Dear Reader,
Welcome to the 56th edition of the good reads newsletter by Malpani Ventures. Sharing your weekly dose of articles for this weekend’s reading!
A Total Addressable Market (TAM) Masterclass
CJ Gustafson interviews Lightspeed Partner Sebastian Duesterhoeft, the “Michael Jordan” of TAM. Some key points:
TAM (Total Addressable Market) is important because it determines the revenue a company can capture over time
Investors want to see a scenario where a company could theoretically return their fund 1x, which means a $500M return potential for a $500M fund
TAM is calculated using a P x Q (price x quantity) framework where the Q is often difficult to determine
Simple reference checks, like spending ~7-10% of infrastructure cost on security products, can be helpful to determine TAM. Gartner/IDC TAM numbers should not be blindly used in pitch decks
In 2020/21, high valuations were paid with little regard for TAM and competitive setup in a space. Examples of mistakes include vertical SaaS and the modern data stack, where the valuation didn't make sense based on TAM opportunity
Vertical SaaS companies have attractive characteristics, but TAM often ends up being an issue. There are few examples of $10B+ outcomes in vertical software, making it harder for large funds to bet on vertical SaaS
Prioritizing website updates
One of our companies is currently revamping its website and conversion funnels in order to make the buying process for its targets simpler. This post can be a good guardrail for website prioritization:
Structure: Highlighting features, use cases, resources, and a "Get a demo" section under "How it works".
Homepage: Showcasing the company's unique POV on the outside sales industry, the problems it's facing and how the company addresses those problems. Adding customer testimonials and case studies for social proof.
Key Feature pages: Changing the focus from "How it works" to real customer problems. Reorganizing 2-4 unique use cases per page into problem-solution modules.
Case studies: Hammering the social proof aspect by placing them in the main navigation for easy access.
How it works pages: Adding new pages, such as integrations, pricing, support, and onboarding, based on customer interviews and recorded demos. Addressing the most common questions from customers during demos.
Resource library clean-up: Removing old content and replacing it with fresh content.
The focus is on making sure website visitors know exactly what the company does and the problems it solves.
Our pitch to healthtech founders
Malpani Ventures is looking to add to its portfolio of health-tech companies. Our pitch to health-tech founders:
Who are we?
What are we looking for?
What is our investment process?
Until next time!