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Post on 05-Jul-2020
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Counting NosesThe Innovator's Guide to Market Sizing
Christina Noren, CPO, Interana
So, How Big is Your Market?
The Truth: No One Knows
If You Are Doing Something Truly New, You Will Be Making a Market
Some of My Experiences in Sizing New Markets
VP Product & Employee #12$3+ billion 2012 IPO> $1 billion annual sales in 2016
Created $2.8 billion market for IT Operations Analytics
Analyst & Employee #20$1+ billion 1999 IPO> $268 million annual sales in 2001
420 telco & service provider customers for converged billing platform; replaced earlier categories
Analyst & Employee #301994 IPO audio business cratered post-IPO
Research led to entry & leadership of new DVD market and a $148 million business by 2006
Current Company:
35+ lighthouse customers
Interactive Behavioral Analytics: Used by 1000s of product managers, marketers, analysts and more to understand every upvote, truck roll, search, swipe and play
Displacing tools in three distinct legacy markets: Business Intelligence, Mobile/Web Analytics, IT Operations Analytics - but we are not any of these
Horizontal to every industry that is moving to digital.
So how do we credibly size the market for investors and our own planning?
Two Approaches to Sizing A New Software Market
Software Industry Research
Integrating multiple analyst firms' research on spending for existing software categories which we are disrupting
"Counting noses"
Lists of companies from reliable sources in proven market segments Combined with evidence-based assumptions of penetration and per organization spend
Software Industry Research Approach
Gather All The Stats You Can
Gartner Enterprise Software Market 10k ft view
Gartner BI Platforms Drilldown
Combine Sources Carefully
Picture The Market Disruption
BI & Analytics Software
IT Operations Software
CRM
Modern BI PlatformsVisual Discovery
IT Operations AnalyticsMobile & Web Analytics
$17.0B 20167.2% CAGR 2016-21
$1.5B 2016
$2.8B 2016
$23.0B 20167.6% CAGR 2016-21
$2.8B 2016
$29.9B 20167.6% CAGR 2016-21
$4.1B 2016
$25B
$20B
$15B
$10B
$5B
$0B
$30BIn
tera
na a
ddre
ssab
le s
hare
$5B+++
$1.1B+$2.5B+
Estimated $8.5 Billion + Interana Addressable Market
That's Great, But...
Where do we go find that $8.5 billion in spending?
Counting Noses Approach
A Better Approach: Counting Noses1. Look at who your customers & prospects are (or are expected to be)
2. Put them in segments of similar types of businesses/use cases
3. Get lists of similar companies or companies likely to have similar needs
4. Make reality-based estimates of
a. ASP: how much value you can extract from each customer
b. Penetration: what percentage will buy from you vs other (including
homegrown/do-nothing)
5. Supplement this with direct research (calling customers/prospects, surveys)
Get Lists of Targets: Crunchbase
Forbes Global 2000 full list
Factors to Consider: Penetration
● How entrenched are incumbent legacy category vendors in each segment?● How much do your early stage product limitations matter to the segment? i.e.
access controls● How universal do you consider the need for your unique value proposition to
be in the segment?● How strong are your existing references & proof in the segment?
Factors to Consider: ASP
● What have your historical deal sizes been in the segment?● How much do you expect your near term roadmap to grow value to
customers in the segment?● What do you know of spending on legacy products in the segment?● How big are the proxies to value in typical members of the segment?
○ For us, data volumes & use cases
Make a Worksheet
Sources: G2000 by industries, Crunchbase > $50mm funding categories, Apps Run The World major SaaS list
Bonus of This ApproachYour market sizing is based on lists of companies that will become your sales prospect list. You're ready for execution!
Any Questions?
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