Startup Corner #16: 5 Frameworks to Size Your Market Like a Builder
Forget hand-waving. Here’s how to actually estimate the market you’re building into
Hey friends,
Let’s skip the pie charts and get straight to it.
Every founder needs to size their market at some point — for a pitch, for a model, or just to know whether they’re spending 5 years building into a niche that caps out at $5M ARR.
The problem is, most “market sizing” slides are either completely vague (“we’re in the $200B productivity space”) or overly precise in ways that collapse under scrutiny.
So in this post, I want to give you practical, honest, founder-usable frameworks you can apply when sizing your startup’s market — especially early on.
No jargon. No fluff. Just ways to get closer to the truth.
1. The Jobs-to-be-Done Sizing (aka, follow the pain)
Best for: New categories or tools replacing old behavior
What it asks: How many people have this pain, and what do they pay today to solve it?
Instead of trying to define your market by existing tools or verticals, this method starts with the job your product replaces.
For example:
“We help finance teams track spend. Today, they do this with Excel, 1-2 FTEs, and scattered procurement tools.”
“There are ~100k mid-market companies with finance teams → assume 30% have real pain → assume a $5–10K ACV = $150–300M starting market.”
This is realistic, grounded, and lets you layer in upside (if we expand from finance to legal, or upmarket to enterprise, etc.)
👉 Works especially well if you're building in a category where people are hacking together a solution — but paying for the problem somehow.
2. The Bottom-Up TAM (aka, user count × pricing)
Best for: Clear user personas and SaaS or subscription models
What it asks: How many users fit our ICP, and what’s our average revenue per user (ARPU)?
Simple math:
Estimate your ICP — e.g. 50,000 recruiting agencies in the US
Estimate % you could realistically reach → say 30% = 15,000
Multiply by ARPU — say $4,000/year → that’s a $60M reachable market
Now layer in growth over time (international expansion, upmarket motion, adjacent roles) and show how this gets you closer to a $250M+ market.
👉 This works when you have a specific buyer/user in mind and can model how big your wedge is. You’re not trying to prove the market is huge — you’re showing how your beachhead has room to grow.
3. The Shadow Market Sizing (aka, where the money already is)
Best for: Products that replace consultants, offline workflows, or informal tools
What it asks: What’s already being spent on workarounds, substitutes, or manual labor?
Let’s say you’re building a tool that automates carbon reporting for mid-sized businesses. No “market report” is going to tell you that’s a $5B market — yet.
But you might say:
Mid-size companies are spending $20–50K/year on consultants to handle ESG reports
There are 40,000 such companies in the US → 15% adoption = $300M+
You price at $15K/year → same market, same pain, lower cost = more addressable
👉 This lets you anchor to existing spend, which is a more believable way to size a market than predicting behavior changes from scratch.
4. The Stack Expansion Model (aka, wedge → platform)
Best for: Companies with a clear wedge that expands into multiple tools or teams
What it asks: If we win this first tool, what else can we credibly own in the stack?
Let’s say you’re building a calendaring tool for remote sales teams.
You start with:
20,000 potential customers × $100/user/year = $2M ARR wedge
But if you can expand to scheduling, call recording, CRM workflows?That same user now represents $500/year
Same customer count → $10M wedge → plus international, plus enterprise…
👉 This lets you model not just market size today, but market depth over time.
It’s not just “we start small and figure it out.” It’s “this wedge gets us leverage into more budget.”
5. The Strategic Reframe (aka, access > ownership)
Best for: New consumer behavior, access-based models, or market reframing
What it asks: Can we expand the market by changing the way people pay, access, or think about the category?
This is how companies like Airbnb, Uber, and Spotify reshaped markets that looked “mature.” They didn’t just compete — they reframed what the market even was.
Spotify didn’t win music by replacing CDs — they changed how people valued ownership vs. access
Airbnb didn’t just tap into hotel demand — they turned everyone into a host
Uber expanded transportation by collapsing car rentals, taxis, and local commuting into one app
👉 This is harder to model with precision — but great to pair with bottom-up data if you're doing something genuinely behavior-shifting.
Investors won’t take it on faith alone — but if you have user signals, it becomes a powerful unlock.
Final reminder: models don’t need to be perfect — they need to be honest and plausible
The point of market sizing isn’t to say “we’re in a $20B category.” It’s to show that:
You know who your customer is
You understand how they spend
You can reasonably grow into a venture-scale business over time
The better you ground that in real behavior, pricing, and adoption logic — the more your story connects with your intended audience.
And when it connects, it’s fundable.
— RB
Startup Corner