My First Million
The best business ideas come from noticing what's working and doing it better, faster, or for a different audience.
AI Tool TAM Calculation Model
Framework for calculating addressable market for AI productivity tools by multiplying user base by willingness to pay based on productivity gains
Decision Rule
If user base is 30+ million and productivity gain justifies $1000+ annual payment, even small market share can create billion-dollar business
How It Works
Productivity tools create direct time savings that can be quantified in economic terms, making price justification easier than consumer products
Failure Modes
Overestimating user willingness to pay for productivity gains
Underestimating switching costs from existing tools
Ignoring network effects that protect incumbents
Assuming productivity gains translate linearly to payment willingness
Example Decision
“Cursor targets 30 million developers who would rationally pay $1000-10000 annually for 2x productivity gain, creating $30-300 billion TAM where even 1% share builds massive business”
Related Knowledge
AI will create more disruptive opportunities than incremental improvements
Entrepreneurs should target core business functions rather than building AI features for existing products
Broad vs Deep Market Entry Framework
A framework for choosing between targeting a massive market with moderate per-customer value versus targeting a smaller
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all of the assumptions are off and every company is kind of up for grabs
AI is creating a fundamental reset where established competitive advantages no longer protect incumbent companies
perfectly rational for every single developer to pay at least $1000 a year
Productivity tools that create significant value can command high prices because the economic benefit justifies the cost