The Mathematics Behind The Intro Machine

Power of a Network
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I am a reformed physicist, so I see mathematical models everywhere as a way to boil down the complexity of the world. Because being able to embrace simplicity in the complex and evolving world is one of the keys to success and peace of mind. So let’s talk about the math behind the Intro Machine.

There are two main principles behind the math that you should understand so that you can be successful. The first is the Law of Large numbers, the basis of actuarial science and batting averages. The second is Metcalfe’s Law, which talks about the power of a network. We’ll get to that in a bit as it is a little more complex and we should build up to it.

The Law of Large numbers states that as the number of trials or events increases, the actual value of results approach the mathematically expected value. That means that if you are throwing a fair set of dice, you will throw a pair of 1’s one out of 36 times. Any one toss is (literally) a crap shoot, but if you throw them 36 million times you will have essentially a million snake eyes. Now if you throw five times you could get snake eyes twice (or none), but the probability is pretty skewed against it and as you throw more and more you will have retrogression to the mean, which means that you approach the expected averages. This is why in baseball we talk about people hitting to the back of their baseball card, that a .300 hitter in a slump will break out and go on a tear (assuming no injuries or age issues) and end up right around .300 at year end. And a .200 hitter on a hot streak should enjoy it and learn from it but probably isn’t going to keep it up for a month or year or career. How does this translate to Introductions and your business?

If you are a one out of four closer, then to get two sales a week you need to have eight attempts a week. One week you might only get a single sale, two weeks later you will get three and over a quarter or a year you will be close to your 25% average. Don’t fool yourself when you have that hot week of four sales, and don’t jump off the cliff if you have a two-week dry spell as long as you are running the activity you need to be doing.

So if you know that one out of eight introductions on average leads to a sale, and that your average sale is worth $1,000 to you, it is pretty easy to see that an introduction is worth on average $125. Basic math, right?

So if you want to make an extra $10k over the next quarter given these ratios, you just need 80 more introductions that you then take through your sales process to get the 10 sales, on average. Simple, but not easy or else you would already be doing it.

Now let’s get into the complex math of Metcalfe’s Law. This law states that the value of a network is proportional to the square of the number of individual nodes (or people) in it. Think of a telephone system: a single phone has little value until connected to a network. The actual equation is ~{n(N-1)}/2 if you want to be more exact. If there is only one phone it is useless, if there are only 5 phones in the world connected there are roughly 10 potential connections. At 100 phones there are 4,950. At 10,000 phones there are 49,995,000 different connection combos. Now realize that over 90% of Americans aged 18-50 have smart phones and just accept that the number of potential connections is mind-blowingly large. But how does this apply to your business?

Assume that each client you have has 50 individual, unique people in their network that you would want to meet. If you have 50 clients, that is roughly 2,500 potential introductions. Have you gotten all of those referrals yet? Why not?

If you have 300 people in your network (a relatively small number for a professional), and they each actively engage 10 of their contact nodes a week that is over 200 connective interactions a day that could help your business, or your clients. Even assuming you could capture 10% of these would be a tremendous value to everyone in your network, and the larger you can extend your interactive reach the more value potential for every single member of the group. Linkedin shows the power of secondary connections very well. If you were to think on it for five minutes you might come up with some ways to unlock the potential.

The issue is capturing the introductions from those interactions. To turn on the nodes in the network. If only there were a simple way to do so, maybe on those 250mm+ smart phones that are out there…

Maybe something that was built specifically by someone that understands the value of introductions, and teaches about it. If only there were a Machine for Introductions…..

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