Founders often get TAM totally wrong. It's easy to calculate using this simple formula.
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Steve Barsh, Dreamit Ventures Managing Partner, shares common mistakes founders make when calculating their Total Addressable Market (TAM) and gives you a simple formula you should use to accurately calculate your startup’s TAM. Many founders present their startups’ TAM as the size of the problem they’re solving or the market size of a well-known company in their sector. While these statistics can inform potential investors about the scope of the problem you’re addressing or the scale of potential competitors, it doesn’t help them understand your TAM—the total amount of revenue you can earn if you sell to 100% of your market. At the end of this video, you should be able to determine your TAM by multiplying the total number of customers in your market by your product’s price.
0:00 - Intro
0:26 - Top TAM Mistakes
1:32 - Market Sizing Example
2:20 - Correct TAM Calculation
3:34 - Takeaways
3:44 - Outro
