Large companies often focus R&D on high-ticket items, neglecting smaller accessory categories. This creates a market gap for focused startups to innovate and solve specific problems that bigger players overlook, allowing them to build a defensible niche.

Car washes generate significant revenue from monthly subscriptions for "unlimited" washes, capitalizing on the fact that customers use the service less than they expect. This model can be adapted to other recurring needs, like bike washing, creating predictable revenue and increasing customer lifetime value.

Instead of popular but saturated local services, focus on high-value, overlooked niches. Examples include smart home automation, closet organization, and garage renovation. These markets often have fewer competitors and high-value customers, presenting a significant opportunity.

Niching down doesn't limit your market; it clarifies your value proposition for an ideal customer. This extreme specificity about your product's strengths and weaknesses also appeals to a much larger adjacent audience, who can now confidently evaluate your trade-offs and decide to buy.

Don't overlook seemingly "boring" industries like cybersecurity or compliance. These sectors often have massive, non-negotiable budgets and fewer competitors than glamorous, consumer-facing markets. Solving complex, high-stakes problems for large companies is a direct path to significant revenue.

By intentionally limiting its scope of services to avoid competing with larger players, a business can create a powerful referral engine. Referring high-ticket jobs to partners builds goodwill and generates a steady, free flow of qualified leads for its own niche services.

After five or six failed B2C ideas, Browserless founder Joel Griffith found success only when he pivoted to solving a problem he experienced personally as an engineer. This deep domain expertise in a B2B niche was critical to building a product that resonated.

In an era of powerful general AI models, smaller software companies' advantage is deep vertical expertise. They win by creating a product so tailored to a specific niche that it feels like a custom, in-house solution. This 'for me' experience is something large, horizontal models cannot replicate.

1Password's growth illustrates the 'land and expand' model. Start with a B2C product individuals love, which they bring into their workplace. This creates organic internal demand, allowing you to then approach the company with an enterprise solution offering management and compliance.