It doesn’t matter how good your team or product are if you are entering a terrible market. You might have nailed the value proposition with an amazing new technology, but if there are only a handful of customers willing to pay, then you’re dead in the water.
What makes a good market? The answer depends on what kind of business you want to build, but here are some things to look for. First, it should be big enough. If you want to build a $100 million business, don’t pick a $10 million market. All things equal, bigger markets are better because they give you more room for error. If you miss the mark with one segment then you can always pivot in the direction of another. Next, a great market is one that is growing quickly. Entering a shrinking market is like trying to make lemonade from already-squeezed lemons. You might get a few drops but you’re going to work damn hard for them, and still not get your cup of lemonade. Conversely, there’s a lot of love to go around in quickly growing markets, which creates great opportunities for new entrants. If 80% of success in show business is just showing up, 80% of success in startups is picking the right market.