The biggest number in the room is the least reliable one
Almost every case for a new market opens with its size. A prospectus names a total addressable market, a strategy deck sizes the prize, an investment memo leads with the category, and that number quietly sets the order in which opportunities get ranked. The bigger the claimed market, the higher the opportunity climbs the list. The reflex is understandable, and it is also the least reliable input in the room.
We paired the market-size claims 8 companies made in their IPO filings between 2017 and 2021 with the revenue each business actually reached 3 years later, or its last reported year for the one taken private earlier, both from primary SEC filings. The 8 are Uber, Airbnb, WeWork, DoorDash, Beyond Meat, Blue Apron, Oscar Health and Casper. The claims ran from $432 billion to $5.7 trillion. Ranked by the revenue they reached, 6 of the 8 land in a different position than their claimed market would predict, all but Uber and Airbnb. Size is the number everyone leads with, and it is the one that mis-ranks the field.
Every company reached a fraction of the market it named
Start with the raw distance between claim and result. The median company in this set reached about 0.25 percent of its claimed market by its measurement year. Every one of the 8 reached less than 1.5 percent, and 7 of the 8 came in under 1 percent, all but Oscar Health. The prize each named was real; the share any of them touched by then was nowhere near it.
The largest claims show the pattern most plainly. Uber told investors its personal-mobility business addressed a $5.7 trillion market, then reached $31.9 billion in revenue 3 years after filing, about 0.5 percent of the number in the prospectus. Airbnb estimated a $3.4 trillion market and booked $9.9 billion by 2023, roughly 0.3 percent. These are the 2 strongest results in the group, and they still cleared less than 1 percent of what they claimed.
The narrower numbers do not rescue the exercise. Where a filing disclosed a serviceable market, that figure also towered over the result. Casper led with a $432 billion sleep economy, then disclosed that the categories it actually addressed were worth $67 billion; its last reported annual revenue was $497 million, roughly 130 times smaller than the market it said it already served. A smaller true number was still the wrong number to rank on.
Rank by reachable demand and the order changes
Now rank the 8 twice. Order them by the market they claimed, largest to smallest, and then by the revenue they reached, and 6 of the 8 change position. Only the 2 largest claims, Uber and Airbnb, hold their place. We call the 2nd ordering the reachable rank, and it is the one that tracks which businesses actually got built.
The reversals are not small. Beyond Meat pointed to a $1.4 trillion global meat category, the 5th-largest claim in the set, and produced the smallest business of the 8 at $419 million, 0.03 percent of that category. Oscar Health named $450 billion of premiums, the 2nd-smallest claim, and reached $5.9 billion, 1 of the 4 largest revenues in the group, behind only Uber, Airbnb and DoorDash. The size of the prize did not pick the winner, and in these 2 cases it pointed the wrong way.
Oscar's revenue is gross premium rather than a marketplace take rate, so its ratio sits highest in the set for a reason worth naming. That is the point, not an asterisk. Ranking a health insurer, a marketplace, and a food brand on raw market size sorts them on a number that means something different in each business, which is exactly how the order goes wrong.
Ranked by the revenue they reached 3 years after filing, 6 of 8 companies land in a different position than their claimed market size predicts.
Source: Lunon analysis of company S-1 registration statements and Form 10-K revenue via SEC EDGAR and the SEC XBRL company-facts API, 2017 to 2023.
Size and reachable demand answer different questions
A market-size number answers how much money changes hands in a category. It says nothing about how much of that spend is contestable, how fast a new entrant can take it, or what it costs to hold once won. Those are separate questions, and they are the ones that determine revenue. Treating the 1st number as a stand-in for the others is the error the 8 filings share.
This is why the claim and the result barely correlate across the set. The claimed markets span more than a 10-fold range, from $432 billion to $5.7 trillion. The revenues span more than 70-fold, from $419 million to $31.9 billion. The 2 orderings hardly rhyme, because a large category and a reachable one are not the same asset and were never priced as if they were.
The number that mis-ranks is the one everyone leads with
Reachable demand accounts for 3 things a market-size figure leaves out, and each one moved a company in our set.
A claimed market is not a served one. DoorDash pointed to the $1.5 trillion Americans spend on food and beverages, then disclosed the narrower $600.5 billion they spend at restaurants. It reached $8.6 billion, well under 1 percent of the headline figure and 1.4 percent of the narrower one it also published.
Demand you win still has to be kept. Blue Apron sized the U.S. grocery market at $781.5 billion. Its revenue peaked at $881 million the year it went public and fell to $461 million 3 years later, a 48 percent decline. A market a business can reach once is not one it can necessarily hold.
Category size says nothing about your slice. WeWork put its addressable market at $1.6 trillion across 280 cities. The company that eventually listed reached $3.2 billion in revenue in 2022 and filed for bankruptcy the next year, 0.2 percent of the market it had named.
Reachable demand is a ranking question before it is a pitch number
For anyone ordering opportunities rather than selling one, the reachable rank is the more useful list. A deal team weighing targets, an operator choosing where to expand, and an investor comparing theses are all doing what a prospectus does in reverse: turning a set of markets into a ranked order. If the ranking input is claimed size, the list inherits the same error 8 filings made.
The correction is not to distrust big numbers but to demote them. Reachable demand, the share a business can actually win and keep, and the cost of winning it belong above market size in the order, because they are what separated these 8 companies from one another. The claimed markets were nearly uniform in their optimism; the reachable rank is where the businesses diverged.
None of this argues against sizing a market. It argues for ranking on the harder numbers underneath it. The prize a market represents is worth estimating; it is simply the wrong field to sort on when reachable demand and acquisition cost are what move a business from one position to another.
The question worth asking comes before the size
The size of a market is the easiest number to produce and the last one that should decide an order. It is estimated once, cited for years, and rarely checked against what a business reached. The more demanding questions, how much of a market is reachable and what it costs to reach, are the ones that reordered these 8 companies into the reachable rank, and they are the ones worth asking first. Rank by the market you can reach, not the market you can name.
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