There is a simple chart which might help you to better understand what type of business do you want to start:
1. Startups pursuing large markets (either existing or new). Typically they require a lot of work and/or serious technology investment in the beginning and must demonstrate considerable traction/growth in terms of increasing market share/sales/user base/technology innovation etc. and at the same time seek for substantial funding to be able to hire workforce, develop technology, pay for data centers etc.
Such business requires a lot of work and serious time investment until they exit or grow considerably (3+ years), involves substantial risk of failure and potentially huge payoff in case of success. And the reason why pg and other investors are describing startups in this way because this is the only kind of business which is fundable (i.e. what YCombinator and other investment companies are interested in).
2. New businesses pursuing smaller markets with less competition or less competition risk. Typically they have better chances to succeed, require less effort, imply slower growth, have typically clearer business model and smaller payoffs, require no outside money investment. No one would invest in them anyway unless they demonstrate serious growth potential -- that is the business is viable but not fundable.
Comments
There is a simple chart which might help you to better understand what type of business do you want to start:
1. Startups pursuing large markets (either existing or new). Typically they require a lot of work and/or serious technology investment in the beginning and must demonstrate considerable traction/growth in terms of increasing market share/sales/user base/technology innovation etc. and at the same time seek for substantial funding to be able to hire workforce, develop technology, pay for data centers etc.
Such business requires a lot of work and serious time investment until they exit or grow considerably (3+ years), involves substantial risk of failure and potentially huge payoff in case of success. And the reason why pg and other investors are describing startups in this way because this is the only kind of business which is fundable (i.e. what YCombinator and other investment companies are interested in).
2. New businesses pursuing smaller markets with less competition or less competition risk. Typically they have better chances to succeed, require less effort, imply slower growth, have typically clearer business model and smaller payoffs, require no outside money investment. No one would invest in them anyway unless they demonstrate serious growth potential -- that is the business is viable but not fundable.
Ah, this is very helpful. I was aware that I wanted to do something like #2, but I was not aware that such a partitioning was the norm.