If you believe your TAM is 500 million when it’s actually 50 thousand, then you’re looking in the wrong places.
Founder: “Alright! I am ready to launch. We need to know what’s our total addressable market (TAM). It’s important before I talk to an investor. Can you look this up for me?”
Co-founder: “It’s $2 trillion, according to Statista.”
Founder: “Ugh, are they reliable?”
Co-founder: “I think so; let me google and check.”
Co-founder: “Yes, it’s reliable.”
*One week later*
Investor: “All looks good; I am ready to invest. Oh, I forgot to ask, what’s your TAM?”
Founder: “I am glad you asked. We are standing on a $2 trillion TAM.”
Investor: “Are you telling me you sell cassette tapes in 2022 with a TAM of $2 trillion?”
Founder: “Yes, we have Statista as a reference.”
Investor: “Hahahahahahahahahah. bye.”
Sorry, this is the first thing that I’ll do. Statista plainly sucks. As a business consultant for over ten years, I’ve worked with many clients and needed to conduct market research in almost every job.
Statista’s information to me is as valuable as Sam Bankman-Fried’s claim that an FTX accounting error resulted in an $8 billion loss. Both these pieces of information are purely rubbish and unreliable.
I am usually not siding against any product in my articles. Yet, in this case, if you are looking for actual numbers, do not use Statista.
This is based on personal experience. Their numbers are just sometimes extremely wrong. In the game of market research, the accuracy of numbers matters the most.
I believe Statista is optimizing its search presence for anything a person searches for that does not have enough market research.
How many people globally cook with their left hand? If there are no answers to this except a Statista page, then ignore that page as well.
That’s my introduction before I even introduce myself.
Now that this has been dealt with. I’m Al Anany, a business consultant in Zurich, Switzerland. I’ve been working in the business industry for over ten years.
Everyone needs it in the corporate world. If you work in any of the fortune 500 companies, it’s doubtful that you haven’t worked with or around market research.
Even though Steve Jobs was not a fan, that does not mean it is not crucial. Imagine entering a dark room with no lights.
Market research is essentially someone entering before you and telling you where not to step on.
In the startup world, it’s as essential as it gets. Let me explain.
You are typically starting or working in a startup. This sentence already means that you are unsure of your success.
90% of startups fail, and you’re telling me you’ll succeed? You also want me to bluntly believe you because of your smile?
That will not happen with any potential investor or new team member. However, you’d grasp their attention if you told them you have some credible statistics to support your product’s market need.
You might be wrong even with market research and a hundred financial analysts. However, your chances have slightly decreased, which is a win-win.
So let me tell you how I used to gather information when I was working with a client in a series A funding round, for example.
It sounds like a promotion, and I am about to say Pitchbook or something. But, nope, it’s not a promotion, and it’s not Pitchbook. It’s actually not a company or a product. It’s simply the governments’ data.
These are my favorite statistics. For instance, I was looking into the volunteering market for a small pitch. So this screenshot is gold to me.
Working with global clients, I always prefer this as my number one option. For example, if I am researching the African market, nothing is better to convey the stats than the governments and organizations of this country.
However, there is a problem with the above screenshot and with this option in general — the outdated content.
This statistic ends in 2019, which is okay for volunteering as the reporting halted because of COVID. But other industries sometimes have similar gaps for no reason. In that case, I always go to my plan B — Deloitte and Mckinsey.
For example, a research document dated 2021 is almost useless to me if I am researching the crypto market. I need to access new data. I’d simply google — “Deloitte Crypto Market 2022.”
Then I’d filter the google search to show me the latest. I would end up with reports from Deloitte that are extremely beneficial.
It looks fancy, I will give them that. But I couldn’t care less about how it looks like. I have my designer beautify whatever numbers that I come up with. What I am looking for is accuracy.
But again, there is one last problem with the screenshot above. Can you guess? You, the reader in the back? No? Okay…
When I look at the report above and see the word “Survey,” my guards are up. I do not trust the words of a hundred or a thousand people to convey a statistic about a market that serves billions.
Hence, I advise you to beware. The first thing you need to do is to look at how many people actually participated in this survey. I never consider surveys by themselves as enough. They could power your claim, but if they’re supported by other stats.
However, if you tell me that a company surveyed 1000 people, and 80% are not trusting the cryptocurrency market these days. I would instead read it as, “800 people do not trust the cryptocurrency market these days.”
That’s not remotely the same.
You’re studying the shoe market of Poland, and you can not find the stats you are looking for; what would you do?
Would you give up on the market opportunity? Would you just assume some random number based on the population? Would you just say it is similar to another country, so it should be the same?
These situations happened to me quite often as some data is challenging to obtain. In these cases, I turn on the scientist mode and ask myself all the possible questions to achieve a thesis.
Okay, let’s say we are doing Poland.
- Is there any statistic for a nearby country with almost the same population and history?
- Are there any contradictions between the cultures?
- I can’t access the shoe market. How about the fashion market? Is it similar to that neighboring country?
- Let’s take another five countries as samples in an excel sheet, research all of them, then start projecting numbers for the shoe market in Poland.
- Finally, let’s question whether they make sense in any possible way and criticize the values as much as possible.
If it passes all of those phases (I’ve omitted other questions, of course, depending on the industry), then I will work on the assumption.
Even when you conduct the most thorough market research for your product, a piece of the puzzle is still missing.
This is when Steve Jobs swoops in. The market research might have told Nokia that their phone is quite good nowadays. That an iPhone is too fancy. Then they went out of existence in no time.
Market research shows you what the market is doing and what it will probably do. But market research is you studying people.
If there’s one thing to know at the end of this article, it is that people change their minds all the time. So be aware that a number is never a constant.
I’m Al Anany, a business consultant in Zurich, Switzerland. I believe in the power of delivering value to you, the reader. You’ll find me on most social platforms by simply googling my name. Follow me if you’re interested in the value of my content.