Figma's market initially seemed too small to attract major VC interest or intense competition, giving them space to build a defensible product. Founders can gain a significant advantage by working in overlooked spaces, provided they have genuine passion to sustain them for a decade or more.
Related Insights
Glean spent years solving unsexy enterprise search problems before the AI boom. This deep, unglamorous work, often dismissed in the current narrative that credits AI for its success, became its key competitive advantage when the category became popular.
Fal strategically chose not to compete in LLM inference against giants like OpenAI and Google. Instead, they focused on the "net new market" of generative media (images, video), allowing them to become a leader in a fast-growing, less contested space.
Startups often fail to displace incumbents because they become successful 'point solutions' and get acquired. The harder path to a much larger outcome is to build the entire integrated stack from the start, but initially serve a simpler, down-market customer segment before moving up.
Legacy industries are often slow to adapt due to inertia and arrogance, creating massive opportunities. Flexport built a simple duty calculator in three days that the entire trade industry adopted, proving that a startup's key to success can be entering a field where competitors are technologically complacent.
Initial data suggested the market for design tools was too small to build a large business. Figma's founders bet on the trend that design was becoming a key business differentiator, which would force the market to expand. They focused on building for the trend, not the existing TAM.
Contrary to conventional startup advice, Figma's founders began with a fascination for a technology (WebGL) and then searched for a problem to solve. This technology-first approach, a hammer looking for a nail, led them to explore various failed ideas like face-swapping before eventually landing on collaborative design tools.
Canva's success wasn't from targeting competitors but from identifying a real market gap through their first niche product (a yearbook tool). When users asked to use the tool for newsletters, it validated a larger, unsolved pain point that Canva then focused on exclusively.
Despite Figma's massive success, Dylan Field considers their long pre-monetization period a mistake. The company started in 2012 but didn't earn its first revenue until 2017. He strongly advises founders against this path, emphasizing the need to ship and learn from the market more quickly.
Large platforms focus on massive opportunities right in front of them ('gold bricks at their feet'). They consciously ignore even valuable markets that require more effort ('gold bricks 100 feet away'). This strategic neglect creates defensible spaces for startups in those niche areas.
Many founders fail not from a lack of market opportunity, but from trying to serve too many customer types with too many offerings. This creates overwhelming complexity in marketing, sales, and product. Picking a narrow niche simplifies operations and creates a clearer path to traction and profitability.
