Entrepreneurs: Stop Talking About Market Size.
I’m advising several budding startup ventures on their pitch decks and presentation style through the Bunker Labs incubator. During this process there is one thing that’s stuck out to me which I see happening over and over again: The ease at which an entrepreneur can delude him or herself into thinking they have the winning lotto ticket because of the gigantic market size.
A very smart Entrepreneur in this incubator took me through his pitch deck the other day and his eyes lit up when he got to the part about market size.
It’s a 4.6 BILLION dollar marketplace! And if we can just get a fraction of that, a small slice, we can do some serious damage.
I had to stop him right then and there. I asked him, “Who do you want as your first 5 customers?”
He didn’t have an answer.
“What’s your strategy for getting your first 5 customers?”
Stumped look on face.
He had his head in the clouds. He let a gigantic number like that delude him into thinking that because it’s a big market, the plan for ‘how’ to get customers was secondary. Of those 4.6 billion dollars, he didn’t have a clue how he was going to make $1, or with who.
This same thing happened on an episode of Shark Tank I recently caught. The woman pitching had a few thousand dollars in sales over several months. The Sharks kept asking her how she plans to grow the business, and she kept responding with, “there are 85 millions moms in the U.S.!”
She couldn’t say what she would do to find her next 10 customers, and was convinced that a market of ‘85 million!!!!’ was enough.
This mindset is pervasive in entrepreneur culture. It’s like the startup version of bragging about the size of your D.
I’d rather an entrepreneur tell me “It’s a small market, but I plan to do X, Y, and Z to dominate it” than tell me the market size with no sales strategy.
Relying on the big numbers enables you to stay vague, and keeps the problem you’re solving so far removed from the person you’re trying to persuade (investor/customer/stakeholder/etc).
No one can visualize 85 million moms, but they can visualize one mom in a maternity ward, which helps them visualize the entire maternity ward, which helps them visualize the maternity wards of an entire hospital group, which inspires them to believe you know what the hell you’re doing.
When you’re pitching your business, don’t hang your hat on the market size. Get your head out of the clouds, have a plan, and talk about what’s in front of you.
Hi, I’m Rajiv ‘RajNATION’ Nathan, I’m the founder of RajNATION Innovation. Feel like your story sucks? I work with growth-focused startups like Keyo, Capital Construction Solutions, and more on pitch and story to help you raise venture capital and acquire customers. Visit www.rajnationinnovation.com and holler at me. I also host the Discover Your Inner Awesome Podcast — real convos with entrepreneurs, founders, artists and musicians to bring you the real side of success.