A useful number, not a magic one

Founders talk a lot about market size. Pitch decks always seem to have a slide called “TAM.” Numbers in the billions get thrown around with confidence.

Most of those numbers aren’t very useful. They’re produced to impress, not to think with.

Market size is genuinely worth thinking about. But the goal isn’t to land on the biggest possible number. It’s to land on an honest one — and to use it to make better decisions about which problems are worth your time.

Let’s look at how to do that without falling into the usual traps.

Why people inflate the number

It’s easy to inflate market size, and very tempting.

Bigger numbers feel safer. They make the opportunity sound exciting. They impress investors, advisors, friends. They reassure you.

But they don’t change the...

Estimating market size without fooling yourself