ceding certain ground to traditional HR, the company’s pitch would, dare I say, be eightfold better.

I see it beyond AI as well: In a startup trying to replace bottled beverages, in one that aims to improve on the standard oral anesthetic for dentists, and in one that offers better consumer credit reporting. In each case, there’s an opportunity to define a narrow use case for the current solution while arguing that the bulk of the market is better served by the new entrant.

I wanted to end this post with an ironic carob product that summed up just how failed the ingredient had become. However, its failure is overwhelming; I couldn’t find anything even worth making fun of.

What I did find, however, was an article about the deep Sicilian history of the carob tree. And in that I saw how I would reposition carob if I decide to become a carob baron in retirement: not as a chocolate replacement, but instead as a unique ingredient with a rich heritage that is the crucial and unique ingredient in amazing recipes of a storied Mediterranean culture. That might not be a path to vanquishing chocolate, but suddenly carob would be fighting the battle on its own turf.