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Your market type determines everything — and most founders pick wrong.
💡 Three market types — existing, new, resegmented — require completely different strategies. Misidentifying yours is a common fatal mistake.
One of Blank's most counterintuitive frameworks: not all startups face the same challenge. Your strategy depends entirely on your market type, and there are only three:
Existing market: Customers exist, competitors exist, the rules are known. You win by being better — faster, cheaper, more features. Think: a new CRM competing with Salesforce. The risk? Incumbents are entrenched.
New market: No customers exist yet because the category doesn't exist. You win by education, not competition. Think: the first smartphone. The risk? It takes years to grow — you'll burn cash waiting for adoption.
Resegmented market: You take an existing market and carve out a niche — either as a low-cost player or by targeting an underserved segment. Think: Southwest Airlines (low-cost) or Tesla (luxury electric niche). The risk? You must clearly define your segment.
The trap: founders often think they're in a new market (exciting! no competition!) when they're actually in an existing market (brutal! entrenched incumbents!). The launch strategy, spending rate, and timeline are completely different for each type.
Source: The Four Steps to the Epiphany — Steve Blank