Should founders size their idea's market based on the eventual whole-product vision rather than the narrow feature it initially resembles?

Sumeet Gajri · published Jan 17, 2020

A small initial market can be a positive feature rather than a drawback, because it lets a company dominate that market very early and use it as a foundation for much larger adjacent markets.

Carta's plan was to dominate cap tables first, which laid the foundation for rebuilding private and public market infrastructure — a huge opportunity.

Scope: conditional on the founder having a vision for the possibilities beyond the initial market

17:39 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta

Wesley Chan · published Aug 22, 2022

A small initial wedge is compatible with a huge vision — the founders of great companies know from the start that they are building a product, not a feature, even if the launch product looks small

Gmail's invite-only launch was a wedge but the 2GB vision was fixed; Elon always intended a mass-market electric car, not just the Roadster

11:47 20VC: Why Market Always Wins Over the Founder & Why I Do Not Do Market Sizing | Why it is not the Best Time to be Investing but it is the Best Time to Have a Fund & The Type of Deals to do Today | Why The Best Founders Have 100 Year Plans with Wes Chan, C

Paul Graham · published Mar 2011 · hedged

Airbnb will eventually capture hotels, starting with small ones, because there is a continuum between private sofas and hotel rooms and no clear point at which the spread up the chain-size scale stops.

Listings already moved one step toward professional accommodation within months, and once something becomes a big marketplace you ignore it at your peril.

Scope: framed as a bet; will start with small hotels

source Subject: Airbnb

Paul Graham · published Aug 2013

The target market need not be big yet; it is often better to start in a small market that will grow into a big one or lead into one, so long as there's a plausible sequence of hops to dominating a big market.

source How to Convince Investors

Wesley Chan · published Aug 22, 2022

The fallacy of market sizing is that founders conflate the market for their feature with the market for the whole product; the useful exercise instead is convincing yourself you're building a product and not a feature.

Founders pitch an air-conditioning-knob company against the $3 trillion car market and then do '1% of the market' math; that jump is where founders get screwed because they never understood how to migrate from feature to product.

18:22 Conflating a features market with the whole products market is the core sizing fallacy