

Ask YC: how to do market research? - tapostrophemo

When somebody asks you "Who are your competitors?", how do you find the answer?<p>Some are obvious - Yahoo vs. Google, Emacs vs vi, etc. But if I'm making a "website that does X", and X is pretty narrow, how do I find the competition? (Beating them is no problem...  :-)
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tjic
We recently launched HeavyInk.com (a mashup of a comic book retailer,
collection management, social networking, etc.) competing in a somewhat
crowded market of comic book retailers.

Before we did this, I did a lot of competitive research.

I searched on all the relevant keywords. I ended up finding a ton of comic
book retails, plus a lot of other related sites that had excellent ideas
(collection management, social networking, pull list management, etc., etc.,
etc.). So: right there, by digging deep into the search results, I found a lot
of things that I didn't even know existed, and this let me expand my concept
of what we wanted to deliver, and it also let me get a much better handle on
what the market is like.

After identifying the big names in the space, I went off to Alexa and other
sites, and measured the traffic of each of these competitors.

I also got some information via backchannels on the likely revenue of 2 or so
of the 10 big competitors, and then verified it through another backchannel. I
then did some curve fitting to come up with an algorithm that predicts the
revenue of an online comic book store, based on their Alexa rank and traffic.

I then went through the top 10 or 20 sites, and took notes. After I saw the
commonalities between them, I created a spreadsheet, and listed all of the
salient details of each competitor.

At this point I had a good handle on (a) what price point we wanted to aim for
during our growth stage; (b) what features we might want to offer.

Then I set up a survey on Wufoo (I ran the survey past a survey designer first
to get her imprimatur on it), and sent email to the top 10 or 20 comic
bloggers. Two or three of them linked to the survey, and we ended up getting
around 500 people to take the survey.

I wrote a script that imported the CSV data from Wufoo into our database, and
then wrote a bit of Ruby code that did a mediocre version of cluster analysis.
This let me find out which groups of customers would be most profitable, and
in turn let me find out what features these customers would be interested in.

Then we wrote up some design documents and started coding.

We coded for three months, and went live in a "quiet beta" two weeks ago.
We've been hunting bugs, and will announce to our list of 500 or so survey
takers on Monday or so.

That's how I do market research.

\-- Travis Corcoran, president HeavyInk.com

"Your comics are here."

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falsestprophet
All of that is nonsense. Just build it and launch it. Then the market will
tell you what it thinks.

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dhouston
what if what you're doing takes more than a weekend to build?

there are more cost effective ways of seeing what the market thinks besides
disappearing into a hole and coding.

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falsestprophet
There really is no excuse to build anything that takes a great deal of time.
There is not a shortage of good, simple ideas. You are forfeiting many of the
advantages of being an internet company if you are building something that
can't be prototyped in weeks rather than months.

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dhouston
ok, but how many online to-do lists does the world need? assuming you're a
hacker, if your 'good, simple idea' is easy to develop, expect to get your ass
kicked by someone smarter than you in business and marketing who can pay a few
code monkeys to pump it out.

good hackers get leverage and sustainable competitive advantage by solving
hard problems, or at least creating software that is difficult to write.
saying it's not worth building anything that takes time doesn't make any
sense.

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falsestprophet
First of all, an online to-do list probably does not qualify as a good idea.

And secondly, good hackers can be hired too; it is possible to replicate most
things.

I think that valuable web entrepreneurs are, in general, good hackers and good
businessmen. A lot of hackers think the business end isn't important and a lot
of businessmen think the technology isn't important. They are wrong. You will
probably have serious competition and you need to be prepared to compete.

This isn't a kind industry. A lot of teams get crushed. Your team ought to be
able to compete on both the business and technical fronts.

edit: I noticed you are one of the founders of DropBox. I don't know a great
deal about your product. But, as far as I can tell we agree. DropBox seems
like a straightforward, simple, focused application.

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shayan
My rule number one: if you don't know your competition right off the bat,
don't simply assume they don't exist, look hard to find them ... (and if you
end up finding them, ask yourself why they couldn't make it to a point that
you would know about them without doing so much search, and how your product
would be any different than theirs and same thing wont happen to you)

If you have direct competitors then it won't be too hard to tell who they are,
you do some basic searches and you will find them.

But I think you should look at indirect competition as well... look at all
those companies that if they intend to come in they can crush you over night
(and I don't mean Google, Yahoo and the other big guys necessarily, I mean all
those other companies that their business models allows them to do the same
thing as you do, if they like to do so, but they never thought about it or had
the intention to do it... sometimes they might have some strengths that would
make them more successful than you.)

Also, I would keep in mind that if your product differentiates from the
competition by just a few features you don't have a huge advantage

And if you ever intend to compete with any business that has any social
aspects to it (i.e. web 2.0 businesses) never forget the network effects they
could have just for being out there before you

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dhouston
well, how do you expect your customers to find you (or your competitors)?
search? forums? trade shows? word of mouth?

then search, look on forums, go to trade shows and ask potential customers
what they do to solve the problem you want to fix and how they would find you.

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ALee
I generally looked for keywords in a Lexis-Nexis search, Google search, and
then just looked around for anyone who was doing what we were already doing.

