Good morning! Welcome to the third edition of the newsletter, with some tweaks.

Here’s the deal…

Vertical SaaS Playbook delivers tactical guides, links, and deep dives on how to build and grow your Vertical SaaS product.

• Every Sunday, you’ll receive actionable insights on how to build, grow, and operate Vertical SaaS. This is free to all subscribers.

• Every Thursday, you’ll get a deep dive on how to build vSaaS products from zero to one. This is for paid subscribers only. Upgrade here.

This might not be what you expected when you signed up. No hard feelings. You can unsubscribe here.

In today’s email:

• Do Big Markets Matter for Early-Stage Startups?

• Vertical spotlight: Fareharbor

• A few good links

Let’s get after it.

Do Big Markets Matter for Early-Stage Startups?

Startups often include a market size slide in their pitches, aiming to capture a portion of a large market. However, defining a market, especially a large one, is challenging and often leads to misconceptions.

Instead, startups should focus on niche markets. These are easier to define, understand, and serve. They provide a clearer understanding of the customer, problem, and go-to-market strategy. Niche markets also tend to move faster, allowing startups to gain traction and potentially expand into larger markets later.

Key Takeaways:

• Defining a market accurately is crucial; overestimating market size can lead to unrealistic expectations.

• The "1% market fallacy" is a common pitfall; capturing even a small part of a large market is challenging.

• Focusing on niche markets offers clarity and a competitive advantage.

• Early-stage startups should avoid competing in large markets without a distinct advantage.

• Market size matters, but understanding and defining it correctly is more important than its sheer size.

For early-stage startups, the allure of big markets is deceptive. A more strategic approach is to start with a well-defined niche market, understand it deeply, and then consider expansion. This approach leads to more realistic goals and a better chance of success.

Read more from Focused Chaos

Vertical spotlight: Fareharbor

FareHarbor, a remarkable example of a vertical-focused bootstrapped company, showcases the potential of self-funded ventures. Founded by brothers Lawrence and Zachary Hester, FareHarbor began as a small startup in Hawaii, offering an online booking platform for tour and activity companies.

Despite initial challenges, the Hesters' commitment and strategic decisions led to exponential growth. FareHarbor's platform, known for its user-friendly interface and robust features, quickly became a favorite among tour operators.

In 2018, Booking Holdings acquired FareHarbor, marking a significant milestone in the company's journey. This acquisition not only validated FareHarbor's success but also highlighted the viability and potential of bootstrapped companies in the tech industry.

Read and listen more from Tidemark Capital

A few good links

• Pricing Lessons from Working with 30+ Seed and Series A B2B Startups

• The Complete Guide to Vertical SaaS Metrics — Fractal Software

• Picking Your Market: Vertical TAM & Concentration

• Customer Interviews: How to Recruit, What to Ask, and How to Synthesize What You Learn