Beware Paved Roads: How to Find the Real Niche Opportunity

Tue, Feb 6, 2024

Friends and I set out to build a niche marketing agency focused on a particular industry we felt confident in our ability to serve.

When we pulled together a few guinea pig clients to test our assumptions, the absolute best thing happened: Everything went horribly wrong.

We found the tech stack being used by every small operator in this niche was massively flawed. We could not influence the front-end website and had no opportunity to replace it because it was connected to the back-end business management application they all relied heavily on.

There were no integration capabilities; the software provider couldn’t spell API and no viable alternatives in the price range necessary for our particular niche to be profitable given their model. Providing the marketing services we had planned was a literal impossibility.

The guys I worked with immediately discussed giving up on this niche and finding another. I went the other way and got excited. I’m not any wiser than they are, but I’m a decade older and have learned a precious lesson in that time: Beware the paved roads.


Here’s the problem with paved roads: Everyone can drive on them.

They’re easy to navigate, clean, flat, well-traversed, perfectly mapped, easy to enter and exit…perfectly accessible. They attract traffic. Everyone goes to where the road has already been paved.

When the road already exists, your value proposition is inconsistent, the amount of competition is massive (and ever-increasing), and you’re constantly racing to the bottom regarding price and margin. Half the time, your customers can do the work themselves and hire you for ease.

But where there’s no road? No one goes there. You look like a dummy when you try. More often than not, you can’t even take your car past a certain point. You have to get out and walk. Sometimes walking is impossible, and you have to climb. It’s up to you to find the way.

But that’s where the real opportunity lies.

Because once you figure out how to get there, you’re the only one who knows. It’s the definition of a blue ocean (except we need to stick with our road analogy). You’re in a category of one, and you solve a problem no one else has solved.

This is where leverage and scale are found. But it requires seeing the opportunity where everyone else sees a dead end.


It’s the biggest irony of entrepreneurship: Everyone is looking for the easy way there, while the biggest opportunities are in finding the ways that don’t yet exist.

So, what did we do? We pivoted from a marketing agency to a SaaS-enabled service agency. We started scoping out how to build an application to solve the business management problem while allowing us to do our marketing tasks.

Oh, and by the way…

If you know anything about business valuations, marketing agencies trade at a very soft 6x. In contrast, the median valuation multiple for SaaS companies is over 10x (Source: SaaS Capital).


The problem is always finding a SaaS opportunity that isn’t already saturated (paved road).

It isn’t easy, but train yourself to get excited when things don’t work out.

When you start to hit bumps, detours, dirt roads, and dead ends, remind yourself that you’re getting closer and closer to the real opportunity.

And, best of all, you’ll be among the few who see it that way.

What are some examples of how you turned a dead end into a golden opportunity?