The Growth Engine
7 concepts · ~30 min · Intermediate
Understand how pricing, retention, market sizing, competitive advantages, and GTM strategy combine to create a compounding growth machine.
What You'll Learn
- ✓Size your market using bottom-up TAM analysis (the method VCs actually respect)
- ✓Evaluate whether your startup has real product-market fit or just initial traction
- ✓Identify which type of competitive moat your business can build and how to strengthen it
- ✓Choose the right GTM motion (PLG vs Sales-Led) for your ACV and buyer
- ✓Choose a pricing strategy that maximizes revenue without killing growth
Total Addressable Market (TAM)
Strategy
💡 The Concept
Total Addressable Market is the total revenue opportunity for your product if you achieved 100% market share. It's broken into three layers: TAM (total market), SAM (Serviceable Addressable Market — the segment you can reach), and SOM (Serviceable Obtainable Market — what you can realistically capture). Investors use TAM to assess if a market is worth entering. VCs typically want a $1B+ TAM to justify their fund economics.
⚠️ The Trap
The most common TAM mistake is 'top-down' sizing that inflates the number. Saying 'the global CRM market is $80B, so our TAM is $80B' is nonsensical if you only sell to 500-person tech companies in North America. This 'TAM fantasy' is the #1 reason investor pitches fail — it signals the founder doesn't understand their actual market.
🎯 The Action
Use bottom-up TAM calculation: count the number of potential customers you could serve × what they'd pay annually. Start with SOM (what you can realistically get in 3 years), then SAM, then TAM. Be specific: '12,000 mid-market SaaS companies × $30K/year ACV = $360M SAM.' VCs respect founders who demonstrate precise market understanding over inflated claims.
Knowledge Check
Challenge coming soon for this concept.