Written by Conor McCarthy. PHOTO: Dan Freeman
First of all, what are mental models?
“Mental models are how we understand the world. Not only do they shape what we think and how we understand but they shape the connections and opportunities that we see. Mental models are how we simplify complexity, why we consider some things more relevant than others, and how we reason.
A mental model is simply a representation of how something works. We cannot keep all of the details of the world in our brains, so we use mental models to simplify the complex into understandable and organizable chunks.”
With that in mind, I have collected 10 mental models that will help you on your journey to your First 10 Customers. Some of these were things I noticed my guests touched on during The First 10 Podcast, others have clicked into place after I put 2 and 2 together. Each mental model links to further information should you wish to go deeper.
1. Initial Conditions
“What happens first, even something ostensibly trivial, can have a disproportionate effect.” Sometimes called the Butterfly Effect, this idea from Chaos Theory describes how small changes in the initial conditions (early on) in a process or a system can result in large differences at a later stage.
I put this mental model first because finding your First 10 Customers is a great example of initial conditions at play, and it works in a few ways. Early customers give invaluable feedback that can radically alter the direction and strategy of your product or service launch (think pivots). This change happens rapidly, and those small suggestions taken on board can be the difference between an idea that makes it and one that fizzles. After all, the customer is always right.
Another way it has an effect is that it changes how you see your customers. In having conversations with your ideal customers, you find out things that alter the way you see them, and the ways you can help them get where they need to go.
Those first customers, those first steps in building your business, aren’t like the other steps of building your business.
2. First Principles Thinking
It’s a smart idea to have a deep understanding of the fundamental principles in any discipline you spend quality time in.
One way to figure things out at a deeper level, and give yourself a “thinking edge” is to develop your First Principles Thinking about that field. With so much access to information available to us, building a strong foundation of knowledge is key to deep understanding and also to discern what’s worth knowing, from what’s not.
Elon Musk uses a tree analogy — “it is important to view knowledge as sort of a semantic tree — make sure you understand the fundamental principles, ie the trunk and big branches, before you get into the leaves/details or there is nothing for them to hang on to.”
Digging in and understanding the basic atomic structure of what you need to know about means you can build your understanding on strong foundations.
It’s a little meta, but applying the mental models such as those described in this post to your business idea is a way to gain valuable insights into understanding your First 10 Customers.
3. Inversion Principle
Instead of trying to do the right thing, just make sure you don’t do the wrong things.
The Inversion Principle is simple but feels counter-intuitive at first. Instead of thinking of ways to solve a problem, we instead ask how we could guarantee that the problem persists. Then we simply avoid those things.
So instead of asking “What do I need to do to make this customer conversation a success?”, instead ask “What might I say that would guarantee this conversation is a waste of time, for me and for them?”
Or, instead of asking “What can I do to find more customers in my target market?”, ask “How do I ensure I never find another customer?”
Avoiding poor decisions is easier than making the right decisions.
If you are going to build a business around a problem or pain a customer has you need to make sure the problem is real and not a “meh” problem.
Finding out how incentivized people are to solve their problems is a core task in a customer conversation. The problems your ideal customers will pay to solve is a much smaller percentage of the total problems they face. If you don’t fully understand and engage with your customers, you may find you’ve misunderstood their incentives.
How are we incentivizing our customers to work a) with us and b) on this problem? Is it a trust issue? Is it the difference between wants and needs?
Also worth considering are the incentives that lie unsaid within a customer conversation itself. While people want to help you with your new idea, they also don’t want to appear to be “mean” by giving you feedback they think doesn’t align positively with your idea. The Mom Test by Rob Fitzpatrick is the classic read on this topic and is a huge help in having conversations that result in highly useful information that will help you on the road to your First 10 Customers. The sub-model here is called “Social Desirability” whereby customers will say what they think is “socially acceptable,” and not what they really feel.
5. Pareto Principle
It’s one thing to follow your passion, and it’s another to start a business, where the most important factor for success when starting out is to create products that people actually want to buy.
Starting a business means going in with your eyes open. The majority of new businesses fail because neither the market nor the desired customers need their ideas. The reality of these odds can be summarised by the Pareto Principle, also called the 80/20 Principle. It asserts that “a minority, a small number, of causes, inputs or effort usually leads to a majority of the results, outputs or rewards, so most of the outputs result from a very small part of the causes or inputs.”
It might not be a clean 80/20 split, it might be 90/10 or 99/1, but the basic idea of imbalance holds.
So what does this mean for finding your first 10 Customers? It can mean:
- Only 1 in 10 (or even 100) customers will likely convert
- 20% of your offer will be LOVED by 80% of the people
- 80% of all sales effort is wasted, but that 20% success rate could lead to the next 80% of your business
- 20% of the people you meet will generate 80% of the value in your customer conversations
And lastly, when talking to customers, your listening to talking ratio should be at least 80/20.
Read: Forbes Article
“Am I keeping this as simple as possible for my customers?”
Of course, we want to let our customers know how amazing our product is, how many bells and whistles it has, and highlight all the things we think it can do for them. As much as we care about our idea, we need to care about the needs of our customers more.
Our customers just want their problem to be fixed, or at least eased. They want their lives to be better, and a simple Value Proposition is a way to say complex things with simple words, making sure first and foremost that people understand it. Would a 5-year-old “get” this? A great Value Proposition “should be made as simple as possible, but no simpler.”
7. Multiply by Zero
You have done the thinking work. You have come up with a brilliant idea, something you think is crucially missing from the world. You think you know a large group of people who would eat this up. You sit on the idea, pondering its many facets, adding to an ever-growing research document that seems, with every line and diagram, to prove the validity of this idea.
But you never ship. So it doesn’t count.
Not shipping is an example of multiplying by zero. All that time and energy, all those insights and potential customer-pain-relief, all is worthless unless you get your idea out the door and work on it there.
Another place that your idea might suffer from this maths issue, is failing to identify and deal with your greatest assumption.
For instance, are you assuming that the people whose problem you are addressing regard this problem as worthy enough to spend their money on? Or is it a “meh” problem to them at the end of the day, something they can live without? Or maybe the market for your idea is so small it could never sustain your business. If you fail to address your biggest assumptions, you run the risk of multiplying your work by zero.
Find the places in your business where you are potentially multiplying by zero, and take care of them.
8. Confirmation Bias
A vital question to ask yourself when you are considering your ideal customers is “Am I hoping this person exists in the world? Or do they really exist?”
Life is a lot easier when we only pay attention to information that confirms our existing beliefs. We don’t have to deal with things that throw our carefully laid plans off track, things that don’t fit with our current idea of what our customer’s worldview is. We might even be proved that we are wrong, which, when we are starting out on the path to our First 10 Customers, is one of the most vital pieces of information we can obtain.
According to Farnam Street, “What a man wishes, he also believes. Similarly, what we believe is what we choose to see. This is commonly referred to as confirmation bias. It is a deeply ingrained mental habit, both energy-conserving and comfortable, to look for confirmations of long-held wisdom rather than violations. Yet the scientific process — including hypothesis generation, blind testing when needed, and objective statistical rigor — is designed to root out precisely the opposite, which is why it works so well when followed.”
9. Selection Bias
I also call this one the “Adwords Allure Bias”.
If you’re going fishing, go where the fish are. Trying to sell a course on Bitcoin? Investigate who has bought similar courses. Looking for crowdfunding? Find people who know what that is and have already funded another project. Trying to promote your podcast? Try and be a guest on podcasts that your audience already listens to. Basically, if you’re looking to “sell” X, identify the people that have self-selected for X already.
Otherwise, you might fall into the trap of trying to target everyone, with the help of simple-but-expensive Google and Facebook Ads.
As much as possible, only talk to customers who represent your target market.
Read: Tom Chanter on Medium
10. Discomfort Razor
I stole this one from George Mack, and as he describes it:
- The more uncomfortable the activity, the more likely it will lead to growth.
- The more comfortable the activity, the more likely it will lead to stagnation. 1000 uncomfortable hours > 10,000 comfortable hours
In the early days, it can take courage to send that email, publish that blog post, pick up that phone, make that ask. But that’s the only way we will find our early customers and build the business we want. Steve Blank would tell us to “get out of the building”, and if that induces an awkward feeling in you as you read these words, that might be where you need to go.
In coach Jerzy Gregorek’s fine phrase “Hard Choices, Easy Life, Easy Choices, Hard Life”
Of course, there are a ton of mental models that apply to getting your First 10 Customers, and I’ll cover those in future posts.
Also, check out some of the top takeaways from the first season of The First 10 Podcast, or subscribe to the podcast for more new episodes every week or so. Even better, you can get a short video and a checklist that will help you on your way here. If you like all that and want even more, have a look at some ways we can work together. And if you really, really want to throw yourself into the deep end, I host a regular First 10 Bootcamp Session. The goal of the Bootcamp is to help you find your First 10 Customers, using a process I’ve refined over the last 4 years. Details are here.
About the author
Conor McCarthy – Host of The First 10 Podcast, Coach at Seth Godin’s altMBA, Small Business Essentials Workshop, Story Skills Workshop, Bootstrappers Workshop, Marketing Seminar, Freelancers Workshop. Compound Coach.
If you are interested in sharing other mental models, submit an article to become a guest author.