How to Build Habit-Forming Products with Nir Eyal - I Love Marketing Episode #222

I'm dean jackson, he's joe polish, and this is the I love marketing podcast. Hello, this is Joe Polish and I've got a very smart guy with me on the line by the name of Nir Eyal. And he wrote an amazing book called how to Build Habit Forming Products. And Nir, how you doing?

I'm doing really well, Joe. Thanks so much for having me. Absolutely.

So what we're going to do first, I'm just going to be the only section of this interview that actually read anything. I'm going to read a short bio so people know who you are. Near I L spelled N I R E Y A L Near writes, consults, and teaches about the intersection of psychology, technology and business. Near founded and sold two companies since 2003 and has taught the Using Neuroscience to Influence Human Behavior course as a lecture at the Stanford Graduate School of Business. In addition to blogging@nearandfar.com, spelled N I R N A-F A R.com Nir's writing frequently appears in TechCrunch Inc. The Harvard Business Review, and Psychology Today. He's the author of the best selling book how to Build Habit forming Products and Nir. I actually met you through our friend Greg McKeown who wrote a book called Essentialism. And we've had some really great conversations, including last time I was out to the San Francisco area, you invited me up to your home, I met your lovely wife and we had some good brainstorming sessions. So you're doing some really, really awesome stuff.

Thanks, I appreciate it. Yeah, it's kind of funny because my, my book. So Greg writes in his book Essentialism about how to focus on, you know, the stuff, the stuff that really matters and how to like, not get distracted by all the other stuff. And my book is kind of like the. The maker's guide for the other side of that. How do you make products to become habit forming and to get people attention and make sure that they keep coming back and interacting with your product?

Yeah, and I've never read anything that is more articulate and well laid out and described than the hooked model that you do. People can watch some really awesome videos of you online. And one thing of course, I'm super excited about is along with Greg, who's going to be speaking at my Genius Network annual event, you will be also. And so I wanted to introduce your work to a lot of my Genius Network members. So they're familiar with it. Because what you have studied and what you have documented, I think is a real game Changer for a lot of people. So in your own words, how would you describe who you are and what you actually do?

Sure. So I've been in advertising and gaming for many years, and my last company, before it was acquired, we would see a lot of these techniques used to keep people coming back. And so after my company was sold, I took some time and I wanted to actually figure out how could I get these techniques that I'd learned out to a larger population, right? How could I take the techniques that are used to control people's brain? Let's be honest here, right? Advertising and gaming are very much about mind control, right? Advertisers don't spend that money for their health. And game makers know exactly what makes people want to play their games ad nauseam. And so I took these lessons and I wanted to codify them into a book that makers, entrepreneurs, innovators, people who are building behaviors that I think could enhance people's lives, right? These products that build healthy habits. I wanted to pull some of these techniques that I learned and put them in a usable format so that we can use them to help people live better lives, right? So that we can help people do the things that they want to do, live the. Live the kind of lives they want to live. But for the lack of good product design that I found that many of these products that want to help people live better are just not built in a way that is correct. Right? They're not built in the way that would get people to keep coming back. And so I wanted to make a very simple guide based on some very good psychological research that I've collected over the past several years that really explains why is it that we can't stop using these products, right? Particularly Facebook and Twitter and Instagram and WhatsApp and Snapchat. What is it about these products that keeps us coming back time and time and time again?

Yeah, it's a fascinating thing. And I will say this too, because, I mean, most of my listeners know that I have a huge emphasis on helping people with addictions, the recovery community. What causes someone to go into personal and professional addictive behaviors, from workaholism and behavior, from sex and gambling to drugs and alcohol. And I've been very open about being an addict. And I was a terrible drug addict when I was like, you know, between the ages of 16 to 18 years old and everything. So we've talked a lot about addiction. And what I want to share in the beginning is you do such a great job. Towards the end of your book, you describe different types of individuals and ways that companies design habit forming technologies and they can be facilitators, peddlers, entertainers, and what you call dealers. And people will can read the book to get a much deeper understanding of these, but you actually talk about the morality of what you're creating and how to use it. And I think where you're coming from is just a real value creation place, not a book on how to imprison people with addictive sort of things. Although you do a great job of describing exactly how that works and how this company.

I wrote this book for two reasons. The first reason I wrote this book is that I have been an entrepreneur. I've sold two companies. I know exactly how hard it is to build a product that people actually want to use. That is not easy. A lot of people say it's easy, it's not. So the first reason I wrote this book is that as a former entrepreneur, I was banging my head against the wall trying to design products and services that people would come back to and use. And so my first calling was to help those other entrepreneurs out there today to utilize some kind of framework to make their life easier. We can talk about this hook model, this four step process that we see in all sorts of habit forming products, but here's kind of the second reason I wrote the book is that I believe the world is becoming a potentially more addictive place. And the way that we can do something about this, the fact that things are becoming, they're becoming better, right? The products and services we use are becoming better and better with time. That's exactly what keeps us using them. So the same tenets of these products that make them better also make them potentially more habit forming and more addictive. So the second reason I wrote this book is that I think all of us need to become more aware as consumers, as users of these products. We all need to understand how to put technology in its place. I mean, I don't know anybody here in Silicon Valley, where I live, that's not struggling with too much technology. And so I think the remedy to that is not, you know, we're not going to throw our iPhones out the window and never use them again. That's just not reality. Right. We have to use these technologies today. But the idea is by understanding the four steps of the hook, you can not only help people build healthy habits in their lives, but you can also break the unhealthy habits that you don't want so that you make sure that you control your technology as opposed to your Technology controlling you.

Right? Awesome, awesome. So what we'll do, we'll get to the four step hook model in a moment. I want to first just kind of go right to square one, because the subtitle of your book is how to build Habit Forming Products. How do you define habit and when does something become habit forming?

Right, so the definition of a habit is the impulse to do a behavior with little or no conscious thought. It's about 40% of what you do every day, day in and day out, whether you like it or not, is done purely out of habits, these behaviors that we do with little or no conscious thought. So the goal of a habit forming product is to become one of those behaviors, is to create this mental association that with little or no conscious thought, you're using a product without any kind of prompting, without any kind of expensive advertising, without spammy marketing messages. You're using the product, you're using the app or service on your own. I called it unprompted user engagement. So that's the ultimate goal of a habit forming product. And so when you think about the kind of products that I discuss in my book, some of the masters of habit formation think companies like Facebook and Twitter and Instagram and WhatsApp and Snapchat and email and our iPhone. Even you think about spectator sports, how easy it is to become engrossed in them. All of these things utilize these hooks. And what we can do is learn from these principles, right? We can learn from these masters of habit formation to figure out what are these people doing inside their product. What's the deeper psychology that drives our behavior that we can learn from and then of course incorporate into our own products and services.

You know, I'd like to ask you about how you went about approaching this subject matter and how much work did it take for you to uncover this? Because, you know, what's cool about your book is it's not a super huge book. I mean, people can. It's very densely packed with really. You know, I don't endorse books this strongly most of the time because I read a book. But I would put your book in just a category of a world class, easy to read, simple to understand, powerful, very useful book. And it's not something that, yeah, it's not something that someone could just sit around one day and philosophically write about. I mean, you had to do some real serious research in order to document the stuff you did. Even your whole case study of the Bible app, just how well you describe that, I mean, how did you go about Doing this. I mean, what, what point did you're like, I'm going to study these companies because no one else has ever done it before and I'm going to document it. So what was the journey of creating Hooked?

Well, that's, that's it. First of all, it's a huge compliment to me because, you know, there's this quote I really like by William James who said that the art of being wise is the art of knowing what to overlook. And so that's, that's kind of the lens that I started with because look, I read a lot of business books and let me tell you, I'm not shy to admit it, I don't finish them. You know, I'll get maybe a chapter in and I'll kind of have the main idea and then I don't really need to take the rest of my day to learn all the other ideas that just basically support the main central thesis. So that's not the book I wanted to write. I wanted to write something super practical because I've been an entrepreneur twice. And let me tell you, I never read business books when I was in the trenches because I didn't have time. I was so busy running my company that I just didn't have time for fluffy stories and interesting anecdotes. I needed to be told what to do. And so in the back of every chapter of my book, you'll find two things you almost never find in a business book. On one side of the page you'll find a summary, like the CliffsNotes version of what you just read. And a lot of business authors don't do that, I think, because if you actually summarize what they just talked about for the past 40 pages, it'd probably be one or two sentences. So they're kind of scared of being naked and just saying what they want to tell you. So I give you a one page summary of that chapter. And then on the other side I have a section called do this Now. Like literally the questions that you need to ask yourself if you want to build a habit forming product. And I did that because again, like this is written from an entrepreneur's perspective. I know how hard it is to build something awesome and I'm trying to help those people who are struggling with trying to figure out how to build a great product or service and to make it happen for me, I'm trying to help them out in the quickest way possible. So the book is relatively short, it's not a very long book, and I excluded a ton. I mean, there's, you know, what you see in that book is only a tenth of what I wrote, but never made it to the book because I didn't think it was absolutely necessary for the reader to know. And so there's not much fluff. So that's a huge compliment. And then how did I get to this subject area? Well, it started from my personal experience having founded two companies, being in the trenches, seeing many of these techniques used in the advertising and gaming industry. And the funny thing is that even in those industries that are so dependent on changing users behavior, on changing consumers actions, it's interesting that not many people actually know the why. They just know, you know, they just know that it works, right? They see what their competitors are doing, they see what has been done before, and so they just keep doing it, but they don't actually know the underlying psychology of why it works. And so it's much more powerful to understand kind of the quirks and the patterns and tendencies of human behavior so that we can design products and services with that in mind. And then we really become masters of it, right? But it fundamentally starts not by copying the other guy, but by understanding soundly how these principles play out so that we can apply it to building these products and services. So it really came out of my years of experience in those industries. And then when my last company was acquired, I had some time on my hands and I wanted to get back to what I really love to do, which is write. I've always enjoyed writing and more than anything I wanted to build another company. I thought at the time, and I had this very strong hypothesis that when it comes to many of the technology products we use, that habits matter even more than ever. So this was 2012, so this was three years or so now. And I had this very strong hunch that as the interface shrinks, right? So that as we go from desktop to laptop to mobile and now to wearable, every time that happens, there's just less real estate on people's screens to tell them what to do, right? So as that happens, habits matter more. And we can see this. I mean if you look at the home screen of your phone and then you flick to the right a few screens and you see all the apps you don't use because you don't see them, you realize how important habits are, that it's just these products that we use frequently enough that actually carry the day. And that's honestly one thing that really was a real eye opener when I realized this, this truth that many people don't want to accept, but I think is really a fact, is that there is no rule anywhere that says the best product wins. You realize that, like I've never seen an 11th commandment that says the best product wins. And so a lot of people out there think, well, I'll just make the best product and I'll give it all these bells and whistles and it'll be super awesome and then everybody will come and use it. And that's just not the case. That many times when it comes to the products we use, particularly when it comes to tech products, it's not the best product that wins many times. It's just the one that owns the mind monopoly, right? It's the one that owns the habit, the one that's first to mind, that carries the day. And so that's, you know, that combination of my own work experience, the importance of habits, and how I was seeing how products that weren't necessarily better but were better at forming habits were the ones that would win. Those three things kind of solidified in me and I knew I had to write this book.

No, that's great, that's great. And you know, what you just said is such an important point that I think a lot of people reject it or don't want to believe it, especially if they're people that are good people that really care, that have integrity, that are craftsmen or craftswomen. I guess if you want to be politically correct that really do create things that they believe are of the highest quality. And then they get frustrated when they see people that have something that, that they don't consider as good or they just know isn't as good, that are making more money. I mean, you even describe it in the book about. I can't remember the person's name that you mentioned in the book about Twitter, how you can literally recreate the code or whatever for building Twitter in a day. And there are different platforms, I think it was app.net or whatever that would be a better version. But it's literally having ownership of the market and just being in the mind share like you had mentioned. I mean, this has nothing to do with habit forming technology products. But I remember back in the day when I first started teaching marketing, we would ask audiences say the term pizza what comes to mind. And people would most at that point point in time, 80% of an audience would say Domino's and then Little Caesars or Pizza Hut. Those were like the big three pizza companies in America. Depending on where people are listening to this at. However, every single person has had better pizza than Pizza Hut, Domino's and Little Caesars. But those were the companies that had the market share. And it had nothing to do with. And I realized early on that there's no relationship between being good and getting paid. I mean, you can be the best in the world and be totally broke. So that's important for people, the hopeful thing.

And I think that story really illustrates, I think a really important point that the way that companies used to have that mind monopoly, the way they bought their way into being first to mind, used to be through display advertising. Right. So the people who you would say, hey, what do you think of when you think about pizza? And the reason they would say Pizza Hut or Domino's was because those were the people who spent the most money on advertising. It used to be that when people watch TV as the only medium of entertainment several years ago, you could buy your way into people's minds. And so while that was the case, that wasn't very good for the little guy because if you couldn't afford mass media advertising, you were out of luck. So the hope and the promise and what gets me excited about the future is that for the first time we see companies building these mind monopolies, building these habits inside users head, not through mass advertising. Right. When was the last time you saw a Facebook ad on television? You know, almost never. I don't ever remember seeing a face. I don't think Facebook's ever run a television ad. You never see mass market ads for these companies. Why? Because they're building habits, they're changing user preferences, they're winning that first to mind position in the consumer's brain not through display advertising, but for the first time through experiences. They're running people through hooks. And so that's a huge shift, right? That for the first time with very little money spent on ads, you can actually build these habits in users lives by following this four step process I describe in the book.

Yeah, well, you know what, let's go through just maybe, I don't know, three minutes or however long you could do the overview of your four step hooked model and, and then we'll go into some depth on some of the steps. I would love to do that if you could give an overview of the hooked model.

Absolutely. So the hook model is this experience designed to connect your user's problem to your solution with enough frequency to form a habit. So these hooks have four basic steps. They start with a trigger, an action, a reward and an investment. So when it comes to the trigger phase, there's Two types of triggers. There's internal triggers and external triggers. Internal triggers are these things that we experience in our day to day life that prompt us to action, but where the information for what to do is stored as a memory or an association in the user's mind. So, for example, when I feel bored, that's when I check ESPN or check the news or stock prices or sports scores. When I feel lonely, that's when I check Facebook. When I feel uncertain, that's when I'm on Google. These internal triggers, these are the promised land a company wants to go in terms of forming an association with one of these internal triggers. These itches in the user's life. And they're not creating these itches per se, they're catering to these very old. These are things that have been with humanity since the dawn of mankind 200,000 years ago. We've always felt lonely or indecisive or fatigued or uncertain. And so the ultimate goal of these products is to be first of mind whenever the user experiences these emotions. But to get there, they have to start with what's called an external trigger. And an external trigger. These you'll be very familiar with, right? These are things in our environment that tell us what to do next with some piece of information. Click here. Buy now, play this. All of these things in our environment tell us what to do next. After the trigger comes the action. The action is the simplest behavior done in anticipation of a reward. So it's something like scrolling on Pinterest or hitting the play button on YouTube or, or searching on Google. Something incredibly simple done to get an immediate reward. And there's a lot more we can talk about, but I'm giving you the 30,000 foot version of the hook. The variable reward phase is where the user actually gets rewarded. They get what they came for. And it tends to not just be a reward, it's oftentimes a variable reward. So this comes from the classic work of B.F. skinner. Skinner talked about how when he took these pigeons and he put them in a little box and inside this box he had a little disc to peck at. And every time the pigeon would peck at this disc, they would receive a reward. They would get a little food pellet. And at first Skinner would have the pigeons peck at the disc and receive a reward. He observed that they would very quickly. He could train these birds to very quickly peck at the disc when they were hungry, right? So peck at the disc, get a reward. They did it whenever they were hungry. But then Skinner did something a little bit different. Skinner introduced this variable, reward. So sometimes the pigeon would peck at the disc, but nothing would come out. The next time the pigeon would peck at the disc, they would receive a reward. And so that variability, sometimes yes, sometimes no, turned out to dramatically increase the rate of response. The number of times these pigeons pecked at the disc increased when the reward was given on a variable schedule of reinforcement. And so in all sorts of products that we find most habit forming, most engaging, the things that capture our attention and won't let go, you'll find these variable rewards. Whether it's gambling, whether it's, you know, any video games, whatever you might consider that really captures our intention, you'll see these variable rewards. And we see this all the time in many of the technology products we use. And then finally, and perhaps most neglected, is this investment phase where the user puts something into the product in anticipation of a future benefit. So in the case of, let's take a messaging app like Slack or WhatsApp or any number of other messaging services, when you send someone a message, when you invest in the platform to send someone a message, you're investing in the service because you're not necessarily getting something right away, right? There's no immediate reward when you send someone a message. There's no points, there's no badges, there's no leaderboard. You don't really get anything right away. What you're doing is investing in the platform for a future reward of a reply. And that reply comes coupled with an external trigger that brings you back through the hook once again. And so those four steps, trigger, action, reward, investment. These four steps is how we see customer preference changed, how tastes are formed, and how these habits take hold. So that's about as quick of a run through the hook as I could possibly give you.

No, that was fantastic. So, yeah, I love it. That was a great summary. Let's go through them with. I want to bring up to the listeners too. Is that through thinking this through? And I mean, you provide really good questions also to get people to think about it. It's not just saying, hey, here's what it is, but it causes your brain to actually think about how what you're doing with your products, your services and your business and your outcomes, how it act actually impacts people. And what can you do to make yourself way more desirable, way more appealing, way more useful. There's a great term you use in the book. It was Gandhi's quote, be the change you want to see in the world, where you say, build the change you want to see in the world. And I love that when I read that, it really made me think before the Internet even existed. You know, a little bit of my story. But I was a dead broke carpet cleaner living off credit cards. And I learned marketing because I needed to eat, I needed to survive, and actually learned some methodologies that allowed me to build and grow my business. And then I started teaching that to other cleaners. I mean, that's literally how I started my marketing business, which has now become Genius Network and all the things that I currently do. But when I discovered things that I had never known before, what I set in my mind was I'm going to create for these people that are professional carpet upholstery cleaners and fire and flood damage restoration people. I'm going to create for them what I wish had existed when I first got into the business so I didn't have to go through the misery that I went through. You know, going deeply in debt, trying to figure out how to make things work and literally nearly not making it. And I've always thought, how do you become more useful to people so that people can really utilize that? And by going through this hook model and thinking it through, I think everyone that is an entrepreneur listening to this simply cannot avoid becoming more useful to humanity. Unless of course, you happen to be an evil person that's using all of this for destructive ways. It just literally it's a value creation model. So I want to kind of go through some of it and go a little bit deeper with it. And of course, you know, everyone needs to read the book, that's just part of it. But we'll talk about things too that aren't in your book. So let's go to go back to the first one. In the first step, what are triggers and how do the internal and external triggers work together so that people get a much deeper perspective on this?

Sure. So these external triggers, you know, these are things that, like I said, that are in our environment. They tell us what to do next. And so there's some principles around how we can design effective triggers. But I tend to find that that's actually not most people's problem. We know how to get attention, right. We use contrast and we use grouping and we, we do things that can get people's attention through these external triggers. And then we have these internal triggers which I think people don't think about anywhere nearly enough. So it's amazing. You know, I've consulted with many big name technology companies here in Silicon Valley. I'm sure you can, you can think of a few, as we think about some of the most habit forming products in Silicon Valley. And it's amazing. I'll walk in for one of my consulting sessions and they'll tell me all the specifics of the product and the features and all the fancy bells and whistles the product can do. But when I ask them, okay, but what's the user's itch? What's the internal trigger? What's the psychological need to use this product? They haven't a clue. And so that's a big potential shortfall of someone who's building a product. If you're building a product that you want to turn into a habit, you've got to be able to identify what's that internal trigger, what's the thing that occurs with sufficient frequency in the user's day. And frequency here is a big deal. There's a lot of research that shows us that if the behavior does not occur within a week's time or less, you're not going to get a habit. So that's a big deal. So if your product is not being used within a week's time or less, you have to really consider whether you can ever make it habit forming. And chances are you can't. So then the question becomes, well, okay Nir, that's great, but my product is not used frequently. What do I do? So I'll relay a quick story. I was at a convention of 700 real estate agents. They brought me in as a guest speaker and the woman who hired me brought me on stage and said, you know, here's Nir Eyal, he's an expert in habit formation. He's going to tell us all how to make buying and selling a home a habit. And you can see where I'm going with this. There is no way that you are going to make buying and selling a home a habit. It's the antithesis of a habit, right? It's something that does not occur frequently and it's something that requires a ton of conscious thought, right? We deliberate ad nauseam about what we're going to when we're going to buy and sell a home. It's never going to be a habit. So I couldn't back off the stage and say, like, look, I'm sorry, you hired the wrong speaker. I gave my speech anyway and I taught them how to build habit forming products. We did this whole long workshop and at the end of the workshop I was amazed because people really got it. They said, look, you know, I figured out how we're going to make this process into a habit. We're not going to make buying and selling a habit. We're going to make something else a habit. So for example, one woman came to me and said, look, I'm a real estate agent for this community and what I'm going to turn into a habit I want to own the internal trigger of financial anxiety. Is that something that occurs in people's lives a lot? Absolutely. People are constantly sorry about the stumble there, constantly thinking about financial anxiety and so she wants to own that internal trigger. Whenever someone in my neighborhood has anxiety about their kids college fund or the gyrations of the stock market or can they make their retirement savings goal, whatever it might be, I want them to call me. I want them to come to my website, I want to check out them to check out my newsletter, my app, whatever it is, I want them to give me a call. I want them to be in the habit with little or no conscious thought to think of me. Whenever they think of anything having to do with financial insecurity, well, guess what happens when anybody in her neighborhood wants to finally buy and sell a house? Guess who they're going to turn to? Of course it's going to be her. So the mantra I want people to remember about, about the importance of triggers and about how to, you know, what the future of business looks like, I think is that monetization is a result of engagement. Okay, that's the mantra. I want everybody to print that somewhere in their office. Monetization is a result of engagement. That far too many companies think, okay, here's how we make money. So here's what you consumer needs to do for me, and that just doesn't work. I think the future of business is trying to figure out how to engage people in something that's valuable to them throughout their life enough to build a habit so that when the time and place comes for them to check out, for them to monetize, for them to buy something and give you money, well of course it's going to be you because they've built a habit around engaging with you. So that that just talks to the freak. The importance of frequency and triggers. Figuring out that right internal trigger that occurs with enough frequency to form a habit.

That's great. And there's such a good point there too. I love that term monetization as a result of engagement and in the past, I mean, what's really, really cool about the way you describe modern day services and things that people use is that the days of having really powerful and effective advertising has shifted Now, I'm always a big fan of however you can tell. I think of selling as influence, and I think of marketing as storytelling. So there's always going to be the time and the place where you can articulate and explain and describe what it is that you do so that people understand it. So marketing is never going away. As a matter of fact, you. You have to become more sophisticated, building in something that is really damn useful, though. It's like my buddy Dean Jackson, who we do the I Love Marketing podcast with. He says, a convincing argument is way more effective than a compelling offer. So a compelling, irresistible offer is 10 times more powerful than a convincing argument. And when you have a habit that is just built in and people are doing it, that is the marketing. That's what you do, and that's what makes it valuable. Now, you mentioned the real estate lady owning financial anxiety of people in her area. I have a friend who is a genius network member named Richard Rossi, and he has this great line where he says, wherever there's anxiety, there's opportunity, which is so true.

It's so true.

Yeah. In your particular, like so many of the companies that you describe could be, you know, the anxiety is this. I'm freaking bored, and this takes away my boredom. I mean, and this makes me feel good. It makes me not feel isolated. How much of the successful companies in these internal and external triggers are not positive, but negative is where it starts. I mean, I would think that most of the things that you're seeing as successful are people transforming pain and anxiety, not enhancing pleasure. I mean, is that. Is that true?

Well, a bit of it is semantics, right? A bit of it is the way you want to look at it, because it's kind of two sides of the same coin. Because if you think about, let's take a habit like using Facebook, right? So you could say, well, I use Facebook because I'm seeking connection, okay? So that's positive. The other side of that same exact coin, the same exact psychological tendency of why you use Facebook is that you're lonely, right? So I like to think about it in the. In the negative. Not because I'm a pessimist, quite the opposite. I'm quite, quite an optimist. I like to think about it in the negative because as product makers, as entrepreneurs, as people who are building stuff, we have to think about the user's pain. Why? Because if there's no pain, there's no problem, right? If everything is hunky dory, I'm good. I don't need anything. And the Goal of products is to satiate some kind of need. And so I want product makers to think in those terms of what's the pain point. Far too often I see the problem, especially in the tech business is, is, you know, we can do this cool whiz bang thing with our technology and so people will just love it. I see something very similar when it comes to offline goods in terms of price. People buy my product because it's cheap, okay? So I'm gonna undercut its competition because I've got a cheaper price. That's not necessarily the customer's pain. Sometimes it is, but far more often there's this other anxiety, you know, that not being able to trust somebody is a form of anxiety. That's a customer pain point. And that's a situation where, you know, as opposed to what classical economics tells us with supply and demand and how people will buy more of something that's cheaper, you actually see that people will pay for something that's more expensive when they're buying something else. Right. So if you're buying trust, you're actually willing to pay a higher price. That goes against what, everything we know about rational decision making. But of course there's other heuristics, there's other things that inform that decision. And so there's all kinds of these examples in human psychology that can inform how we should build our products and services. And so I always bring people back to understanding what your customers pain really is, because that's the only way you can tailor your product or services to alleviate that pain, to scratch the user's itch to give people what they want. Yeah. Love it, love it.

Awesome. So in the second step, the action phase of the hook model, how do behaviors work?

Yeah, so this phase of the hook is all about getting the behavior to be as easy as possible to do. When it comes to habit forming products. It's all about getting people to do the behavior as easily as possible, as quickly as possible, so we can pass them through the four steps of the hook with enough frequency to form these habits. So this is where we really want to think about good design. And we hear a lot about design these days. Design has kind of become this buzzword that everybody needs a designer on their team and for good reason. I mean, great product design is about eliminating the friction, right? That's, that's what we, we say that a lot here in Silicon Valley. That every product wants to reduce friction, reduce the effort that it takes to doing a particular behavior. And if you think about it, if you zoom Out a bit. All innovation is about reducing friction, right? I don't care if it's the cotton gin or the iPhone. All human. All innovation is about reducing the steps, reducing the effort between the user's needs and the reward, getting what it is that we want out of the product. And so in the action chapter of the book, I show you how, I tell you exactly the six tenets of user ability. How to increase users ability, how to make behaviors as easy as possible to do. And interestingly enough, the counterintuitive insight here is that most people think, well, if we want to get someone to do something, we have to boost motivation, right? We have to convince them to do the behavior. We have to talk to them and preach at them and show them ads. And yeah, that's part of it, right? Like that might be part of the journey is to increase motivation. But it turns out that in my research that actually is less important than just making the behavior easier to do. I can't tell you how many times I see products shoot themselves in the foot because doing the thing that you want people to do is just too damn hard. And so I show people exactly how to take the friction out of the process. Yeah, I love it.

And I mean, of course by doing that, I mean, it's sort of like bringing to life the easy button thing. Just the more that you can actually do that, the happier you're going to be and the higher the chances of success. Okay, so on the third step of your model, variable reward, how is variability used to keep people coming back to the product or the service?

Yeah, so variable rewards are kind of freaky, frankly.

Totally. Yeah, completely.

It's one of those things that once you see in the world, it's one of my favorite sections of the book to teach when I teach my workshops is teaching about these variable rewards. Because you kind of see people's eyes light up and they realize how we are all in these Skinner boxes with the products and services we use. You know, we talked about B.F. skinner earlier, the father of operant conditioning took these pigeons and he did those famous experiments with, with giving a reward, a reinforcement on a variable schedule of reinforcement and how these pigeons and as well as people respond more, we become more entranced, more engrossed by these experiences. When there's a bit of uncertainty, a bit of mystery. And of course the classic example is of course gambling. You know, when you pull on a slot machine and you see those little rotating wheels and bells and whistles and all the lights going on at the end of the Day, it's about the uncertainty of the reward, what you might win at the end of the day. And so with each pull, there's that uncertainty, there's the mystery. And of course, we see this in all sorts of contexts. I mean, what part of what makes sports so engrossing? And it's amazing. I'm not a big fan of watching sports, but let me tell you, I love watching people watching sports. It's fascinating because it's one of these weird things that we only do, we only allow ourselves to do in public in very few controlled circumstances. So if you go to a sports bar during a big game and you know everybody's riled up and watching the game, and if you were to go up to that television set and turn off the tv, I mean, people would literally shoot you, right? Like you would be threatening your life in America if you turned off a television during a big game, during a, at a sports bar. And why is that? What's going on? Well, of course it's variable reward. There's all this uncertainty that keeps us engaged. At the end of the day, who cares? Nobody remembers what last year's games turned out to be. Nobody remembers who won the final Four two years ago or three years ago. It's a long lost memory. Nobody digs those videos up and watches them again and again and again because we already know what's going to happen. The, the outcome is certain. It's when it's uncertain that we become engaged. And so in all sorts of products that we see becoming habitual, we find these variable rewards. My favorite example, online, when you think about what makes Facebook or Twitter or Instagram so darn habit forming. Why are literally billions of people using these products and services so often? Well, if you think about the feedback, right, when you open up Facebook, you're never quite sure what you're going to see. There's uncertainty, right? What did people post? What photos might I see? What are the comments going to say? How many likes does something get? All of these things have a high degree of variability. So opening your newsfeed and checking and checking and never done searching for that next interesting piece of content uses the exact same psychology as pulling on a slot machine.

Yeah, totally. I mean, I would almost, you know, so much about this and I actually, you know, being, being a marketer, I always, you know, tell people that marketing is really applied psychology. I mean, when you start studying why people behave the way they do, I mean, you learn more about human behavior than I can't even imagine another profession other Than the, than this world of, you know, that I would coin, you know, Mark and Mark to learn more about how people do what they do and observing them. And I'm very similar to you and I could care less about watching sports, but I think it's fascinating to see how people respond to them and I think it's an incredible model that entire economies and community engagement have been built around. So all of that's fascinating to me. Now that being said, here I am last night, I got sucked into this trap and I don't do it all the time, but I'm literally looking at my iPhone and I had important stuff that I have to do today. A lot of things going on. I mean my interview with you and I have meetings before and after. I have a real busy day and I literally spent two hours, I haven't done this in the long ass time but when I had to get up early in the morning, I spent two hours looking at feeds and articles on the new, you know, iPhone news app that they just released with all these different articles where I self select things that are my interest level to me. And then Facebook sitting there just scrolling and sucked into it like a gambling addict just swatched over a slot machine, pulling the handle mindlessly. And I literally spent probably two hours last night doing mindless activities looking at that. And you know, of course I know that this is. There are millions of people that do that every single day.

Right.

But the fact is it just sucks you in and do you with all of your research and everything, what the hell is going on in the human body that causes that? I mean what, what, what is.

What has happened?

How would you describe it?

It's, it's nothing more than the hook. I mean, you know, let's take. Just because you mentioned it, let's take the, this Apple news app. So this news app, the way it works. I'll walk you through the hook. The internal trigger is boredom. Boredom is something that humans have faced forever. There's been a lot of research. Timothy Wilson did a great study that he found that when he put people in a room that after a certain period of time, some people would actually prefer to have an electrical shock than to just sit quietly and do nothing. I mean, we hate being bored. I mean, and it's not that crazy. You think about. You laugh, right? Like wait, people would rather have an electrical shock than to just do nothing? Yeah. And it's not that crazy actually because we seek entertainment, we seek novelty. We really hate to be bored. And so, you know, as leisure Time. I know it doesn't seem like it, but, you know, the average American actually has more leisure time today than ever. And so every little gap of unaccounted for time is something that we seek to occupy and just, you know, make sure we're not bored. And so that's the internal trigger, I think, for the news app, I think. You know, I happen to believe that people tend to read way more news than they actually need. That, you know, I used to be a news junkie, and there's a reason I use that term that's also used with addiction, because I was very much addicted to news. But then over the years, I've decided, look, you know, this is just something I'm not doing to be a better person or, you know, I was convincing myself that I was reading so much news because I said, that's what a responsible citizen does. No, I was doing it because I was bored.

Yeah.

And once I discovered that I could put it in its place, I still read the news, but a lot less than I used to because I just found that I was not doing it for the right reasons. Then the action is to open up the app. Very simple, very easy behavior. Open the app. The variable reward is in the content itself, right? Every scroll is the next headline. Some are good, some are bad, some are interesting, some are mundane. And that scrolling and scrolling and searching for the next headline, the next interesting piece of news are all parts of this variable reward, Right? It's just like pulling on a slot machine. And then finally, the investment. Well, what's the investment with this Apple news app? Well, here's the thing. They're collecting data about you. And so the investment in this app is the more you read, they're tracking what you read, how much of it you read, whether you like it. And based on that data, they are tailoring the product to you. So the more you invest in the product by using it, the better and better and better and better it becomes based on your data, both passive, passively collected data as well as actively collected data. Like when you like an article or when you tell it, what kind of stories you like, those are all forms of investment. And then, of course, then it loads the next trigger. So that next evening around 7pm, when Apple knows that you're probably bored, there was a great study done a few weeks ago in Spain that found that with a very simple mathematical calculation, phone makers can actually determine when you are feeling this emotional state of boredom. And that's, of course, when they trigger you with an external trigger that Says, hey, how about checking up and getting up to date on the day's news? That's the external trigger prompting you through this hook once again. That's why you use it.

But I'll tell you, though, but most people wouldn't even begin to think about it this way. And once you know this, I mean, think about just what an advantage you have by positioning your products, your services, your company, and just what it is that you create. Because not knowing this will send so many people down a rabbit hole of creation that will end up in most cases, failing miserably because there are some sophisticated products and services and people that are thinking this through. And of course, like a guy like you writing a recipe book about this, it's really damn valuable to have those recipes and to understand what the hell is going on. Now I'm going to even do it, like to give kind of a psychological sort of on audio, sort of a hook thing here in the variable rewards section, when you summarize it with, remember and share and then do it. Now you talk about three ways your product might heighten users for variable rewards. Using rewards of the tribe, which is gratification from others. Rewards of the hunt, which is material goods, money, information, and then rewards of the self, Mastery, completion, competency, consistency. There's a lot to this. And so you got to read the book in order to go deep into those things. And if we just switch to the next question and go further on investment, which you were just talking about, this will be really useful. But the mere act that I just said those things instills this, like, oh, shit, I got to learn about rewards of the tribe, rewards of the hunt, and rewards of the self, which you do. I mean, you really do. It's a game changer. And that's why you need to read his book.

Thank you, Jeff.

It's more like a cliffhanger I'm trying to create here. You were just talking about investment, so. Yeah, talk about that more. So how do small investments of effort that people make people make that allows them to return and keep using the product and service? Please talk about the IKEA effect, because I love that.

Yeah, we talked about these investments and how important it is to get people to put something into the product. Now, a lot of companies don't think about this step. They think, look, the goal of our product and services is to deliver what the user wants. Yes, it is. Right? That's absolutely the case. And that's what the reward phase is all about. Right? Scratching the user's itch, giving them what they want. But if you're not asking the user to invest in some way, and I don't just mean with money, if you're not asking the user to invest in one of these other forms, then you're missing a huge opportunity. And these different types of investment includes doing something that the user does, something that the user puts into the product to make it better with use. So, for example, data, we talked about how the Apple app collects data about you and makes the product better and better with use. Content. The more content I put into an app like Google Drive, right? The more documents I save on Google Drive, the better it becomes as my one and only cloud library, the more followers I have, right? So the more followers or connections I have, for example, on Twitter, the more followers I have, the better it becomes a way for me to reach my audience. So if Twitter tomorrow were to say, look, you know, we're going to shut down Twitter unless you start paying for it, who's more likely to pay? Is it going to be someone with 10 followers or 10,000 followers? Well, of course it's going to be the person with 10,000 followers because they stored all this value in the form of their follower count. And then finally, reputation. So on sites like Airbnb or ebay, these sites where reputation on the platform matters, the more I invest in my reputation, the better I can, the more I can charge for my goods and services using these platforms. And how likely am I to leave one of these platforms after I've stored all this value in the form of reputation? Not very likely, right? I'm not going to go bounce from ebay just because a better product comes along because you know what, I've like stored all this value in terms of my five star reviews. And I'm not going to leave for some other platform because I've stored value, I've invested in the service based on my reputation score. So these are just a few ways that you can get people to invest in your service to make them more likely to return. One other way that you mentioned, Joe, about investment is that we turns out that the more effort we put into something, the more work we put into something, the more we like it. And so that's where this IKEA effect comes from that Mike Norton and Dan Ariely studied at Harvard. What they found was, is that people have this weird tendency to have a higher affinity for things that they have built themselves. And so they call it the IKEA effect. Because you know, when you go to Ikea, you buy some crappy cheap furniture but the fact that you built it now means that you're going to take it from your dorm room in college to your first house, to your second house with kids, and maybe keep it for the rest of your life. Even though it's just some cheap piece of furniture, the fact that you built it, that you put effort into it, suddenly makes it more valuable. And so we find that there's lots of these circumstances. We're actually getting people to put work into something. Notice, by the way, it comes after the reward. That's very, very important. If we ask people to invest in the wrong time in the hook, it can totally backfire and they'll never get to the reward in the first place. But if we ask people to invest after the reward phase, it can make them want the product more next time. It makes it more and more valuable with use. Yeah.

That's so awesome. I mean, I was even explaining this to my girlfriend last night. I was saying, you know, if a parent has some piece of artwork that their child drew in crayons or something, they may hold onto it for years. Now, if it was some other child, you would have no value on it whatsoever. You wouldn't even think about it. But just the mere. There's this book that has been huge, which is the Life Changing Magic of Tidying up by Marie Kondo. It's this organization book. And the whole premise of the book is, does this spark joy when you hold onto it? And what she writes about is the more effort that you put into something, be it an article of clothing or a piece of artwork or whatever, the harder it is to get rid of it. That's the whole point. The harder it's going to be to get rid of the IKEA furniture. The harder it is to give up your business. If you've got a ton of Yelp reviews that are very positive, it's human psychology. So it's very powerful for people to think about investment. For entrepreneurs and business owners listening to this, what are a few immediately actionable ways that they can use? Utilize this model now. Yeah.

So I think the first step is to ask yourself, is the product or service that you're building, does it require a habit? Not every business needs a habit. This is not magic pixie dust that you can pour in every business and you're going to be the next Facebook. Lots of companies just don't need habits. And that's totally fine. In which case what you can do is you can take some of these principles that I talk about in the book and you can Use them piecemeal, right? You can figure out, do I understand my triggers? How can I make the action easier? Could I use variable rewards? Am I asking for an investment in the right way? And you can take those lessons piecemeal. Now, if you're in a kind of business that requires a habit, if the way that you create and deliver value to your customers necessitates unprompted engagement, meaning you couldn't afford to pay for ads every time to bring people back, just like Facebook and Twitter and Instagram and Slack and WhatsApp. You know, these companies, they would go out of business if they had to pay for advertising every time to give people back. They have to form habits or they die. And if that's the kind of business you're in, then you have a high bar because you have to do all four of these steps. And so what I hope this can do for people is that when you're thinking about, hey, how do I improve my product? How do I improve my service? How do I improve my business? How do I improve the customer experience? You're asking yourself, do I meet this test? Do I have the four basic parts of the hook? And if the answer is no, how can I fill that hole? How can I make sure that I have these four basic elements? That's really the most actionable step you can take away. The thing I want want you to remember is that these habits are not mistakes. Right? They're not accidents. Zuckerberg did not get lucky. He knows what he's doing. The guy who built Instagram, they were symbolic systems majors at Stanford, which is a degree that combines computer science and psychology. They know how the human mind works and they design these products and services to be habit forming. And so that's what I think all sorts of other companies have the opportunity to do now by using these four steps of the hook.

Yeah, that's great. That's great. Now, we talked about it early in the beginning and you do cover this in the book, but I just want to. I'm going to ask you just a few, you know, kind of like rapid fire questions and things you can talk to. Are there any moral implications or thoughts you have about the model being used for good versus bad?

Yeah, that's, that's a great question. I'm not sure it's a rapid fire question.

No, you know, and by the way, you don't need to answer it in two seconds to go and take the time you need in order to respond to it.

So, yeah, it's something I think about deeply. It's something that I'm very concerned about. I do believe the world is becoming a more habit forming and more potentially addictive place. The way I think about it is that, you know, there are very few companies that I see that actually come to me and say, look, we have a problem that people are overusing our product. Because the vast majority of people who come to me looking for help or looking for consulting services or read my book, they're looking for how to get people to give a shit about their product, right? The problem is nobody's engaged, nobody cares about our product, even though it's a great product. And so for the vast majority of people, and I'm talking, you know, 99% of products out there, they have good products, they have good services, but for lack of good design, people aren't using it. People aren't doing the things they wish they would do with the products because they're not properly designed. And so that's really where my heart goes out. That's really the people I want to help. People who are building stuff to help others, and yet their products aren't designed well enough or with these tenants to keep people coming back. So that being said, you know, there are people who are using these tactics for frivolous reasons and maybe even for nefarious purposes. And those type of folks, you know, there's certain industries I won't work with. I won't work with gambling companies, I won't work with porn. I won't work with companies that are even doing social games like, you know, Candy Crush or Angry Birds. I won't work with those guys either. Because there's some industries that actually rely on addicts and that I have a problem with. But the good news is, and I don't talk about this particular thing in the book, the good news is that for the first time, these companies know, you know, addiction is nothing new. Addiction has been with us for a very long time. The difference is that, you know, many years ago, if you were an alcohol distiller, for example, you could throw up your hands and you could say, well, we don't know who the alcoholics are. How do we know who the addicts are? It's not our problem. But for the first time, these companies that are using digital technology to hook people, they know, right, these social games know exactly who you are and how much you're playing. So they have the option to do something about it. And some of them already are. There's Stack Overflow, which is the world's largest Technical question answer site. These guys actually have a policy in place that says if you use the site more than 20 hours a week, you can't earn any more points. So they basically break the hook. They take out the reward phase of the hook to make sure that you don't abuse the product. And I think all sorts of products building that are building potentially addictive products should use that kind of framework. They should have what I call a use and abuse policy. But again, for the vast majority of businesses, that's not their problem. The problem is that nobody cares. Right. That not enough people are engaging with them in the first place.

Yeah, exactly. No, I mean, it's, it's almost like hardly anyone seeks out what I do because they, you know, just, you know, they just have so much business, they don't know what to do with it. So.

Yeah, that's great.

Well, no, perfect answer. That was, that was awesome. So let me ask you a couple more things. What are some unusual, interesting, rarely thought about ways the Hook model could be used?

Well, I think there's a lot of ways we can use it for good. You know, I put my money where my mouth is, and I do angel investing in companies that I think are using the Hook model in ways that benefit others. So there's a great company I invested in called seven Cups of Tea, and Seven Cups of Tea is founded by a psychologist. And he wanted to, he's a therapist and so he wanted to find a way to reach more people. And so what he's done is use the Hook model to help soldiers coming back with ptsd. He's helping parents of children with a disability like down syndrome or autism. And what he found was that these folks, veterans and parents who are suffering, what he found was that these people needed someone to talk to, they needed some way to alleviate their anxiety. And so how many of them were dealing with anxiety was in unhealthy ways, they were turning to substances, they were doing unhealthy behavior behaviors. And what he found they actually really could use is therapy themselves. But of course, therapy is very hard to get to. Right. It's expensive, it's time consuming. You have to figure out who the right therapist is. It's a lot of work. So instead he built this app and with a push of one button, these folks can be connected to a listener with just one button. And as soon as you're connected to a listener and you start talking to a person who's trained, they're not a licensed therapist, but they're a trained listener, you start Feeling better yourself. And then here's the interesting thing. You get offered the opportunity to learn how to be a trained listener yourself. And then over time, what he's found is the people who actually train, who take them up on this program to become a trained listener themselves, they get better, dramatically better. And they use this process of the hook, of the four steps of the hook process to actually help people deal with their difficulties, to have an ear to listen to, and then become someone who is, who listens to others through this process. And it's all done through these healthy habits by using the four steps of the hook model.

That's awesome. That is awesome. Yeah. I mean, I love hearing things like that too, because it is so cool in a lot of things that I don't run. But I have been either involved in or the catalyst of being in, either the guy that came up with the idea or an investor. And I do have quite a few companies that I'm involved in. Things like joe volunteer.com to link people that want to volunteer with organizations that need it, with EthicalServices.com, which was started in the cleaning industry for finding ethical companies that sign a code of ethics to the ways that I applied Genius Network and genius networking and spaceuniversity.com which I own, which I'm still in. Like, what the hell do I even do with it? Because I want it to be a platform that educates young people on space. And so I'm thinking through everything related to your hook model and how we can improve all of those different businesses. What are your favorite examples of the most effective products, services, companies, or anything else that are using or have used this model?

I think the classic, the products that hook me are the ones we talked earlier of email and Facebook and Twitter and Instagram. Part of my daily struggle, in fact. And I'll be the first to admit that I struggle sometimes with these products because they're so good. They're also very habit forming. And so I think these companies that I profile in the book are the masters of habit formation. These companies like Facebook and Twitter and Instagram and WhatsApp. And as you become kind of a more public person, it becomes difficult sometimes not to use these things, that I even find myself sometimes getting sucked into these products and services more than I'd like. And so here's what I do, right? As the guy who wrote the book on how to build habit forming products, I break the hook where I don't want it, right? And so that's, I think, a secondary benefit of this book is that by understanding how these products work, you can say, okay, you know what? I don't like how I am around my kids when I can't stop checking my damn iPhone. What's going on here? How can I put technology in its place? And I've actually taken many steps to break those hooks. So for example, Twitter was getting to me. I couldn't. I found myself distracted about constantly checking Twitter. Even though it's a great product, I was using it too much. So I uninstalled it from my iPhone. It's no longer on my phone and I only use it during certain times of the day at my desk where I don't feel like it's distracting me my whole day. And I know many folks like this who struggle with using email too much, using devices too much. And it does have a cost. So I think I'm not anti these technologies. Of course I'm not. Right. I help build them. But what I want people to do is to also be aware of these hooks in their lives so that they can make sure they can put technology in its place and not feel like it controls us.

Yeah.

Love it. Love it.

And of course, you know, my ulterior motive with even seeking out someone like you and reading your book and sharing it with other people is, you know, one of the things that I want to do in the world of addiction is help destigmatize addiction. I think the way we treat addicts, at least, you know, people that are in prison stuff, is the modern form of human slavery. And I want to actually create a, you know, as much, not only education based information, but a platform to assist people with addictions because addiction is really a connection disease. So I'm thinking of how to disconnect addiction through connection and how do I actually use the hook model in order to do that. So I'm a student here just as much as anyone, learning better ways to engage. So where should people go if they want to work directly with you? Get more deeply involved with what you're doing and learn more about it. You have your website near and far, but talk about anything that would allow people to go deeper with what we've talked about today. And of course, of course many of my Genius network members are going to meet you in person at the upcoming annual event. But where do people go?

Yeah, absolutely. Looking forward to the genius event. I can't wait. It's going to be great. And you can learn more about me@nearandfar.com near spelled like my first name, Nir and far near and far.com and the book is called how to Build Habit Forming Products and it's available anywhere books are sold.

Awesome. Awesome. Any famous last words? I mean, this has been great.

Any famous last words? I'm not sure. You know, I think I just like to reiterate the point that habits are not formed by mistake. They're very intentional. They're designed. And by mastering these habits, we can master our own lives. And so I hope I've inspired your listeners to look into the power of habit forming technologies and learn how they work so that they can help people live better lives and live better lives themselves.

Awesome. Awesome. And so wherever you happen to hear this interview, if you heard it on ilovemarketing.com or on Genius Network, wherever you heard it, I'd love to have you comment immediately. Go out right now and buy his book. You can also get the audio version of it also if you'd like to listen to it. But definitely read the book. Check out some of Nir's videos online. He's a phenomenal speaker, as you can obviously tell, and great at explaining. Very valuable model here. And also if you happen to work for a company that is having any sort of challenge engaging with people, share this interview and get them a copy of his book. Because I truly think this will change the way that you think about not only your business and your clients, but if you actually apply it, you will make more money, you will engage with more people, and you can probably change some lives in the process. So as always, Nir, great talking with you. Thank you so much. And to all of our listeners, let us know your comments and we'll talk to you next time.