Naval: A great company expands the market it’s in. You need some sense that the market is expandable and it’s not limited to what it seems at first glance.
You can’t wait for an obviously large market, but you don’t want to bet on every company going after a small market, either.
One good rule of thumb: If you see customers hacking together a new product with suboptimal tools, that’s evidence of demand. That can help you estimate how large the market would be if the product was widely available and broadly usable.
If you are vertically specialized, you will also have a sense of how large the market can be. But as a rule of thumb, great startups usually grow their market by a factor of 10 or more.