PS#043: Building 10x Market Maps (Part 2)
Let’s be clear, building a market map takes a lot of time and effort.
It may be a simple way to start providing value in your career, but it is in no way easy.
I often see summer interns being asked to focus on building a market map (or a similar form of analysis) for a specific space/industry. As I’ve discussed in my course How to be a VC Associate, this is a recipe for mediocrity. It’s hard to separate yourself when you’re simply doing exactly what every other intern is doing and has done for years.
Well, one way to separate yourself from the pack is to take even this task to the next level.
As promised, we’re going to discuss…
A sustainable approach
Building multiple market maps (at once)
Customizing the output for different audiences
Without further ado, let’s jump in.
A sustainable approach.
The first step is creating a sustainable approach for building these market maps – one that allows an investor to do so continuously, efficiently, and expeditiously.
As I mentioned in last week’s issue, if there’s a lot of friction, you likely won’t keep up this habit. Fortunately or unfortunately, the consistency is exactly what makes this valuable.
Each and every week, I run through the same process of (1) categorizing, (2) synthesizing, and (3) visualizing…
(1) Categorizing
At the end of each week, take the companies sourced (e.g., leads, first calls) and bucket them into the appropriate market map categories. This might mean putting them into an excel tracker or dropping a logo into a presentation. You might also drop in research, news, and/or articles that relate to the market, adding some more color and perspective.
Whatever it is, make sure you’re doing this religiously each week.
I’ve found that if you do it weekly, it tends to be much more manageable and starts laying the groundwork for your own analysis.
(2) Synthesizing
When you’ve hit a range of critical mass (think 5+ companies in a category), start identifying trends. Pull out the characteristics that you’re seeing, whether it’s the customer behavior, product characteristics, business model components, GTM strategies, etc. Take a few minutes each week and just try to write a little bit about what you’re learning. Don’t worry about being right. This will evolve and you will iterate on these concepts over time (as you gather more information).
I talk about this a bit in my issue on a VC’s Weekly Schedule, this think time (i.e., writing time) is critical for synthesizing all the information that you’re collecting each week.
(3) Visualizing
Start working on the output. I provided some examples in last week’s issue to help get started, but this can be as simple or as complex as you’d like. Personally, I think starting with a basic market map is a great place to begin.
As you start building out your categories, map it out onto a slide and start dropping in logos. If you choose this type of medium upfront (i.e., PowerPoint, Google Slides, Miro, etc.), you’ll save yourself some time. I think this type of medium, plus a simpler one (i.e., Excel, Word, Google Docs, Google Sheets, etc.) works best.
As you learn more about the market, more specific breakdowns will become apparent.
At the end of the day, the key to all of this is doing it weekly.
Every week, without fail, go through these three steps.
Categorize, synthesize, and visualize. Carve out a few hours on Friday (or maybe it’s Saturday morning) to organize all of this. The process of categorizing/visualizing will save you a boatload of time and the synthesizing will give you a competitive edge (mentally) in the market.
It’s all about getting 1% better.
Building multiple market maps (at once).
Now, this is where it starts getting cool (or maybe that’s just me).
Once you have a process for categorizing, synthesizing, and visualizing, there is nothing stopping you from doing multiple market maps at the same time.
Honestly, it’s easier.
The information is fresh in your mind from the week and ends up being a much better process than trying to remember what you learned from a call weeks (or months) back.
Even better, this will give you a wider berth to source companies and find investment opportunities. You can expand your sourcing to start tackling multiple aspects of your funds mandate at once.
In a few months time, you’ll likely have several market maps that can be shared within your network.
Customizing the output for different audiences.
Alright, this is where I believe the great investors differentiate themselves.
It’s one thing to build a market map, it’s another thing to extract the appropriate insights and communicate them effectively to the appropriate audience.
If you can do this, I think you’ll almost always be able to provide value. I truly believe this.
So, how do we do this?
Again, great question. We start by defining our audiences. For simplicity's sake, we’ll focus on two main audiences – startups and investors.
Startups
For founders, it’s all about their startup.
Personalize the insights you’ve uncovered through this process to that framework and you’ll create better, deeper conversations with founders. For example, you’ll be able to have in depth discussions about the competitive landscape (i.e., Who’s out there? How are we different?), customer behavior (i.e., What solutions are winning? Why?), market opportunities (i.e., Are there potential areas for expansion?), etc.
Focus on their startup. It means everything.
Investors
For investors, it’s all about their deal flow.
As I’ve discussed in my issue on VC conversations (PS#012: 4-step Guide to Structuring VC Conversations), figure out what your fellow investors are looking for in terms of investments. If your market map(s) align with their mandate, you’ll have tons of intel to share. Everything from specific companies/deals to discussing trends/insights on the space will be valuable.
As an early investor, demonstrating your value across the industry is critically important. Not only to help find a potential full-time role, but to also make sure you’re maintaining the widest possible access to deal flow.
For both of these, if you can personalize it AND provide value, you’ll watch your reputation grow as an investor.