Making "Easy" Assumptions on Markets

Don't Fall into the Trap of Generalizations

A common trend I’ve experienced amongst investors, founders, employees……even parents is galaxy brain thinking about certain markets.

For example, recently I was talking with a smart engineer who was ideating around starting a company and thinking through various ideas. This engineer asked me why they should consider security since the market was so crowded.

What’s interesting to consider is what does “crowded” mean. Is security just all one thing? For example, does Mimecast (email security) do the same thing as Splunk (Security Information and Event Management, a SIEM) or Crowdstrike (endpoint security) or Cyberark (privileged access management)? In the eyes of CISOs, security professionals, and yes even users, these all do very different things.

A user will interact with Okta to auth into services, while Mimecast will run in the background flagging malicious emails and spam, and while Crowdstrike protects endpoints like laptops, mobile phones and much more (in many cases without the user even knowing). They all do very different jobs so saying “security is crowded” is just surface level thinking.

The same thing can be said for say a window manufacturer. Are all windows the same? Once again I can assure you they’re not. Some are better for keeping out heat, some for keeping in heat, some for reflecting light, some for keeping out sound, some are brittle, some are stronger, and some are designed differently or made of different material. The point being each product has a different need, a different consumer, a different use case.

Within these markets, you can have companies like Andersen Windows that make good quality windows across the spectrum. You can also have a window manufacturer that focuses just on making the best doubled paned windows. Both of these companies could do well and one could argue that the specialized one may even do better economically (more to come on that in a different blog post about verticalization).

So the next time someone says “well Microsoft already does that” or “ there’s too many players in this market” or something else like that, remember that those are all very high level thoughts! Dig a level deeper to understand the nuance in the markets and the product differentiation inherent in those markets. Start with user pain points and how they can be be solved and that can help guide thinking when an overall market/industry feels overwhelming.

Don’t just push the Easy button each time :)