Why Everyone Gets TAM Market Sizing WRONG: Total Addressable Market Explained by a VC

How do you estimate or calculate market size or TAM? This is one of the trickiest things to get right in startup pitches and pitch decks. As a VC, I've seen many founders miss one crucial thing when estimating TAM Total Addressable Market bottoms up based on revenue potential. But beyond that, even venture capital investors and ex consultants who specialize in market sizing can get this wrong by 100 or 1000x.

I've heard thousands of TAM market size estimations, and I share the #1 mistake I see repeatedly. In this video, I break down the basic definition of TAM Total Addressable Market, how to think about serviceable available market and serviceable obtainable market, what are the most common mistakes made while calculating total addressable market and estimating TAM for investors, and examples of how to estimate market size properly.

0:00 Intro
0:49 SAM SOM TAM - should you care?
1:00 TAM Definition most founders use: Revenue Potential
3:11 TAM Definition I recommend: Enterprise Value
5:11 5 Reasons why we get TAM Wrong!

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