This was posted by Dharmesh Shah on the On StartUps blog (which I recommend you check out). It echoes much of what was written by Steven Blank in the Four Steps to the Epiphany. Focus on making a product good enough that a core group of people will buy it. If it’s useful for the few, you have a better chance of making it useful for many.
"Why A Real Market of A Few Is Better Than A Mythical Market of Millions
1.
If you build a product that serves the needs of a few *real* customers,
it’s unlikely your opportunity will be limited to just these few.
You’ll likely find a way to extrapolate and address larger markets
later.2. By focusing in on a smaller market of real potential
customers, you’ll actually stand a chance of selling them something. If
you’re going after a market of millions, it’s easy to fall into the
complacent thinking of "I’m investing for the long-term and building
something that will appeal to the masses later…". I think your chances
are much better of you have something to sell to a few people *today*
than a hypothetical product that will theoreticaly appeal to millions
later.3. The cost of acquiring customers seems to be
proportional to the broadness of the market you’re going after. This
should not be too surprising. It’s more expensive to reach a broad
market with a meaningful message that will sell them than a small,
contained market. The smaller market is easier to get data on, easier
to address, easier to convince and easier to delight (hence resulting
in referral business).Now, here’s the one big risk to going
after the smaller, more contained market of a few: If you’re not
careful, you can fall into the "custom solutions" trap. This is where
you are so focused on meeting the needs of the few that you have a
hard-time making the eventual leap to the market of millions. This is
one of the reasons why I refer to the "market of a few" rather than the
"market of one". A market of one is dangerous — as there’s a high
chance that you fall into the custom solutions trap. But, as soon as
you try and serve the needs of two or more real customers, your odds of
falling into this trap go down. The trick is finding the right balance:
Enough of a market so you build something that is relevant for many,
but not so broad that the market becomes hypothetical."