Why most startup founders don’t need massive TAM numbers

A real conversation with a talented and dedicated founder:

“The seed investors I’m talking to don’t think our TAM (total available market) is big enough since we focus on healthcare.”

Really? How many real companies in your market?

“738,000 businesses in healthcare that have the problem we solve. That equates to a $50B market and a $4B opportunity for us if we sell to a reasonable subset of that.”

That’s not big enough? Hmm. Either you are talking to naïve or junior investors (there are plenty of them) or they are just throwing that at you instead of their real objection, which is very common.

So what’s your ACV (average contract value?)?

“We are up to $4K a month, so $50K ACV.”

How many customers would it take to create a $50M business?

“That would be…1000. Oh, crap. That’s like 1% of 1% of our market.”

What’s the fastest way to get to 1000 customers? Do that.

Ignore those bozo investors and their made-up TAM. They will want to invest in you when you hit 100 customers.

“Thanks.”

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