How to calculate Total Addressable Market (TAM) - Startups 101

[@slidebean]

A platform for founders to scale their startup ► youtube.slidebean.com/TAM-comment

[@johnnygarces2216]

this was an MBA lecture done in 15 minutes. im in awe

[@COSMO_INC1]

Hahaha! It's True!

[@jeevanjotsinghnarula2453]

Haha, well not taking any MBA so I am fortunate.

[@carleenhaylett1759]

Pure gold. Just redid my TAM slide. GUILTY as charged as a top-downer. Total convert now my entire life is about bottom up! THANK YOU yet again.

[@stevebarsh7727]

Carleen Haylett Thx for watching and so glad it was helpful! - Steve @ Dreamit Ventures.

[@slidebean]

Thank you! We're so happy to see it helped!

[@harshverma3737]

I have to admit that this is the best channel.

[@bashimolowo]

I concur! I visit for 30 minutes every night.

[@charleyluckey2232]

Still no change on the market. We are already in the big crash, Inflation is a catastrophe. This CPI report is a colossal failure. To bring the housing market to a halt, the FED will have to pull all the stops. The unfortunate issue is that other markets are being decimated. If you want to stay green, you have to rely on a lot of diversification. Currently up 14% and being careful. Still a better deal than leaving it in a savings or checking account yielding 0-1 percent interest

[@riggsmartins4033]

If you are not in the financial market space right now, you are making a huge mistake. I understand that it could be due to ignorance, but if you want to make your money work for you, prevent inflation from eroding your savings, build generational wealth, and cultivate good habits and financial knowledge, you must be in the market

[@charleyluckey2232]

You are right! I diversified my $400K portfolio across various market with the aid of an investment coach, I have been able to generate a little bit above $1.2m in net profit across high dividend yield stocks, ETF and bonds during this red season

[@charleyluckey2232]

My advisor is "LARRY KENT NICK ". In terms of portfolio diversity, he's a genius. You can glance his name up on the Instagram and verify him yourself. He has years of financial market experience

[@charleyluckey2232]

INSTAGRAM

[@charleyluckey2232]

@ Larry Kent Nick Trading

[@brianndege5331]

This video is awesome, I'm a victim of top down approach and today the approach will change. Greetings from Kenya slidebean

[@slidebean]

Thank you! All our love back to Kenya!

[@Superstud11]

Thank you for posting. I've been a senior sales executive for years. Companies coming from overseas want to be successful in the US but they don't have the right approach. I will be sure to forward this to the many who ask me for help understanding strategy.

[@camiloguzman1801]

Not only this video is gold info, but has the right aproach in how to take on a market, and how your firm construct a key advantage over that spot. Guys and Gals of Slidebean for me you have surpassed the already high expectation that i had over your content.

[@slidebean]

Thank you so much, Camilo! Glad the video was helpful!

[@naava1978]

I LOVE this GUY! Please collaborate with them again. I loved this video and saw so much value.

[@slidebean]

We love Steve, too! Looking forward to our next opportunity to collaborate!

[@dsrathore01]

How did it go? It has been 4 years now, were you able to build the company you were building, and raised capital?

[@a.ajeeli]

Amazing, thank you! ... I think a lot of people don't understand how important this video is !

[@kennygo770]

I realized through this video that marketing is by doing own research with mine not searching someones report pay to read. what a lecture what a genious talented man.

[@小张同学-v6i]

this video is a gold mine!

[@stevebarsh7727]

Thanks for watching! Very happy you found it helpful!

[@slidebean]

Thank you!

[@crazy_gamers_0079]

Can I include TAM, SAM, and SOM as the user base, such as '5 billion users in a particular market,' or should I only use monetary value, like the size of the market in terms of dollars?

[@ahmetakil787]

I can listen to him for days

[@slidebean]

Thanks, Ahmet!

[@davidriley354]

I imagine most people that come across this video are studying this subject, like myself, so I know I'm very much a noob and will respect any correction given, but this sounds like mashing TAM, SAM, and SOM together. What's confusing me is that I understand that you wouldn't set the price of your product before knowing whom your product would serve (The SOM), so I'm trying to understand why you would use TAM as specific to a company and not a market. The video states that you've got to find "Your TAM", but I understand "Your TAM" or your company's TAM as SAM. TAM is the total market, yes? And SAM is the market as it is specific to a company, with SOM being the customers that can actually be reached. Based on the example in the video, I understand that all companies would be the TAM, "All start-ups" would be the SAM, and "Target Customers" Would be the SOM". From there you'd figure out your pricing, correct? Again, I'm happy to be corrected as I'm very new to this, but using TAM as company specific instead of market specific just seems unnecessarily confusing to me.

[@aditya1290]

Timestamps 0:00 - Intro 0:31 - Steve Barch and TAM 1:10 - Mistakes startups do for TAM 1:35 - What is TAM NOT 3:36 - How to calculate TAM 5:35 - Examples 8:35 - Pricing 10:05 - Narrowing 10:55 - Slidebean example 12:25 - What investors is looking for 13:45 - Summary All the best

[@euphrosyne3484]

Thank you!

[@scottmarker-treasurevalley7244]

Wow! This is a fantastic quick overview for any company of any size wanting to learn how to figure their TAM, total addressable market. Spoilers alter. Most of you are probably figuring it wrong. Thanks for the video!

[@COSMO_INC1]

True!

[@youknowitzg00d]

Cool. I kinda like your premiers. As I sit here in my startup office I got something asides from my next water break to look forward to.

[@bhasuda]

What is your startup about?

[@bhasuda]

And the DF?

[@slidebean]

Thank you for watching!

[@stevebarsh7727]

Glad you liked it! -- Steve

[@RichardWilliam-i4z]

Well that would be impossible to do considering I'm in my late 50s and I'm more interested in investments that could set me up for retirement in my 60s, my goal is at least $2million.

[@MaryPatricia-wr3wj]

As you plan your retirement, be sure to talk with a financial advisor who can help you make the most of your retirement investing scheme.

[@RichardWilliam-i4z]

@@MaryPatricia-wr3wj Very true, If you're looking for help building a retirement nest egg, you most likely want a certified financial planner with expertise in retirement planning. With the aid of a coach, I grew my reserve from $160k to almost $600k during this Red season.

[@MaryPatricia-wr3wj]

@@RichardWilliam-i4z How can one find a verifiable financial Planner, I buy the idea of employing the services of a Financial Advisor because finding that balance between saving and living requires counsel.

[@RichardWilliam-i4z]

@@MaryPatricia-wr3wj KRISTIN GAIL CUNNINGHAM. On the internet, that’s the financial advisor I use. She’s verified; you could also read more about her and then communicate with her. it’s always good to do your research before putting your money into any investment.

[@MaryPatricia-wr3wj]

@@RichardWilliam-i4z Thank you so much! Found her webpage and left a message. Hopefully, she responds.

[@adikrashnik]

this is the most practical helpful video I've seen in my life

[@patrickdainese2166]

Hi, brilliant video. Thanks for that. Is your definition of TAM what others explain with SAM or SOM? Because you are breaking down the TAM pretty much there would not be much left for SAM or SOM. Thanks for your answer.

[@slidebean]

Good Q! Welcome to discuss with other founders or Caya on Discord slidebean.com/startup-cafe

[@JakobHelm]

This is the key question here.

[@Ken-ul6ll]

THIS

[@excel2minutes]

Great content. Please make a video on the assumptions one usually do while calculating TAM, SAM, market sizing. Also, where top down and bottom up approaches are effective.

[@k80ahh]

I love these videos and they are super helpful. Can you make a more detailed video with multiple examples showing how to obtain good data to calculate bottom-up TAM. It isn't obvious or easy to understand how to figure out how many ideal customers are in the segmented market I will use in my estimate.

[@daveking4229]

Interesting topic and definitely have fallen into the top down trap on early startups I tried. Nice to know that I finally got it right. My tam is $1.6B just in the US based on gov stats. Now who has a checkbook and a pen handy LOL

[@stevebarsh7727]

Thanks for watching Dave and glad to hear you got it right! - Steve

[@fliu5282]

if you are a 4-Legged Cap Table startup, let me know. meaning: 1. you are a coder, 2. you got a co-founder. 3. you got an MVP (minimum viable product) 4. you got PMF (product market fit). Optional 5. Extra Leg: if you got $50k in friends and family round invested in you, i have the checkbook and a pen handy. LOL. Other than that, keep dreaming. P.S. Go convert your CPA's LLC stupid advise into Deleware corp, then i can open your e-mail; otherwise, it automatically all goes to junk folder and gets "deleted".

[@MikeLingle]

Great walkthrough of TAM! It seems like growth (CAGR) of the target market is also an important element to mention to investors.

[@slidebean]

Thanks for watching! Steve's insights are awesome!

[@moss5052]

If i have a monthly subscription base, do I have to multiply that number by 12? Or is TAM not equivalent to 1 Year?

[@alexandramccarthy3790]

Top down model is taught by so many other channels. No wonder so many of us are trying to apply it to our business. I did think it doesn't make sense.... Now I know why! :)

[@lighttheoryllc4337]

Salam, Great Video of info that the SBA and SBDC centers will NEVER tell you.

[@santiagomachado2587]

Excelent content, cristal clear, please can you share also SAM and SOM calculation for a startup, thanks!

[@janet.lindiwe]

Thanks a lot this was super helpful. But my question is if I look for the wellness industry and then I only want women age x to x for example... how do I go about that? It's easy to find statistics on the total market or regional markets but then to know how many of those actually fit my other demographics?

[@lexie02jones25]

Can you do more videos like this?! where you bring in investors to help us topic like this? it's really helpful. I just realized I was way off on my TAM! LOL.

[@slidebean]

Thank you for watching! We're glad it helped! Browse our channel as there are many more videos related to this one! Also, you're welcome to discuss with other founders or Caya on Discord slidebean.com/startup-cafe

[@akbarkhan-nq3xl]

Very very very helpful and informative. Thank you SlideBean

[@slidebean]

Glad it was helpful!

[@ProfessionalTycoons]

My God this video is SUCH GOLD

[@slidebean]

Thanks Jae! 😊

[@JohnSmith-hn6kv]

I find these sort of videos fascinating. Not relevant to me at all, but I love 'em.

[@gustavomaspersonal]

I understand that Steve and Dreamit work this way, with a TAM and go-to-market strategy, but, since I'm pitching many different investors, and most of them probably work with TAM, SAM, and SOM, what should I do? I think the TAM on this video is the SOM on others. I don't know which approach to take.

[@molly2frodo222]

The TAM in the video can be considered the SOM. At 00:55 he stated he is not a big fan of SAM and SOM. Based on the video what I gathered is he thinks stating the entire number of customers there are is useless. It is only valuable to state the customers you will be targeting not every possible customer that exists. Lets say for example your target market is college students. Your TAM (according to this video) would not be all college students if the college students that would interested in your product/service are medical students. Your TAM would be medical students not all college students. Hopes this helps someone better understand the video.

[@kritivatsa8713]

Literally the best explanation! it worked for me very well

[@lernik4]

Thanks a lot for the video. Probably the best that I've seen so far. I have a few questions if I may. Is showing an accurate TAM number sufficient? Or is it also important to show SAM and SOM? And if the market is growing fast (30-35% CAGR), should the startup show the TAM for the current year or forecast the future TAM in 5-10 years (when the exit is assumed to happen)?

[@ikennapaschal3875]

Steve is a great guy.

[@stevebarsh7727]

Thx for the props @Ikenna and for watching! - Steve

[@slidebean]

He is! :) Thank you for watching!

[@thesecopsgroup]

As a cyber security company, This video has solved my problem :) Thank you slide bean. I wanna connect with him.

[@indianspiritualitygyan7660]

Thanks for making this video and saving my life

[@abdulrhmankhallil8254]

Can't be better, Piece of knowledge that worth Thanks, Slidebean wish you the best KEEP GOING

[@stevebarsh7727]

Very happy you found it worthwhile. Thx for tuning in! -- Steve

[@slidebean]

Our best wishes back to you! Thank you!

[@animelover5093]

I'm glad found this content. it helps with my learning journey for product/maket

[@stephankochen1518]

Now I'm even more confused. If the TAM no of customer is already broken down to your target niche and geography, what's left for the SAM and SOM breakdowns of the market?

[@gabo1841997]

Now how do we find the information to calculate that TAM correctly? - # of niche-specific companies, - Corporate behaviors across different regions to calculate the global scale of the problem. - etc, etc, etc.

[@adrianmoreno2717]

First time learning about TAM and I fully get it.

[@kimgreen3933]

I am always on the hunt for good learning tools. This is a good one!

[@Cloudnine2024]

Good info! But where do you get the information to get this drilled down in information?

[@dinuoooooo]

I have some questions 1 how to think the Tam evenif the cost of company’s products is not the same it’s a services product so how 2 could I approximate the price to be a medium price?

[@Trashpanda_404]

The thing I’m confused about, does the GTM, TAM, SAM and SOM go under the marketing or sales sections for a tangible product business plan

[@aligulaj]

Question: What pricing would you use if you have a three tier subscription plan to calculate the TAM? Would I be wrong to use MRR or ARR? Or will it be the sum total of TAMs for each plan? Great channel by the way.

[@Robertohanas]

Might want to calculate the TAM using adoption/ tier. Ex: Price: T1Px0.25+T2Px0.6+T3Px0.15 T1P = Tier 1 Price 0.25= projected share of the customers that will choose that tier. This is how I'd do it,hope it helps. Have a good day.

[@sampat97]

@@Robertohanas Hey dude, this was really helpful. Do have anything on how to calculate the projected share of customers?

[@pavlosvasileiadis8209]

Super useful, keep on the great work!

[@slidebean]

Glad it was helpful!

[@itsDe0n]

so amazing, got to know a lot of things in detail Thank you

[@william.darrigo]

You explained this so simply. Thank you as always

[@COSMO_INC1]

Yeah, you are right!

[@kristofvizy3970]

Great video! But how do you even start to calculate how many branches of mid-sized banks (or whatever selection you finally found possible) there can possibly be?

[@slidebean]

Good remarks! Welcome to discuss with other founders or Caya on Discord slidebean.com/startup-cafe

[@princessikeod]

Nice video but how can I calculate the TAM for a private clinic especially where there is no general data. Thank you

[@slidebean]

Good Q! Welcome to discuss with other founders or Caya on Discord slidebean.com/startup-cafe

[@anthonyifemade2305]

Thank you so much for prodiving multiple examples

[@justthej]

Very helpful, thanks, Steve!

[@chloealix8063]

Absolutely amazing and the best thing I've seen. So simple and clearly explained. Thank you so much!!

[@reecebrauer7289]

How would you calculate TAM for a gambling startup where the amount the player spends would vary greatly? I can't even attempt at a ballpark figure because i just don't know.

[@elielmathe]

I have question: How is the number of users constituting the TAM calculated? Is it the number of potential users in the first year, five years or any other period? Thank you.

[@slidebean]

Good Q! Welcome to discuss with other founders or Caya on Discord slidebean.com/startup-cafe

[@georgecool9917]

Very simple and clear explanation!

[@damveiss7517]

Interesting ! But what about the TAM when your business model is based on a variable commission ? For example in the betting/casino industry where the user deposit the amount of money he wants, there is no fixed price for your service so the TAM is not relevant ? Thanks guys and continue the good work ;)

[@stevebarsh7727]

Just document your assumptions around spending (price) and possibly segment the audience and spend.

[@damveiss7517]

@@stevebarsh7727 Thanks Steve. Looking forward to see more content like this

[@stevebarsh7727]

@@damveiss7517 It's coming! Look for the #DreamitDose in the KZbin Dreamit Ventures channel.

[@nandphal8955]

@@stevebarsh7727 Thanks Steve

[@nandphal8955]

I love Caya. He is simply faadoo

[@sawsanagourmat6142]

Hi ! Thanks for the great content, how do you consider competitors in the TAM? I am thinking for example about Kindle who gained market shares compared to hardcover books. Do you take into account customers how could switch to your product? Thanks !

[@slidebean]

Good Q! Welcome to discuss with other founders or Caya on Discord slidebean.com/startup-cafe

[@aldemarog]

Great video, totally agree! Can you do a explanation on SAM and SOM ?

[@kishorbalaful]

Hi Kaya, How can we calculate TAM for a startup that doesn't rely on a primary price strategy but works on selling data and affiliate markets. Thanks.

[@molly2frodo222]

did you every figure out the answer to your question?

[@techmadeazy]

This is awesome. But I have a question. In the bottom up process, how do you calculate the TAM for something as universal as WhatsApp? Imagine WhatsApp when they had launched and lets imagine that it charged $1 per user per month for the sake of this exercise. How would you calculate the number of customers at that stage? Any thoughts guys?

[@emmanuelokebugwu6944]

I just tossed my entire startup financial model into the trash! What a revelation!

[@slidebean]

Hope the video helped!

[@emmanuelokebugwu6944]

@@slidebean I'll be spending this night redoing all my models - Thank you for this channel and the superb content you put out!

[@kefamutuma7402]

BEAUTIFUL VIDEO. well explained!!

[@slidebean]

Thank you for watching!

[@aprilmintacpineda2713]

THANKS!

[@stevebarsh7727]

Glad you liked it. Thx for watching!

[@afiqjaffarran]

For company like fb n IG, what would be their customer. User or those who post ads? How do they based their TAM? User x pricing or clients with ads x pricing? I'm confused

[@slidebean]

Good Q! Welcome to discuss with other founders or Caya on Discord slidebean.com/startup-cafe

[@ajromeroesclusa]

Any ideas on how the "customers x price" would work for a lending fintech model ? Did the "intuitive" top-bottom strategy, but reviewing this approach for TAM

[@creativecontent8919]

what happens if your company sells multiple products? Do I multiply the number of customers by each product price and add them all up in the end to get my TAM?

[@shreyasdeshpande6653]

Thanks a lot sir. But how to calculate market growth rate as market growth rate is( (market size for 2nd year - market size for first year)/ market size for first year )*100. I'm working on my startup and I don't have previous year data, this is my first year. How can I determine my market growth rate

[@QutabBaig]

Is TAM calculated on annual basis or does the TAM calculation indicate a market of 5-10 years?

[@keshavsharma1029]

Hey I am an early-stage startup founder and had a question about the TAM. So we are creating wearable AR glasses which is a submarket of wearable devices and we plan to expand our product portfolio overtime to capture more of the wearable devices market. So as the TAM, should I include the whole wearable device market size (as per reports) or just the wearable AR glass market size?

[@saikeerthikumarpoolla1917]

As of now, you have to estimate tam with respect to AR Glasses only.

[@BrandonHo]

How would you go about calculating TAM if your company has non-recurring revenue (one time purchases only)

[@wanacreate]

What if you have multiple types of customers? Should you have two separate TAMs or one on your deck?

[@ogagaDotTech]

Excellently Explained

[@nithinmoorthy5911]

From this video, is it implied that it would not be possible to calculate the Tam of an idea ?

[@pnjwck]

Great explanation. Please the SAM and SOM plss

[@varshard0]

I like how Steve used Slidebean as an example

[@slidebean]

We love Steve!

[@noitpursid6190]

@@slidebean Can you make a video on SAM,SOM

[@fliu5282]

don't know where you come from but the presenter is 100% accurate, truth and the way "ALL startup should subscribe to". the rest are just "some ink over flow on toilette paper".

[@slidebean]

Thanks, F! David is a special guest from DreamIt Ventures, and we love him as well! Caya is the CEO of Slidebean, the company that hosts/created this KZbin Channel. Find out more at slidebean.com Welcome!

[@maryankitsenko9694]

Hm, I still don't get it. If I am a personal financial advisor (kinda B2C), how do I do my calc? I can't use the top-down, market size, or problem size approach. I can't take number of people with certain income/networth level and simply multiply it by the price. The point of TAM is to set the goal/benchmark for the company to hit, isn't it? But if I do 5 people a month, my TAM is "5 * my price" that's smth really off. Thank you for the video anyways!

[@slidebean]

Good Q! Welcome to discuss with other founders or Caya on Discord slidebean.com/startup-cafe

[@kapetanioss]

Thank you! That was super helpful

[@Je.rone_]

This video is extremely informative

[@ranaahmed7293]

So after calculating the TAM for the targeted customers, how to figure out the percent of the TAM that the company could get? Thanks in Advance

[@slidebean]

Good Q! Welcome to discuss with other founders or Caya on Discord slidebean.com/startup-cafe

[@88Xlmk]

Many startups have no idea how to investigate or keep tracks of their market, or even the current market state. Other create startup, work for 1 or 2 years max, pocketing half the money from investors and sales and close the company as it is in the red and walk away with few millions(I know number of people who do this every 3 years)

[@slidebean]

Thank you for your comment! Interesting!

[@elijahjohnyarra]

Is there a really good example slide for TAM?

[@jodysterling1813]

OMG this was AMAZING thank you

[@faisalwahabkhan5310]

awesome video and a golden advice

[@stevebarsh7727]

Happy you found it worthy! Thx for watching. -- Steve

[@slidebean]

Thank you, Faisal!

[@ntcuong01ct1]

Dear Friend, I want to calculate the profit margin of FMCG/Steel industry. Could you help?. Thank you.

[@jaredcordner7099]

Happy to have a chat if you need a hand. FOC obvs

[@ntcuong01ct1]

@@jaredcordner7099 , please share cho your email

[@jaredcordner7099]

ytuong1 hey don’t want to share my email here but head to www.stucclothing.co.uk (side hustle of mine) and send me a message through the contact box there. I’ll get in touch that way

[@dorisjohn1779]

Brilliant video.

[@slidebean]

Glad you enjoyed it!

[@pindakaashonden]

Hi Steve, Great informational video once again! Question: why are you not a fan of SAM & SOM? Thanks

[@stevebarsh7727]

SAM and SOM are fine. I often find TAM + your go-to-market strategy get's the job done very clearly.

[@petrolking7824]

That's great content. Thanks 🙌🏿

[@victorokello9611]

This was of great value!!

[@jimbo2112]

I may be wrong, but it feels like you are wanting to see the SOM and not the TAM or SAM? That makes perfect sense to want the SOM number, but the "showing your workings" is illustrated by the TAM and SAM?

[@gspencer6750]

This was gold.

[@RainBreakerGOD]

That was rich! Thanks Caya and dreamit

[@stevebarsh7727]

@denzel - thanks for watching! you're welcome! -- Steve

[@slidebean]

Thanks, Denzel!

[@everythingjamieraine9270]

THIS WAS GREAT!