1.8
TAM / SAM / SOM
A three-layer market sizing convention: the total market, the portion a given business model can serve, and the share it could realistically win.
No single originator; VC and consulting vernacular hardened in 2000s startup literature
What it does
Layers total, addressable and realistically obtainable market. Its genuine function is establishing shared language in an investor conversation.
When it breaks
Produces no decision. The number is almost always reverse-engineered from the desired conclusion, and it never identifies which assumption is the fragile one.
Case
WeWork's 2019 S-1 claimed a $3 trillion total addressable market — 255 million potential members across 280 target cities, times $11,700 per-employee occupancy cost — and said it had captured about 0.2%. The IPO was withdrawn weeks later and the valuation fell from $47bn to roughly $8bn.
Wolf Street — WeWork's $3tn TAM ↗Diagram — not yet drawn
Three nested rectangles at true relative scale using the WeWork numbers, so the innermost is a sliver — the honest version of the diagram everyone draws as three tidy circles.
In the wild
Unvetted · not part of the tier assessment
What has been written about this tool in the last twelve months. Machine-retrieved and unchecked — everything above this line was checked.
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