The Market Selection Check
Choose buyers with urgent pain, market tailwinds, and money to act.
- Difficulty
- Easy
- Time to result
- ~days to results
- Steps
- 5
- Confidence
- 94%
The Market Selection Check tests whether hard work is aimed at a commercially favorable audience. First, verify that customers are already in pain and actively want the problem solved. Second, prefer a growing market, where demand supplies a tailwind, over a shrinking one that can erase market-share gains. Third, confirm spending power: a painful problem among buyers who cannot pay remains difficult to monetize. Finally, relate price to the value created in the customer's world. Identical conversion work is worth much more to a $100 million company than to a $1 million company because the same percentage improvement creates far more money. Market quality comes before offer optimization because strong demand can sell an ordinary offer, while structural decline can defeat an excellent one.
Origin
Hormozi presents the check from his book and illustrates it with resume coaching, enterprise software, conversion optimization, newspapers, and a hotdog stand facing a starving crowd.
Core principles
- 01Existing pain creates demand for a solution.
- 02A growing market supplies a tailwind for the same amount of work.
- 03Customers need spending power for value creation to become revenue.
- 04The customer's economics constrain what the same work can earn.
- 05A strong market cannot excuse a weak product over the long term.
How to run it
- 1
Verify painful demand
Identify the concrete problem customers already want solved. Stronger pain generally supports stronger urgency and willingness to pay.
Pro tip Look for current attempts to solve the problem rather than relying only on stated interest.
Watch out Do not manufacture demand for a problem the market does not feel.
- 2
Check the market direction
Determine whether the number of buyers and total demand are growing or shrinking. Favor tailwinds when the work required is otherwise similar.
Pro tip Compare market growth with the rate at which you could realistically gain share.
Watch out Gaining share in rapid decline can still produce a shrinking business.
- 3
Confirm spending power
Verify that the customer can afford a solution and controls money for this problem. Consider adjacent versions of the customer with stronger economics.
Pro tip Distinguish helping unemployed people get a job from helping employed executives get a better job.
Watch out Pain and growth do not compensate for an audience that cannot buy.
- 4
Anchor to customer value
Estimate the outcome's value inside the customer's business or life. Use that value to assess whether the market can sustain attractive pricing.
Pro tip Compare identical work across small and large customers to expose the market-value lever.
Watch out Do not charge against theoretical value you cannot credibly create.
- 5
Choose the strongest crowd
Compare candidate markets across pain, direction, spending power, and value creation. Select the audience where these conditions reinforce one another.
Pro tip Treat strong demand as an advantage, then earn repeat business with a strong product.
Watch out A starving crowd may buy once, but poor delivery prevents compounding growth.
In the wild
A resume coach targeted unemployed people and discovered that the audience was broke. Hormozi contrasts that market with corporate executives seeking better jobs, who experience a related problem but have much stronger spending power.
→ A small shift in the customer served materially changes monetization potential.
A business used a strong revenue-share offer and gained newspaper-market share, but the market was shrinking at a compounding rate of 25% per year. Execution could not overcome the disappearing demand base.
→ The company could gain share without growing the business.
A hotdog seller positioned outside a bar at 2 a.m. or near a stadium crowd can sell out without winning on sauce, price, or product features. Concentrated demand becomes the decisive strategic advantage.
→ Market demand outperforms incremental offer optimization for the first sale.
Common mistakes
Serving pain without spending power
A real problem does not make a viable market when the chosen customers cannot afford the solution.
Ignoring structural decline
Excellent execution and market-share gains may not overcome a market contracting faster than the business grows.
Pricing from your own effort
The same work can create radically different value depending on the customer's scale and economics.
Is it for you?
Best for
Founders and service providers choosing among markets before building or repositioning an offer.
Not ideal for
Operators already committed to a market who have no practical ability to change the customer served.
From the transcript
“the first thing is you wanna make sure that the people actually want what you have”
“you want the marketplace to be growing rather than shrinking”
“The third one is you want them to have the spending power”
From the episode
Alex Hormozi: The Value Equation, How To Make Offers So Good People Feel Stupid Saying No
Alex Hormozi