Toy Markets
&gt; <i>&quot;Amazon was for selling books online when relatively few people used the internet. Google was a search engine in a landscape crowded with search engines that weren’t themselves gigantic businesses. Ebay was for selling beanie babies.&quot;</i><p>I don&#x27;t find Google, Amazon or Ebay as compelling examples of &quot;toy markets&quot;. Google started when search engines such as lycos, ask jeeves and yahoo were already household names. The key issue is that at that point, none of them were giant companies because they hadn&#x27;t figured out how to monetize their businesses. However, their market was clear and obvious as the internet already had wide adoption.<p>Ebay was an auction site. People have a lot of crap and want to get rid of it. The site <i>obviously</i> had a large potential target market to begin with.<p>Amazon started out with books, which is a huge and well understood market. An online bookstore could offer a far better selection than any physical bookstore. Even if Amazon were just selling books, it would be a fairly large company. If Amazon was never founded, there would have been <i>someone</i> else who filled the niche pretty quickly.<p>(Some of these early companies definitely made big bets on the popularity of the internet. Amazon was founded in 94 and Ebay in 95. Back then, the internet had less than 20 million users, so it was obviously a niche, but it was also growing very quickly (usage just about doubled each year for the next 4 years) [1]. If an investor was already bullish on the rising popularity of the internet, than the fact that companies like this would have large markets was a no brainer. It&#x27;s kind of like how Coinbase, or someone similar, will obviously be huge if cryptocurrency pans out.)<p>The article also mentions Facebook, which again, was founded well after the internet became a big thing. MySpace was already getting pretty big traction by the time Facebook came around.<p>When I think of companies that started out as &quot;toy markets&quot;, I think of Apple where their early product (the Apple I) was geared towards early-adopter consumers. But even Apple wasn&#x27;t really a huge company until Jobs came back in the two thousands (in 2001, after the tech bubble collapsed, their market cap was about 200x less than it is now and far far smaller than Microsoft was at the time).<p>The fact is that many very successful companies don&#x27;t start out in &quot;toy markets&quot;. They start out in big markets, but they just do things better than the next guy. Amazon and Walmart didn&#x27;t invent retailing, but they did (and do) run very efficient supply chains. Apple didn&#x27;t invent the market for cell phones, but they made iterative improvements to what was out there until they came to dominate a huge market.<p>[1] <a href="https:&#x2F;&#x2F;www.internetworldstats.com&#x2F;emarketing.htm" rel="nofollow">https:&#x2F;&#x2F;www.internetworldstats.com&#x2F;emarketing.htm</a>