Competition VS Expansion

Does your product try to compete in an existing market for a slice of the pie?  Or does your product expand the pie for everyone, possibly even creating a new market in the process?

I rarely ask this question directly (questions asked too directly often result in answers you want to hear), but it’s one of the key questions I explore early during a meeting with Founders.

I recently read a history of the early days of Google Maps written by Recode.  The following quote is from the Where2 founder (the Where2 acquisition was part of the core foundation of the Google Maps Genesis story), talking about the feedback he received from VCs when he tried to finance Where2 early on:

“I remember early on, a lot of our detractors — and there were many — telling us, ‘This is not a good area to get into,’” Lars Rasmussen recalls. “They would talk to us about how a person only needed maps, at best, a few times a week.

I can hear the squeaky hampster wheel of a VC’s mind spinning through this quote. The VC is thinking about the product as another player in an existing crowded market, competing for market share of what he/she deems to be a niche behavior (looking at a map).  

But, hindsight being 20/20, we now can see Google Maps was a case of market expansion. It’s a product I personally use at least 15 times / week, probably more. Only in a world where Google Maps exists is the expanded pie obvious to see.  And yet, that’s exactly what Founders (and the VCs who back them) need to do: believe that the opportunity is much larger than at present, because the proposed product will expand the market in its wake. They need to see the non-obvious.