Have you noticed all the startups raising massive sums of money recently? Perhaps you’ve scratched your head wondering how a company like Buzzfeed, known for its website full of animated gifs, listicles and quizzes, just raised $50 million dollars, valuing the company at a reported $850 million. Snapchat, the messaging app known for helping teenagers sext one another, reportedly received a $10 billion valuation from its investors. Has the world gone mad?
Some industry watchers see the recent boom in seemingly trivial apps and websites as foretelling tech bubble 2.0. However, there’s much more to the story.
Our knee-jerk reaction to classify innovation as either important or frivolous is exactly why many are left aghast when previously dismissed companies reveal shocking valuations in ridiculous investment rounds.
Vitamins and Painkillers
Most people, including many professional investors, tend to put new products into one of two categories: vitamins or painkillers.
Today, there’s an app for just about everything. With all the amazing things our smartphones can do, there is one thing that hasn’t changed since the phone was first developed. No matter how advanced phones become, they are still communication devices — they connect people together.
Though I can’t remember the last time I actually talked to another person live on the phone, I text, email, Tweet, Skype and video message throughout my day. The “job-to-be-done” hasn’t changed — the phone still helps us communicate with people we care about — rather, the interface has evolved to provide options for sending the right message in the right format at the right time.
Clearly, we’re a social species and these tech solutions help us re-create the tribal connection we seek. However, there are other more hidden reasons why messaging services keep us checking, pecking, and duckface posing.
Slack isn’t just another office collaboration app. The company has been called, “the fastest-growing workplace software ever.” Recent press reports claim that “users send more than 25 million messages each week,” and that the company is, “adding $1 million to its annual billing projections every six weeks.” Smelling an opportunity, investors just plowed $120 million into the company, giving it a $1.12 billion valuation.
“Our subscription revenue is growing about 8 percent monthly, before we add new sales,” says Slack’s business analytics lead Josh Pritchard. “This is, as far as I know, unheard for an enterprise SaaS company less than seven months after launch.”
Perhaps even more surprising, Slack’s user retention stands at an astonishing 93 percent. How does Slack get its users hooked?
On the surface, no single factor seems to set Slack apart from a plethora of other collaboration tools. However, a closer look using the model described in the book Hooked: How to Build Habit-Forming Product, reveals the user psychology behind the company’s success.
“Hi Nir,” the email began. “I have been reading your work and find it incredibly interesting.” Naturally, this is the kind of message a blogger loves to receive. However, this email was special for another reason. It was from a prominent New York publishing agent who represents several authors I read and admire. “I don’t know if you’ve already started down this road or whether writing a book interests you, but I’d be delighted to have a conversation with you if you are interested.”
Was she kidding? Heck yeah I was interested!
We scheduled a time to talk. She told me she is fond of my work and thought it could reach a larger audience if it was promoted by a major publisher. That email and the subsequent call would lead to the release of my book, Hooked: How to Build Habit-Forming Products, which just debuted on the Wall Street Journal bestseller list this week.
On May 1, 1981, American Airlines launched its frequent flyer program AAdvantage. Since then, a flood of loyalty programs have attempted to bring customers back through rewards.
Today, you can become a card-carrying member of just about anything: hotels, supermarkets, drugstores and pizza chains. If you’re in a store, chances are someone will ask, “Would you like to join our rewards program?”
Marketing professors, store managers and executives are still not sure how effective these initiatives are. One puzzle is the link between participation and loyalty. It’s not that strong. Millions of Americans are enrolled in at least one loyalty program, but just a fraction of them are dedicated customers. Typically, loyalty programs work only to the extent that they reward customers who are already loyal.
More than a year and a half ago, with the dedicated help of Ryan Hoover, I started working on my book, Hooked: How to Build Habit-Forming Products.
Hooked compiled 2 years of writing and research (and many more years of professional experience) into a guide to help people like you design engaging products that have a positive impact on users’ lives.
Today, I’m thrilled to announce that Hooked is available in a new professionally published edition. The book looks and feels much better than the previous self-published edition and as a special offer to my readers I’ve created special bonus content to help you build more impactful products and better personal habits.
- A 10-part video interview with me on designing for user engagement.
- The Hooked workbook — a step-by-step companion to the book.
This week I chat with Ryan Holiday, an author, hacker, and self-described “media manipulator.” Ryan’s new book “The Obstacle is the Way” takes an interesting look at how challenges shape and improve our lives.
We discuss the personal habits Ryan integrated into his working life to reveal how he accomplished so much in so little time. Enjoy!
I do quite a bit of research, writing, and consulting on product psychology — the deeper reasons underlying why users do what they do. I also frequently teach and speak on the topic. Invariably, after each talk, someone approaches me and asks, “That was very interesting. Now where do I learn more?”
I’m never sure what to say, since there’s so much great information available. What this person really wants to know (and I’m assuming you do, too) is where all the really good stuff is. They want to know the highlights, the takeaways, and the methods and techniques that can help them be better at their careers, build better products, and ultimately improve people’s lives.
That’s why I’m proud to announce a new online course called Product Psychology. This free course taps into the collective wisdom of some of the brightest minds in the field to help you better understand user behavior. They’ve taken the time to dig up their favorite articles, videos, and resources to get you up to speed quickly. Best of all, lessons are sent free via email.
In 1936, a man named Kurt Lewin wrote a simple equation that changed the way we think about habits and human behavior.
The equation makes the following statement: Behavior is a function of the Person in their Environment. 
Known today as Lewin’s Equation, this tiny expression contains most of what you need to know about building good habits, breaking bad ones, and making progress in your life.
Let’s talk about what we can learn from it and how to apply these ideas to master the habits that shape your health, happiness, and wealth.
What Drives Our Behavior?
Before Lewin’s Equation became famous, most experts believed that a person’s habits and actions were a result of the type of person they were, not the environment they were in at the time.
In the never-ending effort to motivate employees, companies are taking cues from video games–adding scoring, virtual badges, and other game-like elements to everyday work processes to make jobs more fun.
To weed through some of the hype, here are four pros and cons to gamifying the enterprise.
The most often cited reason companies try gamification is to improve employee motivation. Apparently, there are a lot of workers who need the extra boost. According to a 2013 Gallup poll, 70% of U.S. workers reported themselves as not being engaged in their jobs.