As part of the continued series on startup anti-patterns, we look at the perilous pursuit of endless new unknown markets: “Chasing Blue Oceans.”

What It Is

“Chasing Blue Oceans” is the anti-pattern where startups repeatedly seek untapped markets that lack competition but also lack the necessary customer demand or market size to sustain a venture-scale business.

Inspired by the popular business strategy book Blue Ocean Strategy, this anti-pattern emerges when founders prioritize chasing open field opportunities ahead of disrupting well understood categories. In the process founders and team members might be biased and over validate whether that new space is actually worth playing in.

The logic behind the strategy is simple: go where there is no competition. It feels seems and right – why compete with incumbents and other folks i you can, instead, chase a less competitive category. Unlike “Red Oceans” filled with rivals fighting over market share, “Blue Oceans” represent fresh opportunities.

But in reality, these oceans are very often “blue” because there’s no real market to compete over in the first place. Startups that fall into this trap are often visionary but miscalculate the balance between innovation and market reality. They are also risking being “too early” to the market, a well know starup fail point.

Why It Matters

The allure of Blue Oceans can lead to costly distractions, wasted capital, and eventual startup failure. Here’s why:

1. The Market Isn’t Big Enough – The biggest pitfall is misjudging the size of the opportunity. Venture-scale businesses require large and growing markets, but many Blue Oceans are small ponds. If a company can’t find enough paying customers, even the most innovative solution or the best team won’t succeed.
2. Slow or Non-Existent Adoption – Even if a market has potential, it may not be ready for a new solution. Early-stage industries often lack the infrastructure, customer behavior, or urgency to adopt cutting-edge technology, leading to long sales cycles, slow growth, and an inability to scale. No scale = no funding. Companies die because they run out of many, not because they don’t have great directions and ideas.
3. Endless Pivoting Without Progress – Startups chasing Blue Oceans could fall into a pattern of constant pivots, each aimed at discovering a more promising market. Instead of iterating toward product-market fit, they end up on a never-ending quest for an opportunity that may not exist.
4. Lack of Competitive Pressure Can Be a Bad Sign – While competition can be intimidating, it often validates that a real market exists. If no one else is operating in a space, it’s worth asking why. Are you truly ahead of the curve, or is there simply no real business to be built there?

Diagnosis

To determine if your startup is “aimlessly” Chasing Blue Oceans, ask yourself:

• Are there real, paying customers who urgently need your product? If your sales pipeline is full of “interested” but non-committal prospects, your market may not be viable. Also, are those customers growing themselves and are they willing to pay enough for your product to justify the efforts involves and selling, building the product, and servicing those customers
• How many companies have successfully built a business in your space? If the answer is close to zero, there’s a good chance the opportunity is too niche. No competition is bad sign.
• Are you shifting markets every 6–12 months? Frequent pivots in search of a better market are a strong signal that you’re in Blue Ocean territory.
• Does your market have natural adjacencies? Some markets start small but can expand into larger ones. If your Blue Ocean doesn’t naturally lead into a Red Ocean with more opportunity, you may be stuck and should reconsider.

Misdiagnosis

Not all Blue Ocean strategies are bad. Some companies do create entirely new markets—Airbnb, Uber, and Tesla are examples of companies that initially seemed to be chasing obscure opportunities. However, the difference is that these companies had:

1. A clear, pent-up demand for their product. They weren’t just innovating for innovation’s sake; they were solving real problems that customers desperately wanted addressed.
   Further, they were presenting entirely new product that disrupted or out-innovated customers. Tesla built and electric car – a car that at the time didn’t have much demand, but cars in general represent a huge opportunity. AirBnB scaled an existing product (home rentals) to compete with hotels.
2. Mass-market potential. They weren’t building niche solutions; they were creating new behaviors in industries worth billions. Their products seemed niche at first, but took over the red ocean market eventually.
3. The ability to convert skeptics. A common mistake in Blue Ocean thinking is assuming that people will adopt a new behavior without friction. Market creators must have a strategy to drive mainstream adoption.

Refactored Solutions

If you suspect your startup is Chasing Blue Oceans, consider these adjustments:

1. Validate Before Building. Before you commit years of effort, validate that real customers will pay for your product. Conduct interviews, run pilot programs, and test demand in measurable ways.
2. Start in a Red Ocean and Expand. Many successful companies start in competitive markets, prove their value, and then carve out their own niche. Competition often means there’s real demand.
3. Assess Market Timing. Some ideas are great but too early. If infrastructure, regulation, or customer behavior isn’t ready for your solution, you may need to rethink the business model. A pivot might be necessary. Time is money and your company burns cash everyday. You can’t wait forever for the market to mature.
4. Focus on Real Urgencies, Not Hypothetical Ones. Entrepreneurs often get excited about theoretical problems that “should” exist but don’t actually cause enough pain for customers to pay to solve them.
5. Look for Big Adjacencies. If your initial market is small, make sure it has clear expansion opportunities into larger, profitable segments. If that is the case it might make sense to invest in a small blue ocean market, with the clear understanding that this is a temporary workaround that will lead to a big opportunity.

When It Could Help

Despite the risks, Blue Ocean thinking can work when applied strategically. It may be worthwhile when:

• Your solution is truly revolutionary. If you have a breakthrough technology or business model, like OpenAI with generative AI, a Blue Ocean may be justifiable. This is especially true if you have new, foundational technology, that changes the target market.
• You can create network effects. Some markets start small but explode once they reach a critical mass (e.g., social networks, marketplaces, and platforms). If you have clear conviction and data that the Blue Ocean opportunity will become massive (not based on a wild bet) than being the first to open up this opportunity might be a smart thing to do.
• You have the capital to educate the market. If you have the runway to build awareness and shape customer behavior, you might be able to create demand over time. Unfortunately, most startups don’t.

Conclusion

The dream of an uncontested market is enticing, but the reality is often less glamorous. Chasing Blue Oceans without validating market size, demand, and urgency can lead startups down a costly and frustrating path.

Instead of prioritizing open space, founders should prioritize solving big, well-defined problems for real customers. Remember, most successful startups don’t win by avoiding competition—they win by executing better, moving faster, and solving problems that matter at scale.

The unfortunate reality and VC pattern recognition is that disrupting and innovating in a well understood, at scale, market. A red ocean. If often and easier path to building successful scalable startups. Those markets have clear demand and a new technology addressing the existing large market in a completely new way can hit the ground running right away, instead of waiting for the market to show developer, if ever.