Are You Creating a New Market or Serving an Existing One?

Two consumer subscription companies illustrate the difference clearly: Spotify and Calm.

Spotify — serving a market that already existed

The market for Spotify was clear: everyone loves music. Consumers would love all the music in the world catalogued and instantly accessible for a small monthly fee.

The issue wasn't proving demand — it was figuring out the rights issues that plagued music startups in the past. Spotify knew their market existed; they just had to figure out how to avoid making the same mistakes as Napster.

Calm — creating a market from scratch

When Calm launched, their market did not exist. They helped create it by building a great product and launching at exactly the right moment — just as the general population was becoming aware of self-care.

Calm did not know for sure there was a pot of gold at the end of the rainbow. But their product was so good it helped create the market they now exist in.

Great products create markets

Some of history's most valuable companies built their market rather than finding one:

• Uber — created the on-demand ride market and the gig economy
• Airbnb — created the short-term home-sharing market
• Calm — created the mainstream meditation and mental wellness market

The lesson: if your market doesn't exist yet, that isn't necessarily a red flag. The question is whether your product is strong enough to pull people in and whether the timing is right.