Scarcity Is a Lousy Strategist

It's fast, it's confident, it sounds exactly like analysis… and it has never once been right about how much was out there.

A business owner emailed me this week asking whether he should skip a local event, and buried in the middle of the message was a sentence he clearly thought was a fact.

"Our area is saturated."

He'd counted seven or eight direct competitors inside a five mile radius. (He runs a martial arts school, but swap in any local service business and the email reads exactly the same.) Other vendors from his industry were already signed up for the event. He wanted to know if it was worth showing up.

Here's what I keep coming back to. This is a guy who audits his payroll to the dollar. He knows his lease terms, his close rate, his cost per lead. He would never accept "our costs are up" from a bookkeeper without a number attached to it.

He accepted "our area is saturated" from himself with no number at all.

YOU AUDIT EVERYTHING EXCEPT THIS

Look at the asymmetry, because it's running your calendar right now.

Somebody brings you an opportunity and you get rigorous. What's the CAC? What's the payback period? Who else tried this and how did it go? Show me the numbers. You've built a whole apparatus for pressure-testing a claim that might cost you money.

Your own head brings you a threat and the apparatus takes the afternoon off.

"The market's crowded." "That channel's played out." "Everybody already has a provider." "That's not our demographic." These show up with the confidence of a P&L and about as much evidence as a fortune cookie, and you file them under strategy.

They're not strategy. They're threat detection, and there's a real mechanism under there.

Richard Lazarus and Susan Folkman described appraisal as two steps. First you decide whether something matters to you. Then you decide whether you can handle it. Jim Blascovich and Wendy Berry Mendes made that second step measurable: judge your resources as roughly equal to the demand and your body produces a challenge state. Judge the demand as bigger and you get a threat state.

Same market. Same competitors. Two different bodies walking into that room… and two completely different decisions coming back out.

Now here's the part you can use. These aren't personality traits. Research reviewing the model under real pressure calls challenge and threat "not fixed and dichotomous, but rather malleable states" on a continuum, and challenge beat threat on performance in surgery, athletic seasons, flight simulation, and negotiations.

Malleable means you can move it. On purpose. Before the meeting starts.

RUN THE NUMBER. IT TAKES AN AFTERNOON.

Saturation is a testable claim. That's exactly why it deserves better than a feeling.

The golden rule is: saturated means the people who want the thing already have it. That's the whole definition, and it's arithmetic, not atmosphere.

Run it on my industry first, since I'm the one making the argument. The Sports and Fitness Industry Association surveys 18,000 Americans a year. In 2023, 6.61 million Americans age six and up did martial arts at all, and that's counting the casual ones. US population age six and up that year was about 314 million.

That's 2.1 percent. Count only the committed students, the ones training thirteen or more times a year, and it drops to one percent.

Ninety-eight out of a hundred people near that owner train nowhere. Not with him. Not with the seven guys keeping him up at night.

Now do your version, because the arithmetic doesn't care what you sell.

Agency or consultancy. Count the companies in your niche and your geography that actually fit your ICP. Then count how many are paying anyone right now for what you do. In most professional service categories that second number is a small piece of the first, and a good chunk of the ones who have somebody aren't happy about it. Your competitor's client list isn't a wall. It's a warm list with a switching cost.

Private practice. More than one in five American adults, 23.1 percent or 59.3 million people, live with a mental illness in a given year, and roughly half of them get no treatment at all. A town with a dozen therapists isn't a town where everybody who needs one has one. It's a town where the unmet need is big enough that twelve practices haven't dented it.

Financial advisory. Count households in your area above your minimum. Then count how many have a real advisory relationship instead of a 401(k) they haven't logged into since the pandemic. "Everybody already has somebody" might be the most repeated untested sentence in that entire industry.

SaaS or a new product. "Someone's already doing this" is not a market-size finding. It's a category-exists finding, and those are opposite signals! The real question is what share of your addressable market uses any solution at all, including a spreadsheet and a prayer.

Every one of those is a number. You can have it before lunch.

Almost nobody gets it, and it isn't laziness. It's that the feeling already handed down a verdict, and going to check feels like arguing with something you already know.

I TALKED MYSELF OUT OF A MARATHON

I've done this. Not as a thought experiment.

I've talked myself out of marketing for reasons like this. For example, I had an opportunity to do a local marathon and I figured "that's not my demographic. Who's going to bring their kids to a marathon and marathon people already have a fitness activity… none of those guys will want to come!" And guess what, the news story that covered it wasn't the runners but it was about the "Kids Zone" that was overflowing with families and kids. Not the first time I let "logic" make a decision. Every time, I was wrong about what would've happened.

Look, I am not saying if you try some marketing activity and test it out, and if you try to fix it, and if you get help on how to make it better… and it still doesn't work? Learn the lesson and ditch it! But often either we give up too early or we come up with "reasons" why it won't work and don't do it in the first place.

That's the whole problem with this particular mistake. Every year I sat out taught me nothing at all. One year I showed up and got results.

The second one costs more, and it never shows up on a single report you look at.

YOUR COMPETITORS PAID A BILL FOR YOU

There's a reason a crowded market feels crowded, and it isn't exhaustion.

Businesses that need a customer to walk in and look around cluster on purpose. The eighth one doesn't open in a dead market.

When Chung and Kalnins tested this on the Texas lodging industry, they found that when buyers have to personally inspect what they're buying, "sellers can reduce consumers' search costs by spatially concentrating," which raises the odds of a visit and a sale versus sitting off by yourself.

The next finding is the one that should stop you cold. Independents and smaller operators gained the most from the crowding. Small hotels' revenue went UP when they were surrounded by bigger ones. The authors point out this means the usual panic about the category killer moving in is mostly misplaced.

Broader work on clustering finds businesses near an anchor firm run 15 to 18 percent higher employment in that anchor's industry. Density tracks with more activity, not less.

Put that back on the owner in the email. Seven competitors spent seven marketing budgets teaching every family in that town that this is a normal thing to sign a kid up for. He got that education for free, and he's treating it like a bill.

WHAT YOU'RE ACTUALLY SAYING

The claims in that email weren't exotic. Aaron Beck catalogued this family of thinking errors back in 1963, and his main finding was about direction: the thought lands first, and the feeling comes downstream of it. David Burns later expanded the list into the ten most people have heard of.

Here's what those sentences actually mean, translated.

"Our area is saturated" = I have a feeling about my market and I've never once put a number on it.

"They'll get the good prospects" = I'm predicting the future and calling it data.

"Customers want the thing we don't offer" = I'm reading the minds of hundreds of people who haven't thought about this category yet this year.

"We can't compete on that" = I made a list of what I don't have and never made the second list.

"It's not worth showing up" = I'm grading pass/fail on something that's actually scored in conversations.

Not one of those is analysis. Every one is a prediction wearing the costume of a finding.

THE DECISION THAT TEACHES YOU NOTHING

This is the least obvious idea in the whole essay, and it's the one I'd put on a wall.

Not showing up isn't neutral. It's the actively worse option, and the reason is mechanical.

Paul Salkovskis showed that safety-seeking behavior, which includes deciding in advance not to go, blocks the correction. Protect yourself from a feared outcome and you never collect the evidence that it wasn't coming. His words: by preventing disconfirmation of threat-related thoughts, safety behavior is "a crucial factor in the maintenance" of the anxiety itself. Later work on inhibitory learning gives you the mechanism: safety behavior shrinks the gap between what you predicted and what actually happened, and that gap is the only place learning lives.

Read that as a business statement. It is one.

Every channel you didn't test. Every event you skipped. Every market you wrote off in a meeting. None of them produced information. They produced a year of quiet, and your brain filed the quiet as proof.

The belief comes back next year with more confidence and better grammar. It's undefeated because it never took the field.

Saturation manufactures its own evidence, too. Believe it, and you stop marketing, stop showing up, and start discounting. Do that for two years and you'll have all the proof anybody could ask for.

TWO MOVES, TEN MINUTES, ONE NUMBER

I'm a licensed psychotherapist, and the tools that fix this are the clinical ones, unmodified. They work on a market assumption exactly the way they work on anything else, because the machinery underneath is identical.

(Business coaching here, not psychotherapy. If you're carrying something heavier than a marketing decision, that's a conversation for a clinician, not a Substack.)

Move one takes ten minutes at your desk. Christine Padesky's seven-column thought record was the first one to put evidence columns next to a balanced-thought column, and it anchors the sequence in Mind Over Mood: name the automatic thought, ask where the evidence is, build the alternative.

Run it on the real sentence, not a polite version of it.

Automatic thought: our market is saturated, we'll get buried. Evidence for: competitors exist. Evidence against: you've never measured one of them, you have no idea what their pipeline produces, you have no data showing a prior attempt failed because of them, and 98 percent of your addressable market buys from nobody. Balanced thought: my result here depends on how I execute.

Move two does the actual work. James Bennett-Levy compared the two head to head and found that thought records work the logical system while behavioral experiments hit the emotional one. Practitioners rated the experiments "more powerful and compelling" for producing real belief change.

The thing you're avoiding IS the experiment. Set it up like one.

DON'T do this: go in with a vague hope, work the room, come home, and decide afterward whether it "felt worth it." That's how you collect a feeling and call it a result.

DO this: write the prediction down with a number in it before you leave. "Because the market is saturated, I'll book fewer than three real conversations." Then go, execute properly, and count.

Now you own data instead of a forecast. And the forecast has never once survived the count.

None of this is soft, by the way. A meta-analysis of 36 experimental studies covering 2,847 participants found a medium-to-large effect for workplace interventions, with cognitive-behavioral programs beating every other type. A World Bank randomized trial ran five weeks of it with SME owners, not students and not patients, and the gains kept growing at the three-month follow-up.

One more finding out of that meta-analysis, and it's the opposite of what you'd guess: adding more components made the results WORSE. Simpler beat elaborate.

WE BOTH SAID "SCHOOLS"

When that owner wrote "seven or eight schools in five miles," he meant seven or eight competitors.

When I read the word "schools," I pictured buildings full of kids.

Same word. Two completely different maps of the same town, and whichever map is in your hand decides where your next dollar goes. His map had eight pins and every pin was a problem. Mine had the elementary schools, the middle schools, the preschools, the daycares, the after-school programs, and every PTO with a fall fundraiser and a chair who needs a vendor. North of forty doors. Eight of them had a competitor behind them.

Nobody was knocking on the other thirty-two.

That's the reframe, and it isn't a motivational one. It's a filing error with a price tag on it. Scarcity counts rivals because rivals are visible and countable and they produce a feeling. Opportunity has to be counted on purpose, because nothing about it is loud.

The market you think you're in is a rendering. You built it out of the things that scared you, and you have never once opened the file to check.

Go get the number. It takes an afternoon, it costs you nothing, and it's the cheapest strategic work available to you this quarter. Whatever it comes back with, you'll be deciding on evidence instead of adrenaline.

If you're sitting on a market you've already written off, or a channel you keep deciding not to test, that's the conversation I want to have. Book a strategy call and bring the number you're most afraid to look at.

Dr. Greg Moody