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Entrepreneurs respond to existing demand, they don’t create it.

The market should already be “pulling” for what you’re building; the demand should already exist.
When there’s sufficient demand for a product you can feel it.

It feels like the market is pulling you (as opposed to you trying to pull the market over to your product).
The best businesses unlock pockets of untapped demand.
Trying to create a new category is incredibly difficult.

People almost always buy products in categories they're familiar with.

April has a good thread on this:
Demand grows on its own, influenced by a variety of factors, until it reaches a tipping point, at which point companies build things that satisfy that demand.
What factors shape market demand?

- Changes in price or supply for related goods
- Government policy, investment, R&D
- The ubiquity of related technologies
- Evolving societal trends and tastes
- Evolution in a product category
- Rising (or falling) incomes
- Economic cycles
Supply generally follows demand.

This makes sense! Customer demand increases, entrepreneurs respond to that demand by supplying a solution.

For example, Airbnb hosts respond to demand; they don't create it.

Ref: forbes.com/sites/hbsworki… Image
If Apple “created demand” for the iPhone, why can’t they replicate that success across all their products?

Because they can’t define the size and shape of demand! That’s my point.

There were pre-existing market conditions in the smartphone market that Apple benefitted from.
We have limited influence over:

- What kinds of things customers want
- How bad they want them
- Global supply

But we have almost zero influence over:

- How many customers there are
- How much they can spend
- What their alternatives are
- Socio-political trends
VC money enables startups to operate outside of normal market conditions:

- CAC doesn’t matter as long as user base is growing
- They can undercut market prices (and lose money)
- Often, they ignore gov regulations

It looks like they’re creating demand, but it doesn’t last.
I wrote a post that expands on these ideas:

"Ultimately, your product's potential is determined by the size, momentum, and characteristics of your market."

justinjackson.ca/surfing Image
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