A lot of the founders in my DMs pitched me a on prediction markets. I think most of them are chasing the wrong opportunity… Prediction markets are now among the most competitive categories on earth. @Polymarket and @Kalshi are raising mind-boggling numbers, and traditional players like @RobinhoodApp are building their own products. The category has incumbents with massive liquidity, strong brands, and aggressive product roadmaps. For the startups building net new prediction markets, it’s worth asking: what is the unique edge? Some pitch adding new market formats as their wedge. I don’t know if this is defensible. Every incumbent is actively expanding into new formats. Look at what @Polymarket offered just a year ago compared to today. They ship new products by the week. If the incumbents can add your market type faster than you can build distribution, the advantage evaporates. Others argue that better tech is the wedge. Tech doesn’t appear to be a limiter on @Polymarket or @Kalshi. The platforms work. Users aren’t leaving because of a tech problem. In my opinion, the more interesting opportunity is packaging prediction markets into entirely new products for underserved customers. People who would never open a @Polymarket account but have a real need to express a view on some future outcome. An outdoor concert venue might want to go long on rain for Sunday night to hedge cancellation risk. A logistics company might want to take a position on port delays. These are prediction market use cases dressed up as risk management tools, sold through channels the incumbents might not touch. And you don’t have to reinvent the wheel. You don’t need to build the market, source the liquidity, or design the matching engine. You can plug into existing prediction market APIs and focus entirely on distribution and product. There’s a fair pushback about platform risk here. But @Polymarket is onchain and open, which makes this meaningfully less risky than building on a closed platform. I’m not saying a new prediction market will never break through. In many mature categories someone always finds a way. @HyperliquidX broke into perps, one of the most competitive verticals in crypto with many well-capitalized competitors. AI gave @CoreWeave an opening in cloud. But in each case there was a specific structural reason the new entrant won. Disclosure: We are @Polymarket investors. Take the above with a grain of salt
