Market Sizing & Competitive Analysis17th September 2014

Dwight Gunning - @dwightgunning

Market Sizing & Competitive Analysis17th September 2014

Dwight Gunning - @dwightgunning

TOPICS

• Market Sizing

• Why is market sizing important?

• Sizing approaches

• Competitive Analysis

• Understanding the entire competitive landscape

• Evaluating competition and answering the right

questions

@dwightgunning

MARKET SIZING

@dwightgunning

@dwightgunning

MARKET SIZING FOR YOUR INVESTORS• Investors aim to help companies grow to $100M+ revenue in 3-5

years

• Some ballpark numbers:

• 1% of a $10B Market —> Is the market too broadly

defined?

• 5% of a $2B Market —> This looks feasible / realistic.

• 50% of a $200M Market —> Is the market share too

optimistic?

• Market Growth

• How is your specific segment going to grow over time?

• Market Value: gross vs net

• Do you sell your own product or take margin on somebody

else's?

Present the sizing story you’re confident with and stand by it 100%@dwightgunnin

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TOP DOWN ANALYSIS

• Total Available Market (TAM)

• Typically a top-line industry figure

• Serviceable Available Market

(SAM)

• The market you can actually reach

and serve based on your customer

acquisition and sales channels

• This is the number VCs care about

• Serviceable Obtainable Market

(SOM)

• The realistic market share you

expect to obtain.

Total Available Market(TAM)

Serviceable Available Market(SAM)

Serviceable

Obtainable Market

(SOM)

“Define your market sizing as tightly as you can.” - Mark Suster@dwightgunnin

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BOTTOM UP ANALYSIS

• Use your own data:

• "Currently we have x clients who pay $y. There are N thousand

companies like this and so far we’re converting at B%.”

• Use representative data from your research:

• “Taxi driver’s monthly fare revenue is €5000. We’ll supply 20% of the

drivers work (€1000) for 10% commission (€100). There are 550,000

drivers in our launch cities. 10% market share => €66M market value.”

• Who’s the biggest company in the space right now?

Sanity Check: top down and bottom up sizing should “line up”@dwightgunnin

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@dwightgunning

COMPETITIVE ANALYSIS

@dwightgunning

"Explain your startup in the context of theenvironment in which you operate including those

who you partner with, those who you compete against and things that keep you up at night”

Stephanie Palmeri - Venture Capitalist

@dwightgunning

THE COMPETITIVE ENVIRONMENT

• It’s more than just competitors. Think about

• How else is the problem being solved?

• What are my suppliers and partners planning?

• Could my customers compete? (e.g. B2B / when part of a value-

chain)

• Know the environment inside out:

• Macro business environment e.g. trade agreements

• Economic + political trends e.g. Data privacy and recent NSA

events

• Cultural shifts e.g. Mobile, time-shifting

• Tech innovation e.g. 3D Printing, AR/VR, Wearables

• Regulation / Legislation e.g. online gambling, taxi and

transport

A deep understanding will build confidence amongst investors@dwightgunnin

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COMPETITOR ANALYSIS

• Competitors: Direct / Indirect / Future

• Points of differentiation

Pinpoint insights and secret weapons that will ensure you succeed

Buffer - Social Media Tool ZANA - Learning Network

@dwightgunning

Tweet me: @dwightgunning

Tweet me: @dwightgunning