Recall that:
SOM service obtainable market – “where we will start “ or “is this interesting”
SAM service available market – “where we are going “ or “is this financially powerful for the company”
TAM Total addressable market – “how big we could get” or “is this feasible to invest with enough short-medium term gains to justify”
general market statistics:
Chicago per household spending on “recreational lessons” is $249.84 (Consumer Expenditure Sueveys, Bureau of Labor Statistics)
- This category includes things like cooking, music, dance, tennis, swimming, skiing, sewing. Language, and other instruction.
Estimated 84 million households in the US metropolitan areas as of 2020 census (80% of households in the country)
US continuing education market (non-degree, non-credit adult learning) was estimated at 93.25B by 2028 (link)
Total Addressable Market (TAM)
What we’re measuring: total spending in the US on any non-degree, per-class learning or recreation lesson (arts, dance, cooking, language, yoga, skills, etc.).
Source 1: BLS Consumer Expenditure Survey (2022)
- Spending for recreational lessons
- $249.84 per year per household
Source 2: 2020 Census
- 84 million households in the US metropolitan areas as of 2020 (80% of households)
Source 3: Arizton Advisory and Intelligence
- Continuing Education Market size: 60B
- CAGR: 7.47%
Estimated spending on recreational lessons in metropolitan areas = 249.84 * 84 million = $21 Billion
Estimated spending on continued education (non-degree) = $60 Billion
Since this is often sponsored by employers (not necessarily our business model) we can make a conservative estimate that 50% of this spending is by consumers, so our addressable market from continuing education is $30B.
To avoid double counting, we can take the weighted average of consumer spending on recreational lessons and consumer spending on continuing education:
- Estimate that 75% of spending is on recreational lessons
- Estimate that 25% of spending is on continuing education
TAM / User spend on all recreational / continued learning = 0.75(21 billion) + 0.25(30 billion) = $23.25 B
Effective Classy revenue possibility = 0.18 * 23.25B = $4.185B
Serviceable Available Market (SAM)
- How many people need or can use product?
We took the bottom-up approach to calculate SAM:
# buyers/month * units per buyer * price per unit * months/year
# of buying/month = lands somewhere between monthly active users and 52,000 and 31,000 monthly transacting users
(41,500) *(avg 2.4 classes)*(avg $34)* 12 = 41M / 48M
If we generate around 41-48M annually, then our market share of the 23.5 B TAM estimate is:
0.002 %
Service obtainable market (SOM):
You start with a very tightly defined market, and you can interact with it often to develop a hypothesis for Product-market fit
The market we are confident that we can reach with our new features/strategy is the group of new post-graduate workers who moved from their college towns to start jobs in San Francisco:
5.4% of college graduates moved to sf in 2025
- 1.47 million graduates entered office-centric roles this year
- This gives us ~80,000 new graduates in San Francisco
- Source: JLL 2025 Talent Hubs Report
- The average starting salary among them is 84,000, with 45% going to rent. Leaving half of their salary to other living and recreational-related expenses
- Source: https://online.aurora.edu/best-cities-young-professionals/
Our ideas lean into the community and relationship-building aspect that Classy offers; we want to work to integrate more social network features into Classy’s model to strengthen ties to classes, instructors, and learners. These feature additions are especially geared to this customer segment of new grads who are highly social, have disposable income, and are actively trying to establish a community in a new city.
