Recently I have spoken to a few very early stage startups that are tackling big markets like healthcare and travel. Big markets have appeal since you only need to get a few points of market share to make a whole lot of money. They problem with big markets is that you will face big competitors who have mature and feature rich products. You can go after these markets, but you need to do it with a guerrilla warfare approach.
As a startup with limited resources, you are unlikely to be able to offer something immediately that can compete head-to-head in a huge market with an established group of leaders. You’ll need to find a customer niche that is underserved by the incumbents, or you’ll want to pick one feature where you can improve the customer experience by a big margin, say 10 times better.
I had a conversation like this with a healthcare tech startup. They will be battling with massive incumbents and told me they have an all-inclusive solution. How is that possible? The big boys have spent hundreds of millions of dollars building their platform over the last decade, no startup is going to beat them by trying to do everything. My advice was to pick a small group of features where the incumbents are weaker and do those few things in a great new way.
When I spoke to the travel startup, they seemed receptive to the focus idea. They agreed that it’s unlikely they will create the definitive travel guide for every type of traveler today. However, they can get their business rolling by offering a great travel guide for adventure seekers or backpackers or Eco-Travelers. My advice was to get really good at one niche and work hard to build network effects within that niche before expanding to other ones.
Thanks for reading today’s post, hopefully this will help you focus your efforts and allow you to win in your chosen market.