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A company can implement the bottoms-up analysis in their operations by first identifying their target customer profile. This involves understanding who their ideal customers are, their needs, and their behaviors. Next, they need to determine the willingness of these customers to pay for their product or service. This can be done through market research, surveys, and customer interviews. Lastly, the company needs to strategize how they will market and sell the product to their target customers. This could involve developing a marketing plan, sales strategy, and distribution channels.
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So how do you calculate your total addressable market size in a way that a top VC firm like Andressen Horowitz would like? Instead of the classic way to calculate TAM based on the market share of a total market size, Andressen Horowitz prefers what they call a "bottoms-up" analysis which counts your market size by the target customer profile, their willingness to pay for your product, and how you'll market and sell the product to them.
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