This guest column is by Anjli Jain, Managing Partner at EVC Ventures
Competitive Market or Untapped One?
You are asking the right question.
You are likely to go wrong.
But you can easily pull back. If you run lean and easy.
It is a question I get from a lots of budding entrepreneurs both in Chicago and here in India.
Let’s look into each one of them.
Going after competitive market make almost everyone’s hair stand on its end.
Look at those huge competitors. Their sales force. Their colossal marketing budget. Their discounting abilities. How can you fight them?
I know tons of companies who entered crowded markets and succeeded.
Zoho, GroveHQ tons of other examples from the SaaS niche itself.
And how could I miss Wish, one of the most famous shopping apps on the planet? Despite the hugely crowded market by global players like Alibaba and Amazon and hundreds of local players like Flipkart in India, Wish thrives.
Because Wish doesn’t innovate in the pricing model only. Wish innovates across the entire value chain. It innovates in tapping the exact niche. Connecting buyers directly with makers is one of the things that made Wish stand apart.
Who shops from Wish? Those who don’t shop from Amazon. The digital version of a Walmart like crowd – located in smaller cities looking for throwaway bargain they would buy instantly in their impulse. No wonder it calls itself Walmart for the next generation…
There is something beautiful about crowded markets. If there are tons of competitors already, that means that there are tons of customers as well. The market is huge.
And as big as the current players seem to be they are likely to leave huge gaps around them and unaddressed needs.
You don’t have to be better than these companies.
You only have to be better than these companies in your particular niche.
For startups It is far easier to find niches in established markets rather than creating new markets
Tapping unaddressed markets can be a far more challenging undertaking
Because you don’t have sufficient knowledge to be mostly right
Even if you do, you are likely to be right 10 years earlier. Like many dotcom entrepreneurs turned out to be but had no idea around that time and sold out their ventures too early.
Untapped markets involve gamble and gambling requires two things – patience and collateral.
Elon Musk taps unaddressed market and pushes hard to uncover it. He may or may not succeed.
But one thing is for sure. He didn’t start chasing untapped markets as a rookie entrepreneur.
My advice to you if you have to go with a definite one – go for competitive market. The pressure the need for agility for swiftness for adaptation will teach you tons. There is no better way to learn sales than to sell something in market full of competitors. Selling is the most important skill you can ever possess as an entrepreneur.
David Ogilvy became master in mass selling (aka advertising) but only after spending months selling home appliances door to door.
Image credit – True Activist