How Big Is Your Idea?

In 2012, siblings Adora and Aaron Cheung walked into Y Combinator with an idea: making it easy to book a home cleaner.

They turned the idea into a platform where users could instantly book vetted home cleaners via web or app.

And they called the startup Homejoy.

Within two years, Homejoy had raised $40 million from top-tier VCs, expanding rapidly across 30+ US cities.

The pitch? “The market is huge, because everyone needs a clean home.”

Technically, they were right.

The U.S. home cleaning industry was a massive $10 billion market.

Most home cleaning services operated offline, driven by referrals, small local agencies, and a large informal workforce paid in cash.

There were no dominant players, no consistent pricing models, and barely any tech in the workflow.

Homejoy believed software could fix that.

Their bet was that booking a cleaner should be as seamless as ordering an Uber.

A digital platform could simplify scheduling, standardize payments, and build trust through ratings and background checks.

Customers would gain convenience and transparency, while cleaners would get steady work without chasing clients or negotiating every job.

But by 2015, Homejoy was gone.

It turned out, a huge market didn’t automatically mean a huge opportunity.

High customer churn, low margins, and legal pressure over worker classification made the business unsustainable.

Growth outpaced retention.

And when the numbers stopped adding up, the model collapsed.

So, what how did they end up here?

Homejoy’s Market Sizing Mistake

On paper, Homejoy had it all : A $10 billion market, a sleek booking experience, and venture capital backing.

But they they confused a big market with an easy one.

They assumed if just a tiny slice of homeowners booked recurring cleanings online, the business would scale itself.

But the customers had other plans.

• Most just wanted a one-time, last-minute clean, not a regular service.

• Few came back. So retention was weak, and they had to keep buying the same customers over and over.

• And every new city came with new logistics, more cleaners, and more coordination nightmares.

The result? A leaky bucket business with sky-high operating costs.

Homejoy’s downfall wasn’t about a lack of demand. It was about misreading how that demand actually behaved.

And they’re not the only ones.

A lot of early-stage founders make the same mistake - pitching the dream (Total Addressable Market) and skipping the hard question:

What part of the market can you actually win, right now?

Let’s break that down.

The Market Sizing Framework (Simplified)

To size your market properly, you need to break it down into three layers.

This helps you separate the big vision from what’s actually within reach - and avoid building a business on false assumptions.

1. TAM (Total Addressable Market)

This is your biggest possible market, a.k.a the “if everything goes right” number.

It includes everyone who could potentially use your product, regardless of where they are or how ready they are to buy.

Homejoy’s TAM: The entire U.S. home cleaning industry, worth around $10 billion.

2. SAM (Serviceable Available Market)

Now zoom in.

Your SAM is the portion of the TAM that you can realistically serve based on your current product, location, and capabilities.

Homejoy’s SAM: Urban dwellers in major U.S. cities who were comfortable booking cleaners online.

3. SOM (Serviceable Obtainable Market)

This is the slice of SAM you can realistically capture right now.

The customers most likely to buy from you in the short term.

Homejoy’s SOM: People who not only booked online, but did so regularly.

In other words, recurring users who wanted ongoing cleaning services.

The Builder’s Playbook: How Calendly Got Market Sizing Right

Calendly didn’t win by targeting everyone with a calendar.

They won by obsessing over one clear pain: the back-and-forth of scheduling meetings.

Instead of chasing a bloated TAM like “all professionals who take meetings,” they made surgical choices:

• TAM: Over 500 million professionals globally who attend meetings.

• SAM: Around 50 million in tech, sales, consulting, and recruiting. People whose calendars are their job.

• SOM: An early wedge of tech-savvy solo users and small teams who were actively annoyed by scheduling ping-pong and eager to streamline it now.

That focus paid off.

They didn’t try to boil the ocean.

They solved for the most frustrated users first.

Those who desperately needed a fix and would rave about it.

Calendly went from a side project to a scheduling tool used by over 20 million people, generating $100M+ in ARR, all while staying profitable for most of its early life.

They earned distribution by nailing depth, not breadth.

How We Found Our Ideal Customers at Co.Lab

When we launched Co.Lab, our mission was clear: help people break into product management through real, hands-on experience.

But in the beginning, we cast the net too wide.

We assumed our ideal user was anyone who aspired to be a PM.

That was our TAM - every dreamer on Reddit, every lurker in Slack communities, every person who said “one day I’ll switch.”

But those people weren’t feeling the pain. Some were years away from making the leap, so they didn’t need us yet.

Trying to convert them felt like selling umbrellas in a drought.

So we zoomed in.

Our SAM became those who were already in the arena.

People actively applying for PM jobs and hitting a wall.

Mostly bootcamp grads and career switchers who knew the theory but lacked proof of execution.

They were frustrated, rejected, and looking for a way to stand out.

But even that group had its limits. Not everyone could commit or pay.

Then we found our SOM:

Aspiring PMs already working in tech, in adjacent roles like product marketing, support, or sales.

These people had context, clarity, and career urgency.

They didn’t just want to learn, they wanted to transition now.

And many of them had access to a learning & development budget at work, so cost wasn’t a blocker.

That was our turning point.

The moment we stopped chasing everyone and focused on the ones most ready to act, everything changed.

We had sharper messaging, faster growth, and real outcomes.

That clarity helped us bootstrap Co.Lab to $1M+ in revenue, serving learners across 60+ countries - all by focusing on the right slice of the market, not the whole pie.

What You Can Take Away as a Builder:

• Define the segment where the pain is sharpest and action is urgent.

• Make trying your product as easy as possible.

• Don’t beg for attention. Win it by solving a real problem, so well your users bring others with them.

Helpful AI: Puzzle

Each week, we spotlight a digital tool, AI resource, or business hack that can help you streamline processes and boost productivity.

This week’s pick: Puzzle🌐🚀

If you’re managing startup finances without a CFO, Puzzle is your new best friend.

It’s an AI-powered accounting platform built specifically for startups, combining the structure of traditional accounting with real-time startup metrics.

Use Puzzle to:

• Automate bookkeeping with bank and Stripe integrations

• Track burn rate, runway, and cash flow instantly

• Generate investor-ready financials with a click

• Stay due diligence-ready always

Whether you're pre-seed or post-Series A, Puzzle gives you clear visibility into your financial health without needing a finance degree.

Founder Resources

If you're thinking more deeply about market sizing, behavior, and early-stage focus, here are three resources worth your time:

📘 Book – The Lean Startup by Eric Ries
Still one of the clearest guides on how to validate an idea before scaling it.

A must-read if you want to avoid building for a market that isn’t ready.
→ Read it here

🎧 Podcast – StartUp Podcast (Season 1)
A behind-the-scenes look at what it really takes to launch a company.

Includes honest moments where founders realize they misread demand or overestimated the market.
→ Listen here

📄 Article – Tomasz Tunguz on Market Size
A short, practical read on how to think about TAM, SAM, and SOM with examples.

Especially useful when pitching or pressure-testing your idea.
→ Read the post

Audience Corner

What’s the smallest market you’ve seen someone absolutely win, even when the TAM looked laughable?

Reply or drop your pick in the comments, and I’ll feature the best next week!

If this helped clarify your market approach, send it to a founder who’s still sizing markets by "vibes."

Until next time,

Sefunmi