The Advantages of Vertical Markets

When choosing a market for a startup, it's helpful to understand the distinction between vertical and horizontal markets.

• Vertical Market: A single industry or hobby (e.g., pool cleaners, web designers, wine collectors).
• Horizontal Market: A market that cuts across many industries or hobbies (e.g., general-purpose invoicing software).

For a self-funded startup, targeting a vertical market offers several significant advantages over a horizontal one.

Key Advantages

• Similar Behavior: People in a vertical market tend to have similar backgrounds and behaviors, which makes it easier to create a single, effective marketing message.
• Powerful Word-of-Mouth: People in the same industry talk to each other. If your product is good, word-of-mouth marketing can spread quickly through conferences, trade publications, and online forums.
• Easier to Reach: Members of a vertical market tend to "hang out" in the same places, both online and offline. This makes it much easier and more cost-effective to reach them with your marketing efforts.
• Well-Defined Needs: A vertical market has a well-defined set of needs that are common to most of its members. This makes it much easier to build a product that provides a comprehensive solution and delights your customers.

While it may be tempting to build a product with broad appeal, the reality is that for a self-funded startup, the focus and efficiency of a vertical market offer a much higher probability of success.