Bootstrapped startups and the shit I learn in therapy

I’ve been thinking about TAM a lot lately.

TAM stands for Total Addressable Market. It refers to the size of the overall market that your startup is entering. I first learned the term when I was going through an accelerator program, trying to raise money for my first startup.

When you’re playing the fundraising game, you need to demonstrate how you’re going to grow to a massive valuation (hundreds of millions or billions of dollars) so you can give your investors an outsized return.

You want to paint a picture for investors of this massive market full of people desperate to give you money.

When I became interested in bootstrapping, I figured I would never think about market sizes again.

Who cares how big the market is? I don’t need millions of customers to build a good bootstrapped business. The internet’s a big place, I’m sure I can find enough people to make it work.

But there’s still a sweet spot for bootstrapped founders.

Do you want to build a business that brings in 500,000 a year? Or 5 million? If the latter, then you’re going to need a good-sized market.

Do you want to build a product-led growth business where you have a relatively low price point and acquire customers through inbound channels? Then you’re going to need a bigger market than if you’re comfortable doing enterprise sales and charging tens of thousands of dollars a year.

Justin Jackson has compared starting a business to surfing a wave. If you have a super-small wave, it’s going to be hard to get up on anything other than a longboard. And even then it might not be a great ride.

Likewise, if your market isn’t big enough, if there isn’t enough pent up demand, then you’re going to struggle to build something sustainable with a $20 per month price point and focusing on SEO. But too big, and the market will likely be crowded with more competition from VC-backed companies.

As I’ve been evaluating startup ideas, I’ve been developing a set of heuristics. I still don’t want to do the typical VC fundraising math. But I do want a way to quickly judge if a market aligns with my goals.

How many customers do you need?


Avg price point vs goal $250k ARR $500k ARR $1M ARR $10M ARR $50M ARR
$20 / month 1,042 2,083 4,167 41,667 208,333
$50 / month 417 833 1,667 16,667 83,333
$100 / month 208 417 833 8,333 41,667
$250 / month 83 167 333 3,333 16,667
$1k / month 21 42 83 833 4,167
$10k / month 2 4 8 83 417

Inspired by Amy Hoy and Alex Hillman's Year of Hustle cheatsheet, I’ve charted the number of customers you need to acquire in order to hit an annual revenue goal based on the average monthly price point of your product in this table.

Now let’s assume you don’t want to build a sales team and instead want to rely on product-led growth. We can come up with a rough approximation of the number of website visitors you would need at each goal and price point to hit the number of customers in the table above.

We’ll use these conversion benchmarks from FirstPageSage for a product with a free-trial (no credit card required).


Avg price point vs goal $250k ARR $500k ARR $1M ARR $10M ARR $50M ARR
$20 / month 67,335 134,669 269,339 2,69M 13.46M
$50 / month 26,934 53,868 107,735 1.07M 5.39M
$100 / month 13,467 26,934 53,868 538,677 2.69M
$250 / month 5,387 10,774 21,547 215,471 1.08M
$1k / month 1,347 2,693 5,387 53,868 269,339
$10k / month 135 269 539 5,387 26,934

At the lower price points, that’s a LOT of visitors. If you have a freemium model, you’re going to convert users to customers at much lower rates, so the numbers are more than 4 times as high.

Also, you’re never going to get every user in a market to visit your website. So you need a market that’s BIGGER than those numbers in order to build a viable business.

Let’s assume you’re a really good marketer, and you can get 1 in 4 people in a market (25%) to visit your website. Now we can use that to calculate a rough minimum market size depending on our price point and goal.

Minimum market size

Avg price point vs goal $250k ARR $500k ARR $1M ARR $10M ARR $50M ARR
$20 / month 270,000 539,000 1.08M 10.77M 53.87M
$50 / month 108,000 216,000 431,000 4.31M 21.55M
$100 / month 54,000 108,000 216,000 2.16M 10.77M
$250 / month 22,000 44,000 87,000 862,000 4.31M
$1k / month 6,000 11,000 22,000 216,000 1.08M
$10k / month 1,000 2,000 3,000 22,000 108,000

These numbers are still on the optimistic side, so I would only use them as an absolute minimum when evaluating markets. If the market you’re evaluating is right around these numbers, you might still have an uphill battle. But I’ve found this helpful for giving me a starting point when thinking through the opportunities I want to pursue for my next bootstrapped business.

Jason Cohen’s simple heuristic

Jason Cohen, the founder of WPEngine (a bootstrapped unicorn), has an even simpler test for evaluating market size.

Do 10M people or 100k companies have the problem?

If so, then you have a plausible market (although it may still not be a good market, for reasons we’ll get into later).

How many customers are there in common markets?

Now that we have our heuristics, let’s look at some classic markets that indie founders tend to go after. We can compare the estimated size of each to our minimum market size table and to Jason’s plausible market test to evaluate how good the market is.

Note: I will link to the sources where I’m pulling this data

SaaS companies

The numbers I could find on SaaS companies varied a good bit. But it seems to be less than 100,000 worldwide. According to a report from Vainu, a sales database, there are approximately 72,000 SaaS companies. Crunchbase has 34,389 companies classified as SaaS in their database.

  • Minimum price point to hit $1M ARR: $250/month
  • Pass/Fail Jason’s test: FAIL

This is one of the most popular markets for Indie founders to go after. After all, we’re SaaS founders so it’s easier to find problems in our own domain and to understand how to reach people like us. But if you’re restricted to just SaaS companies, the numbers really don’t look great unless you have a high-value product you can charge for.

Software companies

There are something like ten times as many software companies in the world as SaaS-specific companies. Crunchbase has 338,523 categorized as software companies in their data. IBIS World counts roughly 50,000 US-based software publishers in one of their reports.

  • Minimum price point to hit $1M: $100/month
  • Pass/Fail Jason’s test: PASS

Using ~350k as our estimate, expanding to general software companies pushes us up into a range to pass Jason’s test. Although you may still need a high-ish price point to build an ambitious bootstrapped business in this market.

eCommerce businesses

eCommerce is on a whole different scale from software companies. I probably knew that, but I did not have a good grasp of the order of magnitude until I looked at the numbers. According to a report which referenced data from builtWith, there were 26.5 million ecommerce sites worldwide in 2023. And at the time I’m writing this, builtWith has more than 6 million Shopify sites alone in their dataset with 2.7 million of those based in the US.

  • Minimum price point to hit $1M: Less than $20/month
  • Pass/Fail Jason’s test: PASS

Ecommerce passes all of our tests with flying colors and generally looks like a great market to get into for indie founders. Of course, this also means there’s lots of competition. If anything, you’ll likely want to narrow the scope of this market at first and find a smaller subcategory you can sell to.


Justin Jackson has talked a lot about how different it feels building Transistor for podcast creators than many of the products he has built in the past, largely because of the market. And for good reason. According to data from Listen Notes and Podcast Index, there are roughly 3-4 million podcasts in the world.

  • Minimum price point to hit $1M: $20/month
  • Pass/Fail Jason’s test: PASS*

Podcasters look like a great market to sell to. Not too big, but plenty of space to operate in. Although I will put an asterisk next to the Pass grade for Jason Cohen’s test because a lot of podcasters are closer to individuals than businesses and we are below the 10M mark. But I think it’s safe to say there are at least 100k that are genuine businesses.


Freelancers are another order of magnitude jump in terms of market size. According to a post from Exploding Topics, which pulls data from the World Bank and the Bureau of Labor Statistics, there are roughly 76 million freelancers in the US and 1.57 billion worldwide. Although it’s important to note that they are using self-employed as a proxy for freelancers, which would include gig workers, business owners, and more.

  • Minimum price point to hit $1M: Less than $20/month
  • Pass/Fail Jason’s test: PASS

This looks great at first glance, although I’m a bit skeptical. In large part because I have tried to sell to freelancers before and know how reluctant they can be to purchase, plus how fragmented the market is. But there’s a reason a lot of well-known indie founders (Amy Hoy, Ruben Gamez) got started here.

Software engineers

According to this blog post referencing data from the Bureau of Labor Statistics, there are more than 1.5 million software engineers in the US. This alone would fail Jason’s test of 10 million people. But the global market expands that number to 26 million which gets us to a pass.

  • Minimum price point to hit $1M: $20/month
  • Pass/Fail Jason’s test: PASS

Advertising agencies

I couldn’t find any reliable numbers for digital marketing agencies, so I’m going to use advertising agencies instead. My guess is that this is just an old name for a category that now includes digital marketing agencies, but that’s purely a hunch. According to IBIS World, there are 433,410 advertising agencies in the world in 2024. The numbers I found for US-based firms were between 50,000 and 120,000, although I couldn’t find sources on the blogs stating numbers in the higher end of that range.

  • Minimum price point to hit $1M: $50/month
  • Pass/Fail Jason’s test: PASS

Real estate agencies in the US

According to the National Association of Realtors, there are 106,548 real estate brokerage firms in the US with 3 million active real estate licensees. There are also some really interesting statistics on the demographic breakdowns of realtors in that article.

  • Minimum price point to hit $1M: $250/month
  • Pass/Fail Jason’s test: PASS

The number of real estate brokerage firms just barely passes Jason’s test, but there are probably a lot of independent realtors that don’t work for firms. And while there are only 3 million individual agents (assuming I’m interpreting licensees correctly) they’re more prosumers than consumers. Either way, you’re probably going to need to find a product with enough value to justify a higher price point and get good market penetration.

I will also say that I kept this market scoped down to the US, because I assume that real estate practices and regulations vary a good bit from country to country. But if your product did have global appeal, these numbers are likely a good bit higher.

Other factors to consider besides market SIZE

Market size is only one small piece of what makes a great market. In his blog post on looking for markets with strong demand, Justin Jackson outlines four factors that make up the shape of a great opportunity:

  1. Number of potential customers
  2. How much they spend
  3. The frequency at which they buy
  4. Their willingness to pay

Market size is the starting point, but a massive market with no budget, that rarely buys new products, and isn’t willing to pay still isn’t a good market.

Jason Cohen lays out 6 factors that make up a great market:

  1. Plausible - Big enough
  2. Self-aware - Know they have a problem
  3. Lucrative - Have budget
  4. Liquid - Willing and able to buy today
  5. Eager - Willing to buy from you
  6. Enduring - Will stick around

In his post, Jason goes on to provide a formula you can use to do a quick analysis of any market.

I’m always hesitant to rely too heavily on formulas for big, squishy problems. Many junior PMs get themselves into trouble trying to map every feature idea they have to a RICE score rather than doing user research and thinking critically. But I’ve found the formula a really helpful tool for framing my thinking about a particular market or opportunity and communicating what I’m feeling in my gut.

I’ve created a spreadsheet that you can use to vet your own ideas against Jason’s formula too. Click on this link, and then copy it to your own Google Drive to edit.

How to use this post

Bookmark this post and reference it the next time you’re evaluating one or more new ideas to decide which opportunities are worth your time (and money).

A giant market won’t make your next product successful, but a small enough market could kill it even for bootstrapped founders. Just because you don’t need to bullshit your way into a massive TAM to please investors, doesn’t mean you can ignore market size altogether.

At the same time understand the size of your market is just a starting point. From there, you need to answer the questions Jason and Justin outline to evaluate the quality of the market as it relates to your product and use case (probably by talking to customers). And then of course you still have to execute on your product and marketing.

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