I Love How Markets Are Constantly Dividing Into New Slices

In a pitch presentation, the presenter said:

If we can only get 1% of the $4 billion market, we have a $40 million business.

But you won’t. Nobody ever gets the small percentage of the large market. I hate those tops-down market projections.

What happens instead, I think, is that markets are like organisms that are constantly growing and then dividing themselves into smaller markets. Think of how many different kinds of computers there are, or automobiles, or restaurants … every market seems to have started as a piece that was sliced off of a bigger market.

And I love that way of thinking about markets. Successful companies create new markets.  Then competition, the copycats, jump in, and successful companies either fend them off, deal with it, or create yet another new market.

Don’t aim for a tiny piece of a huge market. Create your own new market. Divide and conquer.

(Illustration: jscreations/Shutterstock)

7 thoughts on “I Love How Markets Are Constantly Dividing Into New Slices

  1. I like the analogy. My only question is that this assessment appears to fly in the face of Seth Godin’s advice for bootstrap entrepreneurs (perhaps this advice doesn’t apply to bootstrappers?).

    He suggests that successful new businesses typically are “self-priming”, meaning they improve upon an existing business model/product vs. trying to create an entirely new market.

    He doesn’t say that to do so would always end in failure. Just that it takes a heck of a lot of money to fund sufficient national awareness for such a product to even have a chance at long term success.

    For example, we sell wrist wallets (we call them Monk Paks). During the warmer months when consumers are outdoors and active, we believe they would be open to a unique and easy-to-use design that would store their personals and allow for hours of handfree movement.

    We launched this past summer and while sales are steady, we continue to ask ourselves the question whether this particular product is self priming or if people are for the most part stuck on the old concept of carrying their wallet in their back pocket or a purse on the shoulder (regardless of convenience).

    So far early adopters who have purchased the product have taken to the Monk Pak and have seemlessly integrated its use into their daily lives.

    1. @Ramin I think we’re talking about the same thing. Splitting a market into smaller pieces is improving on an existing business as much as it is creating a new market. And for your wrist wallets, presumably, you’re hoping to create an offshoot of the wallet market. That’s just another cell splitting, in my analogy.

  2. This is a great piece to discuss discovery v. creation entrepreneurial ventures. By no means did Southwest Airlines create a market, yet they are the most profitable airline in the history of United States aviation. Southwest is a great example of a discovery venture. Facebook created a market. It was a viable idea yet it constantly evolved, rendering any top-down financial projections useless.

    Markets grow, yes. They divide because companies create innovative reasons why they exist, not because they decided to spontaneously. Southwest Airlines was created for the “everyman”, the 85% of potential customers who could not afford air travel in the 70’s. When Delta and other airlines tried to mimic Southwest’s approach, it didn’t ring true with customers, and they lost significantly. Southwest started with WHY they formed before they decided WHAT they would offer.

    If anyone is familiar with Simon Sinek’s “Start With Why”, this compliment’s this piece perfectly.

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