Traditional market sizing approaches often fail startups because they rely on abstract dollar figures that reveal little about execution mechanics. The alternative—building your Total Addressable Market (TAM), then narrowing to Serviceable Addressable Market (SAM), and Serviceable Obtainable Market (SOM)—transforms market analysis from guesswork into strategic planning.

Most founders start their research with a Google search for “market size,” finding reports that claim their industry is worth billions. These numbers are seductive for investment attraction but useless for strategic planning. They aggregate spending across wildly different customer segments, use cases, and competitive dynamics that may have nothing to do with your specific opportunity.

Instead of relying on pre-packaged market data, which provides only the dollars spent without much insight into who is doing the spending and how those dollars are being allocated, start with the people who most closely fit your criteria. These are often your closest business relationships.  

Let’s use the pet food delivery market as an example. When you first consider all the potential “dog owners”, the market looks huge. But if your product specifically targets dog owners in downtown condos making over $75K annually, then anyone living in suburbs or rural areas is outside of your addressable market, which significantly narrows your focus. This kind of precision matters because it’s the difference between targeting a theoretical market and identifying actual customers.

Strategic TAM Construction

Building TAM from first principles requires defining your market based on customer problems, not industry categories. Take the example of targeting dog owners who need convenient food delivery. Instead of using broad “pet industry” statistics, you calculate:

• 90 million US households own dogs
• 32% live in urban areas = 28.8 million urban dog-owning households
• 68% of urban households have income over $75K = 19.6 million qualified households
• Total: 19.6 million households that fit your customer profile

This approach gives you a general TAM based on actual customer volume with specific, measurable characteristics.

SAM: Strategic Narrowing

Your Serviceable Addressable Market emerges from research-backed segmentation. Data showing that 35% of high-income urban dog owners live in condos or apartments, combined with evidence that downtown residents are 3x more likely to use delivery services, creates a strategic slice: 35% of your 19.6 million TAM, or 6.86 million households.

This isn’t arbitrary percentage-taking—it’s strategic focus based on a specific problem (convenient food delivery for busy urban dog owners) that your solution addresses better than alternatives.

SOM: Leveraging Unfair Advantages

Your Serviceable Obtainable Market should reflect your genuine competitive advantages, not wishful thinking. Back to the pet food delivery example introduced earlier, if you have relationships with trendy co-working spaces over traditional office buildings, that relationship becomes your entry point—your unfair advantage for accessing customers more efficiently than competitors.

The SOM forces a critical strategic decision: not just how big of a market slice you’re targeting, but specifically who you’re targeting and why you can reach them better than anyone else.

Data-Driven Validation

Building markets requires finding and validating reliable data sources. Government statistics, industry reports, and public company filings provide the foundation for defendable market calculations.

When you can trace your market size back to American Pet Products Association data and publicly available urban demographics, your projections become credible rather than speculative. You’re not just claiming market opportunity, you’re demonstrating that you understand exactly who your customers are, where to find them, and how to reach them efficiently.

This precision transforms every aspect of your business. Your marketing can focus on channels where downtown condo dwellers spend time. Your sales team knows to emphasize convenience and urban lifestyle benefits. 

Most importantly, you’re now also focusing your offering—designing and building your digital product to address the specific needs of urban apartment/condo dwellers with experiences and features relevant to their context. Elevator-friendly packaging, flexible delivery windows for busy professionals, and GPS tracking for doorman buildings become core features rather than afterthoughts. Now your SOM has connected all the way downstream through your business.

For investors, this level of precision signals founders who think strategically about execution, not just opportunity.