I'm noticing something.

_{[Read time: 3.5 minutes]}

I have this framework about noticing things…

I say:

“One point is an anomaly. Two points make a line. Three points make a trend (so start paying attention).”

And now, after hearing it ten or so times, it’s clear this isn’t just me.

There seems to be a shift happening to the people who built service businesses around the creator, solopreneur, and founder-led/tiny businesses.

They are moving to new buyers.

At first glance, it’s an obvious market to go after.

No procurement teams.

No approvals.

They’re visible.

They’re reachable.

They make decisions fast (short sales cycle).

And they need help because they are wearing so many hats.

On paper, it feels easier to build a business here. But in practice, it seems to be getting harder.

Some of the people I’ve known been serving this audience for 3, 4, 5+ years are:

• Moving up market → serving a bigger business model.

• Moving diagonally → serving a bigger business in a new industry.

• Moving to a more sophisticated buyer → serving same size but only those whose been in business for a long time, or had previous business.

(When I say sophisticated, I don’t mean IQ, it’s about more about level of experience and already overcoming that early-stage part).

It’s been interesting to watch.

And lately I’ve been thinking about why I keep hearing it.

And a name keeps popping into my head.

Michael Porter.

This was a name I could not escape in business school.

He is probably one of the most well-know businesses strategists in the last 50 years.

One of his big frameworks is that every market is shaped by five forces:

1. Rivalry among competitors

2. Threat of new entrants

3. Threat of substitutes

4. Bargaining power of buyers

5. Bargaining power of suppliers

Together, those forces shape how attractive and sustainable a market really is.

When I look at this market of creators, solos, and small buyers through Porter’s lens, two forces stand out:

#2 → The threat of new entrants.

There’s no barrier to entry.

Anyone can wake up tomorrow, post on LinkedIn, and compete with you.

And they do.

(I know there is this little thing called positioning, but still there is a super low barrier)

And #3 → The threat of substitutes.

Now, with AI and automation, buyers don’t just compare you to another provider.

They ask if they even need a provider at all.

For years, the five forces this all felt academic (or only applicable to corporate landscape).

Lately it feels very real.

Markets with low barriers fill up quickly.

Everyone starts to look alike.

Buyers hesitate because they can.

And when buyers can’t tell the difference between you and everyone else (or between you and software) the work gets harder to sell.

And then…there’s the pain of paying.

This is where Porter’s market forces meet behavioral economics (human psychology).

For a small business (as described before), every dollar spent feels like a dollar they personally won’t see in their pocket.

Even when they know they should reinvest, it feels like a sacrifice.

For a larger business (think CEO-led or partner-led), it’s different.

The money is already assigned to the business.

It’s seen as a tool to keep the business alive and growing.

It doesn’t sting in the same way.

It’s this connection between Porter’s forces and the pain of paying helps explain what I’m seeing.

The structure of the market creates competition and substitutes. The psychology of the buyer makes it even harder to close the sale.

Together, they’re pushing some people toward buyers with more at stake.

Of course, moving up comes with its own tradeoffs.

• The sales cycle gets longer.

• There are more conversations.

• More questions.

• More people in the room.

• Greater expectations.

The stakes get higher, and so do the risks.

But that’s business, right? …a series of tradeoffs about how to spend limited resources.

I’m not saying everyone should move up market.

I’m not saying the lower end of the market is dead.

I don’t have a neat conclusion to offer.

I just keep hearing and seeing the same pattern.

The market is telling a story.

And stories, when you hear them enough times, are hard to ignore.

Thank you for reading.

— Peter

P.S. If you’re starting to hear the same story in your market, but you’re not sure what it means yet…let’s take a closer look together.