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Our More Addictive World

by Nir Eyal in What's next? with 17 Comments

Nir’s Note: A few weeks ago, I wrote a brief post summarizing some thoughts for a potential book chapter. I asked my readers for help and you delivered! The comments were fantastic and I received several insightful emails. Therefore, I’ve decided to continue with the experiment with the article below. This week’s post is much shorter and less developed than my previous essays and is intended to solicit more of your thoughts and feedback for a potential book chapter. Give it a quick read and tell me what you think. —

kids on techThe world has become harder to resist. Products are getting better at giving people what they want and – for the most part – that has been good thing. Yet, the historical trend-line shows products are also becoming more habit-forming.

All products alleviate customers’ pain. Even products used to gain pleasure must first generate desire, a unique form of discomfort, which the customer will pay to satiate.

Manufacturing Desire

The engine driving the evolution of marketing and advertising for the past 125 years has been the increasing speed with which companies adapt products to better meet customer needs.

The Age of Scarcity (prehistory – 1930s):  For the majority of human history, the basic necessities of life were expensive and rare. Human populations growth was mediated by the limitation of resources. Keynes formulation of Say’s law[1] was that “supply creates its own demand” and in a time of scarcity, goods sold quickly to those who could afford them. Though commercial communication traces back thousands of years, the term “marketing” only made its debut in 1884. Prior to the industrial revolution, products attracted consumers mostly by being available. The limited supply meant high prices and only the well-off had any discretionary spending power.

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The Future is Driven by Interface Changes

by Nir Eyal in What's next? with 5 Comments

Nir’s Note: In this guest post Ryan Hoover takes a look at how interface changes drive innovation. Ryan blogs at ryanhoover.me and you can follow him on Twitter at rrhoover.

imageWhat do motorized vehicles, broadband internet, and smartphones have in common? These technologies all introduced new forms of user interface, transforming its user’s daily lives and behaviors.

I’ve been studying Nir Eyal’s work and recently read his article on the power of interface changes. As stated in his post, interface changes have the potential to radically change user behavior, disrupt incumbents, and enable new opportunities only imagined in film and sci-fi novels.

If you’re building a new startup or operating an existing business, look out for interface changes. Interface changes have the power to catapult your startup to success or kill it on arrival.

So if interface changes are such a big deal, what opportunities or threats can we anticipate? Here are a few examples:

Wearable Computing - smart watches (e.g. Pebble, Apple’s rumored “iWatch”), Google Glass, Myo, and other wearable technologies will enable new interactions and become strong drivers of habit-formation as our ability to interact with technology increases.

Quantified Self - Nike Fuelband, Fitbit, Jawbone Up, and other biometric monitoring devices have seen traction with early adopters. I anticipate greater adoption as new use cases arise as this technology increases in fidelity and connectedness.

Connected Vehicles - Ford, a company founded more than a century ago, is innovating with its Sync technology. Their internet connected platform brings apps to the driving experience. Skitcher and Pandora have already integrated to take advantage of this new interface.

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Time for Digital Hat Racks

by Nir Eyal in Self, What's next? with 4 Comments

The first thing Don Draper does when he gets to his office is give his busty secretary a suggestive wink. The second thing he does is take off his fedora. Finally, depending on the severity of the previous night, he completes his morning routine with a stiff drink.

What can we learn from Don’s habits? First, that scotch and submissive secretaries always equal drama. But what of that fedora? There’s a lesson there too.

As any Mad Men fan knows, it was once popular for men to wear hats everywhere they went — except that is, when they stepped indoors. When a gentleman went inside, he removed his hat and placed it on the nearest rack. It was a required social norm, a sign you were ready for business.

Though hats have long gone out of fashion, the custom should be a guide for how we adapt to the increasing pervasiveness of personal technology. It’s high time we started doing with our digital devices what well-mannered men did with their fedoras. We need a digital hat rack.

It seems that whenever people meet in person these days, they do so while separating their attention between the people in the room and the devices in their hands. Somehow, it has become socially acceptable to digitally masturbate in each other’s company. You might say, “but I’m taking notes or responding to an important request!”  No you’re not, you are digitally dicking around.

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The Network Effect Isn’t Good Enough

by Nir Eyal in What's next? with No comments

Note: I’m pleased to have co-authored this post with Sangeet Paul Choudary, who analyzes business models for network businesses at Platformed.info. Follow Sangeet on Twitter at @sanguit.

If there is one altar at which Silicon Valley worships, it is the shrine of the holy network effect. Its mystical powers pluck lone startups from obscurity and elevate them to fame and fortune. The list of anointed ones includes nearly every technology success story of the past 15 years. Apple, Facebook, Microsoft, eBay, and PayPal, have each soared to multi-billion-dollar valuations on the supreme power of the network effect.

But today, the power of the network effect is fading, at least in its current incarnation. Traditionally defined as a system where each new user on the network increases the value of the service for all others, a network effect often creates a winner-takes-all dynamic, ordaining one dominant company above the rest. Moreover, these companies often wield monopoly-like powers over their industries.

IN THE BEGINNING

Once, all a company needed to do to leverage the network effect was facilitate communication between a critical number of customers. If enough people used a particular system to exchange information, a leader would emerge and become the de facto platform. Companies who could either form a marketplace or facilitate the flow of information between parties became tremendously powerful as central hubs of data transfer.

In fact, the first network effects platform was Bell Telephone, which established a government-sanctioned monopoly nearly 100 years ago. Since then, successful network effects businesses have sung from essentially the same hymnal.

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Escape From Message Hell

by Nir Eyal in Users, What's next? with 1 Comment

We are caught in an endless cycle of messaging hell and the pattern is always the same. First, a new communication system is born — take email or Facebook, for example. Ease-of-use helps the product gain wide adoption and reach a critical mass of users. And then things turn ugly.

Some crafty entrepreneur figures out how to exploit the system and starts building a business around it. He reaches millions of people and opens the floodgates to countless others who seek to emulate his methods. Inevitably, the messaging channel is deluged with crap, clogging the pipes of what was once an efficient mode of communication — again, email or Facebook.

Notification Noise

The latest messaging onslaught is hitting the notification systems on our smartphones. Those little red badges hovering over our app icons and urgent graphics along the top of our screens incessantly remind us of some task that needs doing. They crowd out real priorities with bits of tiny triviality. Notification spam has many up in arms, but the flood of distractions continues.

This is the story repeated ever since telemarketers started ruining dinners across the land. It was not until federal legislation effectively put them out of business with the Do Not Call Registry did they stop their pestering.

To date, platforms have been responsible for policing spammers on Facebook, Twitter, Android or Apple’s iOS. But keeping exploiters out is only half the challenge. The real problem is keeping the channels useful as they grow. Exhibit A:
Exhibit B – A Google search for “I hate email” returns 586 million results, more than twice the results for “the Beatles.” Very scientific, I know, but you get the point.

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The Next Secrets of the Web

by Nir Eyal in What's next? with 408 Comments

Right now, someone is tinkering with a billion dollar secret — they just don’t know it yet. “What people aren’t telling you,” Peter Thiel taught his class at Stanford, “can very often give you great insight as to where you should be directing your attention.”

Secrets people can’t or don’t want to divulge are a common thread behind Thiel’s most lucrative investments such as Facebook and LinkedIn, as well as several other breakout companies of the past decade. The kinds of truths Thiel discusses — the kinds that create billion dollar businesses in just a few years — are not held exclusively by those with deep corporate pockets. In fact, the person most likely to build the next great tech business will likely be a scrappy entrepreneur with a big dream, a sharp mind, and a valuable secret.

Where are the Secrets?

I believe secrets about human behavior, which provide insights into the way people act even though they can’t tell you why, are levers for creating user habits and competitive advantage. These kinds of secrets are also relatively cheap to uncover but can be the basis of massive enterprises.

Once, only large companies had the resources to discover monetizable secrets. Throughout the twentieth century, companies like GE, Dupont, Chrysler, and IBM specialized in discovering the optimal form of physical goods and their insights lay largely hidden in the discipline of industrial design. For these companies, uncovering secrets required massive R&D investment to find the best way to create a better, cheaper, or faster product.

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What Is, and Is Not, Your Product’s Job

by Nir Eyal in What's next? with 1,765 Comments

Recently, my mom came for a visit.  She read my blog and discovered her son has a crazy habit of running barefoot.  After some convincing, she begrudgingly accepted my rationale, especially after I showed her that a nice Jewish professor at Harvard said it’s ok.

But on one morning, as I was about to walk out the door, my mom stopped me with a tight grab to the arm reminiscent of my childhood.  “It’s bad enough you run outside with bare feet but you look ridiculous running with these cheap shmatte gloves.”  She always had an eye for spotting the quality of apparel and she correctly identified my Wal-Mart bargain bin gloves, which I bought for $2 per dozen.

“Why are you wearing these things?” she exclaimed.  “You must be cold!  Let me get you a nice pair of warmer gloves. You’re cold, right?  Is that the reason?”

“No,” I said.  “It’s not.”

She tried again.  “It must be a fashion thing then.  The kids are not wearing shoes on their feet but they’re wearing gloves on their hands.”  This time she was sure she’d deduced the reason.  “So at least let me buy you some nice quality gloves from Bergdorf.  You want to be in with the times, I get it.  Is that the reason you wear gloves when you run?”

“No,” I said again.  “It’s not.”

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Pinterest’s Obvious Secret

by Nir Eyal in What's next? with 2,821 Comments

Note: This article was first published in Forbes

Executive Summary:

  • Pinterest is onto something big, but few know its obvious secret.
  • The company is succeeding because of its focus on reducing users’ cognitive load.
  • Pinterest brilliantly aligns its user experience with its business objectives of getting users to consume, create and share content.
  • Pinterest will soon have the richest consumer purchase intent data ever assembled.

Last week, I sat down for drinks with a few friends.  “Have you heard of this Pinterest website?” said Jonathan, “My wife is totally addicted.” “Yes! Molly is hooked too,” said Ben, “She even has her grandmother into it, who, by the way, still can’t figure out Facebook.”  “What’s Pinterest?” said Colin, the unmarried engineer.

My friends, the very definition of tech-savvy, couldn’t understand Pinterest’s astounding success.  For one, the idea of capturing photos on a virtual wall is nothing new.  The Facebook newsfeed is 5 years old and searching for pretty pictures on Google Images is ancient.

And yet, the Pinterest juggernaut is growing faster than Facebook when it was this size.  Investors recently plowed in$27 million only five months after the company raised its previous round of financing.  But even those who believe Pinterest is onto something big may not really understand why.

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Personalized eCommerce Is Already Here, You Just Don’t Recognize It

by Nir Eyal in What's next? with 2,504 Comments

NOTE: This post originally appeared in Techcrunch. (Photo credits)

Reading Leena Rao’s recent article on Techcrunch about the personalization revolution, you get the sense that the tech world is waiting for a bus that isn’t coming. Rao quotes well-known industry experts and luminaries describing what needs to happen for e-commerce to finally realize the promise of personalized shopping, a future where online retailers predict what you’ll want to buy before you know yourself.

Ironically, Rao and her pundits are missing the zooming race car that’s speeding by them as they wait for the personalization bus to arrive. That racecar is Pinterest and the new breed of startups marking the beginning of what I call the “Curated Web.”

The promise of personalized e-commerce began over 10 years ago with technology pioneered at Amazon. It was then that the mental dye was cast for what eCommerce personalization would look like, an algorithmic solution for matching customer to products. Web watchers came to expect that someday all online retailers would have such algorithms on their sites and the dream of personalized commerce would finally be realized.

For over a decade, startups took their best shot at making this apparition a reality. Companies like Hunch tackled the data collection piece of the equation, asking users endless survey questions to determine their tastes and preferences. Google’s Boutiques.com tried to crack the challenges of structuring the data associated with personalized shopping recommendations. Ultimately, these attempts failed.

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Where is the Web Going?

by Nir Eyal in What's next? with 1,639 Comments

Here’s the gist:

  • Disruptive web innovation comes from changes in interface.
  • Interfaces, which make information easier to understand by mainstream users, create world-changing companies.
  • The next stage of the web is the Curated Web, which like the stages before, will create massive opportunities for entrepreneurs who see the trend.

Is this it?  Really?  Facebook wins, cashes in its chips, and we all go home?

Of course, there is more to come and it’s a future filled with sheer awesomeness.  Within the next few years, technology will improve your life in ways you can scarcely imagine.  But if you’re looking for where we’re headed, it’s useful to know where we’ve been and most importantly, we should know the catalyst driving us from one phase to the next.

Though tech types tend to focus myopically on the laws of hardware innovation, including those written by Moore, Metcalfe and Kryder, these principles focus on infrastructure, which is only the first phase of a rising technology wave.  After infrastructure, technology waves enter a platform and finally an application phase.  It is during the platform phases in particular that entrepreneurs build world-changing companies without much initial capital, a la Gates and Zuckerburg.  How do companies change user behavior so profoundly and produce massive growth, seemingly overnight?

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