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Understanding Markets

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Enrique Godreau, Managing Partner of 9Mile Labs, shared some thoughtful, data-driven ideas around market sizing and competitive analysis for startups.

If you are looking to understand more about Total Addressable Market, Serviceable Addressable Market, Target Market, etc., check out these slides.

Enrique shared this presentation at the NEXT Program in Seattle (swnext.co)

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Understanding Markets

  1. 1. Ideas,  Markets,  &  Compe11on   Enrique  Godreau  III   9Mile  Labs   April  15,  2014  
  2. 2. Big  Ideas   •  New  Big  Ideas  &  Small  ideas  take  similar  effort   •  Might  as  well  go  for  the  big  idea!   – What  if  on  5/25/61  John  Kennedy  had  said,  “This   Na)on  should  commit  itself  to  achieving  the  goal,   before  this  decade  is  out,  of  delivering  a  pizza  in   New  Jersey  and  returning  the  delivery  person   safely  to  Manha?an”   – No  cordless  tools,  microchips,  joys)ck,  reflec)ve   insula)on,  smoke  detectors,  water  filters  or   satellite  TV  
  3. 3. Big  Ideas     •  They  don’t  need  to  be  hard  or  complicated   •  They  don’t  need  to  be  en1rely  new   •  They  don’t  need  to  require  lots  of  money   •  They  can  help  you  build  a  big  business   But  How?   •  Suspect  the  “same  old  way”   •  Nurture  Uncommon  Sense   •  Don’t  simply  be  crea1ve,  imagine!  
  4. 4. Ideas are a dime a dozen It’s all about execution
  5. 5. Market
  6. 6. Total   Addressable   Market   Serviceable   Addressable   Market   Market   Share   Market  Size  
  7. 7. Total   Addressable   Market   Serviceable   Addressable   Market   Market   Share   Market  Size   People  with  2  feet   People  into  SnowSports   People  who  ski  
  8. 8. 8     3M  SMB  retail  stores   $1K  /  store   $3B  per  year   $5K  /  store  upside   $18B Market (not  including  na1onal   chains)   The  market  is  huge   x   +   (Real Example)
  9. 9. Key  is  defining  that  first  target  well   •  Accessible,  well-­‐funded  target  customer   •   Compelling  reason  to  buy   •   Feasible  WHOLE  product   •   No  entrenched  compe11on   •   Good  follow-­‐on  segment  poten1al   •   Known  partners  and  allies   •   A  quick,  decisive  victory!   Source:  E.  Dooley/UW  
  10. 10. Bigger  markets  provide  more  op1ons   SnowSports   Offering   Ski  Boots   Snowboard   Boots   Snowshoes   Telemark   Boots   Cross-­‐ country  Ski   Boots   MonoSki   Boots   •  Larger  markets  provide  more   op1ons  to  succeed   •  Assume  REV  goal  of  $50  million   •  If  TAM=$50  million;  1  chance   •  If  TAM=$1  billion;  20  chances   •  Building  a  business  is  hard—   why  not  improve  the  odds?  
  11. 11. !  Sweat Equity !  Credit Cards !  Home Equity Loan !  Friends & Family !  Government loan/grant programs !  Revenues/profits !  Incubators !  Angel Investors !  Venture Capitalists !  Commercial Bank Loans !  Mergers & Acquisitions (“M & A”) !  IPO Sources of Money (in order) Source:  A.  Dishlip/Summit  Imaging  
  12. 12. !  Sweat Equity !  Credit Cards !  Home Equity Loan !  Friends & Family !  Government loan/grant programs !  Revenues/profits !  Incubators !  Angel Investors !  Venture Capitalists !  Commercial Bank Loans !  Mergers & Acquisitions (“M & A”) !  IPO Sources of Money (in order)
  13. 13. •  Coffee  has  been  brewed  for  500  years   •  In  2004,  Keurig  took  pod  system  to  home  market   •  The  pods  cost  10X  more  than  tradi1onal  methods   –  Consumers  want  speed  and  convenience   •  Results   –  FY13  $4.4  billion  with  greater  than  40%  market  share  
  14. 14. Compe11on   Enrique  Godreau  III   9Mile  Labs   March  31,  2014  
  15. 15. Compe11on   com-­‐pe-­‐.-­‐.on   –  process  of  trying  to  beat  others:  of  trying  to  win  or  do  beoer  than  others   –  an  ac1vity  in  which  people  try  to  win  something  or  do  beoer  than  others   –  opposi1on:  the  opposi1on  in  a  compe11ve  situa1on,  or  level  of  opposi1on  
  16. 16. So  what?  
  17. 17. Mobile  Adver1sing  Today   •  $7.3  billion  in  FY13   –  5X  increase  in  revenues  since  2011   –  FY17  Revenue  forecast  of  $27  billion   •  #1  Google  got  $3.9  billion   –  More  than  half  of  total  revenue!   –  Earned  93%  of  all  US  Mobile  search  ad  $’s   •  #2  Facebook  got  $965  million   –  13.2%  Market  Share   •  #3  Pandora  got  $372  million   •  Then  there’s  the  rest  …  
  18. 18. How  do  you  win?   #1  Be  the  best  in  your  category   #2  Create  a  category  you  can  be  the  best  in  
  19. 19. Breakthrough’s   •  Product  Innova1on   –  Beoer  Experience   –  Benefit  Enhancement   –  Price  and  Value   •  Business  Model  Innova1on   –  Produc1on  Model   –  Distribu1on  Model   –  Profit  Model  
  20. 20. Market  Category   •  Defined  by  value  proposi1ons   that  differen1ate  it  from  others   and  appeals  to  the  market   •  Pick  Criteria  where  you  win   •  Pick  Criteria  you  can  promote   •  Pick  Criteria  that’s  new  and   worth  talking  about   •  Define  the  category  so  you  can   extend  it   Building    your  own  category   establishes  the  Rules  of  Engagement   If  you  create  it,  you  own  it!   Categories  live  in  customers’  minds   Otherwise  you  are  in  a  brand  brawl   SalesForce  said  Cloud  Compu1ng  was   the  future  and  everyone  else  laggards   FedEx  said  overnight  shipping  rules   Tableau  said  numbers  are  hard,   visualize  your  data   App1o  says  manage  your  IT,  don’t  just   build  your  IT  

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