For venture capitalists (VCs), the size of the market is of utmost importance. It serves as a proxy for gauging a company’s potential magnitude, which in turn indicates the scale of potential return on investment. This approach primarily applies to well-defined industries. For instance, if you aim to challenge traditional travel agencies with AI technology, your total addressable market (TAM) would be equivalent to the combined earnings of all travel agencies worldwide.
However, this approach breaks down when one is pioneering entirely new markets. Back in 2008, Uber, in its pre-seed presentation, projected a “best case scenario” of reaching $1 billion in annual revenue. Fifteen years later, it’s amusing how far off the mark the company’s prediction turned out to be.
Elon Musk, an entrepreneur with a remarkable history of disrupting markets, has consistently thought on a grand scale. Whether with PayPal, SpaceX, Starlink, Tesla, SolarCity, Neuralink, or the Boring Company, Musk has demonstrated an extraordinary ability to envision audacious concepts that defy traditional market size assessments. For SpaceX, the TAM isn’t simply the combined budgets of all space agencies; it represents the transformation of space exploration and satellite launches into an affordable endeavor that spawns a new generation of startups.
This prompts a question: What is happening with Twitter/X? Musk’s actions in that realm appear nonsensical unless you consider his track record. PayPal, while financially successful, failed to revolutionize the banking system as originally intended, becoming a mere patch on a flawed system. I argue in my column this week that X isn’t an effort to dismantle a successful social media platform but a second attempt to revolutionize international banking. This time, Musk may possess all the necessary elements to bring about this change.
Moving on to other developments in the startup world this week:
The Influencer Economy: Despite my aversion to the term “influencer,” there is an abundance of content creators, and this economy is undergoing significant evolution.
Musk’s Impact on Content: Morgan reports that verified accounts, denoted by blue checks, are not shielding sex workers from Musk’s crackdown on adult content. This aligns with the idea that Musk may be steering Twitter toward a financial role.
Influence and Eyewear: Brian observes that the Ray-Ban Meta sunglasses seem tailor-made for influencers, with their design catering to this niche.
Declining Traffic: Sarah discusses a report indicating a decline in traffic and monthly active users on Twitter/X.
LinkedIn Job Cuts: Ingrid reveals that LinkedIn is planning to cut an additional 668 jobs, bringing the total to nearly 1,400 job cuts this year.
AI Advancements: ByteDance, the company behind TikTok, has introduced a new video editor targeting businesses with AI-generated ad scripts and presenters.
