It’s easier to sell into a New Store than an Old Store. An Old Store already does things a certain way. A New Store is much more likely to be open to new ideas.
If you’re selling to an industry that’s opening a lot of New Stores, you’ll have a strong wind at your back - think of Mindbody Online, selling into yoga studios starting 20 years ago in the early innings of a national yoga boom. In this way, selling to tech startups has had lovely tailwinds in the past 5-10 years.
The principle of targeting New Stores over Old Stores generalizes across business software. It’s easier for a startup to sell to a knowledge worker doing something for the first time.
We think this is an underrated point in building disruptive software. If you talk to the existing market, you’ll talk to potential customers who have processes in place. To convert them to your new software, you’ll have to conform to some of their legacy processes - which are often relics of the past, not designed to leverage new technology.
This doesn’t mean a startup should ignore Old Stores. When Canva started, they knew that the existing market of graphic designers used Photoshop and they knew the product intimately. They also knew that Photoshop power users were not asking for a product like Canva.
The most disruptive software tends to be democratizing. It removes friction to enable more people to pursue a given activity. Canva let any non-designer become a designer. Shopify let anyone become an online merchant. Mindbody was not quite as disruptive, but it made it easier to operate a new yoga studio.
Not only did these software products create value for New Stores, the software also made it more attractive to start New Stores in the first place. This is why we tend to be very skeptical of market size analysis at the seed stage. A disruptive software product can help unleash an entire industry of New Stores.