Day 12/100 - How Founders Estimate Market Size Using Top-Down and Bottom-Up Thinking
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Startup Playbook | 100 Days of Learning in Public
Day 12/100 — How Founders Estimate Market Size Using Top-Down and Bottom-Up Thinking
Today's startup lesson:
The way you estimate market size matters just as much as the numbers themselves.
I learned two common approaches:
Top-Down Research
Start with large industry reports.
Then narrow the market using assumptions around geography, customer segments, and market share.
Strength:
• Fast
• Shows industry potential
Limitation:
• Can become overly optimistic.
Bottom-Up Research
Start with actual customer data.
Use pricing, usage patterns, waitlists, pilot programs, or early revenue.
Strength:
• Grounded in evidence
• Preferred by investors
Limitation:
• Requires real data collection.
Big takeaway:
Top-down demonstrates vision.
Bottom-up demonstrates credibility.
The strongest founders communicate both.
Day 12 complete.
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