The Power of Habit For Startups and Investors

How Establishing A Few Crucial Habits Can Propel People To Success

Review of Power of Habit by Charles Duhigg

Review of Power of Habit by Charles Duhigg

Why is this book helpful to a startup founder and to an investor?

Charles Duhigg's "The Power of Habit," talks about why we do what we do and what we do in life and business. It's a New York Times best seller. Let's look at it in case you get a chance to read it or if you just want to use these bullet points to help guide you.

Number one. The habit loop starts with a cue. Everything we do starts with a cue. It's either the time of day, a particular place, a certain emotion, or the presence of particular other people, that ritualized behavior that becomes a cue. All these cues fall into five categories. Time of day, particular place, certain emotion, presence of particular other people, a ritualized behavior that becomes a cue. A cue can be a good habit or a bad habit. Knowing when to clean up or make your bed is a positive cue, a bad habit like smoking a cigarette is a negative cue. He was interviewed in a article by Adage and mention those particular five categories as well.


The second point is what is called the Febreze effect. In this idea, he analyzed the story of Febreze and Proctor and Gamble. A guy named Drake Stenson at Proctor and Gamble turned Febreze into a household name. Febreze, and I pronounce it incorrectly, is a product that's associated with smelly odor and smelly things.

What Proctor and Gamble did was brilliant. They took this new product that no one had really known about and built out a brand name on the fact that anytime something smelled bad you picked up Febreze and you'd make it smell better. It's a brilliant way to associate bad smells with the habit of cleaning, and to use Febreze when you clean. 

The bottom line is that if you've got a brand and you've got a company, Febreze, Proctor and Gamble - whatever you are - you have to figure out how to establish and sometimes piggy back onto existing habits to make your brand a household name.


When you're aware of how your habits work, and you recognize the triggers, cues and rewards, you're halfway to changing the bad habits for the better. 


Number three is Alcoholics Anonymous. Alcoholics Anonymous is a psyche of that belief is a critical component of successful habit change. There's so many people out there that you don't even know about who are anonymous. They attend weekly, daily, or however many times they need to to attain their goal. They need to have somebody with them to help them to eliminate and get rid of a bad habit, which is alcoholism.

Alcoholics Anonymous is a way to connect with people in an anonymous setting and to rid yourself of a tremendously bad, deleterious habit that can effect your life in such a negative way. Alcohol addiction, as he talks about, is such a hard thing to break. Having the belief system in place and having people to support you in that process can help eliminate such a terrible addiction.

It's a nice point he made about the power of habit in particular and how the Alcoholics Anonymous's belief system is so powerful that I have so much respect for what that organization has done.

Number four is Michael Phelps. Michael Phelps' example is small wins fuel transformative changes. Small wins fuel transformative changes. Michael Phelps has a habit of training and doing the same pre-race ritual before every Olympic race. Phelps is the most decorated Olympian in history and his habits have led him to success. 

How Does Establishing  a Few Good Habits Ensure A Business's Success?

How Does Establishing  a Few Good Habits Ensure A Business's Success?

During every practice he does the same thing and they're small steps towards a bigger, more transformative goal of winning the Olympics. Small wins do make a big difference. That's the Michael Phelps example. Your pre-race ritual that is a habit can end up paying fruits of gold.

Number five is brands and change. People are more likely to change brands when they undergo big changes in their lives. For example, when people are buying new homes, or they are making purchases in their lives that are big and transformative, they're more likely to make a change in their own lives.

When you're buying a home, which new homeowners tend to also make big transformative changes in other parts of their lives. If you're a brand trying to connect with the new home owner, Proctor and Gamble knows every new homeowner there is in the country. They've got lists and they'll market to them via newspaper, direct mail and internet ads. They know that when you move into a new home maybe you'll buy a washer and dryer. You've got to have a washer and dryer. You will be more likely to buy their products as a result of moving in.

When people make big changes to their habit they often do as a result of big purchases. That's the point of number five, brands and change. Changing habits happens as a result of big, fundamental restructuring and purchases in one's own life.

Number six. When you're aware of how your habits work, once you recognize the cues and the rewards we talked about, time of day, rituals, and things like that, you're halfway to changing them. Identifying the problem is halfway to solving the problem. Recognizing that you do have habits, where some are positive some are negative. Not all of them are bad. Once you've recognized them, once you write them down, you can control the changes you want to make in your life.

Why don't you spend a moment writing down your core habits right now. I want you to write down all your habits, just knowing that and knowing what you do positive. Put them in two columns, pros and cons. and write down which ones you do that are positive like cleaning up everyday or taking your car every month to get it washed, whatever the habit is for you. The negative, smoking, drinking, many of the vices out there, whatever the habits are. Knowing those will make you shape your entire life around that process.

The bottom line is I think it's a great book and it should be on your bookshelf. If you like that book, check out our book which is a bestseller on startups, and venture capital, and rethinking venture capital. It's called "Kings Over Aces" One point that I want to make for entrepreneurs out there. Building your own positive habits is important but you have to recognize the positives and negatives. 

How can small positive habits ensure your startup's success?

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