Why Should a Startup Start in a Tiny Market?

David Senra, reading Peter Thiel and Blake Masters, says every startup should start with a very small market because creative monopolies start excessively small and then monopolize. Every startup is small at the start, and every monopoly dominates a large share of its market. Always err on the side of starting too small. If the first market looks too big, it almost certainly is.

Small still has to be a real sale. Apple's first sale was 50 computers for $25,000 to a shop Senra believes was in Palo Alto, and Steve Jobs walked in barefoot. The perfect target is a small group of particular people, concentrated together and served by few or no competitors. Once a company dominates a niche, it expands gradually into related markets. Jeff Bezos' founding vision was to dominate online retail, but he started with books. At D.E. Shaw, a hedge fund in New York, Bezos and David Shaw looked for businesses that could use wild internet growth. The code name for what became Amazon was the Everything Store: start with books, then sell everything. Amazon added categories until it became the world's general store.

Sequencing markets correctly is underrated. The most successful companies make that path, from one niche into adjacent markets, part of the founding story, the way Amazon did.