Hey friends, it’s Jorian—welcome to Into the Ring. I’m a startup fundraising coach for top founders and have worked with 60+ founders who’ve raised over $270M. (Want to work with me? Check out more details at jorianhoover.com)

Thank you to the couple dozen founders who came to my co-hosted founder dinner last week with Jason Shen (3x founder and now exec coach) in SF. One of the top recommendations I give founders who are considering fundraising is that they should meet more VC-backed founders. And so it was great to see everyone trading notes, starting friendships, and connecting over how dang hard building a startup is.

This week’s newsletter includes a couple of my recent rants. In addition to my usual tier 1 funding deal rundown and VC podcast/newsletter recommendations, I’ll give a quick rant on why you should (keep) doing things that don’t scale, and a longer rant on whether you should show a TAM slide.

As always, thank you for being part of this Into the Ring tribe of 2,000+ startup founders and operators/investors from OpenAI, Anthropic, a16z, Lightspeed, etc. If you think someone else might like this newsletter, they can sign up here.

Now onto today’s newsletter!

I’m often impressed by the incredible lengths founders go to do things that don’t scale at the pre-seed stage.

I often wish founders would continue doing things that don’t scale at the seed stage.

Recently I’ve come across some startups that really rolled up their sleeves at the pre-seed stage and went all-out to find new customers, but once they got their first four customers, they tried to turn everything into a “process” and now they’re unable to get new customers at the seed stage.

I’m no expert when it comes to sales (if you’re looking for that, check out Rob Snyder’s writing), but I often see the result of sales when founders show me their traction while fundraising.

And I often wish these founders kept doing things that don’t scale and remembered what they did in their pre-seed stage. Because if you were able to compel four customers to work with you when you didn’t even have a product (and they’ve grown with you since), then you should be able to compel even more now that you do have a product.

Rant over.

TAM sometimes feels like a three-letter swearword for me.

The amount of time founders (and sometimes investors) stress about it relative to its importance feels wildly off-balance at times.

We’ve all seen it, the TAM slide. And for those of you new to startups & fundraising, TAM stands for Total Addressable Market.

TAM is the answer to the question “if you could sell to every single potential customer at full price, how much revenue would you make?”

And the usual way you’ll see it on a slide is three concentric circles — TAM on the outside, SAM (or Serviceable Addressable Market) in the middle, and SOM (Serviceable Obtainable Market) on the inside. Think of SAM / SOM as further refinements of your TAM to show the markets you could reasonably go after in the short/medium term.

I’ll say it out of the gate: I think it’s useful to have a rough idea of what your TAM is. But the vast majority of the time, I think founders waste their time building a TAM (and a SAM/SOM) slide and spending hours and hours on it.

I hold this belief for a few reasons:

And I’m generally a fan of avoiding unnecessary rabbit holes where you can. I’ve hardly ever seen a back-and-forth between a founder and an investor on TAM calculations that ends up in a good place…

If you’ve been a reader of Into the Ring for a while, you’ll probably know that I like to provide nuance on fundraising topics. Hardly ever do I believe things like “never ever do this” or “only this way works.”

With TAM, I think it can be genuinely useful to share if you are building in an area where investors are biased toward believing it’s a small TAM, but you have strong data to back up that it’s a much bigger TAM.

In this case, your well-researched data might actually create an “aha” moment for an investor that puts you in the driver’s seat and enables you to update their opinion.

I mentioned you can also get pulled into TAM rabbit holes. A couple examples of this, and why they can be so gnarly:

(*one note: if you are building into an area with a genuinely small(er than venture-backable) TAM and trying to get VC investment, that is super important to know yourself. Knowing that your TAM is “too small” is helpful because you’ll realize that you have an uphill battle to achieve VC investment and either need to pivot/broaden your market size, look for different types of investment, or find a way to convince VCs it is a large market.)

One workaround to showing the classic TAM/SAM/SOM slide is to “point” to the market size rather than calculate it super mathematically.

What I mean by this is that you show one or two numbers that demonstrate how big a market is and allow investors to squint and use their gut to see the big opportunity.

One example of this is to give a statistic about the amount of spending in a certain area — for example, last year $400B was spent on X (or you could do a forward-looking version of this statement).

Another example is to share your ambition through a statistic, such as “we want to serve 100M customers by X”.

I’ve just put generic examples here, but you can make these a lot more specific to your startup. Essentially the goal is to get VCs to realize that you’re dreaming big and going after a huge opportunity.

After all, most decacorns created big opportunities that weren’t getting filled previously. So why are we still looking at lagging metrics to determine whether something’s investable?

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