I like small but growing markets. Markets that other’s don’t realize or believe how much they will grow. Where there’s a thesis behind why the market will grow.
-Where other’s don’t realize or believe in the growth because there will be less competition – in terms of investment dollars and customer dollars.
-Growing because the market needs to be large enough for the company to grow to be a massive company.
Large established markets usually have large and established competition. It can still be profitable to enter these markets but growth potential can be limited.
It’s risky to enter an unproven market because there’s a risk the market won’t grow and therefore the company won’t grow. But that’s what venture capital is for. High risks and high rewards.
Some examples of small but potentially growing markets might be independent teachers (if you believe education will become decentralized), Google glass wearers (if you believe wearable will be huge), freelancers (if you believe the corporation is unbundling), etc.
It’s not enough to just participate in these markets, you still have to solve a problem and deliver value to a customer segment. Do that, be right that it’s a growing market, and about a million other things along the way hah, and you might have a really valuable company!