The Joy of Small Markets

If you want to get rich, the irony is that small markets are often better than large ones.

Sometimes I am asked “why are you still in Singapore?” The question behind the question is: “Cedric, I want to aim for a billion dollar outcome. I cannot imagine being a founder if the upside is not at least a billion dollars. Why are you still in Singapore, where the upside is so small?”

Embedded in this question is a model of the world that goes something like this: “only businesses in billion dollar markets are worth doing.” This is the view that is predominant today, because venture capital is the most prominent form of new venture formation, and venture capital demands large outcomes.

But let’s walk through an example that should break this model. This example comes from some smart thinking by Jonathan Knee, a former investment banker turned academic at Columbia Business School. I suspect the example that Knee uses was originally elucidated by Columbia business professor Bruce Greenwald in Competition Demystified, though I disliked the book so much that I learnt about it only by way of investor George Ho (who is aligned with the school; he taught a semester