What's the Total Addressable Market for Your Product? How I Answered This impossible Question

Posted by Shahzad Khan

"What is the total addressable market for your product?"

I read this question on the funding application I was working on, and needed an aspirin. It was giving me a headache.

Ask me how many grains of sand are in the Sahara desert, and I can probably give you a very good estimate based on square kilometers, the typical depth of the sand laying above the bedrock, and by counting a couple of samples of how much sand is available in a square inch or so. As an engineer, this is a tangible problem with a tangible solution.

However, I can’t read minds, and don’t have a ready model for how to determine an exhaustive number of potential customers, many of whom were likely to have different uses for our technology.

...or so I thought.

Turns out, the solution for this was quite straightforward. It’s a classic market research problem.

 

A million dollars isn't cool, you know what's cool? A billion dollars.

— Sean Parker’s character in "The Social Network"

 

I opened up the list of our beta and paid users, and cross-referenced them against job titles and firms. It became clear that we had solid traction in the government relations, government analysts and policy analyst roles. There was also a subset of users that employed our customized web intelligence solution for lead generation purposes; apparently, being able to track a thousand online sources and instantly be informed when people in your sector have new funding, are opening new offices, or have a new product launched is amazingly useful for lead generation. Gnowit’s web intelligence platform carries out this monitoring automatically, which customers find very useful as they get back two to three hours a days that would be invested in just searching for this business-critical info.

Still, to truly have a comprehensive answer to the "what is your market worth" question, I’d need to find a list of users with profiles similar to the ones who have validated our software solution, run surveys, analyze the data and come up with defensible numbers. The funding application was due in days, and the clock was ticking.

It was time to use up a lifeline and get some help.

We at Gnowit are fortunate to be one of the firm’s that is being incubated by the Invest Ottawa Accelerator, under the capable leadership of Kevin Carroll. Over the past three years, Bruce Lazenby rebranded the former OCRI to Invest Ottawa, and they have helped many Ottawa-based tech startups drive from prototype to product to revenue. My cohort has dozens of firms that started out with little more than an idea and all have significant traction (some in millions of dollars).

My lifeline in this case was our Entrepreneur in Residence at Invest Ottawa, Chris Johnson, who suggested that we have a chat with the Lead Analyst, Vahid Sadr. I was astonished at the resources that Vahid had access to—with access to all the major industry research reports in the world. He took a look at my one page summary of my research, fired up his browser, and worked with a colleague at the MaRS in Toronto (Joe Lee) to get me a set of reports that were on-target and incredible in their details.

The reports laid out our industry by sectors, identified the major customer use-cases, the priorities of the customers and where the money was. It provided in black and white ink the compounded annual growth rate for each market. Everything we needed and more.

The best part was that it validated a lot of our hunches and assumptions, and laid out a solid framework by means of which we could segments our market.

We now know our total addressable market (TAM), and it's quite a bit over a billion dollars. I estimated that between the consultancy we received, the time and effort dedicated to our research and the access to the original reports, we’ve received over $50,000 worth of services, all for free, in exchange for the promise that we will grow and create jobs in Ottawa.

My go-to person for market research is now Vahid, and I would encourage any Ottawa based startup to definitely look into the Invest Ottawa Business Acceleration Program. They always come through for us.

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Shahzad Khan

Shahzad Khan

Shahzad is the co-founder and CTO of Gnowit Inc, which employs Artificial Intelligence to automate media & web monitoring and provide instant analysis on the top auto-curated issues. He holds a PhD in Computational Linguistics from Cambridge University (UK), and has a passion for machine learning, natural language processing and transforming high-technology into everyday products. more



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