|Ryan Rich||Oct 28, 2019|
A market’s true size is determined by its proximity to the human condition.
Think of a human as the trunk to a tree. The core branches of that tree are the stuff that keep us alive — sleep, sustenance, shelter, money, health, etc. A market’s proximity to these essential branches determine the potential of capitalistic success. Spanning these branches means an even higher likelihood of success.
The further up the tree you go, the smaller the market becomes until eventually you don’t have a viable market. The trick is to not mistake your market for your niche. Starting with a small subset of a larger market is a niche. You create a product that a small number of people rely on. You make it so good they evangelize it. Then you grow to meet the needs of the larger market.
Issues arise when you conflate your niche and your market. What you may think is your niche, may end up being the entire size of your market and then you’re in trouble.
I’ve witnessed this happen first hand. You’re building a product, you’re talking to customers, you’re shipping code, you’re improving the design — it feels like you are hitting product market fit…and then the sales fall off a cliff. A year later the product has 20 customers, the same number it had a year ago. Your market, which you assumed was your niche, may in fact have been just 20 organizations. This happens with highly specific B2B software and can often kill a company that doesn’t know any better.
If you’re starting a startup it’s imperative you understand the difference between your niche and your market. Build your product and GTM for your niche, but know from the beginning how that blooms into a billion dollar opportunity.