Question 1

What's the difference between TAM, SAM, and SOM?

Accepted Answer

TAM (Total Addressable Market) = the entire global revenue opportunity if your product captured 100% of that market (e.g., 'all money spent on hiring globally' for a recruiting tool). SAM (Serviceable Addressable Market) = the realistic slice you can reach given geography, product focus, and distribution (e.g., 'mid-market hiring software in North America'). SOM (Serviceable Obtainable Market) = what you'll realistically capture in 3-5 years with your current strategy. Investors focus on SAM; you plan with SOM.

Question 2

Top-down vs bottom-up, which should I use?

Accepted Answer

Top-down = start with TAM (industry reports), apply your market share assumptions to get SOM. Fast, uses credible external data, prone to anchoring on wrong TAM. Bottom-up = estimate customer acquisition costs, average deal size, expected customer count over time, calculate revenue from there. Slower, but grounded in unit economics. Best practice: triangulate, use both methods, compare results, investigate differences. If top-down gives $10B and bottom-up gives $500M, something's wrong with your assumptions.

Question 3

How do I size a market that doesn't exist yet?

Accepted Answer

New market sizing (AI-generated audio, climate tech, etc.) requires proxy analogies: 'podcasting grew from nothing to $2B in 10 years; voice-AI will follow similar S-curve but faster due to LLMs.' Start with TAM of the problem (e.g., 'enterprise content creation budgets'), estimate what % shifts to AI, project adoption curves. Include adoption barriers ('enterprises are risk-averse') and network effects. Use 3 scenarios: conservative (5% adoption, slow), base case (20-30%), bull case (50%+). Investors expect scenario analysis for emerging markets.

Question 4

Top-down vs bottom-up accuracy, what bands should I use?

Accepted Answer

Top-down is ±50% accurate at best (industry reports vary wildly, TAM definitions differ). Bottom-up (unit-economics based) is ±20-30% accurate if your assumptions are validated. When sizing, always state confidence bands: 'SAM is $500M–$2B' not '$1.2B'. For early stage: 'We're 80% confident in the $500M floor (from payroll data); the ceiling depends on adoption curves.' Mature markets: narrow bands (±10-15%). Emerging markets: wide bands (±50%+). Flag uncertainty explicitly.

Question 5

How do I decide between TAM-based and fundraising-friendly numbers?

Accepted Answer

Never lie, but frame strategically. A $15B TAM might be real (entire enterprise software market) but irrelevant if your niche is $200M. Lead with SAM ($200M), explain how it expands over 10 years (to $2B). Investors respect bounded ambition with clear logic over pie-in-the-sky. Use appendix for TAM derivation so you can defend both numbers.

Question 6

B2B vs B2C sizing, different approaches?

Accepted Answer

B2B: start with customer count (e.g., '50,000 SMB marketing teams'), × average deal value ($50k/year), × your expected market share (1-5% first 5 years) = $250M-$1.25B SOM. Easier to validate (talk to customers). B2C: start with TAM (e.g., 'global job market $5T'), estimate serviceable slice (US job market $2T), × your share of user attention (0.1-1% in category) = $200M-$2B. Harder to validate (requires behavioral assumptions). Both require scenario analysis.

Question 7

What if the market timing is wrong (too early or too saturated)?

Accepted Answer

Market timing risk is separate from market size. A $10B TAM is useless if adoption rates are 0.1%/year (take 50+ years to profitability). Flag timing explicitly: 'TAM is $5B but only $20M serviceable NOW due to [regulatory bottleneck / high switching costs / enterprise sales cycles].' For early markets: show inflection signals (regulatory changes, tech breakthroughs, behavior shifts) that justify now, not 2035. For saturated: explain consolidation opportunity ('3 players dominate 60%, fragmented middle is ripe for disruption').

प्रदेश	ज्युनियर	मध्यम	सीनियर
USA	$100k	$145k	$200k
UK	£60k	£95k	£130k
EU	€65k	€105k	€145k
CANADA	C$105k	C$160k	C$205k

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