Finding business ideas: The market lifecycle

I love talking about business opportunities, markets, ideas, etc. Last week I was holding a conversation with an indie hacker friend, we were talking about crowded markets and had some disagreements on the topic: should I create a product in a crowded niche?

It got me thinking on how markets got crowded in the first place and what is the typical market lifecycle. I will disclose my thoughts and hopefully, you guys can give your input and add to the discussion.

1. A new blue ocean

Generally, when a new idea arrives it comes from one the following:

• A pain point that never got addressed, probably a pain point that the users don't even know it exists as if it was an obvious problem someone would've done already.
• A technological change, existing pain point but now solved in a different way using current technology.
• Niche changes, down or up, for example, when Uber launched there was an influx of Uber-like projects in other niches solving different problems the Uber way.

2. Copycats

A successful new product/idea will be followed by a plethora of clones in no time. These copycats will most of the time compete on price, capitalizing on the fact the market is open and people are aware that they need a product like that.

Eventually, there will be too much competition, almost every marketing channel for the idea will be a bloodbath, and starting a new business in the niche will be a hard battle.

3. Variations

This is the phase where the market starts to expands into submarkets with the same(or similar) idea applied in a more niche-specific way, in a new vertical or focused only on some aspect of the original idea -- for example Airbnb with Craiglist. When this happens a new market is created and it is often a new blue ocean.

4. Helpers

The market is crowded, so every little competitive advantage matters and the market itself becomes a pain point to the business on it. Therefore, new opportunities arrive.

In this phase, a new ecosystem of business emerges to address the business pain points on the original market.

Not only to gain competitive advantage but sometimes to even help new businesses emerge. You can see this pattern on Uber for example.

Uber -> Copycats -> Uber-like apps for lots of industries -> Business that helps other businesses build their own Uber.

Why I'm writing that?

I think understanding market lifecycles can help one finding business ideas that can be successful, and also helps with appropriated timing.

What do you guys think?