Great overview, one of the cleanest I've seen. But your examples are bad - no one is going to invest in a software company to reach those numbers. A more realistic example where a VC would actually invest in would of been more helpful, which ties it to the investment decision the VC's are making - Is this a viable and large enough TAM, is their an addressable segment that actually exists and can be reached, and does the company have the leadership in the initial execution phase to actually close the SAM as revenue on the books? I look forward to the book.
the "strategist vs dreamer" distinction is everything chris. most founders think bigger tam = better pitch. wrong. investors fund wedges, not wishes. the som is where you prove execution ability. a tight $5m som with clear path beats a vague $500m sam every time. the mistake is conflating market potential with market access. nail where you win first, expansion comes later 💯
Whether you're funded or bootstrapped, these are numbers and concepts it pays to know!
Great overview, one of the cleanest I've seen. But your examples are bad - no one is going to invest in a software company to reach those numbers. A more realistic example where a VC would actually invest in would of been more helpful, which ties it to the investment decision the VC's are making - Is this a viable and large enough TAM, is their an addressable segment that actually exists and can be reached, and does the company have the leadership in the initial execution phase to actually close the SAM as revenue on the books? I look forward to the book.
the "strategist vs dreamer" distinction is everything chris. most founders think bigger tam = better pitch. wrong. investors fund wedges, not wishes. the som is where you prove execution ability. a tight $5m som with clear path beats a vague $500m sam every time. the mistake is conflating market potential with market access. nail where you win first, expansion comes later 💯