How To Start a Business With No Money: Your Path To Entrepreneurial Success

Why Founders Should Rethink TAM for Startup Success

Update The Power of Shifted Perspectives on TAM In the startup world, the Total Addressable Market (TAM) has long been treated as a holy grail for investors and entrepreneurs alike. However, Jahanvi Sardana from Index Ventures shakes up this conventional wisdom by urging founders to redirect their focus. During a recent talk at TechCrunch’s All Stage event, Sardana pointed out that many groundbreaking companies have emerged from spaces that did not even exist when they began. Notably, she asked the audacious question: “What was the market for search before Google?” This opening statement challenges the prevailing belief that a defined market is a prerequisite for startup success. Emerging Markets vs. Invisible Ones Sardana distinguishes between three categories of markets: known, emerging, and invisible. The known market includes situations where a founder must prove their innovation distinctly outshines incumbents. For instance, in the personal care industry, even commonplace products, like toothbrushes, require a compelling value proposition to stand out. Beyond that lies the emerging market—areas where a product begins gaining traction and has the potential for mainstream acceptance, much like the rise of non-alcoholic beer. Sardana emphasizes that founders should be attuned to these transitions and anticipate market shifts. The Invisible Market: A Risky Opportunity The most challenging, according to Sardana, is the invisible market. This domain is marked by the absence of a pre-existing market, compelling founders to innovate radically and illustrate their vision to potential investors. “Think about smartphones in 2006; nobody knew they wanted them until Apple showed them what was possible,” explains Sardana. Herein lies both the risk and the reward—if successful, founders can define an entirely new market space. This shift in focus encourages startups to prioritize product-market fit first and foremost, especially in contexts as disruptive as artificial intelligence, which is currently viewed as the next significant wave of innovation. Why Founders Must Rethink Their Strategies In a rapidly changing technological landscape, startup founders must adapt their strategies to not only chase markets but actively shape them. By breaking away from the traditional TAM mindset, entrepreneurs can find new pathways to success and innovation that historical frameworks may overlook. Embracing this mentality can set the groundwork for the next generation of market leaders.