Building State
Increase retention by letting users accumulate value they do not want to lose
- Difficulty
- Advanced
- Time to result
- ~months to results
- Steps
- 5
- Confidence
- 98%
Building State applies a video-game retention mechanism to products. As players accrue armor, weapons, or skins, the accumulated state both rewards continued play and makes departure costly. Products can create the same dynamic through non-transferable reputation, audiences, social graphs, rewards, or deeply embedded infrastructure. The strongest state does two jobs: it represents work a user does not want to lose, and it helps that user obtain even more value in the future. A seller's reviews improve buyer trust, a creator's subscriber base improves distribution, and an API integration becomes costly and risky to replace. The design question is therefore not merely how to provide the same value repeatedly, but what users can build inside the product that makes future value compound.
Origin
Shapiro borrowed the idea from video games and turned it into a retention lens for software and investment diligence, using it to assess whether companies could keep customers as they grew.
Core principles
- 01Accumulated state makes leaving feel like losing prior work
- 02State should help users gain more value over time
- 03Non-transferability increases switching costs
- 04Reputation, audience, relationships, and infrastructure can all become state
How to run it
- 1
Map accumulated value
Identify everything users build through repeated participation, including points, content, ratings, followers, contacts, data, integrations, and learned workflows.
Pro tip Look for assets that become more useful as they grow.
Watch out Most products provide repeat value without letting users accumulate meaningful state.
- 2
Build non-transferable reputation
Help users earn reviews, rankings, or other trust signals that improve their outcomes inside the product. The inability to carry those signals elsewhere increases the cost of switching.
Pro tip Marketplaces and directories naturally support this form of state.
- 3
Compound audience and relationships
Let users build followers or a curated social graph that improves their reach and access. Continued participation should make future distribution or connection easier.
Pro tip Separate audience state from relationship state; both can retain users for different reasons.
- 4
Embed into infrastructure
Become part of code, workflows, or operating patterns that would be costly and risky to reproduce with a replacement. The more the surrounding system adapts to the product, the stickier it becomes.
Pro tip APIs can capture this effect when teams build code and habits around them.
- 5
Test for increasing value
Verify that accumulated state gives users more value over time rather than merely trapping them. Track whether established users achieve better outcomes or easier future gains.
In the wild
A seller who has earned more than 10,000 feedback ratings gains buyer trust and may rank better in search. Those ratings cannot simply be transferred to an eBay competitor.
→ The seller has a strong reason to keep operating where years of reputation continue to improve revenue.
A creator with a million YouTube subscribers can use that base to improve future distribution, but cannot transfer the subscriber list or even export subscriber email addresses.
→ The audience compounds the creator's advantage and makes leaving YouTube difficult.
Products such as Twilio, Stripe, AWS, and Segment become woven into code and team patterns. Replacing them requires new engineering work and introduces implementation risk.
→ Deep integration creates retention through accumulated technical and organizational investment.
Common mistakes
Delivering flat value forever
A product is less sticky when users receive the same value in every period and build nothing that improves future outcomes.
Treating state as a post-hoc feature
Shapiro frames strong state as part of the product's DNA, not a cosmetic retention feature attached after the core design is fixed.
Is it for you?
Best for
It is best for marketplaces, social platforms, loyalty programs, and infrastructure products where value can accumulate over repeated use.
Not ideal for
It is not ideal for one-off utilities where users cannot build meaningful reputation, relationships, rewards, data, or workflow investment.
From the episode
Growth tactics, retention strategies, and becoming a better writer
Julian Shapiro (Demand Curve, Hyper, Webflow, TechCrunch)