Total Addressable Market (TAM), Serviceable Available Market (SAM), and Service Obtainable Market (SOM) are three important metrics used to evaluate the potential of any startup. These metrics are used to measure the size of the market and the potential for growth for a startup.
TAM is the total potential revenue that a startup could generate if it captured 100% of its target market. This metric is used to evaluate the overall size of the market and the potential for growth. For example, a startup that offers a new product or service in a specific market would have a TAM of the total revenue generated by that product or service in that market.
SAM is the portion of the total addressable market that a startup can realistically capture taking into account factors such as competition and distribution channels. For example, a startup that offers a new product or service in a specific market may have a SAM of 50% if it can only realistically capture half of the market due to competition and distribution limitations.
SOM is the portion of the Serviceable Available Market (SAM) that a startup can realistically capture taking into account factors such as the company's target customer segment, sales and distribution channels, and the company's ability to scale its operations. For example, a startup that offers a new product or service in a specific market may have a SAM of $1 billion, but its SOM may be $500 million, because it only targets a specific customer segment and its sales and distribution channels are focused on a specific geographic region.
In conclusion, TAM, SAM, and SOM are important metrics used to evaluate the potential of any startup. These metrics are used to measure the total addressable market, the serviceable available market, and the service obtainable market respectively and can be used to evaluate a startup's market position and growth potential. Understanding these metrics can help a startup identify opportunities for growth and make informed business decisions.