It's important to understand how big an opportunity is before deciding if you are going to invest your time and money (plus possibly other people's money) into a startup. We'll talk through different approaches to figuring this out in this week's lecture.

1. Market Opportunity
!
Sean Ammirati
Partner, BirchmereVentures
Adjunct Professor, Carnegie Mellon University
#CMULean

2. Market Opportunities
1. Large Number of Total Potential
Customers / Users
2. Rapid Predictable Future Growth
3. Clear path to replicable user / customer
acquisition
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3. 1. Market Sizing
Total Addressable Market
Served Available
Market
Target
Market
Top Down Bottom Up
Take key variables in revenue
model & multiple by market
data assumptions
!
!
Example:
# of Potential Users x
# of PageViews x
(Average RPM in Mkt/1000)
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4. Sample:VigLink
http://lsvp.com/2011/03/16/how-to-estimate-market-size/
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5. Real Goal: Make sure
this is worth your time!
!
(and your investors money)
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6. Sample: NoWait
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7. $185 B
300,000
locations
the table service market.
10%Fine Dining
Reservation

8. $185 B
300,000
locations
casual dining.
!
!
!
!
!
OpenTable for
Casual Dining
Casual Dining
Walk-in

9. 2. Be Weary of Analysts
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10. Market Types
B2B: used & purchased by businesses
B2C: used & purchased by consumers
B2B2C: sold to business to acquire a
consumer
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11. 3.Tools for user /
customer acquisition
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12. For Next Week ...
• Present (~5 minutes):
• A slide with fully flushed out business
model canvas
• Focus on Key Parts of Canvas based on
business model pattern
• Highlight key assumptions (variables) you
would use to build a financial model
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13. seanammirati.com
!
@SeanAmmirati
#CMULean