How do you update and refine your market size assumptions as you test and validate your venture hypothesis?

1 Use multiple sources and methods

Don't rely on a single source or method to estimate your market size. Different sources may have different definitions, scopes, and biases that affect the accuracy and relevance of the data. Use multiple sources and methods, such as industry reports, surveys, interviews, web analytics, and bottom-up or top-down approaches, to cross-check and triangulate your market size estimates. Compare and contrast the results and look for patterns and outliers.

2 Segment and target your market

Your market size may vary depending on how you segment and target your potential customers. You may have different segments based on demographics, geography, behavior, needs, preferences, or other criteria. Each segment may have different characteristics, pain points, and willingness to pay for your solution. You may also have different target markets based on your value proposition, positioning, and competitive advantage. Segment and target your market based on your venture hypothesis and test your assumptions with each group.

3 Track and measure your traction

Your market size assumptions are not only based on external data, but also on your own performance and traction. You need to track and measure how many customers you are reaching, acquiring, retaining, and monetizing with your solution. You also need to monitor how your customers are using, engaging, and referring your solution to others. These metrics will help you validate your product-market fit, identify your most valuable segments, and estimate your market share and growth potential.

4 Adjust for changes and trends

Your market size is not static, but dynamic and evolving. You need to adjust your market size assumptions for changes and trends in the external environment, such as customer behavior, preferences, and needs; competitor actions and reactions; industry dynamics and regulations; technological innovations and disruptions; and social, economic, and political factors. You need to stay on top of these changes and trends and anticipate how they may affect your market size and opportunity.

5 Validate and test your assumptions

Your market size assumptions are not facts, but hypotheses that need to be validated and tested. You need to constantly test your assumptions with real customers and data, and not rely on your own opinions or biases. You need to design and run experiments, such as landing pages, prototypes, MVPs, or pilots, to test your value proposition, customer segments, channels, pricing, and other aspects of your venture hypothesis. You need to collect and analyze feedback, data, and insights from these experiments and use them to update and refine your market size assumptions.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?