Sequoia Capital’s Jim Goetz is famous for his early investments in AdMob, WhatsApp, and Github. He knows a thing or two about small apps that end up being used by millions of people.
It’s all the more surprising, therefore, that he doesn’t seem to agree with the typical TAM-SAM-SOM slide most VCs expect from startup fundraising pitch decks.
Who are those beachhead customers?
The word beachhead comes from a World-War II event.
“The beachhead market is named after the WWII battle of Normandy where Allied soldiers stormed the beachheads of Normandy enabling them to dominate one of the most important battles of WWII; without this win, the war may have ended in German victory. Finding your beachhead market is one of the most important strategic moves you make in setting up the foundation of your business.” (source: MIT)
The beachhead customers are the early power users who will pay for your product, talk about it around them, and enable you to build a base from which to go to other segments of the market.
Why not do TAM first, then?
The supporters of the TAM-SAM-SOM framework argue that it’s a good way to express the potential of your startup. The larger the market you’re going after, the larger the startup can become.
When you focus on the beachhead market, you’re not concerned about the ultimate size of the market. You try to nail the product/market fit by starting with those who are closest to your product.
Which methodology makes more sense in your opinion? TAM-SAM-SOM or Beachhead?
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