The Game with Alex Hormozi - How to Recognize Opportunity in a Marketplace | Ep 260

Episode Date: December 22, 2020

Are you really looking at the right market? Today, Alex (@AlexHormozi) talks about the important questions you need to be asking when evaluating the market to determine opportunities and the viability of an option.Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.Timestamps:(0:19) - Identifying a good market for your business(1:36) - The four key market characteristics for success(4:26) - Applying the market selection framework(6:30) - Making the right market choiceFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

And as soon as he switched from selling newspapers to selling masks in manufacturing, he went from a few million dollars a year to few million dollars a week. Welcome to the game where we talk about how to get more customers, how to make more per customer, and how to keep them longer, and the many failures and lessons we have learned along the way. I hope you enjoy and subscribe. What's going on, everyone. What I want to talk to you about today is a question that I get all the time, which is, how do I know I have a good market, right?

Which is, what are the things I should be looking for to know I have. a market that I should go after. And the first thing I want to address here is, you know, I had this conversation yesterday and someone's like, hey, I'm between, you know, dentists and hearing aid specialists and pharmacists, right, for what market I want to go after and serve, right? And I was like, okay, cool. Well, what are the considerations, right? And they didn't know how to actually analyze each of those businesses.

And so the first rule of thumb that I'll give anyone is, as long as the market is not dying and is either normal or growing, then which. of the markets can you provide the most value to? All right? So most value. And that's given your skill set. So if you have an advantage inherently or you have experience working with people in a specific marketplace, or especially if it's personal experience, then I would usually

recommend going after that market first because you know their pains, you know what it feels like, you will empathize with them and you ultimately create a better product that will provide more value to them and you'll be able to win. Now, that's a great scenario. But many people I talk to have basically no experience in any market. And I'm like, okay, well, then these are the four things that I look for. So they are as follows. The first thing that I'm going to look for is, is the market in pain?

So do they have a desperate need for my product or services? A nice to have is not something people are going to take their money out and buy, especially in a bad economic condition, right? If we're in a good economic time when you're watching this, and that's awesome. And if we're in a bad one, then you'll know. So the first thing I'm looking for is do they have a desperate, need, are they starving for the thing that I'm looking for? There are some things that are timeless, right? Health, wealth, and relationships are the timeless needs of humanity, right? You know, are they,

are they sad and lonely? That's relationships. Are they broke? That's always pain. And health are they, or they feel bad about how they look and are they unhealthy, right? And so there's the three big ones, right? But is their key pain that I'm solving? The second is, is the market growing, right? So I'll give an example of this. I think I've told the story of my buddy who owned the newspaper company. He could not figure out why his company was not growing. And he called me up and I was like, dude, like, you're much smarter than I am. It's probably because you're selling the newspapers. He was like, no, no, it can't be that. And I was like, no, I think it's that. And as soon as he switched from selling newspapers to selling masks in manufacturing, he went from a few million

dollars a year to few million dollars a week. Same entrepreneur simply applied it to a growing marketplace. The next thing that I'm looking for in terms of marketplace is, are they easy to find? And this is important because if you're marketing and you can't find your prospects, if I'm marketing to plastic surgeons, for example, and the only people seeing my ads are nurses, then I'm not going to be able to get my product, my service in front of them or even get my offer to them if they're impossible to find. And so whenever I'm picking a market, I'm going to try and find one that I can easily target that has associations.

They have groups. They have channels. They all watch. They're all congregated in one place. And so that way I can cast my fishing line there. And then I can hook the clients that can take a step towards me. Because if you can't find them, they'll never find you. Right.

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So that's my give. Go check it out. Amazon and back to the show. And so one, they have to be in pain. Two, they have to be growing. Three, they have to be easy to find. All right? Now, the fourth one is purchasing power, all right?

which is do they have the monies right now a quick example of this is i had a friend of mine who was looking at this and he was like dude i've got the perfect market i'm going after unemployed people and i want to coach them on how to do their resumes right tons of pain on not having a job he said it's definitely growing because people are coming in out of the market so there's tons of people that are coming in out so my ads won't get fatigue and i was like okay he's like they're super easy to find and i was like that's great but then he's like no one wants to buy my stuff because they all say they don't have jobs. And so he wasn't able to have the purchasing power from this target, right? And so let me give you an example of two different ways that you could use this framework,

right? So let's say if I were a relationship coach, I was somebody who serves couples or I'm good at helping people find love, right? Well, I'm going to look for a market that has all four of these things, which means instead of saying I'm going to help, you know, college kids, right, for me, in my service business, find love. All right, instead of having, that's a heart, college kids find love, what I would probably do is instead go after seniors, right, in maybe their second half of life to find their next partner.

That would probably be where I would focus. And what happens there is seniors have tons of pain because they're alone. It's growing because people die and get older every day, right? They're easy to find. And I know that senior citizens, in general have far more money than college kids do. Right? And so even though I have the same core value proposition, I'm choosing to serve a better market that I will ultimately probably make more money with. All right. And so this is kind of

the process that I look at is number one, above all else, which market can I provide the most value to? If I have personal experience, that's going to trump everything. Now, if I don't have personal experience and I just have a skill of being able to market or sell or whatever, then I'm going to look at my market in these, in this, four, four piece system, whatever you want to say, checklist. And the thing is, is you can't just have three of them, right? In the newspaper example, they were in tons of pain, they were easy to find, and they had purchasing power.

The problem is they weren't growing. They were shrinking every year, right? The unemployment example, they were growing, they were in pain, but they didn't have the purchasing power. So that's the problem there. The nurses and plastic surgeons example, that would be one where if I can't find, them then I can't display the ads to them and then obviously if people don't watch your product at all and it's just a nice to have then they will not buy it

all right and so you want to make sure that you do not have one two three of these you want to have all four in any market you pick and ideally pick a market that you already know you can provide value to and solve a problem that meets these four criteria and you'll have the recipe for success so hope that made sense that's how I look at markets that's what I look at when I'm trying to invest in companies I look at the founder I see if they already have experience in this and then I see if the problem that we're solving matches these things and then at that point i say you know what i think this is a

good opportunity let's do it hope you enjoyed that and uh see you the next vid