Episode 007

Building habit-forming products that improve your users' lives with Nir Eyal

Is the goal in tech simply to get people addicted to our products & services? Or is there more?

In this episode, Nir Eyal, author of Hooked, shares how to build products that benefit your users’ lives, instead of disrupting them.

In this episode, we cover:

Do we have a moral obligation to improve the lives of our users and customers? Or is the goal simply to get them addicted to our products and services?

In this episode, Nir Eyal, author of the best-selling book, "Hooked: How to Build Habit-Forming Products," shares how there IS a way to get people to use your products in a way that benefits their lives, instead of disrupting them.

After founding two tech companies that were both acquired, Nir spent years running experiment after experiment to learn exactly how successful companies were creating products that people couldn’t put down, and his research led him to the conclusion that companies focused on improving the quality of life of their users have the best shot at success.

Today, he shares with us:

  • The difference between hooking people and addicting them, and why addiction is NOT the goal of great product design
  • Why it’s definitely in a company’s long-term interest to create products that improve the quality of life of their users
  • The exact steps you can use to understand the needs and pain points of your users
  • How producthunt.com used Nir’s model to generate massive amounts of engagement

You’ll also hear Nir’s take on why making money and helping people are NOT mutually exclusive.

Enjoy!

Show notes
  • [00:03:06] The goal of Nir’s book, and the difference between habit and addiction
  • [00:06:57] Whether companies have moral and ethical obligations to build products that are beneficial to their users
  • [00:08:37] The science of addiction
  • [00:12:48] How to design products that are habit-forming and improve people’s lives
  • [00:14:28] The techniques that help companies discover consumer pain points
  • [00:15:38] Insights from Nir’s personal experience about finding internal triggers
  • [00:17:44] How Ryan Hoover recognized the opportunity in Product Hunt
  • [00:20:26] How to encourage engagement
  • [00:21:45] The next steps after building a hook
  • [00:26:33} Questions you should ask yourself when designing a product
  • [00:28:17] How Nir learned the steps that he recommends
  • [00:30:49] Companies that Nir has invested in
  • [00:31:35] How you can discover your customers’ internal triggers
  • [00:35:23] The importance of understanding customer psychology
  • [00:37:41] How companies can use data to understand customers
  • [00:38:51] How cohort analysis can explain customer usage of a product
  • [00:40:22] How to measure cohorts
  • [00:41:57] How companies can tell if their products are having a beneficial impact on their users
  • [00:44:04] Why Nir believes that a people-first approach is the most sustainable way to succeed
  • [00:46:02] Resources that Nir recommends
Transcript

[00:00:32] David: I’m David Peralta and today we’re talking with Nir Eyal, author of the bestselling book Hooked: How to Build Habit-Forming Products, about how you can design products and experiences that actually benefit your users rather than simply addicting them.

If you're in the tech or digital marketing space, you’ve probably heard Nir’s name or book come up before, and with good reason. After founding two tech companies that were both acquired, Nir spent years running experiment after experiment to learn exactly how successful companies were creating products that people couldn’t put down, and his research led him to the conclusion that companies focus on improving the quality of life of the users actually have the best shot at success. He also has taught at the Stanford Graduate School of Business and has actively invested in successful companies such as Eventbrite, Product Hunt, anchor.fm, and more.

But the reason I decided to reach out to him was after one of my team members at Hotjar sent me an article that Nir had written that questioned how much ethical responsibility companies have when they start designing products that can manipulate behavior on a massive scale. I wanted to know, how can we build products that knowingly change our user’s behaviors in a way that encourages positive habits that better the lives of our users. I'm glad I asked because Nir had a lot to say about the subject.

Today, he shares with us the difference between hooking people and addicting them, and why addiction is not the goal of product design, why it’s definitely in a company’s long term interest to create products that improve the quality of life of their users, the exact steps you can use to understand the needs and pain points of your users, how producthunt.com uses Nir’s model to generate massive amounts of engagement, and why making money and helping people are not mutually exclusive.

Nir was a pleasure to speak with and he had me laughing out loud throughout the interview. I hope you learned as much as I did from it.

Nir, thank you so much for taking the time and joining us.

[00:02:29] Nir: My pleasure. So good to be here.

[00:02:30] David: You're most well known for your book, Hooked, which is really about behavioral design and helping create products that become a daily part of our user’s lives. But it's called Hooked and it's about creating habits. I have to be honest that both my co-host and I, when we first read the book, it's very useful, and it's very helpful, but we had a little bit of an uncomfortable feeling with the notion of hooking people, and addicting people. Both of us felt that this is something that's kind of manipulative and not really the goal of what we should be doing. We wanted to ask you about that. How do you feel about that? Let me ask you differently, is the goal to hook people or is it something else?

[00:03:16] Nir: Well, the goal is to hook people. And what do I mean by that? When I wrote this book, authors spend a lot of time on the title of a book, and I probably spent just as much time on the title as I did the actual contents of the book. At one point, I was considering calling it, "How to Build Addictive Products," but that's before I understood what addictions really are, and why you would never want to build an addictive product. Before they read the book, they think the book is about how to addict people. But when you read the book, I actually give a definition of what is the difference between an addiction and a habit. An addiction is something that hurts the user. We never would want to addict people. That's why I didn't call the book, "How to Build Addictive Products," I titled the book How to Build Habit-Forming Products. Now, habit-forming products, we have good habits as well as bad habits.

The goal of this book, the reason I wrote the book, and granted, the title is meant to be provocative, right? It's meant to get people's attention, because if I had wrote, "How to build high engagement user experiences," nobody would have bought that book. I wanted to get people's attention, and here's the trojan horse, right?

Here's the thing that most people don't know about the book, is that I wrote the book because I found how hooked I was getting to these products. I didn't make Facebook and Twitter and Instagram and WhatsApp and Slack, I didn't make those products, I used those products as archetypes for how all sorts of businesses can make their products more engaging. I use those products because they're the best in the business. If you want to get really good at something, you don't want to ask your schlubby neighbor down the street that doesn't know how to do the thing you want to do, you want to ask the best in the business. If you want to be a fast runner, maybe you talk to Usain Bolt; if you want to be a world class investor, you talk to Warren Buffett; if you want to be an amazing actor, you call Keanu Reeves, I'm just checking if you're listening.

[00:05:14] David: No comment.

[00:05:15] Nir: Okay, good, you’re still awake. The idea is we want to look at the best in the business. The Trojan Horse here that I mentioned earlier was that as someone who found that I was getting hooked myself, I wanted to understand how these products do this to me. By the end of the book, almost everybody who read the book asks themselves, "Wait a minute, this is being done to me."

The goal is twofold, number one, I've built products twice now. I've started two tech companies, I know how difficult it is as a founder of these companies to build the kind of products that people want to use. That is not easy. That is not trivial. It's really, really hard. And the vast majority of the companies that I've ever talked to in my professional career, their problem—let's be honest here—is not that they're addicting anybody. Their problem is nobody gives a shit about their product, that they're banging their head against the wall, making a product that they know would benefit people's lives if they would just use it. That's the big problem. The big problem is not that a few companies like Facebook and Twitter suck us in, the real problem is that most products out there suck. They're awful.

That's why I wrote this book, is because it's not fair that it's just Facebook and the gaming companies and the social media guys that know how to do this stuff. We can use this stuff for good. We can build the kind of products that get people to become more productive at work, to connect with friends and family, to be healthier, to save money, that's who I wrote this book for, not for Google and Facebook, they already know this stuff. I wrote it for everybody else, because there's no reason we can't use the same, exact psychology of what drives high engagement experiences to help people build healthy habits.

[00:06:57] David: And do you feel that companies have some kind of moral or ethical obligation to create products that benefit their users?

[00:07:04] Nir: Not just a moral and ethical obligation, a business imperative. Look, human beings come with a fuse in their brains, that when something bad happens to us, when something negative happens to us, we stop doing the thing that caused that pain. It's called the operant conditioning. If something hurts you, you learn. Like as a child, if you hurt yourself, you learn very quickly to not do that thing anymore.

Consumers are the same way. And if you hurt somebody in the use of your product, you know what people do? They stop using the product. It is very difficult to keep people using your product if you are not solving their needs. That's exactly what's going on today with Facebook, and why they have 20% less usage recently over the past few months, because Facebook isn't cutting it anymore. People are starting to figure out that it's not giving them what they want. It's not scratching their itch anymore, and they're dialing back their use.

To build a hook model that sustains people's long-term engagement, you don't just make this once and say, "Oh, that's it. I'm done." Your hook can break, and that's exactly what we're seeing now happening with Facebook in particular, is that the hook broke. It's not scratching people's itch, it's not giving them what they want, and so they stop using the product.

[00:08:23] David: In other words, you can have products that addict people, and I would argue that Facebook is addictive. You could also say that certain foods are addictive, and people are concerned...

[00:08:37] Nir: That's because you don't understand addiction. No offense.

[00:08:41] David: Yeah. Can you help me understand addiction a little bit more?

[00:08:43] Nir: Let's talk about the science of addiction. People get addicted to certain foods. People get addicted to sex. People get addicted to alcohol. People get addicted to drugs. But there is nothing I can put in your body, or put on some screen that is going to get everyone addicted. That does not exist.

In 1966, Dan Rather went to New York City and he shot up heroin to show the American public the growing opioid crisis back in the 1960s. Dan Rather didn't get addicted. He said it gave him a really bad headache, and he never did it again. In fact, millions of people are given better than street grade heroin every time they go to the hospital because they broke their arm. A tiny fraction of those people actually get addicted.

I like to drink a glass of wine with dinner, I'm not an alcoholic. I enjoy sex, I'm not a sex addict. I like food, I'm not a food addict. It doesn't work that way. It doesn't work that a substance is just mind-hijackingly addictive, and boom, you get addicted to it. It doesn't work that way. There is the interaction between the person and the product. Some people do get unhelpfully addicted. For those people, companies have a very special responsibility.

This is something that I wrote about two years ago for The Atlantic. I wrote an article about how the fact that these companies know how much you use these products and services means that they have a moral imperative to do something for that 1% to 5% of the population that has a problem with addiction. It's a very small percent of the population, but those companies have an ethical responsibility because any time somebody wants to stop using your product, you have to help them stop. You can't keep them in against their will.

That's a tiny, tiny percentage of the population, which we do need to do something about. Let's be very clear. These companies have been saying this for years, need to help the addict, but by us thinking that we're all addicted, we're fooling ourselves. We're fooling ourselves because the chances are there's about a 95% to 99% chance that you are not one of those people who is actually addicted, you just like the stuff because they built it to be engaging. They have designed it in such a way to get you hooked.

If you hold your breath and say, "I'm going to wait for Facebook to make their products less engaging to make me want to use it less often." If you hold your breath, you're going to suffocate. They are not going to make the product less engaging. You've got to take some personal responsibility and put the stuff away.

In fact, my next book, because I get asked about this so often, my next book is called Indistractable which is all about how do we fight distraction—not just digital distraction, all sorts of distraction—because look, as addictive so called or that people think these technologies are addictive, the average Facebook user spends about 30 minutes a day on Facebook. The average American spends five hours a day watching television. There's lots of things that we can overuse, that we can abuse, that distract us. We need to learn this fundamental skill of how do we not get distracted by these products and services, so that we can do the things we really want to do.

This is not a new problem, humans have been struggling with distraction for a very, very long time. I want to give some solutions for how we can use the same psychology of how these products are built in reverse to help us put these technologies in their place.

[00:12:09] David: That's a great point. I should point out that our audience is probably not Mark Zuckerberg, or the founders of Twitter, or any of these other major products. Our audience is people who are struggling or doing a good job but want to do better at creating habit-forming products, ideally so that they can benefit their users, so that they can improve the quality of their user’s lives.

[00:12:31] Nir: Should they be so lucky that they have the problem of having users who want to use their product too much.

[00:12:37] David: Exactly.

[00:12:37] Nir: In all of my workshops—I’ve taught thousands of people—I've never had somebody raise their hand and say, "You know what? People overuse my product." That just hasn't happened.

[00:12:45] David: Okay, that's a really good point. Why don't we dive into how is it that people can design a product that is not only habit-forming, but actually improves people's lives?

[00:12:57] Nir: Absolutely, yeah. The first step is to understand what pain point you're solving, this is the internal trigger. The internal trigger is the first step of the hook. We have to understand what's the itch that our product is going to scratch, because the fundamental reason that we use any product or service, any product or service, there's only one reason, and it is to modulate our mood, to make us feel something different, it's called the homeostatic response.

When we feel cold, we put on a jacket. When it gets too hot again, we take it off. When we feel hunger pangs, we eat. When we feel overly full and stuffed, we stop eating. When we feel emotional discomfort, like loneliness, we check Facebook. When we're uncertain, we Google. And when we're bored, we check YouTube and Reddit, and stock prices and sports scores, etc., etc. So fundamentally, the first thing you have to do is to understand what's the user’s itch, what's the pain point that occurs frequently enough in the user's life that you can attach your product’s use to that problem.

Just to be very clear here, when we talk about ethics, we never want to create discomfort, that's unethical. What we want to do, and the reason that product management is such a great job, the reason why entrepreneurship is still so exciting is that we can solve people's problems. We need to look for those pain points in their lives, not just the functional pain points, but the emotional pain points that we can attach our product’s use to, that's the first step.

[00:14:25] David: To dig into that a little deeper, in your experience, what is the most effective way to discover those pain points?

[00:14:31] Nir: Right. There's a few techniques that I describe in the book. There is the five why’s technique, which I didn't invent, that's been around for quite a while. It started out from the Toyota production system where we keep asking why until we get to some kind of deeper level emotion. There is user narratives, where this is a technique that Jack Dorsey espoused, and I think he picked it up from somewhere else as well. But this is a technique where we follow people. We do kind of an ethnographic study of where are they right before they might use our product. Another thing we might do is we might look at nascent habits. I always tell entrepreneurs and product people that I want to know what the existing habit that your product is going to replace. You might want to find how people currently solve this problem. Are they stitching together something with scotch tape and bubble gum because there's no good solution in the market? Are they putting together a bunch of Google Docs to kind of make an ad hoc solution? Those are all fantastic places to find nascent habits, where there isn't a great product at market. You can you can take those hackneyed solutions, and then create a better solution for that problem.

[00:15:38] David: Do you have any examples from your own experience of a time when you did that and a particular insight that you learned from applying one of these processes you just mentioned?

[00:15:46] Nir: To finding internal triggers?

[00:15:47] David: Yeah, exactly.

[00:15:48] Nir: One product that comes to mind is Product Hunt, which I invested in. In fact, the founder of Product Hunt, a friend of mine, Ryan Hoover, who, actually, helped me edit the book Hooked, we worked on it together...

[00:16:04] David: Right. His name is right there on the cover.

[00:16:05] Nir: Exactly, exactly. The funny thing is that he became so famous and such a big deal in the startup community, I wish I would have made his name bigger than mine because he's way more famous than I am now. But at the time, nobody knew who Ryan Hoover was. But that's a great example of a product that met a nascent need in the market. It turns out that there are lots of people out there who would like to know the latest and greatest tech developments, but not so much the news front, but in terms of the new product front, right? They're interested in what new solutions are out there. It used to be before Product Hunt, the only place you would get this stuff is by reading the tech press, right? TechCrunch, and Techmeme, and you kind of just hope that some reporter would decide to write about some startup after a lot of begging and pleading. There's all these gatekeepers keeping news about new product launches to themselves.

People were having a hard time finding out about these solutions. Here came Product Hunt started by Ryan Hoover, and he used the Hooked model in building the product, because he knew it better than anyone second to myself. He knew it very, very well, and he started it out actually as a newsletter. It was called Startup Letters, and he would send out these emails about, "Here's the latest and greatest product launches that I just heard about," from his network, and then he turned it into a product, then he turned it into Product Hunt. Once he saw, "Wow, there's a lot of people who have this itch, this need to be up to date on the latest product launches from small teams."

[00:17:37] David: Can you tell us if you have the information, at what point did he realize that this was a potential opportunity? Because it's great that he had an email, but was it the size of his email list, was it the feedback he was getting? What was it exactly that gave him the indication that, "Hey, this could be something bigger, this could become a product by itself?"

[00:17:57] Nir: Yeah. I think it's because he saw engagement. Right now in the startup community, and it has been this case for several years, is that everybody's drunk on growth. Everybody wants to be a growth hacker, everybody wants things to go viral. The thing is you can always buy growth. You can always buy growth, right? You just buy some ads, and you can buy growth.

What I saw when I lived in Silicon Valley—I recently moved to New York—but what I've seen in my entire professional career is one company after the other that exhibits this trait that I call Leaky Bucket Syndrome, that they pay for a bunch of users to come in, and then all those users go out. They grew, but they didn't sustain. Because you can buy growth. You can buy the top of the funnel stuff, but if the users don't stick around, if your business is just a leaky bucket, then you're never going to get that sustained hockey stick growth.

However, what you can never buy is engagement. I always say engagement before growth. I think that's, to answer your question, that's what Ryan saw. Ryan saw that people were getting really into these Startup Letters, right? They wanted to know when is the next one coming out and the open rate was amazing, and so consistently he would send them. I think he started every week, and then he started doing them more frequently, and consistently people were engaging and engaging. They were going through the four steps of his hook: the trigger, the action, the reward, and the investment. When we complete the hook and we see that they're occurring with a significant portion of our user-base, that tells us something. When we start seeing 20%, 30%, 40%, 50% of our users are engaging with the product habitually, well, that says there’s something there.

By the way, just a quick disclaimer, engagement isn't enough. You need three things for every successful product. You need what I call GEMs: Growth, Engagement, and Monetization. I can't take credit for this, by the way, this came out of LinkedIn, in terms of how they decide what businesses to build, this came out of Reed Hoffman. He says that for every business, you need Growth, Engagement, Monetization; GEMs. You have to have a way to grow your user base, you have to have a way to keep them engaged, that's the E, and then of course you have to have a way to monetize. You can have one of the three, that's not good enough. You have to have all of the three to make for a successful business.

[00:20:16] David: Let's stick with engagement for now, since that's the one that we're talking about. In Ryan's case, there was organic engagement. He was doing something that naturally people were interested in, and there was a really strong response to it. Is it possible to create engagement? Or is there something people can do to encourage engagement?

[00:20:33] Nir: Yes, you build a hook. The formula for engagement, that's all I've been focusing on. I don't care about growth, that's not my specialty. I don't specialize in monetization, that's not what I do. I care about growth, not because those other two things aren't important, they're critically important, just not my area of expertise. The formula for engagement is the hook model, right? It's trigger, action, reward, investment. Product Hunt is a perfect use case for this, as is Facebook, as is YouTube, as is Google, Twitter, Slack, Instagram; all of these products exhibit the four steps of the hook model—the trigger, the action, the reward and an investment.

It was by studying these products and seeing this pattern repeated time and time again that I was able to write this book, and hopefully, people out there can use it as a diagnostic tool that if you're building the kind of product or service that requires repeat engagement, and you're not getting it, for some reason people are not engaging with the product, you can use those four steps of the hook model to see, "Hey, where is it deficient? Where might I be missing something that I can then go back and improve in the product?"

[00:21:40] David: Why don't we stick with the example of Product Hunt since you seem to know it pretty well? Once he saw that there was this engagement, and he decided that he was going to create something out of it, what was the next step following the hook model?

[00:21:56] Nir: Sure. The internal trigger, I think, for a product like Product Hunt would be, for many people, it's a form of entertainment. The internal trigger, the itch is maybe boredom. It's, "Hey, I like to consume information to scratch my itch of boredom," and so I could go to Quora, I could go to The New York Times, or I could go to Product Hunt. I think that was probably his—I haven't talked to him about this specifically so we may want to talk to Ryan about this as well—but I would assume for a content company like Product Hunt, it's this internal trigger of boredom.

The action phase is to open the email. They send out this daily email, the action is to open the email, or if you're internally triggered even without the external trigger of an email in your inbox, it might be to type in producthunt.com, that becomes a daily habit, or open the app. They've made it incredibly easy, specifically with the app, and now they're trying some new things to even increase that engagement even more to make it incredibly easy to get relief from your internal triggers.

If the internal trigger is boredom, the goal should be how do we entertain you as quickly as possible to relieve that boredom? Then the variable reward, the next step of the hook—or maybe I should explain a little bit what the variable reward is all about. The variable reward is some kind of mystery, some kind of uncertainty, some kind of novelty that keeps the user looking for additional information. Sometimes, the variable reward is added to the product.

For example, if the internal trigger is boredom, well, then, variable rewards can be a great way to entertain. If the internal trigger is seeking connection, loneliness, well, then, the variable reward can be what's called the variable reward of the tribe connecting you with other people, seeing what's going on in a way that you might use Facebook or Instagram for. It could also be in the form of game-like mechanics if you're getting to the next level, the next accomplishment, the next achievement, those can all be forms of variable rewards.

Or, the reverse side of this is that many products operate in what's already a variable situation. For example, many products in the enterprise space operate in a condition that's inherently variable. For example, when you check a dashboard for a piece of marketing software, for example, you've got all these things that are variable in your job, right? How are my ads doing? What does the subscriber base look like? How are people engaging us, all this information.

What the platform wants to do is to give you greater agency and control over an uncertain situation. It's still variable, in that case the job of the product is to give you greater control over the outcome. Does that make sense? It's a lot to take in, I wrote a whole book about this, but just a 30,000 foot view.

And then finally the last step of the hook, the investment phase, is all about when the user puts something into the product in anticipation of some kind of benefit, some kind of future reward. It's not about immediate gratification, it's about something the user does to get some kind of reward or something that makes the product better with use in the long term.

That might be something for example like data, content, accruing a reputation or followers, all forms of investment that make the product better and better, with which you can do all those things. Every time you upload something on Product Hunt, every time you follow somebody's recommendations, every time you comment on something, the product is using that information to make the product better, and better, and better with use, as does Facebook, and Twitter, and Instagram, all those products do the same exact thing.

The idea is that the more you use the product, the better it becomes, with use. And that's amazing. That is something that has never been possible at this velocity in the history of business, in the history of innovation. We've never been able to make products on the fly this way, because of this critical investment phase of the hook. The idea is through success of cycles through these hooks—trigger, action, reward, investment—people begin to associate that product's use with the discomfort. Now, I'm not going to open a magazine, I'm not turning on the TV, I go to Product Hunt to scratch that itch.

[00:26:00] David: Okay. I see what you're saying. Again, going down to a practical level, because it all sounds great, I'm talking to you and I'm just like, "Oh, that's awesome. You're totally right." And then, I want to start a product, I go back to my computer, and then I'm just like, "How do I do that? How do I know what the right kind of investment is for my product? How do I know what's going to work? How do I know what's really going to create that sensation in people that they feel like this is bringing something positive into their lives?"

[00:26:34] Nir: Right. You can't skip the basics of how you design a product. I wish I could tell every single person out there, "Here's what to build to make the next billion dollar success story." I don't know, because I don't know your customer as well as you do, but I can prompt you with five key questions.

The first question to ask, and this is something you can do with a pen and paper. Before you hire any engineers, before you design any pixels, I want you to sit down with a pen and paper and ask yourself number one what's the internal trigger? What's the itch that prompts the user to action frequently enough in their day to form a habit? And the frequency needs to be a week's time or less. More frequency is better when it comes to a habit-forming potential.

The second question is what's the external trigger? What's the thing that prompts them in their environment with some kind of cues, some piece of information that tells them what to do next?"

Then, what's the action? What's the simplest thing the user can do to get relief from that discomfort? And how can it be made simpler?

Then, number four, what's the reward that scratches the users' itch and yet leaves them wanting more?

And then, finally, the fifth question is what's the bit of work, the investment that the user does to increase the likelihood of the next pass through the hook?

I wrote the book around these four basic questions, and I wanted the book to be super practical. I've read so many damn business books that are so boring and take so long with stories and anecdotes, and sometimes terrible, hard to read studies. I've been an entrepreneur two times, I know how hard it is to build the kind of products that people want to use, that keep people engaged, so I wrote the book to be a very fast read, full of exercises that prompts you step, by step, by step with these questions to answer in order to figure out how to make your product, the kind of product that people want to keep coming back to.

[00:28:18] David: Did you ask yourself these questions when you were designing your products? The products from the companies you founded?

[00:28:24] Nir: God, I wish, I wish. Unfortunately, I learned these steps too late. The way I came to this whole process. I'd started two companies, the first one was quite successful and really put me on my feet. The second company was not so successful, it's where I saw a lot of products come and go. I saw a lot of apps being built back when apps didn't mean iPhone apps, this is when apps meant Facebook apps, this was around 2007, 2008. The Apple App Store hadn't even opened up yet, and I just saw so many companies coming and going, and we couldn't figure out why.

After my last company was acquired in 2012, I wanted to figure out before I start the next thing, what are the tenets of habit formation? How can the next thing that I do build habits in users' life? Because I had this very strong hypothesis that as the interface shrinks, as we went from desktop, to laptop, to mobile devices, to now wearable devices, and now audible devices, the interface has shrunk to the point where it's disappeared. If you think about the Amazon Echo, there's no more screen interface, it's a voice interface. If you can't get the user to remember what it is they want to do with that product, then your product doesn't exist.

If you're not on the home screen of the iPhone, then good luck, you might as well not even exist. The user has to know what they want before they touch the device. That means we can't depend upon external triggers alone. We have to build the connections with those internal triggers.

I had that insight, I knew that's the kind of product I wanted to create next, and I just started writing about this stuff, I started interviewing psychologists, and I started spending a lot of time at the Stanford library doing a lot of research. And then I started talking to a lot of people who actually build these kind of products in Silicon Valley, people at Twitter and Slack, and Instagram, and Facebook, I started talking to them about how does this work? I started writing about it on my blog, and that became a class that I taught at Stanford for several years at the design school there, and then that became the book.

I've used this formula, it turns out I really enjoy being an author, I love teaching, I love working with other companies, that scratches my maker itch, and I feel like I have a much bigger impact by spreading this knowledge as opposed to just using it myself. But who knows, I think someday I might actually go back into building another product. But I've also scratched the itch by investing in a lot of companies. I invest in companies that can show me, that can demonstrate that the hook is critical for their success. Products like, Product Hunt, Eventbrite I've invested in. Marco Polo is an app that’s doing very, very well these days that has similar dynamics. There are several other companies. Some of them, I'm blanking out.

[00:31:15] David: Yeah, no problem.

[00:31:16] Nir: On my website, you can see... Oh, 7 Cups is another fantastic example.

[00:31:19] David: Yeah, yeah. There's no question, it's a very impressive resume. One thing I'd like to ask, and you talk about the internal trigger, that's the first step, right? You have to connect with what is that internal trigger? What is that itch that your customer, your user needs to scratch? How do you discover that?

[00:31:36] Nir: Yeah, we just talked about it earlier, around nascent habits, things that people are doing that you can replace that current behavior. And, what are they currently doing to scratch that itch? That's one big area that we can do that five wise techniques, and then we can build narratives.

[00:31:50] David: What I mean is I can do that on my own. I can sit down and I can answer these questions myself, but there's something that...

[00:31:58] Nir: Not really. You can take a shot at it.

[00:32:00] David: That's exactly the point that I'm trying to make. What concrete steps do people need to do so that they don't just do it by themselves?

[00:32:10] Nir: Yeah, so you can't not do build, measure, learn. When I was starting my last company, Eric Ries, Steve Blank, these guys were huge inspirations for us. I believe in the lean startup methodology, hook, line and sinker, I think it's a much better way to build software than, for example, the waterfall processes we used to use where we would stick a bunch of engineers in a room somewhere, and then a year later they'd finish the project development, and 9 times out of 10, nobody wanted to use what they built. I absolutely believe we should talk to customers, we should listen to them, we should hear them out, we should do customer development.

There's a couple small problems that I have sort of using lean startup methodologies and getting out of the building and talking to others, there's a couple problems. We should actually do it. I'm not saying we shouldn't do it, however, there's a couple problems. One problem is that there's all kinds of needs that people can't tell us would have changed their behavior. The first rule of user research is don't listen to people's mouths, don't watch their mouths. You want to watch their feet. Don't watch what people say, watch what they will do, because there's all sorts of things that people will tell you they want, or that they will do, and they don't do it. And anybody who's built a product has seen that happen before, and it's incredibly frustrating.

The way we get around that is that we not only talk to people, that's great. We should do that too. But we should also understand how people think. We need to understand consumer psychology in order to build the kind of products that we need to build that have a higher likelihood of success.

That brings me to the second problem, which is the build, measure, learn loop, looks—because it has three parts—like we should weigh each three of those equally. We build, we measure, we learn. That's not true, because if you think about it, where does all the blood, sweat and tears, and, of course, money all go? Does it go inside the building, the measuring, or the learning?

It's the building. Measuring, learning, that's fun, that you can do in a couple days once you have the processes set up. That's easy. It's the building where all the blood, sweat, tears and money all go. With the problem that we had at my last company, and that all product teams have, is answering this fundamental question of, "What do we build next?" Every company has this burn down chart of a million features they'd love in their product, but what do they design next? Do they design what the customer says they should build, the loudest customer says they should build, should they design what the boss says we should build, should we design what the—God forbid—VCs say we should build? That's the worst case scenario.

Instead, what I propose, is that we use some kind of framework, in my case I propose the Hooked framework to figure out what do we build next by understanding what's deficient. We can use the hook model to say, "Hey, do we know really what our customers' internal triggers are? Is the action easy enough? Can it be made simpler? Is the reward rewarding and it leaves people wanting more? And is there an investment that increases the likelihood of the next pass to the hook?" By asking those questions, we can very quickly see, "Ah, that's what's deficient. That's what we should build next. We should fix that," as opposed to just guessing, or listening to the wrong people.

[00:35:23] David: You made a point that it's really essential to understand customer psychology, right?

[00:35:27]Nir: Mm-hmm.

[00:35:28] David: Most of us don't have advanced degrees in psychology, and you said we shouldn't be watching people's mouths, we should be watching their feet. Can you give me a practical example? What does that actually look like in real life? Do you know of a company that did that and an insight that they gained from that, that they wouldn't have gotten if they had just looked at the customer's mouths, if they had just listened to what the customer thought they wanted?

[00:35:50] Nir: There's lots of examples in the annals of tech development. One process that I talk about in my book is called Habit Testing. Habit Testing is about this three step process–you identify, codify, and modify, those are the three steps. The first thing you do is you identify who among your user base is already habituated to the product?

To give you a specific story, if you think about in the case of Twitter, this is a kind of a famous anecdote that I heard directly from Josh Elman back in the day when he was at Twitter. You identify the people who are already habituated. When they found who were the people who were most active on Twitter, who were the people...and this is very, very early days. Who was habituated? Who was using it every day? They found that those people were the ones who had followed—I can't remember what the exact number was, I think it was 10 people—if you had followed 10 people in the first few days of being on Twitter, you were more likely to be a habituated user.

So then they codify–the second step, first they identified, then they codified. Well, we should help everybody do that, right? We should help everybody follow X number of people on Twitter as of their first day. And then you modify.

They change the user experience. Part of the very first thing you do when you sign up for Twitter is you are prompted, they changed it from just follow anybody you want, go straight to the feed, into, "Hey, here are people who are very, very popular on Twitter. Here's Oprah. Here's a sports star, etc. Do you want to follow any of these folks?" By identifying the users, codifying what these users did, and then modifying the user experience to make everybody go down that path, they very quickly discovered a way to increase people's engagement, send them down the four steps of the hook, and create this product usage habit.

[00:37:41] David: In other words, it wasn't that they went out, talked to customers and asked them what would make you want to use Twitter more? It's they looked at the data and saw these are the kinds of users that are using Twitter the most, and this is the step that is most indicative of what's going to cause them to use Twitter more. They looked at the actual actions.

[00:37:41] Nir: What's special about them, exactly. What's special about these users and sometimes it's a customer segment insight, sometimes we see, "Well, it's only this type of person who gets a ton of value out of our products. So maybe we go after that market as opposed to everybody." Sometimes it's a specific behavior, that people see the value of the product if they do a specific behavior upfront, as in the case of Twitter.

[00:38:24] David: One issue that I have with this–I mean, the model is great, however, how do you codify that? How did Twitter find that out? How can I as a product designer, or a product manager figure out what is that step, what is that thing that my users are doing that's causing more usage? What do I need to look at? What kind of data do I need to have in order to really find that out?

[00:38:51] Nir: It's not very hard, right? We do cohort analysis. We figure out per cohort, when we make a change, does the user engagement increase or decrease? You have to have a hypothesis. Companies are typically flushed with hypotheses, they have all kinds of things that they could test. They don't know what to test first, second, third.

What I would recommend is look at the Hooked model, see what might be deficient in your product, then come up with hypotheses. How could you test whether it's one of these four steps of the hook is deficient, design that feature, roll it out and then see what happens to each cohort. Whatever the interval of engagement that makes sense for your product, and it's different for every product. Some products don't make sense to be used every day, some products don't make sense if they're not used every day. It depends on the specific usage of your product, then you can see since this change was made, is the cohort that we rolled out this change, is that cohort ¦now, the habitual engagement of that cohort, did it increase or did it decrease? And we just keep doing that.

[00:39:56] David: Our audience is going to be at different levels. Just really quickly to define, so a cohort is basically a group of people who are presented either at a certain time, or presented to a certain action as compared to a different group who have not had that action. But now, for people who are first being exposed to this idea for the first time, how can they measure cohorts? What's an easy, practical way that they can start discovering this information about their users?

[00:40:22] Nir: There's a lot of tools out there that you can pay for. A lot of companies end up rolling their own, but there's a whole mess of tools recently that came out over the past several years. I'm not sure if I'm allowed to mention them, but...

[00:40:36] David: Yeah, sure. Go for it.

[00:40:39] Nir: So Optimize is one tool, there’s several out there. If you just look at cohort analysis, there's all kinds of tools these days that you can plug in solutions to figure out, and you can set the goal. One of the fundamental questions to ask yourself, "How often should someone engage with my product?" Meaning, what is that level of engagement? And again, that's specific to your product. Some products you have to engage with every day.

For example, if it's a social network, if you're not engaging with a social network almost every day, then it's not going to work. However, other products, it doesn't make sense. You only engage with them let's say once a week, for example. You have to define how frequently you would expect a habituated user to engage with your product, and then we simply track. We track what percentage of our customer base, since we rolled out this new feature, how engaged are they. Then, you start rolling out parts of the hook to improve one by one, each feature and see, "Okay, did we increase engagement? Did we decrease engagement?"

[00:41:37] David: Okay, makes sense. And now, bringing it back to people first, because this podcast is all about helping others succeed by putting people first, putting their users first, putting their customers first. Going back to this notion that the most ideal product that we can create is one that actually materially improves the lives of our users.

[00:41:55] Nir: Yeah, Amen.

[00:41:57] David: How do we measure that? How do we know, like, we might have a good intention, but now, how do we measure is this actually having an impact on the lives of our users? Is this making a difference?

[00:42:07] Nir: Yes. The best metric, I think, is do people keep using your product? Because, again, as we talked about very, very early on, people come with this fuse that if a product is not benefiting them, they quit. They stop using the product if it doesn't improve their lives. If you see that retention is dropping, something is going on. It's not meeting their needs anymore for one reason or another, so that's something we have to fix. That's clearly the best metric to look at.

I think at least in the short term, engagement is the best metric. We can also combine that with qualitative information. We can also talk to our users and ask them, "Hey, how do you feel about this product? Is it benefiting you? Do you enjoy it? You'll be able to sense that not only through the quantitative numbers of how often are people using a product, but also the qualitative feature.

For example, I think Facebook is a good case study of this right now. They focus so quantitatively on increasing user engagement. But, I think, in some ways maybe they didn't see coming this backlash that I think Facebook is dealing with right now, and we'll see how it all plays out. I think they're scrambling like crazy to figure out how to improve their hook, how to fix some of the things that broke in their hook, to make sure that people want to keep using the product.

If the product doesn't benefit people, eventually they quit. This is the crisis that's going on right now with Facebook, is that it's not scratching people's itch anymore, it's not doing what they wanted to do. And so, they're bouncing. I think they probably could have had some early warning on that, and maybe they do, by the way. I don't have any inside information on what they've been doing or haven't been doing, but I think that the combination of qualitative information in terms of calling up customers, seeing how they're doing, seeing if it feels like the kind of product that they enjoy using, that they'd recommend to a friend. There's all kinds of techniques like Net Promoter Score, etc., that we can see if the product is benefiting them in their lives.

[00:44:04] David: Great. A lot of people are on the fence about embracing the people first approach, or a lot of our listeners have expressed that they work with people that are on the fence about embracing the people before profit approach. What would you say to them to help them understand that this is really the most sustainable way to succeed?

[00:44:22] Nir: Well, it's hard for me to understand how you couldn't embrace this. You know what? If you're a fly by night company, if you just want quick profits, okay.

[00:44:32] David: There's a lot of companies out there where the bottom line is the most important thing, and they treat the profit more important than the effect that they're having on their users. They treat making money as more important than the impact that their product is having on their consumers' lives.

[00:44:46] Nir: But it's stupid to think it's mutually exclusive. The path to make money is to care about people, and what they want. That's our job is to give people what they're looking for. Again, you can fool somebody once, shame on you. You can make a buck, but you can't keep fooling people. If people don't like your product, if you are not people-focused, if you don't understand consumer psychology, if you don't scratch their itch, if you don't give them what they're looking for, they're going to leave. They're going to stop using your products. And, of course, if you screw them over, if you do something unethical, if you coerce them somehow, there's all kinds of shady tactics that people can use to pull one over on folks.

But that stuff never works, because of two reasons. Number one in today's hyper-connected world, if you do something that pisses people off, they don't just complain to you about it. They complain to everybody they know on social media about it. You have a real reputational risk of doing anything shady with customers these days, because you get called out on it. And then two, the customer themselves, not only will they tell everybody else, they will stop doing business with you. I think the only way to be in a sustainable business these days, if you want to stay in business for very long, you have to figure out how to put people first.

[00:46:02] David: My final question, if you had to pick one resource to help our listeners succeed by putting people first, what would that be? It could be a book, a podcast, a video, or anything else?

[00:46:10] Nir: Oh, well, that's a tough one. I'm looking at the library behind me here, and I've got several hundred books here on consumer psychology, and there's just so much out there, you know...

[00:46:22] David: Pick one. I'm going to challenge you. Pick one.

[00:46:25] Nir: Pick one it's really, really, really tough.

[00:46:29] David: It doesn't have to be the best one, but one that you think would really make an impact on our listeners, or one that's particularly helped you. Let me ask you that, what has made a personal impact on you or really shaped the way you're thinking about consumer psychology, behavioral design, everything that you're passionate about?

[00:46:48] Nir: It's such a mishmash of experiences and research, and various books, it's hard. I'm going to piss off my author friends if I recommend just one. I'll tell you this–if you get a copy of my book, I don't care if you pay for it, feel free to rip it off online somewhere. It's $14 on Amazon, but feel free to pirate it somewhere, I don't really care. Look at the back of the book, and there's a very extensive bibliography with hundreds of resources. If you want to go deeper, that bibliography will keep you busy for a very, very long time.

[00:47:16] David: Nir, thank you so much for taking the time. It's been a pleasure.

[00:47:19] Nir: It's been awesome. Thank you so much.

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