Expert-Speak: ‘It Has Never Been More Critical To Find Our Niche’

Have you found your niche? I received a lot of advice when I set up my company, but perhaps the most important consisted of just three words: Find Your Niche.

Five years later, I’m still struggling to apply this principle. Interestingly though, so are most of the companies I deal with.

So why is this, and what are we missing out on exactly? Well, let’s start by defining what a niche business is.

Per ChatGPT, it’s “a company that focuses on a specific segment of the market, catering to a particular group of customers with specialized needs or interests”.

Nerve Money provides a great example of what it means to be niche. If you have not heard of them, that’s because you are not a musician or comedian in need of a business banking app. You see, Nerve only focuses on delivering banking services to artists living in America.

Like all niche businesses, Nerve has a huge advantage in that it has fewer competitors. In the United States, thousands of banks fight for market share with similar products and services. But Nerve isn’t competing against the likes of JP Morgan and Citibank. Its founders believe they have found a differentiated offering that will appeal directly to American artists who want help with invoicing and payments.

But it’s examples like this that simultaneously highlight the benefits of going niche whilst scaring business owners away from trying to find theirs.

And that’s because size matters!

Nerve, for example, may face less competition, but they are restricted to the three million people who sing songs and play guitars. Most bankers I know would treat this as a passion project and would never imagine taking the idea to go niche to their leadership teams.

However, the fear that going niche means missing out on larger opportunities, is also a fallacy. Because niche doesn’t have to limit your upside.

In fact, some of the biggest and most well-known businesses in the world are actually niche.

Have you, for example, heard of Patagonia? Yes?

Well, they achieved global success by targeting outdoor enthusiasts who value high-quality, environmentally-friendly clothing.

Or, what about Nvidia?

Their initial niche was GPUs designed for gamers. And now they have found a bigger niche where they provide AI chips for data centers, with over 40% of their revenue coming from Apple, Alphabet, Microsoft, and Meta.

As an aside, at the time of writing, this niche business is now worth just over $3 trillion, and they are the second-most valuable company in the world.

That puts them just ahead of Apple, who many would argue also deserve to be considered niche.

So, niche most definitely does not mean small. It does mean narrowing your focus so you really zoom in on delivering quality, differentiated services that solve real problems and generate real value for your clients.

And what excites me most about this idea of ‘going niche to thrive’ is that the opportunity to succeed has now been amplified a thousandfold because of the arrival of artificial intelligence and large language models.

These technologies allow us, for the first time, to design and distribute an infinite array of products tailored to solve end-user problems in highly personalized ways.

If you’re wondering where the demand will come from, rest assured. We each have an endless capacity to imagine new problems, and each one, much like fingerprints, will always require a unique solution.

But will big businesses, like JP Morgan, have the wherewithal to use their capital and resources to create hundreds of differentiated brands that cater to every possible human whim?

Or will it be the century for startups, which, like Nerve, leverage the democratization of technology to collectively solve for these infinite use cases?

I don’t know, although I do have my hopes and suspicions.

Ultimately, whether AI drives huge consolidation or mass fragmentation, it is clear that in both cases, the spoils will go to those that move away from second-rate generic offerings to instead focus on niche services that solve our unique problems at scale. As business leaders, it has never been more critical to find our niche. So, I’m going to double down on finding mine. Have you found yours?