The Total Addressable Future is Now
If you follow me on Twitter (@shervin) you read my recent Tweet stating that Apple stock is the greatest public index of the Total Addressable Future (TAF). For some of you, TAF may be a new term, so let me clarify it before I make my point.
Total Addressable Future is sometimes defined as Total Available Market going forward into the future. With the development of companies like Amazon Web Services that can take a startup global in days instead of what used to take months or years, we now have these new terms entering our language. Total Available Market, then, is a term used to describe the revenue opportunity available for a product or service. In any startup business plan, there must be an estimate of the market size that could potentially be served with the company’s new product or service.
But here’s the rub, as Shakespeare used to say. This estimate of a startup’s market size has to include variables like competition and distribution, and in the case of most game-changing business startups, litigation is a major variable. New businesses (like hyperloop, for example, or previously, Uber and Airbnb) require new laws because nothing exactly like them has ever been seen before. Therefore, new laws and new language must be created and these things cause delays to market.
I could write a whole series of Medium posts on the ways that the pandemic has created TAF and TAM estimates to change drastically. For the sake of brevity, let’s take this one aspect of current pandemic challenge: distribution. We’ve all seen the images online of ships waiting in the harbors, unable to deliver products to ports due to pandemic restrictions, lockdowns, quarantines, testing, etc. You get the picture. There’s always been the element of the unknown in every business venture, but these kinds of economic delays can be so restrictive that new business ventures literally cannot enter the market at all.
Constraints such as competition, litigation and distribution challenges frame the TAF with boundaries, reducing the market down to the serviceable available market (SAM).
Apple stock is the greatest public index of the Total Addressable Future (TAF). Funds like Sequoia Capital (at sequoia on Twitter) and similar 10x funds are the greatest private index of our Total Addressable Index. The latter index is generationally locked up to new investors and the former is open to all.