Does anyone know examples of YC companies who are in small markets? I was under the impression they only liked larger markets (since they are more fundable by vc's and the like).
Looking for YC cos in small markets could be misleading. By the time you know they're YC cos, they've been exposed to YC and so would have been encouraged to reconsider their market if they were in a bad one. There may be some that are still in what seem to be small markets, but if so that's probably because they're in the Altair Basic phase.
This is a long about way of me asking if people consider the adult entertainment market small/big. That's where our startup is "disrupting." It's one of those industries where you hear talk of the "billions" being made, but not many share their numbers. One of the few well known exits in the adult space was AdultFriendFinder being sold to Penthouse for $500 million...and interestingly they grew the site from little to no outside money.
Browse through http://yclist.com/ to see if any companies were small-market. Version 1 doesn't have to cater to a giant market, but you should have a plan to get there eventually (and be able to concisely express your plan).