GE 197: Hooked Author Nir Eyal On Mastering the Art of Habit-Forming Products (podcast)

Hey everyone, in today’s episode, I share the mic with Nir Eyal, entrepreneur, educator and author of the best-selling book Hooked: How to Build Habit-Forming Products.

Listen as Nir discusses the power of manipulation (and the two types of manipulation), the four essential elements that create a hook to forming a habit, why it’s not the best product that wins but rather the product that comes first to mind, and the three pillars necessary for every successful new product. He illustrates his concepts using Facebook, Snapchat and Twitter—key, successful companies who have mastered the art of forming habits.

Nir Eyal is speaking at the Habit Summit in San Francisco April 4-5, 2017 about “How to Morally Manipulate Your Consumers.”

Download podcast transcript [PDF] here: Hooked Author Nir Eyal On Mastering the Art of Habit-Forming Products TRANSCRIPT

Time-Stamped Show Notes:

• 00:43 – Leave a review and rating and subscribe to the Growth Everywhere Podcast
• 01:19 – Nir had a solar business, went into gaming and advertising, and learned to “manipulate” people along the way
• 01:47 – There are two types of manipulation: persuasion and coercion
  • 01:58 – Nir thinks persuasion should be encouraged and coercion is unethical
  • 02:10 – Nir saw how persuasion and coercion was used in the gaming and advertising industry and wanted to write it into a workbook
• 03:20 – Some examples of habit-forming products are Facebook, Instagram, Slack, Snapchat, Sales Force and GitHub
• 04:07 – Building customer habits give you a “monopoly of the mind”
  • 04:19 – Your product is being used with little or no conscious thought, even if your competitor is better
  • 04:27 – Great examples of this are Google and Bing
• 05:05 – It is not the best product that wins, it’s the product that comes first to mind that captures the market
• 05:25 – The hook has four parts: trigger, action, reward, investment
  • 05:43 – These steps change people’s preferences, create tastes, and forms habits
  • 05:53 – An external trigger is a call to action
  • 05:58 – The action is a simple behavior that gives you a reward
  • 06:03 – A variable reward provides you something, but also makes you want it more
  • 06:18 – The investment is what you do that makes the product better for a future reward—it also loads the next trigger
  • 07:09 – An internal trigger is when people associate feelings with a product
• 07:27 – The ultimate goal of a habit-forming product is to be associated with a negative feeling
• 08:47 – The habit zone refers to the products that you use habitually
  • 09:22 – A habit zone requires frequent behavior
• 09:53 – Based on Nir’s study, products that are not used within a week’s time or less will NOT become a habit
• 10:47 – There are products that will only be used once, like insurance
  • 11:15 – Businesses that are not habit-forming can easily be switched
• 12:14 – Pana is a travel app used by Nir
  • 13:20 – Pana caters to people who travel every week
• 13:55 – The GEM framework is the 3 pillars for every successful new product
  • 14:20 – Having a habit-forming product is not enough, you should also have Growth, Engagement and be able to Monetize
  • 14:54 – Engagement is often neglected
  • 15:11 – Growth without engagement is worthless
• 16:55 – Nir believes no one understands the power of habit-forming better than Mark Zuckerberg
  • 17:20 – Mark knows what makes people “tick and click”
  • 18:10 – Mark understands the keystone habit of products
• 18:47 – Part of monetization is market potential
• 19:10 – Nir comments on the network effect and Snapchat
  • 19:47 – The network effect says that the more people have access to the technology, the more valuable it becomes
  • 20:57 – Facebook and Twitter have the network effect because everybody is already there
• 21:48 – There is constantly a potential to create products that build healthy habits
• 22:34 – Once the interface changes, there is an opportunity to market
• 23:02 – Complex tasks, such as dashboards, can be made easier by the conversational interface
• 24:25 – Nir is excited by the developments in Conversational UI and human bot hybrid
• 24:58 – x.ai is a bot that books meetings for you
• 26:59 – What’s one must-read book do you recommend? – Sapiens by Yuval Noah Harari
• 27:35 – How did you get to bestseller level? – I sold a lot of books in a short amount of time
• 29:10 – What has the book done for you so far? – I don’t have a saleable asset to what I do, there is nothing that carries on after me EXCEPT the book
• 30:01 – Check out Nir’s blog and his book, Hooked

3 Key Points:

1. It is not the best product that wins, it is those that comes first to mind.
2. Having a habit-forming product is not enough, you must also know how to grow, engage, and be able to monetize.
3. Leverage the “network effect”—the more people that have access to that technology, the more valuable the technology becomes.

Resources From This Interview:

• NirAndFar
• Hooked: How to Build Habit-Forming Products
• Pana
• x.ai
• Must-read book: Sapiens: A Brief History of Humankind by Yuval Noah Harari

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