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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 ne

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.
  - xapata 10y ago
    Are you saying travel is inelastic?
    - jonwachob91 10y ago
      ... Travel is one of the most elastic industries. Entire theme parks here in Orlando close down during the summer because travel always dips. What I'm saying is that AirBnB is not a large enough factor to impact the overall market size. For a quick snap shot, I looked up number of American's that AAA predicts will travel on the 4th of July ever year. In 2011 the number was 39M[1], in 2016 it was 43M[2]. Not really that big of a difference. AirBnB does make travel more attainable for the non-traditional worker[3] (such as students), but students won't rapidly expand an industry. [1]http://newsroom.aaa.com/tag/independence-day-travel-forecast/ http://newsroom.aaa.com/tag/independence-day-travel-forecast... [2]http://newsroom.aaa.com/2016/06/aaa-americans-will-take-trips-ever-independence-day-weekend/ http://newsroom.aaa.com/2016/06/aaa-americans-will-take-trip... [3]http://blog.airbnb.com/economic-impact-airbnb/?_ga=1.115674822.1940512795.1462906962#new-york http://blog.airbnb.com/economic-impact-airbnb/?_ga=1.1156748...
      - xapata 10y ago
        Depends on what you mean by rapid growth. For an activity that is already stable at a large volume, any noticeable growth can feel rapid. Further, AirBnB's tiny slice of the market could consist of some cohort that would not otherwise participate. CouchSurfers, for example. I used to do CouchSurfing, but I found I preferred paying for AirBnB in some cases. Obviously, now AirBnB is much bigger than its first adopters.
- pixelmonkey 10y ago
  Yes. Airbnb's original 2011 pitch deck is online. They literally have a market size slide and supporting slides to back it up: https://www.slideshare.net/mobile/PitchDeckCoach/airbnb-first-pitch-deck-editable https://www.slideshare.net/mobile/PitchDeckCoach/airbnb-firs...
  - ScottBurson 10y ago
    They launched in mid-2008 [0]. By 2011 they had been running a growing business for a couple of years; their Series A was in late 2010, apparently preceding this pitch deck (!). I was imagining the market size question being posed at the seed stage. (And I suspect that whoever wrote the line I quoted above was thinking along the same lines.) If we could read AirBnB's YC application, would it have a similar estimate? I rather doubt it. [0] https://en.wikipedia.org/wiki/Timeline_of_Airbnb https://en.wikipedia.org/wiki/Timeline_of_Airbnb
    - pixelmonkey 10y ago
      I mis-labeled the pitch deck as being from 2011. It's actually from 2008. Described in this BI story as being a copy kept by an MBA student from that period when investors were snubbing them. http://www.businessinsider.com/airbnbs-first-pitch-deck-2015-3 http://www.businessinsider.com/airbnbs-first-pitch-deck-2015...
      - ScottBurson 10y ago
        Oh, okay. Well, point taken, then.
- elmar 10y ago
  Airbnb was rejected by seven investors who could have had 10 percent of the company for $150,000 in 2008 http://www.businessinsider.com/airbnb-was-rejected-by-seven-investors-in-2008-2015-7 http://www.businessinsider.com/airbnb-was-rejected-by-seven-... and the story of the one that wanted to invest Airbnb, My $1 Billion Lesson https://arenavc.com/2015/07/airbnb-my-1-billion-lesson/ https://arenavc.com/2015/07/airbnb-my-1-billion-lesson/
marcosdumay 10y ago
Neither Google nor Facebook created their markets. And neither could realistically estimate their market's size at the beginning. There's a point about doing one's homework, but I don't think this is the correct conclusion.

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.
- xapata 10y ago
  Are you saying travel is inelastic?
  - jonwachob91 10y ago
    ... Travel is one of the most elastic industries. Entire theme parks here in Orlando close down during the summer because travel always dips. What I'm saying is that AirBnB is not a large enough factor to impact the overall market size. For a quick snap shot, I looked up number of American's that AAA predicts will travel on the 4th of July ever year. In 2011 the number was 39M[1], in 2016 it was 43M[2]. Not really that big of a difference. AirBnB does make travel more attainable for the non-traditional worker[3] (such as students), but students won't rapidly expand an industry. [1]http://newsroom.aaa.com/tag/independence-day-travel-forecast/ http://newsroom.aaa.com/tag/independence-day-travel-forecast... [2]http://newsroom.aaa.com/2016/06/aaa-americans-will-take-trips-ever-independence-day-weekend/ http://newsroom.aaa.com/2016/06/aaa-americans-will-take-trip... [3]http://blog.airbnb.com/economic-impact-airbnb/?_ga=1.115674822.1940512795.1462906962#new-york http://blog.airbnb.com/economic-impact-airbnb/?_ga=1.1156748...
    - xapata 10y ago
      Depends on what you mean by rapid growth. For an activity that is already stable at a large volume, any noticeable growth can feel rapid. Further, AirBnB's tiny slice of the market could consist of some cohort that would not otherwise participate. CouchSurfers, for example. I used to do CouchSurfing, but I found I preferred paying for AirBnB in some cases. Obviously, now AirBnB is much bigger than its first adopters.
pixelmonkey 10y ago
Yes. Airbnb's original 2011 pitch deck is online. They literally have a market size slide and supporting slides to back it up: https://www.slideshare.net/mobile/PitchDeckCoach/airbnb-first-pitch-deck-editable https://www.slideshare.net/mobile/PitchDeckCoach/airbnb-firs...
- ScottBurson 10y ago
  They launched in mid-2008 [0]. By 2011 they had been running a growing business for a couple of years; their Series A was in late 2010, apparently preceding this pitch deck (!). I was imagining the market size question being posed at the seed stage. (And I suspect that whoever wrote the line I quoted above was thinking along the same lines.) If we could read AirBnB's YC application, would it have a similar estimate? I rather doubt it. [0] https://en.wikipedia.org/wiki/Timeline_of_Airbnb https://en.wikipedia.org/wiki/Timeline_of_Airbnb
  - pixelmonkey 10y ago
    I mis-labeled the pitch deck as being from 2011. It's actually from 2008. Described in this BI story as being a copy kept by an MBA student from that period when investors were snubbing them. http://www.businessinsider.com/airbnbs-first-pitch-deck-2015-3 http://www.businessinsider.com/airbnbs-first-pitch-deck-2015...
    - ScottBurson 10y ago
      Oh, okay. Well, point taken, then.
elmar 10y ago
Airbnb was rejected by seven investors who could have had 10 percent of the company for $150,000 in 2008 http://www.businessinsider.com/airbnb-was-rejected-by-seven-investors-in-2008-2015-7 http://www.businessinsider.com/airbnb-was-rejected-by-seven-... and the story of the one that wanted to invest Airbnb, My $1 Billion Lesson https://arenavc.com/2015/07/airbnb-my-1-billion-lesson/ https://arenavc.com/2015/07/airbnb-my-1-billion-lesson/

marcosdumay 10y ago

Neither Google nor Facebook created their markets. And neither could realistically estimate their market's size at the beginning. There's a point about doing one's homework, but I don't think this is the correct conclusion.