Friday, May 16, 2008

VC wannabes: learn how to size markets...now!

If you are planning to pursue VC after business school, a word of advice: get experience doing market sizing (OK, market estimating is probably more like it) and practice, practice, practice.

By market sizing, I mean taking a given market (like the market for HD Televisions, Widgets, Oatmeal cookies) and slicing and dicing it based on a series of assumptions.

I have had some time to practice this through my internships (looking at market sizes for purposes of business plans or VC investment) and to a small degree in classes, but you can always improve - and improvement means practice.

If I could rewind to the summer, I might have spent some time doing practice management consulting case interviews (even though I didn't want to go into consulting) for that very reason.

Why?

Well, in case interviews, you need to quantitatively walk through a business problem and figure out the magnitude of profit, revenue, etc that guides your decision-making. More importantly, it forces you to develop your own analysis process.

Doing this repeatedly is bound to make you improve in that area.

Bonus VC job tip: Pick an industry you know little or nothing about and spend about 10 hours (give or take) during a 1 week period looking at the industry trends, value chain, competitive landscape, market sizes, value proposition for key players, and think about who you would like to invest in (if anyone). After doing this, you'll know yet another space, and have yet another set of insights to share during your informational and formal interviews.

1 comment:

Mike Fishbein said...

Could you recommend some resources on how to "size markets"?