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> we are limited to billion dollar ideas How did matchmaking for music lessons get into the discussion as a billion dollar idea? Referrals for tutoring in any

by awb 7y ago

> we are limited to billion dollar ideas How did matchmaking for music lessons get into the discussion as a billion dollar idea? Referrals for tutoring in any subject (math, reading, music, etc.) would be a bigger market, but even then it might not be a $1B company.

rubyn00bie 7y ago
Well I was right there with you, thinking it was a completely shit idea, but a little math shows how it at least popped up on the radar (and I don't think its quite so bad myself after some thought): 100,000 music instructors, $60 per hour, at 365 days per year is roughly: $2.19 billion gross revenue per year-hour in the segment. Assuming, the average hours per day are like 3.5 (I can't imagine folks doing this are giving lessons for a full 8 hours per day, 5 days a week), that gives a total market of like: ~$7.65bn. Assuming they could earn a 20% stake in 100% of the market, that's like $1.53bn. Looking at the numbers, I think there is likely more potential than they realized[1]. I would suspect that by and large, digital advertising is capturing almost none of the market as kinda proven by their analysis. Looking at how low the frequency of searches were compared to the sheer number of employed individuals tells me something is off as a whole with the analysis. That is to say, digital advertising isn't showing the volume of or demand for musical teaching service because it's highly likely everyone believes it's incapable of doing so or adding value... That (driving the market online) is the problem to be solved in the space, because it sounds _hard_, and solving hard problems tends to be the way to make a lot of money. The other opportunity I would look at is, sort of from the other side: how to fix (what I assume to be likely) most music instructor's "underemployment" problems (i.e. inconsistent, few, or not enough hours). I imagine this angle would probably net more gross sign-ups as well since users (instructors) would be advertising the platform for you. With all that said, you'd have to assume there is latent under-served demand (25-35%) in the market too to bother with anything I've said... that 25% is essentially what would be left over for others after you've captured the niche. One last thought, for the VC since it looks like they're reading HN. Have you thought about doing retroactive market analysis where unicorns now exist to see what the market looked like then (e.g. short-term vacation rentals in ~2006)? Might give you some strong signals for where there is potential... [1] They are indeed a VC so it may not be in their best interest (time value of money, opportunity costs, etc)... Edit: Adjust some bad arithmetic.
- awb 7y ago
  $60/hr and booking 3.5hrs per day all 365 days of the year are all really high estimates IMO. That's $76k/year. My guess is that only the top 1% of music tutors are making that much per year. And only 100k tutors in the US is an incredibly small market.
  - patmorgan23 7y ago
    Yeah booking 10-15 hrs a week at $35/hr for 40 weeks would probably be a much more representative sample (Thats $14,000/year per person on the low end)
- thaumasiotes 7y ago
  > That is to say, digital advertising isn't showing the volume of or demand for musical teaching service because it's highly likely everyone believes it's incapable of doing so or adding value An ad for online one-to-one art lessons has been popping up in my Wechat moments. Judging by the ad copy, they feel they have two strengths: 1. No need to transport your kid to and from the lesson. 2. Your kid will like this more than classroom-based lessons. I conclude that the market they're trying to serve is parents who would like their children to learn to draw. But there are a lot of those, and their selling points seem pretty reasonable.
- ssivark 7y ago
  > Assuming they could earn a 20% stake in 100% of the market, that's like $1.53bn. That makes no sense. Why would/should instructors+students continue to give them 20% commission for follow-up classes beyond the first one? It seems like just wishful thinking. The app store situation is very unusual (monopoly/monopsony), and does not apply in this context.
  - cortesoft 7y ago
    Yeah, this is the problem Wag has been having... and they ended up trying some draconian things to try to prevent people from working outside the system. These market place ideas don't work nearly as well for businesses where there are long term, repeated, interactions between seller and purchaser. They work best when there is a one time exchange, because a market is really getting paid to make an introduction. edit: I see now that many people made this argument much more eloquently in other comments on this thread.
nautilus12 7y ago
> How did matchmaking for music lessons get into the discussion as a billion dollar idea? This is a near perfect example of how "big business" can kill the spirit of entrepreneurship. The idea (or VC cocaine induced fever dream) that every idea should be a billion dollar idea is exactly whats wrong with the current tech climate.
anstosa 7y ago
Brainstorming and validation rarely starts with a perfect idea. It starts with some about of demand, an unsolved problem or an inefficient market. We start to dig and as we talk to potential customers we get a better understanding of the problem and pivot accordingly. Sometimes we end up unearthing a great idea, sometimes not. It's worth remembering that finding billion dollar business narratives often involve some amount of market creation or expansion. It's not just "can we capture enough of the market that exists". It's "would customers pay more for a better experience?", "would more people become customers if the process was easier? Or cheaper?". - Ansel from PSL

by awb 7y ago

rubyn00bie 7y ago

Well I was right there with you, thinking it was a completely shit idea, but a little math shows how it at least popped up on the radar (and I don't think its quite so bad myself after some thought): 100,000 music instructors, $60 per hour, at 365 days per year is roughly: $2.19 billion gross revenue per year-hour in the segment. Assuming, the average hours per day are like 3.5 (I can't imagine folks doing this are giving lessons for a full 8 hours per day, 5 days a week), that gives a total market of like: ~$7.65bn. Assuming they could earn a 20% stake in 100% of the market, that's like $1.53bn. Looking at the numbers, I think there is likely more potential than they realized[1]. I would suspect that by and large, digital advertising is capturing almost none of the market as kinda proven by their analysis. Looking at how low the frequency of searches were compared to the sheer number of employed individuals tells me something is off as a whole with the analysis. That is to say, digital advertising isn't showing the volume of or demand for musical teaching service because it's highly likely everyone believes it's incapable of doing so or adding value... That (driving the market online) is the problem to be solved in the space, because it sounds _hard_, and solving hard problems tends to be the way to make a lot of money. The other opportunity I would look at is, sort of from the other side: how to fix (what I assume to be likely) most music instructor's "underemployment" problems (i.e. inconsistent, few, or not enough hours). I imagine this angle would probably net more gross sign-ups as well since users (instructors) would be advertising the platform for you. With all that said, you'd have to assume there is latent under-served demand (25-35%) in the market too to bother with anything I've said... that 25% is essentially what would be left over for others after you've captured the niche. One last thought, for the VC since it looks like they're reading HN. Have you thought about doing retroactive market analysis where unicorns now exist to see what the market looked like then (e.g. short-term vacation rentals in ~2006)? Might give you some strong signals for where there is potential... [1] They are indeed a VC so it may not be in their best interest (time value of money, opportunity costs, etc)... Edit: Adjust some bad arithmetic.

awb 7y ago
$60/hr and booking 3.5hrs per day all 365 days of the year are all really high estimates IMO. That's $76k/year. My guess is that only the top 1% of music tutors are making that much per year. And only 100k tutors in the US is an incredibly small market.
- patmorgan23 7y ago
  Yeah booking 10-15 hrs a week at $35/hr for 40 weeks would probably be a much more representative sample (Thats $14,000/year per person on the low end)
thaumasiotes 7y ago
> That is to say, digital advertising isn't showing the volume of or demand for musical teaching service because it's highly likely everyone believes it's incapable of doing so or adding value An ad for online one-to-one art lessons has been popping up in my Wechat moments. Judging by the ad copy, they feel they have two strengths: 1. No need to transport your kid to and from the lesson. 2. Your kid will like this more than classroom-based lessons. I conclude that the market they're trying to serve is parents who would like their children to learn to draw. But there are a lot of those, and their selling points seem pretty reasonable.
ssivark 7y ago
> Assuming they could earn a 20% stake in 100% of the market, that's like $1.53bn. That makes no sense. Why would/should instructors+students continue to give them 20% commission for follow-up classes beyond the first one? It seems like just wishful thinking. The app store situation is very unusual (monopoly/monopsony), and does not apply in this context.
- cortesoft 7y ago
  Yeah, this is the problem Wag has been having... and they ended up trying some draconian things to try to prevent people from working outside the system. These market place ideas don't work nearly as well for businesses where there are long term, repeated, interactions between seller and purchaser. They work best when there is a one time exchange, because a market is really getting paid to make an introduction. edit: I see now that many people made this argument much more eloquently in other comments on this thread.

nautilus12 7y ago

> How did matchmaking for music lessons get into the discussion as a billion dollar idea? This is a near perfect example of how "big business" can kill the spirit of entrepreneurship. The idea (or VC cocaine induced fever dream) that every idea should be a billion dollar idea is exactly whats wrong with the current tech climate.

anstosa 7y ago

Brainstorming and validation rarely starts with a perfect idea. It starts with some about of demand, an unsolved problem or an inefficient market. We start to dig and as we talk to potential customers we get a better understanding of the problem and pivot accordingly. Sometimes we end up unearthing a great idea, sometimes not. It's worth remembering that finding billion dollar business narratives often involve some amount of market creation or expansion. It's not just "can we capture enough of the market that exists". It's "would customers pay more for a better experience?", "would more people become customers if the process was easier? Or cheaper?". - Ansel from PSL