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Does economic and geopolitical volatility affect your startup’s TAM? • Tech Crunch

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Startups and their Investors love to talk about big markets and how they’re going to fix them. The total addressable market, or TAM, refers to the dollar value of what a startup wants to sell to a specific demographic. If you build a widget that plugs into a browser, your TAM might be the total number of users in that browser, reduced by the fraction using your technology, multiplied by the annual value of that usage.

For startups chasing a new or emerging market, TAM can be a very bullish indicator. In a growing market there is plenty of room for upstart companies to attack incumbents; Sometimes startups create their own marketplace, but that’s a bit rare. (Big TAM doesn’t always lead to high success, and small TAMs can still give big companies strong margins from hooked customers.)

TAM is important for startups, how they pitch to investors and how investors make investment decisions. It is very complex. We’ve written about it on Technology Flow for years. And today I think even that is not enough.

If the macroeconomic environment is somewhat fearful, I believe the TAM question for startups is more like reading tea leaves than making realistic predictions, especially for those who are busy selling their product instead of proving there is a market for it. They are building.

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