This is a three part series on how to win your startup market. Part 1 is delivery (tactics to win), Part 2 is finding your quadrant (how to differentiate), this is Part 3.

In the first company I built I didn’t understand markets. I assumed like everyone else, it was a business class exercise to add up the most amount of people and argue why you could capture x% of them. That was the wrong way to think about it.

A better way to think about a market is…what is the tidal wave you are going to ride?

What makes this hard is that your tidal wave may not even exist yet. Which means you are looking for converging trends that may create a new tidal wave.

When we started Contour there was no tidal wave for action cameras. That changed when YouTube started.

YouTube became a tidal wave for self recognition. People wanted more video views, which means they bought better tools to make better videos to get more views to receive more recognition to further satisfy their ego. The end result was a business model that was much stickier than people realized. Customers were not one time buyers, but instead life time buyers willing to purchase accessories and additional cameras to get a better shot.

GoPro was smart enough to recognize this was a tidal wave and winning it is all that mattered. They won, we lost.

Why this matters is because in order to build a big business you need market momentum. That momentum translates into easier growth, which drives everything else.

Here is how I think about finding a your market tidal wave.

Why Market Wins

Before the how, it’s important to understand why market is the most important ingredient in startup success. Marc Andreesen outlines this better than anyone. You should read his post, "The only thing that matters."

The key argument is halfway down the post when he quotes former VC Andy Rachleff…

• When a great team meets a lousy market, market wins.
• When a lousy team meets a great market, market wins.
• When a great team meets a great market, something special happens.

The end summary is that a great market is more important than a great team or a great product.

Why A Narrative

Everyone looks at a market differently. Personally I prefer the Chris Dixon method in saying market size is about narratives, not numbers.

This makes it easier to say if X is true then we believe Y is inevitably true. If Y is true then we believe Z will also happen. Following your logic is much easier than saying the market A is X million people and market B is Y million and together they will make a new market called C that is Z billions of people large.

By talking people through a line vs a series of dots you also shift the discussion away from arguing about the size of each dot and your probability of capturing it. Instead the discussion becomes about the line and what has to happen for the line to become a huge wave.

Ultimately the key to the right narrative is finding investors who already have their own narrative that matches yours. It’s very hard to convince someone about a new narrative for a market they aren’t already thinking about. Most investors have already formed their own narratives and therefore their investment in you is just a self validation of what they already believed.

This is a complicated way to say that a narrative is how investors talk so it’s easier to sell them in a way they are already thinking.

How To Make A Narrative

Start with the person who will be buying your solution and look at the trends happening around them. Whether a B2B or B2C business you want to understand the broader customer, purchasing, psychological and use trends that are happening.

A few ways to do this…

1. Purchasing behaviors.
One path is to look at how purchasing is changing. In the case of Box, Aaron recognized first a technology shift would happen from mainframe to pc, pc to cloud, and cloud to mobile. These shifts only occur every 10 to 15 years therefore IT departments were about to buy a whole new suite of tools. This was going to be the tidal wave that Box needed to ride

2. Psychological needs.
Human needs have never really changed. But what can change is the interest in one of these needs. Take the Wellness Wave, it’s been a tidal wave that Fitbit, Nike, Apple, and Peloton have taken advantage of. Each has a variant wave they are riding but the general narrative is that people are looking to be healthier, to use data to help them make better decisions, and therefore are looking for companies that help them lead healthier lives. A word of caution is that by the time the press are writing about your wave, you already missed it.

3. Use behaviors.
How people accomplish basic behaviors, change over time. Take work for example. It has changed radically in the last 100 years from heavy labor all the way to remote computer work. You can look at how everything has evolved from where to when to how people work. Each new behavior trend is replace by the next so looking at how the world is shifting form 9-5 to remote is a massive tidal wave that some companies are already riding. Slack is currently the most famous, riding the trend in work communication from stagnant email to a constant stream of discussion.

4. Same behavior in alternative markets.
This post is a bit technical but Reid Hoffman talks through the Linked In Series B pitch. Here he uses search analogies in other markets to demonstrate why there is a tidal wave towards a 2.0 version of people search. It’s a market wave built around networks vs individual nodes. Notice how he eventually gets to a [quadrant they can win], but first paints a picture around the people search trend.

I’m sure there are more ways to look for tidal waves, these are the four I prefer to use.

Writing Your Narrative

You can write your narrative with words or learn communicate through power point slides.

Personally I prefer a written narrative, which means that I don’t have a pitch deck. This isn’t for everyone but it helps me to think through the market and the tidal wave we’re trying to ride.

If you plan to communicate your narrative through a slide deck look at Mary Meeker and her Internet Trends Report. It’s a series of different narratives but she knows how to explain trends in a format that investors understand.

If you have questions email me or dm @marcbarros.