Brand, scale, network effects, and technology in some combination define a monopoly; but to get them to work, you need to choose your market carefully and expand deliberately.
Every startup is small at the start. Every monopoly dominates a large share of its market. Therefore,
every startup should start with a very small market.
Always err on the side of starting too small. The reason is simple: it’s easier to dominate a small market than a large one. If you think your initial market might be too big, it almost certainly is.
Small doesn’t mean nonexistent. For example, Facebook at Harward, Google focused on a search engine for Ph.D. students, PayPal with eBay, Blabla car in France, Uber etc.
The perfect target market for a startup is a small group of particular people concentrated together
and served by few or no competitors.
Any big market is a bad choice, and a big market already served by competing companies is even worse. This is why it’s always a red flag when entrepreneurs talk about getting 1% of a $100 billion market.
In practice, a large market will either lack a good starting point or it will be open to competition, so it’s hard to ever reach that 1%. And even if you do succeed in gaining a small foothold, you’ll have to be satisfied with keeping the lights on: cutthroat competition means your profits will be zero.
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