💯 raw business value in growth & efficiency Intel - ie how to build Hypergrowth with the least amount of cash invested. Plus also if you're looking for investment
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 💯
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.
Agreed. The sizes in the examples are too small for VC but not investors more generally. They're also more applicable to most opportunities. Your points are well made so thanks for sharing. As a VC our lower threshold is $1 Billion TAM (still theoretically too small as we're deploying €300m fund) and as an angel then I like it as small as possible - a super niche. Why? Because super niche businesses have localized issues so unique software, AI & or business model is loved by the buyers & you'll need very little cash invested (or zero) to kick off cash and own the market. Obviously NOT a VC bet. But I like these alot.
Whether you're funded or bootstrapped, these are numbers and concepts it pays to know!
💯 raw business value in growth & efficiency Intel - ie how to build Hypergrowth with the least amount of cash invested. Plus also if you're looking for investment
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 💯
💯 agree. The uncomfortably narrow beach head, the fist 10 raving fans as buyers, it all starts from there 💙
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.
Agreed. The sizes in the examples are too small for VC but not investors more generally. They're also more applicable to most opportunities. Your points are well made so thanks for sharing. As a VC our lower threshold is $1 Billion TAM (still theoretically too small as we're deploying €300m fund) and as an angel then I like it as small as possible - a super niche. Why? Because super niche businesses have localized issues so unique software, AI & or business model is loved by the buyers & you'll need very little cash invested (or zero) to kick off cash and own the market. Obviously NOT a VC bet. But I like these alot.
This is probably the best breakdown I’ve read on TAM/SAM/SOM that actually ties it back to execution.
Most decks die because founders chase TAM and skip SOM.
Thank you, Chris, for writing this post.
My pleasure. Thanks for sharing your wisdom 🌞
This is a masterclass in breaking down a complex, often confusing concept into an actionable roadmap.
I've seen so many founders lose credibility by just grabbing a massive TAM number and calling it a day.
Really appreciate the clarity here.
Thanks 👏