That dumb market share assumption just won't go away
This week I got hit by it three times… It’s such a cliche it’s not even funny. Here goes: “If we only hit a 2% market share then our business will be worth [large random number]”. OK folks, back to some basics here.
If you think your business is huge on 2% market share, you have either (a) misdefined your directly addressable market or (b) you are wrong. Voila. It is late here in London and I am entitled to a random opinion with no evidence or justification whatsoever.
On that note here is a splendid occasion to remind my dear readers of a seminal post (series) on the topic of getting ready for your VC, from the master guru in person. Read this now, print it, read it again. Yes, this one is worth killing a tree for. Here is the relevant abstract:
- And never, ever say your market projections indicate you’re going to
be hugely successful if you get only 2% of your (extremely large)
market. That also signals naivete. If you’re going after 2% of a large
market, that means the presumably larger companies that are going to
take the other 98% are going to kill you. You have to have a theory for
how you’re going to get a significantly higher market share than 2%. (I
pick 2% because that’s the cliche, but if you’re a VC, you’ve probably
heard someone use it.)
<–here is the the guru, lost his hair b/c of sociopath VC
<– the guru before his undergoing sociopath VC exposure
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