1. Step 14: Calculate TAM for Follow-on Markets

2. Two Types of Follow-on Markets How to Calculate Broader TAM Workshop
Outline
Overview
Two Types of Follow-on Markets
How to Calculate Broader TAM
Workshop
November 14, 2018

3. Overview
This step:
Consider “follow-on” markets you will expand into after dominating beachhead
Calculate broader TAM
November 14, 2018

4. Only focused on beachhead market Now
Overview
So far:
Only focused on beachhead market
Now
Take step back, validate existence of other similar markets
Make sure you’re heading in right direction (towards $$$)
November 14, 2018

5. Two Types of Follow-on Markets How to Calculate Broader TAM Workshop
Outline
Overview
Two Types of Follow-on Markets
How to Calculate Broader TAM
Workshop
November 14, 2018

6. Two Types of Follow-on Markets
Same customer, different product (aka upselling)
Same product, different customer (aka adjacent market)
November 14, 2018

7. Two Types of Follow-on Markets
Same customer, different product (aka upselling)
Already have idea of customer’s needs and priorities
Useful in determining next product
Already have sales channels in place
But may stretch capabilities
Same product, different customer (aka adjacent market)
November 14, 2018

8. Two Types of Follow-on Markets
Same customer, different product (aka upselling)
Same product, different customer (aka adjacent market)
Similar to beachhead (i.e., adjacent)
More common approach than upselling
May require new features or further refinement
May require different packaging, marketing, pricing
Challenge is establishing new customers in new market
November 14, 2018

9. Two Types of Follow-on Markets
Can pursue either strategy (or mixture)
Upselling
Adjacent market
Analogy: bowling pins
Beachhead market is lead pin…
November 14, 2018

10. Two Types of Follow-on Markets
This step:
Identify some follow-on markets
Estimate TAM
Already have markets from step 1 (segmentation)
Don’t spend too much time on this..
Focus is still dominating the beachhead market
November 14, 2018

11. Two Types of Follow-on Markets
Why calculate broader TAM?
To be aware of long-term potential
Investors like to see this
Provide alternatives if beachhead fails
Again- don’t let broader TAM distract you
Beachhead is still #1 priority (for now)
Have to win beachhead first..
November 14, 2018

12. Two Types of Follow-on Markets How to Calculate Broader TAM Workshop
Outline
Overview
Two Types of Follow-on Markets
How to Calculate Broader TAM
Workshop
November 14, 2018

13. How to Calculate Broader TAM
Identify five or six follow-on markets
Calculate TAM (as in step 4)
Estimate number of end users
Estimate annual revenue per user
Multiple => TAM for that market segment
General rule: to attract investors, broad TAM should be $1B+
With 10 or less follow-on markets
November 14, 2018

14. Two Types of Follow-on Markets How to Calculate Broader TAM Workshop
Outline
Overview
Two Types of Follow-on Markets
How to Calculate Broader TAM
Workshop
November 14, 2018

15. Make list of market segments Should have this from Step 1
Workshop
Make list of market segments
Should have this from Step 1
Only change one variable at a time
Same customer, different product (upselling)
Same product, different customer (adjacent)
Not both!!
November 14, 2018

16. Discuss and identify markets that are most viable
Workshop
Discuss and identify markets that are most viable
Estimate number of end users
Estimate annual revenue per end user
Calculate TAM
You don’t need to be as precise as TAM for beachhead
Rank top three markets in each category
Same customer
Same product
November 14, 2018

17. Workshop
GOAL: identify top 2 follow-on markets WORKSHEET: TAM for Follow-on Markets
November 14, 2018