Applying Choice Architecture to Fund Raising
The past week was mostly on how to create a habit forming application and the leading theories that support the "How". Exoskeleton looks like an interesting new sector of innovation and machine learning. Besides, I starts to look into more examples on venture capital investment and the logics behind.
This term was coined by Thaler and Sunstein (2008) in the book Nudge: Improving Decisions About Health, Wealth and Happiness and refers to the practice of influencing choice by changing the manner in which options are presented to people. For example, this can be done by setting defaults, framing, or adding decoy options. Thaler and Sunstein have endorsed thoughtful design of choice architecture as a means to improve consumer decision-making by minimizing biases and errors that arise as the result of bounded rationality.
Create Incentives: make sure you talk about benefits, preferably immediately,
Reduce Choice Overload: the ideal number of alternatives will depend upon the cognitive effort required to evaluate each option and the heterogeneity of needs and preferences across consumer
Understand Mappings: the information needs to be translated to what users can understand, the ways in which options and attributes are grouped influence the choice; For instance, car buyers can be nudged toward more responsible purchases by itemizing practical attributes (gas mileage, safety, warranty etc.) and aggregating less practical attributes (i.e. speed, radio, and design are grouped together as “stylishness”).
Set Defaults: users are more likely to choose what is set as default, for example, instead of choosing how many MB data they need for a month, asking them to describe the need for data in terms of what they do (watch video; read email etc); and how long (1-2 hours per day etc) to calculate the best plan will be a better design;
Give Feedback: users should see clearly what went wrong and they should know immediately ; for example, when fill in a form, users should see the error right away under the field instead of wait all the way until they press “Submission” and get surprised by all the read error messages;
Expect Error: it is guaranteed that users will make errors and it is thus important that the application makes it easy to recover from the errors
Structure Complex Ideas: the ways in which options and attributes are grouped influence the choice; For instance, car buyers can be nudged toward more responsible purchases by itemizing practical attributes (gas mileage, safety, warranty etc.) and aggregating less practical attributes (i.e. speed, radio, and design are grouped together as “stylishness”).
Other techniques include labelling (e.g. good v.s. bad); translating' (instead of a drink 200ml waters a day, say drink 8 glasses of water);.
Barnum Effect/Forer Effect
Barnum effect is the observation that individuals will give high accuracy ratings to descriptions of their personality that supposedly are tailored specifically for them but are, in fact, vague and general enough to apply to a wide range of people. This effect can provide a partial explanation for the widespread acceptance of some beliefs and practices, such as astrology, fortune telling, graphology, aura reading and some types of personality tests.
"We’ve selected the top 10 offers just for you", in fact, the offer are applicable to a large population that process similar demographic characteristics, or in the case of Amazon, cross-refer products among the user groups (if person A bought product X and person B bought product Y, then person A will probably like Y and person B will probably like X.
Walking Hyundai Exoskeletons Help Paraplegics Walk
Exoskeleton is a sector I recently get involved in. As a sector it has the perfect condition for investment: a large potential user population with little or no product and service that answer their needs (or we can always say it is under-served).
Ekso Bionics: Ekso weighs 45 pounds (20 kg), has a maximum speed of 2 mph (3.2 kph) and a battery life of 6 hours. It is suitable for users weighing up to 220 pounds, who are between 5 ft 2in and 6 ft 4in tall
HAL 5 is a good one, $20,000, 22 pounds and 2.5mph, it does not seem to need crutches which is awesome. Besides it has an interesting product line including limb extension etc.
ReWalk, another competitor in the sector, seems not doing well, it makes much less money than Ekso, but one thing is interesting is they seem to offer a leasing option, I mean, you as a hospital can rent this equipment, that will take the budget concern off from many rehab centre and even patients, well, then I guess you need a local entity
Another thing I came cross just digging out relevant stuff is the VR fields. There is a very interesting speech given by Miguel Nicoelis from Duke University on how how he use VR to train paralyzed people to walk. Which made me think if you actively look into medical for rehab purpose, VR can also be very interesting.
36kr South East Asia Investment News
36kr regular publish the “South East Asia” venture capital movement news that looks at investment M&A and other forms of movements in the SEA sector. I read the second article of this series on the tram to work today. Companies mentioned in this article concentrate on 3 areas: content operation; Commerce and Fintech.
Content Operation, Entertainment: Tecent joint force with Ookbee, a Thailand content platform, Ookebee is a platform for magazines, books and audio content for both big publishers and independent content producers, right after it purchased Sanook Online and renamed it as Tencent Thailand.
Malaysia-based REV Asia recently 70% of the ownership of 3 local content platform: Siraplimau、Myresipi and Kongsiresep, all of the 3 owned by Dua Marhalah Sdn Bhd. Siraplimau focus on mother community while Myresipi and Kongsiresep allows users to publish and share cooking recipe.
Article also mentioned Cheetah Mobile (猎豹移动, which is the former Kingston), China based leading mobile security and productivity service (clean cashe files; manage battery life etc) provider. It ventured into the content industry through the purchase of News Republic, one of the largest independent News and Content producer; besides, its content business also take up on the live steaming section with the launch of live.me and in the gaming sector with “Rolling Sky”.
Dua Marhalah Sdn Bhd’s website says “Good Content Counts”, that’s true. Relevant, friendly target tap into many psychology theories of our mind: it offers a “favor” (useful information) and reader thus likely to return the favor with share and recommend (and it also generates more favor to them which is even better); it gives variable rewards (different contents gives different satisfaction) etc. And the target group of female with kids is even more spot on as most of them crave for help, attention and the community support.
Commerce: Singapore based, mobile only P2P marketplace Carousell expands to create the ecosystem for monetization. In 3 years time it raised $6M from Sequoia Capital and $35M from Rakuten, and made the following acquisition:
- Duriana: a competitor of Carrousel in Singpore, Malaysia and Indonesia; with 60+ million users;
- Watch Over Me: a personal security technology provider
- Caarly: 2nd hand vehicle P2P marketplace
While its close rival, also Singapore based, Mobile focused P2P Shoppee, has reached 1.4 million sellers and “Annualized” GMV of $1.3 billion in 2015.
I was an early adopter of Carosell in Hong Kong a year ago. So far I have only sold 1 item with all the 20 items I list on the platform. Its current monetization model is charing users for advertising fee to improve the ranking of their listings,. One unique feature is the square-shape photo it requires and as it also requires the width to be left not blank, I sometimes cannot use the photo I took before because it will cut the product image.
One other phenomenon I notice is whenever I list electronic items on the platform, I often get contacted from people from Ghana, India, Tanga etc and ask me to ship the products to their country. This is a common theme for second-hand items though, as also seen on eBay, Geoexpat selling section etc.
FinTech continue to be popular: RB Investments and Kaleden Holding invest US$5M in InstantPay, a India-based electronic payment and transaction processing system, currently its network comprise of 50K+ outlets in India. This is its Pre-A round.
As usual, I try to put down the 3 pieces of interesting readings together. These weeks somehow I found myself with 2 books, both related to behavior-forming design, “Hooked: How to Build Habir-forming Products” and “Herd: How to Change Mass Behavior by Harnessing Out True Nature” from which I discovered some interesting mass behavior theories.
How is it related to investment, my past experience of fund raising for my own startup and helping VC companies validating candidate market and EV taught me that investors always want to invest (or “ et” if I may say) in things that appeal to the common traits of human beings, applying the Barnum effect also here, it is a no brainer: there is enough end users to pay for it; we can associate ourselves with the product or service etc.
And we can design things to look like the above, following the Choice Architecture, take fund raising for example, bringing benefits always trump reducing cost; and yes there are very few doing well in my sector, and we are the only one landing on your table (“default”). A product can be very complicated, sayExoskeleton, it is a very complicated piece of engineering work. But after all, it is a device that allows people who cannot walk or have problem walking walk and life better.
Several entrepreneurs I talked to have problem attracting ventures. When I talk to them I try to help them structure their business proposals to follow the Choice Architecture I introduced above and pitch to look as the default choice (they are anyway). Of course, the result also depend on the capability of the entrepreneurs but so far it worked well.
The Six Principles of Good Choice Archiecture
Thaler Explains How "Choice Architecture" Makes the World a Better Place
Barnum Effect, human bias to consider general comments be tailored to themselves
Collective Behavior Definition on Wikipedia
Ekso Bionics, a worldwide pioneer in the field of robotic exoskeletons
HAL, Exoskeleton Solution Provider
Rewalk, Exoskeleton Solution Provider
Walking again: Hyundai’s exoskeleton helps paraplegics move on their own
Miguel Nicolelis: Brain-to-brain Communication has arrived, how we did it
腾讯进军泰国内容行业，印尼也“玩”共享单车 | 东南亚创投周报
Vavaapps, Solution that allows Inserting Contents into Audio
Myresipi, a Malaysia-based female content sharing and discussion forum
Siraplimau, , a Malaysia-based female content sharing and discussion forum
Dua Mar Ha Lah, a Content Marketing Company