AI Automation Redefines Market Size, Targeting $100K Salaries Over $1K Software Spend for 100x Growth

A new perspective on market valuation for automation software is emerging, suggesting that the total addressable market (TAM) could be exponentially larger than traditionally calculated. Venture capitalist John Loeber recently highlighted this shift, proposing that the market for automation should be measured by the salaries of employees whose tasks are automated, rather than the existing software spend. This re-evaluation could lead to a 100-fold increase in perceived market size for AI solutions.

Loeber articulated this view in a recent tweet, stating, > "The average employee in this industry spends $1,000/year on software but earns $100,000/year on salary. By our software automating them, our TAM is the salary, not software, market size: 100x larger." This approach radically expands the potential revenue opportunity for companies developing advanced automation technologies. Manav Garg, a founding partner at Together VC, echoed similar sentiments, noting that AI-led workflow automation means the TAM now includes the replacement of human work, significantly enlarging the addressable market for startups.

This redefinition comes amidst growing discussions about AI's profound impact on white-collar professions. Reports from institutions like Goldman Sachs estimate that AI could potentially replace the equivalent of 300 million full-time jobs globally, with sectors like law and administration particularly vulnerable. McKinsey's analysis suggests generative AI could add trillions to the global economy by transforming knowledge-worker jobs, with customer operations, marketing, sales, software engineering, and R&D seeing the biggest opportunities.

However, the ambitious nature of targeting human salaries as TAM also implies significant challenges, as hinted by Loeber's concluding remark, "(Good luck with that)." The widespread automation of high-salary roles raises ethical concerns about job displacement and necessitates massive reskilling efforts. Forbes Business Council emphasizes that while AI promises efficiency, it also demands proactive strategies to address shifting skill requirements and ensure responsible development to prevent biases and protect individual rights, fostering a future of human-AI collaboration rather than obsolescence.