04 June 2014 / Last updated: 27 Jan 2017

In Defense of "Hobbyist Markets"

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Jessica Livingston's article on the WSJ yesterday, had a very interesting quote:
Successful startups almost always start narrow and deep. Apple started with a computer Steve Wozniak made to impress his friends at the Homebrew Computer Club. There weren’t a lot of them, but they were really interested.
Apple started out from within the Homebrew Computer Club, which was spurred by the arrival of the Altair 8800. The same machine ran Microsoft's first product, the Altair Basic. A 'hobbyist' machine almost nobody knows about today was the starting point for two of the largest tech companies, with a combined market cap somewhere around $882 billion. Oh, and it also started the personal computing revolution, for a few trillion more in value.

The World Wide Web started in 1991, and as Wikipedia tells it:
Scholars generally agree that a turning point for the World Wide Web began with the introduction of the Mosaic web browser[26] in 1993, a graphical browser developed by a team [...] led by Marc Andreessen.
Amazon and Yahoo started up in 1994, and by 1996, the Google project had started. The web was also derided as a fad, a toy, and anyone who knew anything, knew the future was in the walled gardens of AOL, Prodigy, and Compuserve. Remember those guys? Marc Andreessen went on to build Netscape, a humble $4B exit that in the process scared Microsoft into realising the potential of the Web.

Amazon, Google, Microsoft, and Apple are four of the six largest technology companies today, by market capitalisation. The other two are Samsung and IBM, and positions 7-10 are filled by Intel, HP, Foxconn, and Hitachi, all of which predated the Altair, but were clever enough to greatly benefit from the personal computing and internet revolutions. Granted, most of these companies were also well-placed and quick enough to exploit the mobile and cloud infrastructure revolutions, fast enough that no truly big challengers have had a chance to emerge there.
The word hobbyist is such an easy putdown, that you can almost visualise the scene: Someone in a big company raising the issue of exploring the potential of the Altair 8800 or the WWW, and someone else swiftly shutting them down: "That's a hobbyist market. It will never move the needle for us. Focus on our core products that are putting bread on the table!". Did anyone say innovator's dilemma?
People seem to have a difficulty distinguishing hobbyists as in weekend golfers and stamp collectors from hackers and makers, serious technology professionals passionate enough to explore the frontier in their own free time.
Which is why it is such a perfect place for startups to thrive in. There are only small windows of time and opportunity when tiny companies can snatch a huge market under the big guys' noses, and markets protected from view under the 'hobbyist' blind spot seem to be a key ingredient of that pattern.
While I can't tell you how many companies started out in those hobbyist markets and failed, and I'm sure it's the vast, vast majority, I can tell you that all the largest technology companies today that were startups in recent memory, also started out there. And 100% is a hard percentage to argue with.
If you're looking to build a lifestyle business, a perfectly respectable ambition, this doesn't apply to you. But if your dream is to start the next Apple, Amazon, or Google, perhaps it's time to look at what the hobbyists, the hackers and makers, are doing today.
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by Alexandros MarinosFounder/CEO, balena

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