Perceived Market Saturation Is Ego Protection--Expand Reach

Deep Dive

The discussion begins with a strong aversion to the word "mindset," which the speaker finds overused and laden with unsubstantiated mythology, such as concepts being stored in the body or notions of synchronicities, frequencies, vibrations, and manifestation. The speaker proposes to define language as behavior, illustrating this with the example of saying "hi" to solicit a response and being reinforced when that response is given. This concept is further explained through a personal anecdote about his wife, Leila. In their early relationship, when Leila cried, the speaker would attempt to comfort her, but if she continued to cry, he would become quiet. This silence, followed by his eventual anger, led to Leila stopping her crying. He realized he had been inadvertently reinforced for getting angry when she was sad, which then caused her to stop crying, creating a vicious cycle. He argues that people often use words not because they have defined them, but because of the positive reactions they receive from their community when they use them, citing terms like "manifestation" and "frequency" as examples. The speaker emphasizes the importance of definitions, stating that his first step in breaking down any problem is to define it: "What does this mean? How do we know? And why does it matter?" This process, he explains, involves logic, evidence, and utility.

The conversation then shifts to the primary reason most people and businesses remain small: the belief that their market is saturated. The speaker asserts that this is incorrect for 99% of people, stating that markets are typically a hundred or a thousand times larger than entrepreneurs perceive them to be, with the average entrepreneur tapping into less than 1% of the actual market. He likens this limited perception to looking at a business through a keyhole when a large door to its true potential is in front of them. This limiting belief, he suggests, often exists to protect egos, allowing entrepreneurs to blame market saturation rather than acknowledge their own shortcomings in advertising or scaling. He clarifies that while extremely small, isolated markets might exist (like the hypothetical 140 people in a rural town in the Sahara Desert), most markets, even local ones in cities with hundreds of thousands of people, are vast enough. For most other industries, he argues, it is nearly impossible to have saturated the market.

To illustrate this point, the speaker recounts a story about his gym business, Gym Launch. He learned of a gym software company doing $10 million a month solely through outbound sales, a business he had never heard of. This revelation broke his belief about market limitations, as this unknown company was generating five times his revenue. He then visually explains the concept of market saturation using a pie chart. He posits that when competitors enter a market, people perceive their share of the pie shrinking, leading to sadness and a belief of a limited market. However, he argues this is false. The "small slice" of the pie represents only one way of reaching customers on one specific platform. When considering all potential platforms (Instagram, Facebook, TikTok, YouTube, X, radio, TV, direct mail, email, etc.), the actual market share is infinitesimally small. Furthermore, within a single platform, there are multiple ways to advertise (posts, stories, images, carousels, shorts, vlogs, community posts), and entrepreneurs often only utilize a fraction of these.

The discussion then addresses the "red ocean" strategy. The speaker acknowledges that business advice, for instance, is a highly competitive "red ocean" market, but argues that the bloodier the water, the more fish there are, often correlating with bigger rewards. He reconciles this with the concept of niching down by explaining that in the beginning, entrepreneurs should artificially constrain their pond to compete where "sharks aren't swimming," becoming the biggest fish in a small puddle. As they grow, they can move from a puddle to a pond, then to a lake, and eventually to the open ocean. This progression is directly correlated with skill and experience. The reason "riches are in the niches," he explains, is that fewer competitors mean less direct comparison, allowing for greater pricing power and profit, although the upside is capped, albeit usually at a higher level than perceived.

The speaker then outlines five directions for business evolution from a current market position represented as a dot. First, one can go "up market" by targeting larger clients, such as franchisers instead of single-location gym owners. Second, one can go "down market" to target a larger, less affluent group, like individual trainers compared to gym owners. Third, one can go "adjacent" by applying existing systems to a different industry, such as using gym business knowledge for chiropractors. Fourth, one can go "broader" by expanding the scope, like moving from gyms to general health and wellness, encompassing med spas and weight loss clinics. Fifth, one can go "narrower" by focusing on a highly specific segment, such as only working with spin studios. He notes that most small business owners have not defined their market position and simply accept any customer with a credit card.

He then offers tactics for those who believe their market is too small, suggesting they are likely not getting enough leads, which is a separate issue. The solution involves making more content, in more places, making it better, and consistently for a long period. This approach, combined with running ads and outreach (direct mail, DMs, phone calls), can achieve omnipresence. He reiterates that it is unlikely the market has been capped; rather, the entrepreneur has been too unskilled to capture a larger percentage. This is normal, and as skills improve, the market can expand.

For local businesses, he provides specific strategies to expand earning potential with a single location. First, expand the physical location by increasing efficiency, knocking down walls, or adding seats, such as reducing class times from 45 to 30 minutes to fit more in. Second, add more channels for customer acquisition beyond the current one (e.g., posting on Instagram, X, YouTube, Facebook, TikTok). While the rule of "one avatar, one product, one channel" can lead to $1 million in revenue, businesses in smaller markets (under 50,000 people within a 10-mile radius) may need multiple channels to saturate that market. Third, open another location, as a single store can represent a $100 million opportunity if the model is successfully duplicated and scaled. He believes most businesses can reach $10 million a year by opening new markets, and that many people fail because they are impatient and chase "shiny objects" rather than sticking with their current vehicle for the long term.

The speaker then uses a visual to explain the cost of switching opportunities. If a business is in its third year, starting a new venture means its first year is actually the fourth year of progress, and its second year is the fifth. Growth becomes easier as a business gets larger, so switching always puts one behind. He emphasizes that sticking with an opportunity, unless there is a fundamental flaw in the assumption, provides a head start and maintains momentum. He identifies "features, not bugs" as a common pitfall, where entrepreneurs mistake inherent difficulties of a business model for flaws. For example, the cleaning business struggles with talent attraction and retention, while fitness businesses