What is TAM (Total Addressable Market)?

TAM (Total Addressable Market) is the total revenue opportunity if you had 100% market share. Usually broken into TAM (total market), SAM (serviceable addressable market—realistic target), and SOM (serviceable obtainable market—what you can win in 3-5 years). Example: TAM = $100B cloud market, SAM = $10B project management software, SOM = $500M we can realistically capture. Investors want to see big TAM.

When Should You Use This?

Calculate TAM when fundraising (investors ask), validating market opportunity (is this worth pursuing?), or planning long-term strategy. Use bottom-up (count potential customers × price) not top-down ("1% of a $100B market"). Update TAM as your product evolves—you might expand into new markets. Don't obsess over TAM pre-PMF, focus on serving 100 customers well first.

Common Mistakes to Avoid

• •Top-down math—"1% of a huge market" is lazy, count actual potential customers
• •Claiming every human—"anyone who uses a computer" isn't your TAM
• •Ignoring competition—TAM shrinks if the market is saturated
• •Not updating—your TAM grows as you add products/markets
• •Using TAM to justify bad ideas—big market + bad product = failure

Real-World Examples

• •Notion—TAM: $50B+ (productivity software), SAM: $10B (knowledge workers), SOM: $1B (multiplayer docs)
• •Stripe—Started with small TAM (online businesses needing payments), expanded to $1T+ with more products
• •Airbnb—TAM: $1T+ travel market, SAM: $100B alternative accommodations, SOM: $10B short-term rentals
• •Superhuman—Intentionally narrow TAM (high-volume email users), premium pricing to compensate