This week’s podcast is about habit formation. And Gmail is a good example of a moderate version of this that can be copied.

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 our Tech Tours.

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Here are the 4 psych hacks:

1. Gmail is Habit Forming via a High Frequency Utility Over a Long Time
2. Gmail is Internally Triggering. That’s the Gold Standard.
3. Gmail Has Task Completion Rewards. Ok But Not as Good as Variable Rewards.
4. Gmail has Infinite Variability. But This Is More Powerful in Entertainment than a Utility.

A lot of this is from the book Hooked: How to Build Habit Forming Products, by Nir Eyal.

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Related articles:

• How Alibaba.com Re-Ignited Growth with the Alibaba Management Playbook (Tech Strategy – Podcast 253)
• How Amap Beat Baidu Maps. My Summary of the Alibaba Playbook. (Tech Strategy – Podcast 252)
• Scale Advantages Are Key. But Competitive Advantages Are More Specific and Measurable. (Tech Strategy)

From the Concept Library, concepts for this article are:

• Share of Consumer Mind
• B2C Customer View: Habit Formation
• B2C Customer View: Variable Rewards
• B2C Customer View: Infinite vs. Finite Variability
• Front of the Cue (not in categories)

From the Company Library, companies for this article are:

• Google: Gmail
• Facebook

———transcription below

Episode 258 – Gmail.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, habit formation, and three others, let’s call them Psych Hacks, that you can basically copy from Gmail. Now I really like Gmail. I think it is a very good product and a.
Really, it has most, like 80% of everything I like about digital businesses. You can see there a lot of powerful stuff. At the same time, it’s not one of these, once in a lifetime company like, you know, Facebook and Tencent or TikTok, you know what you can kind of copy from Gmail. You can pretty much any company can try to copy.
So, it’s a lot more, let’s say, usable than these, you know, unique, um, dominant companies. Um, anyways, I’m going to [00:01:00] go through sort of three to four sort of psychology related concepts that they use very aggressively, and it’s, um, yeah, it’s pretty great. I think it’s; it’s a fun subject. So that will be the topic for today.
Uh, housekeeping stuff. As mentioned, we are doing a. Tour to Shenzhen in the greater bay area of China. So, you know, Shenzhen, Guangzhou, Dongguan, that whole area, which is pretty amazing, economic phenomenon. And obviously looking at digital companies and some other things, but really. Broader than tech. Thinking more about investment, that’s a good place to, if you’re an investor, you’re looking at companies in China or looking at companies in Asia, which is really being impacted by a lot of what’s coming out of China, particularly Shenzhen area.
Uh, it’s a pretty good place to understand in terms of that. So, we’re going to be doing that. The details were supposed to go up today, but I think they’re going up tomorrow the next day. We’ve [00:02:00] already talked to a decent number of people and, um, yeah, I guess the, the differentiating factor on this from our previous tours is it’s coming in under about $900, for three days.
So. Anyways, it, it’s going to be pretty great, I think. And that will be in November-ish. Anyways, details coming in today, but if you’re curious, send me a note. go over to techmoatconsulting.com or just send me an email or something like that. emails on the website. Okay. other thing, last thing. If you can, review this podcast, that would be helpful.
I’m sort of trying to get it a bit more on the radar than it has been recently. Although it does pretty well actually, it’s, it’s kind of interesting to watch those numbers. But yeah, if, if you can take a couple seconds and do that, yeah, I’d appreciate it. Okay. Standard disclaimer, nothing in this podcast or my writing or is website adv advice?
Try it again. Nothing in this podcast or my writing or website is investment advice. The numbers and information for me and any guess may be incorrect. The views and opinions expressed may no [00:03:00] longer be relevant or accurate. Overall, investing is risky. This is not investment, legal, or tax advice. Do your own research.
And with that, let’s get into the topic. Okay. We’ve got a couple concepts for today. the big one, I guess we, we call it habit formation. And there’s some good books written about this. one that I like and a decent amount of this habit framework that I’m going to talk about comes from a book called Hooked, by near aal.
I’ll put the, the link in the show notes. That’s really great book and it’s. It’s not just habit formation, but it’s habit formation in digital in sort of, you know, screen-based interfaces. And it’s, it’s really powerful. I mean, it’s shockingly powerful. So that’s kind of the main concept. I’ll also talk about share of the consumer mind as a competitive advantage, which is a big deal.
Another concept keep in mind is variable rewards. Um, we’ll go into that a little bit. [00:04:00] And then I’m going to touch on a couple digital superpowers, but those aren’t that important. Really, the first three will be the main concepts for today. Okay, so I don’t think I have to explain Gmail. It’s um, free email.
And this isn’t specific to Gmail. This could be really any free email product. It’s not really company specific. It’s about the product and why it has such, you know, power to it. It is really shocking and, and we can broaden this a little more generally to why are digital services like checking your email?
W why, why do we do that so often? Why do we check our messenger all the time? Why do we check social media? Like there’s something really powerful going on in terms of habit formation and consumer, really consumer psychology that I think these companies are aggressively hacking. You know, I’ve kind of been joking for a while.
I think these companies are basically using software to hack the [00:05:00] human brain, and it really does work. So anyways, but we’ll put that aside for a second and forget the, you know, the habit formation, consumer psychology. Let’s just talk about the business itself and the product itself using sort of, let’s say, digital superpowers list.
Okay? Even with that. It kind of has 80% of the things I like, like, okay. First on my digital superpowers list is, does this product or service create a dramatic improvement in the user experience? Can user be consumer, it could be B2B customer, it could be developer, it could be content creator. In this case, we’re mostly talking about consumers, but you know businesses.
Well, yeah, I mean. One email obviously was a huge thing, much better than you know, snail mail. But when these free email services came along, man, that [00:06:00] was, that was a 10-x improvement in the product, right? Kind of WeChat, WhatsApp was the same, you know, wait, I can send messages on my phone for free rather than getting, you know, dinged by my mobile company for every text message.
Okay. If you can offer something people use all the time for free. That’s fantastic. And it also sort of sits within, you know, a sort of frequently used utility. And if you actually look at what Google builds, you know, like Microsoft is big into productivity tools for businesses, but also for individuals.
Google has always been a lot about daily or high frequency utilities. storage of cloud, you know, photos, sending emails, things like that. They like to get to be sort of the utilities you use every day with high frequency. Well, it turns out mess. You know, email is something we do all the [00:07:00] time, so that’s a great place to position yourself as a business.
High frequency, really daily hourly utilities is pretty good. in addition to that. They are sort of at the front of the queue for the user experience. I mean, there’s only a couple companies that really sit at sort of the, the doorway to the internet. Facebook is a doorway. Apple has their, you know, their mobile operating system.
That’s a doorway. there’s a couple and everyone else kind of is behind them in the queue. If you want to reach people online, well, you’re probably going to have to go through Facebook because they, that’s where people are. Well, email is a sort of a primary doorway, and if, if you’re positioned as a primary doorway onto the internet or something like that, that’s pretty great.
So, they have a pretty great position. It’s a high frequency, high frequency service utility. utilities don’t tend to differentiate that much, so. Sometimes if [00:08:00] you’ve got big competitive advantages that can help you because it makes hard, it makes it hard for someone to come at you with a differentiated service.
Uh, sometimes it can make you into commodity if you don’t have a competitive advantage. So, you know, commodities are not great, but in this case it’s a pretty good utility. So, number one, dramatic improvement in the user experience by any measurement. Um, number two, I talk about platform business models.
Gmail’s not really a platform business model. It’s one of those businesses that doesn’t really fit cleanly in a bucket for me, in terms of business model, you could say it’s a platform. Hey, you’ve got two user groups. You’re serving, you’re serving people who use email, and you’re serving advertisers who will then, you know, populate every, every now and then you get a, you know, an advertisement email in your queue.
You could say the same thing about, you know, print newspapers. Okay. They had two user groups, the advertisers and the readers. I don’t really consider [00:09:00] that a platform business model. It has some of the aspects in the sense that you can cross subsidy. So why is Gmail free? Well, because advertisers are paying for it.
That’s why. So that’s, that’s a powerful thing if you can do it. But I usually consider platform business models is when you are fundamentally in the business of enabling interactions. Well, that’s not what Gmail does, at least in terms of advertisers. Now, I guess you could say it’s sending messages for that one, and you could make the argument, Hey, it’s a platform business model.
Like, um, you know, certain groups of people are sending messages and certain are receiving. I don’t really buy all that. I just consider it a communication service with some subsidized pricing. But anyways, that’s pretty good because you can offer it for free. Um, you know, a high frequency daily utility that is also free.
That’s really powerful. number three, it’s got [00:10:00] 100% digital economics. There’s no logistic centers. There’s no dudes on scooters delivering packages. This is a digital creature, and so it has all the nice things we like about digital economics. Um, it scales very easily. Usually, you get margin expansion with greater volume.
Uh, it scales quickly. You know, it went to a global service very fast. It has effectively a zero marginal cost for every new user. And there’s some, but not that much. Um, it doesn’t have any limits on capacity. You can double, triple 10 times your volume without building new factories. I mean, you got to add servers and stuff, but it’s pretty minimal.
Uh, yeah. So, it’s an easily scalable without sort of limit digital service. It has all the good things we like about digital economics, which is great. And last couple things I like [00:11:00] about it, it’s got built in word of mouth. It’s not viral in the sense that if I send you a message, you don’t have to sign up to Gmail to read my message.
No, I mean, email is an open network. It’s not a proprietary closed network, but. You know, if I send you an email from a Gmail account, you’re going to see it came from Jeff at Gmail. Well, that’s natural marketing. It’s word of mouth. or at least marketing and advertising that everyone’s sending emails to each other.
They used to put, you know, tags on the bottom of the email powered by Gmail or whatever. But yeah, it’s going to naturally market itself with no real cost. So, your users, they don’t become your sales agents, but they become your marketing agents. That’s great. And then there’s some soft switching costs, right?
You don’t really want to change your email if you don’t have to. You know, cause people you know have your email they might send you, although that’s not a big deal like it used to be 20 years ago. You have all [00:12:00] your messages stored there. You don’t want to let, I mean, when’s the last time you deleted an email account?
You may have started a new one and used that, but have you ever deleted an email account? No. There’s sort of a tendency to keep ’em, because you got a lot in there, sort of what we call stored value. So, this, you got some soft switching costs in there. They’re not. But anyways, all of it’s great. I mean that all of that is kind of really attractive.
Okay. They don’t have network effects. That would be great. They have economies of scale. They’ve got some other things, but there’s a lot I like in terms of digital businesses. Just off that. That alone would be cool. Then we get to the point of the podcast, but it’s also got these psych hacks starting with habit formation that have real power to them.
And that’s kind of the, you know, the big, I think the, their biggest source of power is probably there. Eh, I maybe won’t say that, but it’s really important. Alright, so take away number one. I’m going to go through four. Number [00:13:00] one, um, it’s Gmail and really free email. It is very habit forming with a high frequency service and the frequency bit matters, a high frequency service over a long time.
You know, so the question is, how often do you check your email per day? It’s probably pretty frequently. How long from when you wake up? Do you check your email? Do you even get out bed before you check your email? Right. And you could say the same thing about checking your messenger, maybe social media, but definitely messenger email are more similar in what they’re doing, like.
Why do you do it? Have you ever thought about, why do I do that? Have you ever noticed, like you check your email, you start to check it more and more frequently over time? It’s almost like it’s a habit that grows. Um, not as much as social media. If you spend a lot of time on TikTok or Twitter [00:14:00] or something, you’ll probably notice it.
Over time. You’re spending more and more and more, it grows naturally. Same thing happens. Like, I Dunno if I have a cup of coffee in the morning and then I say, oh, I’m going to have one in the afternoon. I, it’s almost like there’s a, a gravitational pull to keep increasing. Suddenly it’s two every day.
Suddenly, you know, you, you can kind of feel that with a lot of these social media, and maybe not as much with Messenger like an email, but you can sort of feel something strange is happening to you. Like, why are you doing? It’s, um, you can see it in, I think, yourself. You can see it in almost everybody.
Every human being on the planet pretty well, not at, but in, in many countries is checking their email. If not, you know their messenger for sure, all the time. So, you know, that’s kind of the red flag. Something strange is going on now. What? What is it? Well, yeah, it’s habit formation that has been supercharged with digital technology.
That’s it. Habit [00:15:00] formation is nothing new. We’ve been seeing it forever. But software combined with habit formation, this is like discovering gunpowder. It’s a big, big deal. Now for those not familiar, the basics of habit formation, people have been talking about this in business forever, which is, you know, you’re basically have different parts of your brain and in.
Order to save energy and do things in a more efficient manner. When you do something multiple times, frequently, it goes from more the more active portion of your brain. Your conscious thought, your active engagement of thinking to something that sort of happens on autopilot and it actually gets hard coded into your brain.
Pathways get sort of etched and then you can kind of do that without thought and it happens very easily, like. For example, the first time you drive somewhere or travel somewhere, let’s say in a car, your brain is, is engaged. [00:16:00] You’re thinking about how to get there. What is the street, how was the map? How do I turn, whatever, whatever.
If you’re driving to work every day, you’ll notice that you can drive to work without even being aware that you’re driving. It just kind of happens and then you, you know, you’re thinking about stuff in your head, but it isn’t driving, and then you realize, oh, I’m at work. And you, you almost don’t even have any memory of doing it.
Well, that’s because it’s an active pathway and its sort of etched into your habit, um, pattern, and it just happens. And you know, the, the reason for that, I’m kind of paraphrasing, I’m probably not getting this. Too, right? But it’s more or less, right, is this is just about saving energy. You know, you’re, it’s the same reason we walk instead of run.
Running takes energy. We can walk very efficiently with minimal energy and your body likes things like that. Save energy. So, habit formation sort of goes into the unconscious part of your brain. Well, it didn’t take businesses very long [00:17:00] to realize, you know, it’s a lot easier to sell our service to an inactive mind.
An active mind is, is a harder sale. What’s the price? Is it good? Do I need it? A sort of passive, unconscious purchase or, you know, usage. That’s a pretty great, I mean, generally speaking, not to be crude, but it’s far easier to sell to emotion and an unconscious mind than it is an active, engaged mind that’s thinking about the pros and cons.
So generally, that’s true. It’s easier, it’s usually more profitable. So. And then the question is, alright, how do we get something into the unconscious part of people’s mind? How do we make it a habit? And lots of companies are very good at this. Um, cigarette companies, cigarettes are a habit-forming device.
Um, you, you know, the first thing you look for is frequency. For it to become a habit, you have to do it. If [00:18:00] not weekly is maybe the least frequent you can do it, but really you want daily or if not, you know, if you can all the time frequency, you need high frequency to get a habit created and it also needs to go for a fairly significant period of time.
Can’t be just one day, it, it gets created over time and then it gets etched in and you know, so cigarettes, your average cigarette smoker. And these numbers, I don’t know them like I used to, and it’s 15 to 20 cigarettes per day, so they’re probably taking seven, 10 breaks from work, going outside, smoking a cigarette, probably two coming back.
It’s not just daily, it’s all day long. And so, you get the habit. It’s something laid, like it helps that nicotine is super addictive. It gets etched in and then you can see how addictive it is. And habit formation is hard to break because people will try and quit. It’s difficult. And even if they do quit, they tend to fall back into it very easily.
People who [00:19:00] quit smoking go back, things like that. Now that one has a lot to do with chemistry, nicotine’s, addictive, and we could say the same thing for coffee. We could say the same thing for, um, alcohol, but there’s lots of other habits that aren’t necessarily chemical, that you can see in life. Um, if you live in Southeast Asia, Thailand.
You kind of notice every time you walk by a seven 11, have you ever noticed that there’s like almost a quiet pull? Like when you go to a seven 11, oh, let’s go in and you don’t actually go in there to, with, I want to buy something specific. It’s almost like there’s, it’s not a huge pull, but you can kind of feel it, you can feel lots of little sort of quiet tugging on your mind, in these things.
Now when you, you know, there’s books written about all this, but you can look up, um, hooked. By near il and the standard framework you will hear is habit formation has three. You could say four, but let’s say three steps. You [00:20:00] need some sort of trigger or cue. You need something that triggers you. when you see the trigger, then you take an action.
Once you take the action, you get a reward, and that becomes the cycle. Then it happens again. You see another trigger. So. You can sort of put triggers into external and internal triggers. External trigger is I like to smoke. I walk down the street; I see a cigarette vending machine. They don’t have those anymore, but they used to.
The site of the cigarette vending machine is a trigger. I decide to take an action. I walk over; I buy the cigarette. I get a reward. I take the first puff of the cigarette. I feel better. Now that would be an external trigger. You see it on the street. Coca-Cola ads are like this. It can also be, um, an internal trigger.
I feel anxious. I feel worried. Um, I sort of feel uncomfortable. That would be a trigger, a cue. the [00:21:00] action I take. I’m going to go smoke a cigarette outside with, you know, I go out, I smoke, I feel better, my anxiety goes down. Same thing. Um. The famous example of this was how they got Americans, some advertising company.
I forget which one. How, how they got Americans to brush their teeth finally. cause Americans used to be like a, a truly disgusting, dirty people, you know, one bath every six months and they definitely didn’t brush their teeth. So, the teeth were terrible. And so, Pepcid back in, look up 19, you know, 19 10, 19 20, people weren’t brushing.
Pepcid had sort of a famous marketing effort done by a guy named Claude Hopkins that really sort of. It created a daily habit in Americans to brush their teeth. And it was the same pattern, which was, okay, we need a trigger, we need a queue. Something that happens naturally. You know, you want something [00:22:00] that happens as a queue that you don’t have to spend money on.
If you put vending machines in billboards for Coke everywhere, you’re going to trigger people. But you got to spend money for those. You want something that’s sort of free and natural. Well, one thing that’s sort of free and natural is, um, that film you get. When you wake up and you can feel it on your teeth, you know, that sort of grimy whatever film that you feel on your teeth when you go, well, that’s a natural cue happens to everybody.
Great. There’s your cue. What’s the action we take? Well, we go in and we brush our teeth. Okay. it didn’t work. No, it, it really didn’t, um, work and people weren’t brushing their teeth. And what Pepin realized was, you need a reward. What’s the reward? The reward? Usually a reward is, it can’t be an intellectual reward.
It has to be sort of a feeling like, Ooh, that cigarette tasted good. I get the Russian nicotine. Ooh, that first can of Coke. [00:23:00] When you open it and it’s cold on a hot day, that first Gulf tastes good. Well, the reward was that burning sensation you get when you brush your teeth, you know, you brush your teeth.
It, it doesn’t, it kind of stings slightly. Well, that isn’t in the toothpaste. Naturally, they added, um, some type of oil to create that sort of mild burning sensation, and that’s the reward. They added that. So now you had a cue, an action, and a reward. Ooh, that next time you brush your teeth, you’ll feel it.
Ooh. When you’re done, you kind of feel like, Ooh, my teeth are clean. Pepcid added that oil in there to make it feel like that. And sure enough, by 1920s Americans were brushing their teeth. They basically created daily habits. So anyways, it’s a cool subject. There’s books written about it and I won’t go through too much, but I want to get to the digital version of that.
So why does Gmail work? Well, you could say there’s an external trigger that, you know, you open up your computer and you [00:24:00] see on your email list, it will have, you know, probably fairly noticeably how many unread emails you have. You’ll notice it. Ooh, I got 10 unread emails. I’ll go check those. Um, you could say, okay, then I go and I check the emails.
That’s my action. And what’s the reward I get? Well, this is where it gets interesting. You could say in one sense that you get sort of a feeling of completion. Okay, my queue is empty. Task completion is actually, kind of significant. So, it’s a high frequency service that’s important. You do it multiple times a day.
You use it for years and years and years. Length of usage really matters, and you could view if you view it as purely utility. Okay, I see the notification. That’s the queue I take the action; I go through my unread emails. I’m done. The little light disappears and you know, I feel like I completed something.
So, you can see if we view it as purely utility, you can see the habit formation cycle. So that’s kind of [00:25:00] point number one, but I think it’s actually much more interesting than that. Point number two is where we, we start to get into the psychology more. point number two, it’s self-triggering and having a habit is awesome.
It’s really good having a habit that self-triggers is, I mean, that’s like the holy grail. This is where the queue that’s happening is not something external. Like I see the notification of, oh, I got 10 on Enid emails. Oh, I see the Coca-Cola billboard. You know, something like that. not even the, you know, the film on the teeth, although that’s kind of self-triggering to know we want something that comes from your own mind.
It’s not an external trigger; it’s an internal trigger. Have you ever noticed, like when you get up in the morning, why do you check your messenger? Like do you really think there’s something important or is it more [00:26:00] like just kind of, either you don’t think about it at all, you just grab your phone and do it, or it’s almost like it’s an itch in your mind a little bit like, Ooh, I should check my Twitter.
Why I don’t need to, there’s no utility there, but it’s almost like it’s an itch in your mind. And so, you open up your app, you open up your messenger, you open up your email, you check it really quick, and it’s like you scratch the itch and then you feel a little better. Almost nothing I’m describing is about a utility, like I need to check my emails to get my work done.
No, it’s something, it’s something different than that. It’s almost pure psychology. Okay, so if you can get, and way this usually works is when you create a habit with an external trigger, like, here’s your unread emails, here’s the, you know, the billboard, here’s all over time, as the external trigger causes an action, causes reward as that goes [00:27:00] on for quite a significant period of time.
You start to build an internal trigger into your mind, it won’t happen naturally. It has to sort of be built over time, um, where suddenly it’s not like, it’s almost like it’s not about going day to get the coffee, it’s the anticipation to getting the coffee. And you basically start to get these itches in your mind.
Uh, and that’s really phenomenal. If you can get it and, you know, you go and check your email, you go and check your social media account, and then you feel better, you’ve scratched the itch. that’s pretty spectacular. That’s the holy grail, really. cause now you don’t have to spend money to trigger people.
You don’t have to put billboards up; you don’t have to send out notifications. Hey, you know, this is why every app in the world wants you to accept notifications on your phone. They want to be able to send you triggers. Well, this, you don’t even need that. Your own mind is creating the triggers all the time for them.
Now, this [00:28:00] book hooked the way they talk about internal triggers. They’ll say it’s usually when an action or service is closely aligned with a thought, emotion or a routine. For a lot of social media, the motion that’s really being triggered here is boredom. You have a little idle time. You’re on the bus.
Ever notice that, like if you’re idle for. 30 seconds. You get on the bus, you’re waiting on the metro, you immediately open your phone. Like boredom is a big sort of trigger. loneliness can be one. Now, the reason I’m talking about Gmail and not like Facebook is cause Facebook is, they’ve got a lot of negative emotions that they’re tied into envy.
Jealousy, outrage, frustration. I mean, they, they kind of feed into a lot of, you know, it’s kind of the dark side of the force. Gmail doesn’t really have any of that negative emotionality. It’s, it’s a trigger, it’s a cue. but it, it’s, it’s pretty much, [00:29:00] you know, white hat in terms of building these sorts of digitally created triggers in people’s minds.
Uh, the one that’s probably relevant for Gmail is just FOMO. Fear is a big trigger. Things we’re afraid of will trigger us Fear of missing out. Yeah. I got to check my work to see if I’ve missed anything. I got to check my messages to see if, you know anyone emailed that’s fear of missing out. Did I get any messages?
Uh, is anything happening at work or, you know, whatever. What are people saying? Did anyone email me? so it, it’s probably for email, I think it’s mostly about fomo, fear of missing out. You could argue it has a little bit to do with boredom, but I think that’s much more why you open TikTok and Instagram or whatever.
Uh, so anyways, Gmail’s awesome. It’s high frequency. The core is a utility, which means it has some, you know, service value. You use it forever, and it turns out its self-triggering. [00:30:00] Not as much as social media in short video, but it’s pretty self-triggering. And that doesn’t cost you anything, really what you want.
If you’re going to build a, a habit in a customer in your product, you really want a self-trigger if you can get one. And the other thing you really want is you want the absolute minimum necessary effort by the user. To take the action you want the minimum physical effort. You don’t want them to have a go across the street to the coffee.
You want, you know, the coffee stand right there. Um, in this case, you just want them to open their phone. No, no effort whatsoever. You don’t want ’em to have to spend any money on a cup of coffee. Nope. Gmail’s free, and you want no emotional or you know, sort of mental effort. You want to make it super easy when you feel the itch, you can scratch it without the slightest bit of effort of any kind.
That’s really what you want. Okay. That’s point number two. I’ll [00:31:00] finish up here. I’ve been going for a while. Um, number three, I kind of talked about already, oh, l make one more point. Share of the consumer mind. Right. This is one of, for me, this is one of the big demand side competitive advantages. but it’s always a bit vague when I talk about it.
I, I sort of break share. This is a Warren Buffett term. You know, when a business or product controls part of your mind, it has a share of your mind that is a competitive advantage, and you can get there by different mechanisms. Um, it can be emotional, it can be, um, by chemistry, nicotine, caffeine, sugar, but one of the ways you can get there is habit formation.
I actually have a list of these. I’m sure I’ve published it before, it’s on the website, but I have a list of like seven different ways to get to share of the consumer mind. Yeah. When you see someone checking their email five times a day or check they’ve got, they own your mind, right? They have got a piece of your mind captured.
Uh, now can you get a [00:32:00] mental monopoly, like not just a piece of it, but like all of it within your relevant industry sector. Tencent kind of does, I don’t know, I’ve heard that phrase, mental monopoly. I’m not sure I buy that. But anyway, so we can see at a certain point, habit formation. It can be a nice aspect of a product, but at a certain point you can say, yeah, this is a competitive advantage.
And it is actually quite powerful. If you’re competing against a product that has a strong habit formation, it is very hard to shock those customers out of it and come over to your product. It is. I mean, it is like beating your head against a wall. You can drop the price. They don’t care. You can advertise.
They don’t care. They’ve been smoking Marlboro cigarettes for 20 years. They are not switching to Lucky’s. It doesn’t matter what you do, there’s only a couple things you can really do. You, you basically have to drop the price by like 90% or you have to wait for a major technological disruption to wipe out the [00:33:00] whole product category.
But you know, the kind of habit formation I just talked about, self-triggering, no effort required, almost impossible to break that. All right, number three. Um, Gmail has as mentioned sort of task completion rewards. You feel a sense of completion when you finish your emails. That’s kind of a nice thing.
That’s okay, but it isn’t too powerful. The real powerful one, which Gmail doesn’t have is variable rewards, right? This is why slot machines are the most addictive form of gambling. Like much more than blackjack, much more than anything. cause you pull the lever, um. the wheels turn, well, now it’s just digital, and then you get a different reward every single time.
Ooh, I got two lemons in one, but I almost made it, but I didn’t. But the reward is dramatically more powerful when it changes all the time. If you are getting the same clean feeling on [00:34:00] your teeth day after day, that’s good. Okay. It’s not nearly as good as, you know, pulling the lever on the slot machine and every time it’s different.
Variable rewards is super powerful. slot machines have it. Maybe you win, maybe you lose. Um, social media has it. When you flip to the next video on TikTok, you don’t know what kind of video you’re going to get, something you like, something you don’t like. Um, we don’t know, when you, your newsfeed on Facebook or Instagram is also sort of variable rewards.
You don’t know when you’re going to get you post something, you want to see how well did it do well, how many likes did it get, how many shares did it get? That’s a form of variable reward as well. That’s so much more powerful. Gmail doesn’t really have it. Facebook does. Facebook arguably has the strongest hand of maybe any company in all of this.
Like if you run [00:35:00] the list for, let’s say, basic Facebook newsfeed or be, say Instagram, it’s a free high frequency service. Okay? It’s not a utility, but it’s an entertainment service. That’s pretty good too. Very emotional. It ties into a chemical need, which is dopamine, which is not as good as nicotine, but it’s pretty good.
Uh, it has internal triggering. people check this stuff all the time, and it’s not just based on fear of missing out. What, what messages did I miss? They have a pretty evil set of emotions they tap into, anger envy, frustration. I mean, I’ve heard Facebook referred to as digital cigarettes, which is kind of true.
Um, there’s no effort, mental, physical, or money spent otherwise to access it and take your action. when you do take the action, you see what’s in your newsfeed. You see many likes. Your posts get, you get variable rewards. [00:36:00] That’s great. And the whole thing is a digital entity. So, no operation. So, it scales beautiful.
I mean, it is, you know, it’s right up there with cigarettes as one of the most powerful products ever built, and I put both of those on the dark side. Um, anyways, I put gambling in there as well and, you know, anyways. Okay, last point. so task, so variable rewards is huge. Last one, which is a small point.
The other thing you kind of want is similar to variable rewards. You kind of want infinite variability. Um, you know, I like video games. I like ghosts of sushi. Muff my favorite game by far. But after I’ve completed the entire Quest two or three times, I’m pretty bored. I’ve done all the side missions. I’ve done the main quest because it’s the same game over and over.
So even something you really, really like. We get bored. Um, TV shows don’t last forever. Well, soap [00:37:00] operas do, but most don’t even a show. I really liked The Walking Dead the first couple seasons. Ooh, this is interesting. The zombies, you know, fifth or sixth season, I’m like, are they still running around the woods?
I got bored of the characters. I got bored of the whole thing. So, you know, this is why musicians reinvent themselves every five years. So finite variability, you’re going to lose your hold on people. Now, that’s not a problem for a utility like Gmail, but it’s a problem for a lot of content and entertainment.
So, what you really want is not Ghosts of Tsushima. What you want is World of Warcraft. You want infinite variability where every time you play World of Warcraft, it’s different because it’s all about what the other players do. Right. It’s a multiplayer, you know, M-M-O-R-P-G, right? So, when you have other players creating things, um, you get infinite variability, which, so World of Warcraft people have been playing that thing for decades, right?
It’s close to decades now. [00:38:00] and they’ll keep doing it. They’ll play it their whole lives. You know, that’s why YouTube and the Facebook newsfeed are more powerful than say, a TV studio. Where they have just their said shows. But no, YouTube is infinite variability. You can dig around there forever. So, okay.
Gmail doesn’t really have that. I mean, you could say kind of you don’t know what kind of emails you’re going to get. You could argue that it’s slightly there. Um, but I don’t really think that plays into it at that much. I think variable rewards is what matters. You have to sort of really know what the reward.
The user gets when they scratch that itch. just having an infinite variability product, content, entertainment, that’s good too. But it, it’s a little bit on the side. So that’s kind of the last concept for today, which is infinite variability. Talked about variable rewards, we talked about. Self-triggering internal triggers, which are really the gold standard.
And then this idea of habit [00:39:00] formation having three steps. Yeah, you can see all of that, those four points. You can see all of those in Gmail in a fairly moderate form. It isn’t social media, it isn’t WhatsApp, but it’s quite good. And. That’s a fairly strong hand. I’d give it like a six out of 10 in terms of all of this.
And when you put that on top of the fact that it’s just a really good business model, anyways, it’s great. Anyways, that’s the content for today. I think it’s pretty interesting subject and there’s kind of this progression that’s a little worrisome where you know, people have been designing in these sort of psych hacks.
Into software more and more aggressively over the last, let’s say 10 years. cause everyone’s in a constant fight for your attention and engagement, and they’re using every trick they can to get there. There, you know, putting gambling into things and, you know, gamification everywhere and trying to sort of, you know, do endless dopamine hits, things like that.
So, there’s this, you know, sort of list, but [00:40:00] now we’re moving into where you’re going to engage with, basically AI is going to be one of your primary interfaces. For the web and for service. You’re going to be having sort of a, a back-and-forth conversation of some kind with the generative ai and you know, you think you’re having a conversation, but the AI is really viewing it like a game of chess where they are trying to move their pieces across the board, over the course of a conversation, which can be a short conversation.
It could be over weeks and months to get you due to a sale or to get you to a state of habit formation. So, this sort of hacking of the human mind with software is turning into hacking of the human mind by AI agents, which is kind of worrying. So, I’m, I’m keeping an eye out for that. I haven’t seen it, but I’m kind of looking for it.
Anyways, that’s the content for today. I hope that’s helpful. As for me, it’s, it’s been a good, um, couple weeks really. Um, my [00:41:00] girlfriend’s mother has been living with us for the past month. Which is, which has been a very, in interesting experience for a guy like me, and she’s, she’s heading out in the next day or so, so that’s sort of the end of that for a while.
Maybe six months, we’ll probably do this again. Something like that. yeah. But that’s, that’s been really nice. But yeah, I’m kind of. I’m ready to have the place be a little quieter, which is my more natural state of things. So that’s good. we’re, we’re trying to think of a vacation actually. This, any suggestions would, would be really appreciated.
We’re, we’re looking for a vacation, I think for October. we like to do water stuff, you know, we go to the water parks, we do whitewater rafting, or at least river rafting in Bali. We had a great time. We did canyoneering in near Cebu; we swam with whale sharks and Bohol obviously beaches everywhere.
So, we’re kind of looking for a new water activity, like maybe in Indonesia. Indonesia or Philippines tends to be more, I know there’s water rafting in Nepal, [00:42:00] but I’ve been looking for something new, maybe near Manila or um. Java or, or somewhere in Indonesia. If you know anything that’s like that, you know, send me a note.
Uh, we really enjoyed, water rafting, sort of whitewater rafting. That was fantastic. So anyways, any, any suggestions would be appreciated. I think we got about a month to figure this out. Anyways, that’s it for me. I hope everyone is doing well, and I’ll talk to you next week. Bye-bye.

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I am a consultant and keynote speaker on how to accelerate growth with improving customer experiences (CX) and digital moats.

I am a partner at TechMoat Consulting, a consulting firm specialized in how to increase growth with improved customer experiences (CX), personalization and other types of customer value. Get in touch here.

I am also author of the Moats and Marathons book series, a framework for building and measuring competitive advantages in digital businesses.

Note: This content (articles, podcasts, website info) is not investment advice. The information and opinions from me and any guests may be incorrect. The numbers and information may be wrong. The views expressed may no longer be relevant or accurate. Investing is risky. Do your own research.