{"id":14235,"date":"2026-04-22T10:00:25","date_gmt":"2026-04-22T04:30:25","guid":{"rendered":"https:\/\/gtm360.com\/blog\/?p=14235"},"modified":"2026-04-17T19:56:59","modified_gmt":"2026-04-17T14:26:59","slug":"like-success-tam-breeds-tam","status":"publish","type":"post","link":"https:\/\/gtm360.com\/blog\/2026\/04\/22\/like-success-tam-breeds-tam\/","title":{"rendered":"Like Success, TAM Breeds TAM"},"content":{"rendered":"<p>According to a popular joke on X fka Twitter, the greatest fiction is written in <em>Excel<\/em>, not <em>Word<\/em>.<\/p>\n<p>This is a dig at <strong>Total Addressable Market<\/strong> projections given by startups in their fundraising pitch decks. And also by <em>McKinsey<\/em>, <em>Gartner<\/em> and other leading consulting and research analyst firms.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p dir=\"ltr\" lang=\"en\">I&#8217;ve started doing it. But I&#8217;ll need to wait 8 years to know the result. <a href=\"https:\/\/twitter.com\/hashtag\/McKinsey?src=hash&amp;ref_src=twsrc%5Etfw\">#McKinsey<\/a> <a href=\"https:\/\/twitter.com\/hashtag\/Metaverse?src=hash&amp;ref_src=twsrc%5Etfw\">#Metaverse<\/a> <a href=\"https:\/\/t.co\/XdKnRlfnXV\">pic.twitter.com\/XdKnRlfnXV<\/a><\/p>\n<p>\u2014 SKR (@s_ketharaman) <a href=\"https:\/\/twitter.com\/s_ketharaman\/status\/1588400796663963648?ref_src=twsrc%5Etfw\">November 4, 2022<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>There&#8217;s some truth to this. Startups are mainly funded by VC. Unlike traditional forms of capital like equity and bank loans, <a href=\"https:\/\/gtm360.com\/blog\/2018\/11\/16\/teardown-of-the-vc-investment-playbook\/\" target=\"_blank\" rel=\"noopener\">venture capital indexes on home runs<\/a> from very few portcos, and backs only businesses with huge TAM (at least one billion dollars when I last checked).<\/p>\n<p>To appeal to VCs, there <em>is<\/em> a tendency among startup founders to inflate TAM.<\/p>\n<p><a href=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2026\/03\/tam-cinema-theater-screens-india.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignright size-full wp-image-14236\" src=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2026\/03\/tam-cinema-theater-screens-india.jpg\" alt=\"\" width=\"403\" height=\"220\" \/><\/a>The <a href=\"https:\/\/x.com\/kushkatakia\/status\/2022170049675739295?s=20\" target=\"_blank\" rel=\"noopener\">common critique<\/a> of this approach is that treating India as a market of 1.4 billion consumers is a fiction. According to the critics, the real TAM for most products\/ services is less than 150 million. The critique is grounded on the argument that India has a low per capita income ($2800), so a vast majority of Indians do not have the purchasing power to belong to the TAM of most products \/ services.<\/p>\n<p>This argument sounds sensible at first blush but it misses a key point: TAM is a stake on the ground, not low hanging fruit readily available for plucking.<\/p>\n<p>No startup claims to achieve its TAM on Day 1. By the time a startup projects to get there in a few years, a lot of things happen in the world around it.<\/p>\n<p>Economy grows. Trickle down effect takes hold. Poor become less poor and their disposable income raises. Therefore they can afford things they could not before. Ten years ago, my maid servant &#8211; er, household help &#8211; was not in the TAM of smartphone. Today all ABCDs (<em>Ayah Bai Cook Driver<\/em>) in my housing complex have a smartphone. Anybody who went by the TAM of smartphone 10 years ago would have wildly underestimated the market for the device.<\/p>\n<p>Marketing creates aspiration and raises the desire of people. Middle class increases its spend on discretionary goods. A good example of this is the explosion in credit card market &#8211; the business has grown by <a href=\"https:\/\/gtm360.com\/blog\/2025\/11\/29\/unpacking-the-credit-card-boom-in-india\/\" target=\"_blank\" rel=\"noopener\">300% in the last five years<\/a>.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p dir=\"ltr\" lang=\"en\">&#8220;Capitalism requires the construction of needs that do not naturally occur&#8221; ~ Martin Kihn, Gartner.<\/p>\n<p>Advertising constructs needs by telling people &#8220;The Way To Be A Better Person Is To Have Better Things&#8221; ~ <a href=\"https:\/\/t.co\/WOYSVK6sgV\">https:\/\/t.co\/WOYSVK6sgV<\/a> via <a href=\"https:\/\/twitter.com\/RegaJha?ref_src=twsrc%5Etfw\">@RegaJha<\/a> .<\/p>\n<p>\u2014 SKR (@s_ketharaman) <a href=\"https:\/\/twitter.com\/s_ketharaman\/status\/1234818415413600256?ref_src=twsrc%5Etfw\">March 3, 2020<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>Prices fall. This increases affordability. According to what is popularly called the &#8220;Chart of the Century&#8221;, many goods have become more affordable in the two decades e.g. TVs, toys, mobile data, clothing, furnishings, etc.<\/p>\n<p><a href=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2026\/03\/PRICE-DEFLATION-USA-2000-2022-CHART-CENTURY-fi.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-14237\" src=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2026\/03\/PRICE-DEFLATION-USA-2000-2022-CHART-CENTURY-fi.jpg\" alt=\"\" width=\"630\" height=\"344\" srcset=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2026\/03\/PRICE-DEFLATION-USA-2000-2022-CHART-CENTURY-fi.jpg 630w, https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2026\/03\/PRICE-DEFLATION-USA-2000-2022-CHART-CENTURY-fi-500x273.jpg 500w\" sizes=\"auto, (max-width: 630px) 100vw, 630px\" \/><\/a><\/p>\n<p>Then there&#8217;s <strong><em>Jevon&#8217;s Paradox<\/em><\/strong>, which posits that \u201cWe\u2019ll spend more on what gets more productive\u201d. This\u00a0is an extreme case of explosion in TAM due to fall in price, and has several examples viz. transistor.<br \/>\n<!--BLOCKQUOTE, NO LHS LINE, GRAY--><\/p>\n<blockquote class=\"skr-bq-noline\">\n<div style=\"background-color: #fafafa; padding: 15px 30px;\">Today we all know Moore\u2019s Law, the best contemporary example of Jevons paradox. In 1965, a transistor cost roughly $1. Today it costs a fraction of a millionth of a cent. This extraordinary collapse in computing costs \u2013 a billionfold improvement \u2013 did not lead to modest, proportional increases in computer use. It triggered an explosion of applications that would have been unthinkable at earlier price points. At $1 per transistor, computers made sense for military calculations and corporate payroll. At a thousandth of a cent, they made sense for word processing and databases. At a millionth of a cent, they made sense in thermostats and greeting cards. At a billionth of a cent, we embed them in disposable shipping tags that transmit their location once and are thrown away. The efficiency gains haven\u2019t reduced our total computing consumption: they\u2019ve made computing so cheap that we now use trillions times more of it. &#8211; <em><a href=\"https:\/\/www.a16z.news\/p\/why-ac-is-cheap-but-ac-repair-is\" target=\"_blank\" rel=\"noopener\"><strong>Why AC is cheap, but AC repair is a luxury<\/strong><\/a>, a16z<\/em>.<\/div>\n<\/blockquote>\n<p><!----------END----------><\/p>\n<p>Finally, there&#8217;s the mother of all stimulants: Debt. BNPL has expanded the TAM of consumer goods by many times. Mortgage has expanded the TAM of home buyers by 10X or more.<\/p>\n<p>All of these factors boost the TAM for startups. Most of them are driven by external factors &#8211; e.g. state of economy &#8211; and do not call for any specific action by them (other than to position themselves in the market expansion slipstream caused by them).<\/p>\n<p><a href=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2026\/03\/INTERNET-FAX-DOOMER-PAUL-KRUGMAN.jpg\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-14261\" src=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2026\/03\/INTERNET-FAX-DOOMER-PAUL-KRUGMAN.jpg\" alt=\"\" width=\"250\" height=\"339\" srcset=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2026\/03\/INTERNET-FAX-DOOMER-PAUL-KRUGMAN.jpg 501w, https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2026\/03\/INTERNET-FAX-DOOMER-PAUL-KRUGMAN-368x500.jpg 368w\" sizes=\"auto, (max-width: 250px) 100vw, 250px\" \/><\/a>Failure to consider these stimulants leads to hilarious underestimations of TAM like:<\/p>\n<ul>\n<li><em>UPI:<\/em> An ex minister predicted that the TAM of UPI wouldn&#8217;t exceed 10 million users probably because there were fewer than 5M smartphones at the time. UPI now has 450 million users.<\/li>\n<li><em>Internet<\/em>: An Economics Nobel Laureate once likened the Internet to fax machine and predicted that it wouldn&#8217;t have a TAM of more than 100 million. Enough said.<\/li>\n<\/ul>\n<p>TAM also depends on how one views the market.<\/p>\n<p>There&#8217;s an old story of a shoe manufacturer who sends two salesmen to a remote island to estimate the TAM for its shoes. One guy comes back saying there&#8217;s no market for shoes since everybody is barefoot. The other guy comes back saying there&#8217;s a huge market for shoes since everybody is barefoot. The first guy treated barefoot as the end state. The second guy treated barefoot as the start state. So they projected wildly different TAMs.<\/p>\n<p>That said, not all external factors need to be TAM-accretive. Some of them could also depress TAM e.g.<\/p>\n<ul>\n<li>The TAM for business travel fell due to COVID-imposed lockdowns for a couple of years before it started ticking back up due to &#8220;revenge travel&#8221;.<\/li>\n<li>According to <a href=\"https:\/\/gtm360.com\/blog\/2026\/02\/10\/will-ai-kill-saas-is-the-wrong-question\/\" target=\"_blank\" rel=\"noopener\">SAASpocalypse Maxis,<\/a> AI will kill software and slash the TAM for SAAS.<\/li>\n<\/ul>\n<p>The point is, whether it rises or falls, TAM is not fiction. It&#8217;s prediction.\u00a0 As the famous baseball player Yogi Berra once said, &#8220;It&#8217;s hard to make predictions, especially about the future&#8221;!<\/p>\n<p>Some startups achieve the projected TAM. Some startups don&#8217;t. Such is life in business.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>According to a popular joke on X fka Twitter, the greatest fiction is written in Excel, not Word. This is a dig at Total Addressable Market projections given by startups in their fundraising pitch decks. And also by McKinsey, Gartner and other leading consulting and research analyst firms. I&#8217;ve started doing it. But I&#8217;ll need &#8230; <a title=\"Like Success, TAM Breeds TAM\" class=\"read-more\" href=\"https:\/\/gtm360.com\/blog\/2026\/04\/22\/like-success-tam-breeds-tam\/\" aria-label=\"Read more about Like Success, TAM Breeds TAM\">Read more<\/a><\/p>\n","protected":false},"author":4,"featured_media":14237,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17,8,1,15],"tags":[],"class_list":["post-14235","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-b1-integrated-marketing","category-it-marketing","category-mandatory-category","category-vc"],"_links":{"self":[{"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/posts\/14235","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/comments?post=14235"}],"version-history":[{"count":11,"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/posts\/14235\/revisions"}],"predecessor-version":[{"id":14331,"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/posts\/14235\/revisions\/14331"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/media\/14237"}],"wp:attachment":[{"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/media?parent=14235"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/categories?post=14235"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/tags?post=14235"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}