Small Markets Expand Categories

Greg Isenberg and Shaan Puri discuss how successful companies often start in small, seemingly limited markets before expanding into massive opportunities. They use Snapchat and Uber as prime examples of this evolution.

• Market Evolution Principles:

  • Small markets can expand to become entirely new categories
  • Initial market size shouldn't be a deterrent
  • Need to consider small, medium, and large market potential

• Snapchat Example:

  • Started in preppy LA high schools ($50k/year schools)
  • Initial assumption was college students would be primary users
  • Found unexpected traction with high school students using iPads
  • Key insight wasn't just communication, but ephemerality
    • People hesitate to share when content is permanent
    • Disappearing messages solved a real problem

• Uber Example:

  • Initially viewed as just "on-demand black car in San Francisco"
  • Founders didn't fully grasp potential initially
    • Hired external CEO early on
    • Only later realized the massive potential
  • Evolved from niche service to creating new category
    • Transformed into "on-demand transportation via technology"

• Key Takeaways:

  • Don't immediately dismiss small markets
  • Look for potential to expand into new categories
  • Initial market size isn't always indicative of ultimate potential
  • Sometimes you discover your true market after launching