Bigger isn't always better, yet investors won’t stop obsessing over things like Total Addressable Market. The faulty reasoning begins with the premise that large profits must come from large markets. This is assuredly false.

Not all parts of a market are serviceable, and even if they are serviceable, there is no guarantee that such activities can be done profitably. It must be understood that large markets invite a large amount of competition and, generally speaking, if you want to make a lot of money, competition is bad. Time and time again, we’ve seen competitive pressures erode excess profits until most participants become mediocre.

Instead of wanting to be a big fish in a big lake, why not aim to be the biggest fish in a small pond? Or what if you could be the only fish?