Some lessons I’ve learned after a few years of closely observing our portfolio companies and the industry more broadly.
Overall, I’m now much more focused on markets that I used to be, as I’ve seen founders surf the waves of growing markets or compete with weak incumbents and look great by comparison. I still believe that high quality founders outcompete the competition, but temper this with the knowledge that choosing the right market can make merely good founders appear great.
- Building something 10x better than the status quo is the best way to build momentum and stand out from the crowd
- A market with desperate customers is often a signal that there’s an opportunity to build a 10x better solution
- Part of the excitement around generative AI is that it is a true technology underpinning to build 10x better solutions in many verticals
- Just because something is a "big market" doesn't really say much in terms of your ability to disrupt it. If anything, large markets are generally replete with competition. It’s far more important to find a niche, wedge or geography where you can identify desperate customers and build something 10x better for them
- Dominating a niche gives you the benefits of market leadership (e.g. mindshare, brand, reference customers). In some cases, the niche itself is a growing market that happens to be early (e.g. sensor calibration for vehicles). In others, you’ll need to expand into adjacencies in order to keep growing
- Picking an industry with weak competition makes building a 10x solution easier, since 10x is relative
- Not all market needs are static. Being early to a wave that grows substantially generates powerful momentum (e.g. pickle ball, SMS marketing, consumer interest in nutrition)
- High quality founders better exploit opportunities and move faster than other companies. This can compound over time. However, the overarching lesson is that picking the right market and strategically choosing what you work is the most important decision to get right