Nice try, startup, but that’s not your usable available market (SOM) •


There’s one problem I’m starting to see more and more: startup founders, in their desperation to show the size of their markets, are significantly crossing the line and claiming numbers for their TAM/SAM/SOM that are unattainable and absurd.

I get it: you want to give the impression that you are building a very valuable business. But in the pitching process, you still need to maintain a sense of fairness.

When trying to understand the total addressable market, the total usable market, and the total available market, be very careful that you tell the right story.

The problem became especially apparent in a recent teardown of Vori’s pitch deck, but it seems unfair to invite them separately; it’s a common problem with many pitch decks I see.

The following slide appears in Vori’s pitch deck:

That’s not your SUM. Image credit: Vori

In this slide, Vori talks about “the largest non-digitized retail segment”, which is probably correct, but the total spending of $765 billion in the US is not the market size – this is the size of all spending, by consumers, in supermarkets. . (Statista has some interesting numbers over there.)

Investors are smarter than that

The problem is that Vori is not launching a supermarket, but a tool in front of grocery stores. In other words, even if Vori’s company does the best it can and gets 100% market share in every independent supermarket in the world, that doesn’t mean the company will have $250 billion in sales: it means the industry it serves returns that amount.

Nowhere in its slide deck does the company go into what it believes is the top end of revenue in its industry. That can be bottom-up (how much money indie supermarkets spend on inventory management and analytics software, how much could that market grow and what percentage of those stores could you have as a customer?) or top-down (how many supermarkets are there multiplied by the price of your services per supermarket – that is your total market size).

I understand why Vori chose to use these numbers, but they are meaningless at best, clueless at average to good and deceptive at worst. As a startup, you want to make sure you paint a rosy, aggressive picture of growth, but don’t be tempted to use the biggest numbers you can find. For example, if you are a car dealer, your total usable market is not the value of the cars you sell (that’s the SUM for the car manufacturer). Your SUM is the total value of sales commissions, service plans, aftermarket goods and services, and anything else you can actually make money off. Don’t confuse the two!

This is an extract from the complete deck breakdown of Vori’s deck. You can learn this and more from my weekly pitch deck teardown column on!


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