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Total Addressable Market

Market sizing includes how to size a total addressable market (TAM).

  1. Learn Total Addressable Market with the Practica AI Coach

    The Practica AI Coach helps you improve in Total Addressable Market by using your current work challenges as opportunities to improve. The AI Coach will ask you questions, instruct you on concepts and tactics, and give you feedback as you make progress.

  2. What is a Total Addressable Market and Why Does It Matter?

    • Matrix Partners logo
      How to calculate your total addressable market and make a great TAM slide for investors

      Jared Sleeper, VC, Matrix Partners

      Jared argues that startups often include total addressable market (TAM) slides in their pitch decks as a formality without much thought. A more thoughtful TAM analysis can improve a startup's pitch and business decisions. There are three ways to calculate TAM: top-down using industry reports, bottom-up using early sales data, and value theory using buyer willingness to pay. Jared recommends the bottom-up or value theory approaches as they involve tangible data and assumptions about potential product market fit. A good TAM slide can show investors that a startup is targeting a large enough market to achieve venture-scale returns.

  3. How To Calculate Total Addressable Market

    • Visible logo
      Modeling Total Addressable Market

      Mike Preuss, Co-founder & CEO, Visible

      Total Addressable Market (TAM) refers to the overall revenue opportunity available if a company achieves 100% market share. Calculating TAM helps determine how much effort and funding to put into a new business. There are top-down and bottom-up approaches to calculating TAM. The bottom-up approach, though more work, is often more accurate as it estimates potential sales and customers. Startups should focus on TAM as it helps shape their Go To Market strategy, forecasts, and fundraising efforts. Building an accurate TAM model requires understanding where the target market begins and ends for the company's specific product or service.

  4. Examples of a Total Addressable Market

    • Benchmark logo
      How to Miss By a Mile: An Alternative Look at Uber’s Potential Market Size

      Bill Gurley, General Partner, Benchmark

      Bill argues that Professor Damodaran's assumptions of Uber's total available market and maximum market share are too conservative. Uber provides a radically different experience compared to taxis through faster pick-up times, wider coverage, easier payment, and greater safety. Lower prices enabled by higher utilization could also significantly expand demand. Uber could potentially replace car ownership for some users if it becomes cheaper and more convenient than owning a vehicle, especially among younger demographics. Bill estimates that Uber's total available market could be up to 25 times larger than Damodaran's estimate, which would require a maximum market share as low as 20% to justify Uber's current valuation.