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Table Table 2 Go-to-market & pricing

Why do top-down market sizing models fail in commercial execution?

DimensionTop-Down Sizing (Analyst Research)Bottom-Up Sizing (Unit Operations)
Primary data sourceThird-party industry analyst reports (Gartner, IDC)Company CRM data, firmographic registries, lead lists
Core calculation logicApplies speculative percentage haircut to macro industryMultiplies verified account counts by realized deal size
Addressable boundariesAssumes universal product compatibilityExcludes accounts lacking required integrations or scale
Sales capacity constraintIgnored; assumes infinite commercial executionDirectly bounded by sales rep ramp, quota, and deal velocity
Competitive displacementAssumes greenfield captureModels incumbent switching costs and contract lock-ins
Decision relevanceUseful for venture capital storytellingMandatory for territory design, hiring, and revenue quotas
Typical failure modeMassive overestimation of reachable revenueCan be overly conservative if new channels are omitted

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Reference & Evidence

Source: Table from this essay. Sources and interpretation are given in the article.