Generational Companies Don't Take TAM; They Create It

Generational companies don't just capture existing markets; they create new ones. Stripe is a perfect example. When Patrick Collison said, "The biggest, most important companies that will be Stripe's customers do not exist yet. They are still just ideas in someone's mind," he was highlighting how Stripe wasn't just about payments. It was about making it so easy to handle transactions that whole new businesses could emerge. Stripe simplified online payments, and in doing so, it spurred countless startups to build their services on the web, knowing the infrastructure was there to support them.

Shopify is another great example of this. During their roadshow, when asked about their TAM, they mentioned the vast market of 46 million SMBs in the US and how they'd only need to serve a percentage of them to be a large business. But during their journey from startup to default platform for online commerce they didn't just end up serving existing businesses; they empowered a whole new wave of entrepreneurs. By making it simple to set up an online store, Shopify enabled new kinds of businesses to thrive, including unexpected players like Kim Kardashian’s shapewear brand and Kanye West’s sneaker line. These brands weren't just traditional small businesses; they became major industry disruptors.

Generational companies don't just ride the wave of existing trends; they create the wave. Uber and Airbnb are classic examples. Uber didn't just compete with taxis; it reimagined how we think about urban transport. Airbnb didn't just offer cheaper lodging; it transformed our concept of what temporary living space could be. These companies built platforms that were adaptable, and ready to support needs that hadn’t even been thought of yet.

The essence of these generational companies lies in their ability to see beyond the present. Instead of merely capturing existing markets, they expand them. These companies didn’t just meet current demands—they created the future, positioning themselves at the forefront of tomorrow’s economy. They show us that the real magic happens when you build for the customers and industries that don’t yet exist.