What Startup Will You Build? How to Identify Market White Space
http://www.flickr.com/photos/marieswartz/4228616284/sizes/z/in/photostream/
David Teten Partner, ff Venture Capital ffvc.com // @ffvc teten.com // @dteten November 14, 2013
© 2013 David Teten. More at ffvc.com and teten.com
Don’t Take Notes!
Download detailed slides and see the video at:
ffvc.com/market-research
© 2013 David Teten. More at ffvc.com and teten.com
• Founder Institute New York (three times) • Harvard Club of New York Tech & Entrepreneurship Group • Harvard Graduate School of Arts & Sciences Business Club / Harvard
Graduate School Council • Limmud NY / Limmud FSU • National University of Singapore Techno Venture Forum (Entrepeneurship
Centre) • New York Business Expo • OCE Discovery (Canadian innovation conference) • Princeton University Keller Center • Thought Leaders in Business series (Yale Club of New York) • Womensphere (twice)
Past Audiences for This Presentation
© 2013 David Teten. More at ffvc.com and teten.com
Intro Tools Signals Network Next Steps
• Next Steps
• Growing Your “Network 2.0”
• Signals of Potential Customers
• Tool of the Trade
• Introduction
http://www.flickr.com/photos/marieswartz/4228616284/sizes/z/in/photostream/ © 2013 David Teten. More at ffvc.com and teten.com
Intro Tools Signals Network Next Steps
Investment Search Process (# Companies)
Angel groups using Gust
(2010)[i] ff Venture Capital
(2012)[ii] Typical
entrepreneur Profiled initially 20,850 NA ~3-6 Target Selected 1,315 ~1,700 ~3 Met 1,047 ~1,000 - Due diligence 577 ~18 2
Invested/launched 541 ~15 1
Deals as % targeted companies
33.5% (2.1% of
submissions)
0.8% 33%
[i] Available at http://angelsoft.net/a/venture-valuation , as of twelve months ending March 17, 2010. [ii] David Teten. © 2013 David Teten. More at ffvc.com and teten.com
Intro Tools Signals Network Next Steps
Idea Search Process
Brainstorm/Source
Research
Filter/Judge
Execute Lean
Refine/Pivot
today’s focus
ffvc.com/pitch/
leanstartup.com
Intro Tools Signals Network Next Steps
ff Venture Capital (ffvc.com)
• Early-stage technology venture capital fund • Founded 1999, with over 180 investments in over 70 companies • 20 employees in Manhattan and Hoboken • First investments typically $100-$500K at valuations of <$5m pre-money • Follow on in later rounds for best-performing startups • Prominent investments include:
Cornerstone OnDemand (IPO); Quigo Technologies (sold to AOL for reported $340m); Indiegogo; Klout; 500px; HowAboutWe
Intro Tools Signals Network Next Steps
ff Venture Capital: Over 180 investments in over 70 companies
Investments as of July 17, 2013 Only logos of active companies whose investment from ff VC is publicly disclosed are shown.
Intro Tools Signals Network Next Steps
David Teten (teten.com) • Partner, ff Venture Capital, early-stage technology venture capital fund • Founder and Chairman, Harvard Business School Angels of New York . Co-founded
Venture Capital Access Program, introducing women and minority entrepreneurs to Harvard-affiliated angels
• Lead author, The Virtual Handshake: Opening Doors and Closing Deals Online (TheVirtualHandshake.com)
• Lead author of first-ever research study on best practices in private equity/venture capital deal origination
• Lead author of first-ever research study on best practices of venture capitalists in increasing portfolio company value through operational support
• Harvard MBA 1998, Yale BA, both with honors. • @dteten
© 2013 David Teten. More at ffvc.com and teten.com
Intro Tools Signals Network Next Steps
Harvard Business School Angels of Greater New York (HBSAlumniAngels.com/NY) • Second largest angel group in tri-state area. • Members are Harvard affiliates from all industries. • We invest in companies regardless of any Harvard affiliation. • $52K average individual check size per company per angel. • Launched Venture Capital Access Program, focused on helping women
and minority investors raise capital from our network.
© 2013 David Teten. More at ffvc.com and teten.com
Intro Tools Signals Network Next Steps
Info is private Inspired by Robert Bruner, Applied Mergers & Acquisitions, page 186
Info is public
Sweet spot of highest returns
Customers pay high prices
Customers pay low prices
Few competitors Many competitors
Why Private Information About Opportunities Is More Valuable
© 2013 David Teten. More at ffvc.com and teten.com
Intro Tools Signals Network Next Steps
* http://innovation.utdallas.edu/documents/OpportunityEvaluation.pdf . Photo: http:/www.flickr.com/photos/nasonurb/3372990703/
Sources of Entrepreneurial Ideas
It is far easier to identify entrepreneurial opportunities in areas where you have expertise
• Prior knowledge • >70% of founder’s businesses
have roots in their last job • Alertness • Pattern recognition • Active search
© 2013 David Teten. More at ffvc.com and teten.com
Intro Tools Signals Network Next Steps
Peter Drucker’s Sources of Innovation Opportunity (1 of 7)
Peter Drucker, Innovation and Entrepreneurship. http://500px.com/photo/24975643
First four are within the enterprise --- essentially symptoms: Unexpected success, failure or outside event
© 2013 David Teten. More at ffvc.com and teten.com
Intro Tools Signals Network Next Steps
Peter Drucker, Innovation and Entrepreneurship. http://500px.com/photo/3568550
The incongruity between reality as it actually is and reality as it is assumed to be, or as it “ought to be”
Peter Drucker’s Sources of Innovation Opportunity (2 of 7)
© 2013 David Teten. More at ffvc.com and teten.com
Intro Tools Signals Network Next Steps
Peter Drucker, Innovation and Entrepreneurship. http://500px.com/photo/2750064
Peter Drucker’s Sources of Innovation Opportunity (3 of 7)
Innovation based on process need
© 2013 David Teten. More at ffvc.com and teten.com
Intro Tools Signals Network Next Steps
Peter Drucker, Innovation and Entrepreneurship. http://500px.com/photo/19113541
Changes in industry structure or market structure that catch others unaware
Peter Drucker’s Sources of Innovation Opportunity (4 of 7)
© 2013 David Teten. More at ffvc.com and teten.com
Intro Tools Signals Network Next Steps
Peter Drucker, Innovation and Entrepreneurship. http://500px.com/photo/2399314
Peter Drucker’s Sources of Innovation Opportunity (5 of 7)
Demographics (population changes)
© 2013 David Teten. More at ffvc.com and teten.com
Intro Tools Signals Network Next Steps
Peter Drucker, Innovation and Entrepreneurship. http://500px.com/photo/2480850
Peter Drucker’s Sources of Innovation Opportunity (6 of 7)
Changes in perception, mood and meaning
© 2013 David Teten. More at ffvc.com and teten.com
Intro Tools Signals Network Next Steps
Peter Drucker, Innovation and Entrepreneurship. http://500px.com/photo/26552303
Peter Drucker’s Sources of Innovation Opportunity (7 of 7)
New knowledge, both scientific and nonscientific
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Intro Tools
http://www.flickr.com/photos/marieswartz/4228616284/sizes/z/in/photostream/ © 2013 David Teten. More at ffvc.com and teten.com
• Next Steps
• Growing Your “Network 2.0”
• Signals of Potential Customers
• Tool of the Trade
• Introduction
Signals Network Next Steps Intro Tools
Identify opportunities with four major techniques:
Based on Bruner, Robert F., Applied Mergers and Acquisitions. New York: John Wiley & Sons, 2004. Page 90.
Listen to markets (“top down”)
Listen to firms (“bottom up”)
Start with Data (“inside out”) Observe a pattern of attractive performance in a certain sector, e.g., past successful investments by your competitors.
Analyze performance results for sectors of the market, then drill down to the most attractive companies.
Analyze performance of individual companies, and seek to identify common causal patterns
Start with ideas (“outside in”) Start with a theme you believe in, e.g., the aging of Western populations.
Investigate the implications of your theme on your industries of interest.
Investigate the implications of your theme on your companies of interest.
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Intro Tools
Market mapping is a powerful way to identify white space. Sample Market Mapping Approach
# Stage Example from Klout.com 1 Choose industries and geographies of initial interest Lean entrepreneur in US.
2 Define your proprietary point of view. Thesis: People will care about their influence on social media networks, just as they care about their dress/appearance in face-to-face networks.
3 Translate into investment theme for specific industries and/or geographies of interest.
Expect growth of analytics companies analyzing social media influence.
4 List major players in target industries/geographies, and how each will be impacted by investment themes.
Recruiters and marketers will use social media influence as a filter for identifying candidates with whom they want to work.
5 Iteratively improve market map based on feedback from industry
Discuss elements of the market map with key sector players through industry forums and mass media.
6 Determine which activities along the value chain offer the highest return (typically the proprietary ones).
A large database of information about social media influence is difficult to build and can be branded.
7 Identify areas of future growth. People will care about their influence in niche markets, e.g., who are the influencers in the fashion industry.
8 Assess fit with your strategy. Examine how people are using the product.
9 Regularly update the market map based on market feedback and lessons from investment prospects.
Get smarter.
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Intro Tools
Grossly Simplified Entrepreneur’s Market Map: Social Networking, mid 2005
This chart is purely illustrative and is not intended to be exhaustive.
Geography
Target Market
US Europe LatAm
Business
Dating
Social
LinkedIn Xing
Facebook myspace
Orkut
Match.com Plentyoffish
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Intro Tools
Other Sample Market Maps
Quality
Products
Customer Segment
Distribution Channel
Contextual info about each company to Include • Management strength • Product strength • Client desirability • Financial returns
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Intro Tools
http://flickr.com/photos/neilt/2517652/sizes/o/
Google Search Hacks
• Filetype:pdf
• Filetype:ppt
• Filetype:doc
• Books.Google.com
• Site: [proven site]
eDonkey—search hard drives
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Intro Tools
• Often available free for students
• Public libraries also often offer free access
• D&B • Hoovers • Factiva • LexisNexis
Major Research Databases
© 2013 David Teten. More at ffvc.com and teten.com http://www.flickr.com/photos/kodomut/3728718035/sizes/l/
Signals Network Next Steps Intro Tools
http://www.flickr.com/photos/kodomut/3728718035/sizes/l/
Wall Street Research
• Charles Schwab account
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Intro Tools
• Slideshare – presentation slides from conferences/events
• Scribd, Docstoc, Edocr – general • Wepapers – focus on students • Twidox – focus on academics • Archive.org – Web archives
http://www.flickr.com/photos/sookie/94778946/
Online Document Repositories/Marketplace for files, publications, presentations, and whitepapers
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Intro Tools
Free Social Media Monitoring Tool: Bottlenose*
* ff Venture Capital portfolio company © 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Intro Tools
• Astragy • Attaain • Compete • Rivalmap • Socialtalk • SpyFu • Tracked • Workstreamer
Tools for Tracking Competitors
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Intro Tools
• Prestige
• Open doors
• Education
• Substantive experience
• Target marketing
http://www.flickr.com/photos/uaeincredible/3333223048/sizes/o/
How to Woo Interns
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Intro Tools
• Business School
http://flickr.com/photos/foundphotoslj/1134148114/
Intern Sources in New York
– Columbia Business School Small Business Consulting Program
– Insite NY – Levin Institute JumpStart – NYU EEX
• InternMatch.com • Colleges • Student Special Interest Groups • IIM Ahmedabad Forum for
Industry Interaction © 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Intro Tools
http://www.flickr.com/photos/extraketchup/748452643/sizes/o/
• Adword buys • Google Docs (Surveys) • Surveymonkey • Polldaddy
Polling
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Intro Tools
http://www.flickr.com/photos/marieswartz/4228616284/sizes/z/in/photostream/ © 2013 David Teten. More at ffvc.com and teten.com
• Next Steps
• Growing Your “Network 2.0”
• Signals of Potential Customers
• Tool of the Trade
• Introduction
Signals Network Next Steps Intro Tools
• Observe customers in action • In-depth interviews • Snowball sampling
• Ask for referrals to potential buyers to build a sample
• Online surveys • Bleeding-edge users`
Customers
http://www.flickr.com/photos/superrabbit/319538167/ © 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Intro Tools
Analyze search engine traffic
Source: Jeff Stewart http://500px.com/photo/6878052
• What phrasing do people use to describe their problem? • Use Google Adwords Keyword Tool
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Intro Tools
Vary your launch pages, and always collect emails
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Intro Tools
Source: Jeff Stewart. Interaxon and Indiegogo are both ff Venture Capital portfolio companies.
Cash is a market signal
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Intro Tools
Source: Jeff Stewart
Ship early
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Intro Tools
• CB Insights • Crunchbase • Techcrunch • Mashable • Mercurynews.com/vc • Venturebeat
Identify (and probably avoid) the sectors attracting VC funding
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Character – Competence – Relevance – Strength – Information – Number – Diversity
Intro Tools
http://www.flickr.com/photos/marieswartz/4228616284/sizes/z/in/photostream/ © 2013 David Teten. More at ffvc.com and teten.com
• Next Steps
• Growing Your “Network 2.0”
• Signals of Potential Customers
• Tool of the Trade
• Introduction
Signals Network Next Steps Character – Competence – Relevance – Strength – Information – Number – Diversity
Intro Tools
http://www.flickr.com/photos/23439761@N03/3258313816/sizes/l/
Social media allows you to convert cold calls to warm calls
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Character – Competence – Relevance – Strength – Information – Number – Diversity
Intro Tools
Network Valuation Formula
= D * ∑ (Chn*Con *Rn* Sn*In)
Ch = Character Co = Your Firm’s Competence R = Relevance of the contact S = Strength of your relationship I = Information N = Number of people D = Diversity
N
n=1 David Teten and Scott Allen, The Virtual Handshake: Opening Doors and Closing Deals Online (www.TheVirtualHandshake.com) © 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Character – Competence – Relevance – Strength – Information – Number – Diversity
Intro Tools
Biography analysis software allows you to search by common affinity and more effective subsequent outreach.
• Boardex • Identified* • Klout* • LinkedIn • Saleforce Data.com • Pipl • ZoomInfo
Leading Providers of Biography Analysis Data
* ff Venture Capital portfolio company © 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Character – Competence – Relevance – Strength – Information – Number – Diversity
Intro Tools
http://flickr.com/photos/h-k-d/2898797929/sizes/o/
Learn from People Who’ve Been There
• Ex-employees • Customers who’ve analyzed market vendors
(BestVendor.com)
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Character – Competence – Relevance – Strength – Information – Number – Diversity
Intro Tools
Organizing / Speaking at Events
http://www.flickr.com/photos/programmerman/2315566040/sizes/l/
• Alumni organizations
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Character – Competence – Relevance – Strength – Information – Number – Diversity
Intro Tools
How to Get People to Return Your Calls
• WIIFM • Affinity • Information • Others' Credibility • Ego Boost
http://www.nus.edu.sg/oam/studentprofiles.html © 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Character – Competence – Relevance – Strength – Information – Number – Diversity
Intro Tools
Online meets Offline
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Character – Competence – Relevance – Strength – Information – Number – Diversity
Intro Tools
Effective analysts are data hounds
Data source Selected technology for inserting data into CRM Business Cards
ScanBizCards, Cardscan, CardMunch, Cardshark, IRIScan, Neatco, Plustek
Emails Contact Capture, eGrabber, EverContact, Gwabbit Cloud Plaxo, LinkedIn CRM Salesforce, Act
Tools for Assimilating Data into Your Contact Relationship Management (CRM) System
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Character – Competence – Relevance – Strength – Information – Number – Diversity
Intro Tools
• IERG Online • Executive Forum • INMobile • Sermo
Platforms • LinkedIn • Xing • Google Groups • Yahoo Groups • Zintro
Sample Gated Communities for Executives
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Character – Competence – Relevance – Strength – Information – Number – Diversity
Intro Tools
Sample Gated Communities for Investors
© 2013 David Teten. More at ffvc.com and teten.com
Early-Stage Private Mid-Market Private Public
AngelList Assoc for Corporate Growth Albourne Village Caplinked Axial FT Alphaville Longroom FundersClub IntraLinks (MergerID,
PE-Nexus) Sum Zero
Gust MergerMarket Value Investors Club SecondMarket
Signals Network Next Steps Character – Competence – Relevance – Strength – Information – Number – Diversity
Intro Tools
© 2013 David Teten. More at ffvc.com and teten.com
Take One Step
http://flickr.com/photos/extranoise/169187125/sizes/l/
• By technology • By industry • By geography • By personal
characteristics • By market
Signals Network Next Steps Intro Tools
http://www.flickr.com/photos/marieswartz/4228616284/sizes/z/in/photostream/ © 2013 David Teten. More at ffvc.com and teten.com
• Next Steps
• Growing Your “Network 2.0”
• Signals of Potential Customers
• Tool of the Trade
• Introduction
Signals Network Next Steps Intro Tools
http://innovation.utdallas.edu/documents/OpportunityEvaluation.pdf
Further resources • Baron, R.A. Opportunity Recognition as Pattern Recognition. Academy of
Management Perspectives. Feb 2006 • Drucker, P.F. 1993. Innovation & Entrepreneurship. HarperBusiness. New York. • Bhide, A. 1996. The Questions Every Entrepreneur Must Answer. Harvard Business
Review. Nov-Dec 1996. • Gourville, J.T. 2006. Eager Sellers, Stony Buyers: Understanding the Psychology of
New Product Adoption. HBR June 2006 • Teten, David, and Allen, Scott 2005. The Virtual Handshake: Opening Doors and
Closing Deals Online. AMACOM, 2005. Free copy at TheVirtualHandshake.com • The Institute for Innovation & Entrepreneurship at UT Dallas:
http://innovation.utdallas.edu • ff Venture Capital Business Plans Requirements:
http://ffvc.com/resources/business-plan/
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Intro Tools
Any questions ?
slides at ffvc.com/market-research
Sign up for our mailing lists at ffvc.com and teten.com
@ffvc @dteten
© 2013 David Teten. More at ffvc.com and teten.com
Signals Network Next Steps Intro Tools
Appendix: Additional Slides from Presentation in Singapore
http://www.flickr.com/photos/90664717@N00/380336885/sizes/z/in/photostream/ © 2013 David Teten. More at ffvc.com and teten.com
Definition of Market Research
http://www.marketresearchworld.net/index.php?Itemid=38&id=14&option=com_content&task=view . http://www.flickr.com/photos/niosh/2492013803/
• Market Research is the systematic, objective collection and analysis of data about a particular target market, competition, and/or environment.
• Always incorporates some form of data collection, whether it be primary or secondary research.
© 2013 David Teten. More at ffvc.com and teten.com
Market Research Process
1: Define Marketing Problems and Opportunities 2: Set Objectives, Budget, and Timetables 3: Select Research Types, Methods, and Techniques 4: Design Research Instruments 5: Collect Data 6: Organize and Analyze the Data 7: Present and Use Market Research Findings
© 2013 David Teten. More at ffvc.com and teten.com
Why Do Market Research
• A survey of small business managers in Texas revealed that 84% of those who conducted formal marketing research projects in the past three years felt that the information obtained was worth the money spent.
• Overall, 58% said that they were able to incorporate the research findings into their decisionmaking process.
• Only 6% reported that they were not able to implement the results.
http://extn.msu.montana.edu/communitydevelopment/pubs/mt9013.pdf © 2013 David Teten. More at ffvc.com and teten.com
Darren Luo (NUS), http://flickr.com/photos/foundphotoslj/1134148114/
Intern Sources in Singapore
Universities: • NUS Business School Career Services: http://bit.ly/9GOqAb • NUS Career Services Center: www.nus.edu.sg/osa/career/employer/index.html • NUS Overseas Colleges (NOC) www.overseas.nus.edu.sg/
! The ilead Program: www.nus.edu.sg/nec/ee/ilead/index.html ! NOC Alumni: www.nocalumni.org/site/index.php
• NTU Business School: www.nbs.ntu.edu.sg/careerservices/index.asp • NTU Career Services Center: www.nbs.ntu.edu.sg/careerservices/index.asp • SMU: www.smu.edu.sg/students/career_services/for_employer/recruit.asp • Singapore Institute of Management: www.sim.edu.sg Polytechnics • Singapore Polytechnic: http://bit.ly/aPGxwu
• Entrepreneurship IAP: www.sp.edu.sg/wps/portal/vp-spws/spws.i.entrepreneurshipinsp.itp • Temasek Polytechnic: www.tp.edu.sg/home/global/glo_sip.htm • Ngee Ann Polytechnic: www.np.edu.sg/ss/internship/Pages/local.aspx • Nanyang Polytechnic: www.nyp.edu.sg/aboutNYP/job_opportunities_for_employers.html • Republic Polytechnic: www.rp.sg/iep/employer/
© 2013 David Teten. More at ffvc.com and teten.com
Darren Luo (NUS), http://flickr.com/photos/foundphotoslj/1134148114/
Intern Sources in Singapore
• jobs.triplepoint.asia/jobs
• www.singapore-interns.com
• singaporeinternship.com
• originsingapore.com
• internsg.com
• IIM Ahmedabad Forum for Industry Interaction
© 2013 David Teten. More at ffvc.com and teten.com