How To Pick The Right Market
The speaker explains that market selection risk can be mitigated by running small ad tests across multiple markets before committing to a physical location. By spending $500–$1,000 in each of several markets, entrepreneurs can identify where lead costs are lowest before signing any lease.
Summary
In this brief clip, the speaker addresses the challenge of choosing the right market for a service-based business with a physical location. Rather than relying on gut instinct or assumption about which location might perform well, the speaker advocates for a data-driven testing approach before making any major commitment.
The core strategy proposed is to run paid advertising campaigns — spending roughly $500 to $1,000 — across five to ten different potential markets simultaneously. By measuring where the lowest lead costs are generated, the entrepreneur gets real market signal rather than speculation.
The speaker then addresses the obvious follow-up concern: what happens to people who opt in through the ads when there is no actual location yet? The answer is delivered humorously but practically — simply ignore the leads, which the speaker notes is what the vast majority of business owners do anyway. The point is that this approach allows entrepreneurs to gather genuine market data at a relatively low cost, while avoiding the massive downside risk of signing a multi-year commercial lease in a market that ultimately proves unresponsive.
Key Insights
- The speaker argues that market selection risk can be systematically reduced by running small paid ad tests across multiple markets rather than relying on intuition about which location to choose.
- The speaker recommends spending $500 to $1,000 per market across five to ten markets simultaneously to generate comparative lead cost data before making any location commitment.
- The speaker uses lowest lead cost as the primary metric for determining which market is worth entering, framing it as an empirical signal rather than a subjective judgment.
- The speaker dismisses concern about leads generated without a live location by noting that ignoring leads is standard behavior among the vast majority of business owners, normalizing it as a negligible ethical or practical issue.
- The speaker frames the entire strategy around avoiding the downside of signing a 5-year commercial lease in a market that was never validated, positioning ad spend as cheap insurance against that outcome.
Topics
Transcript
[0:00] There are better and worse markets absolutely for any type of service. But guess how you can pay down that risk? Instead of being like, "Oh, I think I want to open up a location in, you know, La Habra." What I would do is I would run ads. So, I'd spend like $500 or $1,000 in five or 10 markets. And I would see where I got the lowest lead cost. Well, what do you do when people opt in and then you don't have a location? Do what 99% of business owners do anyways. Ignore the leads. You'll be okay. They'll just keep living their lives. So, you get to avoid signing a 5-year lease for a…
Full transcript available for MurmurCast members
Sign Up to AccessMore from Alex Hormozi
Why His Close Rate Won't Budge...
A business owner running a marketing and sales company struggles with a low close rate on sales calls, where prospects either can't afford the first payment or can't get financing approved. The advisor suggests the issue may be a lead qualification problem rather than a sales problem. Adding funnel qualifications is proposed as the key solution to improve profitability.
How I Define Culture In An Organisation
The speaker defines organizational culture as the spoken and unspoken rules that govern reinforcement — determining what gets rewarded, ignored, or punished. They outline two approaches to codifying culture: a comprehensive rule-based codification or a faster values-based approach using a few core statements. Values are described as 'chunked up rules' that, when unpacked, reveal underlying behaviors.
Your Competitor Is Cheaper”
The speaker addresses the objection that a competitor is cheaper by reframing the conversation around risk-adjusted return. Rather than focusing on price alone, they argue that a lower-cost option carries greater risk of failing to deliver results. The penny stock vs. Apple stock analogy is used to illustrate this point.
Profit Is Unnatural
A mentor described as a 70-something year old billionaire shared the counterintuitive idea that profit is unnatural. He argued that businesses naturally drift toward spending away their profits over time, and that maintaining profitability requires deliberate, ruthless expense control by a dedicated person.
My Founder Story
Alex Hormozi recounts his entrepreneurial journey from a consulting job to building a portfolio of companies generating over $250 million in aggregate annual revenue. He details his failures, pivots, and major exits, including selling Gym Launch and Prestige Labs for $46.2 million. The transcript serves as both a personal origin story and a pitch for his brand, acquisition.com.