12. Balance Your Expectations With The Market Reality - Business Bits - 30 Days Writing Challenge
When establishing any strategic (and financial) goal, please, please, pretty please, with sugar on top, pay attention to the market conditions. Before projecting that “hockey stick” growth, and pitch it to your potential investors, do your homework and understand the real potential of the market you’re trying to conquer.
I’ve been suffering from this “dreamatitis” situation for years (“dreamatitis” is that psychological affection that makes you project unrealistic expectations over your business, as you may have already guessed). I don’t know if this is even a word, but I think it describes pretty well the situation.
Of course we all want to put a dent in the universe. Of course we all want to be successful. But we must strive to not get into this “positivity bias”, no matter how important the project is for us, no matter how strong is the psychological link between that project and our self-esteem or general feeling of wellbeing.
A business is just a business and it should be treated as such. It has a beginning, a growth period, a leadership period and then comes its natural decline. In my experience there is even a more detailed evolution ladder, involving 7 stages, but we may talk about that in a future post.
For now, what matter is to put our expectations for our own business in perspective.
A Steemit Exercise
Since the beginning of this 30 days writing challenge, I enjoyed catering the examples in these blog posts to Steemit itself. The fact that it’s still in beta, that it’s based on an emerging technology and it’s still evolving, makes it a good candidate for various business modeling processes.
Now, what would be a decent expectation for Steemit? What’s the market size? How much money the founders should expect from it? What would be a plausible position for them without being too low or too high?
We can’t answer to all of these questions but we may try to get at least a ballpark.
Please keep in mind that what follows is the result of less than half of our of research. In real life you may want to spend a lot more time in identifying the real size of your market.
Well, the first step is to find what I call “comparable” businesses, or businesses that are doing similar things. If we consider “tipping” social networks, like Tsu, to be similar, we may have a starting point.
Although it went dark in August this year, Tsu claimed that it had around 4.5 millions registered people at its peak.
So, 4.5 millions is the first “wild” guess.
At the next level we try to identify a much more established community like, let’s say, Stackoverflow. Even if they don’t tip their users, Stackoverflow has a very high affinity and a lot of traffic. It's a good "comparable".
Well, according to this answer on Quora, citing an interrogation of Stackoverflow API, the site has about the same number of registered users as Tsu, a little over 5 millions.
Hmm, we’re getting there.
Once we analyzed the players at the entry level, we can move on to the next level. Identifying the much bigger player that we may challenge with our business. In our case, this would be Quora. Well, according to this entry Quora claims to have 100 millions unique users.
So the range is now between 5 and 100 millions registered users.
But there’s always Reddit, you know. It’s even mentioned in the White Paper of Steemit, so it’s clear that it was used to model a few business processes. So, according to this report, there are 234 millions registered users in Reddit.
Ups. Quite a lot.
So, in the “worst case scenario”, if Steemit plays its card well, it can go up to 4-5 millions users. Please, compare this number with the total number of users they have now, which is reportedly at 100.000. After 10 days of being here and lurking over the stats, my opinion is that at least 2 thirds are bots, so the total number of active users might be around 35.000. But I might be wrong. Nevertheless, that signals a huge potential for growth for Steemit.
Now, the second level will be one order of magnitude, namely the magical 100 millions benchmark. That, I personally consider to be a hugely successful outcome.
And then, if Reddit will decide to go dark as well (highly unlikely, by the way, but not impossible, if we remember the days of digg or delicious), Steemit could grow up to 200+ millions users.
That’s pretty much the possible market size for Steemit, in 3 layers: moderate success (5 millions users, like Tsu or Stackoverflow), huge success (100 millions users, like Quora) or even “queen of the prom”, like Reddit (200+ millions users).
Anything lower or higher than that will be outside market reality. I do hope @ned and @dan are looking at these numbers (but I suppose they’re already dreaming them by now).
So, always balance your own ambitions and expectations with real numbers from the market.
If you don’t do that you’ll end up either aiming unrealistically high, either going under your true potential.
And if you’re really good, those realistic expectations will be surpassed by your results anyway.
That’s how unicorns are born.
image source
This post is part of a 30 days challenge on business, you can find the entire list of articles here.
I'm a serial entrepreneur, blogger and ultrarunner. You can find me mainly on my blog at Dragos Roua where I write about productivity, business, relationships and running.
