A successful startup? Focus on niche market

Ninety percent of startups fail within a year. Let's increase your chances to survive!

3 years ago   •   9 min read

By Vladimír Záhradník
Image by StartupStockPhotos from Pixabay

Startups fascinate me. It’s tough to succeed, and this is the reason why I dream of building one. According to the Fortune article, 90 percent of startups fail within a year. As a primary reason, they state “No Market Need,” staggering 42 percent.

When I look at the startup scene, I see too many startups competing for the same customers. At the moment, several startups build yet another social network or video streaming platform, not to mention the plethora of existing platforms out there.

Just the other day, I read about the Paris-based startup Yubo, which develops a video platform for Gen Z. They secured €11 million in funding to expand globally. Honestly, I will be surprised if they’ll outlive five years from now.

I also see many startups obsessed with augmented reality. They think about how cool the technology is and what a revolutionary product they develop. A product, which will change the world as we know it.

Image by Pexels from Pixabay

The reality is that often such startups didn’t ask the people for their opinions and often end up with a product no one wants. They may experience an unpleasant surprise one day!

Lastly, the advent of machine learning has stimulated the creation of many startups, in which the founders are experts in the field and don’t know where to apply their expertise meaningfully. Hence, they copycat the other popular startups in the ML world and hope to beat them someday.

I don’t understand this. Building a startup is hard. Why make it harder by competing with ten companies, who do a similar product to yours? I believe that to increase the chances to survive, startups should focus on markets with only a handful of competitors or even better find a market where you are the only one.

A niche market is a key to succeed

Building your product for a small but very specialized customer base has many benefits.

Imagine that you make a living as a content creator and social media influencer. Each day you produce videos for YouTube and write blog posts on Medium at least once per week. To let the world know of your content, you write daily posts on Twitter and Facebook and publish photos on Instagram. To grow your influence, you try to engage with your audience by responding to their comments. Also, you know that your audience on Twitter is mostly from the US and is most active in the evenings, and your audience on Facebook is most active during lunchtime.

Image by cloudlynx from Pixabay

You spend hours dealing with social networks, and you have no one to help you with it. One day you’ll find a new product, which allows you to schedule your posts for all social networks and which also aggregates comments into one single app. As imperfect as the application is, you’ll happily use it and tolerate all its quirks.

As the startup providing the software, you’ll easily convince your users to be your beta testers for free. They will often overlook small issues with your product and will happily use it because it makes their life more comfortable. Such people will recommend your product to others, and one day you’ll have a stable user base.

I will give you a few particular examples of what I mean by the niche market. I’m positive that if you create a product in these segments, you’ll have a solid chance to be profitable. Maybe you’ll not earn millions, but you can have a decent living out of it.

Example #1: A video demuxing and editing tool

I’ve been recording TV shows since high school. First on VHS, later by capturing the digital broadcast stream and processing it. I’m by far not the only one who does that to this day.

Image by 동철 이 from Pixabay

There are two common digital standards, DVB in Europe and ATSC in the US. The point is that you’ll receive all the TV live streams within one huge transport stream, which you store in a big file, and you need to process this file. It usually contains one or more video streams, multiple audio streams, subtitles, and other data streams. Also, most likely, it includes scrambled packets or packets with errors.

Usually, you want to select individual streams from this file, cut out the commercials, process the data not to contain invalid packets, and you want to make sure that audio and video stay in sync.

In the old days, we all used an open-source tool called Project X. It supported elementary stream repairs, including audio/video synchronization; it provided essential video cutting tools and allowed us to demux the transport stream into individual files. Developers stopped working on the application years ago, and people stopped using it as soon as the TVs transitioned to HDTV. Project X supports only standard definition files with MPEG2 video codec.

Project X

Nowadays, most of us use a tool called TS-Doctor. It has the same functionality, but this time it’s commercial. At the time of writing, a single-user license costs almost €35. This tool is, by far, not perfect. It often crashes, has UI errors, occasionally hangs, and supports Windows only. However, we still use it because there’s nothing better.

Cypheros TS-Doctor

Do you see the power you could have if you’re the only one providing value to the specific group of people? It’s worth mentioning that just one guy develops this tool. Imagine what you could accomplish with a team of people.

Another tool we often use is called VideoReDo. It allows us to cut out commercials out of the video stream without re-encoding the whole file. People use this application because TS-Doctor is inaccurate in video editing. You can achieve the best results by combining these tools.


A commercial license for VideoReDo costs almost $100, and I bet this software is developed only by a couple of developers. Also, worth noting that they make a new release of the application only a few times a year, and usually, it contains just bugfixes and compatibility improvements. Nothing significant.

Now, imagine you could build a product, which combines the most required functionality from both of these tools. Even with a small team, you can write the software in a relatively short time and be on-par with the functionality of TS-Doctor. Not only that, you could seize the whole market. The competitors are dormant, don’t innovate, and yet they’re profitable because others build just another 3D reality framework or Instagram AR filters.

Example #2: A subtitle transcribing tool

This second example is from a similar area, like the first one. Often you record a video, which contains hardcoded subtitles directly in the video. Sometimes, you’ll find such subtitles when you watch a movie in English, and suddenly the actors speak a foreign language. Another example is the anime. It often contains hardcoded English or Japanese subtitles.

Aegisub. Image by Linux Screenshots from Flickr

Your target audience is the fansubbers — people who translate the subtitles for free, just because it’s fun. To create the subtitles in their language, they need to have the original captions in a format, which contains original text and timing, when to show the lines, and for how long. You would be surprised, but often, they transcribe the original subtitles manually, line by line.

You’ll need to solve two problems:

  • Reliably detect if a movie contains hard-coded subtitles
  • Reliably transcribe the words, including correct timing. For parts, where your software is uncertain, provide easy to use interface for the user to fix the parts manually.

If you’ll be able to automate both tasks reliably, you won a vast customer base. I’m sure many of them would pay few bucks a month if your application saves them hours of work.

At the moment, I know of one free Windows app to help with this task, but it isn’t accurate at all. Also, it’s slow. It needs to go through every video frame and analyze it, which takes a lot of time.

I’m sure there are better ways to detect the presence of hardcoded subs, and transcribing speed could also be improved, not to mention accuracy.

The OCR techniques used by the tool are elementary. If you’d integrate OCR engines like Tesseract, license an engine from companies doing OCR recognition on scanned documents, or even improve the OCR recognition with the help of AI, you’ll have a much better product. State of the art in this segment!

With proper pricing, you should be profitable in a relatively short time, and potentially, you could offer the technology, or parts of it, also to the TV broadcasters.

Example #3: Sign language interpretation tool

Did you ever wonder what the hearing-impaired people are talking about with the signs? I certainly did. Imagine an app for iPhone and Android phones capable of looking at the signs and interpreting them as a text or voice.

Image by Darelle from Pixabay

Over time, when the augmented reality will be more prevalent, the interpretation of the signs could be shown in your glasses. Machine learning will be a perfect choice to tackle with the sign language interpretation.

The main issue I see is that sign language is not standardized. There are different sign languages, as there are different spoken languages. However, if you solve this, you will have software, which:

  • Translates amongst different sign languages as a text or synthesized voice
  • Allows the people who don’t know the sign language to ease the communication with such a person
  • It gives the possibility of talks between hearing-impaired and blind people. Hearing-impaired people will be able to read the lips, and the blind people will hear the synthesized voice.

Even if you don’t solve the most significant problem to translate among different sign languages, you can focus on the most dominant ones, like those used in the USA, United Kingdom, Spain, or France.

Again, this tool would bring such value to the customers that with proper pricing, you’ll earn money in no time.

Example #4: Transcription of a spoken word from mute videos

A software capable of transcribing spoken words out of the silent videos will find its use in various surveillance cases. I’m sure you could come up with more use cases.

You can solve this challenge with machine learning algorithms. In this field, there is already some progress; AI is already better at lip-reading than humans. Google is working on it, also MIT and Stanford, maybe a few others. But I’m sure a young startup will find its place easily.

Example #5: Music sheet creation tool

I got the idea for the last example while watching YouTube. YouTuber named Tantacrul, who is a composer and UX designer based in London, reviewed some tools for creating sheet music.

Image by Steve Buissinne from Pixabay

In his videos, Tantacrul reviewed the most popular software and found significant shortcomings in each of them. He also mentions that you can still find musicians who write sheet music with pen and paper. I’m sure there is a huge opportunity to innovate. It turned out that there are only a few companies on the market, their software suites exist for decades, and these companies are not motivated to innovate.

I thought of pursuing the idea of creating a revolutionary software in this area. However, at this time, I work on something else. Feel free to grab the idea if you want.

How to find niche markets

There is no universal rule. However, I’ll try to provide a few hints. First, keep your ears open. You’ll be surprised how many ideas you get just by listening carefully. Second, expand your professional network of people. Try to get to know people with different areas of expertise. They often have problems with their work, and you could provide a solution. Third, go to various meetups. Prefer meetups in your field of expertise, but also go to meetups where people discuss other areas. If you’re a developer, go to accountant meetups, lawyer meetups. Just go out there and meet people!

Image by Arek Socha from Pixabay


I believe in the power of niche markets, and I’d like to know your experience. If you feel inspired by some of the ideas mentioned above, build on them. I wrote this post because I focus on things not mentioned here. I have plenty of them. Also, if you use them, let me know about it so that I can track your progress. As always, feel free to leave comments below.

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