Some people tell us that it can be difficult to understand LaunchScore’s estimates, despite our detailed “how it works page”. In this post, I’m going to try to explain it by comparing it to what Zillow does with Zestimates.
Zillow, the popular home pricing directory, produces Zestimates, which are based on a statistical model. They estimate the value of a home using methods similar to an appraiser, but they don’t actually visit the houses, relying instead on data about the houses and neighboring houses. They cover over 100 million U.S. homes and mainly get their data from MLS listings over many years. The interesting thing is that they can offer an Zestimate for homes that are not actually on the market, which helps people decide if they want to sell.
Launchscore, the new small business pricing directory, provides not a Zestimate, but a PYE which is based on a statistical model. We use Census data to find gaps in the market, where there should be more small businesses of a particular kind, but they are not there. The value of these gaps is estimated to get a sense of the value of businesses that are not yet in existence. This can help entrepreneurs decide if they want to enter into that niche.