i am still amazed how most startup investors are great at understanding that startups can grow exponentially but don’t understand that markets can too “the TAM is too small” has cost startup investors more money than any other often-repeated phrase i know of

Aug 19, 2022 · 3:57 AM UTC

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(“the founder is too inexperienced” is a close second and “what’s the barrier to entry?” is a close third)
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Replying to @sama
Category-defining companies seem to dominate a niche and ride the wave of TAM expansion
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Replying to @sama
That’s what I’ve heard as well about automatic meeting note market.
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Replying to @sama
This is why most investors are mid, by definition
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Replying to @sama
TAM is too small = I don't like you / I don't think you're the one to make this work
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Replying to @sama
The opposite is also very true too, and perhaps even more common. Investors have a tendency to overestimate TAM and funding startups that only appeal to a niche audience.
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Replying to @sama
But often the TAM actually is too small, and when this happens it largely fizzles out in the shadows, except in high profile cases like Juicero.
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Replying to @sama
I’ve had “the TAM is too small” moments myself. There’s an element of having a larger margin of error, wiggle room to try things or pivot at a bigger TAM, not just the market size and growth per se.
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Replying to @sama
all that short term thinking 😅
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Replying to @sama
"Network States" are a good example. It's a new concept and they don't currently exist. So one could argue TAM is 0. But if they work, the TAM is the size of Nation States.
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Replying to @sama
Problem is also: ▪︎ Investors are often skeumorphic They require you to prove traction based on *current* markets.
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