A startup once told me their TAM was every smartphone owner on the planet.
They were building a mobile app to find climbing partners. 🧗
Let that sink in for a second.
I’ve coached 1600+ people with Cogiteo, the vast majority in tech startups. 🐣🦄 And in nearly every business plan I’ve had in my hands, TAM, SAM, SOM appear proudly lined up — presented as proof that the market is there and waiting for you.
But after seeing them misused so many times, I’ve come to understand that these metrics mostly reassure… the people who write them. 😅
Back to our climbers.
How should they have built their TAM?
☑️ Smartphone owners — yes, but which OS? If the app is iOS only, Android users don’t count. ☑️ Among those: people who actually climb. ☑️ Among those: people actively looking for a climbing partner — not those who already have one. ☑️ Among those: French speakers. Because the app was in French.
Four filters. And the TAM is already a fraction of “all smartphone owners” — before even touching SAM and SOM.
The TAM trap
Bigger is more convincing? That’s what many founders believe. That’s the mistake. An experienced investor who sees an oversized TAM doesn’t think “wow, what potential”. They think “they don’t understand their market”. A well-constructed TAM, with explicit and verifiable assumptions, is a signal of maturity. It shows that you know who you’re going after, why these people have the problem you’re solving, and how you count them. That’s what builds confidence. Not the number.
The SAM trap
Narrowing the geographic scope isn’t enough. “We’re targeting Europe” is a sentence, not a SAM. Do you have a localized offer in every language? A sales team on the ground? Contracts adapted to local regulations — GDPR, labor law, taxation? Customer references in each country to establish your credibility? SAM is the market you can serve with your organization as it stands today. Not in 3 years if everything goes well. Now. What you can reach, not what you want to reach.
The SOM trap
This is the most dangerous — and the most revealing. The Serviceable Obtainable Market is the market share you can realistically capture in the short term. And “obtainable” depends on one thing only: your real execution capabilities.
Back to our climbers. Let’s say:
→ 2 million active French-speaking climbers on smartphone (realistic TAM) → Those actively looking for a partner at the gym or on the rock face: say 30%, so 600,000 people (SAM) → They have 1 developer, 0 salespeople, 0 marketing budget, and 12 months of runway.
With a freemium model at €4.99/month for the premium version, and a realistic assumption of 500 downloads in the first month with 10% premium conversion:
SOM year 1 = ~250 paying users × €4.99 × 12 months = ~€15,000 in revenue.
Not €200M. Not €40M. €15,000. That’s an honest SOM at launch. And that’s exactly what a good investor wants to see — because it shows you have your feet on the ground, you know your constraints, and you know how to build progressively.
A modest but well-argued SOM convinces infinitely more than an “optimistic” one with no foundation.
The real fix?
Stop building these numbers top-down (“1% of the global market = €2.5 billion, easy”). Go bottom-up: how many customers can you realistically sign next month? In 6 months? With what resources? Multiply by your average contract value. That’s a credible SOM.
Investors don’t fund a market. They fund your ability to take a share of it. 🎯
Food for thought 🙂