Five Startups Who Put Behavior First

    Many companies seek to apply behavioral science to existing business models. Sometimes these are hasty ad-hoc executions, such as failed gamification systems. Other times, they may be more thoughtful and innovative, such as Merrill Edge’s “Face Retirement” campaign.  However, such examples are still a matter of applying behavioral insights to a traditional model. What about companies that use behavioral insights right from inception? In this article, I want to list five excellent examples of startups building their core business model around behavior.

    1. Moven: Motivating long-term savings

    What it is: A variety of fintech companies provide customers with savings/spending reminders and other tools to help consumers try to budget their money effectively. While Moven does also offer these types of features, it also goes one step further by offering a “Smart Savings Account”. This system allows customers to develop a personalized savings path, where personally relevant savings goals (i.e. a vacation, a new car) appear on a wish list timeline. Customers’ saving and spending behavior interact with this list, allowing them to visualize their progress towards specific goals.

    Why it works: Cognizant recently published a report that argued that digitization has disproportionately favored ‘fast money’. There are apps and technologies that allow us to make mobile payments, use our current accounts, and access credit. However, digitalization has left behind our ‘slow money’ needs, such as saving for retirement and investing. Moven provides a direct answer to this problem and makes long-term goals more concrete by visualizing them and giving them an exact date. As a result, savings goals are no longer nameless accounts with no specified purpose, but a clear and motivating outcome.

    The advantage of this? Research has shown that challenging but specific goals increase performance compared to challenging but non-specific goals (Locke & Latham, 1991). As an example, saving 3231 Euros for a vacation to Thailand should be more successful than simply asking customers to for travel.

    Moven Smart Savings App (image from

    2. Applied: Objective hiring decisions

    What it is: A spinoff of the UK Behavioral Insights Team, Applied helps to optimize the recruitment and hiring process by putting psychology front and center. First, Applied forgoes the traditional CV screening process of recruitment. Instead, applicants answer five role-specific questions. Up to three evaluators then score these questions. Applied randomizes all questions, and ‘chunks’ them. This means that recruiters score answers from all applications one question at a time, rather than go through an entire applicant’s application one by one.

    Why it works: There is a variety of behavioral principles at play here (as one might expect from a company started by The Behavioral Insights Team). However, randomization and chunking are key to the process. Beyond just anonymizing the application process (eliminating potential bias against ethnicity, gender, etc.), it also helps to rule out the halo effect (Nisbett & Wilson, 1977). The halo effect refers to a spillover effect in judgments, where one unrelated attribute can unconsciously affect other independent attributes. In the context of recruitment, one exceptionally good or bad interview answer could unfairly bias recruiters to applicants’ other responses.

    With Applied, recruiters do not unfairly punish promising candidates for one weak answer. Similarly, recruiters do not reward weak candidates who luck out with a perfect response. Furthermore, an employee at Applied notes that the first few applicants for a job are often scored more critically as recruiters attempt to dial in the correct criteria. Applied handles this with the randomization and chunking.

    3. Lemonade: Putting trust back in insurance claims

    What it is: It would be downright negligent to discuss behavioral science in start-ups without mentioning Lemonade, the successful peer-to-peer homeowners and renters insurance company launched late last year. One of the key elements of Lemonade’s success is the input of famed behavioral economist Dan Ariely, who serves as the chief behavioral officer of the company. Unlike many other insurance services, Lemonade automates much of the claims and reimbursement process. However, more importantly, Lemonade takes a flat 20% fee and distributes any surplus to charitable causes.

    Why it works: Lemonade attempts to align their interests with the customers. Because of the flat fee structure, there is no incentive to deny claims. This means that unless there are suspicious circumstances (flagged by their AI), Lemonade pays the claim automatically. Customers are therefore not encouraged to embellish their claims, as they know that Lemonade has no motivation to challenge them. On top of that, customers sign an honesty pledge at the beginning of a claim (rather than the end). This is another behavioral insight, capitalizing on the effect of priming, or making a concept salient before future behavior.

    Lemonade’s basic business model, courtesy of

    4. Bumble: Making online dating female friendly

    What it is: It might be easy to dismiss the online dating app Bumble as a clone of Tinder. On the whole, it is very similar to other dating apps: prospective daters scroll through profiles and swipe left or right according to their interest. When two users swipe right (indicating interest), Bumble creates a match. However, there is one key difference in Bumble: the onus is on women to initiate a conversation after a ‘match’. For same-sex matches, either party has an opportunity to initiate a conversation.

    Why it works: Whitney Wolfe, the co-founder of Tinder, created Bumble shortly after she left Tinder and sued for sexual harassment and discrimination. What emerged is a feminist approach to online dating that flips a common gender difference on its head. More specifically, although research has demonstrated that although women typically adopt passive roles in relationship initiation, this imbalance can be reversed (MacGregor & Cavallo, 2011).

    In a study examining dating behavior, researchers asked women to write about at a time they felt control (versus a control group). The women that wrote about this experience were just as likely as men to report a future willingness to be more active in approaching partners, such as “If I see someone I find attractive, I might take the initiative to do something to show them that I am interested.” Bumble functions in a similar way, restoring personal control to female participants and giving them the ability to explore direct initiation strategies.

    Bumble’s interface, taken from

    5. Hooked: Changing fiction to meet a digital world

    What it is: There is no easier way to describe Hooked than an app that displays short-fiction in the form of text messages. Hooked’s app is styled in a traditional messenger format, and when users press the screen, a new message appears. It has been a surprise hit with users, and a top download since its release in 2015.

    Why it works: The founders of Hooked capitalize on a few behavioral trends. First, people spend a staggering amount on their phones per day. Rather than attempting to squeeze traditional fiction formats onto mobiles, Hooked changes the format to meet the medium. Secondly, Microsoft research has shown that people who are avid social media users, multi-screen users, and general tech enthusiasts typically suffer from reduced attention spans (Microsoft Attention Spans, 2015). By introducing ‘micro-fiction’, delivered in the form of bite-sized texts, Hooked caters to our declining attentional resources.

    Hooked in action, image courtesy of TechCrunch

    Designing from the customer up

    This is hardly the full gamut of start-ups that capitalize on behavioral insights. Even within the mobile banking space there are is a variety of fintechs that leverage consumer insights (Qapital, another venture by Dan Ariely, also uses concrete savings goals). However, this list contains what I think are a diverse set of behavioral insights across a range of industries (i.e. finance, HR, dating, entertainment). These companies all make behavioral insights the backbone of their approach, and their success testifies to the effectiveness of the approach.


    Cognizant. The Future of Money.

    Locke, Edwin & Latham, Gary. (1991). A Theory of Goal Setting & Task Performance. The Academy of Management Review. 16. . 10.2307/258875.

    MacGregor, J. C., & Cavallo, J. V. (2011). Breaking the rules: Personal control increases women’s direct relationship initiation. Journal of Social and Personal Relationships, 28(6), 848-867

    Nisbett, R. E., & Wilson, T. D. (1977). The halo effect: Evidence for unconscious alteration of judgments. Journal of personality and social psychology, 35(4), 250.

    Yashari, L. Meet the Tinder Co-Founder Trying to Change Online Dating Forever.

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