By Lane Rettig, Wharton MBA 2014
On Tuesday, February 5, Dr. Elliot Menschik led a standing-room-only workshop on market sizing as part of the annual workshop series for the Wharton Business Plan Competition. You can view the video here, as well as other workshop sessions. Menschik opened his talk by describing himself as a “physician, neuroscientist, engineer and once-upon-a-time-hacker.” He managed to roll all of this experience into his session.
In his discussion, Menschik proposed two ways to size the market for an enterprise: Take a top-down approach or a bottom-up approach. As an example, he led the group through the exercise of sizing the market for his first startup, HxTechnologies, which allowed easier sharing of medical records. Dr. Menschik explained how he started at the $3trn figure, the total size of the US healthcare market, and whittled this down to arrive at a final market size of about $900m which he believed HxTechnologies could save radiologists in major metropolitan areas on redundant imaging.
From the bottom-up perspective, Menschik discussed pricing methodologies: asking prospective customers what they would pay for a product, and performing conjoint analysis or concept tests to hone in. He warned that it’s important to be realistic about reachable market share due to constraints such as geography and the number of competitors.
He then helped students size the market for several of their own ventures, from healthcare communication technology to light therapy to online art markets. He touched upon a number of relevant topics: patents and IP protection, minimum market size that would interest large investors, and modeling patterns of consumer behavior. Finally, Menschik talked about opportunities in the developing world and strategies for sizing less liquid markets with less available data.
The number of students who attended the workshop, their active participation and the number of difficult questions they asked are testament to the ever-growing entrepreneurship community at Penn. The next BPC update comes later this month with the announcement of the 25 semi-finalists.
Bio: Lane Rettig is a member of the Wharton MBA Class of 2014, and a member of the Lauder Class of 2014 (Chinese track). Before Wharton, Lane worked for six years as a software developer at D. E. Shaw & Co., a New York-based quantitative hedge fund. Lane believes that entrepreneurs are happier and more productive, and strives to promote entrepreneurship among his classmates.