Ask YC: What are the most profitable online markets?
10 comments
There is a TON of information out there. If even one firm in an industry is public, you can look up their SEC filings at Edgar. You can then look up their web traffic at Alexa, and look up that of their competitors. Hand wave a ratio between the two,and assume that the competitors have the same ratio.
Google the business press for interviews with founders, and press releases.
Find industry wide statistics ("hunting is a 12 gazillion dollar per year industry").
Call up a wholesaler who sells to the competition and say that you're thinking of launching a firm, and you want to know the process to purchase from them, and what their maximum discount tier is. Chat with the new accounts rep and ask how many folks qualify for that top tier. If you're thinking about selling shovels online, and Shovel Wholesaler Inc. has a maximum discount tier of 40% off retail for $1 million/yr in purchases, and they let drop that "just two or three" retailers qualify for that tier, then you can figure out that shovels.com, allshovels.com, and ishovels.com (the three biggest retailers) likely come in at 1.5, 2, and 4 million per year (or something like that...if the top seller was a light year ahead, they would have negotiated a higher tier).
Although I've not used this approach, you can call up SCORE and see if anyone there has info.
Ping your network on LinkedIn for contacts with info.
I note that your example (gamefly, netflix) is one that I've actually done, because one of my two firms (SmartFlix) is in this space. Their numbers were easy to get from the SEC. I've got a spreadsheet comparing all of their financial ratios to ours (cost of customer acquisition, lifetime value, revenue, profit, revenue per employee, etc., etc., etc.).
Never before in the history of mankind has it been as easy to get info on competitors.
Put on your Sherlock Holmes hat, pop that pipe in, and get to work!
Google the business press for interviews with founders, and press releases.
Find industry wide statistics ("hunting is a 12 gazillion dollar per year industry").
Call up a wholesaler who sells to the competition and say that you're thinking of launching a firm, and you want to know the process to purchase from them, and what their maximum discount tier is. Chat with the new accounts rep and ask how many folks qualify for that top tier. If you're thinking about selling shovels online, and Shovel Wholesaler Inc. has a maximum discount tier of 40% off retail for $1 million/yr in purchases, and they let drop that "just two or three" retailers qualify for that tier, then you can figure out that shovels.com, allshovels.com, and ishovels.com (the three biggest retailers) likely come in at 1.5, 2, and 4 million per year (or something like that...if the top seller was a light year ahead, they would have negotiated a higher tier).
Although I've not used this approach, you can call up SCORE and see if anyone there has info.
Ping your network on LinkedIn for contacts with info.
I note that your example (gamefly, netflix) is one that I've actually done, because one of my two firms (SmartFlix) is in this space. Their numbers were easy to get from the SEC. I've got a spreadsheet comparing all of their financial ratios to ours (cost of customer acquisition, lifetime value, revenue, profit, revenue per employee, etc., etc., etc.).
Never before in the history of mankind has it been as easy to get info on competitors.
Put on your Sherlock Holmes hat, pop that pipe in, and get to work!
Nice post. Talk about lighting a fire under someone's butt...
I could be wrong, but I think you're asking the wrong questions, if you plan on being a startup. The question you should be asking (yourself) is: "what do I have a competitive advantage in"? Call it what you want and classify it however you will -Zipfs law, paretos curve, The Long Tail, Common Sense - and you will find that competing in the "most profitable online markets" is no sure way to profitability. Its winner-take-all (almost), so don't let the dollars distract you.
You're not wrong.
You could also say, "What do I HAVE to do?"
If there's something you just have to do (for whatever reason), forget about market size. Do it.
SuccessProbability = (Ability + CompetitiveAdvantage + Preserverance) * Passion
If Passion = 0, nothing else matters.
Market size doesn't affect the probability of success. Only the magnitude of it.
You could also say, "What do I HAVE to do?"
If there's something you just have to do (for whatever reason), forget about market size. Do it.
SuccessProbability = (Ability + CompetitiveAdvantage + Preserverance) * Passion
If Passion = 0, nothing else matters.
Market size doesn't affect the probability of success. Only the magnitude of it.
I would suggest finding and targeted underserved markets and becoming the big fish in a small pond rather then a small fish in a big pond. Of course, if you can enter into a market that already has big players and actually push those players out then that is even better. If they need money they can come and work for you.
Not that I know anything about this, but at least for the bigger industries you could look at their financials. Add up the market capitalization for the companies in an industry (Google says Expedia is $9B now), and that should give you the overall value of the market.
Unless, of course, you think there's another bubble...
Unless, of course, you think there's another bubble...
Unlike the 2000 "bubble" The current bubble i would say is in private equity. the first time around there were more IPOs so the market took a big hit. If the current bubble; if indeed their is a bubble; bursts then it shouldn't affect the market as bad.
my 3.4 cents
my 3.4 cents
I should imagine its something like this
porn retail gambling travel news
porn retail gambling travel news
for example. The size in revenue of Travel (expedia,kayak,priceline) The size in revenue of Gambling(pokerstars,fulltilt) The size in revenue of Rentals (gamefly,netflix) and so on..
also the spending of ad dollars and how they pertain to the web ad based economy as a whole.