Stored Value

What it is

Eyal names five forms: content, data, followers, reputation and skill. His observation is that unlike a physical asset, stored value appreciates with use instead of depreciating, which is what makes each pass through the investment phase compound rather than simply repeat. The user is not just returning, they are depositing.

The economics came first. Switching costs were formalised by Paul Klemperer in 1987 and developed by Carl Shapiro and Hal Varian in Information Rules in 1999. Eyal's contribution is the typology and the placement of it inside a habit loop, not the underlying claim that accumulated assets raise the cost of leaving.

In effect

The five forms are easiest to see in the cases Eyal uses. Spotify's Discover Weekly is stored content: the longer it is used the better it gets, and that improvement does not travel to a rival service, at pages 144 to 147. LinkedIn and Mint store data, a profile or a financial picture that has to be rebuilt from scratch elsewhere, at pages 147 to 148. Twitter stores followers, at pages 143 and 149. Marketplaces including eBay, Upwork, Yelp and Airbnb store reputation, a seller rating or review history with no export button, at page 151. Photoshop stores skill, years of muscle memory built into one particular interface, at pages 152 to 153.

For a user the framework reads as a warning rather than a tactic. The question worth asking of any service is what it is holding that cannot be taken out, and whether the absence of an export route is an oversight or a design decision.

What it does not say

It does not say this is research. No study tests the typology, the five categories are Eyal's carving of the space rather than a measured structure, and the company cases are illustrations chosen after the fact.

It does not say stored value explains why a product failed. Eyal attributes App.net's failure to its never having acquired followers of its own to store. The shutdown in 2017 is a matter of record; the causal reading is his interpretation and not a tested finding.

It does not say the idea is new. Presenting stored value as a discovery rather than as a habit framing of switching costs overstates it, and the prior literature is the better citation when the point being made is economic rather than about product design.

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