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@NYUEntrepreneur
Sizing up your marketand competition
Jerry Hao
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@NYUEntrepreneur2
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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?
[email protected]@nyuentrepreneurentrepreneur.nyu.edu16 Washington Place
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