Consultants - I want to know about your job!
To all those who are or were in MBB or LEK/Strategy&, can someone really walk me through two things:
1) How do you actually size up any market? I'm sure there's a lot of secondary research reports on market size that you can utilize (but you don't get paid for googling) and experts on the industry whom you can speak with, but what are the sources beyond that? What do you tend to do with channel checks, focus groups, customer surveys. How do you effectively utilize all the avenues to come up with a market size? Can I see an example out there?
2) I've been hearing a lot about consultants using multi-variate regression models to determine the profitability of a market. Can someone please talk to me about how you go about selecting the variables in this, and how do you actually run the model? Any example that's online I can see.
3) How does one go about thesis designing? What are the steps / processes that you'd go about if someone was to tell you "give me an investment thesis on the agtech space"
Thanks!!!
I love my job. I think consulting is a great industry with the potential to teach you a varied set of new skills and open many doors. But, as with all professions, here are some honest truths/dirty little secrets no one will admit.
1) Yes, market sizing does often entail speaking to experts and using their knowledge to gauge certain parameters but this often is supplemented with some VERY generous assumptions or straight up WAGS (Wild-Ass Guesses). And yes, we do get paid to Google things. We often have access to datasets or databases that have a paywall but you can generally find a good amount of information in the public domain. Clearly, this alone won't cut it but it will be a good starting point. Generally speaking most consulting projects will follow the same 3-phase approach: 1. Secondary research, 2. Verification of the secondary research with primary research and 3. Package all that into recommendations with a dash of internal knowledge based on the experience of Partners.
2) Really? I don't think those are used as often as people make them out to be used. If they are, they are simply regressing a bunch of shit until something leads to a reliable insight. But even here you have the issues that correlations does not equal causality. Primary market research is often used to understand causality and then you extrapolate that information to what it could mean for profitability.
3) Thesis design is highly specific to the project at hand. Often times you will have a very specific question to answer and the thesis comes naturally from the initial question. You would rarely get a mandate as vague as "Give me an investment thesis on the AgTech space", perhaps something more along the lines of "What is the most valuable and profitable sub-segment of the AgTech space?" which already includes more measurable parameters. Even in these broader investment style cases you would start by asking why the client wants to invest in something and based on their answers (e.g. eliminate competition, grow, fill a portfolio gap) you can narrow down your options and have a more targeted thesis.