Index Ventures’ Jahanvi Sardana shares the truth about TAM and what founders should focus on instead
For early-stage founders, the concept of Total Addressable Market (TAM) often looms large, seemingly dictating a startup’s potential for disruption and conquest. However, Jahanvi Sardana, a prominent Partner at Index Ventures, offers a crucial reminder: many successful startups have emerged from markets that were, at their inception, virtually nonexistent.
“What was the market for search before Google?” Sardana questioned the audience at TechCrunch’s 2025 All Stage event in Boston. She continued, highlighting examples like “the market for operating systems before Microsoft, or the market for cloud before Amazon?” These historical precedents underscore a fundamental truth: innovation often precedes a defined market.
Sardana eloquently likens the evolution of markets to surfing, where massive waves periodically emerge for founders to ride. She identified the internet, mobile, and cloud as past monumental waves, now eclipsed by what she deems the most significant wave yet: artificial intelligence. “Have you shaped the right product to ride this wave?” she urged, emphasizing that this critical alignment is precisely what defines product-market fit.
Understanding Your TAM: Beyond the Conventional Buckets
Sardana categorizes TAM into three distinct buckets, providing a nuanced framework for founders:
- Known Market: This is an existing market where a founder aims to replace a legacy incumbent. The challenge here is to compellingly articulate why their startup offers a superior solution. As Sardana put it, “Everyone brushes their teeth. You have to tell me why you’re building a better toothbrush.”
- Emerging Market: Characterized by a product or service currently used by a niche sector, but with clear potential for mainstream adoption. Sardana cited “non-alcoholic beer before it became cool” as a prime example of an emerging market that successfully crossed over.
- Invisible Market: Deemed “the biggest trap” yet also “a little bit of a dark art,” this market doesn’t exist until a founder creates it. It demands profound innovation and the ability to demonstrate an unforeseen need or possibility to investors. “Think about smartphones in 2006; nobody knew they wanted them and they changed the world,” she explained. “People don’t know what they’re looking for and sometimes you have to show them what’s possible.”
The Investor’s Lens: Pitching Beyond Metrics
During a Q&A session at the All Stage event, founders probed Sardana on investor expectations regarding TAM. While acknowledging that “It’s OK to create that slide and talk about the math behind your TAM,” she cautioned against over-reliance on industry metrics that lack unique founder insight. Excessive dependence on external reports, Sardana noted, can signal a superficial understanding of the market a founder seeks to build within.
Addressing the complexities of sizing TAM in large marketplaces, Sardana humorously admitted, “Well, that question hurts,” recalling Index Ventures’ past decision to pass on Airbnb due to perceived small TAM. She highlighted that Airbnb’s innovation created entirely new inventory, surpassing even major hotel brands and fundamentally altering travel behavior. For marketplace TAMs, she advised founders to focus on “what is unlocking supply, and once you unlock the supply, how will behavior change?”
What Truly Stands Out to Investors?
Ultimately, Sardana emphasized that investors, including herself, are “in the business of evaluating founders more than markets or products or anything else.” A company truly stands out when a founder deeply understands their customer and the compelling reasons behind their willingness to purchase the product. “When you talk about your market, it’s really a lens on your ambition,” she concluded, shifting the focus from rigid market numbers to the visionary drive of the entrepreneur.
