Last Thursday, on August 14th, we officially shut down the last remnants of Neosync after our acquisition. It was a strange feeling to pull the plug on something that was all consuming for three years. I think one of the hardest parts of being a founder is that it's disorienting. There is so much that needs to get done, that it's hard to focus all of your energy and attention on one thing. Your mind constantly wanders like a dog pulling at a leash. You try to pull back and it slowly comes back to your side before darting away again.
You're constantly prioritizing and re-prioritizing everything that you have to do that you rarely get a moment to sit back and reflect on the bigger picture. Now that I'm just a lowly employee again, I've had some time to reflect on the big picture and one phrase keeps popping up in my mind - "it's the market, stupid".
This is a riff off of James Carville's famous, "it's the economy, stupid" phrase that won Bill Clinton the 1992 presidential race. In the early 1990s, the US was experiencing a recession and unemployment climbed to about 8%. James Carville, then Clinton's strategist, iterated and re-iterated to Clinton and all of the staffers that the only thing that really mattered to everyday Americans was the economy. They hammered this point home every chance they got and it paid off as Clinton swept Bush in the election.
For startups, "its the market, stupid". Nothing matters more than the market you pick. It doesn't matter how great your product or messaging or whatever is, if there is no existing demand for your product or category of products then you will not be successful. Sounds obvious, right? Yes and no.
As founders, the same delusion that drives us to start a startup and try to beat the odds also blinds us from the obvious. We rationalize the lack of demand in so many different ways. Our competitors didn't do a good enough job selling, they didn't appeal to developers, their messaging wasn't clear, their product was confusing to implement, the reasons go on. In reality there just wasn't enough demand.
So how do you pick a good market? I've been spending a lot of time thinking about this and here is roughly the framework that I've come up with.
First of all, is your market new or has it been around for a long time? If your market is new (less than a few years old), how fast is it growing? If it's not growing 20-30% year-over-year then it's probably not growing fast enough and there isn't enough demand. If your market isn't new, then has anyone else ever been successful in your market? You have to accept the fact that there are other smart, ambitious people out there who want to be successful. If none of them are building or have been successful in your market then it's probably a bad market.
These are all questions to judge the demand of your market. A good market has a lot of demand. I know this sounds simple but I think we overcomplicate it. We look for these diamond-in-the-rough markets to try and seem smart and show everyone that we found something they didn't. When in reality, they knew all along.
As someone once told me, "it's better to ride a big wave with a lot of people than a small one by yourself."
Evis
PS. Undoubtedly, there will be people who read this and disagree. They'll come up with some example of a business or market that proves me wrong. That's the hard part about the startup world. There are always counter examples. If there was a proven playbook, there would be a lot more billionaires. But there isn't. For every example you have, I can come up with a counter example. But I do think there are general trends and that's what I'm trying to highlight here. Hopefully that sticks.