What problem am I solving?1. Is this problem worth solving?2. Are there many solving this problem?3. What’s my unfair advantage in this?
Doing NewthingsReplicating things that workTechnology0 to 1Globalization1 to n
What’s my solution?1. Am I different or am I better?Beware of cheaper, faster, better disease!
Start-ups win by being different. The goal of a newventure is to dominate, to own a new category!First, name your category and then only do anythingelse like logo, name, messaging, viral- campaign etc!When successful, the category is known by the startup!
What was the first successful MP3 player?First mover loses to First-minderCreative Technologys product, the CreativeNomad Jukebox.What was the giant MP3 winner?Apple’s iPod
Who will pay for my solution?What is my #1 source of revenue?If you have 5 different source of revenue, then something is wrong. Pick 1.
How do I estimate market size of category that doesn’texist?Top Down: TAM - Total Available MarketFocus: Ideal Customer = SAM - Served Available MarketSales: Customer Adoption = SOM = Share of Market
Market estimate for an app that will scan food dishes and monitor calories!1.How many end users have an over-weight problem?2.How many have an under-weight problem?3.For (1) and (2) how many are in a) U.S b) Europe c) China d)India e) Rest of the world4.What portion of them own a smartphone?5.What portion are• Obese• Over weight by 30 pounds or more• Think of themselves as "over-weight"• Have serious (doctor treated) health problems related to excess weight6.What portion are• Seriously under-weight• Chronically under-weight• Psychologically under-weight7.The total of the above equals TAM• Units• Price per Unit• DollarsSource:nesheimgroup.typepad.com
Market estimate for an app that will scan food dishes and monitor calories!Focus: Ideal Customer = SAM = Served Available Market1. Which segments of TAM is your product most appealing to(pick 6: Seriously under-weight, Chronically under-weight, Psychologically under-weight )?a. Which segment is most eager to use your product?b. What 2 related segments are next as measured byproduct appeal?2. In what year will you offer products for each of those 3market segments?3. Line up these 3 segments like Bowling Pins4. The total of the above equals SAMUnits x Price per Unit = $Calculate % of TAMSource:nesheimgroup.typepad.com
Market estimate for an app that will scan food dishes and monitor calories!Sales: Customer Adoption = SOM = Share of MarketFor each of the 3 Bowling Pins:a. At what rate (% of each of the 3 market segments inSAM) will customers purchase your product, eachyear, for five years.UnitsPrice per UnitDollarsb. Add the 3 sets of numbers to get your Sales.Total UnitsTotal DollarsAverage Selling Price% of SAMSource:nesheimgroup.typepad.com
Market estimate for an app that will scan food dishes and monitor calories!Boundaries1. SAM in early years should be less than 25% of TAM, rarelyover 50%.2. SAM below 10% is too small, or TAM is too large, notfocused enough, lacks meaning.3. SOM over 30% of SAM is rare. Gorillas of new marketssettle in around 30%• SOM below 10% is too small.• Your adoption rare may be too conservative.• Or your product is rather boring, not appealing.Source:nesheimgroup.typepad.com