The Market Matters More Than The Idea

The Market, not the Idea, is the single biggest predictor of startup success. Recently, I've been obsessed with finding the right markets to dominate. I took a hard assessment of where successful founders have actually won, and I asked myself: Why were they able to conquer and create monopolies while other companies fight for scraps of profit?

I think this largely comes down to the selection criteria of the market itself. The key isn't starting with a "startup idea." It’s finding the right market.

When you look deeply into why certain startups work, it's not always that they miraculously found a perfect idea and rode it to infinity. Sure, some get lucky. But the deliberate founder increases their odds of luck by choosing the right ocean to swim in.

The Formula for Winning

From my observations, the formula appears to be:
Emerging, fast-growing market > Established, massive market.

If you enter a young market growing 10% to 50% annually, the wind is at your back. Compare that to an established market flooded with competition, where people are just copying each other and iteratively improving on what already exists. In those markets, it becomes incredibly hard to capture any share because there are already dominant players swimming in the ocean.

The Nike Fallacy

There is a respected entrepreneur I admire, but he says he's trying to become the "next Nike."

In my opinion, this is faulty thinking. You're comparing yourself by analogy to a dominant player that has already taken a massive foothold.

When Nike started, they perfected the model of working with athlete influencers. While they didn't invent it, Adidas was doing it back in the 30s, Nike scaled it in a way that was a novel concept at the time. Just like it was a novel concept for Fashion Nova to work with influencers to blow up fast fashion, or how Gymshark took advantage of fitness social media before anyone else.

Any subsequent people trying to do the same thing are going to have a very difficult time replicating that success. You are basically trying to eat from the same pie and take scraps of their market share. Nike already dominates 20% to 40% of the athletic sportswear market. Sure, you could build a nine-figure business, but you won't become Nike. That title is taken.

Instead, the proper logic is: "How can I learn from what this business did, and apply those principles to a new, uncontested space?"

Blue Oceans and Monopoly Profits

I read The Blue Ocean Strategy some time ago, and recently I've been studying Peter Thiel’s Zero to One. I think a fascinating concept from both books is that they echo basically the same thing: You want to be a player in a market with weak or no competition.

Thiel argues that if you are the last company to make a 10x improvement in a market, you capture defensibility and enjoy monopoly profits for years. Blue Ocean Strategy backs this up with data. In a study of 108 business launches, they found that:

• 86% were just incremental improvements to existing offers. These businesses fought for only 39% of the total profits.
• 14% created new markets. These businesses captured 61% of the total profits.

The math is clear. If you create a new category, you make the profit. If you launch another budgeting app with a 3% feature improvement, you will struggle to grow. Especially now, in a democratized society of software engineering where anyone can copy your feature.

The Trap of Commoditization (My Experience)

For instance, this past year I was working on a spiritual mobile app (acquired) called Angel Claim. Around June or July, a competing app called Starla went viral.

They introduced a "Soulmate Sketch" feature based on astrology. This wasn't a new concept. It had existed in web-based affiliate marketing for years. But Starla brought it to mobile with strong marketing. In a matter of months, reports suggest they spiked to $1M in monthly revenue.

It was truly viral. Everyone on TikTok wanted their compatibility score. But within weeks, competitors copied the feature. I copied it for my app in literally one day. Next thing you know, everybody on the market had the same exact feature.

Starla made massive short-term revenue, but they had no defensibility. A feature that was once a "10x offer" became commoditized overnight because of AI coding. And when a feature becomes commoditized, its value drops to $0.

Creating Defensibility in the Age of AI

This begs a harder question: In the age of AI, how do you create defensibility when anyone can copy your features?

1. Network Effects

As the VC firm NFX states, 70% of value in software comes from network effects. Take Zapier, for example. If you build your entire business workflow on Zapier, migrating away is a total pain. The more you build on it, the more your foundation depends on it. That is defensibility.

2. Data Moats

Companies like Waymo and Tesla are collecting strong data moats. The more their cars drive, the better their models get. A new contender can't just code their way to that; they need the data, which is expensive to acquire.

3. Proprietary Distribution

You can copy code, but you can't copy a relationship with a customer. If you own the distribution, whether that's an email list, a personal brand, or a top SEO ranking, you have a moat. This is why influencers can launch generic coffee brands and sell millions while better products rot on the shelf. Even if you have a mediocre product, distribution is the only thing that doesn't depreciate.

Riding the Wave

I recall hearing a concept from Dario Amodei, co-founder and CEO of Anthropic, that the way you position yourself is to ask a simple question: "What is inevitable in the future?"

Whether it's 3, 5, or 10 years out, you identify what is inevitable, and you position yourself to ride that wave.

The AI wave has transformed from a tech-circle curiosity to a massive societal layer. OpenAI made a big bet early on, and it paid off. For the general consumer (like my parents, who aren't technical) OpenAI is the "face" of AI. It becomes increasingly difficult for contenders like Gemini, Claude, or Perplexity to compete for that general consumer mindshare.

However, smart competitors find new beachheads. Claude was brilliant. Instead of fighting to be the general consumer bot, they leaned into coding. They integrated with tools like Cursor and became the default model for developers. They found a specific segment to dominate.

Shots on Goal

When Jeff Bezos started Amazon, he had a pretty cushy job at D.E. Shaw, making something like a million dollars a year. But he came across a report stating that web usage was growing at 2,300% per year. He bet his whole job on that statistic. He quit to build the future.

You won't always find a 2,300% growth curve. But you might find 20% or 50%. Realistically, massive shifts like the Internet or the Smartphone happen every 20 to 25 years. If the average life expectancy is roughly 75 to 80 years, you only have about 3 or 4 shots in a lifetime.

If you consider the years you are too young or too old to work, you maybe have one or two real shots to take a hard bet on a massive market wave. If something like that comes around, by all means, you have to take it.

The Purple Cow

But not everyone is out here proactively searching for new markets. If you are working in an existing, bloody market, like health coaching or home decor, how do you survive?

You have to become a Purple Cow.

Seth Godin argues that fitting in is failing. If you are driving down the road and see a regular cow (black, white, brown), you don't stop. It makes no difference. But if you see a purple cow, you stop, take a picture, and post it on social media. It is so outrageous and different that you have to talk about it.

The only way to stand out is to be a "one of one."

• There won't be another Elon Musk.
• There won't be another Ali Abdaal.
• There won't be another Drake.
• There won't be another Michael Jordan.
• There won't be another Google.

The moment someone can paint a reference label on you like: "Oh, he's like X but cheaper,” you have already lost. You are swimming in a bloody market.

So how do you actually execute this? You need what Alex Hormozi calls a "Grand Slam Offer." You need to make an offer so good people feel stupid saying no.

If a fitness trainer says, "I'll charge you $500 for a plan," that’s a commodity. But if a trainer says:

"I will come to your house, shop for your groceries, cook your meals, and train you daily. If you don't have a six-pack in 6 weeks, I will refund you and pay you an extra $1,000 for wasting your time."

That is a crazy offer. Most people aren't willing to do that because they don't believe in their product, or they are too busy looking around at what everyone else is doing.

This is the flaw of thinking by Analogy (copying neighbors) versus thinking from First Principles (stripping things down to the basics and building up).

It is hard to deviate from our natural tendencies. We are wired to look around and fit in. But doing things the same way as everyone else results in the same result as everyone else: a failed business and fighting for scraps.

Refuse the status quo. Ask a different set of questions. If you nail this, you set yourself up for extraordinary success.