--- title: "Market Sizing and Opportunity Assessment: How Big Is Real?" module: day2 order: 6 duration: prework: 30 session: 60 challenge: 45 tags: [market-sizing, opportunity-assessment, business-model-canvas, validation, NZ-case-studies] gated: true components: [] teaser: "A market size is not a number you look up. In a small, dense research economy like Aotearoa's, it is a number you build yourself from evidence you can actually reach, and defend line by line." overview: objectives: - "Build a bottom-up market size (not a borrowed top-down TAM figure) for a specialist, small-market context like New Zealand" - "Use the Business Model Canvas as a validation tool rather than a description exercise, working through a real New Zealand research-derived venture" - "Sort evidence for an opportunity into proven, credible, and optimistic tiers, and see how that changes the honest size of the number" - "Produce a one-page, defensible opportunity assessment for your own work" prework: "About 30 minutes: why top-down TAM numbers mislead in small specialist markets, a bottom-up sizing method, the Business Model Canvas used as a sizing and validation tool, and a worked New Zealand case study." session: "A 60-minute working session: a bottom-up sizing drill on your own idea, a Business Model Canvas gallery walk built around the case study, and sorting your own evidence into proven, credible, and optimistic tiers." challenge: "About 45 minutes producing your bottom-up number, a one-page Business Model Canvas, and an evidence tier audit that names what you would need to move each optimistic assumption into credible territory." --- ## Pre-Work (~30 minutes) *Two earlier lessons ended with a rough sketch: a Moat Map, a Business Model Canvas. Both assumed a market existed for whatever you sketched. This lesson tests that assumption before you build anything on top of it.* --- ### Why Top-Down Market Sizing Breaks for Researchers The standard startup-world move is to find an industry report, quote a multi-billion-dollar global market figure, and claim some small percentage of it. This works badly for research-derived ventures, and it works especially badly in New Zealand: the addressable market for a specialist scientific service, tool, or dataset is rarely a slice of a huge global category. It is a specific, countable set of institutions, labs, companies, or funders who would actually buy the specific thing on offer. > **Sprint TODO:** open with a short, concrete example of a borrowed top-down number failing a NZ research venture (real or realistic composite), contrasted with what a bottom-up number would have shown. ### Bottom-Up Sizing: TAM, SAM, SOM, Built Not Looked Up - **TAM (Total Addressable Market):** every entity that could conceivably use what you offer, counted, not estimated from a report. - **SAM (Serviceable Available Market):** the subset you could actually reach and sell to given your current capacity, geography, and credibility. - **SOM (Serviceable Obtainable Market):** what you could realistically win in the next one to three years. For a specialist offering, TAM might be a list of 40 named labs or companies, not a percentage of a global figure. Small and countable is not a weakness; it is more defensible than a large, borrowed number. ### The Business Model Canvas as a Validation Tool, Not a Description Exercise `business-model-types.md` introduced the Business Model Canvas as a sketching tool for the Challenge. Here it is used differently: as a way to stress-test whether a market opportunity is real, by forcing every block (customer segments, value proposition, channels, revenue streams, cost structure) to be filled with evidence rather than assumption. ### New Zealand Case Study > **Sprint TODO:** select and write up one or two New Zealand science ventures that scaled from a research base (spin-outs from a CRI, university commercialisation office, or Genomics Aotearoa-adjacent group are good candidates). For each: what market did they think they were sizing, what did they actually find when they counted, and how did the Business Model Canvas blocks look once evidence replaced assumption. This case is reused in the Session gallery walk below. ### Evidence Tiers: Proven, Credible, Optimistic Sort every claim behind your market number into one of three tiers: - **Proven:** you have a signed contract, a paying customer, or a documented commitment. - **Credible:** you have a strong analogue (someone selling something adjacent succeeded), or direct, specific interest from a named prospect. - **Optimistic:** you believe it, but nothing yet supports it beyond your own conviction. Most first-draft market sizes are almost entirely optimistic-tier claims dressed up as credible ones. The discipline is naming which tier each claim actually belongs to. ### Reflection Prompts 1. What is the largest claim in your current thinking about market size that you have never actually tested? 2. If you had to count (not estimate) your TAM today, who would be on the list? ```lms type: reflection_response id: market-sizing-and-validation-prework-reflection prompt: "Answer one or both prompts above before the session." min_words: 40 ``` --- ## Session *Facilitator guide. 60 minutes. The goal is to replace a borrowed or optimistic market number with a small, countable, evidence-backed one.* --- ### Activity 1: The Bottom-Up Sizing Drill (20 min) *Individual work, then pairs.* Each participant lists, by name where possible, the actual entities who could buy what they offer. Push for a real list, not a category. "New Zealand dairy processors" is a category; "Fonterra, Synlait, Open Country Dairy, and six smaller processors" is a TAM. Pairs then challenge each other's SAM: given current capacity and credibility, which of those named entities could actually be reached in the next 12 months? ```lms type: session_response id: market-sizing-and-validation-session-bottom-up prompt: "Name your TAM as an actual, countable list (not a category), and mark which entries are realistically in your SAM for the next 12 months." min_words: 30 ``` ### Activity 2: Business Model Canvas Gallery Walk (25 min) Walk the group through the New Zealand case study from the Pre-Work, block by block, distinguishing what was assumed early versus what was evidenced later. Then have participants sketch their own canvas on the wall (paper or shared board) and do a gallery walk, giving each other one written question per canvas: "what evidence supports this block?" ### Activity 3: The Evidence Tier Sort (15 min) Each participant sorts their own claims (from Activity 1 and the canvas) into proven, credible, and optimistic. In plenary, ask for a show of hands: who has at least one proven-tier claim? Who has none? Naming the gap is the point, not shame. --- ## Challenge (~45 min) *Produces a one-page opportunity assessment: a defensible number and an honest account of what is still assumed.* --- ### Part 1: Your Bottom-Up Number Write your TAM as a named or counted list, your SAM as the realistic subset, and your SOM as a one-to-three-year target. Show your work: how did you arrive at each number? ```lms type: challenge_prompt id: market-sizing-and-validation-challenge-1 prompt: "Write your TAM, SAM, and SOM, each with the counting method behind it, not just the number." min_words: 60 ``` ### Part 2: One-Page Business Model Canvas Fill in a full canvas for your own opportunity, and for each block, mark whether it is evidenced or assumed. ```lms type: challenge_prompt id: market-sizing-and-validation-challenge-2 prompt: "Complete a one-page Business Model Canvas for your opportunity, marking each block as evidenced or assumed." min_words: 60 ``` ### Part 3: Evidence Tier Audit List your three most important claims. For each, name the tier (proven, credible, optimistic) and the single next step that would move it up a tier. ```lms type: challenge_prompt id: market-sizing-and-validation-challenge-3 prompt: "List your three most important claims, their evidence tier, and the one next step that would move each up a tier." min_words: 50 ``` --- ## Key Concepts Reference **TAM / SAM / SOM:** total, serviceable, and obtainable market, built bottom-up as a counted list rather than a percentage of a borrowed figure. **Business Model Canvas as validation:** using the canvas to test whether an opportunity is evidenced, not just to describe an idea. **Evidence tiers:** proven (contract or paying customer), credible (strong analogue or named prospect interest), optimistic (unsupported belief).