I think it’s time we drop “TAM” in our pitch meetings.
What often happens with TAM today:
- Founders slap whatever biggest number they can find on the internet as TAM and cite Forrester Research
- Investors try to look for an existing, known market as TAM
- They get into meaningless discussions like “Is your TAM $180Bn or $100Bn”
The real opportunities lie in markets that are not obviously big today but have potential to grow huge with the right product. I’m sure a lot of investors passed on Airbnb and Shopify, as their then-known TAM (ie. people who rent our their homes/rooms, or independent ecommerce sellers) seemed very small. But these were examples of non-obvious markets that could have become big with the right products. On the other hand, if the market is already big, there’s a good chance it’s a red ocean.
So what works better than TAM might be what I call NBT^2: Not Big Today, but can be the Next Big Thing tomorrow.