If you’re an aspiring entrepreneur aiming to build an internet/mobile based product, you should consider building for the US/English-speaking market first.
Why? It’s not only because the US is a bigger market (which it is, with 300M+ population and high % of paid users), but the success in the US will lead to an even bigger success in the global/RoW market.
Take Korea for instance (I’m using Korea as an example but the same could be applicable to any other countries, say France, Brazil, etc).
US market itself could be 6x bigger market, just from the population size alone.
- South Korea population = 52M
- US population = 330M (6.3x Korea)
But, if you’ve built a successful internet/mobile service in the US, you will get 3-4x more users from the rest of the world.
Most successful internet companies have far bigger user base outside the US:
- Facebook: 180M (US) / 2960M (worldwide): US = 6%
- Instagram: 170M (US) / 1000M (worldwide): US = 17%
- Twitter: 77M (US) / 400M (worldwide): US = 19%
So for these companies, for every US user, they have 4-10 international users.
Then, theoretically, a successful US internet company can have 24x bigger market value than a successful Korean internet company:
6 x 4 = 24, where 6 comes from the natural market size differential (US population is 6x Korea’s), and 4 comes from an international success factor (successful internet companies get 80% user base outside the US).
These are very simple, back of the envelope calculations – but the point is, there’s a multiplication factor involved here. It’s not just the bigger market size of the US alone; it’s the international success that comes after it, which works as another multiplication factor.
Could this be reflected into the market capitalization?
Just two examples from the public market (these are not directly comparable companies, but in reasonably close sectors):
- Kakao market cap = $19B
- Meta market cap = $806B (42.4x Kakao)
- Coupang market cap = $31B
- Amazon market cap = $1.3T (41.9x Coupang)
Coincidentally and interestingly, both Meta and Amazon have ~42x market cap of that of equivalent companies in Korea.
This doesn’t mean everybody should go to the US/global; you can certainly build an amazing company in Korea, for the Korean users alone. I’m sure anyone would take Coupang’s $31B market cap any day. But also be cognizant that the US/global market is much, much bigger than the Korean market.
Key takeaways:
- Building for the US market is promising not only because US is a big market but also because US can be the entry point for the success in the rest of the world
- In simple, back of the napkin calculation, you can see how US market could be 24x bigger than the Korean market
- As an evidence of this point, some US tech companies are 42x more valuable than their equivalent companies in Korea in today’s stock market