Lesson: Hooked with Nir Eyal

Step #4 Investment: Why the best startups care about user investment

There should always be some kind of reward when the user comes back, but that reward should be on a variable basis. So there are three types of variable rewards that I’ve classified: rewards of the tribe, rewards of the hunt, and rewards of the self.

Let me start with social rewards. Rewards of the tribe are rewards that feel good, that have an element of variability, and come from other people. So empathetic joy, feeling good because somebody else feels good, cooperation, competition, all of these things have a variable component, feel good and come from other people. So, a big reason why we use social media is because of this social reinforcement, rewards of the tribe. And of course, it comes on a variable basis.

Then we have rewards of the hunt. Rewards of the hunt stem from our primal search for food and resources. And so money is a new form of how we hunt for resources and of course, in modern society, money can also be attained through information. So, we see all sorts of information rewards. So scrolling through your Twitter feed, hunting for that bit of information that activates our reward center is part of this habit loop that we see.

The third type is rewards of the self. These are things that feel good in and of themselves. They’re intrinsic motivators. We don’t need other people. It’s not about material rewards or it’s not about information rewards. It’s about things that feel good in and of themselves. So the search for mastery, consistency, competency.

Much of this work comes out of the work of Deci and Ryan, self-determination theory, where these types of intrinsic motivators are on a variable basis. They feel good but we don’t need other people for them to feel good. So game play is a great example, the search for mastery and control and consistency of getting to the next level, the next achievement. And good old email uses the same exact components of checking off that unread message or your to-do list of getting things done. This sense of mastery, completion and competency are all rewards of the self as well.

So we find in all sorts of habit-forming products one or more of these three variable reward types: rewards of the tribe, rewards of the hunt, and rewards of the self. So, the standard dogma when it comes to the design of products is that everything has to be easy, easy, easy, easy. That we have to get users, remove all the friction, all the barriers and all the work to get users to go through our product. And that’s actually true and that’s what I advocate for in the right time and place. In the action phase of the hook, that’s exactly right thing to do. Make the behavior the simplest it can possibly be in anticipation of reward. But after the reward is attained, if we don’t ask the user to invest somehow, we’re missing on an opportunity.

So I want to slaughter that sacred cow that everything has to be easy all the time. That in fact, we need to ask the user to be a bit of work, but it needs to come after the reward. And this investment is something that the user does to increase the likelihood of the next pass, because they do that work in anticipation of a future benefit.

So anything the user puts into the product for the anticipation of a future reward—data, accruing followers, putting in content, reputation scores, even money, investing those things into the product—all make the user more likely to come back in the future.

But the important aspects of that investment is that it has to come after the variable reward and that it has to get the user to invest in product by storing value. The product has to become better and better, the more investment the user puts into the product.

Content, so iTunes, the more content I put into a product like iTunes, the better is becomes as my one and only music library. Data, the more pinning I do on Pinterest or liking on Pinterest, or the more data I would give to a sight like Mint.com, in terms of my personal finance data, the more data I give those sites, the better the product becomes. It becomes customized. There’s more I can do with that product based on the data I give the company.

Followers, the more followers I have on a site like Twitter, the better the product becomes. If Twitter tomorrow sent out an email that said, “We’re going to shut down Twitter unless you pay us,” who’s going to send them the check, someone with 10 followers or 10,000 followers? Of course, it’s going to be the person with 10,000 followers. They’ve accrued all this value in the product.

And then, finally, reputation. So on Airbnb or eBay or TaskRabbit, my reputation is a form of stored value that I can literally take to the bank. The amount of reputation that I’ve accrued, the amount of stored value in the form of this reputation, literally helps me sell my goods and services for more money. So, these are all examples of investment. The more I put into the product, the better it becomes, and the more likely I am to use that product in the future.

There are all sorts of products that I think that I see that are so close. And the most frequently neglected phase of the hook is the investment phase. I don’t know if it’s leftover of offline moving to online, where the idea was, “Get a customer into our physical storefront. Then we get them out as quickly as possible. We don’t want people to linger in our physical stores.”

I don’t know if that’s what created this but it seems like for much of the history of the Web, the idea was make the product “slicky.” Make people get in and out as quickly as possible. And there hasn’t been as much attention focused on how to make a product sticky.

Because it’s not that long ago, how to make money online was all about selling people stuff. And so it was about getting them into their cart and checked out as quickly as possible before they bounce. Well now, when it comes to the way we monetize today, we don’t necessarily want people to get out the product. We want them to stay engaged and that requires a different mindset. And it requires ways for us to figure out how to get people to invest in the product, to put some kind of value in the product so that they stick around, so that they linger.