Subscribe
Share
Share
Embed
Telling the stories of startup founders and creators and their unique journey. Each episode features actionable tips, practical advice and inspirational insight.
00:00:00:00 - 00:00:32:04
Welcome to the Founders Journey podcast. Inspiration education for Founders by Founders. Hey, I'm Greg Barron, multi Exit founder turned VC and host of the Founders Journey podcast. And today we're discussing something every founders needs to master or at least understand to help them make better decisions. And with so much riding on each decision, it's really essential to have mental frameworks to help us go through our day.
00:00:32:05 - 00:00:54:02
So in this episode, I'm going to introduce three mental models to help you make better decisions quickly and with greater confidence. So why your mental model is so important for founders? Every day you place complex, you're faced complex situations where you have to make quick decisions. Yet I can't even count the amount of decisions that most founders have to make in the day.
00:00:54:03 - 00:01:22:17
Myself included. But without a framework, it's so easy to get lost in the data and get overwhelmed by options. And that's the biggest enemy we face, right? It's the unlimited options that are available to us at any time. So founders who use mental models can really cut through the noise. They can really focus on what matters most, and they can really make more strategic decisions and more consistent decisions, which translate ultimately into better leadership.
00:01:22:17 - 00:01:48:17
Throughout our organization, people can understand how we make decisions and then really predict the way that we're going to go in leading the organization, which really helps everybody. So the first mental model, mental model I want to talk about is opportunity cost. Simply really what this means is that every decision you make has a cost. You may not think of it like that, but every time you make a decision, you're giving up something else, right?
00:01:48:23 - 00:02:14:15
So everything has a trade off and that choice that you're making, that decision that you're making, if you go this way means you can't go that way. So to apply this, you've always got to ask yourself what you're getting, but also what you're giving up with each option. Right. It's an important thing. That opportunity cost is something that as founders, we're very busy.
00:02:14:16 - 00:02:41:05
There's a lot going on at any given moment. We often don't think about what we're sacrificing as we make short term decisions that have really long term consequences. That's our opportunity cost that we really need to think about. So, for example, if you're deciding whether to focus on acquiring a new customer, doubling down on your existing ones, ask yourself not only what you gained by choosing one path, but what opportunities you're sacrificing.
00:02:41:05 - 00:03:01:17
So if you're really going to double down on new customer acquisition in this example, by choosing that you are giving up something and that your current customers may not get the attention that they would have ordered, you know, had you chosen that option. And maybe referrals, you know, you sacrifice referrals or you sacrifice customer satisfaction or things like that to get everything as a trade off.
00:03:01:17 - 00:03:17:23
I'm not saying one decision is better than the other, but you need to understand what those trade offs are. That's what opportunity cost is all about. By framing your decisions this way, what you're going to be able to do is prioritize much more effectively. So the second mental model I want to talk about is called inversion. This is an interesting one.
00:03:17:23 - 00:03:36:23
So instead of asking how to succeed, ask yourself what could cause you to fail and then avoid that thing right? This is a really interesting one. And you get a lot of mixed reactions because people view this sometimes as inherently negative. I don't see it that way at all. It's a form of backward thinking that's a really powerful tool.
00:03:36:23 - 00:03:56:12
So especially when you're really navigating really complex situation. So I'll give you an example. If you're planning to scale your company right, you're going to go from kind of early start up to more to more of a scaling stage. You're going to start to do, you know, you're going to start to hire and things like that. You want to ask yourself, what are the top three things that could cause us to fail?
00:03:56:15 - 00:04:17:14
And then if you identify and you address those risks early on, so it's a form of risk mitigation, you can increase your chances of success. This is not one of the criticisms I've heard of this before is like, well, it's kind of like playing to lose or not to lose. No, it's not like playing not to lose because you're deliberately thinking about what are the things that can derail us.
00:04:17:14 - 00:04:38:18
And by really putting those guardrails in place are really thinking about those things. It can keep things moving forward at a much faster pace. So the last one I want to talk about is the 8020 rule. But you may have heard of this also as the Parado principle. This is one that's been around a long time. And what this principle suggests is that 80% of your results come from 20% of your efforts.
00:04:38:20 - 00:05:03:09
You could even argue, as a startup founder may maybe even more extreme than that, but identifying the 20% of your actions that drive the majority of your success is really the key to focusing your energy on what really matters. So give you an example. If you notice that a small subset of your customers account for most of your revenue, that's your 20%, right?
00:05:03:15 - 00:05:29:14
Double down on serving those customers better. That's one way to think about it. You know, if 20% of the way that you're spending your day is actually leading to results and the rest is just leading to frustration or administrative work or things like that, delegate it. Again. These are all forms of the 8020 rule, the Pareto principle. So to wrap up, use these three mental models opportunity cost inversion 8020 rule.
00:05:29:16 - 00:05:55:05
They can help you make faster, more strategic decisions that are more consistent for your organization. So things move really fast in a startup. We all know that your ability to make decisions efficiently can be your greatest competitive advantage. So if you're looking for more tips on scaling your startup, follow me here. For more advice like set the notification, subscribe.
00:05:55:07 - 00:06:05:10
Leave comments. Leave questions. Look forward to continuing to help you build in the future.