Market Size Doesn't Matter Nearly As Much As Value Does

Do whatever you like.

There are two perspectives here.

First, nobody knows whether a market everyone currently thinks is big enough will still be big ten years from now. Second, I think it’s better to think in terms of value rather than money.

The first point is an overwhelming fact. Nobody knows what’s coming. Take a recent example: AI and self-driving cars became commonplace almost overnight. Ten years ago might have been one thing, but twenty years ago, how many people were seriously committed to those fields? Probably nobody but a handful of specialists paid them any attention. The people who kept pursuing those fields undeterred back then are surely the ones now enjoying what we call first-mover advantage.

Now think back to before Windows appeared. Nobody imagined word processors would disappear. In fact, sales of dedicated word processors peaked in 1990 and were completely wiped out within about ten years. (Sharp, the last survivor, ended production in 2002.) No one can predict the future accurately, and assuming the future will look like the present is far too naive.

Now for the second point. This matters enormously. Market size matters. Without earning money, you can’t support employees, expand an office, or fund new R&D. But deciding whether to enter a market based on its size alone is far too simplistic, and it misses something very important.

That something is value.

Say you wake up, watch the morning news, spend an hour idly trading forex, and make $10. Can you really claim, with your head held high, that you’ve created any value for the world? Now say that afterward you eat breakfast, brush your teeth, get dressed, go to your part-time job, and work an hour at a convenience store for $10 an hour. In that case, you can clearly say you’ve created value for the world.

You can create value for the world either by spending money or by earning it. Money is merely a tool for that purpose. What you should truly be pursuing is value—some form of contribution you give to others.

My career has given me a reasonably good understanding of the musical instrument market. The market isn’t especially large, and it’s hard to imagine any major corporation making a fresh entry into it. Still, it’s large enough to support tens of thousands of employees on a consolidated basis. It’s a stable market that neither rises nor falls dramatically, not a very exciting one. If I were an investor, I wouldn’t put money into it. And yet, I’ve repeatedly been struck by the thought that this is an industry generating a great deal of value.

Yamaha Corporation, where I worked in my first career, had the slogan “Making Waves Together,” or in the original sense, creating kando (emotional impact) together. Fine words like “emotional impact” won’t fill your stomach, but looking back now, I think it was a good slogan precisely because it focused on value.

I’m not saying you shouldn’t think about the market at all, but I’d recommend spending more of your time thinking about the value you want to give to society.

The content of this post is an excerpt (original text) from the following book. If you’re interested, please pick up a copy.

The Shape of a Happy IoT Startup

The Shape of a Happy IoT Startup

Originally published in Japanese at https://clazytech.com/2022/09/1215/. Translated with LLM assistance and reviewed before publication.