Knowing Incentives

Inertia is the name of the game.

Your customer will do what they’ve always done and what they’re incentivized to do.

I met with a founder this week who worked on a charity business that helped fraternities run charity events. The underlying inertia or incentive was that the school mandated it. They had to run some number for charity events each term and raise a certain amount of money to be allowed to stay on campus.

At first I thought, that’s kind of gross. Shouldn’t people want to do charity out of the goodness of their heart?

Then I got off my high horse — no one does anything without incentives and inertia all being aligned. This was an extraordinary business opportunity. Frats had to do this. I talked in the pod last week about great products just taking a customer’s existing process and removing steps. This process was locked in - frats had to do this monthly. If they could make the process easier, it was a huge opportunity.

In nearly every industry you’ll find that things aren’t set up in a way that makes sense. Norms were established at some point, and they were kept up because of inertia, and now everything is shoehorned into a weird process.

The way to change that process isn’t to change it — it’s to go with it. Find your version of customers that have to throw a charity event each semester. Don’t try to make other people want to throw a charity event.