As I mentioned yesterday, I believe the market is more important than the management team, assuming both are good at a minimum. For me, I focus on small, fast growing markets as opposed to large established ones. Why? Good question. Here are a few reasons:
- These markets usually have leaders that aren’t so large as to suck all the oxygen out of the space (e.g. what Omniture did to the high end of the web analytics market once they achieved scale and Google Analytics when they consumed the small-to-medium segment).
- These markets by their very nature don’t have incumbents that have to be replaced. Rather, you’re often the first vendor for a company making it easier to define the standards of the market.
- The fast growing nature of the market makes it more likely for several startups to flourish at a small scale.
- The functionality required rapidly changes making it even more fun to be part of the innovation.
What else? Why types of markets do you like?