
Ask HN: How do you define market size when creating a new catogory - pedalpete
We&#x27;re creating a new type of media and solving the issues consumers face when taking quality photos and video.<p>Instagram solved the problem of making photos captured on mobile devices attractive by creating filters.<p>We&#x27;re solving the problem of failing to get the best angles or failing to capture the context you want to capture and resorting to selfie-sticks, drones, or just accepting that the photos you take are limited to the fixed frame of what is captured by the camera.<p>We are looking at all sorts of adjacent markets to define our market size, such as Volumetric Video, etc.<p>I&#x27;m trying to think of something like GoPro, and before Action Camera&#x27;s were a thing, how would they have defined that market size to an investor?<p>Any suggestions?
======
mindcrime
The dirty secret here is that all of these projections are a combination of
utter bullshit, smoke and mirrors, wishful thinking, and bad statistics. And
everybody involved on both sides knows this. The key thing, from what I can
tell, is that you put the effort in to come up with numbers that look vaguely
realistic, but yet sell a story that is investment-worthy.

All of that said, if you really want to try and do some kind of semi-
meaningful estimation, I'd suggest reading _How to Measure Anything_ by
Douglas Hubbard, and then think about what data you _do_ have access to, and
what _n_ th order effects you can use in a model, and what analogies you can
construct.

For example... if you're creating something completely new, for which you
really have no way to estimate demand, do something like this: Start with the
population of the geographic region where you intend to sell your
product/service... let's say it's the US, and the product is potentially of
interest to all adults. That's around 327 million people or so.

Now, figure out what existing "thing" is closest conceptually to filling the
same niche as your "thing". An example might be when TV was invented, they
could have used radio as an analogy. This is not precise, but it doesn't have
to be. Find the market penetration percentage for the analogous item, and
assume approximately the same percentage of people would want/need what you're
selling. Do the math, and call the output your Total Addressable Market[1].

If you can't find something that's a good analogy (or a bad analogy that's not
so bad as to be completely unusable) then you could try other ways to get an
approximation of the potential demand. It's old-school and potentially
expensive, and probably not very accurate, but you could try a survey of the
relevant population. You could also do the "landing page only" thing, run
highly targeted ads, and see how many "conversions" (sign-up for your launch
mailing list, etc.) you get and approximate from that. You could do pre-sells
where you actually sell the thing before it's built. If you're confident you
can ship, this could be good because it gives you $$$ to work with. But if you
spend the $$$ and don't ship, giving out refunds could leave you fucked.

Anyway, there's a lot of stuff out there on this. Jump on Amazon and find a
used copy of an old "marketing research" textbook (or get it off a pirate
e-book site) and read through that. There is some semi-legitimate stuff you
can do, but don't obsess over trying to get "real" numbers. Something
reasonable, combined with bullshit, smoke and mirrors, wishful thinking, and
bad statistics should do the trick.

[1]:
[https://en.wikipedia.org/wiki/Total_addressable_market](https://en.wikipedia.org/wiki/Total_addressable_market)

