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Ask YC: What's your Advice on Performing Market Analysis for a Startup?

24 points by iamdave ↗ HN
I'm in some early stages of a startup concept, and part of the conceptualization involves some pretty intense and detailed market analysis. I would need to contact various hosting vendors and dedicated server individuals and gather information like data transfer rates, processor usage, hardware acceleration, very detailed stuff that goes beyond your ordinary analytics (like what's your typical bounce rate of a user coming from x site).

What's the best way to gather this kind of data without raising the red flag?

21 comments

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dkokelley
What it looks like you're trying to do is go beyond market analysis and into industry analysis for your startup. Your market is much broader and includes your industry as well as your consumers and everything that affects both of those.

Probably the best way to get the information you want is to get a job working at one of those places for a few months. You will learn the industry inside and out if you keep yourself open to gathering information.

Another (probably obvious way you've already considered) is to call the companies as a potential customer. Ask them questions about their products/services that you would expect them to answer for a regular customer.

That should be enough to get you started. Good luck!

aagha
Good suggestion on acting like a potential customer.

Furthermore, I agree that these questions may be at an "industry analysis" level. As such, I'd advise looking into utilizing http://www.marketresearch.com/ or http://www.gartner.com/.

nikiscevak
Honestly, you'll waste your time. They'll see you coming from a mile away.

A fantastic source of market research is from larger public companies. Look up their most recent 10-K (annual report). They are legally obligated to give a fairly detailed market analysis (that synthesizes the research from folks like Gartner etc.) in each annual report. It's a great starting point.

Also, for most startup 'markets' there isn't actually a market. It's completely new. So 'market research' in this sense is not very useful and you should examine the premise that you need to do market research at all (versus say concentrating on whether consumers actually have a problem that you can solve).

mosburger
Totally agree w/ nikiscevak. I abandoned one of my ideas for a wireless MVNO after analyzing the 10-K's of some publicly traded wireless companies. Just reading through the summaries will give you good nuggets of information.
sabat
Why be concerned about raising red flags? I don't think I would be. As PG has reminded us, the idea is far less important than its implementation.
thorax
I did it simply by renting from the bigger companies at their smallest levels for the shortest periods, asking their support team about the service and gleaning what one can from those. Does require some money to do that, though.
prakash
To get accurate answers and hard data, it's best to talk to someone on the inside i.e. who has spent some time in that industry.

A couple of good starting points: - www.webhostingtalk.com - www.streamingmedia.com

OpenWebU
I did the same as thorax. Often if you say you are considering becoming a customer, they will give a one to two week free trial. You learn a lot from salespeople and their sales consultants.

You may enter this trial thinking that you will compete, but you may also learn a lot -- like info to feed into your product strategy -- in my case realizing that I'd like to outsource some components of what I'm doing and focus on what is original/unique about my idea.

OpenWebU
also, i'd like to comment is that you are doing 'market analysis' third-hand -- the products that companies offer are a combination of their opinion of what the markets need, and their own response to customers.

IMHO, true market analysis is going to the real end-customer (the customers of the hosting vendor). If it is obvious what the very they need and what they are willing to pay for, then no need to do this. But let's say as an example, the true end-customers are large IT departments. I'd look around and find someone in that IT department to interview and find them across industries, and see what they are willing to buy. Often these customers are listed as references on their website.

jdavid
you are a startup, the only market analysis you need are sales. overtime update your business plan with things you find on the web, and compare them to your sales figures.

the only customers you should trust are the ones willing to actually pay you for your product.

skmurphy
I would have to agree. What you want is market exploration: who is your customer. Start talking to them. Ask their opinion of what's missing from current solutions. Don't try and chase existing players, talk to dissatisfied customers and folks who should be customers but aren't--find out why. If you chase the existing players you end up with a large feature set and the need for a large development effort that looks more superset than distinct. Think about features you can delete from existing solutions and still appeal to a segment of users. Think about one or two missing features you can add after you have deleted many of the existing ones. A really good book on this is "Four Steps to the Epiphany" by Steve Blank, cheapest place to buy it is here http://www.cafepress.com/kandsranch
felipe
"Four Steps to the Epiphany" is a must-read. Also, get "Bootstrapping" from Greg Gianforte.
sillydude
I think it is important to pay attention to the market in an effort to better understand who your core customers are and anticipate their future needs. In doing so, you create early opportunities to differentiate yourself which makes it easier to compete. It's not just about raw numbers and figures, often these figures don't exist yet in new markets.

RivalMap (previously Competitious) is an excellent tool that helps us organize and discuss market analysis in our startup. There is a free edition for 3 users and I think they are adding news soon too.

Flemlord
Not to nitpick, but I wouldn't call that a marketing analysis. Marketing analysis is more like how big is the market segment? Who are the biggest players in the space, what are their products, and what are their weaknesses? These are questions you'll be asked by any VC (even though they usually know the answers). I managed to land my first round without knowing that data, but I looked bad because I didn't.

You get that kind of data from research companies like Forrester or Tower Group. They do reports on different market segments every so often and charge upwards of $10,000 just for a single copy of the report.

Startup Tip: If you have a friend at a big company or venture capital group, they may have access to their company's research subscription. If so, they could get you the report(s) for free.

iamdave
Thanks for all the suggestions and feedback guys. A lot of people are concerned with me saying market analysis versus industry analysis. I use 'market' analysis because I'm not exactly reinventing the wheel any less than I'm redefining how it's used and open up a new sector of the market.

I've bookmarked the links and will be reading them.

Flemlord
"It's a completely new market," and "we have no current competitors" are usually looked upon with suspicion by sophisticated investors. It's rare to have a completely new market--Google, Microsoft, Apple, Facebook... they all had competitors and were going after a specific market.

Update: I'm not saying you haven't discovered a completely new market, just that it's very rare.

iamdave
Perhaps new 'market sector' is more appropriate? I plan to have a writeup of my idea done sometime by the end of next week so hopefully it will make a little more sense why I use the rhetoric I have. But I certainly understand what you're saying.
craigh123
On the business side, there is lots available online from the sec for public companies that can help you do things like size a market, list the top competitors, etc. See http://www.sec.gov/edgar.shtml . You can also use the google for talks by top execs, esp to analysts (esp. wall st.). That's a great quick way to get a sense of how they think about their different markets. You're giving yourself a huge mountain to climb of research. Can you focus on a subset of issues? Note that customer info can be simplifying - if people are convinced something has poor performance, then that defines the market reality.