6 ms·

> 2. How big is the market? "If you know how big the market is, you're too late." -- quote I saw somewhere Now, that's probably an exaggeration. You can prob

> 2. How big is the market? "If you know how big the market is, you're too late." -- quote I saw somewhere Now, that's probably an exaggeration. You can probably have some idea of the size of the market before you get into it. Is it a small niche, a medium-sized niche, or potentially huge? But I wonder if you can really be much more precise than that.

logicallee 10y ago
>"If you know how big the market is, you're too late." -- quote I saw somewhere I absolutely love this! Thanks so much for sharing. I've always hated size-of-market analysis. It always rings hollow. Your quote is a pretty good reason for why....
- gumby 10y ago
  Yes, but... Your answer to this single question actually addresses a bunch of other question (i.e. it's a signifier for a question cluster): - Are you creating a new market or entering one with existing players? - Are you taking an $YB market and growing it or taking revenue from others (presumably by undercutting them) - Do you understand the motivations of your buyers (i.e. if you're selling motorbikes your customer base isn't all who need powered transport). I raised $20M for Talima without any market size projection -- but I did understand the market (aging baby boomers with disposable income who, as they aged, would need the product). The macro numbers were enough.
  - ScottBurson 10y ago
    What's Talima? All Google is giving me is a resort in the Philippines. Since I'm an aging boomer, maybe it's something I need :-)
    - a_small_island 10y ago
      I searched "Talima crunchbase" and came up with this: https://www.crunchbase.com/organization/talima-therapeutics#/entity https://www.crunchbase.com/organization/talima-therapeutics#... Not sure if that's accurate, but they have received ~20M in funding.
  - danieltillett 10y ago
    Sounds like it did not go so well. What was the postmortem.
endymi0n 10y ago
Sounds like a lame-ass excuse for not even trying. Granted, if you're creating a market like Google or Facebook, it's hard to impossible. If you're doing the next AirBnB or Uber, it's pretty much on the table. If people can't come up with a realistic Market size and their reasoning behind it, 90% of the time they simply didn't do their basic homework (and usually the realistic market size is minuscule).
- ScottBurson 10y ago
  You really think the market size for AirBnB could have been reasonably estimated when it was just getting started? Even if the founders had had some clue -- and I doubt they foresaw it getting anywhere near as big as it has gotten -- could they really have produced a convincing argument to support their estimate? We know, in fact, that there were investors who passed on the opportunity (I forget who, but I'm sure I've read this); so they, at least, weren't convinced. I do agree that the question is important to think about. And I think you should at least be able to say broadly how big you think the market might be, and explain your reasoning. And I also agree that it depends somewhat on the situation. If you're trying to create a whole new market, as you say, it's pretty much impossible; if you're trying to displace an existing player in a mature market, you should be able to narrow it down pretty well.
  - CPLX 10y ago
    Of course it could have been. Look at the amount of money spent on hotels, look at the existing VRBO type options, look at how many people travel to places, try to take a guess at trends in airfares and travel preferences. You could certainly get some sort of order of magnitude guesses together. In this case you'd quickly get to "very big" and "global" and would have a nice answer.
  - jonwachob91 10y ago
    Travel didn't suddenly increase because AirBnB, it just made it more affordable by taking from the existing pie.
    - 10y ago
skewart 10y ago
I get where that quote is coming from. And there is some truth to it. But having no idea how big the market is doesn't necessarily imply that you timed things well and have a great opportunity. Market sizing should be done to set rough upper and lower bounds on who might want to buy your product. If potentially all parents of toddlers might want your product then that's awesome. But if only parents of toddlers who also have a pet fox would be interested, well, it's probably a much smaller opportunity (unless, of course, you can make the case that foxes are about to become incredibly popular as pets).
kriro 10y ago
I think market sizing is a fairly valuable activity. Worst case you are forced to think about it and write down assumptions you can test. The initial guesstimate might as well be throwing a dart but you can use it as an orientation to see what direction you are way off in. Even if you feel like you're creating a new market segment (blue ocean) it can't hurt to think through it. What might the structure look like, what other market segment could be similar etc. etc. At the end of the day you're thinking about aggregated customers. Even if you think market sizing is a waste of time you still need to think about reaching customers and how they interact with one another (feedback loops, word of mouth).

logicallee 10y ago

>"If you know how big the market is, you're too late." -- quote I saw somewhere I absolutely love this! Thanks so much for sharing. I've always hated size-of-market analysis. It always rings hollow. Your quote is a pretty good reason for why....

gumby 10y ago
Yes, but... Your answer to this single question actually addresses a bunch of other question (i.e. it's a signifier for a question cluster): - Are you creating a new market or entering one with existing players? - Are you taking an $YB market and growing it or taking revenue from others (presumably by undercutting them) - Do you understand the motivations of your buyers (i.e. if you're selling motorbikes your customer base isn't all who need powered transport). I raised $20M for Talima without any market size projection -- but I did understand the market (aging baby boomers with disposable income who, as they aged, would need the product). The macro numbers were enough.
- ScottBurson 10y ago
  What's Talima? All Google is giving me is a resort in the Philippines. Since I'm an aging boomer, maybe it's something I need :-)
  - a_small_island 10y ago
    I searched "Talima crunchbase" and came up with this: https://www.crunchbase.com/organization/talima-therapeutics#/entity https://www.crunchbase.com/organization/talima-therapeutics#... Not sure if that's accurate, but they have received ~20M in funding.
- danieltillett 10y ago
  Sounds like it did not go so well. What was the postmortem.

endymi0n 10y ago

Sounds like a lame-ass excuse for not even trying. Granted, if you're creating a market like Google or Facebook, it's hard to impossible. If you're doing the next AirBnB or Uber, it's pretty much on the table. If people can't come up with a realistic Market size and their reasoning behind it, 90% of the time they simply didn't do their basic homework (and usually the realistic market size is minuscule).

ScottBurson 10y ago
You really think the market size for AirBnB could have been reasonably estimated when it was just getting started? Even if the founders had had some clue -- and I doubt they foresaw it getting anywhere near as big as it has gotten -- could they really have produced a convincing argument to support their estimate? We know, in fact, that there were investors who passed on the opportunity (I forget who, but I'm sure I've read this); so they, at least, weren't convinced. I do agree that the question is important to think about. And I think you should at least be able to say broadly how big you think the market might be, and explain your reasoning. And I also agree that it depends somewhat on the situation. If you're trying to create a whole new market, as you say, it's pretty much impossible; if you're trying to displace an existing player in a mature market, you should be able to narrow it down pretty well.
- CPLX 10y ago
  Of course it could have been. Look at the amount of money spent on hotels, look at the existing VRBO type options, look at how many people travel to places, try to take a guess at trends in airfares and travel preferences. You could certainly get some sort of order of magnitude guesses together. In this case you'd quickly get to "very big" and "global" and would have a nice answer.
- jonwachob91 10y ago
  Travel didn't suddenly increase because AirBnB, it just made it more affordable by taking from the existing pie.
  - 10y ago

skewart 10y ago

I get where that quote is coming from. And there is some truth to it. But having no idea how big the market is doesn't necessarily imply that you timed things well and have a great opportunity. Market sizing should be done to set rough upper and lower bounds on who might want to buy your product. If potentially all parents of toddlers might want your product then that's awesome. But if only parents of toddlers who also have a pet fox would be interested, well, it's probably a much smaller opportunity (unless, of course, you can make the case that foxes are about to become incredibly popular as pets).

kriro 10y ago

I think market sizing is a fairly valuable activity. Worst case you are forced to think about it and write down assumptions you can test. The initial guesstimate might as well be throwing a dart but you can use it as an orientation to see what direction you are way off in. Even if you feel like you're creating a new market segment (blue ocean) it can't hurt to think through it. What might the structure look like, what other market segment could be similar etc. etc. At the end of the day you're thinking about aggregated customers. Even if you think market sizing is a waste of time you still need to think about reaching customers and how they interact with one another (feedback loops, word of mouth).