Niche-Making Economics

As tools get cheaper, the minimum viable business shrinks.

The cost of building great things for customers has collapsed. A video game that required 200 people ten years ago can be built by 12 today. Distribution is solved—you can find your people. This changes everything about what's worth building.

You don't need unicorn economics. You don't need to capture the whole market. You need superfans. One thousand true customers is enough.

What This Enables

• Opinionated products: When you don't need everyone, you can be exactly right for someone
• Taste-driven differentiation: Smaller teams can maintain coherent vision
• Direct relationships: Serve customers instead of aggregators
• Sustainable scale: Profitable at sizes that weren't viable before

The Compound Effect

Taste-making and niche-making reinforce each other:

• Strong taste → attracts specific audience → enables niche viability
• Niche focus → permits opinionated choices → deepens taste

Companies that try to be everything to everyone will be outcompeted by companies that are exactly right for someone.

Implication

The question isn't "how do we scale to everyone?" It's "who are we exactly right for, and how do we serve them perfectly?"

AI amplifies this. Smaller teams can now build and maintain systems that previously required armies. The constraint shifts from "can we build it" to "do we know what to build."

Contrarian To

"You need to capture a huge market to justify AI investment."

No. You need to serve your market better than anyone else can. AI makes that cheaper, not more expensive.