The Size of The Pie Fallacy Ep 239

In this episode, the host outlines the "size of the pie fallacy," emphasizing that business owners often underestimate the market's vastness and overreact to competitors. By sharing personal experiences from his gym business and Gym Launch, he illustrates the mistake of focusing too much on competitors instead of capitalizing on the larger, mostly untapped market. He stresses that many businesses vie for attention within the same local radius on platforms like Facebook, yet there are numerous untapped channels for customer acquisition. The key takeaway is to concentrate on delivering value to customers, diversifying acquisition strategies, and not being distracted by what competitors are doing, as the market is significantly larger than one's immediate perception.

• The podcast focuses on strategies for acquiring customers, increasing customer value, and customer retention.
• It also covers lessons learned from past failures.
• The host introduces the podcast as a valuable resource for listeners.

Speaker B: 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.

The quote outlines the main topics that the podcast will cover, setting the stage for what listeners can expect to learn.

• Speaker A introduces the concept of the "size of the pie fallacy."
• The fallacy is the underestimation of the market size and overestimation of competition.
• It's based on the limited perspective from small, familiar communities, such as Facebook groups.
• This narrow view skews the perception of market saturation and competition.

Speaker A: And I've written about this, and I call it the size of the pie fallacy. And what the fallacy kind of states is that the size of the pie for most people is not just twice as big or five times as big, but probably a hundred to a thousand times as big as you actually think it is.

The quote introduces the concept of the "size of the pie fallacy" and emphasizes how people often greatly underestimate the true size of their market.

• Speaker A discusses the misconception of market awareness and competition.
• Personal experiences at the gym and with Gym Launch illustrate the fallacy.
• The realization that the market is unaware of both one's own business and competitors.
• The limited scope of information sources shapes this skewed market perception.

Speaker A: But the reality was that most people didn't know I existed, and most people didn't know they existed, right?

This quote highlights the key realization that both the speaker's business and the competitors are not as widely known in the market as previously thought.

• Speaker A points out the competition in local markets, specifically on Facebook.
• The statement suggests a high level of competition for customer attention within a small geographic area.

Speaker A: Even in a local marketplace. Do you know how many businesses are advertising on Facebook for the same seven mile radius?

The quote raises a rhetorical question about the number of businesses competing for customers in a local area, implying that it is greater than one might expect.

• The speaker reflects on the misconception of overestimating competition and underestimating the market size.
• They realized the market was much larger than their immediate network on Facebook.
• Initially attempted to model a competitor's strategy, but it did not yield the same success.
• Discovered the competitor was earning less despite the speaker's concerns.
• The focus on competition detracted from serving their existing customers.

"And because the size of the pie is so much bigger than just the two groups of people that I know on Facebook that exist, right?" This quote emphasizes the speaker's realization that the market is vast and extends beyond their immediate social network, suggesting that there is ample opportunity for multiple players.

"I had built up this fictitious thing in my mind that was eating and occupying all of my thoughts." The speaker acknowledges that their preoccupation with a competitor was based on a false narrative that consumed their attention unnecessarily.

"And so that was when I had my gyms, right?" This quote indicates that the speaker's experience with overestimating competition took place during the time they owned gyms, providing context for the anecdote.

• The speaker experienced a negative impact by reacting to competition rather than focusing on their business.
• Observed a pattern where new competitors would emerge and then disappear from the market.
• Reactive behavior led to confusion among customers and a lack of consistent direction.
• The speaker learned that many potential competitors are not known to the wider marketplace.

"New guru pops up like he's got something hot and sexy, right? And then what do you know? 16 weeks later, he's gone, right?" This quote illustrates the transient nature of competitors who may seem significant at first but quickly fade away.

"You end up being really reactive. Your customers get confused. And ultimately, the real, real is that the marketplace doesn't even know that either of you exist, right?" The speaker points out that a reactive stance can lead to customer confusion and that often neither the business nor its competitors are as well-known in the market as they might assume.

• The speaker found out about a competitor who was successful without being widely known or using traditional advertising.
• This company focused on outbound sales rather than running ads.
• Despite the speaker not being aware of them, the company achieved significant revenue.

"I just recently found out that there's a company that I have just barely heard of, okay? And they sell a software product that kind of does, like, some sort of fitness stuff for gyms, all right?" The quote reveals that the speaker discovered a competitor operating under the radar, suggesting that success in the market does not always correlate with visibility.

"And they don't run any ads whatsoever. And they have a massive outbound sales team, right? Cold calling, cold email. That's it. And these guys are doing 10 million a month." This quote provides specific details about the competitor's business model, highlighting that they achieve significant revenue without relying on advertising, which contrasts with common marketing strategies.

• The speaker reflects on the realization that there are businesses significantly larger than theirs that they were unaware of.
• It's important to recognize the vastness of the market and the presence of numerous competitors within a local radius.
• A variety of businesses, from hairstylists to car sales, are competing in the same space.
• The speaker emphasizes that the presence of one more competitor is unlikely to drastically affect one's business due to the large size of the market.

"And yet they are bigger than we are. They are three times our size, right?"

This quote highlights the speaker's surprise at discovering a competitor significantly larger than their own business, which serves as a reminder of the market's extensive size.

"Do you know how many businesses are advertising on Facebook for the same seven mile radius?"

The speaker is questioning the audience's awareness of the number of competitors advertising within a local area, illustrating the density of businesses in a given market.

• The speaker lists various marketing channels that businesses can utilize, including Yelp, Google, and email marketing.
• There's an emphasis on the narrow perspective that businesses often have, focusing solely on one marketing channel.
• The speaker encourages businesses to broaden their marketing approach and consider multiple channels.

"There's Yelp, there's Google, there's Google display networks, there's organic, there's email marketing, there's outreach, there's cold calling."

This quote enumerates different marketing avenues available to businesses, indicating the vast array of options beyond what they may currently be using.

"Us and a hundred other businesses are just splitting this one slice of Facebook and there's all of these other slices that exist."

The speaker metaphorically describes the competition on Facebook as a single slice of a much larger pie, suggesting that businesses are overlooking other valuable marketing channels.

• The speaker advises businesses to focus on delivering value to their customers and gradually adding more marketing channels.
• There is a call to action for business owners who are interested in growing their businesses to reach out for a conversation.

"How can I over deliver my customers? And then how can I add channels over time?"

This quote suggests a two-step strategy for business growth: enhancing customer value and expanding marketing channels.

"If you are a business owner that has a big old business and wants to get to a much bigger business, going to 5100 million dollars plus, we would love to talk to you."

The speaker invites large business owners aiming for significant growth to engage in a conversation, indicating their interest in assisting with such expansion.

• The speaker shares an anecdote that serves as a reminder of the vastness of the marketplace.
• Emphasizes the importance of focusing on one's own business and improving the value provided to customers.
• Highlights that awareness of competitors is less important than concentrating on delivering quality service and maintaining a sustainable business model.
• Suggests that becoming less reactive to competitors' actions can be beneficial.
• Encourages the audience to concentrate on variables within their control and to not be distracted by external noise.

"And for me, it was just yet another humbling example of hearing that this guy was doing 10 million a month in my space and I even heard of him."

This quote illustrates the speaker's realization of the sheer scale of the marketplace and the existence of significant players they were previously unaware of. It underscores the theme of humility in business.

"Because at the end of the day, all that matters is the value that you're providing in the marketplace, the values you're providing the customers, and the mousetrap that you've devised for monetizing and providing value."

The speaker is emphasizing the core principle of business success: providing value to customers and effectively monetizing that value. This is highlighted as the most critical aspect to focus on, rather than competitors.

"I've seen so many people take direct shots at us and then disappear within nine months."

This quote suggests that the speaker has witnessed competitors attempting to challenge their business only to fail and exit the market. It serves to reinforce the point that focusing on one's own business strategy is more important than reacting to competitors.

"Just remember that basically no one knows you exist. Even when you think everyone does, no one does."

This quote is a stark reminder to maintain perspective on one's visibility and significance in the broader market. It implies that most businesses are not as widely recognized as they might believe, which can be a humbling realization.

• The speaker advises to concentrate on aspects of the business that one can control and be accountable for.
• Stresses the importance of running a good business and excelling in one's specific domain.
• Suggests that an internal focus can lead to mastery and success without the need for external validation or comparison.
• Encourages the audience to ignore distractions and to remember the insignificance of their concerns in the larger scheme of things.

"And I think that if we can translate that over, then we own the things that we can control and that are accountable for."

This quote is about taking ownership of the elements of the business that one can directly influence and for which one is responsible. It is about internal focus and accountability.

"Don't worry about what your trainers are saying. Don't worry about the guy across the street."

The speaker is advising the audience not to be concerned with the opinions or actions of others, including competitors and possibly even internal team members, but rather to stay focused on their own business goals and performance.

"There's another guy who's 20 times bigger than you who also that you don't even know exists, who's in the same marketplace as you."

This quote serves as a reality check that there are always bigger players in the market, many of whom one may be unaware of. It reinforces the theme of maintaining focus on one's own business rather than getting caught up in comparing oneself to others.

• The speaker concludes with a positive message, wishing the audience well and encouraging them to stay confident and motivated.
• Reiterates the call to action to keep improving and to not be distracted by others in the industry.
• Uses the metaphor of a "tiny little fishbowl" to remind the audience of the broader opportunities that exist outside of their immediate environment.

"So anyways, keep being awesome and I'll catch you guys soon."

This quote is an informal sign-off that serves to uplift and motivate the audience, encouraging them to continue working hard and to maintain their positive trajectory in business.

"And don't think about anybody else. Don't worry about anyone else."

The speaker is reinforcing the message to avoid distractions and to focus solely on one's own actions and business strategy, rather than concerning oneself with the actions or successes of others.