The Habits of Successful People: Thinking in Ratios

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This is the fourth article in our new series with advice on building a business, company culture and life-hacking from Joel, CEO here at Buffer. You can grab all posts here.

Something I’ve found difficult to completely embrace, but which understanding has been super important, is the idea that there is a ratio for everything. I’ve started to call this Ratio Thinking, and I’ve found myself describing this to quite a number of people recently.

The law of averages

I think we all understand that we might not get a 100% success rate on everything we do. In fact, in most cases it is far lower. For myself, I think I have struggled to fully comprehend this.

I’ve heard the idea of a ratio for success many times. I think perhaps the best description I’ve come across what Jim Rohn describes as the “law of averages”:

If you do something often enough, you’ll get a ratio of results. Anyone can create this ratio.

Once I fully understood this, it made everything much easier. As soon as I accepted that the whole world works in ratios, that’s when it became easier. Knowing that success happens in ratios allowed me to go ahead and send that email, without worrying about not getting a response, about ‘failing’.

Here are a few examples where I think ratio thinking can help you as a startup founder:

Ratio thinking in marketing

Arguably some of our biggest success with Buffer has been the content marketing we did in the early days and are once again pushing hard recently. In fact, we are currently hiring our first content writer beyond my co-founder Leo, and plan to grow out a full team for our blogging efforts.

I can remember very well many of the conversations I had with Leo. What he did so well was to quickly realize the law of averages and know that to get a single reply, a large number of emails must be sent to bloggers for a potential guest post. This knowledge meant he rarely felt bad if he didn’t get a response. Instead he knew it’s just the way it works.

What is perhaps even more powerful than just knowing about ratio thinking, is that Leo used this knowledge to his advantage. If he wanted to get a single guest article published, he would sit down and send 5 emails. We had around a 20% success rate based on the emails Leo sent.

Once you’ve established the success rate, for example 20%, you can keep working and eventually the ratio will improve. Maybe you’ll eventually get 3/10 instead of 2. Once that happened, Leo was smart and moved on to bigger blogs and pulled that ratio back down to 20%. This technique led us to our first 100,000 users.

Ratio thinking in fundraising

When we finished AngelPad, we started trying to get meetings with and pitching investors. The law of averages really comes into play with raising investment, too.

Overall, we probably attempted to get in contact with somewhere around 200 investors. Of those, we perhaps had meetings with about 50. In the end, we closed a $450k seed round from 18 investors.

Perhaps the most important part of our success in closing that round was that Leo and I would sit down in coffee shops together and encourage each other to keep pushing forward, to send that next email asking for an intro or a meeting. In many ways, the law of averages is the perfect argument that persistence is a crucial trait of a founder.

Ratio thinking in hiring

The most recent area where I’ve found ratio thinking to be useful is hiring. It can take a large number of applicants to find the right person, someone who has the right skills and is also a great culture-fit.

There are so many factors at play here – so of course there won’t be a 100% success rate. Once you accept that, it can make your life a whole lot easier. That was the case for me – I conceded to the fact that I will need to work hard to publicize our positions, and then only a small fraction of the applications would make sense to follow up for interview.

And the ratio thinking applies in the same way for the hiring process as well as once somebody is on board. This stuff is hard, but once again it is simply how it works – the sooner you accept it, the sooner you can thrive.

Have you encountered the law of averages while working on your startup? I’d love to hear about where you’ve found ratio thinking useful.

Photo credit: Peter Renshaw

 

  • http://solutionzmedia.blogspot.com/ chickefitz

    Joel, this is so true. You should read Go for No by Richard Fenton and Andrea Waltz. It describes this premise to a T.

    If you want the cliff notes version, I interviewed them on my radio show back in 2003. Best to download this episode and fast forward to the 30 minute mark, as it is a 2 hour show and they were the second guest.

    http://www.blogtalkradio.com/solutionzlive/2009/03/03/real-solutionz-for-real-life-business-edition

  • http://tembrooke.net/ Cheryl

    That’s a very healthy way to think about things! I’ve been handling the Twitter stream for a client/friend’s business (which is how I started using Buffer), and at first, I would be disappointed that many of the tweets I sent out didn’t get any interaction (favorites, retweets, clicks). Now I’ve accepted that not every tweet will get a response, and that’s okay — it doesn’t mean I did anything wrong. And changing my expectations makes it all the more exciting when a tweet does get a big response.

  • SFMH57

    A 20% success rate based on emails is extraordinary! Congrats to you now and then! And all the best for 2014. However, the eternal issue for many of us is that we have exacting and unforgiving supervisors for whom 80% is not good enough. They rule with fear and threats, and they don’t care to discuss how difficult this work can be or that we all need TIME to get great things done. Still, this is good info to internalize and carry forward into the new year.

  • Zen-Girl

    I absolutely love this concept, not because it’s far-reaching or a novelty, but because it’s true and actually very simple. Ratios exist in the whole existence of the universe, think Golden Ratio, the Fibonacci ratio, Pi, in design, art, mathematics, etc.
    And also, it resonates with the I Ching way of thinking, that if you persevere on a path, you are bound to experience success along the way. Great of you to boradcast these kind of concepts!

  • http://www.atelieradvisors.com/ Lili Balfour

    Great stuff! Love this => persistence is a crucial trait of a founder.

  • Heather YamadaHosley

    Hey Joel! I agree, the Law of Ratios can be applied to many ventures in life. Did I miss something though? I thought Belle was a content writer for Buffer, but you mentioned you’re in the process of hiring the first content writer besides Leo.

    Anyways, I think Leo’s strategy of focusing on bigger blogs is smart! Thanks for this great post, looking forward to the rest of the series! :)

  • gogiddem

    Great post. I think a lot of it boils down to persistence or—as I like to call it—grit.

  • http://www.manyship.com/ Prasad Kopanati

    Great article. Very encouraging for someone like me who is just starting the journey. Push, push and push some more.

  • Pascal

    In general, I agree with the concept of “law of averages”

    When it comes to people and education level, do it make sense to say that the more degrees you possess, the better it is for your job prospect? (variant: the more education, means the more educated you are?)

    Another angle where a lot of people disagree,
    Job applications. The more you send, the better it is?

  • Florentina Schinteie

    Understanding the ratio thinking might be the “treatment” against procrastination..although I experimented this in numerous situations in my life, I still procrastinate especially when what I do could be judged by others..going forward and not getting stuck in “I need this to be perfect” mentality and just do it so often until reaching success, is the key to getting anything we want in life.

  • Jill Keogh

    During the Blackhawks v. Kings game last night, Stan Bowman (Hawks) was credited with the analysis if the penalty kill ratio and the power play ratio add up to at least 100%, then the team is on track. E.g., penalty kill 75.3% and power play 25.4% …75.3 + 25.4 = 100.7. Only 16 NHL teams are on track with their special teams by this ratio.

    To this article’s point…ratios are the way to analyze productivity and other business goals

  • http://glassduffle.com/ Eric White

    Does using ratio thinking when approaching girls count? HA, just kidding. This is comparable to batting averages. No one is ever going to have a batting average of 1.000. More likely to be around .200-.300, and that’s NOT BAD!

  • Jared Odulio

    Law of Averages…First I heard this way back 1994 with the Wholesale Warehousing Industries; “The more people you talk to, the more money you make”

  • Amita Patel

    Thanks for sharing! You’re absolutely right, success isn’t “all or nothing.” I see this in my life and with my clients. Our perception creates our reality, so looking at things in terms of growing our average makes each success a foundation to build upon. Thanks for the post! P.S. I’ve recently started using Buffer and I’m a huge fan!
    All the best,
    Amita Patel
    http://www.AlignedHolistics.com

  • Clay Schott

    Joel, here’s a standard but useful textbook that describes a number of very useful ratios for all types of businesses: Business Ratios and Formulas (Wiley, 2012) written by Steven Bragg.

    http://amzn.com/1118169964/

    The knowledge presented within makes “ratio thinking” concrete and actionable in several important business contexts.

  • Robert McCall

    That´s a great article Joel – v sound advice. I did this when I was selling real estate – I said to myself – 10 doorknocks equals one lead. It really does work.Now, I am trying to do the same for my art and design business – I´m giving myself one year to generate income, working 12 hour days – half and half (painting and marketing) and just made my first sale so I think I have the ratio squared away, Now I will work on honing my skills. I will share this article with my network – now!.Oh – and if anyone reading this wants real cool pillows – come and visit – shameless plug :-)

  • Reaven

    Just painfully obvious. Your previous articles are more thought provoking.

  • Really?

    So tired of age old wisdom re-packaged in blogs and socialese………please stop it. The power of thinking in ratios???? Please, there’s just no need; the article could have read “Successful people know how much coverage (activity, pipeline, forecast revenue, talent etc) they need to achieve their targets.” Only perhaps that wouldn’t have been so mind-bendingly socialese. @Reaven – whole heatedly agree.

  • angelohuang

    For funding raising ratio, how do you know you will get to 20%? Hiring and marketing can follow this rule, but I don’t think fund raising is following such rule. What do you think?