This week’s podcast is about how non-rational behavior plays out products / services, consumer behavior and network effects.

You can listen to this podcast here, which has the slides and graphics mentioned. Also available at iTunes and Google Podcasts.

Here is the link to the TechMoat Consulting.

Here is the link to the Tech Tour.

Here are the competitive advantages. Look for SCM and network effects.

***Key Points***

Point 1: Digital is super-charging consumer products, experiences and behaviors. Especially when it is about psychology and emotion. And not just utility.

Point 2: The most powerful version of digitally supercharged consumer products rise to the level of share of the consumer mind. A competitive advantage.

Point 3: Products / services are increasingly being boosted by a degree of connectivity. This is usually described as community. Or interactivity.

Point 4: Tribal and belief behavior can have a big impact on consumer experience. Sometimes rising to the level of SCM.

Point 5: Tribal (shared identity) and shared belief behavior can increase retention. Sometimes rising to the level of Switching Costs.

Point 6: Tribal (shared identity) and shared belief behavior can Sometimes rising to the level of Network Effects.

***

Final Point: Digital tools are making tribal and belief effects more sophisticated, surgical and powerful. That is why it is showing up in everything.

—–

—–transcript below

Episode 226 – Digital Tribes.1

Jeffrey Towson: [00:00:00] Welcome, welcome everybody. My name is Jeff Towson and this is the Tech Strategy Podcast from Techmoat Consulting. And the topic for today, Tribe and Belief Network Effects Have Gone Digital. Or the alternative title would be, Why Everything in Life is Now Politics. Which I think is kind of hard to ignore that that has happened.

Anyways, what this is really about is, is two things. That I’m going to kind of pull together, really, let’s say six months’ worth of talking and thinking, I’m going to kind of wrap it all together. One big bucket is network effects, which I’ve written quite a lot about in the last couple weeks. I’ve sent out three articles, podcast.

And the other is just sort of how the consumer experience is changing. With various digital initiatives. And, you know, I talked about gambling and fan behavior and collector [00:01:00] behavior and pop mart and BiliBili. And, you know, both of those ideas sort of combining because ultimately, Network effects can be based on utility, communication, but they can also be based on more emotional and psychological things, just like all those consumer experiences I just mentioned.

So, we’re going to pull all this together into one framework, which has kind of been my goal for several months now. Anyways, that’s today. I hope, hope this is pretty valuable. I think it actually is. For me, it’s very valuable. I’ve been sort of crystallizing my checklists on a lot of companies where my thinking at a certain point got kind of fuzzy.

This is sort of crystallizing that. Anyways, that’s it for today. Uh, let’s see. See you. Standard disclaimer, nothing in this podcast or my writing or website is investment advice. The numbers and information for me and any guests may be incorrect. The views and opinions expressed may no longer be relevant or accurate.

Overall, investing is risky. This is not investment legal or tax advice. Do your own [00:02:00] research. And with that, let’s get into the content. Now I’m going to cut a touch on several concepts today and try and weave them all together. Uh, the ones you’ve heard before is me talking about, Consumer behavior can be on one extreme.

It can be very rational and logical. I want the best I don’t know, bucket. What’s the price? How good is it? Very rational decision making, but then it’s a spectrum that can go into more emotional, more psychological. You know, this video makes me happy. It has no utility, but it makes me happy. It’s a purely emotional product.

And I put this in the concept library under the title of non-rational consumer behavior. And I’ve given you some checklists for that, quite a bit actually. I’ll go through it a little bit. And as I’ve said many times, my favorite type of business is a combination of, uh, a utility and some sort of emotional or psychological effect.

So, my standard example [00:03:00] is shoes. I like shoes like Nike because You absolutely need shoes. You need them every single day of your life. There’s tremendous utility. You have to buy them, but wrapped around that, you get a lot of emotion and psychology and aspiration. And that’s Nike. That’s how you take a 20 utility and sell it for 80.

I love that combination. You know, so I’ve talked about that concept before. Um, the other thing that kind of goes hand in hand in that is share of the consumer mind, which is a competitive advantage. It’s a big deal. It’s sort of number one on my list. It’s a Warren Buffett term. It’s in the concept library.

And I’ve been, the last couple months I’ve been sort of talking about share of the consumer mind at a much more detailed level. various checklists. And some of that’s like fan behavior, gifting behavior, uh, collector behavior, gambling behavior, rewards behavior. And you can, you can really, you know, [00:04:00] nail that down, um, chemical behavior like caffeine.

But as that share of the consumer mind combines with digital tools, it’s getting a lot more sophisticated and I would argue a lot more powerful. You know, slot machines used to be kind of addictive when they were mechanical. When they went digital, they got super addictive because it’s very data driven.

Uh, it just got a lot more sophisticated. It’s like, you know, if you’re a business creating products and services and experience where you’re trying to capture as part of the consumer’s mind, it used to be hunting with a shotgun. Now it’s hunting with a sniper rifle. You can be very precise and data driven.

Um, yeah, it’s pretty scary actually. So that’s kind of bucket number one, this idea of consumer behavior, rational, non-rational, and the highest form of that would be share of the consumer mind. Okay. The other stuff which I want to talk about today is network effects. And I’ve laid out, uh, for those of you who are [00:05:00] subscribers, I sent you one, two, three articles in the last couple of days, detailing out 16 different types of network effects, which are mostly from a company called Network Effects, NFX, Silicon Valley Venture Capital Firm.

Uh, and then in my own framework, specific questions, checklists, all of that, uh, but within that, the one that I sort of put an asterisk by, uh, which is not as clear to me, is network effects based on tribal behavior and based on belief. You know, you can identify with something and that would make it more powerful.

I’m a member of this group. I’m a fan of this community. Uh, I identify as a, you know, uh, an immigrant from Armenia. I mean, you can, you can associate yourself with certain things that we would call tribes, which you could also define as sort of a shared identity. Um, and you can get network effects there. I think they’re kind of strange, but I’ll talk about them.

And the other one is belief, [00:06:00] uh, ideology, religion, politics, um, a lot of that can be very, very powerful. And when you think about these two phenomena, which I’m going to talk about, you can put them into two buckets. The first bucket is, look, this is just a type of consumer behavior. Uh, it doesn’t mean it’s a network effect.

It just means it’s a very, it can be a very powerful type of consumer behavior. If I’m a big Star Wars fan, I can start to identify with this group. I can start to go to the conferences. I can start to wear the logos on my jacket. That’s a form of sort of shared identity, uh, type of fandom. Okay, now we wouldn’t call that a network effect.

We wouldn’t say, well, the more Star Wars fans there are in the world, the more powerful it is to be a fan. No, not really. It’s just that it’s an effective type of consumer behavior, share of the consumer mind, maybe. But there are certain cases where tribal identity and [00:07:00] belief, which are two different things, can rise to the level of network effect.

So, I’m making an analogy between what I just said about non rational consumer behavior. It’s very common. At certain points, it can rise to the level of share of the consumer mind, which is one of the big competitive advantages. This is the same. Network behavior, uh, in certain areas can be very common.

And at a certain point, some of them can rise to the level of a network effect, which is another type of big, basically competitive advantage. That’s kind of the thesis. for today. Anyways, I’ll go through that step by step, but the concepts for today would be non-rational consumer behavior, share of the consumer mind, network effects, which can be based on tribal or belief.

You’ll see those in the concept library, and then behavior based on tribal and belief, which is a lower level. Anyways, I told you there’s going to be a lot of theory today, but. I think I’ll stitch it all together, hopefully in a way that’s very simple. Okay, so let me just sort of run [00:08:00] through this point by point, um, without going off on too many tangents.

Okay, so let’s call this point number one. Uh, digital tools, technologies, business models have basically been supercharging Lots of consumer products, experiences, and really behaviors. Uh, and to do that, they can either sort of make things more effective, more efficient. That would be sort of, hey, it’s got a lot of utility.

I can communicate with everybody on the planet. easily with my WhatsApp. But the more interesting part is the non-rational side of consumer behavior, which is emotion, psychology, uh, all of that. Okay. When you start to combine digital with emotion and psychology and aspiration and all these interesting aspects of consumer behavior, uh, it can be really powerful.

Uh, no doubt about it. And in my mind, [00:09:00] I always put these things as a spectrum. There are certain products that are purely utilities and functional, rational. Buying a bucket, buying socks, uh, buying milk. Well, milk actually can be a little bit. Let’s say buying water. And then there’s another end of the spectrum that can be purely emotional, where the product has no actual utility in terms of the real world, like watching videos.

Entertainment is purely an emotional product. Nobody needs it. But it has a powerful emotional effect. So, you can sort of look at pure forms. of rational versus non rational consumer behavior of utility versus, you know, utility with functionality versus emotion, aspiration, other things. And I did some podcasts over the last couple months looking at those purer forms like videos.

I talked about Kuaishou. I talked about Bilibili, Red, TikTok, and you can, you can kind of [00:10:00] see lots of this behavior. Fine. And then you look for the more powerful forms of it. And that’s why I talked about things like fan behavior. Fan behavior, dedicated fans, super fans. Well, that, I would argue, is a more powerful version of this consumer behavior than You know what, I kind of like Star Wars.

Well, I did before they ruined it. I like Star Wars, but I’m not a super fan. I don’t go to the conventions. I don’t walk around with Star Wars hats. My, I don’t have rooms of my house filled with memorabilia. But there’s levels of fandom. A lot of this emotional stuff. It’s the same thing. I talked about Pop Mart, which is a little bit of a collecting behavior.

Collectors, which I, I talked about, you know, they can go from casual collectors. Yeah, I kind of like the Marvel figures and I’ve got a couple in my room, versus I have an entire wing of my house filled with baseball [00:11:00] cards. I mean, there are super collectors out there in the world. That’s another type that can kind of step up in power.

Gambling and rewards behavior is another one. A lot of what we do on our phones is increasingly sort of bringing in rewards behavior. Buy two and get a point and you get an extra point and then you get a free gift. Um, and that can go up in more power to the point where we start to call it gambling. And certain people have tremendous problems with gambling.

It’s really addictive. There’s a spectrum there too, but there’s real power in a couple of these sort of phenomenon. Uh, so anyways, I talked about BiliBili Kwai show, I talked about like, you know, why is Pop Mart so successful? Well, they do a lot of collecting behavior. There’s a little bit of gambling behavior.

It’s much more than just a regular toy company. So anyways, I sort of took all that apart [00:12:00] and you can see at a certain point when the behavior becomes very extreme. People watch Tik Tok 90 minutes per day. That is very conspicuous behavior. People spend 10 hours a day in the casinos just pulling the slot machine lever over and over.

Very conspicuous. People fill their garages with baseball cards. Conspicuous. So, you look for when it sort of rises to the level of, okay, there’s something powerful happening there. Um, anyways, so all of that would be on point number one that look, digital tools, technologies do seem to be taking consumer behavior products, especially on the emotional side and supercharging them in a lot of cases.

And I think we can see that all over. So, I’m always on the lookout for that. Okay, point number two. Um, the most powerful version of that is when you’ve supercharged a consumer behavior, a consumer product, usually [00:13:00] using digital tools to such a level that we would start to characterize it as share of the consumer mind.

Like this is clearly, you know, this term share of the consumer mind, which is a Warren Buffett phrase. When he talks about competitive power, competitive advantages on the demand side, not on the supply side, like supply of scale and things like that. You look for when a product or service really just claims a part of someone’s mind.

You know, certain people get up every morning, every day of their life, and they go to Starbucks and buy a cup of coffee. That company owns a piece of real estate in that person’s mind. Um, Marlboro cigarettes. People take breaks 15 times a day to have a cigarette and they usually stick with one brand. I mean, we can point out this sort of fate behavior when we see it.

It can be based on habit, can be based on chemical dependency, emotional, aspirational, things like that. Um, so we’re looking for when it gets to that top [00:14:00] level. That’s kind of point number two. The most powerful version of this is when it sort of reaches the level of share of the consumer mind and that is really a judgment call and You have to really think about Whose mind is this capturing because nobody captures everybody.

It’s usually a very specific demographic Like Harley Davidson motorcycles had no competitive power on the supply side. They were just motorcycles They weren’t even they’re like lawnmowers Fairly basic machines, but they had very significant power in the minds of basically 40 plus year old white men in the United States.

That’s actually in the southwest of the United States because you can’t ride motorcycles in the snow. Uh, that was always their core demographic. They sort of had a presence in their brain. People used to wear the Harley jackets. They used to go to Harley meetups. They used to do joint rides together. It was a consumer behavior phenomenon in one specific [00:15:00] demographic.

And unfortunately, they kind of went woke in the last year, which really That particular demographic does not like that at all. And it really looks like it’s damaged the one thing they have. Otherwise, it’s just Yamaha and Honda. And you can buy those bikes which are just as good at half the price.

There’s no difference in a Harley bike other than the name. Okay, so that’s point number two. Point number three, and there’s about four to five points overall. In all of these products I just mentioned, as they go digital, A couple things happen. Um, let me, let me phrase that. Um, most of the products I just mentioned have some aspect of connectivity happening.

Yes, they’re individual products. It’s a Harley motorcycle. I buy it. I ride it. It’s my product. It’s not a network, but at the same time, there is clearly a [00:16:00] connectivity and community aspect associated. You know, we go to conventions together. We do joint rides together. A lot of the most powerful products tend to have a degree of community or connectivity associated with them.

Um, Star Wars fans might go to conventions, uh, Apple fans might go to conventions, um, you might like beauty videos by L’Oréal. People will go online and they will comment and share. This is really where Bilibili was leaning into. That they weren’t just a video service. that focused on anime, comics, and gaming, which was their core customer base.

But within that, they always talked about themselves as a community. And there was a lot of liking and sharing and chatting. So that interaction starts to bring up the idea of identity. And it starts to bring up the idea of connectivity. So, what’s kind of happening in these products [00:17:00] is not only do the digital tools make these sorts of consumer facing products smarter, you know, sniper rifle, not shotgun, but they also usually add a degree of connectivity and social connection.

So, the topics of community and identity. tend to come up almost naturally in a lot of these products on their own before we even get to the idea of network effects. So, a lot of this is happening. And when you, when you talk to CPG companies, like let’s say like Nike, you know, Nike makes their shoes. They have everything I just like.

They have a core utility. They have an emotional aspirational wraparound that gets you from 20 to 80 per shoes. That’s the customer solution, but they increasingly do running clubs. Especially in China before they got shut down. Uh, you know, they do online communities. They do online training sessions.

They’re increasingly bringing in the idea of connectivity and community, uh, to their [00:18:00] standalone product. There’s sort of a process that’s been happening in a lot of these companies and usually it comes up under the moniker of community. We are a product plus a community. Now, I would say that’s interesting, but the next level up is when we get into network effects.

So anyways, keep that in mind. Those are kind of the three points of on this so far. So digital is sort of super charging consumer products, experiences, and behaviors. And they’re really tapping into both utility and psychology and emotions. And you can see various versions of this. Some are weak, some are strong.

Point two, the most powerful version is when it rises to the level of share of the consumer mind. Then it’s a competitive advantage. Point number three, in a lot of these products, we are increasingly seeing not just smarter and more data driven products that are better at satisfying whatever emotional needs you have.

They’re also bringing connectivity into this. Which can bring in [00:19:00] community, identity, these words all get kind of meshed together. Okay, those are sort of the first three points. Let me get to the network effects part. Okay, so we start to talk about network effects. Now, when you look at the list of competitive advantages, my standard list, the two big ones on the demand side are share of the consumer mind and network effects.

Now, switching costs is kind of number three. So, we’re talking about the two big guns. of competitive advantage on the demand side. One I just talked about at length, share of the consumer mind. Now we talk about network effects with really the same approach. Now, before you can start talking network effects, we have to have a people network.

All products that have, and services that have network effects are in the business of connecting members of a network. If I just sit and buy chicken, there’s no way to have a network effect because chicken is not a connected product by definition. So, there’s nothing someone else can do. [00:20:00] that’s going to make my chicken taste better.

But if it’s a WeChat or a WhatsApp or a payment network, all of these things are connected products. So, when someone else signs up for WeChat, my WeChat gets better because the connected product has improved itself. So, we always have to start with the idea of we’re looking for a network as the foundational asset of this.

And networks can be based on protocols, physical networks, in this case, people networks, consumer networks, really. Okay, so we start with that, and then we start to say, okay, you can have, what is the definition of a network effect? My standard definition is, does the marginal user or activity increase the value and or utility to current and potential users?

Okay, I know that’s a little hard to take. It’s kind of wordy but let me take it step by step. A network effect means when someone else uses this [00:21:00] product, it gets better for others. When someone else eats chicken at KFC, my chicken doesn’t taste better. When someone else signs up for WeChat, my WeChat product just got better because I can call more people.

Okay. So, the, the phrase again, does the marginal user or activity marginal. So, the next person has joined WeChat or maybe they’re not new people joining, but people there are doing more. Let’s say if I’m on a marketplace. If a new merchant joins, it’s better for me because I can shop at more places. That would be the marginal user.

The marginal activity would be like, okay, look, a new merchant hasn’t signed up, but the merchant that there is now listing a hundred things to sell instead of 50. So marginal activity can also create value. So does the marginal user activity increase? the value and or utility to current [00:22:00] users like me.

Okay. Again, I’ve separated them. Value and utility are different. Now, before I just said sort of utility versus non rational behavior, but we’re really talking about value. Um, the reason I did that is when people usually talk about network effects, the most powerful network effects are almost all based on utility.

Okay. When you increase the connections to something, it adds more functional value of utility. I can call more people, that’s a utility. Uh, if you look at the most powerful versions of this, they’re all based on direct network effects in utilities. So, on Facebook Messenger, you can contact more people. On MasterCard, you can pay at more stores.

Those are all utilities. They’re functional. They’re not emotional. They’re not psychological. They’re not, you know, these broader, fuzzier types of value. But we separate value and or [00:23:00] utility to potential users. For utility, when most people talk about network effects, they almost always talk about payments and communications.

You increase the number of connections; the value is up. Now, when you’re talking about value, it can be a lot of strange psychology. And that’s really the point of this podcast is to talk about that bucket. So, let’s talk about tribal

behavior. Tribal is an interesting thing. Um, the NFX guys, the venture capitalists, um, they talk about tribal network effects as a non-utility sort of network effect. And it’s this strange idea of, you know, here, this is their argument, not mine, but when we start to look at things like alumni networks of Harvard, uh, military units, fraternities, [00:24:00] sororities, uh, venture capital accelerators, Religions somewhat, let’s say cultural Christians as opposed to Christians that deeply believe and those two are different.

Trust me. I’m part of a tribe you could say identify with or this is a shared identity. We all see ourselves as graduates of Columbia Business School Now, is that a big part of my identity? No, I don’t even think about it, but sometimes it can be.

Um, but when you start to look at these sorts of networks, um, you can see those play out all over the place. In, in the business world, we don’t see them as much. Most everything I just said would not be considered business, would be more societal. We actually do see it in alumni for top business schools and top schools in general that there’s a [00:25:00] basically a network effect.

People graduate from Harvard, they go to Wall Street, they all join the same 10 to 15 firms, let’s say law schools, uh, law firms. And then when they get into the business of hiring 10 years later, they identify and hire from their quote tribe and they hire people from Harvard. So, there’s a sort of slow network effects we see in, in, uh.

the alumni hiring practices of certain schools in general, um, military units. You always meet a lot of you see a lot of businesspeople that have built management teams, uh, based on other Sort of guys who are in the military usually you see that a lot. Fraternities things like that so you can see it, but overall this is not a huge business concept You see it much more in society than you do in business models.

Okay, so nfx here’s kind of what they say Um, this is quote, we suspect that the very first network effect historically as Homo sapiens evolved as a pack animal. [00:26:00] Sorry, let me say that again. We suspect this was the very first network effect historically as Homo sapiens evolved as a pack animal trying to survive.

The ones that built the best tribes survived to procreate, so we are all the descendants of the best tribe builders. Uh, those who weren’t good at building or joining tribes died off. Thus, our brains are wired to join tribes. Okay, I, I basically agree with that. Now, whenever people point to evolution as an argument, I kind of roll my eyes, because it’s like the go to fake argument when you want to prove something.

Well, historically, we evolved, and it’s kind of, it’s dramatically overused. But I, I agree that there is a psychological pull to join tribes. I can feel it in myself. I think it’s there. Um, and there may or may not be tangible benefits to doing that. It may be purely a psychological thing. This is just how I identify.

Other times there [00:27:00] could be actual tangible benefits. Now that distinction is important. If it’s just something that makes me feel good that I like to identify as a, I don’t know, an American in Southeast Asia, that would be more like share of the consumer mind. It’s a type of identity. I feel good about it.

But if someone else joins the Columbia business students or whatever of Asia club, it doesn’t benefit me really. So, the first is more of a psychological, I just feel good about it. If it has tangible benefits where there’s a lot of networking and investment in jobs. Okay. Then if someone joins, you could argue it’s a network effect because there’s an actual benefit to another person joining.

There’s a marginal value for every additional user. So, you kind of, when I think about tribes, I put it into those two buckets. Is this more of a psychological, just, it’s a great product or service or whatever, or is there an [00:28:00] actual network effect because there’s a benefit? It’s a fun thing to think about, actually.

Um, there’s a couple other things that happen when you start thinking about tribes, when you join a tribe, um, you join a group, you go every week, there is dramatically increased pressure not to quit. You know, it takes a lot of time for someone to quit their church. It takes a lot of time for someone to quit something they identify with.

It’s in you pretty deep. So, you could argue what we’re seeing there is a switching cost. That group identity, joining clubs, community, tribal affiliation, all of this increases switching cost as well.

So, there’s kind of a lot going on here. Here’s how I summarize it. Let me sort of bring it around to the so what. [00:29:00] I think when we talk about tribal identity, tribes, shared identity, however you want to characterize it, it’s a huge phenomenon. It’s powerful. Um, I think it plays out in four ways. Number one, it can create a share of the consumer mind or an, a larger psychological impact as part of a product or service.

Um, that’s very good. Uh, I would put that on the share of the consumer mind, or it’s just a good part of a consumer product. Uh, number two, it can become a switching cost. Once you join, you are much less likely to leave. And in fact, uh, when I talk to companies about digital strategy, like acquisition strategy of customers, you know, I always say, look, you got to focus on acquisition, but you also want to focus on retention because actually you can, it’s a lot easier to have an impact on retention than finding new users.

And the biggest tool you can use to retain your [00:30:00] users is to build a community. That’s kind of the same thing. So, number two is a switching cost. Number three, it’s a retention strategy based on community content, community activities, community membership. And number four, sometimes it can become a network effect.

But for it to become a network effect, you really do need to see tangible value for every incremental marginal user. You know, every person who joins this group, that joins this fraternity, joins this religion, I need to see value added to the other tribe members. Uh, I need to see them giving value to the other members.

I need to see everyone focused on growing the tribe. You, you want to see tangible stuff. Otherwise, we’re not talking about a network effect. And this kind of brings me to the last point, which is belief-based network effects, and you can see that tribal self-shared identity does kind of naturally blend [00:31:00] into, uh, belief.

And you can see both, you can see one, you can see the other, um, you know, I come out of a Christian background and everyone at the church knows who’s the believer and who’s just sort of a member. There’s a, you know, there’s definitely a phenomenon of what we’d call cultural Christianity. They’re, they’re culturally there.

Uh, you know, they, they celebrate Christmas, they celebrate Easter, every Sunday they go. But the, the belief isn’t quite, it’s more of a cultural habit than we would call it a, a deep belief. And you can see that with a lot of this. So, identity, tribe, belief, um, they can get sort of muddy depending on what you’re talking about.

Um, all right, shared belief. So again, we got to start with, we need a network. We need a people network. When does the belief. connect people in a network. Now belief in its own right, again, can have a very powerful [00:32:00] psychological effect that doesn’t involve anyone else. So, we would call that share of the consumer mind, something like that.

But when it’s about connecting with other people within a group, when we’re talking about shared beliefs, then we can start to think about network effects. When does what I believe become better, more powerful, more important to me because you believe it as well. That’s different, right? That’s when we start talking about, uh, network effects.

Okay, or shared belief. I like the term shared belief. Okay, so this is one of the network effects NFX talks about. Uh, when they talk about network effects based on shared belief, they talk about currencies, ideologies, and religions. So, currency is pretty easy. Bitcoin. What is the value of Bitcoin? Well, it depends if people believe it has value.

If nobody believes Bitcoin has value, it has no value. What’s the difference between a collectible I can go and sell at [00:33:00] an auction for collectors, versus junk? Well, it’s what people believe. If I have a, a bunch of baseball cards in my garage that no one has seen for 20 years and we forgot about them and they’re in a box and I take them to auction, I can maybe make money.

Right next to that box of old baseball cards, if I have a box of old socks, that is worth nothing. We call the latter junk. We call the former a collectible. What’s the difference? It’s what people believe about it and within a culture, within a community, and it can be global. It can be local. It can be within a school.

It can, you can, you see it at lots of different levels. So, that’s when belief can start to sort of create value. Now, here’s the quote from NFX. Quote, um, Homo sapiens are a pack animal. We want to be in the in group and be accepted by others. Sharing common beliefs is a critical part of [00:34:00] that. If people believe in something, others are more likely to stick with it and believe in it, too.

I’ll keep going. This is their quote. As a result, there are big social consequences for not believing the things your friends believe, and perhaps worse consequences for ceasing to believe in what they believe. This is one factor that makes people stick with group thoughts, making them very resilient to contradictory information.

Unquote. Um, Yeah, interesting. So, you can kind of see we’re bleeding into the same three topics where we’re bleeding into something of we start with the idea of look, I believe something it’s meaningful to me. It’s meaning to my emotionally, psychologically, you know, my identity, that’s all just value to Jeff.

We can also say there’s a form of connected value. When the belief is shared, a couple things happen. The first is I am much less likely to leave. We start to see switching costs show up. [00:35:00] When it’s a group behavior, retention goes way up. And then the third concept again is, and at a certain point, we can see a network effect.

The more people that join this belief, the more valuable it is for everybody. We can see it on the same three levels. Anyway, so in the show notes, I’ll put my basic conclusions for tribal behavior, uh, belief-based behavior, uh, which plays out at these three levels, at the consumer individual level, at the retention level, and at the network effect connected level.

It’s an interesting concept. Uh, the so what of this podcast is, I think this is all going to become more and more powerful, and I would argue if you look over the last ten years, Anywhere I go in the world, Poland, Mexico, whatever, I always, my standard question is like, do you find that people are angrier than they used to be?

For, and usually it’s about politics. And the answer is always yes. Uh, everything seems to be coming politically charged. [00:36:00] Uh, in, in other parts of the world, there’s a religious, same as, you know, same thing, although those two things can blend together. I think these three phenomena we’ve been I’ve just been talking about, I think digital is making them far more effective than they have ever been.

All of this is getting more powerful. And my sort of simple conclusion is everything in life is becoming political and everybody is becoming part of a tribe. It’s hard to point to things like, let’s say in the U. S., it’s hard to point to institutions that used to be neutral in these various ways, who are still neutral.

They have all sort of joined teams. Like you hear this discussed politically in terms of red team, blue team, that every single person and every single institution is joined a team. Historically they were not. Elections used to be something that were every four years, every two years it ramped up. Now it never ends.

It’s all the time, just ongoing, political, [00:37:00] arguing, sometimes warfare. Um, I, my simple explanation for all of this is I think digital tools are so effective. The same way a digital slot machine is dramatically more powerful than tapping, in tapping into gambling like behavior than a traditional mechanical slot machine.

I think this is the same thing. I think the digital tools and business models are incredibly powerful at sort of taking tribal and belief behavior. and raising it up to the top of everything. So that’s my simple solution, why everything in life is becoming politics. But we’ll see. If you, if you think I’m full of it, let me know.

I might be wrong. That’s my simple. I think I’m pretty confident, um, or have some depth when we’re talking about businesses and how this plays out and how these sorts of factors matter. Uh, what I’m sort of been struggling with is, all of these companies I used to study are now having like much larger impacts [00:38:00] on society.

Like governments are worried about them, they’re changing how people think, they’re changing what people believe, like they’re impacting far beyond business now. And I’m kind of struggling to take it up to that next level. Where am I thinking is pretty shallow. I’m sure there’s great thinkers on this. I am not one of them, but you take it down to the business level.

I’m, I’m pretty confident, but society level, eh, try and understand it. And that’s it for the content for this week. I hope this was helpful and I will talk to you next week. Bye bye.

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I write, speak and consult about how to win (and not lose) in digital strategy and transformation.

I am the founder of TechMoat Consulting, a boutique consulting firm that helps retailers, brands, and technology companies exploit digital change to grow faster, innovate better and build digital moats. Get in touch here.

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