How to Think Like a World-Class Marketer | Rory Sutherland

Keep hearing people saying, you will say to your AI, find me a skiing holiday, and it will provide you with a perfect skiing holiday. I like saying people don't decide like that. When you allow check bros too much power over decision making, along with their running dog lackeys in management consultancy, you're optimising for something which may be very, very distant from what your real world customers really care about. What makes Dyson so effective at advertising? Actually, it's not advertising, it's marketing and it's customer experience.

What's the difference between marketing and advertising? Advertising is a subordinate part of marketing, and do you think we're looking for efficiency in the wrong place? We usually do. And so you focus too heavily on cost reduction and too little on value creation. What are the rules of good copy?

If I asked you to teach me how to write good copy, how would you do that? I think a large part of it comes down to... So we were talking about this in the elevator, it was nine years ago. Back when podcasting wasn't even a thing. We might be able to dig out the original content presumably.

What was it? It was your podcast number 47 or something? Oh no, I think it was like 16 or something. Really? It was really low, we'll have to dig out the number, but it's been a long time since then.

Oh, fabulous. And podcasting is excellent. So I've been following Farnham Street, devotedly. Appreciate it. And it's always, always interesting.

Very, very interesting. I mean, the whole question of the decision sciences is, I think, at the moment completely critical. And actually, by the way, it'll be very, very interesting with AI. Because I keep hearing people saying, you will say to your AI, find me a skiing holiday, and it will provide you with the perfect skiing holiday. And I keep saying, people don't decide like that.

At the very least, you'll have to show them three or four or five skiing holidays, from which they choose. Because we can't really choose in the absence of comparison. It's what I mean. It's a freakish element of free market capitalism, which is we can only like something if we choose it in preference to something else. That's interesting.

How does that relate to like a travel agency, which would do that inherently? Like if you said, I'm going to India to chat GPT and you're like, planet for me versus you go to a travel agency and you're like, I'm going to India planet for me. Well, among real estate agents, there's apparently a kind of little bit of a trick, which is you always, before you show someone the house, you want to sell them. You show them a less appropriate house, ideally, that's slightly more expensive, say. So that when they see the house that you want to sell them, it's now clear cut, because they can say, oh, it's a bit cheaper than the other one.

And it's got a conservatory. There's contrast. So there's a kind of decoy effect, a bit like the famous economist experiment with the decoy effect. So, you know, one of my interesting questions is, what interface will AI deploy to help us make choices? And will it make the mistake that you could very easily make?

If you think about it, nobody clicks the home feeling lucky button on Google. I think it's still there, isn't it? It's been there for years. And they've removed it and found that it slightly reduces the appeal. But the number of people who actually click it, I'm feeling lucky, take me straight to a single page, is vanishingly small.

People want to choose between, you know, effectively above the fold options. And so, you know, I'm just intrigued, because it's very, very easy, I think, for people with an economic or tech background, to make assumptions about what people are trying to do and how they choose, and that where, you know, utility maximizers and all this kind of thing, only really to be completely wrong. Do you think we're looking for efficiency in the wrong place? We usually do, in the sense that when you pursue efficiency, there are quite a few problems. But when you pursue efficiency, generally you start looking at numerical or mechanical factors.

And of course, in the process, you disregard psychological factors, where the greater gains may be found. And so you focus too heavily on cost reduction and too little on value creation. I mean, one of the greatest forms of efficiency, by the way, is employing a human being who's really, really nice. Now, this is completely anathema to people in tech who love to define business processes, so as to make them susceptible to automation. You know, person X does this.

We will take that function, we will replace it with algorithm Y. And it's a very beguiling message, because it usually comes with cost savings attached. You might have heard of my thing, the Dorman Faucy, did you? I'll remind the viewers and listeners, which is simply that, you know, you have a hotel, it's a five-star hotel, it has a Dorman, somebody who welcomes incoming guests. You know, a combination of say, McKinsey or Accenture and a tech firm will come in and say, your Dorman currently costs you $X,000 a year.

We have defined his or her function as opening the door. We will replace said Dorman with automatic door opening mechanism and an infrared human detector, and we'll save you $30,000 a year. And then they walk away, they take the credit for the cost saving. And then two years later, you know, that hotels are catastrophe, the rack rates fall off the cliff, because the Dorman was doing multiple things, many of which were human and kind of tacit. Security would be one, you know, there are no vagrants asleep in the doorway, hailing taxis, dealing with luggage, recognizing regular guests, providing status to the hotel.

There are loads and loads of value creation components to that Dorman, which aren't captured in the open the door definition. Is that an example of where the costs are really visible, but the benefits are? I'm busy, correct. Yeah. So it's very, very easy.

Management consulting firms, if you're in a business and it's a management consultants come in, go to the management and say, are they on a game share agreement? A game share agreement is a management consulting scam where you claim a certain percentage of the cost savings you identify in year one. Now, as Roger L. Martin, your fellow Canadian and my own personal friend, Gali, says any idiot can cut costs. OK, what takes real skill is cutting costs in a way that doesn't destroy value.

One of the things that I don't think is understood by tech nerds, and if I'm being really cruel, males in general, in many cases, is the extent to which in evaluating any business or experience, the human component of it, the face-to-face component, does really, really heavy lifting. I will have a story to illustrate this, which I think is fantastic. It's the absolute perfect example of misalignment of optimization through a quantification burst. So, wonderful man, Alex Batchler, used to be the marketing director of Royal Mail, similar to what you have, the Canada Post, right? USPS.

Yes, because USPS. And they couldn't make any sense of the fact that the brand perception of Royal Mail bore no relation to service levels. So there would be districts and areas where, you know, every single first-class letter arrived early the following day, extraordinarily reliable levels of service, and Royal Mail wasn't particularly held in affection or a steam. There are other areas where the service was frankly a bit ropy, and people seemed to love it. Now, this obviously upset them because they thought that all the billions, or certainly hundreds of millions they'd invested in service quality improvement, should translate into customer satisfaction, and therefore, you know, some sort of brand voltage.

And someone had a theory, and they said, I think something else is going on. And the theory, which was put to the test and proved absolutely right, was that the major determinant of whether you liked Royal Mail or not was whether you liked your postman or post-date, mainly to be used in the gender and neutral term. So, people who had a rather unreliable service, but the postman did the odd favor for them, left things in the porch, had a chat with them. In case those people thought it was a brilliant organization, regardless of the actual metrics that were being pursued. And I think that's very true in any service organization.

You know, you may, there's an electricity company, a gas company, a water company, a utility. You may interact with them online in 95% of the time, but the one or two occasions where you interact by telephone or face to face, this proportionately affect your perception of the organization. And I've argued for quite a time. If I were being completely honest, I worked in advertising for 36 years, and if I were a wholly honest person without fear of annoying my colleagues, probably 50% of the time I would advise to a client, take 10% to 20% of your marketing budget, and spend it on upgrading the call center. Pay the people too much, get the best practitioners.

I think it's perfectly legitimate in some organizations. There should be the very best call center. People should be on six figures. Because if you're good and nice, that's how much difference it makes. In other words, it more or less drowns out all your other stuff, all the other noise.

If every time you have a personal experience, you have a good experience, then broadly speaking in the human brain, that's a good organization which I can trust. And when you think about it, I suddenly realize why this probably is. We don't really have much evolved experience in evaluating postal efficiency, do we? Again, we have got a million, half a million years of evolved experience in deciding who to like and trust. Because for most of our evolutionary existence, that was one of the most important questions to get right.

Do I trust this person? Will they attack me? Are they an ally? Are they a foe? If I pay the money, will they deliver?

And so consequently, I think what we do in our brains is we use our human judgment as a proxy. Now, a story to back up to that, you'll probably remember this, OK? It's in my book, Alchemy, which is, imagine you're turning up to my second hand car and you've done up at the house, nondisript house, and the car's parked outside the house. You have a looking at the car and you judge the pedals of wall and the condition of the bodywork. And you have a look around the car.

And you decide you're interested in paying, let's say, $5,000 for this car. So you go and ring on the doorbell of the vendor and the door is answered in one situation by, for example, a female vicar. OK? Could be Catholic, Catholic, but, you know, a pissicapalia, it doesn't really matter. OK?

Female vicar and it's a tidy clean house. At that point, you probably up-weight what you're prepared to pay by a 20% or so. In a parallel universe, the door is answered by a guy in his underpants. In other words, someone with no shame. In that instance, you devalue the car, I suspect, about $1,000 or more.

In fact, you may not even buy it at all. And what we're doing here is we're effectively saying, what I'm going to do is a stand-in for the question, do I buy the car, which I don't have the technical knowledge to answer. I'm going to ask a supplementary heuristic question, which is, do I trust the person who's selling the car to me? And it's an interesting question. My mother didn't know anything about cars and knew a lot about people.

I think she would very reliably go around buying cars just through her assessment of the seller. And similarly, I think she might do better than someone with an engineering qualification who ignored who the seller was and their personality and character. Now, as a bit of evidence of this, I discovered, because I've been investigating this, various real estate agents have said to me that every estate agent does their utmost to make sure that until things are signed and sealed, the vendor never meets the buyer and vice versa. And the reason for that is if one of them doesn't like the other, they won't buy yourself. Now, what do you think about it?

That's completely unless the person is moving next door. Obviously, if you're buying a house from someone who's planning to move next door and they turn out to be a psycho, that's relevant information. But it seems to be the case that if you meet the vendor and you basically don't trust them or think they're a bit shifty, it doesn't matter what the price is, it doesn't matter the condition of the house. Suddenly, you revise your valuation of the house downwards if you don't buy the person selling it to you. And so that's one of the reasons why apparently, real estate agents will leave any kind of contact between the two until after at least the survey has been done and enough commitments taken place.

I went by the way, I once didn't buy a house, basically because the guy was being an asshole about the fridge. Now, the fridge was only worth, you know, I think 0.2% of the value of the house or 0.02% of the value of the house to come quite remember. But because he was being a dick about the fridge, I no longer trusted him about the house. Weirdly, turn out my instinct was right, because then a friend of ours went to buy the same house. They got some separate land registry search done and found out that a chunk of the garden actually belonged to network rail, not to the house.

It effectively filts the large part of the garden. So does that mean, I just want to go back to the real estate thing for a second, does that mean pretty or attractive real estate agents would be more successful than... It's a really interesting question, which is I think, you know, I think we ought to study these things much more because the assumption of an economist is that you need to disintermediate. You don't need estate agents. We just go on Willow, Zillow, sorry, or right move in the UK or whatever it is.

What's the Canadian equivalent? I don't know if you can know. Habbiness.com or whatever. Okay, and you'll throw a dark car. You've got exactly one of those things.

You choose the house you want, you look at it, you then look at the house, get a survey done by the house. We assume that this is a purely transactional exchange. Maybe in a rational world, that's exactly what it would be. But for one thing, actually, someone who's invested 15 years in doing half a house probably cares about what the person buying it is going to do to the house. My parents in law, for example, are fanatical gardeners.

Don't get into this. Seriously, get into something like track. We have no worry that I'm going to be there. No worry, we've got to become an enthusiastic and barely keep a planet alone. Okay, but I guarantee if you went and looked around their house and placed an offer while being an expert in botany and generally quoting people like Gertrude Jekyll and prominent garden designers and sitting herston, duddy, duddy, duddy, dud.

You could buy their house for 200,000 less than if you turned up and said, really, we can knock down that tree and put in a helipad. I think if you said we can knock down that tree and put in a carting track, right? I don't think they said it to you at any price. If you're a founder, you know naming your startup takes forever. You finally land on the perfect name only to find out that Peter from Delaware got to the .com first.

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Give the gift of focus. Find the perfect distraction free paper tablet at Remarkable.com. Is that because people want to feel good about the transaction and feeling good is more than maximizing? Richard Saylor did, I think his most interesting work of all is actually on the concept of transaction utility. Which you may remember, do you remember this?

A little bit. Yeah, it's in nudge. And the famous thought experiment is this, which I find fascinating. And I think it's a really insightful thought experiment. So the idea is you and your best friend are lying on a beach somewhere, and it's hot and you're very thirsty.

And about quarter of a mile down the beach, there's a place that sells ice-cold beer. And your friend says to you, and he asks people to imagine this, your friend says to you, I'm off to blank to buy a beer, tell me what the maximum amount you're happy to pay for a beer is, and if the price they quote the falls below that threshold, okay, I will buy the beer and if not, I won't. And he asks people to imagine what the threshold would be of what they'd pay for a beer on a hot day when they were parched on a beach for a cold beer. The beer is going to be consumed back where they're sitting. So the ambiance or the clear and tell of the establishment selling the beer is irrelevant because you're not going to consume it that.

And the interesting thing is, in one situation, he says there is a boutique hotel selling chilled beer. And in the other situation, he says, there's a shack selling cold beer. And your price changes. And your readiness to pay changes partly in accordance to what you imagine to be the overheads of the establishment selling the good. Even though the net.

And the utility of the beer as distinct from how good the transaction feels. The actual utility of the cold beer is identical in both cases. I think that's Richard Taylor. And I think it's extraordinary interesting because I think we can make, Karl salesman will know this. Make the transaction feel good.

Make them feel good when they drive out of the place. That was a CLT, right? People are more likely to buy from you if they like you. They're more likely to like you if they trust you and you have something in common with them. And you can use all of these things to manipulate people, unfortunately.

It's not manipulation. Be careful of that. Because no, no, no, we've got to be very careful here. One thing might be that a genuine cold-blooded psychopath would intentionally, no, might find it difficult. This is a Jeffrey Miller theory that if you're on a first date, there's an element where apparently, it's a long time I've been married for 30 something years, but women on a first date will turn up a bit late or do something a little bit annoying.

And Miller's theory is that it's a psychopath detection test. So that if you... Interesting. So one of the worst things that can happen to women is to get into a relationship with someone who's is psychopath because you end up with an empty bank account and a, you know, your sister's pregnant by everything. Everything goes hopelessly wrong.

Someone who's written very interestingly about this, by the way, is fabulous woman who writes about education and obviously brilliant. I'll remember her name a second, but she's written quite about this, having a psychopath in the family. Likewise, Kevin Dutton has also written about his own father. There are certain things which you can do which make it very likely that psychopaths will out themselves. So the perfect test might be you bribe the waiter to tip-thoup on them.

Oh, interesting. And they'll lose it. Yes, too. Or you turn up late and someone like, assuming you're on a psycho because you're Canadian. So, you know, that's probably my default one.

Relatively low. We're too polite. Too polite, exactly. It'd be too tiring to be a psychopath in Canada. I'm not super mean. I'm sorry.

Sorry, I shouldn't have been sitting here. I shouldn't have been here. My fault. I got in the way of your suit. The psychopath will lose his rag and can't control this.

And likewise, if you turn up late, there's a chance they'll go, I'll be sitting on my own like an idiot for 15 minutes. Whereas you and I would go, who I know only just want to hear myself, the traffic's terrible. We don't fully know. You see, the value of what is going on in using a personal quality as a proxy for a decision which is simply too complicated to legalize or to reduce the numbers. Also, it is out completely agree in economic terms.

It's sub-optimal. But if it leads to downside variance reduction, which is what we're really trying to do, we're not trying to optimise. We're trying to reduce the risk of downside variance. And that's true in all sorts of things, investment strategy, et cetera, the barbell approach. First of all, make sure you don't do anything disastrous.

Then after that, try and get lucky. You say it like it's a conscious thing, but I think it's an honest one. It's a tremendous one because if it is conscious, it's probably a reverse signal that you're actually a bit off-kilter. If you're consciously doing that, it's fair to see if you study social science matters. But I agree with you that my wife occasionally gets a bit annoyed with me because I will literally apply Talib logic to decision.

Just to give an example, I always argue that over 36 years, holidays where I rented a car, a better than holidays where I haven't. And my argument is you have more optionality. See? So if you rented a car and you find the hotels a bit, or the hotels not in the great area, you can just get in the car and go and find a beach somewhere else and go there every day. In other words, so I deploy occasionally will deploy these kind of Talib lines.

I'll also say let's fly for so and so because it's the status license airport. You're the one who I remember this. You said you should always fly from the smallest airport that's convenient for you. Is that it? Oh, I'm a big small airport thing. That's OK.

Yeah. Actually, it's kind of interesting because airports are schizophrenic in a way because the clean tail of an airport is roughly speaking, a 50-50 mix, between people who fly a hell of a lot and just want to get through the damn thing as quickly as they can. And people who only fly once a year, who regard the trip to the airport as part of the holiday, and they love going through a shopping center and looking at the Mez outlets or whatever. And so airports are effectively catering for two totally disparate groups of traveler. And you can separate these people in the security line effectively. You can't absolutely separate them.

And that's why, in a weird kind of way, I think, you notice sometimes that the Q for the priority lane and security is longer than the Q for the amateur lane, but frequent business travelers will still join the priority lane on the assumption that the people in front of them are more competent. And there's a George Clooney up in the air, a gag about that. Right? And so it is very interesting because is it irrational if it's a very reliable mechanism? So all right, one example would be, I don't think it works very well nowadays because there are enough posh spibs around.

But in the 19th century, if you were a posh and respected real estate agent, you had a lot of repotational skin in the game, in the local community, both commercially and people. So you are highly vulnerable to repotational damage, both commercially and also socially, because a small town or a would have been, to a large extent, a prestige economy. And therefore, dealing with the posh local estate agent, rather than some guy who claims to be cheap, is not irrational. You know, the commission may be higher, whatever it may be. But in terms of repotational skin in the game, as insurance against being, you know, treated appalingly.

But I know, I think there's a kind of weird thing going on, which is that, you know, the job of the real estate agent is to some extent, to be the person who stays behind in the place where the house is sold, to suffer the repotational consequences of, you know, of anything outrageous. Because the vendor of the house isn't really repotationally vulnerable if they're moving 300 miles away. And so, you know, some of the role of these intermediaries is just highly complicated. But when I say that, you know, we fundamentally seem to attach very, very high weighting to, for example, a call center experience versus website design. I'm not suggesting for a second website design isn't really important.

It's almost like there's some experiences that are sort of additive or subtractive, and then there's some that are multiple-cative. Like you can multiply by zero, or you can multiply by 10. Like a difference in that one particular factor. There's a really interesting organization. I can't know what they're called online.

They call this a brand quake. A brand quake is where you do something. It could be resolving a problem really well. That would be a very good opportunity for a brand quake. If a person has a problem, you put quite a lot of effort and intelligence into solving it very effectively for them.

And then you ring them back to check that the problem has indeed been solved. Now, that will be an example of something. I'll give you the perfect story of this. My father, who is half Scottish without stereotyping anybody, it was quite parsimonious with what he bought, generally. I mean, I'm not saying it's genetic, by the way.

I'm just culturally, he was descended from long lines of Highland Scots who didn't get where they were to take by, you know, splashing out. And he had, I think, three, when he died, he had three or four Dyson devices, which he bought from you in his home. He had one on each floor to save from carrying the upstairs. Now, these are, by any objective measure, pretty expensive vacuum cleaners. One of the reasons he was so fanatically loyal was that Dyson, now interestingly, I'm going to make a point here, which is a privately owned company.

And do not underestimate the importance of this. PLCs or companies on the Nasdaq, or the New York Stock Exchange, are incentivized to behave like psychopaths because they're optimized for and short-term transactional value, not long-term relationship building. I think maybe the generalization is that, like, if they're private companies, led by a founder, then they're not run by the finance department, it's so interesting. I think about this a lot, where you have these short-term optimization and long-term effectiveness are too completely different. It's short-term money off versus long-term value on.

Yeah. And so you can, there's always somebody making more money than you, but maybe they're cutting corners, maybe they're doing things that are unsustainable. And like you said, you can always save money in the short-term, but you damage your brand and life. My theory is the primary reason for the success of these private companies, the secondary reason is they look after their consumers better because they're effectively unwittingly their practitioners in the customer value movement, not the shareholder value movement. Well, Buffett had this saying, where his directive, his letter, I guess, to all of his CEOs after he acquired the company was, the only expectation I have for you is to treat this company as if you and your family have 100% of your money in it for 100 years and you can't take it out.

You can't take it out. And I think that approach enables, even in a public company, that enables people to take long-term do the thing that's optimal. Actually, they do something, they look after their customers. And there is an interesting exception of this, probably, which is, for example, Costco, which, actually Enterprise Rent-Gort is family owned, isn't it, Enterprise is family owned. And I tell everybody this, in the IPA Advertising Effectiveness Awards in the UK, my argument is that with the exception of P&G, Diadio, Unilever, marketing led companies, I don't think that PLC is what you call in public-leading trading corporations.

I don't think they can actually do marketing very well because the requirement for short-term self-justification and numbers effectively overrides the real purpose of marketing, which is investment in long-term customer value. I think this is why we're generalizing a little bit, but this is why founders outperform, even when they lead public corporations. They have the same pressures, the same analysts, the same. But they also are considering posterity, aren't they? What is my legacy?

I mean, it's interesting, actually, the German car industry, although their public companies are sort of family-run, Aldi famously, which owns Trader Joe's, is basically owned by actually two German families, that they had a huge feud. But some things going on there, one of the things they do is they look after their staff better. And I think when you look after your staff better, the customer notices. Well, this is part of the Costco thing, so I mean... Costco, exactly.

But that comes from the sole price line of thinking, which when he started Fedmar, he sort of outlined the obligation of our businesses. We have a fiduciary relationship with the customer. And Jim Senegal, who founded Costco, was a student of sole price. And later on, they would merge the companies in it. Of course, they did, didn't they? Yes, you're absolutely right.

Yeah. And I think that's interesting, right? Where you treat your employees better. A nice story from Dyson, which is family-owned. In fact, I think family-run companies, this would include people like S.D. Johnson.

I think they should wear a badge. Just what I mean, just as you have a kite mark on British... Well, loblaws is family-owned, for example, in Canada. Family control. Family control.

McCain, family control. So what I was saying about the advertising effectiveness awards, four out of the five gold winners, it's only every two years this award, and it's very, very rigorously judged. Four out of the five winners, namely McCain, your Canadian heroes, McCain, Yorkshire Tea, Spexavers, and Laithwaits, a wine company. Four out of the five winners, the fifth one was Guinness, which is sort of a family company, in a sense, although it's owned by Diadio. And so my point is that we should actually have a kite mark that allows consumers to prefer to buy from companies which aren't listed on some stock exchange somewhere, and hence aren't controlled by the finance function, because they're more trustworthy.

It's an interesting... I don't know if I agree with that, but it's interesting. Well, is Rogers, is Rogers still family-controlled? I mean, Canada is absolutely packed full of... Well, now they're entirely about that.

Increasingly, you get family-controlled, but not economically-controlled. So you have a dual-class. The Western family would control loblaws, to some extent, even though they're not majority shareholder. Well, I think if you have a corporation that's hundreds of billions, and you control it, 10 or 15% of it, you effectively have control over the company. Yeah. Ford Motor Company falls into that definition.

I think the family... Well, there's a particular class of shares. A lot of dual-class coming, but hold on. I want to go back to Dyson for a second. What makes Dyson so effective at advertising?

Actually, it's not advertising, it's marketing, and it's customer experience. What's the difference between marketing and advertising? Advertising is a subordinate part of marketing, and in many cases, even I've worked in advertising for 36 years. I want to think of myself probably unsuccessfully, but I still aspire to be a marketer, not an advertising person, because advertising is a useful toolkit available to the marketer. And by the way, generally it's pretty effective, but Peter Drucker, the purpose of business, is to find and keep a customer profitably.

That's the purpose of marketing. It's either to create or find customers with whom, over time, you can engage in mutually advantageous relationships to mutual profit. So what makes Dyson so good at marketing? Well, the story I heard from someone who worked at Dyson for 12 years is that he was sitting in a presentation, James Dyson presiding, and they were presenting the call center sort of efficiency statistics. By the way, I'm absolutely fanatical at call centers, because I'm terrified that in AI age, people will try and effectively automate them.

I think what you should do instead is make them slightly smaller, but a lot better. Because I don't think you can substitute for the human in cases of unusual problems, special circumstances, empathy, generally. Don't give me a right, I think you can get AI in, but they aren't suggesting that AI is going to be completely unempathic. But at some point, it's rather like the equivalent of I want to speak to the manager. There will be situations where you want to speak to a person who can understand your specific situation and has the power to intervene to override the normal rules and regulations here to solve your problem, because it is commonsensical to do so.

Even if our service level agreement doesn't normally allow us to send out a replacement part, in this case, since your part is faulty, somebody who has the power to do the right thing. Got it exactly. And I think that will ultimately, you'll have to have the human as the last port of call on that. Also, your call center is the only way you can find out the problems that people can't solve anywhere else. Just what I mean, there was a very smart person I met at Microsoft, who when they took over some fairly niche Microsoft product, they put the call center in the middle of the development team.

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It's the map territory problem, right? So often the businesses are run by the map, which is like the spreadsheets, the volumes, the wait times, the whatever, but the territory is the customer calling in. And the problem- That's cool, we should see, isn't it? The map is not the territory. Yeah, they're experiencing.

And so if you're not touching reality, you can get distorted by the map. But I want to go back to the city, but you said it's the same thing Dan Davis did, which is one huge advantage of being a customer value company, not a shareholder value company, is that customers live in the real world. And therefore you are actually rooted in reality. Whereas shareholders, by the way, not shareholders, but the shareholders are principally interested in justifying their own existence to their investors. And therefore they're dealing with a highly artificial construct in terms of defining the value of the customer.

But I think what's best for the shareholders is what's best for the customer. It's just the timeline mismatch that people have. So if you're timeline for- What do you think you're hearing about? Shareholder value movement is totally incoherent, because over what time frame, which shareholder is what you're optimizing for, it's completely incoherent nonsense, which is very, very friendly to stock market analysts who want a ready supply of quarterly data so they can bullshit their way out of things. How valuable it is to people with pensions is a completely separate matter.

Because one of the things it does, it prevents companies from innovating, effectively, and it prevents them from investing properly in customer relationships. Okay, come back to Dyson, you were telling me this story, somebody had worked there for 12 years. They were going blah, blah, blah, average call time, blah, blah, blah, average wait time. And it was the standard kind of call center metrics about effectively how quickly can we get these people off the phone. I mean, it's a bit more sophisticated than that.

I'm sure there's some measure of satisfaction. But it was kind of evaluating the call center on an operational efficiency standpoint. And Dyson basically said, it's not right now, you've got this all wrong. The way we should look at this is we should treat it as an honor if one of our customers chooses to get in touch with us and we should therefore respond to them accordingly. As if we're flattered by the contact, not as if we're bothered by the interruption.

Or words to that effect. I'm putting words in his mouth, but this is roughly speaking what the person said happened in the meeting. That makes a lot of sense. And by the way, that's why my father had four Dyson's. What didn't you man know he was?

I hope he won't mind if you say it was my late father. But every time he rang them up, which might have been only once every year, they did something astonishing. And they were really, really helpful. And they solved the problem. And the part arrived the next day.

Sometimes they didn't even charge for the replacement part. And therefore, he completely trusted those people. And therefore was willing to pay an enormous premium, really, over other vacuum cleaners, which might have had the same notional effectiveness. Precisely because of that trust. There's so much opportunity here, right?

If you think of you competing in a world where we're moving to AI during call centers, if I took the exact opposite approach, which is by the way, you should do both, a really, really good service organization allows for very streamlined, efficient service for people who know exactly what they want. And extremely empathetic service for people who are undecided, uncertain or find themselves in an unusual situation. And so you need to do both. And that's where I think that the tech bros have got it all wrong because they say the opportunity of tech as being a one way street towards ever greater efficiency, streamlining. And let's say tech bros are not neurotypical in terms of what they want from things.

When you allow tech bros too much power over decision making, along with their running dog lackeys in kind of management consultancy, you're optimizing for something which may be very, very distant from what your real world customers really care about. You're using tech crows as like a, no, no, no, it's perfectly reasonable to say that the people who work in this field are not representative of the whole human population. And that's a reasonable assertion. What is it you're representing when you say tech bro though? Anybody in a tech industry, just as anybody in advertising myself included is overweighted towards a belief in the ability of advertising to solve all problems.

And I will truly admit that I am guilty as charged. However, and people don't get that much opportunity to convince other people of the rightness of their argument. What has happened is that in marketing, for example, the tech company is the consulting firms that sell stacks. And I owe a lot of this to a guy called Adel Borky, very interesting self-taught Libyan marketing writer, former boxer, Adel Borky. And I coined the phrase techno-plasmosis by analogy with toxoplasmosis, which is tech people and consultants have taken over the finance department.

So that the marketing metrics, the finance department has faith in and demands from marketing and not those metrics which are most conducive to building brand and customer value over time. They're the metrics which are most conducive to selling tech solutions to the companies. What are other metrics that are moving? It's all about short-term transactional bottom of the funnel click through, how can you shovel money to meta in a slightly more efficient way? It's not about long-term value creation at all.

Right, now, don't get me wrong, all that bottom of the funnel short-term transactional stuff, he's very important to get right. I'm not disparaging it, but it's only a third of the game. Right. And they're not interested in the other two thirds of the game because they don't make money if someone spends money on their call center or upgrades their call center staff. Well, how does the call center staff call out?

It's sort of like cybersecurity, it seems like a cost. It's a cost. Yeah, yeah, yeah. I mean, Bonnie Blue would do really well in this because she's all about the numbers and not about the quality of the relationship. If I know she did work in NHS Finance Procurement, ironically, or their Finance Recruitment, actually, she recruited people for the National Health Service Finance.

Her approach to sex is merely an extrapolation of what she learned, I think, recruiting finance people for the National Health Service. All about the quantity, not about the value creation, but the relationship. I like this quantification bias thinking. I mean, Buffett, okay, you're quite rightly your hero, is that he was obsessed with the quality of the management company with him, he invested, wasn't he? Well, I mean, I'm obsessed with personal factors.

I've read a lot in, I think, I'm going to give a nuanced answer here, I don't know the answer, so I'll preface that with that. I did read a lot about what he used to do in the 60s, and he's highly private investigators. And what he was trying to determine, I don't think it was anything about the person other than, does what they say line up with who they are? And if the answer is yes, I can deal with that, because I know what to expect. And if the answer is no, if they can't go to work and claim to be a penny-pinter, because if they go to work and say they're going to cut costs, but they're driving around with a Ferrari or whatever else, like this is a thing that it doesn't line up.

And so I feel like he was always just trying to assess the predictability of people, if that makes sense. In other words, by looking at the consistency, consistent to the management level, I see what they said they were going to do. The balance sheet changes over, he had different emphasis on things than people I think realize. And I think with a lot of his investments, I mean, my personal take is he was looking for predictability. And it wasn't about massive disruption.

It was never about things being turned around. He got out of that in the late 60s with diversified refilling was the last real turnaround situation. They sort of got themselves into it. They exited quickly. And when I got bummed, they didn't really get burned, but I was talking to Munger about this over dinner one day, and he's like, we just realized that we made a mistake.

We were never going to make a lot of money in this business, and it was highly competitive, and we had no edge. And so they got out as quickly as they could. And I think that the predictability of what he buys, at least as long-term holdings, if you look at that, I think it's really interesting, because it's like, you can kind of see it, the railroad. You're not going to be using the railroad in 50 years. That's a great example.

So it will be unbelievably difficult to build a particular world, but you can also, you can lever it if it's predictable. Leverage is this interesting thing where he says they don't do a lot, and they don't, when you look at the whole company, but on the railroad, for instance, a decent amount of that in the railroad, because they know what the earnings, it's very predictable. And that is the same as the energy, where they're putting a lot of capital, they put a lot of data, and I talked to this guy in Nova Scotia, John Bragg, and he sort of did the same thing. And so he created Oxford Frozen Foods. He's this incredible story.

He's this billionaire from the small town of 1100 people. He started- I've been to Nova Scotia, what's it called? Oxford. Nova Scotia. He started at one, not two, but three, multi-billion dollar companies from the small town, but he's still there.

He's still there, y'all are like that. Such a great guy too. And it was fascinating to talk to him, because he basically was like, look, he owns North America's largest private telecommunications company. And he said, I wasn't afraid of that at all. And we levered up massively.

We went all in multiple times, acquiring more assets, acquiring it. But if there's something more volatile, he gets very nervous about the debt. So he wouldn't do it if there was volatility, but he also had this thing, it was so counterintuitive to what you hear on Wall Street, which is like, I don't mind paying more. I don't mind paying the most. And I was like, really, that surprises me.

And he's like, well, a lot of these things only come up once. I don't get another shot at it. And if I'm a private company, I don't have public company shareholders, and it takes me five years versus three years to get my mocha out of the deal. Why do I care? I'm never going to be offered this again.

And they're not going to build another one. So when it comes to fiber optic in the ground, he's like, it's getting harder and harder to do. What do these companies, can I get in company? Telecoms, it's easily in cable community. But it's not that they, yeah.

And so, but they, not only do they deliver cable to a large portion of Canada, but they own a lot of infrastructure that people aren't aware of. And he's like, well, what difference does it make? And I've been chewing on that nugget ever since. You know, you can apply this from a marketing perspective as well, right? If you have a client or go back to real estate for a sec, you have a client who's looking at a lake house or a cabin or a cottage or whatever you call them in the UK or in the United States.

And you get a property and you say, my budget is, I don't know, say 500,000. And you find a property that seven, and is it worth splurging on the $700,000 property or whatever it is? And the answer is, is this like a once in a generation property that I'm never going to have the shot at again? And if you can frame things, it's also much more likely to be scarce. Yeah, wherever you get, generally.

You make overpaying seem rational and in a way it kind of is rational, where it's like, well, this is only going to come up once. So like, I have a friend actually going through this. Now they're looking at buying a family cottage. And I'm like, how do you think about these things? He's like, I saw this one, it was perfect, but it was a little more money than, and I brought this up.

Having a cottage on a lake on which yours is the only cottage is the kind of gold standard for Canadian property. That would be the one of the lot of lakes. Yeah. I'd always heard that as a kind of, but it's sort of like, what do you want, if you want a second property, you want proximity, so it's easy to get to, you want privacy, so there's not a lot of things around it. And these things just don't come up very often.

And as many lakes as we have, I mean, the prime properties come up, maybe once every five or six years per lake. And... And as Kate said, in the long term, we're all dead. We're all dead. Anyway, an interesting aside here, but when we sat down, we were talking about high trust versus low trust societies and introducing friction.

Yeah, I'm wondering, spend a beat on that for a second. Well, I meant someone you must interview, by the way, called Philip K. Howard, who's written various books called Life Without Lawyers. He's just written a book which is coming out right now called, I think it's A Can Do, which is restoring the spirit of American Can Do. And he argues that a large part of economic decline and social malaise has come from the over intrusion of law and regulation into practices which should properly be left to subjective human judgment.

That we've created a culture where people are so afraid of making a subjective decision, that they fall back on often totally inappropriate rules and regulations, and there are a whole bunch of people who are employed, not always by the government, just as much by the private sector, who are much more interested in adherence to approve procedure than they are in quality of outcome. Because you can't get fired. Because you can't get fired for following the rule. You can't get me in trouble. You told me to follow this procedure.

It would be to opt out at some point in certain situations in user brain and judgment. But if I do that, if I'm doing a little head-eye, a parapet, there's no upside, and there's considerable reputational risk and career risk from doing something slightly perverse and different. But there are a whole bunch of arguments. First of all, an awful lot of quality human decision making of necessity has to be tacit and instinctive, not regulatory. There are various people, I think it might be Michael Polany, who says, most of life is like a kaleidoscope.

We never completely encounter the same situation twice. And therefore, regulating for the universal, when in fact, the great evolutionary gift of the human brain is adapting to context. It's inherently, lawyers love it, of course, because they make money out of this. Arguably, the legal system, particularly in the United States, has strayed into all kinds of areas, which were once settled by two humans amicably discussing something. And possibly finding a creative resolution to it, to the trade-off.

That's replaced by effectively, we will take this to a legal decision. And that starts to infect, particularly because there's no talk law reform in the US. And that's partly because, I was told yesterday, trial lawyers are among, well, just donors to the Democratic Party, because they resist any kind of tort law reform. This has led to things that should be solved through our evolved human talent for conflict resolution, being solved through a totally inappropriate application of legal structures to a situation which is, in many cases, not really adequately captured by law, or where a legal decision is made, which makes perfect sense within one setting, but which sets a precedent which leads to ludicrous second order consequences.

So for example, if you accept the fact that a, I think, has happened in one of Philip Keherd's cases, someone demanded the trees were dropped down in their streets because one of their grandchildren was allergic to the nut that came off the tree. The argument would be that if you accept that, which may seem kind-hearted and generous within that particular frame of reference, ultimately you've opened up the path to widespread deforestation, because nobody can grow a tree anywhere to which anybody could claim to be allergic. There's an interesting case in England, where someone broke into a theme park or some park of some kind. And then while drunk dove into a pond, which wasn't very deep, and hurt themselves, and then sued, and warned them.

In the lower corns, they said, there should have been a notice warning of the shallow water because you could reasonably anticipate this problem. And then it went up to the hike, whatever it was, the law lords at the time. And they said, if you took this ruling to its natural consequences, you would have no lakes. You would have no swimming, you would have no swings, you'd have no playgrounds, because everything would have to be girt around with warnings about every possible anticipated negative consequence that could arise from this part of the environment. And so what happens is that you've created a kind of idea, I suppose, where the legal solution has become the default, when it should in fact be the last resort.

What happened to common sense? Well, this is the argument being that your fellow countryman, what's his name? Ralston Saul, John Ralston Saul. Have you come across him? You Canadians totally underach yourselves.

You produce wonderful people. And you're always trying to import people like me from the UK or people from the US. John Ralston Saul wrote this book, which I think is all Voltaire's Bostards. And he argues that human brains have evolved with a variety of mental capabilities, only one of which is the capacity for reason. There's also the capacity for imagination, creativity, common sense, et cetera.

We have a whole variety of different mental mechanisms that are disposal gifted to us by a few million years of evolution as a social species. And yet we've made rationality the gold standard. This is one we had about working advertising, by the way. And I think it's probably similar to theoretical physics. And it's probably similar to entrepreneurialism, OK?

Which is what's unusual about those fields, is that rationality is the bronze standard. In advertising, if someone says, this is the problem, and you come up with a completely rational solution, people don't go, right, that's perfect. Let's go and do it, as they would do in a finance setting, or a compliance setting. In most of decision making, in institutions, rationality, i.e., quality of argumentation, is the gold standard. In advertising, if you came up with a rational ad, people would go, that's all right, but can you do it better?

Is there an ad that says the same thing, but in a more emotionally engaging way? Is there an ad that says the same thing in a way that's funny? Is there an ad that says that's in a way people will remember, or will act on? So what is funny about being an advertising creative, and I spent 20 years of my life either in or managing those departments, is the rational solution is where you start. You use it as a springboard to something better.

There's a famous quote, you know, fascinatingly from Neil Spore, who said, you're not thinking you are merely being logical, you'll know that. He was an interesting guy, wasn't he, in terms of his, because he also was the person who said the opposite of a good idea, in boring physics, the opposite of a good idea is wrong, but in high level physics, the opposite of a good idea might be another good idea. Yeah, what can we learn from marketing, from the Mad Men era? That's still true today. I think there was an understanding then, and the remuneration of agencies respected this, because you were paid on commission.

So if you had a big idea and you came up with a campaign, and the client spent millions running the campaign, you made money from that campaign for years after you conceived it. So it was rather like having royalties on a book. Oh, OK. We didn't realize that at the time. Then media independence came along, and so we had to be paid by the hour, like lawyers, management, consultants, and we've never recovered, because it's a catastrophic way to be paid.

And the reason it's a catastrophic way to be paid, my argument is that marketing is actually fat-tailed. So is innovation, R&D, pharmaceutical research, science, OK? In other words, 5 to 10% of what you do delivers perhaps 110% of the value. And therefore, paying people by the hour and demanding that every quantum of effort has to be matched to a quantum of value creation in some neat proportion. This is sort of way market.

Never mind advertising that, OK, right. Let's look at the whole of marketing as a discipline within an organization of which advertising is not necessarily very important part. For a lot of organizations, it may be relatively trivial, what they actually spend on bought communication. On the other hand, how you design your reception or where that still affects the application of psychology to value creation. Let's say you have a brilliant idea, and the value of that idea goes on for 10 years.

I've seen this happen all the time. The agency, let's say an agency, had the idea. They will be in the club to have that idea. They are held responsible for every single unit of cost they incur, year by year by year by year. You cannot offset any of those costs against the value you've created in 2023 by having a huge idea.

Let me give an example. There's an enormous idea for a very large, enormous American, let's say, fast-moving consumer goods company. There's an idea conceived by Ogle the Australia. It has made that company in excess of a billion dollars in the last 10 years. It's still running.

It runs in something like 100 markets, still useful today. For that idea, the agency in Australia got paid $350,000 or rather, that's what they made from it. So in other words, you have a billion dollar idea. You get to buy a small flat in a crap part of Sydney. Now, what I'm saying is that, this is not me bleeding about the advertising industry.

It's saying that anything like R&D or marketing, which is fat-tailed, in other words, a small percentage of what you do. It's Jeff Bezos' point about in business. In baseball, you can only score four. In business, you can score a thousand. In marketing, when you score a thousand, and the purpose, half the purpose of marketing is not operational, gradual, incremental improvement.

It's finding another way to hit the ball out of the park and score 100. If you cannot claim the credit for that, except to the extent that it delivers value in the quarter in which you have the idea, or the financial year in which you have the idea, you are underfunding your marketing effort. If it's like saying to you, you went to JK Rowling and said, yup, you'll have the royalties on the Harry Potter books, but only on the first edition. And consequently, long-term marketing ideas, when you're paid by the hour, or when you're evaluated by the quarter, as marketers would be. Now, if you weren't going to a pharmaceutical research company and said, you invented Blockbuster drug this week, no, or you're all fired.

You accept the fact that you spend a load of money effectively. Okay, this is the real truth. You don't find entrepreneurs in chess clubs. You find entrepreneurs in casinos. They're playing poker. They're playing backgammon.

You know, they're playing games of chance with an occasional very high payoff. And a lot of life is exactly like that, but you don't know where the huge payoff is going to come in advance. The people who are running these organizations for the benefit of financial predictability are trying to make it chess. They're trying to turn it into a reductionist game where the most you can score is one for a win, they're trying to put it's ceiling on. They're trying effectively to pretend it's a high variance mechanism, low variance mechanism predictable process.

Fifty percent of your effort in life, once you ensure the fact that you're not going to starve to death, die, et cetera, you know, you've looked after your children, should be attempted to get lucky. In other words, what Naseem would say, I love this phrase, increasing your surface area exposure to positive upside optionality. You know, find the opportunity. But hold on for once. I want to go back to this.

I want to think about this out loud here. Maybe I'm wrong with a book. It's great. I write a book once. I can sell it for the next hundred years.

Assuming I've heard of my role. If you had a great marketing idea, which continues to add value for the next 15 years, the difference some of that credit should be offset against your current marketing costs. Fair. The difference is marketing also can go the other way. And like Jaguar, perhaps, or Cracker Barrel.

I don't know if you've followed the... So you can create negative value. It's not like the baseline is zero, and there's only upside. And the upside is like one to one million. You can actually destroy a company through marketing.

The case is like an advertising. Some of those are going to defend the companies. Oh, you please do. Yeah, yeah. Because in the case of Bud Light, are you defending Bud Light?

I want to hear them. Yeah, no, no, no, no. They could not have necessarily anticipated that because it was confected outrage. Look, I'm politically on the right, OK? I get just as angry from confected outrage on the right, which is, oh, they've gone woke.

No, no, no, no, no, no. You're merely showing, you know, a mix of ethnic groups and you're advertising or something. This is bull... Right? And the right to it and the left do it.

There's confected outrage on the left, I would argue, about American Eagle, and it's confected outrage on the right. It's done for signaling purposes by a very narrow group of people. Do those for cases actually damage the business? I don't know the figures. Gillette did.

There was an extremely... Now, this wasn't confected outrage because Gillette ran an advertisement. They realized they had to move on, perhaps, from the best a man can get, despite the fact that, obviously, that their customer base is overwhelmingly male for fairly obvious reasons. And they produced an ad which I would argue, and even my wife would argue, was needlessly insulting towards men, in that it conflated the Me Too movement with barbecuing. OK. In other words, it seemed to take a definition

of toxic masculinity which went the whole spectrum from things which all right-thinking men would quite rightly condemn. The things which, for example, two boys having a small scrap on the patch of grass, which all primates play fight. It's not, you know, it's too good. I'm sorry, if there's a kid wailing on another kid with a plank of wood, you know, I'll be quick to condemn it. But I'm not totally, you know, the on-play fighting thing, barbecuing, I don't think, is particularly objectionable.

And that was a case where it was almost a kind of act of deliberative frontory to your court-target audience. The Bud Light thing to put in context was a influencer marketing campaign of which most people in the company were probably unaware. Where they sent personalized cameras above light to a variety of different influencers, one of whom was Dylan Mulvaney. Now, I've got to confess about this. As a Brit, you're Canadian.

The gender thing isn't quite the flashpoint in the UK or Canada as it is in the United States. Did you know, for example, that when it came out, I find this one interesting, in Britain we've had pantomime for 200 years, men dressing up as women, you know, women dressing up as attractive women dressing up as young boys, shakes their dudududududum, you know, cross-dressing. Some like it hot was a highly controversial film with all the studios in the United States when it came out because it involved men dressing up as women. Now, in the UK, my grandmother went to see it, she was a sort of conservative woman, well-sportventional town, it would not have occurred to her. Literally, that there was anything controversial about this at all.

It was simply funny. I think what maybe has changed is the meaning we ascribed to it. Well, in this case, my argument was, okay, all it was, they hadn't made Dylan Mulvaney at the face of Bud Light. Right. You know.

And I think creating these cultural flashpoints through confected outrage is something to be disparaged when the right's do it and when the left do it. I think it's equally absurd because you have, in any communication, you have to understand context and the intention of the person producing the communication. Now, in the case of Jaguar, they wanted it to look unlike, I would argue, I mean, I was talking to Rick Rubin who was in Hawaii and he'd heard about the Jaguar ad, it wasn't an ad by the way, you know that, didn't you? It never ran as an advertisement. It was a brand film that they showed at the launch of the car.

And then I had a right-wing podcast in the UK going, you know, it does the most outrageous anti-conservative sentiment, which is copy nothing. Copy nothing was the exaltation of Sir Wickley of Lyons who founded Jaguar, you know, I think he said it in 1932. He was the original founder of the car company. You've also got to understand their position. What are they trying to do?

I'm just explaining this just in wider context. Which is they fundamentally made a mistake. I can't blame them for doing it because we all do this. We all benchmark against our most obvious competitor. Don't benchmark against your most obvious competitor.

All you'll do is make yourself a copy of them. And Jaguar was always trying to compete head to head with BMW Mercedes and Audi. And bluntly put, because of the scale of those entities, it was always going to lose. Because if you're the kind of person who's happy to buy a BMW, an Audi or a Mercedes, and you're also happy to buy a Jaguar, you'll probably end up buying an Audi or a Mercedes or a BMW. Simply don't, you know, because of scale, winner takes all effects or matter of other things.

So if Jaguar needs to survive in the electric car age, making its cars in the UK, which is a Jaguar lover, ideally want them to continue to do, they've got to find a different kind of target audience rather than benchmarking themselves against, you know, companies which have gains to scale and a whole lot of advantages, they can't replicate. And so going for what you might call the car of choice of the wealthy younger creative class, reasonable bad. It's a reasonable bad. OK, I work in advertising. I'm a massive car lover.

I really, really like, for example, the Chris Bangler of BMWs, I sort of magnificent. I really, really like this because I can't buy one. And the reason is, because part of my schtick, OK, is being a bit left field. And if I drive around in an Audi, it kind of screams, I work in financial services, OK? You know, I aspire to vanigierial roles, just sort of it.

And so, you know, I've always bought slightly weird cars. I don't know, I've been trying to know what you have. What would you have back in Canada? I've got to ask, I have a Tesla. Yeah, fine.

You see that, you know, do you have a sticker on it that says I bought this before Elon went mad or anything like that? So the Canadians don't key your car. It's been keyed three times. It's been keyed by and run into by somebody I can only assume intentionally in the past. Oh, yeah, in the past.

Well, also, where is this hotbed of Elon haters? Is it? It's interesting because my mom got me one of those stickers. And I was like, I don't have a problem with Elon. Like, I don't understand this.

I don't have that in my car. And I want to relate this to sort of everything. I agree. It's a little like biting the hand that feeds you. Well, it's also like going back to the Jaguar about we can tie these two things together, right?

And I think we need a variation in approaches. And the point of this is like we need more people like Elon, not fewer in the world, but you agree with him or not. This is how society progresses. We need differences. We have an environment.

And people thrive or don't thrive in that environment. Ideally, we have some sort of social safety net to catch people. If they don't see it. Well, not ideally. That's essentially in any civilized society.

And so Jaguar, the same thing. They're taking a bat as a company. They're being different. Yeah, they occupy an environment. If you think about it, they survive as Land Rover Range Rover because they have effectively created the category they dominate.

Right. So I want more variety. Right. This is where your wonderful compatriot, Rodrale Martin, raised upon him, OK, makes this point that economists have this fantasy of the world of companies in direct competition, driving down price and increasing efficiency while supplying the same thing, which is based on a false premise that people know what they want to begin with. Now, I would argue when you don't create differentiation, everybody suffers.

Now, let me explain. Because if you have a differentiated car market, it makes the car market more valuable overall to investors because there is more variety within the market. It benefits the companies because they can achieve a reasonable profit on what they do because it has some degree of scarcity or uniqueness. And it benefits the consumer because the consumer ends up the more choice. What often happens is you have something like a regulated telecoms market or you have a regulated insurance market.

And everybody is forced to compete along the same dimension. And what you end up with is just red ocean competition. And nobody wins. But where I was going with all of this is that going back to the Mad Men era and how you can create a billion dollar profit for the company and only get paid 300k. You need to watch that.

And I think I've never actually watched my men. But I think the point that I was getting at is you can also create negative value. And how do you ascribe for the negative value? I can speak for Gillette where the evidence was. And by the way, the research showed it was deeply problematic with a large way that people.

Has American Eagle suffered? I doubt it. In some ways, you could argue it's an ingenious marketing strategy, which is that you press the hot buttons of 1% of the population. So they then repeat your message accompanied by their own signaling outrage. Meanwhile, you get free media coverage practically everywhere.

But maybe I'm naive. I mean, maybe I'm a budget for that Jaguar film. Your ears was zero. Maybe I'm naive. Like the Sydney Sweeney American Eagle thing, I think we're just going back to normal, aren't we?

And we've sort of deviated in the last few years. And that seems more, maybe it's akin to my time and my frame and when I was brought up. But nothing about that struck me as rage or on either side. Like when I looked at that, I was like, oh, great. It's just like an advertisement.

It's about, yeah. I didn't even think more. I didn't think there was more to it. I just saw, oh, this is great. There's a kind of weird sensitivity signaling, which generally has nothing to do with the groups you are trying to protect, which is just, it's sometimes called a purity spiral, where you effectively signal your moral or political purity by signaling extraordinary heightened sensitivity to anything that might conceivably offend someone else, even if the group on whose behalf you claim to be campaigning is completely unconcerned by it.

But I like the opposite of her, whatever that would be. It would not cause rage in me either. I wouldn't even think about the brand. It would just be like another thing that flies by. I don't understand why we're so hair triggered at this moment in time, unlike maybe never before.

Well, you have to really watch it. And I've noticed this in certain people on the right, which is, I think it's fundamentally dangerous to invest too much of your own identity in a political standpoint, to the point where I've seen it in people both sides become effectively deranged. Now, you could say that's the effect of the people who attack them, and that the derangement wouldn't happen and wouldn't be necessary in a different kind of media environment. What's different about today? Why is everybody on such a hair trigger?

Why do we identify so strongly with these strings? I'm going to say, actually, that everybody always blames social media. I would argue that the mainstream media, it is always in your interest, and this is a problem in journalism, because it was in your interest to provoke a fight, because then you have something to cover. Nobody's interested in reading about peace and harmony. They're interested in reading about discord and argument and dispute.

By the way, that's an evolutionary tendency if we're sitting here, and we heard a fight break out across the street. We'd be there with our noses pressed up against the glass. If we heard people amicably discussing the weather, we wouldn't pay out the slides of the tension here, where we've fundamentally evolved to pay attention to conflict, and so the only difference is the tools available to us. And the extent to which social media provides the mainstream media with the tool, I mean, in 1975, you want to define somebody who was outraged by the Sydney's three new version of it. You actually have to do some legwork, wouldn't you?

You'd find it. Now, it's one search on ed, or, you know, blue sky, whatever it may be. Willful misunderstanding is another thing that, you know, is another technique which is deployed. It's perfectly obvious. I mean, you know, perfect obvious that that ad is not intended to mean Sydney Sweeney is the flower of Aryan womanhood, okay?

It's not, you know, it's not that. Now, in a perfect world had they had more budget, maybe they would have had three celebrities of different ethnicities or genders or whatever it may be. But nonetheless, this business where you effectively affect to be outraged by things. I'll give you another story about this. It's so difficult, which is I don't think phrases like uncomfortable or offended or inappropriate.

You know, you get these things where, you know, your presence here, people would find it, you know, would feel unsafe, triggering, okay. They don't really belong in the public sphere. No. They're matters which from a few hundred thousand years, we simply sorted out amongst ourselves. We didn't make recourse to the university dean or the Supreme Court in cases where we were bothered by things because you accepted that just part of life.

And we were allowed then, traceably, to find ways to get along without recourse to some sort of spurious rule book. Consonably, I don't think those phrases, I mean, this is one of the worst things that happens. You say, you know, someone who's described as a newspaper that's being accused of inappropriate behavior. Now, I now have no idea, I've literally had to book people for speaking engagements. You go on there, Wikipedia page, and it says accused of inappropriate behavior.

Now, I have no idea whether they're the next Epstein, it's, or whether they told a knock-knock joke that two people found unpleasant. Do you want them to tell you knock-knock? Yeah, I can't believe it. I could have been misunderstood there, you see. But I now have no idea, literally no idea whether the person's guilty of something or the trivial infraction, which would only have offended 0.01% of the population.

Or they're not guilty at all. Or they're not guilty of. Somebody just made up an accusation, and the accusation became the framing, and the framing became the narrative. So it's highly problematic in the UK. I'm not one of the people about where, I'm not with J.D. Vabs, I don't believe that free speech

is completely dead in the UK. But there are worrying signs where people who make a complaint on the basis that they found something disturbing can then call in the Pueblo Police Matter, unless it involves a direct threat of physical action. Yeah. I mean, simply being disquieted by something can't be. But we've gotten to this point, you know, to varying degrees in varying different countries, where we don't tolerate people who have different ideas than us.

And we saw this last week play out in the US with the assassination of Charlie Kirk. And so whether you agree or disagree with him and his views. I had to confess, I was only dimming a land of existence before I was on perhaps, which I'm a Brit. I mean, I know the name, and I knew. You see the same thing in Canada with sort of our politics.

I imagine you see in the US too, where media is definitely intolerable of one position and more favorable of the other. And you can analyze this, you can study it, you can do a PhD on this, it exists. And it seems like we're just not capable of having to think for ourselves. And we're not capable of having reason, discussion of things and being friends with people. It used to be back in the 30s, the 40s, the Churchill era.

Both sides of the house would talk to each other. They would have dinner together. They would find common ground. How many of these people who are hypersensitized on one side or the other? How many of them really exist?

By the way, don't include things like, one of the things I find really disturbing is the practice of the media describing people who say, oppose uncontrolled immigration and describe them as a far right group. Oh, and well, because that is for that, you know, normal people are described as far right now. If you literally take an opinion which may be held, by the way, from my own personal standpoint, I'm pretty benignly disposed to immigration within reason. However, I also believe in democracy and if a significant proportion of the population disagrees with me, I owe it to them to hear them out, because their circumstances are different to my own. You know, I might be beneficially, you know, one of the most slightly annoying things is people who are very rich people who are pro-immigration, because they say their Polish housekeeper is wonderful.

Well, that is an experience of immigration now, which is not shared perhaps by any means by the other 98% of people. Unconscious of the fact that depending on where you are, you see the world differently, that's inevitable. And the job of a democracy is to accept the majority opinion, even when it goes against your own. And so describing and vilifying an opinion which is held by a fairly large way of the population, regardless by the way, the right is the wrong thing. I'm not even getting into this now.

It's deeply dangerous, because people go, well, if that makes me far right, it looks like I'm far right. I mean, insulting calling people deplorables is a terrible, terrible way of getting deplorables to gag up against you. And then people don't speak out. And they have their opinions, and then you lose debate, and you lose perspective, because you don't hear the other side of it, so you think there is no other side, and anybody who believes that might be an idiot. Like, give an example on this debate which changed my mind a bit.

Very, very good Oxford Congress called Paul Collier wrote this economically balanced assessment of general migration and made some, pointed out that on both sides of what you might call the balance sheet, it was immeasurably more complicated. For example, if Nigeria trains doctors who then immediately hooft to the United States, how is that possibly a good thing? Overall, in that a poor country trains to doctors who move to a rich country which arguably has enough doctors from a country which doesn't have enough, that's not, you know, you have to, it actually depends on how you frame it, right? Because another way to look at that, and I'm not arguing for this by any stretch, is that they come here, they make a lot of money, and they send that money to their family.

All Collier said is, look, this is inordinately more complicated. One of the things he said is the right, for example, of recent immigrants to family reunification is a bit dubious, because you're giving someone a right which the native population do not have. So I can't pick five Canadians and get them British citizenship. You see, I've yet to meet somebody who totally disagrees with all immigration, it's a matter of what reasonable immigration looks like. And also, it should be decided by someone other than human rights lawyers.

Oh, yeah, I would probably agree, because fundamentally, as a branch of the law, that is not a partial entity. Because human rights lawyers, if he's in it, you know that great phrase, this is St. Louis or someone which is difficult to get someone to disbelieve something when their salary is dependent on believing it. And just as management consultants have a huge incentive to sell in digital transformation programs to their clients. And therefore, we have a culture in business which more or less doesn't assume that any money spent on tech is money well spent.

They didn't look at the opportunity, because should we have a better call set? Buffett and Munger had a good way to sum this up, which is never ask your brother if you need a haircut. And it's the same as human rights life. It is in their interest for human rights to capture a greater and greater part of public discourse at the expense of democratic bodies. And consequently, you're not really in the dispensation of justice.

You're in the amplification of grievance business. It's very different. I want to switch gears a little bit. My kids had a question for you. Oh, good.

Go on. A few years ago, we're in Italy on vacation. We walked into Louis Vuitton store and they saw a purse. And they were asking me what makes somebody spend, I think it was, I don't know, 20 or 30,000 euros on a person. I had given them an answer, but they wanted me to ask you.

Some of those things, by the way, weirdly, you can resell them for more than the purchase price, because in some cases, the Kelly bag, for example, they won't sell it to you until you've been a fairly reliable customer of theirs for some time. And therefore, the price on eBay is higher than the price they charge on the snorfs. So, by the way, it's not complicated, but they're very good. Effectively, a large proportion of goods depend for their value on being perceived to be expensive. So, what goes into that though?

Because they were all guilty of it to a degree. No, but they were talking about the store and the service and the lighting. My wife just came back from, you know, somewhere where there was quite a nice night dress in Harrods, England, which was 1800 pounds. Now, you have to remember that there are quite a lot of goods where the purpose of the good emotionally is to say, well, let's take the end line. I don't think there's a lot of hidden truth in advertising and lines of the L'Oreal end line, because I'm worth it.

Some part of that is the person advertising to themselves. So, you know, when you drive around and you brand new Blinged Up Tesla, albeit slightly keyed, okay, you're not actually doing it to pick up chicks. I mean, maybe you have no idea what you're doing in your private time, okay. But if you let's say you bought a bright red sports car, yes, one purpose of it in a particular group would probably be sitting only. I visibly have resources to spare, but quite a large part of this stuff is actually signaling to ourselves, which is, you know, because I'm worth it.

I deserve this. I'm the kind of person who drives this. It provides me with a kind of ego boost to sensory assurance, whatever it may be. And so consequently, if you think about part of the reason my bags became very expensive is that very high-end clothing can only be worn in quite specific situations. On the other hand, a bag like a man's watch can be worn every day.

So one of the reasons why those things are expensive is to use a very interesting measure of cost per entertainment hour. I wear a Casio G-Shock, I think it was 130 quid, because I actually decided as a gross rationalist that the best watch is one that's cheap enough to wear in the shower, so you don't have to take the thing off every day. But Paul Dohman, Professor Paul Dohman, who's the behavioral scientist at London School of Economics, I met him when I first met him. I said, I'm intrigued, because you've worked with Daniel Kahneman on happiness. And I noticed you wear a Rolex.

And he said, no, no, he said, he's extremely good value for money, because it makes me feel good every single day when I put it on. And in 20 years time, I'll give it to my son, 21 years time, I don't know how old his son was. I'll pass it on to my son, who can enjoy exactly the same thing. So it's a repository of meaning. Now, cosper entertainment hour is quite interesting, because it was used to explain the fact that relatively poor young people will spend $90, $100 on a computer game, which seems like a lot of money until you realize that they might play that game for $80, $90, $100 or more.

Super cheap. So it's super cheap. I mean, compared to going to the cinema, I'll wear its $10 per entertainment hour, more if you buy popcorn. So it's quite an interesting metric. One of the things that used to make me really annoyed in Britain was when rich people got really snarky about poor people having large televisions.

And I said, look, if you haven't got much money, TV is a source of long-term entertainment. It's spectacularly cheap. OK. So having a really good television on which to enjoy, cos you're not going to go Porsche Racing at the weekend. You're not going to be there effectively going to Glenbourn or popping up to the Metroland Opera.

Therefore, having a really large television, a perfectly rational decision. Good, deeper on this truth in end line, signaling to ourselves when we purchase something. Jeffrey Miller is fundamentally right that a lot of what we're doing is to advertise ourselves to other people. And the mating mind and spent two books, I think you really should read, because they're extremely good. A third book by my compatriot, Will Store, The Status Game, which you must know.

Fantastic. I've heard of it. And I have to admit, I'm going to, the only caveat I give to reading these books, to be like reading The Selfish Gene, is when you read them, you are at, if you're someone of any kind of sensitivity, you are at risk of experiencing depressive episodes after reading them, because not because they're not true, but because they are. And you go, I'm really that shallow. I do things because they feel good.

I explain why I do them, but deep down the evolutionary emotional reason I'm doing these things is really to show off, or to establish, you know, some sort of one-upmanship or status. It's kind of complicated. Do I buy one piece of conspicuous consumption, as is argued by various people like Lord Layard in the UK? Do I make my neighbors less happy if I buy a newer better car? Because well, I've changed their comparative frame, and therefore, my pleasure comes at the expense of theirs.

Now, that's not, I don't think that's totally simple. I think if you were a real car obsessive in your next door neighbor, Bortofrari, you'd actually be delighted, because you could go out and talk about talk-vectering, and an adaptive air suspension, or whatever it may be, OK? Or the normally aspirated V12. And you'd probably be made happier by that purchase. So I don't think it's absolutely simple.

I think Jay Leno and Jay Leno's garage makes him one of the world's great philanthropists, because he goes and spends a fortune on extremely rare cars, and then shares his passion with an audience of millions. If you are a car enthusiast, you know, it's an extraordinary case, by the way, of translating money into something which is both a selfish pleasure and a generous pleasure. It's complicated. But when you read these books, you realize that status is effectively a kind of thing within us, which we can't turn off. The currencies will change.

The status currencies change with fashion and time and everything else. It was a time where having a digital watch was the highest status thing in my school. If you were the first kid with an LED digital watch, people were in awe of you. So these things change. But nonetheless, it's probably innate.

Would it be nice if we had the power to completely disregard the opinions of others? Well, yes and no. I think such a society might be better in some respects. I also think it would be kind of atrocious, because people would kind of go shopping naked. You know, is shame necessary?

It's book by Jennifer Jackwood, actually. You know, I mean, as a social species, patently at some level, we're massively calibrated to care about the, you know, the reputed wellness. And that's why something needs to be expensive, because then it's a costly signal, a speak-out to tale. It's a, so the guy who rescued the British sparkling wine industry effectively did so by improving quality by 10%, 20%, and then pulling up price by about 150%. Because price is a signal.

Because in the sparkling, in the champagne business, it doesn't matter how good the drink is. If people think you've bought it for 895, it's not doing the job it's supposed to do, which is to signal generosity, to signal hospitality, or to market special occasion. Ooh, I see you've taken out the good stuff, because it's my birthday. And that's pop, I mean, you're Canadian, right? Poplatch was, I think, a practice by the tribes on the Pacific Northwest, was that right?

Where they destroyed possessions. You know more about any of the history than I do. I think it was tribes in the Northwest who practice this poplatch thing, where you destroyed things of value, as kind of a, you know, a signaling mechanism. That is like, ultimate signal. It's like the rapper's burning money on videos or something.

Yeah, exactly. Yeah, signaling things that they're probably not intending to signal. There is a serious question here, which is, can we take an innate and immutable human instinct and harness it for good rather than for real? And Jeffrey Miller's example here is, let's imagine two parallel tribes. Bluntly put, in one tribe, the men folk signal their desirability as mates by fighting each other with axes.

That's a negative sum game. In the neighboring tribe, they signal their desirability of mates by going hunting and trying to bring home meat, which they then share with the rest of the tribe. That's a positive sum game. So there is this really complicated question, which is undoubtedly human pursuit of status, has both positive and negative externalities, depending on the currency you choose to signal. And also, it's not totally easy to say whether it's negative or positive.

I mean, it probably drives a lot of human behavior, which drives ambition, which drives progress, which drives. I mean, if we genuinely didn't care, if we had no shame, you're absolutely right. I mean, no one, I'm sure. By the way, I think also, a lot of valuable goods are affordable now by everybody because they started as luxury goods. Yes.

So I always mention this because it's such a silly boast. My grandparents were the fourth family in Wales to own a dishwasher. And it cost about 100 and something pounds. At a time when their house, which was a very nice house, cost them 4,000 pounds. That dishwasher probably works better than a modern one, too, by the way.

It's still working. They bought it in 1959, 61, something like that. Why are they four hour cycles now? And it's like, yeah, yeah, we're ready Tuesday week. Come on.

I have one of these, it's interesting, just as a funny aside. I have one of these dryers from the 80s in my house. It came with the house. It drives the clothes to the bottom of the hair man. It's like it's gonna be just as expensive to fix this as it would be to buy a new one.

I'll just assume, I was like, no, no, no, no, I'm gonna fix this one. And he's like, why? I was like, I tried this the clothes in 30 minutes. I'm gonna make an unusual foreign environmental responsibility here, folks, everyone listening. Do, if there's a do, simple thing you can do, two things.

Put on your appliances at times when there is an abundance of clean electricity. You don't have to change what you do. You just have to change when you do it. Secondly, if you've got a dryer that doesn't have a heat pump, get a dryer with a heat pump. Because yup, it's slow.

I'm gonna acknowledge that. It's not as fast as an old fashioned dryer. However, the energy efficiency of a dryer with a heat pump, or better still Americans, if you live in Arizona, dry your clothes outside. Because this is something that's slightly bemusing. Because in Britain, we didn't have the social stigma of hanging clothes up to dry to the same extent.

We do now. Nobody would hang clothes up. But that's just a social stigma. Now, in Britain, we've got a fairly climate. You're Canadian, okay?

They're plenty of times of the year where your underpants could be hanging there for three months. They wouldn't know to freeze, but they wouldn't noticeably dry. But I do find it slightly weird in the US, where if you're somewhere like Arizona, you could literally hang them up. I was in foot of Ventura in the island in the clairies. And the amusing thing was, you literally had a washing machine with a nose dryer.

You put it up on the line about 40 minutes later. It was ready to wear. So how would you market that to people? How would you change the behavior? So that it's not necessary.

Now, I understand that people don't want to put their underpants, you know, private things. I suspect that a lot of it is those weird housing associations already have rules that say you can't do it. And then bit by bit, the social norms spreads. Those American housing associations are basically like living in a Nazi regime, isn't it? And it's like those co-op apartments in New York, which are, I mean, in London, we'd never tolerate that degree of kind of intrusion before we're allowed to move into a property.

The interesting thing about the co-op apartments in particular, from what I understand, I don't understand everything. So maybe speaking a bit about something I don't know is the degree to which all people play it. Yes. Whether you're sort of like a student just graduating or you're a billionaire, you're all sort of like playing this game in the co-op housing. No, no, it is completely a game.

And apparently they can demand information which the IRS can't demand. I mean, it is absolutely bizarre. You have a co-op board which will, you know, in occasion kick people out as well. But what probably happens is that once this is very similar, by the way, with a necessity of children playing outside, which is once the behavior drops below a certain threshold, you have an inflection point. So my parents couldn't believe this.

When I was 20, 25, and I told them that when I was 11, I used to cycle 11 miles to the nearest town to see my grandmother on my own at the age of 11. And then when I told them which they didn't know, I used to at the age of sort of 11 climb up onto the apex of the roof and just wander around on the roof 30 feet up. My parents were a goss that they'd ever allowed it to happen. But if most people did that at the time, it was normal. It was completely normal.

It'd be locked up today. My parents would have been locked up for several, you know, several of the things which I was allowed to do when I was young. Now what happens I think is that you reach a threshold or a tipping point where in my childhood, let's say someone had abducted me or I'd been hit by a car. OK? I'll give these that year.

In 1974, 75, 76, that kind of year. If I'd been hit by a car cycling a month or I'd been abducted by a paedophile, OK, my parents would have been described as unlucky. You get past a threshold where that behaviour becomes weird and now my parents will be held as irresponsible and will be blamed. I don't think it occurred to them. I was, I don't know, hit by a car.

It might fall to be honest. I failed to signal before maneuvering. I was hit by a car. Nobody suggested it was my parents' fault for allowing me to cycle around the place. That was just a normal thing you did.

And then you get these weird... I've got a few theories. For example, what are the things that are products of social norms where you can suddenly hit a threshold? To choose among the middle class would have been an interesting thing in Britain. Is this true in Canada as well?

So perfectly middle class people now have body art. And it's normalised. It would have been deeply weird in any middle class milieu to see someone with a tattoo in the 1970s or 1960s. It's just normal. I mean, like, everybody...

You've got to be 59 to notice this year. There's a lot of it that happens over a quite a long time. It's been a search. I've got a theory that all British men would wear shorts all the time if it weren't for social pressure. I also think, for example, OK, here's an interesting one.

I don't know if you're into perineal sunning. What is this? It's a Buddhist practice where you basically expose your perineum to direct sunlight. I think that a fairly large proportion of the population are natureists, to an extent, but which I don't mean wandering around the streets with their shlongs out. But I mean, on a beach, in a field, in sunny weather, in some sort of privacy, they would like to wander around with no clothes on because it's good for you.

It exposes your whole body to sunlight. You get a lot of vitamin D. It's generally healthful. And my argument about sunbathing is, evolution made it really enjoyable. Maybe it's not all bad.

And there are some schools of thought in dermatology, which may have a case that actually weirdly, although it enhances the risk of skin cancer, it improves cardiovascular health. So there was a study, actually, among Swedes, where there was a higher instance of skin cancer among Swedish sunbed addicts. But they actually had a higher life expectancy, which they didn't expect. So quite often, you see, what we do is we measure the narrow effect of a behavior, but not the broader effect. And interesting in terms of how we might get things wrong.

By the way, I wouldn't do it on a beach. There were children present. And then if you go to the parks of Europe, particularly Germans, we'll just wander around naked. Now, I think at some level, if they're no children. Now, in the United States, that would be perceived in a completely different way.

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So quite a lot of these things are arbitrary. They're just, in other words, if doing something makes you weird, there is a point at which you reach the threshold, vegetarianism, veganism, et cetera, where it goes from being weird to mainstream. So what I'm saying is it's not an even process. And sometimes you never get to the threshold. I see what you're saying.

I know we're coming up to time here. I want to get to a couple of questions. What are the rules of good copy? If I asked you to teach me how to write good copy, how would you do that? I think a large part of it comes down to, you know, Michael Polanyi and his idea of a tacit scale, which is we know more than we can tell.

There are some generally good rules, which is right, conversationally, much more conversationally than people think they should write because everybody thinks they have to write a... Actually, I'll give you two examples of this. David Ogilvy, all his books are incredibly readable because I think he was a copyrighter first and an author second. His prose style is very good. And he also adopts a clever trick, which I've stolen, and which a few other people, is that he writes extremely plainly for the most part, but will throw in the odd Cescua Perdilian long word just to remind the reader that, you know, you're not an idiot.

You know, it's almost there to flatter the reader as much as it is to flatter the writer. Conan Doyle, I was talking to Rick Rubin about this. He and I both grew up on those Sherlock Holmes short stories, which are not only models of thinking and deduction and a fantastic lesson for mental gymnastics, I think. They're also... Kings Ams, I believe this.

They're one of the greatest prose writers in English language. Because bear in mind, a lot of that stuff's written in 1880. You read a lot of stuff that's written in 1880. What's that? What's that mean?

Oh, God, hold on. I'll have to go back to page 27 to work out who an Earth-Mr. Homer Angel is, or Miss Mary... Miss something subtle, isn't that one? At no point in reading a Sherlock Holmes short story have I ever had to go back a page to work out who somebody is.

In terms of just absolutely brilliant clarity, those are astonishing. But in terms of persuasion, there are various things. So you use generally verbs of movement. You use verbs in preference to adjectives and adjectives in preference to adverbs, I think. You tend to use Anglo-Saxon words rather than the romance word for the most part, without being silly about it.

You convert a feature into a benefit. There's also an element where sometimes all you need to do is tell people a fact. Now, I don't know any evidence about this, and I'd like to know. And I ask this question, which is, of the people who are anti-vaxxers during COVID, was there a difference between the people who are basically happy with the idea of a vaccine and the people who weren't partly driven by whether you knew that vaccination dated back to the 18th century and smallpox? In other words, it was a 250-year-old medical practice.

Or whether you thought it was some weird new-fangled thing that you couldn't possibly trust. I don't know. But sometimes, do you ever watch Prech Tell Walk on YouTube? You know, there's mathematical puzzles, geometry puzzles? I really recommend them, because weirdly, I find myself on YouTube watching people solve mathematical equations for fun, which I never thought I'd do.

But Prech Tell Walk, and I can't remember what it's called, something like something decision or something. Anyway, it's great, a little YouTube channel. It's not that little. It's a huge following. And sometimes, there's a geometry puzzle which looks completely impossible to solve until you just draw one extra line at which point the solution becomes obvious.

And so sometimes in marketing, all you've got to do is tell people a fact. It's not always about persuasion. It's not always about getting good. It's simply putting people in a state of knowledge or belief or conviction that this thing can make a difference to their lives. And by the way, you're always up against a problem, which is that the two human default modes that do what everybody else doesn't do when I'm done before.

For obvious reasons. What you've done before and what everybody else always does is not necessarily optimal, but it's much less likely to be catastrophic than trying something new that nobody else ever does. So we're kind of heard species and we're kind of habitual species. So in the marketing of something which is genuinely new, you know, the Tesla, the electric car, there is a degree of extreme anxiety, which you don't encounter when you repeat by or when you buy the brand leader. It's like a resistance you have to overcome.

You have to overcome it because just as a camera has a default mode, the human default mode is do what I did before, do what everybody else does. I feel comfortable doing that. Very, very rational default mode. There's nothing silly about that in terms of if you think about it, our evolutionary brain architecture, those two things make a lot of sense. But it does mean, and something I only realized about a year ago, 35 years after I started working in the business, is that as a consequence of that, big, innovative new ideas don't require less marketing, they require more.

Because you're asking people at the initial stages, you're asking someone to do something that nobody else has done, and you're asking them to do something they haven't done before, both of which create a kind of disquiet. And so, providing people with conviction and reassurance, quite often I suspect, by the way, in the early stages of technology, that happens one to one. That, you know, it was my brother, who's an astrophysicist, so he knows all the bloody maths about kilowatt hours and stuff. So my brother provided me with the reassurance to buy my first electric car, a fact. I don't think if he hadn't bought an electric car, I've now had three, would I bought an electric car?

Nah, probably not. Probably not. It will be my brother who persuaded me to get solar panels or a heat pump or something of that kind. But big ideas don't require... The classic geek idea is our idea is so good, it will sell itself.

Since your fellow Canadians do a battlefield, there's no big funded slack. He says the only real measure of innovation is behavioural change. But the only real measure of whether an innovation is significant is whether it both in first order and second order ways changes the way people behave. Now, an interesting question is, is AI at that point yet? And my second question is, the lesson of all tech is that loads and loads of geeks compete through for technological numerical superiority by some measure or rather.

And then someone else comes along with a cute user interface and makes all the money, basically Steve Jobs. Nobody's done that yet for AI. Now, maybe this weird thing that Johnny Ives concocting, which is some sort of weird pendant, which talks to your mobile phone, maybe that's what it is. There is this thing that sort of relates to that, which was Bill Gates had this saying, he's like the best... And I have friends living this now, the best technology doesn't win.

That's a very engineering point of view, because your judging technology by its engineering qualities rather than its human appeal. Oh, that's an interesting refilling. So there are people in every field. Like in the camera world, there are people called measure beters. They're denigrated as measure beters, because they're obsessed with the numerical qualities of the camera, you know, focal lengths and all that stuff.

And they don't take very good photographs. And saying the best... By the way, I mean, B2Max is the famous example where they failed to capture network effects. And in a world where they're network effects, yeah, by the way, the best technology probably often doesn't win. I think that's probably fair.

Everybody was competing to make a slightly faster IBM-compatible BC, but they were all gray and beige. Now, nobody in the tech world would go, the slight problem with this BC isn't the fact that the clock speed or the processing power or the RAM is insufficient. The problem is, if I put this device in any room of my house, it turns that room into an office. If you put an IBM PC, a gray IBM PC, in any room in your house, including the... You might as well put a fucking photocopy and a bloody filing cabinet in the room, right?

Whereas when Joy-Ive comes along and has that lickable... Yeah, I'm back. Yeah, I'm back. You can actually put that in any room of that. It's actually an answer.

It's a passion, Steve. It's a fantastic... It's an endowment. And so their failure to understand the wider context within which they were operating, which is the job of marketing, is exactly the reason nerds hate marketing, because they think in a perfect world, nerd metrics win out. But the consumer is much more bothered by the fact that when you get to the bottom of the iPhone scroll, it gives the little bounce.

Then, you know, you could. If we're to be absolutely honest, you could ridicule, you know, Ives and jobs over their obsession with, you know, bezels and chanffers and things like that. But of course, multiply that by a billion owners using the thing... Yeah. A hundred times a day.

OK, that's a hundred billion encounters. And that probably matters a lot more, in fact, than, you know... By the way, I mean, I'd lost Faith in Apple when they cancelled the car. Oh, interesting. Because I thought...

They had the brand power to create for places like New York and London, a form of micro transport, which was really, really cool, really efficient. The brand power you have, you see, you know, if you're Apple or Ford or whatever, people will buy a weird product from you much more readily than they will from Alpha Romeo. Right. Because they go, well, if Ford is doing it, you know, it must be OK. So one of the gifts of having a strong brand is your power to really disrupt and create new categories.

New categories of transit, for example, which we need, you know, don't we not? I'm going to fuck off 600 horsepower electric car. But when I go into London, I want to micro-lino or an e-bitty little thing, because that's appropriate to the task. And my argument is that they could have done something there. They could have used their power to do something.

And, you know, the finance people killed it, really. And there's a bunch of projects, something rather, you remember. But no, they're just changing the shape of things and making the camera a bit better. Camel guys, by the way, Johnny Gunter. OK.

I tend to buy... This is my ship by two electric cars as well. Always good reason to buy Korean stuff. Do you know why? Why?

Because they're going to do that anyway. The Koreans are going to make fantastic tech or fantastic cars. Regardless of the profit motive. Do you know why? Do you mind up the Japanese?

So they've got two motivations. OK, other people just trying to make money. Deep down. Do you know why the largest Episcopalian church in the world is in Seoul? No.

Right? This is really fascinating. I'm going to Seoul for the first time. I've never been. But the last four presidents of Korea have been very strongly like Catholic, Presbyterian.

Now, before the Japanese invasion, Christianity was a tiny, niche, missionary religion in Korea. When the Japanese invaded, the Chinese Christian population refused to acknowledge the divinity of the emperor. And some of them were martyred for refusing to effectively pay due respect to the divinity of the Japanese emperor. And therefore, it became the patriotic religion. Because it was seen as a deeply patriotic entity.

So I've got to hunt you deep down here. If you go back to the Ira, Genesis or something like that, there's a dual motivation here. Let's make a bit of money. And that's purely, so similarly, if you want to look for anthropological reasons to buy. An awful lot of German businesses are driven by sibling rivalry.

So Puma versus Adidas. Oldie Norse versus Oldie Souths. There's a whole weird family rift in the German current industry, which is too complicated for me to understand about Porsche and the family who own Pinchit. There are a whole load of families, which are kind of weird, warring families. And sometimes the family business has a motivation, which actually considers the winner.

But the consumer is exactly the winner in all this. But going back to that family business thing, that undoubtedly if you can harness other motivations alongside the profit motive, most people working for a company, unless you've bought them off with massive stock options, because they're in the senior management, most people don't get up in the morning to enrich the share owners. No, I didn't get up. I didn't get up every morning. I didn't know what a big shareholder is in my company.

It's probably like the state of Wisconsin DMV pension fund. Well, for the best reason, well, I don't wish that any ill will. But I didn't get up in the morning because I get why I really worry about those DMV people's pensions in Wisconsin. I can worry about customers. I can worry about colleagues.

That's a natural human motivation to serve those people. We always end with the same question, which is what is success for you? Just expanding the adjacent possible, that's a really pretentious article, but push the pebble a bit further. That's it. I mean, one of the reasons I do a lot of this shtick stuff is because the feedback I got was every now and then someone comes up to me and says, I made a different decision because of something you said.

Someone said to me, I bought my house because of you. I thought they might be about to hit me. He's still here from people that are first podcasts every two or three months. Somebody emails me and says, you know, because of that, oh, I love this. I never heard of this person. I went and looked him up and one thing I'm really clear on,

and we've made this mistake, all creative people who made this mistake, which is to go, who know that rationality silly? What you need is creativity. No, no, what you need is two strings to go. OK, this is a complimentary mode of problem solving. It works best in parallel with some rational or quantitative or data driven measures, but the quantitative and data driven measures should not be allowed to crowd it out.

And so when I say the reason someone bought a house because of me, as I said, when you're looking for a house, don't optimize because everybody will want their house. Instead, find something the house has which most people won't like, but you don't care about. Next to a pub. Now, I'm not saying extra rough pub. I don't want to have fights outside my house, but most people, particularly older people, would hate the idea of being extra pub because they crapped all about noise and the beer garden and all that stuff.

I personally, the noise of a pub, a good, happy pub is music to me. I don't get a sleep before midnight anyway, so it's not going to keep me awake. Railway line, personally, to me, it's a bonus to most people that's negative. Go and look for those things where you can arbitrage what's possible. That would be my attitude. Now, similarly, if you've got a problem to solve,

don't purely define the problem in psychology, free terminology. Just as in America, you have a temperature and you have a feels like temperature, which is very, very, very intelligent thing because what makes us feel hot is not just the ambient temperature. It's a combination of temperature, humidity, breeze, and I think there's one other factor. When they do the feels like temperature, there's something like temperature, so many feet above the ground that they factor in. Now, when I'm going outside, I'm not going to do chemical experiments.

I don't need to know what the ambient temperature is. I need to know, will I feel hot? And in the same way, I think there's something really important here, which is that do not define an objective which is designed to serve human beings without considering psychological factors because you might be able to solve your problem very, very cheaply and efficiently by changing the psychology, not by changing the technology. And provided people looking at both with a reasonable amount of imagination. I'm not angry with a bad bit.

I'm only angry with the countenance and lawyers and economists, not because they do what they do, but because they have too much power doing. And they've achieved a kind of monopoly over decision-making, which I don't think they have a reasonable claim to. That's a brilliant place to end. It is not about face to end. Thank you very much. We're not going to wait nine years before we get back to you.

How often are you in London? Once first year. Oh, we must meet up then. That was fantastic.