I think you misunderstood my argument. That may have been entirely my fault; I'm still learning to write.
Small and simple problems are rare in large markets because everybody is chasing after them. The low-hanging fruit get picked very quickly, and you need to produce more to reach the bleeding edge.
By contrast, smaller markets have more low-hanging fruit simply because there are not as many people picking them.
Certainly not compared to what is possible...
I think I understood your argument, I just disagree with what you are asserting and your conclusion.
There is plenty of low-hanging fruit in big markets, because it is a proportionally bigger tree.
If you add the constraint that you want to do everything on your own, then the markets and problems you can reasonably approach are smaller, but I still argue that from a return on investment perspective, you should be looking for the largest market opportunity that you understand enough to build.
If you care to discuss in person, I'm on twitter with the same name. @ me and we figure out the best way to facilitate a discussion.