These are cognitive mistakes that all of us can make! Nobel prize winning economist Paul Krugman once said "By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's". Any other errors you've seen in estimating future market size?
Whenever I mentor local startups here at home catering to our local market, I constantly analyze their creativity and awareness through the ff.: * the way they structure their business model * their future services/market on top of their core * spotting innovations or trends that they can ride on * identifying their potential acquirers if they mature This allows me to understand how they know their startup well and whether they're in for the long haul or not. As I watched this video, I could see the similarities; that's why I always thought that finding your TAM involves creativity and awareness beyond just numbers. Also, that financing startup idea that you shared at the beginning of the video sounds like Hustle Fund's Hustle Flywheel.
@@jom9810 I love that comment - I agree market sizing may come across as a purely analytical one, but actually requires some creativity (esp as you point out to see around corners). Thanks!
Wow this is a wonderfully done video! We are prepping our slide deck now and this is immensely helpful. I was surprised by how many new things this video covered going over the market context not just size that most other videos didn't mention. Thank you!
Please keep making videos, I want such videos to keep coming. Make a series on hiring, product building and operation also. Like how to start from the very scratch....
Seen a lot of videos on TAM - Hands down this is the best. Question though, with respect to TAM do you only scope based on funding size requested (i.e with 5 million I can reach the whole of NA but not the world kinda thing even though there are plans to actually expand worldwide as there is no limitation) or should TAM just be your maximum potential regardless of your funding size and the SOM is where the capability of the requested funding round is articulated.
Thanks so much! If there’s no reason you can’t expand internationally, I’d include Global as TAM. However, there are often good reasons why this isn’t realistic. The edtech market in India for example is very different from that in the US, and consumers behave a lot differently
@3:52, the value of the enterprise 1.5B is more than that of the TAM, 1B. How is that possible, is it because TAM is calculated on the basis of current potential and enterprise value is taking future's market size into consideration (for eg. for e-commerce start up, more consumers will prefer online once the customer behaviour adapts to the online market)?
Good clarification question - the issue is some define TAM as the amount of annual revenue available to make in a market, but that’s not equal to enterprise value for a company. You can’t capture all of that yourself most likely, but the company also is worth more than just the revenue (as you point out, it’s actually the discounted value of all future cash flows over time)
I love your insight on its not always the size of the market but its structure - and that a highly ineffectient and undeserved market can not only be captured but expanded and grown. Thanks again for an insightful video.
Less than 2 minutes into the video. I am already loving your explanation. Been worried already on coming up with our fintech's market potential. Thank you so much. Also the fact that you said "the market potential has got to be worth our time"
Thanks for the request! Maybe I can answer any questions you have on it here? I’m working on a few other projects right now so not sure when I’d be able to put a video out on that
Wayne, thank you soooo much! ❤️ I've finally understood what to consider when assessing TAM. You've got the best content on fundraising! Hands down. 🏆 The way you explain complex topics is just something special. Thanks again!
