The Market Curve

Market sizing is the most-faked slide in every startup pitch deck. Almost every founder googles their category plus "market size" and reports the number confidently, without asking the two questions that would actually reveal whether the market is real for their specific business. Vernal's essay is interesting because it shows what those two questions are — and why answering them with precision changes almost everything about how you design the product, price it, sell it, and hire for it.nnThe central insight is what Vernal calls the Market Formula: market size equals number of customers multiplied by revenue per customer. Both variables need to be computed from the ground up, not borrowed from a research report. His partner Doug Leone's question makes the exercise concrete: what percentage of the Fortune 2000 will ultimately buy this product, and how much will they pay? A company serving 20% of the F2000 at $500K per year has a $200M market — potentially a great business, but not a $2B one. Adding a zero to the ACV gets you there; so does widening to the full F2000.nnThe second and more structural move is the curve itself. Once you understand that Peloton (511K subscribers at $2,200/year) and Yelp (549K advertisers at ~$1,800/year) occupied almost exactly the same point on the curve in 2019, you realise that the curve imposes similar operating constraints on very different businesses — similar sales-to-marketing ratios, similar attrition problems, similar unit economics challenges. Where you sit on the curve determines your playbook, not the industry you're in.nnWe picked this because it is one of the few pieces of VC writing that actually teaches you to compute something rather than feel something — useful for founders, investors, product managers, and anyone who needs to pitch or evaluate a market. The question worth sitting with is where your own product sits on the curve, and whether your team's skill set matches that position.