A Small-Market Monopoly First

From Sam Altman’s Lecture 1, “Welcome, and Ideas, Products, Teams and Execution Part I,” of Stanford’s CS183B course “How to Start a Startup,” delivered September 2014 (course site, archived, transcript). The line appears in the lecture’s “A great idea” section. Altman credits Peter Thiel for the framing; Thiel devoted his own lecture later in the same series (“Competition is for Losers,” Lecture 5) to it.

Altman’s reason: strong startup ideas often look dismissible at launch because the initial market is narrow. Google was the thirteenth search engine, Facebook the tenth social network; each took the slice of users it could win before going broader. The pitch he wants a founder to be able to deliver about their own idea: “Today only this small subset of users are going to use my product, but I’m going to get all of them and in the future almost everyone will use my product.”

Two halves of one idea. A small market is the only place a startup can get a monopoly fast, and that monopoly is worth chasing because it generalizes outward. Stop at the foothold and the recommendation no longer applies.