Total addressable market

Data-Driven Decision Making for Business

Ted Kwartler

Data Dude

Total Addressable Market (TAM)

startup idea

Data-Driven Decision Making for Business

TAM: What is the entirety of the market?

Total Addressable Market (TAM) $$

TAM as a Venn Diagram

Data-Driven Decision Making for Business

SAM: What part of the market can your company get?

Serviceable Available Market (SAM) $$

Data-Driven Decision Making for Business

SOM: What proportion of market can you reach?

Serviceable Obtainable Market (SOM) $$

Data-Driven Decision Making for Business

Calculating TAM

  • "Swag" math
    • Inputs: best estimates
    • Data-driven decision to enter the market
  • Two popular methods:
    • Top-down
    • Bottom-up
Data-Driven Decision Making for Business

TAM: Top-down market sizing

Top-down TAM

  1. Start with macro data set
  2. Logically apply interactions

Example

330 US Citizens

* 10.5% diabetics

* .75 bars per person

* 100% margin ($1)

 = $25.25M TAM

Data points

Data-Driven Decision Making for Business

TAM: Bottom-up market sizing

Bottom-up TAM

  1. Start with granular data
  2. Logically extrapolate upwards

Example

$8B annual revenue

/ 63 candy bars = $127m

$127m * 10% of revenue is sugar free *
100% margin($1)

 = $12.7M TAM

Data points

Data-Driven Decision Making for Business

TAM to the moon!

Data-Driven Decision Making for Business

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