Whether your startup is classified as a pain pill or a vitamin is one of those maxims I’ve been using for years. However the article The real reason ‘stupid’ startups raise so much money by Nir Eyal on The Next Web was literally an eye opener, as it caused me to view the vitamin type companies very differently.
Just a quick refresher for those of you unfamiliar with this categorization of startups. Pain killer startups, solve a real problem for a lot of people. When you are in pain you are very highly motivated to do something about it, namely take a pain pill. But what motivates consumers to take vitamins? Because the are supposedly good for you, but if you forget to take one or even stop taking vitamins you may not notice a difference, or that difference will take a very long time to manifest itself if very. So why invest in vitamins type companies?
Like the author I’m been befuddled by the incredible amounts of funding seemingly trivial vitamin type companies have raised, like Snapchat’s $3.4 billion IPO. That required both hands to scratch my head in bewilderment.
However Nir Eyal has a brilliant new way of looking at this categorization: taking vitamins can well become a habit. What problem did Facebook solve for consumers?
He likens the need to take vitamins as akin to an itch – and habit forming products provide relief.
Habit-forming technologies seem, at first, to be offering nice-to-have vitamins, but once the habit is established, they provide an ongoing pain remedy. It is easy to dismiss these seemingly frivolous technologies when we don’t understand the deeper psychology compelling users to come back again and again.
While I still may be amazed at the vast amount of funding VCs and strategic investors have pumped into seemingly trivial companies I’ll no longer be bedazzled. And I’ll start looking at the many companies I mentor that look like vitamin pill types differently, , They just might be habit formers.