Amey-Thakur Market sizing
Most market sizes are top-down and useless: a large industry figure multiplied by an invented percentage. A bottom-up estimate is smaller, defensible, and actually informs a decision about whether to build something.
Method
- Build from units and price, not from a total. How many potential buyers, how many will realistically buy, what they will pay, and how often. Each step is arguable, which is the point.
- Distinguish the three sizes. Everyone who could conceivably buy, the segment you can actually serve, and what you could realistically capture in a few years. Conflating them is the standard deck error.
- Cross-check top-down against bottom-up. Wildly different answers mean an assumption is wrong, and finding which is more valuable than the number.
- State every assumption with its source. A number whose assumptions are visible can be argued with and improved; a single figure cannot.
- Sanity-check against existing players. If your estimate implies the incumbents should be several times larger than they are, the estimate is wrong.
- Size the beachhead, not the dream. The immediately addressable segment determines the next two years; the total market determines nothing operational.
- Test sensitivity. Which assumption most changes the answer is where to spend research effort (see risk-analysis).
Boundaries
Sizing estimates opportunity, not winnability, which depends on competition and execution (see competitive-strategy). Precision is false comfort; the useful output is an order of magnitude with named assumptions. New categories cannot be sized from existing data and need analogues instead.