Figuring out the Total Addressable Market (TAM) is essential for understanding a business's growth potential and involves calculating the total revenue opportunity if a company captured 100% market share. There are three primary methods for calculating TAM: the top-down analysis uses broad market data to estimate a quick figure, the bottom-up analysis builds market size from individual customer data for a more precise and defensible number, and value theory estimates TAM based on the economic value a product creates, especially useful in new or disruptive markets. Each method provides a different perspective, and using them in tandem can validate assumptions and ensure a credible TAM. Investors often rely on TAM as a measure of potential success, and it's important for companies to also consider their Serviceable Addressable Market (SAM) and Serviceable Obtainable Market (SOM) to create realistic business strategies and goals. Regularly updating TAM calculations in response to market changes or company developments is crucial for maintaining a relevant and actionable business plan.