About these notes

A business should always start with a very niche market


Startups should start with a very, very niche market. When in doubt, it’s almost always better to start smaller. It’s much easier to reach a few thousand people who desperately need your product than compete for the attention of a million scattered individuals. Small market doesn’t mean nonexistent.

Go for a small market of concentrated people served by a few or no competitors. Large markets either lack a good starting point, or they are open to competition. Competition means marginal to no profits.

First dominate your niche market, and then you can scale up. Amazon started selling only books. Then they expanded to CDs, videos and software, which were similar markets. Today they sell everything. Expanding gradually and with the right sequence is hard and requires strong discipline.

Being the first to dominate a market is irrelevant to the success of your business. You want to be the last dominating: make a great improvement and enjoy monopolistic advantage for years/decades.

Dominate your tiny niche market first, and then scale up to your grand long-term vision. Similar to start helping today rather than dreaming of big big big - Anything you want, Derek Sivers.


  • Zero to One, Peter Thiel

← back

Links to this note

The seven questions every company must answer in order to succeed

Engineering: can you create a breakthrough technology rather than incremental improvements? A business needs 10x technological improvement to have real monopolistic advantage 2. Timing: is now the right time to...

Zero to One: Notes on Startups

Aim for 0 to 1 improvements - The dot-com bubble made people cautious of innovation and big thinking - Competition is usually bad for a business - Monopolies exaggerate their...