Wedge Strategy

Definition

Starting with a narrow, focused product in a niche market, then expanding horizontally once you dominate that niche—the startup version of 'start small, think big.'

Example Usage

We wedged into the healthcare vertical; once we captured 30% of that market, we expanded into finance and retail.

Origin

Business strategy terminology popularized by Paul Graham and Y Combinator.

Fun Fact

The wedge strategy is how many successful companies started: Slack in gaming dev tools, Stripe in payments for designers, Airbnb in air mattress rentals.

Source: Business strategy and startup methodology terminology

Related Terms

Beginner

IPO (Initial Public Offering)

A startup's dream scenario where it becomes a public company and founders finally get to sell their stock—statistically less likely than winning the lottery.

🚀 Startup / VC

Intermediate

stake

A wooden stick driven into the ground to mark territory or prop things up, or in the business world, the percentage ownership or financial commitment you have in a deal. High stakes mean high risk and high reward; low stakes mean you're testing the waters.

🚀 Startup / VC

Beginner

Pivot

A strategic change in business direction that's celebrated in Silicon Valley but called failure literally everywhere else. It's the entrepreneurial equivalent of missing your exit on the highway and announcing you meant to take the scenic route.

🚀 Startup / VC

Beginner

innovate

The corporate buzzword for 'doing something new' that appears in every mission statement and keynote presentation. To innovate is to revolutionize or introduce novelty, though in practice it often means adding an app to something that worked fine without one. Companies that claim to innovate daily are usually just iterating on someone else's idea with a slightly different shade of blue.

🚀 Startup / VC

Intermediate

moated

Surrounded by a protective water-filled trench, which in business parlance describes a company with such strong competitive advantages that rivals can't touch them. Warren Buffett made this term famous by obsessing over companies with "economic moats" that defend market share like medieval fortifications. These days, everyone claims they have a moat, but most are more like puddles.

🚀 Startup / VC

Beginner

inbound interest

When investors, customers, or acquirers proactively reach out to a startup rather than being solicited. It's the entrepreneurial equivalent of being asked to the dance instead of doing the asking.

🚀 Startup / VC

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