Techniques for analyzing the attractiveness of an industry to potential startups. Covers analysis of market structures and how to size a market opportunity.
3. If a thing is not worth doing,
it’s not worth doing well.
!
- Charlie Munger
4. Readings
Describing the Habits of Mind
Managing Overconfidence
How to Detect a Management Fad--and Distinguish It from a Classic
Widgets Make a Big Splash on the Net
Read any three reports at IBISWorld Market Research Reports
5. Describing the habits of mind
What does good thinking have to do with market sizing?
Why do smart people attack tiny markets?
Why do people spend their lives trying to squeeze blood out of turnips?
6. Managing Overconfidence
What causes overconfidence? Where have you seen this happen?
When is overconfidence useful? When is realism useful?
Weather forecasters are good at their jobs?!
7. How to Detect a Management
Fad
What do management fads have to do with market sizing?
8. Simple, intuitive, clearcut
Confidently promises big results
Benefits for every industry
Step-down capability
(implementation by part)
Cocktail-party ready
Novel, not radical. Repackage
older ideas in fresh form
Guru-certified with a few star
examples
Fun, upbeat, memorable
How to Detect a Management
Fad an Industry
10. • Competitors
• Market positioning
• Products
• Customer bases
• Industry trends
• Industry size and growth
Collect solid info on:
Industry analysis
19. Netflix
Market sizing
What need? Which customers?
Key questions
Need Market
A movie to watch (1996) Home video rentals
A movie to watch (2013) Home video providers
A movie to stream Home video streaming
Something to do Consumer media
22. Key questions
Total addressable market
How big is the pie?TAM
Served available market
How big is my slice?SAM
Target market
How much can I eat?TM
Top-down
market sizing
23. Rules of thumb
Top-down
market sizing
x% of the market/
segment you could get
100% of the segment
you could sell to
100% of the market for
type of product you sellTAM
SAM
TM
24. Example
US taxi services $5.3b SAM
US taxi & limousine services $9.7b TAM
Uber’s share (2%) $106mLargest company in industry has ~2%
TM
Uber
Source: IBIS World
Top-down
market sizing