The importance of 'Accruing benefits' and 'mounting loss' in building successful products

When I took part in Google's Launchpad accelerator program last year, Sarah Tavel was easily my favorite speaker/mentor. This says a lot because our batch had access to people like Jake Knapp (dude who wrote 'Sprint'), Waze CEO Noam Bardin and Google's own VP of Product Bradley Horowitz

I've been following her work as head of product at Pinterest and have read most of her published articles before I met her in person. Suffice it to say I was star-struck when I finally did!

This video reminded me why I'm such a big fan. The concepts she presents are beautifully simple and actionable and are never obscured behind a veneer of complexity most people who fancy themselves as thought leaders are fond of.

In this talk she reprises part of her presentation that talks about the concept of 'accruing benefits and mounting loss'

"A slower growth rate with higher retention will build a healthier product than fast growth with low retention. So how do you retain users? Sarah says you have to create accruing benefits and mounting loss within your product.With accruing benefits, the more someone uses the product, the better it gets. As a consumer adds data to a product, either explicitly or implicitly, the company uses this data to improve the experience of the user. In mounting loss, the more someone uses the product, the more they would lose if they left. So the longer someone stays with a product, the more its value accrues and it becomes a product they depend on.

To demonstrate this concept, Sarah talks about Evernote. Its core action is creating a note. The more notes you create in Evernote, the more value you get (accruing benefits) and the harder it is to leave (mounting losses). Conversely, anonymity apps such as Yik Yak or Whisper succeed at engaging users in Level 1 and tend to have big spikes in growth at the beginning. But they fail to move to Level 2 engagement, because there is no accrued value or mounting loss."