Hi Robert, I actually think the model you're touching on can be just as or more powerful.
I went to an MIT event that Paul Graham spoke at the other day and he believes the same. He said it's best to really resonate with a tight niche and provide them with a ton of value. In that mode, go ahead and charge premium pricing if the perceived value is high. Plus you're going to be dealing with customers who are lower maintenance. You can call that depth.
From that point, he said it is easier then to expand for breadth. Why? Because niches or sub-markets border other niches or sub-markets. The people in the first niche start to bleed over and influence the next.
All that being said, this approach can be more upfront in-person work to reach those first customers. Like when Airbnb went through Y Combinator. They went from property to property, in-person, selling owners on why renting their home was awesome. And they even helped take pictures to set up beautiful profiles.
Our startup, Cloud Conservatory, is doing a similar approach. We're traveling the country this summer to recruit world-class musicians for a premium-priced service geared toward serious musicians. That target market is somewhere around 400k people in the US. Then, once that ecosystem is established, we're going to produce interactive learning modules geared toward amateur players. That market is 33m+ people in the US who actively play an instrument or sing in a choir. With that comes our scalability.
Hope the examples help illustrate the point!