How to Research and Determine Total Available Market (TAM) and Serviceable Available Market (SAM)
I'm working on the executive summary for my website idea and need to figure out the total market capitalization for the this industry.
For example, if all the yearly advertising (and other) revenue of Yelp, UrbanSpoon, OpenTable, Zagat, etc. were all combined, that would total out to the total available market for the online restaurant review industry.
Any specific websites, key words to look for, firms that provide this research, or any other specific/concrete tips that would help me get the answer to this?
Keep in mind that I am NOT asking how to valuate or determine the market valuation for a specific business or company, but rather what the entire industry is "worth" in terms of total number of users X the average revenue per user (ARPU).
Thanks!
Venture Capital Pitch Business Plan Market Analysis Market Research
-
I can't answer your question, I have no idea. I do however question what you are doing. Why do you need these numbers? Why are you writing an executive summary? Surely your time spent on this would be much better spent actually building your website idea. It sounds like a great way to pretend you are starting without actually starting. – Joel Friedlaender 12 years ago
-
I'm in the process of looking for a technical co-founder/partner. After the tons of time I have spent understanding what developers are looking for, I've surmised that the good ones will only work with people they take seriously and who have a plan. "Ideas are a dime a dozen" is a common expression, and I need to prove my value to a developer as he/she needs to demonstrate a track record. Additionally, I intend to approach venture capitalists when the time is right and this is a necessary portion of any executive summary. A VC presentation is low on the priority list admittedly, however... – User19815 12 years ago
-
A technical co-founder/partner will be much more impressed if you have actually done something towards building it (more than an executive summary). If you can't code, design the website, get the copywriting done for a pre-launch page, actually get a pre-launch page (use something like LaunchRock). I just think doing is better than planning in the early stages. There are things that need to be done before you launch, not all of them are coding, do the others. – Joel Friedlaender 12 years ago
-
Thank you for the input. I'm looking into LaunchRock. I have already designed the general "look and feel" for the website on paper, so I can cross that off the list. As for copyrighting, do I not need to hire a lawyer aka spend money? – User19815 12 years ago
-
Copywriting not copyrighting. Get all your sales/marketing text worded right. – Joel Friedlaender 12 years ago
1 Answer
IF the goal is to attract the potential partners, TAM and SAM are not as important as customer validation.
A market may be addressable, but that doesn't necessarily mean that the constituent parts are willing to pay for something that will support business operations.
What you need is interaction with the particular customers within your SAM and validate that what you intend to offer is something that is of value to them - and what they are willing to pay for such a product.
Such research can be done without the product being built - but like Joel mentioned, it is a good idea to at least have some sort of online presense i.e. launchrock.
Once you validate customer desire + willingness to pay, then you have a defensible SAM. Once launched, you then tweak reality against research, and then have customer traction against your SAM - and a stronger position to present to VC types.
In short: Markets don't pay - customers pay. Find & follow the money.
Your Answer
Venture Capital Pitch Business Plan Market Analysis Market Research
