The Riches Are In the Niches

Time and time again when people approach me with their startup idea and I ask who their target market is, they get so excited to proclaim that their market is “everyone!”. It seems counterintuitive, but targeting a smaller market segment can lead to a much more profitable outcome. You see this same lesson play out quite often. Here’s a few notable ones.



They started off being MobileWorks and being a high-end Mechanical Turk. They created a “People-Powered API” where you’d send requests for random tasks and then download the results. Sounds great, but right off the bat it’s hard to concretely think of a great task to send over. Maybe I can send over something like “Resize and crop all these images”. It’s a nice-to-have but not much else.

They niched down to offering on-demand virtual assistants. This is a bit better. I can see them helping out with something like “Find me the best flights from San Francisco to Milan, Italy”. That would save me a little time, but still not super-valuable.

Then they finally niched down to lead-generating virtual assistants. Basically you give them your target market, and they research, contact, and pre-qualify potential customers for your business. This generates massive revenue for businesses and I can see how this would be very useful to my businesses as well. Apparently this focus has lead to much more success for the company and they now list Stripe and eBay as clients. Niche down and the riches appear.

twitch launched in 2007 and it’s the best option for broadcasting yourself live to an audience. In 2011 they were noticing that their most popular category was broadcasts of people playing video games. They decided to niche down to purely target the live video game market and launched

Fast forward to 2014 and now Twitch accounts for the fourth largest source of internet traffic in the United States. Yes, you read that right. The rankings are  Netflix, Google, Apple, and then Twitch. The Wall Street Journal reported that Google wants to purchase the company for $1 billion.

And remember, Twitch is potentially a smaller market than Yet their focus on this niche has lead to amazing success.

So what?

If you’re having trouble growing, you should consider targeting a smaller market. Modify the copy on your landing page and you’ll see the conversion rate go up for that target market. And you’ll also be able to charge premium prices.