DailyDime

The single highest-leverage decision a founder can make is choosing a market that is structurally expanding – before the crowd arrives.

After 20-plus years building and investing across consumer products, InsurTech, and SaaS – including founding PetInsuranceQuotes.com and selling it to Petco – the clearest pattern I have seen is this: market selection beats execution nearly every time. I have written more than 50 angel checks across FinTech, InsurTech, SaaS, and consumer verticals, and the companies that compounded fastest almost always had one thing in common. They were riding a market that was getting bigger whether they executed perfectly or not.

Great products in flat or shrinking markets fight for scraps. Average products in rapidly expanding markets can generate category-defining returns. When I launched PetInsuranceQuotes.com in 2011, the North American pet insurance market was generating roughly $450 to $550 million in gross written premium. Most pet owners had never heard of the product. By 2025, NAPHIA data put the same market at $6.34 billion — roughly 12 to 14x growth in 14 years, with consistent double-digit annual increases almost every year along the way.

I did not invent pet insurance. I built a better discovery and comparison layer at exactly the moment consumer demand was waking up, and the compounding market did the rest. Here is what that journey – and the investing work that followed – has taught me about picking the right market before you write a line of code.

The Market Usually Matters More Than the Idea

Pet insurance compounded from 2011 through 2025 in a way that made the underlying trajectory almost impossible to fight. The table below shows how consistently that growth held across different macro environments.

Source: NAPHIA (North American Pet Health Insurance Association) State of the Industry data.

Even as growth moderated from its pandemic peak, the rate held well above what most categories ever sustain. Penetration is still low: roughly 6% of dogs and 2.3% of cats in the U.S. carry insurance, which means substantial headroom remains. That combination of durable growth and low penetration is the closest thing to a once-in-a-generation market dislocation that a founder can find – and it is exactly the profile worth hunting for.

How to Evaluate Whether a Market Is Truly Growing

Before committing to an idea, I run it through a five-question market filter. These are not checkboxes – they are stress tests.

• Is there measurable, multi-year growth? One strong year proves nothing. Look for 15 to 20% or higher CAGR sustained across at least five years.
• What are the secular tailwinds? In pet insurance, rising pet humanization intersected with exploding veterinary costs. Those forces were larger than any single company and were not going to reverse. Name the forces driving your market and confirm they are structural, not cyclical.
• How penetrated is the market? Low single-digit penetration combined with rising consumer awareness is the closest thing to a guaranteed tailwind. High penetration plus decelerating growth is a warning sign regardless of how interesting the product is.
• Can you serve a profitable niche inside the bigger wave? In 2011, I could not capitalize a new insurer. I could build the comparison layer – lower capital requirements, faster time to market, and perfectly positioned as demand accelerated. You do not have to own the whole wave to win.
• Will the market still be growing in five to seven years? This is the question most founders skip. A market that peaks in year three of a seven-year build is a much harder business than it looked at the start.

Green Flags and Red Flags When Choosing a Market

After reviewing hundreds of market opportunities as both a founder and an angel, the signals that matter most tend to fall into two clear categories.

Green flags: double-digit growth sustained for five or more years; clear and explainable tailwinds rooted in demographics, regulation, technology, or lasting behavior change; low-to-moderate penetration; rising average revenue per user as a signal of improving product-market fit and willingness to pay; and fragmented or underserved customer acquisition channels that incumbents have ignored. Rising venture funding patterns flowing into a category over multiple years – not just a single hot cycle – are often a confirming signal that institutional capital sees the same structural tailwinds you do.

Red flags: growth driven by a one-off event such as a government subsidy or a temporary trend; high existing penetration combined with slowing growth; heavy regulation that structurally advantages incumbents; rapid commoditization pushing toward race-to-the-bottom pricing; and no visible path to profitable unit economics even if the market grows as projected. Understanding how private fund investors evaluate return potential can help you pressure-test whether your market thesis would survive LP scrutiny – a useful gut-check before you commit.

Practical Ways to Research This Before You Build

Most of the information that matters is findable before you write a pitch deck or a line of code. The research process I recommend:

• Find the industry trade association and read their most recent annual State of the Industry report. NAPHIA was the source for virtually all of the pet insurance data above. Nearly every meaningful category has an equivalent.
• Study public company filings and earnings calls in adjacent spaces. Executives in neighboring markets telegraph where the money is moving better than any analyst report.
• Talk to the best operators and salespeople already in the market. They know the real trajectory – the backlog, the pricing pressure, the customer churn – in ways that do not show up in published data.
• Check Google Trends, keyword search volume, and venture funding patterns over multiple years, not just the trailing 12 months. A single spike is noise. A multi-year slope is signal.

The best markets often feel a little boring or obvious in the early innings. Pet insurance in 2011 felt that way to a lot of smart people I spoke with at the time. That is frequently a feature, not a bug — it means the crowd has not priced in what is coming.

The Real Lesson from 2011

When I started PetInsuranceQuotes.com, I was not trying to predict a 14-year growth cycle. I was solving an immediate problem: pet owners had almost no easy way to compare policy options side by side. The fact that the overall market was entering a multi-year compounding run turned a solid business into a much better one – and ultimately into an exit that changed what was financially possible for me as a founder.

Markets compound. Good execution inside a compounding market is one of the highest-leverage positions a founder can occupy. The pet insurance numbers since 2011 are as clean a proof point as I have seen.

So before you fall in love with the next product idea, ask the harder question first: is this market going to be meaningfully bigger in five years, and am I early enough to ride that expansion rather than fight against a maturing one? If you are evaluating markets right now, drop your sector in the comments or explore more of my angel investing frameworks – happy to share how I pressure-test these decisions.