Why I Will ALWAYS Choose Building for a 'Cluttered' Market
There's a bigger upside than you'd think.
Hello and happy Friday! :)
I was recently on a podcast with Indian entrepreneur and creator Raj Shamani.
We discussed a range of topics, from helping people make money online and high income skills to AI and, of course, building startups.
One question I often find myself answering is if it’s better to build product for a smaller, niche market or a bigger, cluttered market.
There moving many moving factors that you need to consider, but from a broader lens I will always choose to build for a big total addressable market (TAM).
Following is my justification for what I said from when I spoke with Raj. You can watch the full podcast here.
“Isn’t the market too cluttered? How will we ever compete with the big players?”
This was something Raj brought up in our podcast, because I’m sure he’s heard this concern before as well. But if you think about it, do you know what a cluttered market indicates?
Demand.
Your market research is already done! People want a solution, and they’re most likely open to trying a better fit!
Once you know demand exists, your job becomes tweaking your product to offer something people didn’t realise they needed.
A large TAM ensures that even capturing a small market share can result in substantial revenue. And a passionate idea with a small addressable market doesn’t translate into a successful business.
So even if you play a small role in a big market, the latter ensures there is demand. You then just need to pair it with a desirable product fit and marketing.
Simplified was built on this philosophy. Design is a recurring need (and a cluttered market), and Canva was a giant when we launched.
But we recognised that it might be a bit too complicated for some users. A lot of people don’t need that many options for customisation. They need a simple tool to take them from ideation to execution, fast.
Three years later, our 10 million users are proof that we did something right :)
“Okay, I’m convinced. But then how do you recognise these demands?”
If you want to think about business, peel the surface layer and think about routine activities in your daily life. Simple, everyday things that happen daily, and will span years/decades with their conventionality.
A simple and relevant example is the shift towards remote work and digital nomadism. It is a trend that appears to be here to stay.
So there are ample opportunities for tools and services that facilitate remote working environments, like collaboration softwares and co-working spaces.
These are real, everyday demands, and if you’re able to identify how you would differentiate yourself from those already catering to this, you might just crack the opportunity of a lifetime.
Do you think your product caters to a big market?