Strategies to solve a problem and win in an existing market

1. Attack an underserved market:

Historically, the most valuable vertical software businesses have been built by serving industries that have lacked access to software. Simply put, it’s much easier to capture leadership in a greenfield market without incumbents.

  • Underserved industry: Like Procore, ServiceTitan* attacked an entire field services industry underserved by modern software. Now a multi-billion dollar company, ServiceTitan provides a full management tool for owners who are fed up with running their plumbing or HVAC business on pen and paper.
  • Underaddressed market segment: In markets with strong enterprise incumbents, we’ve seen startups win by catering to a neglected market segment. Companies like Mindbody*, Clio*, and Weave* found their path to market leadership by starting in the SMB segments overlooked by incumbents.
  • New and growing industry: New verticals lack strong incumbents, opening the door for startups to capture market leadership. Shopify*rode the wave of long tail e-commerce, Dutchie is attacking the emerging cannabis market, Aurora Solar is benefiting from growth in the solar installation market, and Mambu has built a multi-billion dollar business by catering to a new generation of fintechs and digital banks.

2. Address an overlooked problem:

Once an industry has been served by a vertical market leader, they can be very difficult to unseat. In more mature markets, we’ve seen new leaders emerge by attacking problems that are poorly addressed by market-leading incumbents.

3. Unseat sleepy incumbents:

Existing market leaders have big advantages making it extremely difficult to unseat incumbents. In the auto industry, three 40+ year old software companies — CDK, R&R, and Cox — have chased away dozens of new entrants over the years and grown to over $100 billion in value.

  • They could leverage Android hardware to build a better tablet-based experience for restaurant workers than the PC-based status quo;
  • They could use cloud delivery to constantly make their software better than the legacy on-premise incumbents;
  • By integrating payment processing and capturing payments revenue, they could sell their software at a much lower price point than incumbents and competitors.

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Ravi Kumar.

Ravi Kumar.

1.3K Followers

Building nextgen real estate platform at PriceHubble & podcaster at productlessons.com. I blog about products, business around products, and growth strategies.