What is market size and how do I calculate it?

Rakesh Tondon / November, 2017

Description

In this Startupedia video, Rakesh Tondon, CEO and Founder of Le Tote explains market size and the right way to calculate it.

Video Transcript

What is market size and how do I calculate it?

That’s a really hard question and this is something we’re still struggling with. We scaled a lot and we’ve grown from three employees, 2,5 years ago to now over 200 employees today. We think about how much of the market we’ve been able to capture, and how much we still have to, and this is a sort of a moving target. As a startup, you have to go and figure out the big problem that you’re trying to solve and see if there is a market opportunity there.

Let’s say you pick a segment: this is the big problem, this is the solution that I have, and are people willing to pay money for it? I think that’s the hard part: are people willing to pay for it or not? And then you go out and say how many people do I think I can actually get to? And it could be a very unsexy test but it’s by talking to people that are in and around you, and say “what if I was to do something like this how much would you be willing to pay for it?”, “would you be willing to pay for it?”. It’s like a test that we had to really understand will women share clothes and if they do, how much are they willing to pay for it? And then becomes how many women are in that aged demo that we are going after and what percentage we could realistically get. I think it is picking a number and say that is our north star and say we’re trying to get to that number. It’s really a hard problem and as a startup, you pivot, you change, and you evolve, so your market constantly changes. That’s something that you have to keep in mind, and that’s something that you have to be open-minded about as well.

Company

QUICK INFO

Next Up

Join the Startupedia Community

Connect with VCs and unlock vital startup advice!