Market Size Beats Market Share

A discussion on market strategy and the optimal positioning for business success, focusing on the relationship between market size, growth, and business positioning.

Market Positioning Hierarchy

1. Small fish in a booming market (Best)

   • Easier to succeed in rapidly growing markets
   • Growth of market creates natural opportunities
   • Doesn't require market dominance to succeed

2. Big fish in a small market (Second Best)

   • "Niches get riches" approach
   • Good for building sustainable businesses
   • Better for making a good living

3. Small fish in a big market (Least Preferred)

   • Hardest to succeed
   • Most challenging to scale
   • Difficult to stand out

Key Market Insights

• Market growth matters more than market size

  • Booming markets create more opportunities than static large markets
  • Easier to succeed in growing markets vs established ones

• Revenue Challenges

  • Companies with low price points ($20-100) often hit growth plateaus
  • Buffer example: Revenue flatlined at $21M after initial growth
  • $200-300/year price point is a "dead zone" for scaling
  • Few exceptions exist (Mailchimp, Canva) but very rare

• Strategic Considerations

  • Building for scale requires different approach than building for sustainable income
  • Market selection should align with business goals
  • Easier to be average in booming market than exceptional in stagnant one