The Smallest Market I’ll Go After is $200m

Businesses Can’t Scale Down Below a Threshold

1000 True Fans? Not Enough

  • It assumes I want to make only $100K, but I want to make $500K as a founder, to compensate me for the huge risk involved.
  • It assumes each user, or “fan” as the article calls it, is willing to pay me $100 a year. That’s too optimistic. First, that’s a lot of money, especially outside the US. Second, to get paid that much, I’ll need to build a sophisticated product, which means a bigger team, which means that the assumption of $1m profit we started out with is no longer sufficient. Third, I don’t know how to get $100 ARPU; I know how to get a dollar or two ARPU. Fourth, if your product or service is that good, there’s a chance you’re exploiting a temporary anomaly in the market and it won’t last. The only service I paid $100 a year to was Dropbox, and that too only for 2–3 years before Google Drive launched. Now I pay OneDrive $23 for the same 100GB of storage. $100 is unsustainable. Fifth, the word “fan” implies an irrational liking for your thing, and most people are not fans. Most products have users, not fans, so we need to design for users.

So the smallest market I’ll go after is $200m, and has 2 million users.

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Consulting CTO. Earlier: Google | Founder | CTO | Advisor

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Kartick Vaddadi

Kartick Vaddadi

Consulting CTO. Earlier: Google | Founder | CTO | Advisor

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