Cuando, por qué y como calcular el mercado potencial

When, Why, and How to Calculate Potential Market

by Tim Berry, Guest Blogger

I received an email from somebody asking me how to calculate TAM, which is “total addressable market,” (don’t feel bad if you didn’t know the acronym, because I didn’t either; I had to look it up). I’ve always called that simply “potential market.” As far as I’m concerned, these are the same thing. I’m going to call it potential market here, in this post. Regardless of what term you use, understand that these numbers are stories, possibilities, and hopes, not facts. They’re useful because they give a business plan a sense of scale. People want to know how big this opportunity is and how big it can get.  But market size is relative, markets change quickly, definitions are very fluid, so market numbers are educated guesses at best. 

Market Forecast and Potential Market
For a general review of what a market forecast it, and how to do one, I’d recommend this link to an article I wrote called what is a market forecast*.  A market forecast is almost always looking at potential market, not market share,  realized market, or sales; potential market is almost always a large number. 

Identifying Your Potential Market – Industry Examples
Normally to calculate potential market you start with a large number and then narrow it down. It’s a lot like taking a pie and slicing pieces off of it. The potential market for business planning software, for example, would start with all people who have access to computers that can run the software. You’d have to quickly cut out people who are too young or too old, people whose computers don’t have the right operating system, people who can deal with the languages supported by the software. And then you’d want to narrow that down to people who are interested in business and, still cutting off pieces, people who want to do business planning using software. When I was writing for Business Week out of Mexico City, years ago, the head of an American pharmaceutical company operating in Mexico told me that his marketing team believed that less than half of the population of the country (that was 30 years ago) was really part of the market for aspirin. The rest either couldn’t afford them or would never take a pill for a headache. So the potential market for shoes is people who wear shoes and have money to buy them, but the potential market for athletic shoes is a subset of that, and the potential market for high heels, or ski boots, or children’s shoes, are also subsets.Some web marketing companies like to think their potential is the whole world; but it’s really people who have access to the web, who can order with shipping, who can read the website, and have credit cards. Right? 

Potential Market versus Market Share
In all these cases you start with the large pie and cut off slices that don’t apply. And in all these cases you can see that the potential market is always way bigger than the actual served market, or market share, or actual sales. Nobody ever gets a large percentage of any potential market. Take a minute to think of the largest, most successful marketing brand you’ve ever heard of, and then think of the potential market, and then how much of it they actually get. Take McDonald’s, for example, with all the billions of hamburgers they’ve served, with a potential market equal to roughly that portion of the entire world’s population that can get to a McDonald’s restaurant, how much of that do they actually get? It’s tiny, wouldn’t you agree? 

When it comes to potential market, proceed with caution
All of which argues for taking  potential market numbers with a great deal of skepticism. While the big potential market number is nice to have, it rarely has much relevance to real business, and particularly not startups. Markets are relative. Whatever the potential market for video game software is, for example, it’s obviously way bigger than the market for business planning software. When a new venture comes up with something that everybody can use, and wants to use, that’s obviously way bigger than the venture that solves the problem of, say, working with quadratic equations in spreadsheets. 

Whey potential market doesn’t always impress investors
Ironically, when you take the concept of potential market into battle as part of a business plan or presentation, what works best is more story than number. The phrase “a $4.3 billion market” means so much less to investors than “we’re going to change the way people buy shoes” or “we’re going to end sore feet.” 

Focus on how you’ll get a piece of the market
And the least useful market sizing trick is the one that focuses on a new company getting a small piece of a very big market. I see this one way too often in investment pitches and business plan competitions. Don’t ever tell investors you’re going to get a very small piece of a very large market. Instead, build your sales forecast from the details up, channel by channel, search term by search term, store by store, or customer by customer, to make them credible. A large market is great, but when you get into defining total potential market, every business has a large market. What you’re going to do to get a piece of it is much more interesting.

SBA

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¿La oferta atrae a la demanda? (2/2)

Part II: How VCs Test Market Demand

ED ZIMMERMAN: My last WSJ Accelerators piece focused on how successful repeat founders tested their offerings/company prior to their launch. In this installment, we turn to how VCs test market demand for a product when conducting diligence prior to investing. While this is important for founders like those discussed in the last article, without the track record those founders had, diligence on market adoption becomes even more important.

So, what if you’re not David Chesky of HDTracks, Matt Keiser of LiveIntent, Amanda Hesser & Merrill Stubbs of Food52 or Craig Danuloff of Rewind.Me? What if, instead, you’re an unproven founder? How will VCs test the market demand for your company before investing?

To pull back that particular curtain, I called Ian Sigalow, co-founder and general partner at Greycroft Partners, an early stage tech VC. 2012 has been kind to Sigalow and his colleagues, as they’ve just closed on their third fund ($175M) and scored major exits when portfolio companies Buddy Media and Vizu were recently acquired. Greycroft initially invests $500K to $5M and typically increases that position over time. The fund also has a seed program which, Sigalow says, generally focuses on repeat founders re-entering a market in which they’ve proven themselves.

Sigalow would have sat out Rewind.Me, which raised before launching a product. When Greycroft eyes a consumer-focused startup “we need to see user traction — I can’t look at a product and say ‘this will be the next great thing’ because there are elegant products that never get adopted and crappy products that do.”

In fact, when Sigalow looks at a company likeHDTracks, which targets consumers, he fragments the market into two groups: companies charging consumers, and those making money based on large-scale user adoption (for instance, an advertising-based model). “If it’s monetized by advertising, then a few hundred users makes it hard for us to tell whether it will work (because the company will need millions of users). If, alternatively, (users are) paying a subscription each month, a few hundred users is probably adequate for us to determine what works.”

What about B2B companies (called “enterprise” businesses) like LiveIntent? While a fund like Greycroft may need hundreds of paying or 30,000+ free consumer users to feel like there’s sufficient traction, for enterprise companies, the fund may find sufficient traction with only half a dozen large customers using a product for free in beta.

Sigalow explains that for products sold as “freemiums” (the company provides a base product for free and charges for enhanced versions), Greycroft, not surprisingly, looks at whether customers want to pay for it.

Once they’ve decided they like a company enough to commence diligence, the Greycroft team compiles a list of dozens of people in their own network — experts as well as actual and potential customers in addition to references and customer contacts provided by the startup. Each call may take around half an hour to cover whether customers would pay for the service, to whom they’d recommend it and why, and who else they considered (or would consider) using.

Sigalow doesn’t just rely on the phone. Greycroft heavily uses Instant.ly, an online offering from Los Angeles-based uSamp. Instant.ly “has a 10 million person panel so we can target by age, geography, relationship status, job title, etc. and get thousands of survey results back in real time as if they were our own contacts.” You can specify how many survey results you want and, because Instant.ly usually has some 4,000+ users on its site, you can begin seeing results almost immediately. A few hundred responses from people Greycroft doesn’t know complement the data gleaned from calling their own network.

Sigalow underscored that “some funds like to risk more capital at an early stage. Seed funds, of course, are often doing pre-product.” Angels too invest pre-product, as I did when I invested in Rewind.Me and LiveIntent, but Sigalow’s detailed explanation is not far from how other Series A investors approach diligence prior to funding a promising startup.

Intrigued by Instant.ly, I reached out to uSamp founder Matt Dusig to see how the tester had done his own market testing before launching Instant.ly. “We built an entire business before building Instant.ly” he said, referring to uSamp, which “provides online market research panels and SaaS technology for global market research.” USamp receives inbound requests from corporations looking for market research. Those clients repeatedly told uSamp “we love working with the marketing agencies we use, but sometimes we can’t wait a month or longer for feedback, we want it instantly.” So it was less a question of Dusig testing the market and more of the market shouting at him, which, of course, is a great way to find a hole in the market. Much has been written about “founders in search of a problem” rather than those motivated by an existing problem.

Now that startups have become stylish, there’s a concern that people spend too much time seeking a problem rather than building useful experience and contacts which then would, almost in the ordinary course, reveal problems that desperately demand solving. USamp is definitely in the latter category. In fact, when asked, Dusig explained that prior to founding uSamp, he and his cofounder had built and sold another market research firm and then moved into another online business during the post-sale noncompete period (again, knowing what the market needed trumped testing).

This model of the repeat founder doubling down in a space he or she knows is precisely what VCs crave and, of course, that’s why Sigalow’s fund led the second venture round into USamp, which has now raised approximately $20M from Greycroft,DFJ Frontier and, more recently, Adam Marcus at OpenView Venture Partners.

So are you going to test the market or let the market shout at you? Please post a comment if you have questions or thoughts about the way investors diligence startups or if you have some great ideas and tools for testing the market for consumer or enterprise tech companies. We’ll do our best to answer!

WSJ

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Video: Investigación de mercado

Market Research

I periodically give talks on how to identify, research, and assess new business opportunities, most recently as a keynote at OCE Discovery (Canada’s largest innovation conference), the Yale Club of New York Thought Leaders in Business Series, and to Founder Institute. Following is a video and slide deck.

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¿La oferta atrae a la demanda? (1/2)

Part I: Build It and They Will Come?

ED ZIMMERMAN: “Passion. Instinct. That was it. Blind faith,” responded David Chesky, co-founder of HDTracks, when I asked him how he had tested the market before investing his time, reputation and cash to found his company and build his product. But let’s back up because I’ve been tweeting a lot about HDTracks — for instance, 9 months ago:

RT @EdGrapeNutZimm: don’t need discounts, I’m sold @HDtracks -the only place2hear it all (liberate me from compressed formats) #Hifi #Music

Why? Well, I’m a passionate music fan and an ignorant audiophile geek. That means I prefer tube amps over solid state, but I can’t explain the engineering underlying that preference. I also know that when I hear mp3 compressed files or the 1982 technology used in CDs, I feel cheated. When I hear uncompressed .flac or .aiff files (music stored in formats that let us hear all the info), it makes me happy and my kids and I are able to hear previously unheard details in familiar performances.

Here’s my test of any stereo equipment or new recording format: Does it make me want to listen to my favorite stuff all over again? HDTracks does precisely that. HDTracks has no outside investors; heck, I’m not even their counsel. I’m just a devoted customer. I’ve always loathed audiophile recordings because they’re songs you like by people you’ve never heard of, or people you’ve sort of heard of performing music you’ve never heard of (like a “worst of” compilation). Chesky solved that problem by having NYC-based HDTracks quietly strike licensing deals with the big music labels. He’s now actually making money for all involved and enabling fans to download an ever-increasing list of great albums in high def, uncompressed sound: Beach Boys, Clapton, Stones. But it isn’t just older stuff: Green Day, Tift Merritt andthe National have each released new albums on HDTracks.

Chesky has two advantages: (1) music is something about which many of us feel passionate and (2) in his words: “Here is the market research: …I am an audiophile who wants this and thinks it’s cool; therefore the rest of my kind will want it as much.” Of course, the question now is how big the market is – because he’s going to take it over, and if there are indeed a lot of “the rest of his kind,” we’ll all be sorry we haven’t invested!

Craig Danuloff, a serial founder, started Rewind.Me for the same reason: “I’m more of an ‘I think this is cool so I’m building it’ guy.” Rewind.Me enables us to use past check-ins, posts, tweets and other social media to take advantage of our own digital history – ‘have I been here before?’ (Disclosure: (a) I’m an investor and (b) Craig is an audiophile with a sick amount of .flac files…maybe this approach is just for us audio geeks?)

Are Craig and David crazy or lazy? Not according toJeff Richards, a partner at Silicon Valley and China-based GGV Capital, a leading growth stage fund that has backed Pandora, Buddy Media, Alibaba, SoundCloud and other great companies here and in China. (Disclosure: I’m an investor in GGV Capital).

Jeff says fewer people do testing “given how cheap it is to launch a product now – primarily due to the low cost and on demand availability of infrastructure (AWS [Amazon Web Services]) and ease of distribution (app store) – most entrepreneurs I meet are in a ‘launch and iterate’ mode. The flip side…it’s very hard to remain on top – competitors can launch and iterate quickly as well.” This doesn’t just apply to consumers – sure, we consumers are happy to be early adopters of iPhones or new cameras, but “perhaps even more interesting … I see enterprise customers willing to be part of the cycle – taking a chance on relatively new technology and in return getting to help shape the product. A decade ago no enterprise customer wanted to touch a product until it was ‘fully baked.’ ” This is an important change.

One of our amazing FirstGrowthVN companies, Food52, takes the “splash page approach” (which I see frequently used): “We put up a splash page before we launched to collect email addresses, and we let them join in stages. This was less about testing the specific concept and more about seeing if people had an appetite for a new kind of food site, specifically one coming from our perspective (or really [cofounder Amanda Hesser's], since she had already built such a strong reputation),” according to Merrill Stubbs, co-founder. Amanda Hesser garnered that reputation as food editor of The New York Times Magazine, author of several books, including “The Essential New York Times Cookbook,” and by playing herself in the film Julie & Julia(coincidentally, I’m available to play myself in a major motion picture…for the right price…just letting y’all know!). Here’s how Hesser leveraged that reputation for Food52: “We first tested our recipe contest system via email with family and friends. Then we bootstrapped by getting a book deal, and using the book advance to fund a year of testing.”

But what if you don’t have a product about which people are impassioned?

When Matt Keiser founded LiveIntent (in which I’m an investor), he marketed enterprise customers before he built product by using a PowerPoint deck as a proxy for a costly product (he saved the money up front that Danuloff and Chesky spent in building their actual product): “We made a bunch of mock-ups and a killer PowerPoint. We met with as many potential clients as possible. We refined the pitch until we got five very positive responses for every lukewarm response. We then built what we thought was the right product. It took a few tries. Year one is great, you believe your vision is correct. Year 2 sucks as you’ve learned that your baby has warts and you don’t know if you will be able to fix them. Year three rocks if you survive. Radical innovation is key if you want to be noticed.” He’s telling the truth – Keiser knows I hate to sit through PowerPoint decks but he’s made me do it repeatedly, and then I somehow find myself buying him dinner…talk about a great salesman! Still, Keiser had to rebuild that product (the wart-covered baby) and rebuild he did. It took some time, but boy has LiveIntent now found its groove!

Chesky, a 3x Grammy Award nominee, is deeply experienced and connected in his sector. What if you’re not? Keiser and Danuloff are serial founders who have successfully exited other startups. As for Hesser, well, she’s got plenty of street cred from her NYTimes gig and successful books. What if you don’t have these amazing credentials? How will VCs do their diligence and consider the market for your company’s products? Stay tuned for the next installment!

WSJ

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Emprenda temprano, emprenda simple y evalue

Launch Early, Launch Simple and Test

GUEST MENTOR, Kathryn Minshew, founder of The Muse: When I hear the words other people use to describe me or my team, one that I’m most proud of is “scrappy.” In the early days, we had no budget at all. And even as we’ve grown, it’s been important to us that we never operate like we’re so successful that we can just blow money. Staying lean and eschewing big marketing bucks has forced us to get creative about talking to our users and testing the market demand for our product—but doing so, we’ve also found that it’s completely possible to figure out what the market wants without spending a ton.

The secret: Launch early, launch simple and test. When The Daily Muse initially wanted to launch a job board, our first ideas were insanely (and needlessly) complex. We wanted to integrate with social networks, gather rich personal data to build predictive algorithms, and put together numerous cool visualization tools before launching out to the world. We were just sure users would love it! During Y Combinator, in the first five minutes of a wild meeting with Paul Graham, he urged us to “[expletive] launch already!” And so we scrapped the complex plans and we did. Thirteen days later, we were on TechCrunch with an MVP of our new photo- and video-based job-search product: TheMuse.com/companies.

And from there, we started learning. We did three things to capture and maximize the usefulness of the feedback we got:

1) For our individual users (jobseekers and the career curious), we collected data. We tracked their mouse movements with CrazyEgg. We saw which videos were most watched and which jobs saw the most applicants with Mixpanel. We also encouraged users to give us feedback by embedding simple forms on the site. (One read “TELL US WHAT YOU LIKE” in large letters across the footer.) We also spoke to hundreds of individuals in four geographies to hear their thoughts. All of this cost us less than $100 a month.

2) For companies, our paying clients, we added another simple Google form to the bottom of our product. This one read: “GET FEATURED ON THE MUSE.” When over 100 companies signed up in under 24 hours, we knew we were onto something.

3) We watched for organic growth. We wanted users to love what we were doing so much that they would share it with their friends and colleagues. That means excited tweets from recent college grads, our profiles being blasted to professional networks on Facebook and LinkedIn, and “omgweloveyou” emails in our inboxes. If we weren’t seeing that and seeing our traffic grow, we would know that we weren’t quite there yet.

And more importantly, when we did see it, we paid attention to what exactly our users were saying. They liked our focus on office culture. They loved how visual the site was. They were thrilled that we also offered content on how to handle tough situations at work and during the job search process. We used that feedback to validate our hypotheses about what our users really wanted and sharpen our focus—and learned things that no nicely prepared market research study could’ve told us.

It worked. And it showed us, beyond a doubt, that the best way to gauge market demand for a consumer product was to—you guessed it—get it in front of actual consumers. Of course, you then also have to pay attention to what they tell you—through analytics, through social media, and, if you’re lucky, what they actually say to your face. But most of that comes with a price tag that even a bootstrapped startup can afford.

When talking to first-time entrepreneurs, I often ask them: “How do you know that people want your product or service?” As you can expect, the answer is often that they don’t yet, but will know once they launch. And they’re right. That’s why it’s critical to launch as quickly as possible so you can get that feedback. Throw those bells and whistles out the window; you can add them later. Get your product in front of actual, living, breathing strangers. Your college roommate’s approval does not mean there’s market demand.

One of the top causes of startup death—right after cofounder problems—is building something no one wants. And it’s a sad fact of entrepreneurship that a fancy marketing budget and a lot of launch buzz can conspire to hide that issue. Launch early and often; learn as much as possible about how strangers use your product; and test, test, test.

So what are you waiting for? Just [expletive] launch already!

WJS

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¿Está la gente buscando tu producto?

Are People Searching for Your Product?

KATE MITCHELL: The good news is that there are more tools than ever to market-test your idea. The bad news is that there are many of them and some may cost more than you can afford for your startup. Here are a few simple ideas for gauging initial market interest:

1. Google AdWords can tell you how many searches there are for terms like your offering, which can give you an idea how many people are hunting for a solution like what you plan to offer. You can type in a product idea and see how many searches occur for that term. In addition, a bunch of terms Google thinks are related will come up.

2. Put up what are called “ghost” pages — fake Web pages for products you might offer, including the price and a “buy” button, and then run a small ad campaign on paid search and/or Facebook, and see how many people click through to the page, and how many of those click on the “buy” button. For around $500, you can estimate demand and cost to acquire a customer.

3. See how many “Likes” for comparable products and companies there are on Facebook, and how many followers on Twitter. Put out images on Pinterest and see if they get re-pinned.

Being objective about customer interest is important before you commit more time and money to your idea. It may take a few tries before you get it right, but nothing replaces hard data.

WSJ

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Caddell: ¿Qué es la estrategia digital?

Digital Strategy 101 from Bud Caddell

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Emprendedora de eCommerce china muere por exceso de trabajo

The E-Commerce Entrepreneurs Who Are Literally Working Themselves To Death

ALYSON SHONTELL

A 24-year-old with the Taobao user name "Aijun aj" died of work-induced cardiac failure in 2012. (Taobao/Weibo)

Running an online business can be difficult. It can also be life-threatening.

In China, there's been a spike in the number of overworked employees who have dropped dead, particularly in the e-commerce space.

One company that's becoming infamous for its user death toll is Taobao, a Chinese e-commerce platform that resembles eBay. Merchants can post items on their own Taobao storefronts. They're in charge of everything from keeping inventory and shipping items to updating the website and communicating with customers. But when their businesses take off, the work load can become too much.

In July 2012, 24-year-old "Aijun aj" who was running a store on Taobao died of cardiac failure. She wasn't the first or the last. Jun's death was preceded by a mother who ran a store on Taobao and a 25-year-old who ran another highly-rated online shop. 

Being overworked doesn't directly kill you. It leads to a series of poor health decisions, such as irregular diets, chronic stress, lack of exercise, and exhaustion, which can cause heart issues like Aijun's, blood clots and more.

Since the death of Aijun, other Taobao shopkeepers have expressed how grueling maintaining an online business can be. 

"I miss my sleep," one Taobao store owner told China's YouthDaily. "Although I hired someone to help me with customer service, things are never done. I still have to do the restocking, customer service, delivery, photography, web page design and information editing. As a result, I have to sacrifice my sleep."

Another described the madness of maintaining growth. "I often talk to 15 to 20 customers at once," Su Yuli tells YouthDaily. "Whether you are on your way to the post office to take delivery or sitting on the toilet, you have to be [communicating with Taobao customers]."

A survey produced by Taobao last year showed its sellers often work 10-15 hours per day, YouthDaily reports. And another survey from 2011 of Taobao's store managers cited by Epoch Times is even more startling:

"38 manager/owners, or more than 50 percent, had cervical abnormalities. 37 manager/owners, or 94 percent of the female manager/owners, had hyperplasia of mammary gland. 35 percent, or 26 managers/owners, were diagnosed with hyperopia. Chronic pharyngitis, dyslipidemia, fatty liver disease, and thyroid abnormality were confirmed in 21, 19, 18, and 17 managers/owners, respectively." 

Since Taobao is a platform, not an employer of the over-worked, it can't be blamed when its users push themselves too hard. But Taobao is trying to help find a solution. 

"No matter how important your career is, do not neglect your health, especially during these hot summer days," it warned its shopkeepers after Aijun's death. 

Still, the number of e-commerce related health issues and deaths in China are on the rise. More than 50,000 surveyed online shop owners reported having regular headaches, aches and pains, ChinaDaily reports. A 2012 study cited by Epoch Times found that 600,000 people die suddenly from being over-worked each year.

The most recent incident occurred last week, when 36-year-old Taobao shop owner Wu Lijun died of cerebral venous sinus thrombosis, a blood clot in the brain. Lijun ran one of Taobao's most popular skincare businesses. A May article, "The Top Ten Sudden-Death-Prone Industries." listed "Taobao shopkeeper" as the tenth most fatal career. Again, Taobao alerted its users to the dangers of working excessively.

Exhaustion-induced fatalities have occurred outside the e-commerce industry too. In May, an advertising employee at Ogilvy China suffered a fatal heart attack. Blogs and tweets were quick to blame it on too much work; the man reportedly spent 30 days leading up to his death working until 11 PM.

While companies like Taobao can help create awareness for the work-enduced deaths, it's up to its merchants to know when to pump the breaks.

"Why does a day only have 24 hours? I want to be a rechargeable robot," Aijun lamented once online.

Shortly after, she was dead.

Here's what one merchant's Taobao store ("cat1881") looks like.

Business Insider 

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Cuatro preguntas para saber el tamaño de mercado de su emprendimiento

Startups: Size Up Your Market with These Four Questions

Posted by Dennis Cocco 

Sizing the market is a necessary task for business planning and budgeting for all startups. Those seeking investment from third parties want to be particularly diligent in this task, as VCs and angel investors need to know they are investing in a business with potentially large market size. To determine the market size for your startup, ask yourself the following four questions:

1. What problem are you solving?

Have an understanding of what problem you are solving for customers and the value that your product or service is providing them. The problem you solve for your customers should be real in that it should address a valid point. Sometimes, entrepreneurs are fixated with problems they believe are real, but customers don't see things the same way.

2. Who is your target customer?

Create a profile of your target customer by analyzing the behaviors of this customer. The process of determining the target customer for an innovative product is different from the process used in an established marketplace, which is based on pre-existing product categories. An innovative startup's product or service is potentially disruptive to the marketplace, which requires a more qualitative approach to determine the target customer. The purpose of this process is to ensure that your startup's technology capabilities are directed toward the most valuable customers for future growth.

3. What other vendors or products exist in your space?

Your answer should never be: "There are none." There are and you need to determine how your product is different. Ask yourself if it meets the needs of the people currently purchasing competing products in a way that will sway or tempt the purchase of your product instead? Determine what exactly you have to offer the consumers.

4. What is the estimate number of target customers?

Estimate the practical reach your product/service will have. While there may be 100,000 people in your target audience spread across 50 cities, you may want to take the top 10 cities and see how many people you have within your target audience. This of course gives you the total market potential if 100% of potential customers were to buy from you.

Glideit

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Griner: Todo lo que usted necesita saber sobre los medios sociales

Everything You Need To Know About Social Media from David Griner

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