“We achieved product/market fit for our mobile e-commerce marketplace → Our target market is global retail worth >$20 trillion → We can build a huge business.” There is a problem with this way of thinking.
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Everything depends on your definition of “target market”. Founders and PMs can define it far more broadly than the segment in which they actually have product/market fit.
They ignore the difference between confirmed and potential target markets.
Let’s take a look at Amazon.
At first, Amazon’s confirmed target market was books in the U.S. That’s where they achieved product/market fit and could foreseeably grow.
Of course, Amazon’s potential target market was much larger. The team had a reasonable expectation of expanding into other categories.
But in the early days, it was still unclear if Amazon would achieve product/market fit in those categories. The team still had to go from 0 to 1.
As new categories proved product/market fit, Amazon expanded the definition of its confirmed target market.
There are all sorts of ways to describe and define the target market. However, I have found differentiating between confirmed and potential target markets to be both intuitive and helpful.
Keeping this difference in mind helps to separately think through how big the current version of the product can become (confirmed target market) and also have a longer-term vision of what the team aims for (potential target market).