NYU Startup School: Sizing Up Your Market & Competition

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Sizing up your marketand competition

Jerry Hao

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Generic Strategies

You have limited scale and resources

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Generic Strategies

So you don’t have a cost advantageand can’t go after the whole industry

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Focused + Differentiated

But you can uniquely provide value to an underserved market segment

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“The essence of strategy is choosing

what not to do.”Michael Porter

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3 Steps to Follow

1. Know your initial customer and value proposition

2. Develop your understanding of the market

3. Invest strategically

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Focus

Differentiation

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Step 1:Know your initial customer and value proposition

What problem do you solve? (Unmet needs)Who needs/wants your solution the most? (Underserved customers)

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Business Model Canvas

Differentiated Focused

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Customer Archetype ProfileDescribe the person: name, age, relevant personal infoImage

Jobs To Be Done Existing Solutions

How They Buy

Pains

Gains

Influencers

Barriers

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Customer Ecosystem

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TOTAL

Initial Target CustomerSegment

Criteria

List ≧3 potential customer segments you believe are most likely to be your early adopters/enthusiastsAcross the top row. List ≧5 criteria (excluding market size) you believe will determine your success in the left column. Honestly rate how you can serve each segment today on a scale of 1 to 3, where 3 is best. The segment with the highest total score goes into the Customer Segments box on your Business Model Canvas.

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Step 2:Develop your understandingof the market

Who else solves this problem and how? (Competitors and substitutes)What are their business models? (Competitors’ Business Model Canvas)How much are customers spending to solve the problem? (Market size)

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Search for a solution

Market immersion

Ecosystem

Industry terms

Recent news/issues

How would you find a solution to this problem?

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Search volume and terms

Awareness/intent

Related terms

Competitiveness

Mobile searches

How many people are looking for solutions? What words would your customers use?

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Research reports

Market research

Industry trends

Major players

Adjacent markets

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Media coverage

Competitors

Business models

Past failures

Investors

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Blogosphere

Trending topics

Shareworthy topics

Influential sites

Influential people

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Trends over time

Awareness/intent

Competitor growth

Related searches

Seasonality

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Social chatter

Love/Hate

Needs/Wants

Competitor convos.

Customers

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Early adopters

Competitors

Customers

Past conversations

Trends

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Digital communities

Interviews

Topics of interest

Past conversations

Customers

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IRL Communities

Interviews

Topics of interest

Past conversations

Customers

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Talk to experts

Top challenges

Insider perspective

Trends

Priorities

What do insiders think?

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Think broadly about competitors

1. Tries to solve the same problem AND/OR2. Takes away time, money, or attention your customers

would have otherwise spent on you• Substitutes• Complements

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Starbucks competitors

Brands Product types Needs/Value Props Customer segments

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Get fitBodyToningClothing

Gyms&FitnessPrograms

WearableFitnessDevices

Fitnessapparel

HomeFitness

Competitors

Potential channels

Potential partners

Expansion opportunities

-> Peak performance

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Workshop:Map your ecosystem

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Petal DiagramWhat are the top 5 adjacent markets of competitors, substitutes, or complements where your target customers are looking, using, and buying solutions to their problem? How are these alternatives suboptimal relative to your solution?

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Your Competitors’ BMC

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Top Down Market Size

$10gazillionmarket

Everybody eats! The global food market is massive!Even if we take .0001% of this market…

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Where will you focus yourtime and money?

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Workshop:Qualify and Quantify your market size

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Food delivery TAM

200MAmericansbetween18-65x

Avg 10days/yr gettinglunchdeliveredx

$10averagespentonlunch

How much do people spend on food delivery?$20bn/yr total available market

Numbers are not real!

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Food delivery SAM

How much is spent on food delivery thru iPhones right now?

$800m/yr serviceable available market

$20bnOpportunityx80%smartphone

penetrationX10%orderinglunchon

phonex50%oniPhone

$800m

200MAmericansbetween18-65~10days/yearonlunchdelivery

$10averagelunchspend

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Food delivery SOM

Initialtargetmarket

$800MSAMX

0.5%ofUSworkinginManhattanbelow59th St

How many of those people can I target right now?$4m/yr serviceable obtainable market

200MAmericansbetween18-65~10days/yearorderinglunch$10averagelunchspend

80%smartphonepenetration10%orderinglunchonphone

50%oniPhone

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How will your SOM get you to your SAM?

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Total Available Market

Everypotentialcustomerx

Avg #ofpurchases madeannuallyx

Avg priceofeachpurchase

TAM tells us how big the pie isHow many potential customers exist and how much would they spend?How much is currently spent trying to solve the problem each year?What’s the big vision?

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Serviceable Available Market

SAM tells us how big your slice of the market isWho would buy your solution now, given your existing business model?Who will want a half-baked product from a small team with no money?What are you focused on right now to set you up for TAM?

Serviceablecustomersx

Avg #ofpurchasemadeannually

xAvg priceofeachpurchase

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Serviceable Obtainable Market

Initialtargetmarket

ExpectedRevenueforfirst1-2 years

SOM tells us how much you can bite off right nowHow many people can/should you target right now?Who are you going to sell to in year 1 and 2?Who are you targeting to set you up for SAM?

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Step 3:Invest strategically

Why aren’t competitors solving the problem well enough? (TAMS)How are you (or can you become) meaningfully different? (2x2/Positioning)Why can’t they solve it this way too? (Competitive advantage)

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Petal DiagramHow are alternatives suboptimal relative to your solution?What makes you a meaningfully different/better solution?

Time

Access

Money

Skill

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2x2: Top 2 Differentiators

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Positioning statement

For (target customer) who (has this need)

we are a (category) that (has these key benefits)

unlike (competitors), we (have these differentiators)

BMC BMC

Petal BMC/Petal

Petal Petal/2x2

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“…First dominate a specific niche and then scale to adjacent markets...”- Peter Thiel

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Competitive advantage

Something you are (or become) good atthat:

1. Creates value for customers2. Can’t be copied by competitors

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Advantages arise from

Shifting input costs or availability

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Advantages arise from

Changes in government regulations

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Advantages arise from

Better or differentiated technology

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Advantages arise from

Better understanding of new or shifting buyer needs/preferences

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Advantages arise from

Focus on new or growing industry/segment

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Five Forces Analysis

How intense is competition in your market?

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Prioritize and invest

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The Value Chain

All the things a company does to create valueWhat will you prioritize to build your competitive advantage?

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“Even though you target just those few potential customers today there is no law that says you are limited to those customers for eternity.”- Darmesh Shah, Hubspot

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Alphabet

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Buy books online

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Find people at your school

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Ride in luxury

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Tuesday 10/11, 4pmAcquiring Customers

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1 Attend next week’s Startup School

bit.ly/nyustartupschool

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2 Meet with a Blackstone Launchpad coach

Say you went to Startup School!

entrepreneur.nyu.edu

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3 Enter the $300k NYU Entrepreneurs Challenge

Training & coaching for your startup!Deadline to Enter is Oct 6th!

bit.ly/NYU300k

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4 Come to the Healthcare Makerthon Pitch Night

Learn about most pressing challenges in healthcare and how you can help build the solutions on Oct 6th!bit.ly/pitchnight16

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Questions?

entrepreneur@nyu.edu@nyuentrepreneurentrepreneur.nyu.edu16 Washington Place

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