BTW, I've always understood that the movie industry was a $100bn industry and that consumption patterns were changing, piracy was a growing concern, and globalization was having a greater and greater impact. However, it has not been easy for me to always understand how I could tell a a billion dollar story. I think that's also important.

Market size is critical. So is potential revenue size. See Ken Auletta's Googled where Larry Page predicted $10bn in revenue when they had barely begun.

I would agree regarding market sizing – the bottoms up approach never works. However, I've found contacting potential customers is a great way to validate or contradict the qualitative narrative that both the entrepreneur and myself might share.

I think it's easy for entrepreneurs to get caught up in presenting numbers (“that's what VC's want to see, right?”), as you get caught up in sales mode and want to have all the answers.

Like you say, you're better off with a compelling story and the team to execute.

I would say you really need to evaluate the market size when & if you are raising outside money.

I get you completely there.

Can you reply with your narrative for Hunch?

I don't ask this to question you in any way – I'm just interested to hear how someone who has been successful at this stuff looks at their own business.

Of course most VCs will still require the spreadsheet, if nothing else because the partners will require it of them, but as Nivi says the Market Trends Narrative is a good way to suss out how much the investor believes in your team and vision. This will be critical down the road when the going gets tough.

Reminds me of Vinod Khosla's search for a “$0 billion market (vs. a $0 million dollar market) with a credible path to grow.”

http://www.khoslaventures.com/look.html

So at what point should a founder and startup evaluate market cap? I'm struggling (having fun) sampling the surface of social web information and network applications. Once I score the alpha of that first utility it's still a pretty far reach to sell it as a $1e9 market. Some things are inherently hard to evaluate, like what's the financial value of email? What's the social value of email?