The Niche is Your Friend

Purple Cow

When someone imagines a business idea that launches a startup, many times it's a "big play" - which means it's a large idea that will need many people to build, and will likely serve a huge market. Such ideas cost a lot of money. And you'll either need a lot of up-front invested capital or revenue on the first day to help fund it. And you'll need to have a certain amount of capacity built-in so that your site isn't always down.

This is a common problem. There are so many services that are trying to reach a percentage of the market, and the market is usually everyone in the world with a computer or a cell phone. That's a lot of people.

There is another option...

There are billions of people in the world, and among those are millions of different interests. Sometimes passionate interests: people who will stand in line for 2 days to get the new hot electronic device; people who argue about coffee and the correct temperature for brewing espresso for a specific blend; people who love Bollywood. These are niche markets, and if you can deliver a great service to this niche, either small or large niche, you can build a greatly profitable businesses just on that.

If you haven't read Purple Cow by Seth Godin, I heartily recommend it. It describes the phenomenon of remarkable products and that by being remarkable, these products spur word-of-mouth and create a buzz about the product. In the book, the author also the importance of targeting niche markets instead of creating a product that aims to please everyone. He contends that products that attempt to appeal to everyone are boring by design, and therefore are not worthy of word-of-mouth.

Capturing market share in a niche market is easier, too. But to capture it, you have to become a leader in that niche. And to become a leader, your company and product have to exhibit an interest in the meaning behind the niche. A false interest will show through and those in the niche will not recognize you as an authority. You have to have a genuine passion and interest in coffee or Bollywood if you want to capture that niche. Gary Vaynerchuk, whose book Crush It! explains how to turn your passion into a day job, grew to be a leader in the wine world through his video podcast, Wine Library TV. His passion and interest in wine, along with his energetic personality, NY Jets helmet spit bucket, and unique way of explaining wine fragrance and flavor ("Big League Chew" and "like a pretty girl that pile drives you on the concrete") have propelled him within this niche. Wine is a niche? It happens to be a large one, but not everyone in the wine world will be attracted to Gary's personality, but those who are attracted and respect his passion are his niche – a niche he created within the larger market of wine enthusiasts.

So why is the niche better?

It's more focused, and it's not everyone. By being more focused, it makes it easier to tailor your products to serve them, instead of watering down your product or service to please all. And by your visitors not being everyone, you cut down on server costs and make it much more affordable and simpler to keep up with web traffic. If your audience or market is everyone in the world, you'll need huge scale-out on day one to handle the hordes that will come. But for a niche, you can start small with one server and grow as your audience grows.

See the next post for an anecdote on this.

Next post: there will be blood

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