Research for Startup Founders with Bizologie

Source: GeniusDen archive transcript checked against the recording. Administrative opening and closing material is omitted; the presentation wording is otherwise preserved with light readability edits.

April Kessler: Thank you guys for coming tonight. We are Bizologie. We're going to walk through some of the basics of business research and give you some ideas on things that you can do to bootstrap some of your own research. Of course we'll tell you about Bizologie and some of the things we do. Then we'll have time for some questions in the middle, and then we'll come back to looking at a case study with some research that we did for one of our clients, which was a pretty cool client. So that's us, and we'll get right to it.

Lindsey Schell: All right, so the first question is "Why does my start up need competitive intelligence?" First and foremost, when you are going to seek funding from a VC they will be performing due diligence upon you. You want to make sure that you at least have as much information as they do about you before you walk in that room. Also, just general business research that can help with every stage of growth of your company. Whether you are at that funding stage, if you're beyond the funding stage and you are ramping up personnel to gear towards development and product launch, if you are developing a marketing strategy, there are a number of points along the way at which having secondary research can actually help drive those decisions. Also looking at new verticals, new customers, a lot of start ups that we work with have a very specific idea in mind of who they believe their customer is or will be, and sometimes the research that we perform actually ...

Lindsey Schell: Shows them that there may be other groups that they haven't thought about.

That's actually an example that we'll get to down the line in our case study, we'll show you where that particular thing played out.

April Kessler: All right. One of the first things we talk about in business research is public companies versus private companies. When you're doing your own research, we're using a lot of secondary market research so we're dependent on who has published information out there about them, so privately held US firms aren't required to tell us anything and so they usually don't. We know it's hard to find out about our private competitors, but we want to start taking a look at this larger industry. To do that we find a public proxy, publicly traded company.

Lindsey Schell: Right, so we're looking for a company that is perhaps in the same industry, perhaps has the same type of customers, maybe is not in the same industry but has the same sort of monetization or business model, there's a number of factors that we're looking for but basically trying to find a public company that we can latch onto and research around them to find information about the private companies industry.

April Kessler: Once we have picked a proxy company, or in many cases multiple proxy companies that are like you that kind of represent where you're headed and which markets you're looking in, we go to that public companies investor relations page. If you go to Nike you'll see lots of cool pictures of tennis shoes, and running, and all kinds of cool stuff, but you'll find it hard to find their SEC filings, and so if you add investor relations to your Google search it's going to take you right to their investor relations page and make your search a little faster.

The things that you're looking for there are their glossy annual report, so this is their annual report that they send to their shareholders, it's usually got more visualization of data, so it's kind of a nice ... It's great for anytime you're trying to steal some things for a deck, lots of good visualization on markets and things like that. Then the 10K is the SEC filing that their annual report is based on. It's what's been going on annually. It often includes a little bit more of the market research. The 8K is anything that's been, any key developments that have happened with them that might be of interest to you and of interest to the entire industry as a whole. Their 10Q's are the quarterly reports, and then their S1 is what we call the holy grail of SEC filings. It is the filing that is actually written by the investment banks.

We talk a lot about investment banks, and we use those a lot in our Bizologie research. Those are subscription resources, but if you want to get a look at one for a public company, the S1 is written by those investment banks and it is really the sales pitch. Before that private company is about to go public they're writing this document. It's all about the industry, it's all about the competitors, and there's a ton of detailed information in there. That S1 is great. It only comes out when they go public, so if you've got a publicly traded competitor that's recently public of course that information is going to be a little more current. The proxy statement is where you'll find all of the salary, bonus, stock option information about the Csuite and the big owner. That can be interesting. Also, it could be useful if you are looking to hire someone in the Csuite and you're really kind of trying to figure out like "What are salary ranges for some of these companies that are like us?" It can be interesting for that.

One of the hidden gems is the earnings calls and the conference calls. These are the publicly traded companies speaking with the analysts, these are usually done on a quarterly basis. The quarterly numbers come out, they actually sit in a room, do a live conference call with the analysts. The analysts get to ask them questions. So your quarterly numbers came out, the analysts get to ask questions about why something's happening. Why is this happening? What new thing is happening in the industry and how that affects them? That also could have a big impact on your company as well. Those are really hidden gems. You'll find the audio of the calls on the companies website. The transcripts are the harder thing to get a hold of, but that's really what you want because you can CTRL+F within there and search within there for keywords. Morningstar.com often has a lot of free transcripts of that, so check that out. Look around, sometimes the company will include a transcript, sometimes just the audio file. Keep that in mind.

Lindsey Schell: Another piece of information that you'll want to get from the proxy company data is the SWOT analysis, strengths, weaknesses, opportunities, and threats. For a big company like this it's important to consider the fact that their weaknesses, or their threats, may in fact be your opportunities as an up and comer in the industry. That's a great place to see what the big guy thinks are the issues in the marketplace and then use that to identify opportunities for your company. This particular one came from MarketLine. We pull these from a resource called business source complete. It is a subscription database that is available at most Texas Public Libraries, so you can go in and use it there. You're just going to do a keyword 'SWOT' and the name of the company you're looking for and it will pull that right up.

April Kessler: It's great because when you're doing your SWOT those opportunities and threats are for the entire industry. If this is your industry you've got half your SWOT written for you when you find a proxy company that looks like you. Again, those weaknesses are definitely a place where you can find your niche.

Industry overviews, again sources like MarketLine provide nice industry overviews. I think it's important, and this visual just shows that this is coming from Fitbit, but it's showing you that even a company you might not think is a direct competitor, if you were in the grocery business, we were looking at Whole Foods, that Fitbit is in the exercise business. But in their report they have data about people dieting and trends about diet and trends about health. Which would also be important when you're talking about food and how people are changing their eating habits, and their diet habits, and their exercise habits. You sometimes want to think a little broadly about your competitors, and so when you're thinking about industry consider other people who might be providing industry information.

Lindsey Schell: Okay, so the next big piece of information that you need to nail down are the TAM, the SAM, and the SOM. If you're not familiar with these terms we're talking about the total addressable market, that means the total dollar amount that your industry or your niche represents in terms of the number of customers and the products that are out there and so forth. This is going to be a big number. The VC's are very interested in this number, they are very interested in this number being accurate. There are a lot of people who just sort of make it up and hope that it works in the pitch, that's not a very good strategy. I'll be blunt. Not a good strategy.

April Kessler: Or they just want the biggest number.

Lindsey Schell: Right.

April Kessler: And it's like "Well, they're going to ask you how you came to that number, so big isn't necessarily better unless you can back it up with what that really means."

Lindsey Schell: Right, and then so the next level down from the TAM is the SAM, and that is the segmented addressable market. That means which portion of this big industry are you actually working within, which sort of niche area. Then the last piece of it is the SOM, and that is the serviceable obtainable market. Based on your business, your product, your business model, your revenue model, how much of that segment are you likely to capture from your competitors? This is the realistic number. If you only have two programmers and one product, you need to be thinking realistically about how much of that segment you can actually capture. Right? Those are the numbers that they're going to be looking for in the pitch, and there's a number of ways to calculate this. One of the ways that you can start to get your head wrapped around it is to look at the TAMs from the proxy companies that you're investigating.

April Kessler: It's giving you a good place to start. Here's an example of a total addressable market. This, again, was just an amazing total addressable market. We don't always get this lucky, and this we found, this was from Salesforce. This was out in one of their presentations from their Dreamforce conference. They've broken down the entire enterprise software landscape into these little bits and pieces that they participate in, but this is amazing because if you do web conferencing like these guys, then that's t 10.4% of the entire enterprise market. If you go in there to pitch and you say "I do web conferencing and the enterprise landscape is this big." Yes but, it's also broken down into these little bits, and out of that 10.4% Salesforce is competing in that area, so there's a big person in this race, so things to consider. But this is helping us really break down, and narrow down, and get us much closer to that.

Lindsey Schell: You can feasibly latch onto this if you wish, because you can see at the bottom in the teeny tiny print, Salesforce got this from Gartner, which is a major market analysis company, very reputable, very credible.

April Kessler: Again, citing your sources as you go through too really helps. When you say "This is the number", this is the number that Salesforce uses and they got that number from Gartner. Again, it's helping reinforce that you did your homework and you were using credible sources.

Lindsey Schell: Okay, so the next piece of information that you want to look for are all of the legal, social, and political influences that you may encounter in developing your business model, putting your pitch together, things that will affect your growth. These are all external factors of course. So for example, tax laws, regulatory concerns, SEC changes. The SEC made some changes just this year as to who qualifies as an accredited investor, that's something you want to be aware of so you know who those people are that you can approach for funding. The regulatory concerns, these are often very localized. Airbnb and HomeAway are constantly monitoring local regulations around short term rentals to make sure that their customers are in compliance, so that as they're using the platform everybody stays hunky dory about it. The justice department just gave a nice little slap on the wrist to Bazaarvoice around an attempted acquisition and possible violation of an antitrust law. These are things that you want to take into consideration. Also social issues, you know if something related to your industry is trending on social media, is trending in traditional media, and you need to be aware of a delicate way to sort of play that, that's going to influence potential investors. Of course political, we know that everybody's got to keep on top of how that could possibly play out.

April Kessler: Customers. When you are looking at your proxy companies you can look to see who their customers are and what demographic information they have about their customers. This was an example of some research we did for a client who was in the luxury market. They wanted to know more about those particular customers. They knew their customer was spending in that luxury market, but what else were they spending money on? If this was your client, if you were also in the luxury market, you'd look to a proxy company that also had those similar customers to see what demographic data they had on those customers that then you would gain demographic data on your customer. So it's really, again, just going back to that idea that you're finding somebody like you, discovering what they already know, and using that to help you paint the picture of your industry, your market.

Lindsey Schell: A little bit more about your competitors. We're looking for direct competitors, we're looking for indirect competitors, and then we're looking also for the substitute competitors. This has to do with the fact that because many of you are looking at disruptive technology, or disruptive business models, you may be, whether you know it or not, looking to displace or to substitute some traditional way of doing things in the market. So for example, Uber could be considered ... Anything to do with shared economy is displacing sort of traditional things. Those are all the types of competitors that you need to consider.

Then things that you want to know about them, besides like what their product is, where did they get their funding? How much did they get? How many times have they gone out for funding and been successful? Do they have any MNA activity on their company? Or have they filed that S1 and they're getting ready to do an IPO? Who are their financial and legal advisors? Especially if you're in a situation where your company is looking to be acquired it's a good idea to know in advance who the banks are and who the lenders are that are going to be working with you on the other side of the table. We talked about customers of your competitors. Then also executive bios. It's a good idea to know who's leading your competitors, and where have they been previously, how successful were they in those ventures? It's all good indicators of what you can expect.

April Kessler: You can look for. Here's an example of a visualization of the competitors. This is a Gartner magic quadrant, and these are licensed by Gartner, copyrighted, but they often put these out on the web. Customers of Gartner who are mentioned in those Gartner magic quadrants will buy these reports and put them up on on their website to promote that they are one of the top vendors in this particular area. This one is an example of cloud infrastructure as a service. They are kind of ... They have a couple axis. The magic quadrant specifically looks for ability to execute, completeness of vision. So revenues are one of the things they consider, the number of products, the innovation of those products, and what do these companies look like, and then they have four quadrants. Are these challengers, are they leaders, are they niche players, like where are they in this market?

You can sometimes find a Gartner magic quadrant for your area, for your industry, you can also consider building your own based on what you know about your competitors and what you've pulled together, but VC's are used to seeing visuals like this that help them quickly show what the market looks like and where the players are. You can create something very similar to give an idea about who you are, and how you compete, and what is your niche amongst all of the players. It's a good reminder that you've done your homework, again, and that you know exactly who your competitors are and how compare to them.

Lindsey Schell: This is just a different version of a market map. This one is just listing out the various verticals within the shared economy industry. We've got six different sort of sub industries. This particular item was created by Forester, we found it on Forbes.com, so it was easy to access that. They don't all look this pretty. A lot of times when folks are making their own map like this it's just an excel spreadsheet, that's totally legit, but this one was a nice visual to throw in.

April Kessler: Yeah, this is a good ... You know they're all separated by the vertical that they play in, but this is a good reminder, you're looking at your direct competitor. Say you're in the personal services and these are your direct competitors, but if you're looking at your indirect competitors, your substitutes, people who might come in and just take you out all together, this is an indirect competitor. Uber started delivering stuff and not just people, so who knows if they'll stay in that space but they're taking a look at it. If you are in the delivery business you also need to be looking at those potential new competitors coming in. Having a market map like this is a quick way for you to kind of visually see who's also in the market, who's similar to you who might be making moves.

This is funding. Again, you want to find information about your competitors and who's been funded in that market, companies that are like you or similar to you, who they've received funding from is a big deal. We have subscription databases like CapIQ that we work with, but if you're bootstrapping it, again, you've got sites like Crunchbase and AngelList where you can go to find information about who's funding who and how much they're being funded. This gives you a great insight into maybe potential VC's that you would be interested in, or potential angels that might be interested in a company like yours, and also your competitors and how much money they're receiving. It's a good way to do that. So consider, and remember we were looking at a company that was at the intersection of sports and internet and kind of tech, sports and tech, and so we did a broad search, so sometimes don't forget to take off your blinders, we're always talking about those competitors, and potential competitors, and new competitors, so remember that.

Lindsey Schell: This is just a sort of quick list of the kinds of licensed subscription resources that we have access to. These things are also what the VC's have access to. CapitalIQ is our standard go to for financial information, market information, it's where we access the investment bank reports, so big names that you see up here, Goldman, Credit Suisse, JP Morgan, and Citi, those are just some of the examples of the big banks that are writing large comprehensive market analysis.

We also have a tool called marketresearch.com, this is an aggregator that provides publications and market research from about two hundred different publishers, one of which is Frost and Sullivan that you saw cited earlier. Very expensive reports that are aggregated there that we can pull data from. We also have a Thomson Reuters product called Thomson One that provides similar type data. Keep in mind these are the kinds of sources that the VC's are using to perform their diligence. It's the same kind of thing that we have access to to serve our clients.

April Kessler: Yeah. We'll cover a little bit more of the free resources, and we'll keep highlighting even a few more after this slide. But a few that we wanted to mention specifically, we've mentioned Crunchbase already, crowd sourced companies putting in information about their funding. If you're not in Crunchbase it's a good idea to add your company there because we're going to go look to see if there's information on your company, even if you haven't received funding if you show up there it shows us you're in the know, you're participating in that community.

PWC Moneytree, great aggregator of VC information and it's all free. They look at VC funding trends by industry, by geography, so they even do it by ... They get down to state level. Who's been funded the most? What kind of industries are being funded? If you can show that you're in an industry that's being well funded in the VC area that's a good sign. Right? That this is an area where people are spending money.

FormDs, these are the SEC filings that private companies file when they've received a certain level of funding. It's a great way if you're searching for some information on one of your competitors that's private and you want to see if they've received any funding. We have subscription databases that do this for us, but again if you're bootstrapping it, you can look at FormDs.com, look up your competitors just to see what's been happening with them.

Thomasnet is a great manufacturing database, so if you're looking for any product, or you want to know who makes something that you need in your supply chain, Thomasnet.com is a great free resource for that if anybody's doing any physical product. Indeed job postings, you might not think of that as a place to go for information, but there's a lot of information about companies. Who they're hiring of course, but when you think about that, who are they hiring gives you some insight into what they're doing. If you see them hiring a bunch of programmers and they don't have an apple app right now but they're hiring all IOS programmers, seems like that's where they're going next. If they're starting to hire all knowledge management folks, maybe they're moving into some database management, they're moving in a different direction. Take a look to see who they're hiring and where those people are coming from too. That might be good for you too, again if you're hiring someone you can see salaries and things like that. There's a lot of good information you can find on Indeed in addition to finding a job.

We also highlighted some of our favorite freemium kinds of resources. These are subscription resources but they also offer a lot of free stuff before you subscribe. Bizjournals are local business journals, this particular publisher, the Bizjournals.com publisher, covers forty major cities and it's all local business news. A lot of these private companies that you're interested in as your competitors, there's just no news in the national, there's just nothing out there, and they're not giving ... The analysts aren't covering them because they're private, there's not a lot of info, but the local news is going to be covering them. They're more likely, the CEO of that private company is more likely to talk to the local business journal, to talk about their growth, to talk about the people they're hiring, the economic development they're having in that city. It's great, it's a great resource for you to find some hidden gems of information.

Statista is an aggregator of statistics. They pull a lot of data from a lot of government sources and a lot of market research firms. They again, it's a subscription, the free site will give you the information but it doesn't give you the source. It doesn't tell you who they got it from. It will do in a pinch for a free source, and you can cite that it came from Statista. You might not know exactly who from, you can't go get more data necessarily, but one trick I use is when they tell me what the title is I go searching for that title to see where else it comes up and then that's often who's the publisher of that data, so there are ways to work around that. Emarketer, same way, freemium, some great free charts and graphs, and they're really good at covering tech. They're really good at social media. If you're dealing with anything in marketing, advertising, social media, Emarketer is a great place for you to kind of take a peek and see what you can find for free.

Lindsey Schell: Okay, and the next thing that you'll want to look at is social media of your competitors. It seems like kind of an obvious thing to say, oftentimes the Csuite folks will be issuing little gems about their growth or something that they're excited about that just happened in their company, will show up on Twitter or show up on Facebook. Hootsuite is a great way to just sort of organize everything that you're looking at. Twitonomy is a fantastic resource to monitor the Twitter activity of your competitors. For example, find out how many followers they have, what's the growth rate on their followers, which of their tweets are being retweeted the most, what content is in fact most important to their followers that they're actually talking about that in a routine way. That's a great tool to kind of check that out and make sure that you're keeping abreast of that.

April Kessler: Using those same terms. Associations are a gold mine of information, especially when we're talking about an entire industry. I mean, a lot of times we want you to find that publicly traded proxy company and that's what we strive for, but there are some industries where no one's public, there's just not a single public player in there. It's all too new, or it's all too old school where nobody, it's just small players. For whatever reason, a lot of times there are a lot of private companies in that market, and the associations are where we go to find more information about them. There's an association for almost everything. There are probably five, off the top of my head I can name, for just librarians. There's an association for everything. They are the people who really care about that industry. They're an excellent source of information for the market size, kind of these big overview numbers. Also, how many members? You know it's not everyone, but it's information about those players who take part in their trade association.

These guys also survey their members, so when you want information on particular players in that market they're being interviewed by the association. A lot of that information is only available to members, so if you're playing in that space do consider becoming a member because it's helpful for you. But also check with the association, because if the 2015 report is for sale you might be able to get the 2014 for free or at a discounted price. It's not the most current data, but if your choices are always no data or some data, as a researcher I'm always going to pick some data. It's a great way to do that, or pick up the phone and talk to them. Maybe you just need one little piece of information, and they might be even willing to share that with you because they're excited about that industry and you're excited about that industry.

Lindsey Schell: Another place to look for information is on industry forums. There's a lot of discussion going on there, what's current, what's new, what's cutting edge. This is an example of Stackoverflow, it's a forum for programmers.

April Kessler: Any programmers in the room.

Lindsey Schell: They surveyed their members to find out who's programming in what languages and then made this fancy little chart. This is a great tool to get a glimpse into what's important in the industry and where people are focused.

April Kessler: We were doing a project for a company and their customer is programmers and so they wanted to know about them, they wanted demographics on their potential customer. So we went looking for where their customers hang out, which is Stackoverflow, and sure enough there's more information that they're pulling.

Google search strategies. The librarian in us can't help but help you out with some Google search strategies. Some of the things that we use, of course Google News, you can really customize that to some good keywords, really make some really specific kinds of searches, and you can set up alerts so anytime something comes out on that ... That's a great way, that slide Lindsey was talking about with all the legal political regulation, this is a great way to just kind of stay up to date on that where you don't have to spend a lot of time. Set up some good searches and let Google push some things to you.

Then, we talked a little bit about government statistics, that some are pulled in that Statista database, but the US Government is the biggest provider of statistics. They're pulling stats on everything, and a quick search for that, you can do your keyword 'statistics' your keyword 'site:.gov', site:.gov limits just to government sites. It's a way to kind of sort through and to just find some government sites, and that's great.

Lindsey Schell: It's going to cut through the noise, because if anybody's ever tried to navigate a government agency website and were either pulling your hair out or just ready to commit suicide afterwords ...

April Kessler: It's a lot; there's a lot of stuff on those pages.

Lindsey Schell: You want to use this tool.

April Kessler: Then one of our favorite tricks that we'll share with you is another way to cut through the noise in Google using the 'filetype:'. You can do PDF, that searches for just PDF documents, so these are usually white papers, lots of reports. Market research firms put these out, consulting firms put these out for industries, and it's a way you're searching for your key words, but you're not just looking on any website, you are looking for a PDF document that mentions these words. I use the date, some keywords, and a PDF to come up with some of these reports. PPT is a great way to find power point presentation. Looking for companies, that Salesforce chart, that amazing total addressable market report, we didn't find that from our analyst reports. We actually found that doing a power point search. It was their Dream sales conference, they'd put this power point presentation out, that's where that information came from. Presentations from companies that they've put up for any number of reasons, but they're there. Then excel files, if you know you're looking for a specific number, search for an excel file to see if anybody's posted that type of file with that type of information in there. That 'filetype:', one of those extensions, and then your keywords, that's going to help really focus your search.

Lindsey Schell: Okay, and then the last thing that you might want to take a look at, we talked a little bit before about getting the biographical information on your competitors teams, you also want to make sure that all of your team information is as up to date as possible. The VC's are going to be looking at LinkedIn, they are going to be looking for biographical information and your work history and those kinds of things.

April Kessler: The researchers will check you out on Facebook, so if you haven't made it private you might want to.

Lindsey Schell: If there's more than two of you in the company you might want to develop some kind of standards for what appears in those public spaces about your work experience.

April Kessler: Update that resume on LinkedIn, not just where you were but what you did. If you've raised money before what you did with that money. Really if that's going to look for who you are make sure that your bullet points on there really express what success you've had with start ups, how responsible you've been with that money, what you've done with that money, the growth that you've been able to produce with that. So use that as a chance, remember they're looking at it too. Don't forget about that when you're wrapped up in polishing up your deck, don't forget.

Our next, we wanted to take a few minutes and take some questions now before we got into kind of showing you one of our case studies. Are we cool to do some questions in the middle and then we'll bring it back to our case study? Do you guys have questions for us? Yeah.

Lindsey Schell: Right, okay so the question is where do we get SWOT analysis? We generally use a tool called business source complete. It is a business information database that is produced by a company called Ebsco. They do a lot of databases that are used by people in the library profession by researchers.

April Kessler: Got a lot of news, yeah.

Lindsey Schell: It aggregates a lot of news sources, trade journals, industry publications, that kind of thing. That tool is available from any Texas Public Library.

April Kessler: Business source complete. It has the SWOT analysis from MarketLine in it in addition to all that trade publication, all the Business Week, and Fortune, and Fast Company. I mean, it's an amazing source, so your public library is not just for story time. There's a lot of good business data there, so don't forget it. Go get your library cards today.

That source we were just talking about, that business source complete, will actually have a lot company overviews. They'll also have those trade journals and trade publications. That example came from an investment bank report, so that's one of our subscriptions, but if I'm looking for free I would start there with kind of diet trends and see what companies come up, and health food trends and things like that if that's the angle I was going. Then if Fitbit came up I think the thing to remember is, don't just skip it because you see Fitbit in the title and you think "Oh that's not one of my competitors." If you're searching by keyword and you see something strange come up, take a peek in there, because it might be that they're covering an angle that you're interested in too.

Lindsey Schell: If I'm not mistaken, the advanced search option in business source complete actually allows you to limit your search by industry overview.

April Kessler: Yes, it even has ... It's got new features where if you put in a company it will come up with company information over on the right. Then if you select that company, one of your options over on the left, it's got a couple different menus, but one of them will be company overviews, a SWOT analysis. It's got some great stuff in there, so spend some time with that free resource, it's wonderful.

I think, one of the things we do, we work with a lot of start ups, we were in the VC world where it's like "Okay there's nobody quite like this." One of the things we think about is if you're disrupting, what are you replacing? If you are replacing cars, if you're replacing bikes, we were talking about the jet pack. Right? If you had the jet pack out. I'm waiting, I'm waiting for the jet pack, it's not here yet. But if you develop this are you just replacing the Segway? Okay that's one small market. But if you're replacing the bike travel ... So looking at all these different angles. It might be a compilation. We were doing a project for somebody who is doing some software that does some scheduling of some particular professionals. One thing we did was say "Okay, who are all the professionals that would be their potential client?"

We were doing some things in healthcare, so it's a brand new thing. Right? That this person's developing, but the problem that it solves has to do with heart disease and heart surgery, so how many of those heart surgeries are happening? It's not necessarily that I've got a direct competitor or indirect competitor, when I'm thinking about that market size I really am thinking broadly about "Okay, who's going to buy this? Who would be the buyer?" Then when we get a number, and then "Is anybody else doing this right now? No, but maybe the person who's already in the heart valve business or whatever could easily kind of pivot what they do, maybe they have a big R and D team." So they could be a potential competitor, so don't forget about them even if they're not doing it now. But consider how many of those surgeries would happen, and that would be your big Tam, and then you could go from there.

Yeah, I mean it's ... You want to answer that one or you want me to?

Lindsey Schell: Go ahead.

April Kessler: Okay. It depends on how you are ... What you're trying to do is visualize your competitors, to try and sort them in some way that's meaningful. If you decide "I'm just going to base this on revenue." Or since everybody's private "I'm just going to base my competitors on the verticals they compete in." That's what the visual market map up there was with just the logos. Those were all every shared economy, but we broke it down by vertical. These are all that do food delivery, these are all that did people delivery. We were just kind of giving ... It's a visual representation of that competitive landscape. You can pick how you want to break that out, but just consider thinking about instead of a long list of competitors, start thinking of a way to organize those competitors in a meaningful way that helps differentiate them and helps you differentiate yourself from them. Yeah.

Lindsey Schell: One thing that ... Just another example, the magic quadrant that we saw with the sort of path to innovation, and the vision, and the ability to execute ... We saw a really interesting pitch at South by Southwest V2V this summer where the start up founder had been advised to take out the competitor slide from her pitch, to condense it down and get it into the right time frame for the pitch competition. But then in the Q and A the judges asked her about her competitors because they hadn't seen the slide that she was told to take out, and you could see as she was answering the question, the wheels turning in her head. In her mind she was seeing the same quadrants of the market map, and explaining to the judges who was in each of those quadrants, how far along they were as competitors, where they differed from her product, and who was likely to be a major challenger in the marketplace for her product.

It was really fascinating for us having looked at those visual representations so often, and we could actually see her thinking through where people fell on that quadrant. So it was a great ... She actually won the pitch competition. It clearly impressed the judges that she was able to speak very knowledgeably about who else was in the market. She wasn't sugarcoating anything, she wasn't trying to downplay the fact that there was competition, but she knew exactly how her product was different from everybody else.

April Kessler: Yeah, any other questions?

All right, well lets take a look at the case study we have. This is a company called LookNook. Rachel Guest is the CEO and founder, it is a virtual design website. You can come to the site, upload a picture of your room, get a virtual designer, and you can even share things like your Pinterest page, so "These are the things that I'm interested in. This is the style I like." Then your virtual designer puts together a room for you with particular pieces, and then you're able to buy those pieces at the designer discount. You get all the perks of working with a designer but you do it all virtually. Rachel was pretty far along, she'd been working on this pitch deck for quite some time. She really knew her stuff, she had a beautiful pitch deck already, but she was going for another round of funding and she wanted some help backing up some of the assumptions that they had been making. She's like "We've done some research, we're making some assumptions, we want some help backing that up with some data." That's what she hired us to do. We'll show you a few examples of things we pulled for her.

Lindsey Schell: There we go. All right, so for LookNook we actually pulled three proxy companies. We got Wayfair home furnishings, home furniture itself, as well as the sort of adjacent furnishings, pillows, lamps, that kind of stuff.

April Kessler: Right.

Lindsey Schell: All in e-commerce and a relatively recent IPO. We also included Amazon, the largest e-commerce site in North America, and a great example. Then HomeAway, we included even though they are in a sort of tangential market; they are a major disruptor in the shared economy. That's one of the things Rachel is also trying to attempt as well: to substitute for in-home interior designers.

April Kessler: When we started looking at the competitors and our proxies we took a look ... We've used the Wayfair initiating coverage, and so again this is from some investment bank research, and the initiating coverage is coverage that they do about once a year. It's really in depth on their competitors and the market as a whole. It's like that S1 but we get one every year. It's not just when they go public. This is a great example, we can see the furniture sales, but not only that, we can specifically see the online sales. When Rachel is looking at the LookNook total addressable market, we were really looking at just online sales to really get a more accurate number, and we could see the growth so that was great. Of course we looked at furniture, we looked at Ecommerce, we looked at that shared economy, so that was taking into account those three proxy companies.

Lindsey Schell: Right, and it's difficult to see ... It's okay. On this slide too, the source here is the Goldman Sachs initiating coverage report for Wayfair. This was the TAM that we were able to pull from that Wayfair initiating coverage report. It covers pretty much everything that we wanted it to, the furnishings, the home improvement, the sort of extra pieces of home wares, and it gives us exact numbers, and it also breaks out the percentage of that TAM that is online sales. It gives us some specifics regarding the opportunities within those segments, and it gives us the average growth.

April Kessler: Again, we took a look at the shared economy, because that was one of the things that LookNook was looking at. We can see overall numbers, and then we can see a breakdown for the types of companies. Again, helping us figure out if we're saying she's closest to this company it's closest to what they're bringing in as a part of that shared economy as a whole. This was from Fast Company, so again another free resource. You see us using a combination of subscription and free, so you can kind of get a feel for how much you can kind of bootstrap on your own maybe.

Lindsey Schell: Okay, so the next thing that we looked at for Rachel was what's going on in terms of Ecommerce funding in the VC arena. What types of sub companies or sub industries within Ecommerce are getting the most VC investment? Home furnishings and home improvement are fourth from the, I guess top ten here, so they're getting a significant amount of VC attention. That's something that she wants to be able to show her potential investors, say "Hey look, this is a hot industry."

April Kessler: Lindsey was talking a little bit about this before, this was where we took a look at the customers who are shopping online and we found ... LookNook had specifically wanted us to find some information on millennials and they were kind of focused in this millennial area, and we'll show some more slides of that in a minute. But what we also found was that as far as online furniture sales go it's pretty evenly split between GenX, GenY, and baby boomers. This opens up now a whole new set of customers for LookNook. They're focused right now as they're starting on millennials, but now they know that they shouldn't ignore these other markets because they're really big. So it's opening up some more options. In many cases, you know we're ... We want you to have a realistic TAM, but you also might find some information that also helps you find a new vertical for your product, or find a new customer.

Lindsey Schell: And most importantly challenges the assumptions that you have going in about who your customer is.

April Kessler: Right, and in addition to the online furniture, of course we were looking for that kind of information, but we also wanted to see "Okay, LookNook is growing, and if they're going to target geographically, where are the cities that are having the most growth? Where are the cities that have the most home construction?" If we're looking for customers who are building something new who might be most ready to work with a designer on a new home or new construction this would be a perfect fit. So providing some lists of cities that might be good markets to kind of target next.

Lindsey Schell: One of the next things we looked at were in fact those millennial customers. There's a lot of data out there about how millennials share information amongst each other, and they're shopping collaboratively as well. We wanted some really nice numbers on who actually influences the millennial shopper before they get out their credit card. Where are they getting their information? Is it online reviews? Is it from friends and family? Through social media? We got some really nice numbers here, this item came from Barkley Research.

April Kessler: Then of course we took a look at the competitors. This one was TasteMaker, and where they got their funding, and this one we believe ... This one has closed its doors.

Lindsey Schell: I'm almost certain this company has fizzled.

April Kessler: We were thinking that this one had ... But we wanted to see what money they had raised and from whom, and then it's possible to take a lesson learned from that too. If you're looking at who's received funding, what they've done with that funding, so you can kind of get an idea for that. But again, we used Crunchbase, we used CapitalIQ, we used a lot of different resources to pull those competitors in.

Lindsey Schell: There was another competitor that we found through Crunchbase with some very interesting data. A lot of us have heard of One Kings Lane, a major Ecommerce home furnishings competitor. When you look at their Crunchbase entry, they've actually gotten I think it's all the way to Series F or G. I mean, it's just an insane amount of money that they have raised, and so there's big questions that Rachel wants to answer. How have they done that? What are they doing with all that money?

April Kessler: Where is it going?

Lindsey Schell: Right? What lessons can she take from that for the growth of her own company?

April Kessler: We looked at other adjacent kinds of areas. In particular, LookNook was interested in Pinterest and what people on Pinterest were pinning about. It turns out that forty percent of Pinterest pins are about the home. That's a lot of people talking about home and home décor. Specifically she was interested in Pinterest because they are going to start monetizing and purchasing buy buttons there. They have a lot of home chatter and posts and boards, and if they start doing this buy, what impact is that going to have on the business? Again, looking broadly about even indirect competitors. So ...

Lindsey Schell: All right, so that is the full case study and we're glad to take any additional questions from our in person audience or our online audience.

Right, so ...

Lindsey Schell: Our engagements with start ups are typically one time engagements, in the sense that they're coming to us with a specific need in mind and that is usually the point at which they are going to seek a round of funding. Then after we provide that sort of initial package of information, as they achieve that funding and start to grow those start ups often come back to us for additional pieces of information. Maybe the next round, the series B is a year later, and the landscape has changed a bit so they need to redo the TAM, and they need to redo the competitor landscape and so forth. Our usual starting engagement includes a TAM report, a competitor analysis, and a targeted list of VC's who have recently invested in this space. One of the reasons that's important is because you could waste a lot of time trying to get meetings with people who aren't a good fit for you in the first place in terms of investment dollars. You want to target your energy, you don't want to waste anybody's time, and you want to look at VC partners who have already demonstrated some interest in your industry.

That's the kind of information that we typically provide in those initial times working with our start up clients. That usually runs around two thousand dollars. If you have a lot of additional questions that you want to tie into the research that might take quite a bit of extra time we'll price that out accordingly. We always meet with you personally. If we're in a different city then you are we'll talk to you over the phone, or Skype, or however we can get in touch with you directly.

April Kessler: Or come to Dallas and hang out at Genius.

Lindsey Schell: Right, meeting here at Genius Den. We'll talk to you directly about what information you've already found. We certainly don't want to duplicate anything that you already have. Then we'll go out and see what we can scrounge up.

April Kessler: Yeah, we'll usually report it's ... We try ... Usually we've been able to do about a week return on those, and it's usually in the form of a report, but we'll also be happy to talk you through that report and do a kind of more presentation piece of that. We could do that via Skype or over the phone too, so if you wanted to see it and walk you through pieces of that data we can do that.

Lindsey Schell: We'd be happy to talk to them, sure.

April Kessler: Yeah, yeah.

Lindsey Schell: Absolutely.

April Kessler: Rachel and LookNook had a designer for their pitch deck. What you saw was not theirs. The first piece was their pretty piece, but they did work with a designer and I think that's part of their success as well.

Lindsey Schell: All stages. The question is what stage do we work with start ups? The answer is all stages. We actually just completed and delivered a project that was in ideation stage. This is somebody who just sees a problem that he wants to fix and asked us to help him understand what else is already out there that he may not be aware of, and what are the potential opportunities and niches that he could get into that have yet to be addressed. So yes, we definitely have worked with folks in that stage, we've worked with folks that are going through accelerator programs and have a very structured curriculum and sort of pace to their growth. Then we've worked with people who are just about to hit the pavement with their pitch deck and just need a few extra data points to make sure that they've got everything down.

April Kessler: Venture capital firms are our retainers, and then we also work with advertising agencies, so it's a real mix of the kinds of companies that we're working with. So the start ups are fun from all sizes, and then we have lots of other clients too. It's a fun mix for us, we get to work with a lot of different companies in a lot of different industries.

Yes, and the name of ... The question was do we have a resource. We don't use this one in particular, but I know, it's just slipped my mind ... It's an academic tool for citations that will allow you to grab websites.

Lindsey Schell: Yes.

April Kessler: I will think of it in just a minute, but it's a nice tool. It's really for academics to gather citations for papers, but you can also grab websites, and so it's a nice easy way as you're doing a lot of searching to save those quickly. Because I do that same thing, I have a million tabs open, and then I'm thinking ... Something leads me back to something I saw and I'm like "What tab was it on?" I'm checking my history to find out what website I just ignored five minutes ago because it didn't seem relevant and now it's like "It's everything I ever needed." That ... Zotero, Z-O-T-E-R-O, Zotero, so it's a free tool and it allows you to kind of organize some of those citation-y things, but it will do websites, so it's a nice way as you're just going through. Then you can delete them later, but you'll have them all there, which is a good one.

Those investment bank reports, sure. He was asking about investment bank reports, and what kinds of reports these banks write. These are amazing. These are subscription only. You won't find them out there for sale anywhere, and these are not things you can ... Usually we have tricks for finding all kinds of free stuff where somebody will mention something, that doesn't happen with investment bank reports, it really is in the subscription. But these banks, these are the analysts, these are the buy, sell, and hold reports. On the basic level that's what they're telling you as, you know if you're an investor this is what your broker is giving you. But, way beyond that, these are the reports that come out all the time, just a quick buy, sell, hold, and a little paragraph. You'd see things like that maybe on Morningstar, or ValueLine, and you can get some of that for free, you can get some of that through your public library. But these reports are much more in depth, so they go far beyond just the regular recommendation, and they give deep analysis. Why is this a buy? What is happening in the industry as a whole?

We mentioned these initiating coverage reports, these are reports that come out once a year usually, or when there's a new analyst covering an industry. They cover, like I said, not just a company, but the entire market, all of the competitors. Sometimes they'll even mention big private competitors, so we'll see names pop up that you wouldn't think would be in an investment bank report. Just tons of data, and again they're covering just all kinds of angles, so you know I, again this is where I'm not putting ... I'm keeping my options really open, so when I'm looking for health food I will look in the Fitbit, and I will look in the Whole Foods, but I will also look in any kind of exercise company that comes up. Wherever I see those keywords coming up I'm checking those reports to see what, you know again, what angle they're coming at this data from and what it can provide, and can it provide something new, something I haven't seen before, something the client may not have thought about before, so trying to kind of broaden that search too. Amazing stuff in those reports.