Small markets don't attract large well funded competitors (because their investors don't let them target them or redirect them to larger markets) allowing you to develop and refine an offering you can then aim at larger adjacent markets/segments. One good book that outlines the trade-offs is "The Origin and Evolution of New Business" by Amar Bhide that did a rigorous analysis of the Inc 500 companies.
If the goal to stay small and unfunded, I still take the position that you should look for the largest market you can realistically provide solutions for.
A single programmer writing CRUD apps isn't going to become a competitive telco. I'm not saying wade into fights you can't win,just that if you have to decide between two projects, a considerably larger market should be key to the decision.
