07/20/2016

Enterprise

Many small markets do not make a big market.

That’s one way to cross a chasm. Robbie Knievel jumps the Grand Canyon in 1999. (Source.)

(1) A set of actual or potential customers, (2) for a given set of products or services, (3) who have a common set of needs or wants, and (4) who reference each other when making a buying decision.

He draws particular attention to the last point. Why is the connectivity of customers important in the definition of a market?

  • Airbnb started with millennial travelers attending conferences in cities — obviously a niche market — but, it turns out that these folks also travel for pleasure. A fraction booked Airbnb for their next trip, and a fraction of those eventually became hosts. Hosts posted more inventory in more mainstream locations, which encouraged new demand. Thus started a virtuous cycle that grew the business into the mainstream.
  • The first users of thredUP* were self-identified “thrifters” who shopped frequently at secondhand stores. Their vocal product reviews attracted others in the mainstream, who had never shopped thrift before. Today, the majority of shoppers on thredUP make their first second-hand apparel purchase on the platform.
  • Facebook launched at Harvard College in 2004, when I was a student there. It quickly scaled at other universities and then famously opened up to anyone with an email address in 2006. Its success in crossing over to the mainstream has many viable rationales, but one is the simple fact that its collegiate users (like me) eventually graduated and wished to maintain their connectivity post-college and continue to add new friends.
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