Addressable Market Evaluation Framework

A company growing at 30% per year in a market it has already 40% penetrated is worth far less than a company growing at 20% in a market it has 3% penetrated. TAM is not a vanity metric — it determines how long the compounding engine runs.

Why This Matters

Management teams have a structural incentive to present the largest plausible TAM. Analysts frequently accept these figures without independent verification. This framework provides a disciplined five-step process for independently sizing the addressable market, estimating realistic market share trajectories, and determining exactly how many years of above-market growth remain — the critical variable in valuing any high-multiple growth company.