In Mike Vernal’s article, “The Market Curve,” he discusses the importance of understanding the market for early-stage startups, which is often overlooked by technologist-founded companies. He introduces the Market Formula, which calculates market size based on the number of potential customers and the revenue per customer. Vernal emphasizes the need for founders to provide thoughtful answers to questions about market capture and customer value. He uses the example of enterprise-focused companies to illustrate how revenue concentration from top clients can significantly impact market size calculations.

Vernal introduces the Market Curve, a conceptual framework that plots the number of customers against the average revenue per customer. He categorizes companies along this curve, ranging from those with fewer high-value customers to those serving small and medium-sized businesses, prosumer-focused models, commerce and marketplace businesses, and mass-scale consumer apps. Each category comes with its unique challenges, sales strategies, and considerations. Vernal stresses that a deep understanding of the chosen market is crucial for attracting investors and building a successful business. He concludes by emphasizing that a great product alone is not enough – a profound understanding of the market is equally important.

For new learners, Vernal’s article provides a comprehensive overview of how to approach market analysis for startups. The Market Formula simplifies the task of estimating market size, and the Market Curve offers a visual representation of different business categories. The focus on understanding potential customers and their value provides valuable insights for creating a successful pitch and business strategy. Vernal’s practical examples and questions make the topic accessible for those new to market evaluation in the startup landscape.