Many founders pitch TAM like a golden ticket: “The market is $10B. If we just capture 1%…”
“You are not a lottery ticket.” – Peter Thiel, Zero to One
But TAM isn’t a golden ticket. It’s not even an “if the stars align” number. No company will ever sell to TAM. TAM is a theoretical construct showing market scope, not your opportunity.
Investors don’t fund theory. Boards don’t manage theory. Customers don’t buy theory.
They fund execution. They manage reality. They buy outcomes.
Step one is a rock-solid market sizing. It’s the foundation. Without it, everything else is built on sand.
In the beginning, your models will be full of assumptions. That’s okay. But:
Pressure test your hypotheses. Collect real data as early as possible. Replace assumptions with facts.
Your market sizing, GTM, and sales projections must be coherent, consistent, and rational. Investors and boards see thousands of pitch decks. They pick up inconsistencies instantly, and confidence in your executional rigor erodes when they do.
TAM (Total Addressable Market) is an abstraction. It’s what McKinsey gets paid to calculate – the total global revenue possible if every potential buyer purchased your category, not your product.
You sell fleet management SaaS. TAM is all companies operating fleets globally multiplied by your potential ACV. But you will never sell to all of them. TAM only tells you that the market exists.
SAM (Serviceable Available Market) narrows TAM to the portion you can realistically target with your business model and GTM approach.
You’re selling only in the US, only to fleets with >20 vehicles. Your SAM is the number of such fleets times your realistic ACV. This is directional, not actionable.
SOM (Serviceable Obtainable Market) is the critical piece. It’s your real, winnable revenue opportunity over the next 3-4 years.
If a company claims its SOM is $50M in four years, that implies 99.9-percentile startup performance.
Examples of companies that achieved such outlier growth:
Can you persuasively explain why your company will be in the 99.9th percentile?
If not, it’s not a plan. It’s a fantasy. Strong boards will push the founder to clarify assumptions and re-anchor on achievable targets.
Investors and Boards want TAM and SAM to understand market potential. But SOM is what keeps you alive. You don’t sell to an abstract market. You sell to real customers, under real constraints, with your actual resources.
Reality Check for SOM assumptions:
Your spreadsheet is simply a dream, not a blueprint, if your assumptions don’t hold up in the real world.
Your market sizing, GTM, and sales projections must tell a single, consistent story.
Boards and investors will notice these gaps. A strong board will challenge you to reconcile them to build a plan based on reality. Prospective investors might say nothing and just walk.
“Every great startup begins with a vision. But visions that ignore reality become hallucinations. Market sizing is where your dream meets the hard wall of execution.”
Calculate your market, not the market. Build bottom-up. Challenge every assumption because the market doesn’t care about your spreadsheet. It cares about whether you can win.
48-Hour Challenge
1. Rebuild your SOM calculation – bottom-up, line by line.
2. Stress test it: Is this plan possible with our current team, cash, and GTM?
3. Re-align your GTM strategy and financial projections to reflect what is achievable, not just desirable.
If you want your market sizing, GTM, and sales projections to become your company’s foundation for disciplined execution, not just a slide in your deck, Mir Meridian can help.