0/ Estimating market sizes.
A thread for #desi #founders and #startups
How do you estimate #marketsize for your products and services? A list of things to do and ...
A thread for #desi #founders and #startups
How do you estimate #marketsize for your products and services? A list of things to do and ...
1/ Numbers maketh the man
Please don’t quote numbers you don’t own, haven’t derived or understand for your market size.
You are the founder, do the math yourself. Make sure they validate
With apologies to #Kingsmen + @colinfirth_kr numbers, not manners, maketh the man.
Please don’t quote numbers you don’t own, haven’t derived or understand for your market size.
You are the founder, do the math yourself. Make sure they validate
With apologies to #Kingsmen + @colinfirth_kr numbers, not manners, maketh the man.
2/ Avoid lazy thinking.
It is a bad idea to quote a multi-lateral agency report for Asia for a problem that you are solving.
Don’t tell me that according to World Bank, IMF, IFC or ADB, the FinTech market in Asia will be worth 4 trillion USD in 2030.
Why you ask?
It is a bad idea to quote a multi-lateral agency report for Asia for a problem that you are solving.
Don’t tell me that according to World Bank, IMF, IFC or ADB, the FinTech market in Asia will be worth 4 trillion USD in 2030.
Why you ask?
3/ We just make this shit up.
With apologies to all my consultant friends, as consultants we are really good at guess work that looks real.
Guess who wrote all those multi-lateral agency reports?
We did.
Our guess is as good as yours. Yours would actually be better.
With apologies to all my consultant friends, as consultants we are really good at guess work that looks real.
Guess who wrote all those multi-lateral agency reports?
We did.
Our guess is as good as yours. Yours would actually be better.
4/ Can you really sell to a global market?
Beyond guess work, I don’t really care about global markets. It is going to take you a decade to get to it.
Tell me about the local market, markets you can reach and serve. Markets that will take you seriously.
Beyond guess work, I don’t really care about global markets. It is going to take you a decade to get to it.
Tell me about the local market, markets you can reach and serve. Markets that will take you seriously.
5/ Fresh produce in Karachi.
For instance, rather than selling fresh produce to the world, show me how you are going to sell Fresh produce in Karachi.
Not all of Pakistan, just Karachi. Or wherever your start up is based.
Make the math work locally, than expand
For instance, rather than selling fresh produce to the world, show me how you are going to sell Fresh produce in Karachi.
Not all of Pakistan, just Karachi. Or wherever your start up is based.
Make the math work locally, than expand
6/ Two paths to a number
So how would you go about estimating this market
Two choices.
Model A. Start from the top.
Model B. Start from the bottom
Why Two? Easier to cross check and validate. Also more credible. Less likely to get it wrong. Think #CRCchecks
So how would you go about estimating this market
Two choices.
Model A. Start from the top.
Model B. Start from the bottom
Why Two? Easier to cross check and validate. Also more credible. Less likely to get it wrong. Think #CRCchecks
7/ Top Down vs Bottom up
Model A. Top Down. Pakistan GDP. What proportion is Karachi? What proportion is food? What proportion is fresh produce?
Model B. Bottom up. What do middle class homes spend on food/month? What proportion is produce? Total middle class homes in Karachi?
Model A. Top Down. Pakistan GDP. What proportion is Karachi? What proportion is food? What proportion is fresh produce?
Model B. Bottom up. What do middle class homes spend on food/month? What proportion is produce? Total middle class homes in Karachi?
8/ Why middle class households?
Because that is where our primary market is as a consumer business.
These are the homes that would try and by from a home delivery service
Can we reach all of them? Can we serve all of them? No.
Because that is where our primary market is as a consumer business.
These are the homes that would try and by from a home delivery service
Can we reach all of them? Can we serve all of them? No.
9/ Let me count the ways
How many markets are there?
Total fresh produce consumed and sold in Karachi is one.
Total fresh produce consumed by middle class households in Karachi is two.
Houses holds you can reach is three. Households you can serve is four.
How many markets are there?
Total fresh produce consumed and sold in Karachi is one.
Total fresh produce consumed by middle class households in Karachi is two.
Houses holds you can reach is three. Households you can serve is four.
10/ Relevance
Any one of these is more relevant than total global market for fresh produce. Don't even go there.
The most relevant to you are three and four. But you can't get there without one and two.
Any one of these is more relevant than total global market for fresh produce. Don't even go there.
The most relevant to you are three and four. But you can't get there without one and two.
11/ Market share
Your market share is a function of four. Households you can serve.
While I make fun of projections all the time, sensible market share calculations and math help serious founders stand apart from the crowd.
Focus on what is relevant. Local market share.
Your market share is a function of four. Households you can serve.
While I make fun of projections all the time, sensible market share calculations and math help serious founders stand apart from the crowd.
Focus on what is relevant. Local market share.
12/ To infinity and beyond
Don’t stop here. Improve your estimates.
Project the future.
Do an outlook.
Identify growth drivers.
Do sensitivity testing.
Own the figures.
Dig up relevant, credible, reliable research.
Identify the game competition is likely to play.
Don’t stop here. Improve your estimates.
Project the future.
Do an outlook.
Identify growth drivers.
Do sensitivity testing.
Own the figures.
Dig up relevant, credible, reliable research.
Identify the game competition is likely to play.
13/ Homework assignment
My educated guess for total fresh produce consumed in Karachi?
Somewhere between USD 15 to USD 20 billion dollars per year.
Model it. Validate it. Shoot it down. Own the math
My educated guess for total fresh produce consumed in Karachi?
Somewhere between USD 15 to USD 20 billion dollars per year.
Model it. Validate it. Shoot it down. Own the math
14/ A thread on #marketsizing for #desi #founders #startups
Numbers maketh the man
@babushka99
@Huk06
@faizansiddiqi
@kayzafar
@MaroofAliSyed
@peshawar2o
@jehan_ara
@TalhaIzhar
Based on the lecture at @HabibUniversity
Numbers maketh the man
@babushka99
@Huk06
@faizansiddiqi
@kayzafar
@MaroofAliSyed
@peshawar2o
@jehan_ara
@TalhaIzhar
Based on the lecture at @HabibUniversity
15/ Bonus Tweet
Just to show how easy it is to go off the reservation.
Many many moons ago, when smart phones were really really new in Pakistan, I sat down with a good friend and client to estimate the number of smart phone that would be sold in Pakistan in the next 5 years.
Just to show how easy it is to go off the reservation.
Many many moons ago, when smart phones were really really new in Pakistan, I sat down with a good friend and client to estimate the number of smart phone that would be sold in Pakistan in the next 5 years.
16/ Guess how wrong we were?
My friend shall go un-named but he was a #Telco insider. We both had smart phones. The year was 2011-12. So not too long ago.
Despite being industry insiders, we were wrong by about 60 million handsets.
You are in good company :)
My friend shall go un-named but he was a #Telco insider. We both had smart phones. The year was 2011-12. So not too long ago.
Despite being industry insiders, we were wrong by about 60 million handsets.
You are in good company :)
