Total Addressable Market (TAM)
The total revenue available if your product reached every possible customer in your category.
What it is
TAM = the maximum theoretical market for your product if you owned 100% of every possible buyer. Useful for sizing the bet, useless for tactical decisions.
TAM vs SAM vs SOM
TAM = total. SAM (Serviceable Addressable Market) = the slice you can actually serve given product + geography. SOM (Serviceable Obtainable Market) = the slice you'll realistically capture in N years.
Why it matters for fundraising
VCs want big TAMs. Small TAM = small business. Founders inflate TAMs to fundraise. Realistic SAM/SOM matters more for operating.
Common trap
Calculating TAM by multiplying everyone times average revenue. Investors see through this. Better: bottoms-up. How many buyers exist × realistic price × realistic capture rate.
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