one of the sort of very counter-intuitive ideas that comes out of this Monopoly uh thread is that um you want to go after small markets if you're a startup um you know you want to get to Monopoly you're starting a new company you want to get to Monopoly um Monopoly is you have a large share of a market how do you get to a large share of a market you start with a really small market and you take over that whole market and then and then over time you find ways to expand that market in
in concentric circles and uh the thing that's always a big mistake is going after a giant market on on day one because that's typically evidence that um that you somehow haven't defined the categories correctly that and it's it normally means that there's going to be too much competition in one way or another and so I think almost all the successful companies uh in Silicon Valley had some model of starting with small markets and expanding and you know if you take Amazon you start with you start with you know just a bookstore we have all the
books in the world so it's it's a it's a it's a better bookstore than anybody else has in the world when it starts in the 90s it's online there's things you can do you can't do before and then you gradually expand into all sorts of different forms of e-commerce and other things beyond that um you know eBay you start with Pez dispensers you move on to beanie babies and eventually uh it's it's all these different um auctions for all these sorts of different Goods um and uh and what was very counterintuitive about what's very counterintuitive
about many of these companies is they often start with markets that are so small that people don't think um they don't think that they're valuable at all when when you get started um the the PayPal version of this was uh was when we started with uh with power sellers on eBay which was about 20 000 people when we first saw this happening in December of 99 January 2000 right after we launched uh there was a sense that uh that these were all um it was such a small Market it was terrible we thought these were
terrible customers to have it's just people selling junk on the internet why in the world do we want to be going after this Market but um but you you know you there was a way to get a product that was much better for everybody in that market you could um and we got to something like 25 30 you know Market penetration in two or three months and you got some walking you got brand recognition and you're able to to build the business from there so um so I always think these um these these very small
markets are are quite underrated uh the Facebook version of this I always give is that uh you know the initial Market at Facebook was 10 000 people at Harvard it went from zero to sixty percent market share in 10 days that was a very auspicious start um the way this gets analyzed in Business Schools is always um that's ridiculous it's such a small Market it can't have any value at all and so I think the business school analysis of Facebook early on or of uh PayPal early on or of eBay early on is that the
markets were perhaps so small as to have uh almost no value and they would have had little value had they stayed small but it turned out there were ways to then grow them concentrically and that's what made them uh that's what made them so valuable now I think the opposite version of this is always where you have super big markets and um and I there's so much so many different things that went wrong with all the clean tech companies in the last decade but uh but one one theme that ran through almost all of them
was they all started with massive markets and every clean tech PowerPoint presentation that one saw in the Years 2005 to 2008 which was sort of the clean tech bubble in in Silicon Valley started with we're in the energy Market we're in a market that's measured in hundreds of billions or trillions of dollars and um and then you know once you're sort of a a minnow in a vast ocean um that's not a good place to be that means you have tons of competitors and you don't even know who all the competitors are and so you
want to be you know you want to be a one-of-a-kind company where it's the only one in a small ecosystem you don't want to be the fourth online pet food company you don't want to be the 10th a thin film solar panel company you don't want to be the 100th restaurant in Palo Alto um your restaurant industry is a trillion dollar industry so if you do a market size analysis you'd include restaurants are a fantastic business to go into and it's often large markets large existing markets typically mean that you have uh tons of competition
very very hard to uh to differentiate so the first very counter-intuitive into our idea is is to go after small markets often markets that are so small people don't even notice them they don't think that they make sense that's where you've got to put hold and then um and then if those markets are able to expand you can scale into a a big Monopoly business [Music]
