Accurate estimation of Total Available Market (TAM) is an essential component of a high velocity startup.
I see a chronic overestimation of TAM in my work with startups.
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>>>I was chatting with an experienced venture capitalist in Silicon Valley about his portfolio’s Positioning challenges. He said, “In a lot of cases, Positioning (and the messaging that follows) is indeed the problem. But a bigger problem behind this is that the founders do not see much value in investing in this area. The founders with technology background tend to value certain aspects of marketing such as lead gen, trade show, etc., but completely underestimate the value of proper positioning. It has been hard for me to get the founders to pay attention to it and spend their time and money on it.”
This problem, unfortunately, is pervasive in the industry.
>>>As you know, I categorically support bootstrapped entrepreneurs.
There are numerous startups now that have achieved $4M-$5M in revenue without any external funding.
However, it has taken time. Sometimes, it has taken 5-7 years to get there.
VCs, however, are looking for velocity.
>>>In a tightening market, budgets are under scrutiny.
>>>Many large companies with hundreds of millions in revenues are currently facing slowdown.
>>>There’s an AI blah blah blah phenomenon right now all over the industry!
“Product growth is plateauing or declining but we have AI that will rejuvenate everything …”
Well, AI will do what?
What is the exact positioning of your AI offering?
>>>As discussed, the Venture Capital model looks for hyper growth startups that grow at an exponential pace. Companies that can go from 0 to $100M in revenue in 5-7 years.
Hyper Growth is not a natural state of business. Most businesses grow at a linear pace at best.
>>>