What do you do when you are an academic at the forefront of research in behavioral economics, coming up with amazing insights into human behavior, and the best responses you get from well-established incumbents in the market are a few incremental modifications that don’t risk their bottom line much? You team up with some like minds, take the show to the cauldron of technological creativity and innovation in the US, invite as many interesting minds with diverse startup ideas as you can find from across the world, put them together in close proximity with academics, and have a blast for three days.
That is essence was Startup-onomics – a brilliantly subversive way to build companies and products the right way, from the ground up. The brain-child of Dan Ariely who needs no introduction to fans of behavioral economics, and Kristen Berman from Lytro, this event boasted of speakers of such amazing caliber such as Mike Norton from Harvard, Leif Nelson from Berkeley, Frank Flynn from Stanford, Noah Goldstein from UCLA, Chris Anderson from Wired and Hal Varian from Google.
This is all the more relevant within the Silicon Valley startup culture. We think we design experiences to solve problems that customers face, but as this conference showed, we don’t really understand user behavior well. Academia stays at the cutting edge of this experimentation and there are valuable lessons learnt by academics that have provably meaningful uses in redefining user engagement and managing relationships with customers. Attacking this the right way as a startup makes it much easier to scale things up as the company grows organically with these ideas built into its DNA.
On day one, Dan spoke to us about the problems of overchoice and loss aversion and how businesses can keep an eye out for those. We were also to try listing only three reasons why we love our significant other, and not ten, if we intend to continue to be happy with the relationship. Mike Norton took the stage next and spent an hour speaking to us about the fascinating behavioral dynamics in the world of online dating – signaling issues, trust issues, and how some simple changes to the model will make the experience better for all. We learnt about the lure of ambiguity and how the phrase “familiarity breeds contempt” made sense. Dan Ariely returned to speak to us next about self-control and how to improve it through the right kind of motivators. We spoke about medication compliance and about how making something a habit is not necessary, but it needs to not have a continuous cognition requirement for it to work. Chris Anderson rounded up the day with a closer look at the quantified-self human of the future that we’re headed towards, where the proliferation of wearable health monitoring devices combined with the power of mobile apps will transform the way we observe and modify our own health and wellbeing. If there ever was a walking/talking example of that human, Chris was it. Pretty interesting!
Dan opened up Day Two by talking to us about the psychology of money – relativity, mental accounting and the prepayment effect. Leif followed that up with fascinating results from his research into Pay-What-You-Want models, mixing it up with cause-marketing as well as pay-it-forward scenarios and showing pleasantly surprising results on outcomes. It is heartening to know that humans do feel happier giving to others and would pay more for it. Mike followed that up with an insightful commentary on wealth inequality in the US and how uninformed we are as a nation on how unequal it is. This ignorance cut across political divisions, gender divisions and sadly, income divisions as well. We learnt about last place aversion and the subsequent cruel irony of the folks making just above minimum wages voting against minimum wage increases. Dan continued after Mike, speaking about fairness and labor illusion – how we tend to think that work that took longer and made people work harder should be paid more, and the implications of this in a world where people consider digital products that take microseconds to respond to your queries as easy to do and therefore want them priced free. Dan closed the pre-dinner session with insights into couponing and getting people to try new things to get them out of boring repetition. And of course, some useful life lessons from a study on what women think makes men good in bed and what really correlates to that performance. Hal Varian ended the day with insights from Google’s experiments on HR policies, growth, product design and experimentation.
Day three provided some fascinating insights into what makes us human – helping behavior, prosocial behavior and the power of persuasion. Frank kicked off the day with very interesting data about how hard we think it will be to get help on a particular issue and how, in reality it does not take that many asks to get that help. The one-line insight from the talk was that helpfulness doesn’t increase cooperation necessarily, but help-seeking does, since help-seeking precedes cooperation. Noah followed this up with some compelling findings from his research on using social norms to persuade people to change their behavior. It was amazing to see how just by changing how messages are worded, theft from a national park and towel reuse in hotels are altered significantly in the direction of desired behavior. Mike followed this up with an engaging discussion around encouraging prosocial behavior and his experiments that show that in corporate settings, giving employees money to spend on coworkers makes them happier, and encourages team-building way more than spending it on themselves. He also spoke about how attached people become to even simple objects such as Lego models that they put together in a lab setting, hinting at the fact that the act of creation engages the customer a lot more to a product – a useful insight for companies trying to make their products personalizable. Dan wrapped the conference up with a discussion around compensation and the need to put incomplete contracts in place at the work place as well, rather than complete contracts that only offer a few limited choices on how the employees get reviewed. We ended the session with a riveting anecdote from Dan that we were made to promise shall never be repeated outside, so mum’s the word.
There was an amazing diversity of participants – from South Africa, Sweden, Australia, to name a few – and several startups connected in live from Israel watching a live stream. The sessions were interspersed with small group discussions with the speakers to identify issues that particular companies faced in greater depth and ask for feedback. It was a great opportunity for entrepreneurs from around the world to meet each other and share ideas and inspire each other. Here’s a shout out to the few that I met – Sam, Zahir, Ted, Molly, Dina, Jayesh, Andrew, Shaya, Julianne, Nell, Camilla, Miriam, Sharon, Lauri, Helen, Patrick, Chris, Paul, Eran, Evan, Adam, Ed, Miguel, Dhruv, Liz, Tomer, Pieter, Ashley, Paul .. you guys were just incredible!
And none of this would have been possible without the tireless efforts of Kristen who helped coordinate and organize the conference, herded us around to make sure the sessions progressed on time, sent out email blasts to keep us updated and connected … Kristen, you are awesome!
Sadly, all good things do come to an end. But this end is definitely a beginning and we look forward to staying in touch as a group, exchanging lessons learnt and being as prosocial and behavioral analytics focused as we can get. Thank you Dan and all the speakers for making this a wonderful experience. Here’s to Startup-onomics graduating class 1!!