The Importance of Market Sizing In the Age of Start-ups

A large number of startups approach us to help them create their brands and develop their value propositions. Typically many of the startups are founded by professionals from the technology side, others are 2nd generation business people who want to strike it on their own, away from the family business.

We're seeing a pattern emerging. While they're all bright and immensely talented, they're so strong with their technology or finance that they miss one critical aspect of business: A clear understanding of the size of the market potential they're aiming for. Fundamentally this is a question that should be answered right at the beginning and with clarity before even commencing the business project report.

What is the size of market? Which competitor's audience will shift to us?

It's not just startups who miss this aspect. Even large companies miss this point. Tata Nano is a case in point. They weren't clear whether it should be motorcycle buyers or car buyers. Eventually neither are buying it.

This question appears simple to answer in traditional categories FMCG, durables etc. Who loses share when we launch this new anti-germ soap? Answer Dettol, Lifebouy... But it's not so simple is it? For the next question to answer is WHY would they do so?

Now your answer needs to be more compelling than a line in a powerpoint slide. It needs to be PERSUASIVE.

Most startups today eschew the traditional categories, many are new concepts:

A website that provides you with all kinds of handymen; An app that helps you order a lunch dabba for your meal at office; an app that gives you car service centers close to you etc.

While a number of these startups have a definition of their business, they're ambiguous about the size of it. Which is where the problem starts. Without doing this critical sizing, many businesses are today finding themselves in a quagmire, months and years down the line, unclear on which way to head. The fatigue, doubt, confusion and dwindling resources which is the consequence of jumping headlong into the fray without sizing the market, is often the death knell to a promising startup.

Therefor our advice to any start up is always: BE CLEAR WHO IS THE SOURCE OF YOUR BUSINESS.

If you provide handymen, please find out: What is the size of this unorganized sector? What is the average ticket size? Why are people using it unhappy? What is the new dynamic you're getting into the system? And how will you make money from it?

Simple as these questions may sound, very few companies actually ask themselves of these.

Answering these questions may often be a bitter pill to swallow. But it's better than a depleted bank account, a loss of quality time and a debilitating loss in confidence.

Startup, valuation, scale-up all sounds great to read in the pink pages of newspapers, but eventually they're all businesses which have to make money. And this fundamental question of business needs to be answered with clarity for that to happen.

Black Vs White

There's no other way to describe this fight against black money. It's GOOD Vs. BAD.
I'm sure like me, a lot of you would have already started hearing negative news, 
"This was informed to BJP and allies months ago."
"It won't affect the very rich because their money is already in Cayman etc..."
"There are xyz methods of converting black to white."
"This won't last, black will be back soon."
"Some guy standing in a bank queue heard a conversation about bank employees converting black money for a fee."
ETC. ETC.
Don't believe them please. For years they exerted the power of their black money on us and oppressed us. They would buy judges while we ran around courts for years. They bought land parcels from farmers while we struggled to squeeze into a matchbox. They played the commodities, we paid the price of inflation. They walked past us in temple queues, offices and life on the back of that black.
They suffocated us, parched our minds and hammered our spirit.
Don't. Please don't let them win now. Do not believe their tricks, their sly insidious voices, their apparent nonchalance.
Do NOT believe in hearsay.
This has been a body blow for them. They are down,even their most evil is reeling. Let me explain with an example: India's black money economy is worth Rs. 30 Lakh Crores.
Yes. that's right.
Assuming the crook of Mumbai, Dawood has Rs. 3 Lakh crore of it. Let's say he uses his power and gets every slum dweller (population of 40 lakhs) in Mumbai to exchange Rs.4000 EVERYDAY for the next 50 days. He still saves only Rs. 80K Crores. That's less than a third. And this is the best case example.
Which means even in the best case the smartest black money hoarder will save at the best 50% of his ill-gotten gains.
For people whose identity is power delivered on the back of black money, a 50% loss is a huge huge blow, emotionally and mentally. Unlike us, who aren't so attached to money (we value family and relationships more) these guys love their money. Therefore this is a double whammy for them.
The small black marketeers would do the calculation that had they paid 30% tax they'd be better off today. This blow will convert almost all those guys into the mainstream economy.
So far from being comfortable, they're trying to spoil our sense of victory. they're trying to oppress us again by sowing seeds of doubt in our minds.
Don't believe them. Call their bluff. We have won. No we shouldn't allow them to come back.

The World's Most Powerful Non-democracy

The American ruling class are of two types: Republican i.e. the Rich Guys & Democrats i.e. the College guys. The rulers of that country is always one of the two. Either a product of the wealthy rich guys or a product of the intellectual collegiate type. No other kind can get even a toe in.
Put Ronald Reagan at the center of the ideal Republican candidate the extreme right of who stands Trump.
Put Bill Clinton in the center, extreme left of who stands Jimmy Carter. 
Get the picture?
For the Democrats, It doesn't matter if the presidential candidate is black or Hispanic or a woman but the pedigree is clear. Obama, Hillary, Bill, Carter...see the pattern?
For the Republicans, Rich and white? that's self explanatory. 
The other shocking bit is that from George HW Bush to Hillary Clinton (if she wins) America would have the dubious distinction of having their rulers come from just 3 families in THIRTY YEARS. 
If you go by the clamoring that's happening for Michelle Obama, those 3 families would extend their rule for FORTY YEARS!! Half a bloody century.
Does this sound like a democracy?
China does better than that!
The day a farmer, a waitress, a techie or maybe a tea-vendor becomes their President perhaps we can count them as a real one.
As far as we Indians are concerned, remember just one thing: Americans like every other nation only care for their own interests. So they'll continue to support Pakistan while selling us their weapons.
Right now they're candidates have created a spectacle, so the best thing for us to do is to take a ring-side seat, and enjoy the show they're putting on for us!

Lonely Cloud Consulting for Paranjape Schemes DNA Mumbai + Delhi 20.10.16 Pg 3

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Mistaking customer inertia for customer loyalty

Take the case of a health insurance brand. Ten years back it had an attractive product covering an entire family's health at an attractive premium which consumers lapped up. Every year, the company would increase the premium corresponding to the age and the consumer would pay up noting the 'no-claims' gain.

The brand did not communicate regularly with the consumer except sending the odd birthday emailer intermittently. The only thing that was regular was a premium reminder and methods of auto-renewal which the customers wisely refuse.

Ten years passed by. The health insurance brand begins to believe the customer will remain with it no matter what. "We have exemplary service! we return claims fastest. We permit cashless transactions. We have the widest network!"

Emboldened the brand launches a TVC in which it highlights the gritty nature of its consumer and lauds his spirit. "We understand your spirit and will to run a marathon in the Siberian cold. We're here for You! Attaboy!"

The brand now begins to believe in its own story more than the customer. "This is our brand, these are its values, its tone is helpful, understanding etc." The customers watches mutely, not registering the brand or its message, not even knowing that he has a policy from that brand.

Hubris sets in. "Customers will pay a premium for our superior service and polite call-centers!" Believing in its own self-indulgent world, the brand does the unthinkable. It raises its premium.

The customer is shocked to receive a premium intimation that's double the expected amount. First thing he does is to call at the helpline. This is what he hears: "You've enjoyed our superior service for so many years! you should pay up!"

"What service? I never used it! I haven't interacted with you for 10 years except to pay the premium! Is this how you reward me by doubling my premium?"

"Sorry sir" the haughty voice replies, "We aren't like the others, if you fall ill you'll realize how well we take care of you."

After 10 years the customer is jerked out of his inertia and makes a few calls. In today's world options are dime-a-dozen. He gets many cheaper options, spends no time in shifting. The due date passes by and the brand makes frantic calls, "You haven't paid! you're putting your health at risk!"

Nope, dear brand you have.

The ease with which people are replacing their toothpastes, groceries, noodles, soaps, shampoos etc. from MNC brands and their duplicate desi versions to a young upstart company like Patanjali underscores this point.

Maruti and Hyundai service stations, famous for their humongous service bills are finding their customers driving to Mahindra First Choice Any Car Service which offers an equally good service and has a very transparent billing system.

Brands make the terrible mistake of considering customer inertia for loyalty and begin taking their customers for granted. "Customers will pay a premium, Customers connect with us. Customers love us." Brands, hide behind these empty statements do nothing to continuously demonstrate the worth they place on their customers. Finally they make the terrible mistake of overcharging their customers. The customer accepts small changes or if there's no option s/he bears it. However the moment there's an option, they switch.

Don't take my word for it. Simply go by the reactions of Vodafone and Airtel to the launch of Jio.

Today a brand has to continuously adapt and change to keep offering new benefits to consumers. Don't seek loyalty when you've not done anything to deserve it.

Opportunity lost

Innovation and patience