Here are my notes from discussion about the episode Picking the Right Market to Get Started
On the call: @rosiesherry, @noahwbraggm @pv1, @habibkhan, @bhumi and myself (please share your notes and feedback! I'm sure I'll be missing lots of things).
Side dish in main market vs. main dish in side market
- Consensus seemed to be that it'd be easier for makers/startups to begin as a side dish in a main market. Focusing on a targeted population is easier to do when you're small.
- Being a main thing in a small market can still be great if timing is right. Ex: Podcasts that took off recently. A market that use to be small can grow over time (that reminds me of Gumroad too).
- Many successful businesses started small and grew over time. Few really go after billions from day 1 (Salesforce?). We had a good chat about ceilings for main things in small markets — is it that there's really no way to grow, or is it that the founders are missing on other opportunities? (I like to call that the Mezze strategy: expand your side dish thing with other side things and you get yourself a great meal). No one was undermining how hard it is to be successful at one thing, but more that a lot of companies grow by expanding their surface area over time.
- Hard to really know how big your thing can be in advance, but you can pick how much you want to chew.
- Being a side thing in an existing marketplace (Intercom, Shopify, Atlassian) can also reduce the work you have to do. Distribution channels are set up for you and you can focus more on your product. There are many businesses and M&A happening on top of marketplaces.
Product-Founder Fit at the top
- One thing that everybody agreed on is that passion and product-founder fit matters way more than your market or what you decide to be (main vs. side dish). Had a couple of founders on the call that got successful businesses in markets that they did not necessarily have a great affinity with — made it hard to keep going.
- Figure out what you're passionate about so that you'll still want to get up and work when times get hard.
- This is a short paragraph but I want to emphasize that passion was really the top thing for everyone. Don't pick something that looks lucrative if you don't like it.
Unfair advantages and privilege matter a lot too
- Successful people might have a hard time seeing what helped them get there. Be careful when listening to advice, and Tyler's perspective resonated with a lot of the folks on the call.
- Do your best to pick a market/thing where you know you have an unfair advantage.
- @rosiesherry gave us a much-needed perspective on the unfair DISadvantage that women have in tech. Some people are just going to have a harder time building a business because of not having the same opportunities/access to people.
- Something that gave me pause was a thought from @habibkhan (I think): "The majority of people are underprivileged" -> can you turn this in an advantage if you belong to an underprivileged group? (paraphrasing the second part, don't want to put words in his mouth). It'd be great to explore that point more.
How to pick a thing
Now, this is my personal take on what matters after digesting the discussion:
- Are the founders passionate about the thing?
- Ability to distribute (aka unfair advantage)
- Ability to execute (don't take more than you can chew)
- Market size
So it's not so much about dish size vs. market size, but more about reducing scope to something where you have clear advantages in reach and ability to iterate — and also passion. I tend to side with Tyler's perspective as a result.
I'm hoping that next week we can do another round focused on overcoming disadvantages. Let me know if you have a IH podcast to suggest.