The Art of Market Sizing: Turning Numbers into Narrative
Market sizing is often viewed as a task for start-ups who need to fill out the slide in their pitch decks. But in reality, it’s far more than that. Done well, market sizing is a strategic exercise that helps company leaders validate direction, communicate value, and make smarter decisions. Whether you’re leading a new venture or steering an established business into new territory, understanding your market’s true potential is critical.
Beyond the Pitch Deck
Market sizing isn’t just for raising capital and it isn’t just using some data you pulled with AI to show some impressive numbers — it’s a tool to help you answer some of the big questions:
Are we chasing the right opportunity at the right time?
Is the market growing? Will there still be opportunities to earn from this market in 3, 5, 10 years?
Do we really understand our customers, our competitors, and what drives them?
Doing it right means getting into the weeds: talking to customers, studying current and emerging competitors, and understanding the small, sometimes intangible factors that drive people’s decisions.
Ultimately, your insights should give stakeholders confidence that you understand your space and are positioned to capture meaningful value within it. Without this, you risk basing strategic decisions on assumptions rather than insight.
Adapt the Models to Fit Your Business
Traditional market sizing approaches — the top-down (starting from broad market data) and bottom-up (building from your sales potential) — are useful, but not universal. For companies creating new markets or redefining existing ones, forcing yourself into these models may result in data that just doesn’t make sense.
The key is to tailor them: borrow the structure, adjust the assumptions, and ensure the model reflects your unique narrative. A well-constructed market size doesn’t have to be exact — it has to be believable and defensible.
For example, if you were developing a futuristic wearable device that could alter your dreams while you slept, you might have difficulty finding existing market data out there to build your model because no such tech or product category exists and no users have ever used anything like it.
You’d have to build up your models from scratch and create an easily understood and compelling story using a combination of:
Adjacent market proxies like other wearable sleep devices (medical and wellness),
Customer insights you gathered through traditional customer discovery to understand the appetite for such an innovation,
Barriers to entry for such a new and untested solution that could limit your size and growth.
It’s About the Story, Not Just the Size
Here’s a secret: no model you’ve created is perfect. And that's OK.
As an investor, I take the results of each model with a huge grain of salt because every estimate, especially for companies in their early stages, is based on assumptions and projections with a heavy dose of optimism thrown in for good measure.
I care less about seeing the traditional TAM/SAM/SOM numbers than I do hearing about how your market sizing is driving your Go-To-Market strategies and execution plans. Founders tend to be overly confident about their ability to capture market share from their competitors. Citing unrealisticly large market sizes doesn’t make your case look better, it makes you look like you don’t really understand how hard it is going to be to break into either a saturated market or a brand new one.
This is where the rubber meets the road. Telling the full story of Idea – Analysis – Execution – Value Creation is how you convince your team and your stakeholders of your vision and why it’s worth the effort and money you expect to invest.
Ready to Rethink Your Market Sizing?
If it’s been a while since you last looked at your market size — or if you’ve been relying on rough estimates — now’s a great time to revisit it. Markets evolve, customer needs shift, and what felt true a year ago might look very different today.
Take the time to dig in, challenge your assumptions, and refresh your story. Whether you’re a founder pitching your next round, a business leader planning for growth, or a team member trying to align strategy with reality — understanding your market is one of the smartest investments you can make.
Because ultimately, the art of market sizing isn’t about proving how big your market is — it’s about proving that you understand it.