Earlier this year, I wrote about Nir Eyal’s great book, Hooked, and how it can help you create a product with great retention (e.g, something habit forming). What is particularly interesting is that one of the most habit-forming endeavors is entrepreneurship and building companies. The four principles of the Hook Model—Triggers, Actions, Variable Rewards and Investment—also show why entrepreneurship is so addictive.
Triggers
First, there must be a trigger. Triggers prompt you to take an action. In the case of starting a business, the trigger is seeing an opportunity. It could be waiting for a taxi that never arrives (probably the trigger for Travis Kalanick to start Uber) or going to a restaurant based on a critics review and getting a bad meal (possibly the trigger for Jeremy Stoppelman with Yelp). It is consistent at retail, you cannot find a good wine so you think about starting a wine store.
Actions
The next step in the Hook model is the action phase. The trigger, driven by internal or external cues, tells the user of what to do next. There are three ingredients required to initiate any and all behaviors:
- The user must have sufficient motivation.
- The user must have the ability to complete the desired action.
- A trigger must be present to activate the behavior.
The above can be visualized using Stanford Professor BJ Fogg’s Behavior Model. Fogg’s model shows that elements must converge simultaneously for an action to occur, represented in a formula, B = MAT, which shows that a given behavior will occur when motivation, ability, and a trigger are present at the same time and in sufficient degrees.
In the case of being an entrepreneur, the action is starting and building a company. It is also raising capital, growing your team, pivoting, etc.
Variable rewards
What differentiates the Hook Model from all a regular feedback loop is its ability to create a craving. Feedback loops are all around us, but predictable ones do not create desire. Introducing variability multiplies the effect, creating a focused state, which suppresses the areas of the brain associated with judgment and reason while activating the parts associated with wanting and desire.
The rewards from starting a company are probably more variable than any other possible activity. You may end up creating the next WhatsApp and selling your company for $19 billion or you may end up shutting your doors.
The actual sale also creates one of the greatest rushes you will experience. I wrote last summer about the “Thrill of the Deal,” and that thrill is the manifestation of the variable reward.
Investment
The final step of the Hook Model is where the user does a bit of work. The investment phase increases the odds that the user will make another pass through the hook cycle in the future. Every founder effectively invests months or years of their life (and often their savings) into their company.
Keep it from becoming an addiction
Just like any behavior, the line between habit and addiction is a fine line and you need to manage yourself diligently to avoid becoming an addict. You do not want to start companies just because you have to start companies; sometimes you would be better off pursuing a different course of action. If your expected return is less than the resources you need to put into starting a company, you are not acting rationally by still starting a company. You are no different than a gambler at a casino that knows the odds are negative but is playing for the rush.
Key takeaways
- Starting companies is as (or more) habit forming than most products for the same reasons products can hook you.
- Being an entrepreneur includes a trigger (seeing a business opportunity), action (starting and building the company), variable rewards (selling for millions to going bankrupt) and investment (your time and your money).
- You need to avoid letting it become an addiction and make sure you are starting a company for the right reason, not just because it is habit.
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