Great entrepreneurs can change and expand markets, even consumer attitudes. Total focus on solving a problem for a customer you understand helps you dominate a “small market,” and dominance of a tactical, small market gives an agile and ambitious team a wedge to grow from. Many great companies start from a tactical feature in a space full of problems. Initially, they must fight to maintain focus and simplicity, and solve a single problem well. That is often their competitive advantage vs. large incumbents. The deepening of product value and expansion of surface area and customer base that happens once you have that foothold is a far more linear task than the black magic of solving that initial problem.
The difference then between the companies that get trapped in niches, and those that become strategic, are the teams that have the ambition to keep growing the problem, and the agility and talent to keep attacking it. At the Series A, initial market size is often irrelevant, and eventual market size is hard to see.
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