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

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ddre

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$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?