When we hear of the hottest new startups gaining traction, it's surprising how simple the concepts are. Many times, it's small problems that are approached in a different way that leads to major success. This begs the question of how entrepreneurs can come up with businesses that create new categories.

There are many theories about how to do this. Some startups try to improve on existing products in a niche. This can prove to be successful in some cases, but the majority of the time small improvements do not lead to major successes. In fact, to pull customers away from what they're comfortable with, you must create a new category. Your solution should be built in a way that creates a different niche, not just improves on an existing one.

To learn how to do this, I sat down with Ben Kinney, who was named the 2014 Innovator of the Year by Inman News. Kinney is the CEO and founder of Blossor, a real estate search company that stops consumers from being treated like leads. The first company to attack real estate buying in this way, Blossor has created a separate niche away from Zillow and Trulia.

I interviewed Kinney on his experience of creating a new category instead of building on an existing one. From our talk, I discovered there is a process that needs to be learned to master the art. Here are my major takeaways from our interview.

1. Look For Different Revenue Opportunities

When creating a new company that has established competitors, look at the revenue model that everyone is using. If you're a business-to-business company, are all your competitors making money the same way? Can you make money from your users in a way that has not been done before? The power of being able to see revenue opportunities where your competition doesn't can create a new niche for you. The gold mine is when you can enhance the experience for your customers by introducing extra revenue streams.

For instance, Blossor makes money through the Blossor store, which gives consumers a way to get deals from vendors. This is also done with companies like Kiip, which actually enhances the user experience through ads. When you come up with a new way to make money in a market, you have the power to create a company in a separate category that you can dominate.

2. Identify the annoyances society has accepted

Some of the best companies come from the complaints that we have just learned to accept. When every company has the same problem, we learn to accept it as the way things have to be. Great startups are formed when a founder refuses to put up with the problems the rest of society has given up on.

For example, we all hated when we dropped things between our car seats. This was a problem with almost every single automobile we drove. Finally, two entrepreneurs on Shark Tank refused to accept that and now have a business just to protect the black hole of car seats. The lesson we learn here is to look for what makes peoples lives difficult that no one thinks there's a solution for.

Kinney has done this with Blossor by not spamming consumers when they come to his site. Being treated like a lead is what we all assumed would happen when we use real estate search tools. It was just an annoyance we dealt with. Kinney wouldn't accept that, and was able to create an entire niche by solving that problem.

Published on: Dec 19, 2014