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Killer marketing tricks Amex, Apple and Domino's use on you - Rory Sutherland — Transcript

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0:00There are two ways of making money. You
0:02can either make desirable things or you
0:04can make things desirable.
0:07And there's not much you can do about
0:09the laws of physics. Whereas the laws of
0:11psychology are magnificently malleable.
0:20>> We know about you, but do you know
0:22what you're getting into at all?
0:24>> Up to a point. I know of the podcast
0:26quite well.
0:26>> I know that you're like recently a
0:30kind of a social media star. You even
0:31though you've been killing it for
0:32decades, I heard a story about how
0:34someone just started like uploading some
0:36of your talks and it went viral and then
0:37you said, "Maybe I should do this."
0:39>> It happened I think accidentally and
0:41I've kind of reverse engineered what
0:43happened, which is that most marketing
0:46people talk about what they do and my
0:50argument is of necessity I started
0:52talking about how we think and
0:54consequently,
0:55you know, the willingness to accept the
0:58fact that surprisingly all arbitrary
1:00seeming trivial decisions may have a
1:03monumental effect on is actually
1:06necessary to have a proper understanding
1:08of living in a complex
1:10inter- you know, interconnected system.
1:12You know, if you believe there are
1:14important strategic things and then
1:16there are trivial things which you
1:18delegate down to junior people and in
1:20which you have no interest whatsoever,
1:22fundamentally I think you're missing the
1:24point because the real world isn't like
1:27that. It's you know, it's full of
1:28butterfly effects, all of the bullets,
1:31you know, you know, small things.
1:33Alchemy I call my book because you can
1:35turn lead into gold. You can literally
1:38take something which is seen as a
1:39product disadvantage
1:42and turn it into a strength.
1:44>> I think you had a good example of that
1:45with uh Have you ever heard Sean the
1:48story of how horsepower kind of came to
1:50be?
1:51>> No.
1:52>> Can can tell that story?
1:54>> So one of my one of my great contentions
1:56is that when we look at great
1:58entrepreneurs or great inventors, Jobs,
2:00you know, if you say Edison, Ford, Watt,
2:04Boulton, they tend to be written
2:07up as historians as inventors. And my
2:10argument is that an
2:13invention isn't an innovation until it
2:16changes behavior.
2:18I think it's Stewart Butterfield of
2:19Slack who said something very similar.
2:21You know, the only real measure of the
2:23effect of you're having on innovation is
2:25the extent to which you change behavior.
2:27And you can invent anything you like,
2:29but if you can't get anybody to adopt
2:30it, it's an invention, but it's not an
2:32innovation.
2:34And Watt was selling steam engines to
2:37mine owners.
2:39And the purpose of the steam engine was
2:40to replace the horses they used to walk
2:43round and round in circles draining the
2:45mine so that miners could go in and
2:47effectively mine coal, slate, coal,
2:50whatever without drowning.
2:52What he realized is that you could you
2:54as an engineer, you could talk around,
2:55you know, the calorific capacity of the
2:57boiler or the length of the piston
3:00stroke or whatever, and these people
3:01didn't want to know.
3:03So, Watt and Boulton amongst themselves
3:06said, "Well, what do these people really
3:07want to know before they're prepared to
3:08buy a steam engine?"
3:11They said, "They want to know how many
3:12horses they no longer need to feed if
3:14they buy a steam engine. How many horses
3:16can I get rid of if I buy the steam
3:18engine?" So, Watt went out and invented
3:21a unit we still use today, which is
3:22called the horsepower.
3:24And the reason it's not named after a
3:26famous scientist like the ohm or the
3:27Newton or the coulomb or the Watt for
3:30that matter or Celsius or anything of
3:32that kind is because it's a marketing
3:34unit. It was invented for marketing
3:36purposes because he could then go and
3:37say, "If you buy a 25 horsepower steam
3:39engine, you can actually get rid of 75
3:42horses." Cuz I think the horses worked
3:44in shifts, so it does the work of 25
3:46horses, but it does it 24 hours a day,
3:49so you can now get rid of of 75 horses.
3:51And these people would go scribble
3:53scribble scribble scribble scribble cost
3:55of horses cost of feeding horses cost of
3:57looking after horses and you know on the
3:59back of an envelope they could then go
4:01well I'll have two of those. By the way
4:03we went even further than that. I mean
4:04the industrial revolution was a
4:06marketing revolution every bit as much
4:08as it was an industrial revolution
4:10because there was no point in being able
4:12to produce things in abundance if you
4:14couldn't create corresponding demand.
4:17So you know one of the things about the
4:1818th and 19th century in England was it
4:21was an absolutely pioneering period in
4:23terms of how people marketed things. And
4:26that included the steam engine where
4:28Watt and Boulton would go to a mine
4:31owner now let me get this right some
4:33people were already using Newcomen
4:35engines which were less efficient steam
4:37engines than the Watt engine.
4:39And Watt and Boulton would go along to
4:41the people who were already using these
4:42inefficient steam engines and this is
4:44how they priced their their own steam
4:46engine. They said we'll supply it for
4:48free you pay us a third of the money
4:52that you save on coal.
4:54So it was literally hardware as a
4:55service. Bear in mind this was 1775.
4:58I mean years later Rolls-Royce started
5:01charging airlines for jet engines in the
5:03same way effectively. You pay us for
5:04every hour the engine is in service. Now
5:07what was ingenious about that was of
5:09course it aligned the interests of the
5:12people selling the steam engines and the
5:13people owning the mines because the
5:15people in the country where coal was
5:16most expensive most needed to make
5:20to save money on coal. That was
5:21Cornwall. Would tip where those there
5:23were tin mines quite a long way away
5:25from any available coal fields so coal
5:27was more expensive there. And so the
5:29first Watt engines tended to be
5:31installed
5:33in places where coal was most expensive
5:35which meant the mine owners saved more
5:37money and Watt and Boulton made more
5:39money. So they were actually capturing
5:40the upside. Whereas if all you'd done is
5:43said yep it's 100 guineas for a steam
5:45engine you wouldn't been capturing any
5:47of the upside. I mean, this was you
5:49know, I have to say this this was pretty
5:51smart stuff. I mean,
5:53what one of the worst mistakes you can
5:55make is thinking that people 500 years
5:57ago, 300 years ago, 200 years ago were
6:00thick. They were very, very clever.
6:03And probably they had less time staring
6:05at smartphones and more time to be
6:07clever, to be absolutely honest. But
6:09something I discovered the other day is
6:10the Orison straight in Denmark. The
6:13Danish crown wanted to charge
6:16effectively customs duty on any cargos
6:19passing through the straits of Denmark,
6:21and they had a kind of stranglehold over
6:23it.
6:23And the original thing was they'd send
6:25people on board and say,
6:27uh, "We'll estimate the value of your
6:29cargo and we'll charge you 10%."
6:31And they thought this is a lot of
6:32bother. So, they said they said to the
6:34people passing through the Orison
6:36straight, "This isn't like 1350, okay?
6:38It was
6:39uh you tell us what your cargo's worth,
6:41okay? Uh, we'll charge you 10% on that.
6:44Oh, and by the way, every now and then
6:47we'll randomly buy your cargo at the
6:49price you quoted."
6:50>> Dude, that's like how we pay taxes.
6:52>> It's ingenious, [laughter] isn't it?
6:53Yeah. You you can do property valuation
6:55that way, you see? It simply says, "You
6:57tell us what your house is worth, and
6:59the only deal is we have the right to
7:01buy your house for that amount of
7:02money."
7:03>> What's funny is, um, I think that in
7:05America, I think it's like
7:07I think 0.4%. I could be getting the
7:10numbers off. It could but it's like
7:11between 0.4 and like 2% of Americans get
7:13audited every year.
7:15And like if you do the math, it's like I
7:17don't know, man. It might be worth
7:18pushing it and just get audited once
7:20every, uh, 30 years.
7:22>> actually right. Yeah. I mean, having
7:24said that, an IRS audit, from what I've
7:26heard, is a living nightmare, isn't it?
7:28>> Yeah. Yeah. Yeah, I'm not actually being
7:30serious. You know who needs the
7:32modern-day horsepower is all of the AI
7:35products. You know, if you if you if you
7:37have Claude and you have ChatGPT,
7:39essentially they're all making the
7:40same-looking product, right? It looks
7:43like a chat interface and then it you
7:44type something and then it gives you
7:45something back. And so they're not
7:47differentiated in the experience or the
7:50the look and feel of the product that
7:52much. And then they come out with these
7:54models and each one has a different, you
7:55know, Opus 3.0 light, heavy, expert,
7:58pro, plus and you're you you have no
8:01idea which to use and then they use
8:04benchmarks that are it's like on the
8:06crud lightweight benchmark of coding
8:09expertise we're at 3.779.
8:13Why don't they just have the equivalent
8:14of horsepower? Why don't they just write
8:15IQ?
8:16>> Yeah, or when like Apple was like the
8:18iPhone instead of saying like it's X
8:20amount of megabytes of gigs, they said a
8:22thousand songs in your pocket.
8:23>> A thousand songs in your pocket. Now,
8:25this is the classic thing which is that
8:26engineers,
8:28whether they know it or not, deep down
8:30just want to impress other engineers.
8:32Okay?
8:34And so a psychological solution in their
8:36engineering community would be seen as
8:38cheating. So, I'll make the same point
8:40about electric cars which is you have
8:42this thing called range anxiety and
8:44we're spending billions and billions of
8:46dollars a year trying to produce
8:47batteries with a higher energy density.
8:50It's a really good thing. I'm not I'm
8:51not saying, "Hey engineers, you're
8:52wasting your time." But
8:55isn't it cheaper just to reduce anxiety
8:57rather than to increase range? Because
9:00if the way to reduce range anxiety is
9:02always to increase range, we'll end up
9:04with electric cars being heavier than
9:06they need to be, more expensive than
9:08they need to be and you know, with 50
9:10kilowatt hours sitting outside your
9:11house 95% of the time effectively doing
9:14nothing. So, reducing anxiety and I
9:17realized by the way how irrational this
9:19is. Well, I explained the story which is
9:21it it fascinates me because
9:23one of the things I think that helps, if
9:25you want to do this, is to have some
9:27degree of metacognition.
9:29Which is you don't just think, you think
9:31about your own thinking. It It's
9:33apparently true of fighter pilots. The
9:36really good fighter pilots have good
9:38cognitive skills, but they also have
9:39good metacognitive skills. They don't
9:42just go, "I'm going to do that
9:43instinctively." but they also ask, "Is
9:44there a reason why I shouldn't be doing
9:46that in this instance?" Okay? Or this
9:49time it's different, as it were.
9:52And so, my wife's car is a Mini Cooper
9:54Electric and it's got about a I guess
9:57it's about
9:58uh 28-30 kWh battery and a range of
10:01about 100 mi.
10:02And I've got the Lotus Eletre, which is
10:05a 112 kWh battery, range of about 300
10:07mi.
10:09And I got back from quite a lot of
10:10driving. I'd been down to Wales and
10:12back.
10:13And the car's down to 16%, okay? And I'm
10:16getting And all the lights have gone
10:17amber cuz it's at 16%, so I'm get I'm
10:20I'm going white knuckle on this. I'm
10:22going, "God, I'm down to 16%. Oh my
10:25goodness, I'm down 16%."
10:27Then I look at the actual range and it's
10:29about 58 mi. Now, my wife's car, that's
10:3256%.
10:35Okay? And my wife's car, we drive around
10:37at 56%, i.e. with a range of 56 mi, all
10:40the time without the slightest mention
10:42of anxiety.
10:43But when that's expressed as 16%, not 56
10:46mi, okay? I'm suddenly having
10:49conniptions and really panicking. Now,
10:52what that suggests is that range anxiety
10:55is much more a factor of psychology than
10:58it is of physics.
10:59And the problem with trying to increase
11:01battery range is that laws of physics
11:05are actually kind of set in stone to a
11:07large part, okay? There's not much you
11:09can do about the laws of physics.
11:11Whereas the laws of psychology are
11:13magnificently malleable. And so, that's
11:15the thing that really interests me
11:16because we spend a lot of time
11:18effectively trying to uh work within the
11:21laws of physics, which are immutable.
11:24When it would be a lot easier just to
11:25say, "Actually, you know, why don't we
11:29Why don't we take this undesirable thing
11:31and make it cool?"
11:32Right? [laughter]
11:33>> You know, this is the uh elevators need
11:36to go faster. No, no, no, just put a
11:37mirror in the elevator.
11:38>> a mirror. Just put a mirror. People will
11:40be happy looking at themselves.
11:42And it's actually, by the way, it gets
11:43quite philosophical this because you
11:45suddenly realize that
11:48literally trillions of dollars of effort
11:51are invested by businesses every year
11:55in pursuit of metrics which the customer
11:59may not notice or care about, whereas at
12:02the same time no money is spent
12:05on things which would actually make a
12:06huge difference. There are relatively
12:08easy wins here for both government and
12:11the private sector in saying
12:13I'll give you an example of this. So, I
12:15call this reverse benchmarking. In other
12:17words, you look at all the metrics that
12:19everybody cares about in the category.
12:21You find a metric that's been completely
12:23and ridiculously neglected, and you
12:25double down on that thing. Now,
12:28I first came across this in Will
12:30Guidara's fantastic book Unreasonable
12:32Hospitality.
12:33He goes to the number one restaurant in
12:35the world. All of his team say we ought
12:37to copy this, we ought to do that thing
12:39with the napkins. I really like what
12:40they do in the bathrooms with the
12:41scented chopsticks. Let's copy that. And
12:44Guidara goes, "Not going to copy any of
12:46that because two One, we can't afford
12:48to, and two, they're already doing it.
12:50What I want to know from you is what out
12:51of this evening at the world's best
12:53restaurant, Michelin three-star
12:55restaurant, something like that. What
12:56was a bit disappointing? What was a bit
12:58meh?" And they said, "The coffee was a
13:00bit average. You know, it was nothing
13:02special. And the beer drinkers, probably
13:05the chefs who'd gone along, got treated
13:08really crappily, shabbily compared to
13:10the wine drinkers."
13:11So, he goes back to his own restaurant
13:13and he appoints a coffee sommelier and a
13:15beer sommelier.
13:17And he says, "Your job is not just to
13:19benchmark against these people, it's to
13:22hit it out of the park." Now, if you
13:23think about it,
13:25taking something that's bad about the
13:27category,
13:28not not saying we need to raise our
13:31level to the category average, but
13:33instead doing it spectacularly well,
13:36something that nobody's expecting. That
13:38was what Apple did, I would argue, okay?
13:40That's what Buc-ee's did. I don't know
13:42if you're Buc-ee's Where Where are you
13:44in the US? [clears throat]
13:44>> Yeah, I live in Texas. We We We're big
13:46Buc-ee's guys.
13:47>> Yeah, okay.
13:49Basically started with an insight around
13:51women's restrooms. Now, you could have
13:52just had averagely clean women's
13:54restrooms. You would have benchmarked
13:56Never mind that. They're like the bloody
13:57Hall of Mirrors at Versailles, right? I
13:59mean, I haven't been in them, but I The
14:00men's restrooms are pretty good, but the
14:02women's ones are apparently sensational.
14:04And
14:05my argument is that, you know, if you
14:07Let's say you're a hotel, okay?
14:09Everybody will focus on the rack rate
14:11and the this and the size of the room
14:13and, you know, and so on and so forth.
14:15Have you ever had a ho- even a really
14:19expensive hotel, a laundry experience
14:21that isn't a bit of a pain in the ass?
14:23You know, you've got to fill in a form,
14:25you've got to put it in the bag. By the
14:26way, if you get your laundry back, they
14:28never replace the bag the second day.
14:30So, if you want a second lot of laundry,
14:32you've got to ring up and ask for
14:33another bag and another form. Okay? Now,
14:37what would happen if a hotel If I stayed
14:38in a hotel, which was I'm not saying you
14:40could be totally [ __ ] okay, as a hotel,
14:43as long as you have a brilliant laundry
14:44service.
14:46You know, Apple is, you know, on a par
14:48technologically with other
14:50entities, but it's sensationally good at
14:53the emotional component. You know,
14:55Buc-ee's is what we But it's it's it's a
14:57thing apart. You know, U- Uber doesn't
14:59have cabs that smell of urine. I'm not
15:01suggesting you can neglect the other
15:03stuff.
15:04But I think what you can do is that when
15:06you cause the cu- customer to pay
15:08attention to something, it consequently
15:11becomes more important.
15:13Because it's surprising
15:14and because it it's attention-grabbing,
15:17it therefore suddenly uh causes the
15:20consumer to completely re-weight
15:23their utility function. Now, one of my
15:25examples would be car rental. I don't I
15:27don't know if you rent cars at airports,
15:29presumably occasionally.
15:30>> Hate doing it. Yeah.
15:31>> Yeah, exactly. Hate doing it. Now,
15:33once you've driven out of the car park,
15:35it's the same [ __ ] It doesn't really
15:37matter.
15:38Maybe you can make rental return a bit
15:39better, but let's not worry about that,
15:40okay?
15:42I just ask the question, why is it that
15:44when I book a taxi for $100 to pick me
15:47up from the airport here in London,
15:49they meet me at arrivals and even push
15:51my trolley with luggage to the car park,
15:54yeah? But if I rent a car for $600, I've
15:57got to find and queue at the car rental
15:59desk.
16:01Then I've got to go and find, often in
16:02like 110° heat, I've got to go and find
16:06the car, and then, by the way, there is
16:08there isn't even a laminated sheet of A4
16:10paper in the car saying, "This is how
16:12you open the fuel filler cap. This is
16:14how you release the handbrake." You
16:16know, there's nothing, right?
16:18Once you're in the car, about 10-20
16:20minutes in, you start to enjoy it. But
16:23that initial bit, which nobody seems to
16:25be measuring,
16:26is the bit that's terrible. Now, in some
16:28cases, I would literally happily pay 100
16:31quid if the deal is, "We meet you at
16:34arrivals, okay? We take the luggage to
16:36the car. We hand you the keys. We answer
16:38your questions about how the car works."
16:40If, by the way, they also turn the air
16:42Now, you could do this with electric
16:43cars. If they also turn the air
16:45conditioning on 10 minutes in advance,
16:48okay? Now you've done something which is
16:51Now, there's that thing What What's
16:52What's that funny thing? Turo, isn't
16:53there? I think.
16:55Which because it's humans might might be
16:57able to create something a bit like
16:59that.
16:59>> Yeah, they I I use Turo all the time.
17:01They have a thing where it will the the
17:04owner will drive to your home.
17:06>> And because of that, by the way,
17:09when I rent cars at large American
17:10airports, at Phoenix or somewhere like
17:12that, I actually arrive at Phoenix, take
17:15a taxi to the hotel, and then book the
17:17car the next day. Because the downtown
17:19experience of car rental with no luggage
17:22is so much better than the airport
17:24experience with luggage.
17:26>> You know, we asked you a question
17:27earlier of like, so how do you do it?
17:28And it sounds like one thing that I'm
17:30picking up is, you know, you pay
17:31attention to what irritates you. And
17:34instead of just complaining about it,
17:36that's a great source material. I think
17:38Jerry Seinfeld says, "Irritation is
17:40innovation." I think when he was
17:41creating his uh his talk show, it's
17:44because he had been for years he'd been
17:45famous, he got invited on late night
17:46talk shows, and he would go and it's
17:48just every if you look at every late
17:49night talk show, it's the exact same.
17:51There's the guy at the desk, there's the
17:52cheesy music, there's the band guy that
17:53they have, you know, sort of forced
17:55laughter with. And when he created
17:57Comedians in Cars Getting Coffee, it was
17:59the equivalent of a talk show. He's
18:00like, "What's the opposite of everything
18:02I hate about those things?" And then he
18:04created something and I think licensed
18:05it for like a hundred million dollars to
18:07Netflix,
18:08starting with irritation at the way that
18:10this thing always works.
18:11>> There's a British show, I don't know if
18:12this exists in the US called Room 101.
18:15>> I don't know it.
18:16>> Room 101 is, I think it's from Orwell.
18:18It's the room to which you banish things
18:21that you really want to get rid of. And
18:23people will come in and just have a
18:24rant, and it will be everything from,
18:26you know, uh potholes, slightly boring
18:29choice, to cummerbunds, or something
18:32similar like that, you know. But
18:34something that people just think is
18:35utterly unnecessary and needs to be
18:38eradicated. And you're absolutely right,
18:39irritation is innovation.
18:41And so, one of the things is that I
18:44would argue that um there are in a
18:46sense, there are two really valuable
18:48things, one of which is what you might
18:50call the meta stuff, which is what are
18:53you really in the business of? Now,
18:56you know, Nassim Taleb and I had this
18:58conversation about why you actually buy
19:00the things you buy. And my joke is, you
19:03know, my jokes were, "The reason you
19:04have a swimming pool isn't to swim in
19:06it. It's so that you can walk around
19:08your garden in a bathing costume without
19:10feeling like an idiot, okay? So, on a
19:12hot day, you can walk outside and and
19:15lie outside without wearing many clothes
19:18without feeling stupid, okay? And a
19:20dishwasher isn't principally valuable
19:23cuz it washes your crockery and plates.
19:26It's valuable cuz it keeps them out of
19:27sight.
19:28But when you when you look at these
19:30things and go, "Maybe it's not about
19:32this, maybe it's all about that." What
19:34you have to acknowledge is two things, I
19:35think. One,
19:37you've got to let go of two handholds at
19:39once, which is what makes it difficult.
19:41One is economic logic. You know, if we
19:43reduce the price, more people will buy
19:45it.
19:46Economic logic is has very bad
19:48predictive value, I think, in the you
19:50know, in consumer behavior.
19:52And the other thing you've got to you've
19:54got to partly abandon is conventional
19:56approaches to market research.
19:59Where you you think that we've asked the
20:01customer what it is they want and they
20:03will tell us. Because most of what we
20:05feel isn't even thought, let alone
20:08spoken.
20:09And And also, there are very very large
20:12areas of consumer behavior which are
20:15they may be meta-rational at some level,
20:18but
20:18nobody will ever tell you, "I would buy
20:21that product if it were more expensive."
20:24But there are
20:25plenty of documented cases
20:28of exactly that happening.
20:30>> I think you you you're buddies with the
20:32Daniel Kahneman uh thinking
20:34>> Kahneman. I
20:35I I Yeah.
20:36>> And he in his book Thinking Fast and
20:38Slow, I don't know if you read that,
20:39Sean, but one of his like one of the
20:40famous examples was The Economist, I
20:42think it was, or something like that.
20:44They like do uh this thing where they
20:45say, "You can get The Economist
20:50for $20 a month and you get all of these
20:52things. And if you get the other version
20:54of The Economist, you get all of these
20:55things plus digital access."
20:57>> Paper Paper only, paper plus digital,
21:00and digital only. And paper only and
21:02paper plus digital were the same price.
21:04So, you looked at that and your mental
21:06frame was, "If I get the if I get the
21:08paper version, I'm getting the digital
21:10one for free. Vanishingly few people
21:12ordered paper only. Now if you remove
21:15the paper only one,
21:17so you you know, effectively you had
21:19digital or digital plus paper,
21:22vanishingly few people chose the one in
21:23the middle. But the presence of the
21:25middle option increased by about two or
21:28300% the number of people who subscribed
21:31to paper plus digital instead of
21:33digital.
21:34It I think it shifted the ratio from one
21:36direction to the other. And by the way,
21:38that's pretty valuable to the economist
21:39because my hunch is that their paper
21:42circulation is much more valuable in
21:44terms of advertising revenue than their
21:45digital circulation is.
21:47>> One of the best Ogilvy ads, my favorite
21:49ad, is David Ogilvy writes this letter
21:52and it's I think it's called how we
21:54write ads at Ogilvy. And he like has
21:58this like long, maybe 1,000 or 2,000
22:00word essay on like the 18 points on how
22:04they create ads that are effective. And
22:06some people might be like, well, why
22:07would you give your secret away? And he
22:08was like, well, I'm going to teach them
22:10how we think.
22:11>> There's also really interesting aspect
22:13in business, which is if you give your
22:16secrets away, you assume that people
22:18will copy you.
22:20And the odd thing is they don't. And
22:22quite often the reason is they're just
22:24culturally incapable of doing it.
22:27So for example, if you point out that
22:29physical direct mail is very successful
22:32for a business,
22:34you'd think that your competitors would
22:35go, well, that's a useful learning. I
22:37must do some more of that. What you then
22:39discover is no, actually they're
22:41culturally they just find using, for
22:43example, an old-fashioned advertising
22:46medium simply too difficult to justify
22:49or too unfashionable or whatever it may
22:51be to be comfortable with it. So even if
22:54you just give away the evidence of how
22:56you do what you do, what you find is
22:58that you're copied much less than you'd
23:01expect.
23:02>> You said you study
23:03how we think or you like to talk about
23:05how we think versus what you do. Let's
23:07break that down. Okay, so
23:10if I just asked you a very simple
23:11question that's probably very broad and
23:13you could take it any direction you
23:14want. How do we think?
23:16>> I think what happens is that small
23:19businesses, family-owned businesses to
23:22some extent, founder-led businesses are
23:24an exception here.
23:26What's interesting is simply being able
23:29to understand that value is
23:32not really produced in the factory, it's
23:35produced in the mind.
23:36And that
23:38there are two ways of making money. You
23:40can either make desirable things or you
23:42can make things desirable.
23:45And each of them is as profitable as the
23:47other. For some reason, once a business
23:49fit hits a certain size, it gets focused
23:52on what it does,
23:54not what it means.
23:56And I think there's a kind of invisible
23:58loss there. Now, similarly, at the same
24:01time, I think those businesses lose the
24:04capacity to innovate as well. Something
24:07Something rather depressing happens,
24:08which is uh you effectively get caught
24:12in a mindset where you
24:15probably have a mental metaphor for your
24:17business. You You're looking at it as if
24:19you are an engineer looking at a piece
24:21of machinery.
24:22And it's reductionist. It's about
24:24optimizing the parts rather than
24:26optimizing the whole.
24:28And at some level, I think, uh that
24:31model
24:33becomes unhelpful. But also, what
24:35happens, I think, is that you become
24:38more and more uncomfortable with
24:40uncertainty. And this is where it gets
24:43quite interesting. There's a wonderful
24:44story I always tell, which is Richard
24:46Thaler, the Nobel Prize-winning
24:48economist and behavioral economist, the
24:51author of Nudge.
24:53He once spoke to a
24:55board of about 10 people, very large
24:57company. And he goes to the eight heads
25:00of the largest divisions of this company
25:02and he asked them all simultaneously a
25:04question. Would you take a decision if
25:06it had a 50% chance of increasing your
25:08profits next year by 50% and a 20%
25:12chance of reducing your profits by 30%?
25:15And six out of the eight of them said,
25:16"No."
25:18And Thaler goes back and says, "Well,
25:19you know,
25:21you're all good enough mathematicians, I
25:23assume, to realize these are highly
25:25favorable odds. To a gambling man, you
25:27know, this is a very, very good bet.
25:31And yet you declined to take part. Why
25:33is that?" And they replied, six out of
25:34the eight of them, "Uh because
25:37uh 20% of the time or 30% of the time
25:39I'd lose my job."
25:41And then the interesting thing happens,
25:42which is the chief executive is sitting
25:44at the end of the table and looks aghast
25:46at the eight people and goes, "But I
25:48wanted all of you to take those odds
25:50because net net, in aggregate, we'd
25:54almost certainly end up massively better
25:56off.
25:57Yes, two divisions, one division, might
25:59have a slightly disappointing year, but
26:02four of them would perform
26:04spectacularly."
26:06And you realize that the way that
26:08businesses are structured, as you push
26:11responsibility and accountability
26:13further and further down the
26:14organization, they become more and more
26:16risk averse and they become more and
26:17more uncertainty averse.
26:20So, they would prefer a definite 5 to
26:2310% to a probabilistic a 50% chance of
26:2750%.
26:29And what happens then is that you
26:32fundamentally you become highly
26:34conservative. You're more worried about
26:35downside avoidance than you are upside
26:38opportunity.
26:39And as a result, obviously both
26:42innovation and marketing, I would argue,
26:44are fat-tailed activities where 10% of
26:47what you do is probably more valuable
26:49than everything else. You know, you
26:51can't tell in advance which 10% it's
26:53going to be. They are processes of
26:55exploration and discovery.
26:58And what you do is you get rid of the
26:59discovery layer
27:01in the pursuit of efficiency. And in the
27:04short-term it looks like a great idea.
27:07But in the longer term it's it it proves
27:10fatal, I think, because you've lost the
27:12capacity to adapt, to reinvent, to
27:15reposition in pursuit of the occasional
27:18um the occasional breakthrough.
27:20>> We we have um a very startup oriented
27:24audience of which a lot of people are
27:26founder-led businesses or or they want
27:28to be. So, we could talk about like how
27:29big companies turned around, but what's
27:31an example of a startup or small company
27:34that you look at and you're like, "Oh,
27:36they nailed it and here's why they
27:38nailed it." Even though if if this was
27:39pitched at a big company, this would
27:40never have worked, but here it is
27:42kicking ass.
27:43>> I mean, the example that I always
27:45feature in my book is Red Bull, which is
27:47an example of a business that makes no
27:50sense. In other words, you could only
27:53really justify Red Bull on the basis of
27:55intuition. There was some pre-existing
27:57popularity in Thailand where I think it
27:59was bought by lorry drivers to keep them
28:01awake at night. Okay?
28:04But someone there was capable of making
28:06the leap of imagination
28:08into into an uncertain future
28:11where a drink which cost a lot of money,
28:13came in a tiny can, and research told
28:15them consumers basically found
28:19mildly repellent. Okay?
28:21In defiance of all the rational odds
28:24this had potential. And it's worth
28:26noting that generally there's always a
28:28lot of data from the past cuz all big
28:31data comes from the past. There
28:33generally isn't much data about the
28:34future. There two problems there, one of
28:37which is if you insist that every single
28:39decision is based on data, all your
28:42decision-making has a status quo bias
28:44because all your data comes from the
28:46past. There isn't any data about the
28:48future. The second problem that happens
28:50is that the the things you tend to focus
28:52on tend to be the same things that all
28:54your competitors are focused on.
28:57Which means that you, unwittingly
28:59perhaps, become more and more similar to
29:01every other business in your category,
29:04which means you become more and more
29:05indistinguishable and less and less
29:07distinctive, which effectively means you
29:10get involved in a kind of race to the
29:11bottom. You create kind of red water
29:13competition.
29:15And one of the things I would say is an
29:17almost unfailing trick
29:19to innovate, both to innovation and to
29:22brand building, actually, is to find the
29:25metric which your competitors have
29:27neglected, which they don't even bother
29:29to measure, or which is difficult to
29:31measure.
29:33Quite often it's an emotional metric
29:34rather than a, you know, a time, space,
29:37cost, price, distance metric.
29:39>> What's an example of that?
29:41>> Well, Apple.
29:42Uh in that everybody was asking the
29:44question, "What can a computer do?" in
29:46Silicon Valley at, you know, in the
29:481970s. And Steve asked the question,
29:51"Yeah, but what does it feel like while
29:52you're doing it?" He asked aesthetic and
29:55emotional questions in an industry where
29:58everybody was focused on technological
30:00questions.
30:01But another example, the Uber map is an
30:04example of that, where riding in an Uber
30:06is more or less the same as riding in
30:08any other taxi. What Uber completely
30:10transformed was the experience of
30:13booking and waiting for a taxi.
30:16And by the way, [clears throat] at the
30:17other end of the journey, the experience
30:18of paying for it.
30:20So, the Uber map, whether this was
30:21intentional or whether it was just some
30:23software guys thinking it'd be a cute
30:25thing to do. When you booked a taxi by
30:27telephone, you rang up having no idea of
30:29what the likely availability or wait
30:31time would be. In many In many cases
30:33they say, "Yeah, we'll have a car for
30:35you in 10 minutes." You kind of go, "Oh,
30:36it's too early." You know, you had no
30:38idea. You had no expectation of car
30:41availability. And then when you'd booked
30:43the car, you had no idea when the car
30:44was going to show up, and you'd have to
30:46hover around on the sidewalk, you know,
30:49waving at any likely-looking car passing
30:51car that appeared to be looking for your
30:52address. Suddenly, Uber changed all that
30:55because it gave you an estimate of
30:57availability, it gave you an estimate of
30:58price,
31:00uh it approved your payment in advance,
31:02and then it showed you on a cute map
31:03what the license plate number was of the
31:05car and where it was and how long it was
31:08going to take to get there.
31:09>> The funny part is I think I remember
31:11Sean and I lived in San Francisco when
31:13Uber first came out, and uh you would
31:15pull up your app and you'd be like, all
31:16right, you'd see the cars driving around
31:18you. And you'd be like, oh, there's one
31:20nearby, maybe I could snag it. And I
31:22don't think that was even real. I think
31:24those were fake.
31:25>> I've also heard the same thing about
31:27pizza delivery.
31:29Uh which is when they say it's in the
31:31oven, you know, it's being you know,
31:33it's being prepared, it's in the oven.
31:35>> You just have to add probably, it's
31:37probably in the oven.
31:38>> Uh to be honest, I don't think they're
31:41actually scanning a barcode on every
31:43piece that goes in. There is a component
31:45to it, however, which is that if you
31:48feel that progress is being made,
31:51McDonald's probably make a and KFC
31:53probably make a mistake here in that if
31:55you order on screen at McDonald's, it
31:57basically says
31:59uh in preparation, ready for collection.
32:02And they could probably play a game
32:04there where they say, uh you know, being
32:06prepared, uh you know, on the you know,
32:09on the tray. They could give you an
32:11impression of forward movement because
32:13it's all to do with dopamine and and
32:15sort of uh effort and reward, and
32:17consequently, it's a little like if
32:19you're imagining a chimp hacking away at
32:22a termite mound, if it comes across one
32:24or two little termites, you know, just
32:27small pieces of reward, it'll keep
32:29going, it'll feel content to keep on
32:31going. Whereas if you have a long period
32:33of effort without any
32:35any seeming reward,
32:37fundamentally, the experience is very,
32:39very different. I mean, I remember a
32:41brilliant case of this. And it's simply,
32:43you know, it's it's it's mind hacking. I
32:45I make no apology for it. I probably
32:48would defend in court the practice of
32:52Domino's creating
32:54somewhat fictitious delivery cycles on
32:57the grounds that it simply makes people
32:59feel better. Now, the the having the
33:01cars circling around, I've heard both
33:03stories that they are to some extent
33:05accurate or that kind of what you might
33:08call they're figurative. So, they they
33:10they show you car density without
33:12actually showing you the actual
33:13accurately location of a car. I've heard
33:15various stories about this. There are
33:17also, by the way, elevator buttons
33:20door close
33:22which are placebo buttons.
33:24So, they don't actually speed up the
33:26closing of the doors of the elevators at
33:27all, but they give impatient people in
33:29the elevator something to do.
33:31>> true or is that a rumor?
33:32>> No, no. They they it it's effectively
33:34the illusion of agency.
33:37>> What?
33:37>> And I'm I'm I'm kind of mixed on this
33:40because my argument this gets very
33:43complicated. I mentioned this in my
33:45book, which is that Nurofen, which is
33:48kind of like Advil.
33:49And there were various variants more
33:51expensive than the standard variant,
33:53which were, you know, Nurofen for period
33:55pain, Nurofen for cold and flu.
33:58And
33:59these were formulaically, in some cases,
34:01identical to the base product. And my
34:05problem there is that the psychology of
34:08pain relief
34:10is so full of placebo effects that
34:13taking something that says for period
34:15pain and costs a little bit more will
34:18actually reduce your period pain more
34:21even though the chemical constituents of
34:23the drug are more or less the same. But,
34:25there are debates about the placebo
34:26effect and you know, all the way from
34:29people who claim that you can do placebo
34:31surgery. I mean, there are all people
34:33who claim that if you actually attempt
34:35to a fit a gastric band, then you don't
34:38fit the gastric band for whatever
34:40reason, uh
34:41the person will still lose weight.
34:44I mean, uh so there are people who are
34:46absolute placebo effect um
34:48fundamentalists all the way to people
34:50who are fairly skeptical, but where it's
34:52universally agreed is in the area of
34:54kind of analgesics and pain relief.
34:56Psychological factors, perception plays
34:59a massive uh role. And of course, there
35:01are forms of pain which are enjoyable.
35:05This is where it gets a stranger still.
35:07So, if you have if you have a cut on
35:09your um your shin, say, and you put some
35:13sort of um
35:15uh antiseptic on it, you want it to
35:17sting in a way because the sting is
35:20evidence of efficacy. The fact that it's
35:22hurting proves it's working, and so your
35:24reaction to this stinging pain is not
35:27entirely discomfort because you've
35:30reframed it as this is proof that it's
35:32doing its job.
35:33>> Yeah, it's like burning off the the
35:35germs.
35:36>> off the bad things, etc. And so, you
35:38know, this is where it gets really
35:40strange, but my argument is that nearly
35:43all organizations, and this is where
35:45innovators and and and family-owned
35:47businesses have an advantage because
35:49family-owned businesses are, for
35:51example, privately-owned businesses,
35:53founder-led businesses are free to use
35:56intuition
35:58in a way that publicly-held companies
36:00aren't because most people in a
36:02publicly-held organization feel that
36:05everything they do has to be rationally
36:06justifiable from the get-go. Now, what
36:09you do has to be justifiable eventually.
36:11Yeah, there's no point in doing
36:13something which fails decade after
36:15decade. I get that.
36:18But, the freedom to actually act on
36:20hunches, to act on intuition, to place
36:24bets for which there isn't much
36:26pre-existing evidence,
36:28is an advantage to the entrepreneurial
36:30business over the established business,
36:32cuz they can explore a much larger
36:33solution space.
36:35>> Hey, can I ask you a question on how you
36:36got good at this stuff? Because I know
36:39that you're a thought leader when it
36:40comes to this stuff, but you were a
36:41practitioner for years, and I think you
36:44were a direct response copywriter.
36:46>> Well, well, the story's even better. I
36:47think you were not in copywriting, got
36:49fired, and came back into the
36:50copywriting department, and went to the
36:52top, which is probably a lesson in fit
36:55and knowing your strengths and your
36:57nature rather than
36:59uh just thinking I'm good or bad.
37:00>> Now, I have to admit it wasn't an
37:02accident in that from about week three
37:05working as a graduate trainee in Ogilvy
37:08and Mather Direct, which was the direct
37:10response wing of Ogilvy. David Ogilvy
37:12was a massive advocate of direct
37:15response advertising because he believed
37:17that you learned what works.
37:20And he was absolutely right.
37:21>> Can really quick, define direct response
37:23for people who don't understand it.
37:25>> So, historically, and back in 1988 when
37:28I started work, when there was there was
37:30an internet technically, but there was
37:32no web, it typically meant direct mail
37:35and couponed press advertisements, or
37:39more late or later advertisements with a
37:41coupon or a phone number. But it was an
37:44advertisement which invited the
37:45consumer, buyer, customer, interested
37:48party to respond directly to an
37:52identifiable advertisement.
37:54>> So, for example, like here's one. It's
37:56like an ad for something and and
37:58there'll be a letter and at the end
38:00there's like a coupon and it says, "Fill
38:02this out and tell us you want to buy
38:03this vacuum."
38:04>> And the coupon would have a dotted line
38:06around it with a pair of scissors to
38:08encourage people to cut it out, or
38:10indeed to rip it out and put in their
38:12pocket. What would happen is on that
38:14coupon there would also be a code. You'd
38:17be asked to quote the code if you
38:18telephoned,
38:20which related both to the creative um
38:24execution and the media placement of the
38:27ad. Now, bear in mind in I think
38:29certainly in the 1920s, possibly in the
38:3119th century,
38:33long before medicine and science
38:37had grasped that there was such a thing
38:39as a randomized controlled trial, the
38:42advertising industry
38:44had
38:45started testing this kind of thing ages
38:47ago. Direct response copywriters would,
38:50for example, test headlines by running
38:54small classified advertisements at very
38:56low cost, each with a different little
38:58headline in a, you know, in an ad the
39:00size of a couple of postage stamps. And
39:02they would they would learn which one
39:04got more responses,
39:06and uh they would therefore,
39:09when it came to doing more expensive
39:11large full-page advertisements, they'd
39:14use the headline that had worked in
39:15miniature. But what had happened, and I
39:18assume this was at the behest of
39:19advertisers, but I don't know for sure,
39:22is that newspapers in the United States
39:25and the United Kingdom, when they
39:27produced newspapers, they were printed
39:30on two or sometimes four parallel
39:32presses,
39:33just to produce the number of newspapers
39:35you needed. Now, when these newspapers
39:37came off the presses, they were
39:39interleaved.
39:41So, it wasn't all the newspapers from
39:44from printing press A went to North
39:46Boston, and all the uh all the
39:48newspapers from printing press B went to
39:51South Boston. The output from the two
39:53presses was interleaved, a bit like
39:55shuffling a deck of cards. What that
39:57meant was you could run one
39:59advertisement in on press A, and a
40:01different advertisement on press B, and
40:04you'd created a randomized controlled
40:05trial where, effectively, which of the
40:08two advertisements you saw
40:11uh was effectively random. In other
40:13words, you and your neighbor might well
40:15get a different advertisement.
40:17But it solved that problem where had you
40:19not done that in delivering, you might
40:20have had a case where all the rich
40:22people got one advertisement and all the
40:24poor people got another. And of course,
40:25statistically then the result wouldn't
40:27be very very valid. And because of this,
40:30direct response advertisers endlessly
40:33tested both creative
40:36changes and indeed media selection. They
40:38might find that one medium would work,
40:40you know, four times better than
40:41another. And one creative execution
40:44would work twice as well as another. And
40:46sometimes very very small changes would
40:49make enormous differences. So, for years
40:52this would have run from something like
40:53the 1930s to the 1950s. There was an
40:56advertisement for a correspondence
40:57course which basically taught people to
41:00write more grammatically. And the
41:02headline was originally, "Do you make
41:04mistakes in English?"
41:07Then someone added the word "these". "Do
41:10you make these mistakes in English?"
41:12Which then peaks the curiosity of the
41:14readers. So, they want to know whether
41:16the whether they are the mistakes that
41:18they're making. And then somebody else
41:21added the word "Do you make these common
41:24mistakes in English?" Which
41:25destigmatized the idea that if you were
41:27making these mistakes, you were an
41:29ignoramus.
41:30And so, you would actually have in
41:32direct response businesses levels of
41:35testing at that level of kind of of
41:37detail. And the reason that's so
41:39important
41:41is that what you realize
41:43is that
41:45in psychology
41:47there are butterfly effects all over the
41:49place.
41:50You can do surprisingly small trivial
41:52things.
41:54And they make an inordinate difference
41:56to how people respond, how they
41:58emotionally respond, and consequently
41:59how they behave. And in many cases, that
42:01means whether they buy or whether they
42:03don't buy.
42:04And so, consequently long before there
42:06was behavioral economics, there was
42:08direct response advertising. And in
42:10fact, anybody who had worked in direct
42:11response advertising would have gone to
42:14one of those early practitioners in
42:16behavioral economics who said, "Yeah,
42:18we've done that for years."
42:20I don't know.
42:21And I'll give I'll give you an example.
42:22This is
42:24it's something like 1991, 1992, and I'm
42:26working on direct response advertising
42:28for the phone company. And
42:31we simply
42:33um were offering people the chance to
42:35pay a couple of pounds a month
42:37extra to receive what what called star
42:40services, I think, in the United States.
42:42Network services, which is you could
42:44have call diversion, you could have call
42:46waiting on your phone, and you could
42:47have something else.
42:49Wake-up call or something like that. And
42:50you And if you've paid a certain amount
42:52monthly, these facilities were added to
42:54your home phone line.
42:56And we wrote people letters, and it
42:57said, "Either send back the pre-laser
43:00coupon below in the in the postage-paid
43:02envelope,
43:03or call this number and quote this
43:05code." We gave them a choice of post or
43:07phone. And we had a slightly bonkers
43:10client who didn't want to offer the
43:11postal response. I don't know why. I've
43:13no idea why to this day.
43:15Okay? And so, we said, "Well, let's test
43:17it."
43:19Um Let Let's not just get rid of a
43:21coupon response, because that's
43:23dangerous, because, you know, if, you
43:25know, if you don't test this rigorously,
43:27you could end up effectively damaging
43:29your business quite significantly on a
43:31whim.
43:33And so, we tested three kinds of
43:34letters, 50,000 people each, randomized,
43:36completely randomized selection, as with
43:38the newspapers.
43:40And one lot got postal only, one lot got
43:43phone only, and one lot, as before, got
43:45the choice of phone or post.
43:48Post only, 5% response rate.
43:51Phone only, 2% response rate. When you
43:53offer people a choice, it was just it
43:56was 7%. Not quite, but almost nearly, I
44:00think, the sum total of the of the two
44:02independent response rates. That That
44:05That not surprise strike you as all that
44:07weird.
44:08But to an economist, this would be
44:09completely baffling cuz it would suggest
44:11that the more important factor affecting
44:14whether you bought the product was not
44:16what the product was or how much it
44:18cost, but how you were able to actually
44:21order it. And from that moment on, I
44:24remember thinking, "Okay,
44:27this is extraordinary because
44:30every now and then, there are almost
44:32certainly brilliant businesses which are
44:34failing
44:36because they failed to unblock some sort
44:38of psychological bottleneck. In this
44:40case, the psychological bottleneck might
44:42have been that, you know, all, you know,
44:44people just hated using the phone to
44:46order something.
44:48And you could have rationally spent
44:50millions and millions and millions of
44:51pounds trying to improve the product or
44:53to spend ages demonstrating what a great
44:56product it was.
44:58And yet, if you fail at one
44:59psychological hurdle, you can doom
45:02yourself. And so, it's very painful. I
45:05When people say, "How do you get good at
45:07this stuff?" I'll tell you I'll tell you
45:08my one trick, which is I think I have
45:10ADHD.
45:12Broadly speaking,
45:14I'm not very interested in the middle of
45:16things.
45:18So, I'm interested in looking at a
45:19question from a deep philosophical
45:21level, and I'm interested in trivia.
45:23I'm not really interested in
45:25in the in the middle because I think in
45:28complex systems, there are two things
45:30you can do. You can tinker with the
45:32details and achieve surprisingly
45:34valuable responses, or you can
45:36effectively come up with a new paradigm
45:38for what you're doing.
45:40It's very similar to direct response
45:41advertising where the rule is you either
45:43test one thing or you test everything.
45:46So, in direct response advertising, this
45:47would go back to the 1920s to 1930s,
45:49people like, you know, uh Claude Hopkins
45:52and the early kind of practitioners of
45:54scientific advertising as they like to
45:56call it, which is, you know, you either
45:58test the single word or you come up with
46:00a completely different advertisement
46:01with a different visual. If you test
46:03five things, you can't be sure which one
46:05of the five is making a difference.
46:08>> Right.
46:08>> You know, you've said a couple of things
46:10that I I think are pretty fascinating.
46:11The first one that I wrote down was
46:14competing on a different dimension. So,
46:16you mentioned the taxi versus Uber
46:18example. And I love this because if you
46:20just sat down with a piece of paper, you
46:22gave somebody a creative assignment, you
46:23said, "Hey, make a better taxi." They
46:26would almost always focus on the ride.
46:28The cost of the ride would be the first
46:29if I could make it way cheaper, that
46:31would be great. If I could make it way
46:32faster, that would be great. If I could
46:33make it way more premium in some way the
46:35ride. And what you pointed out was that
46:37there was a psychological bottleneck
46:39that was preventing people from doing
46:40it. When Uber first came out, I remember
46:44people thought it was overvalued. And I
46:45was living in San Francisco, they were
46:46raising money, and they were doing this
46:49analysis of what percentage of the taxi
46:51market if Uber made up 25% if it if it
46:54took 50% market share of the taxi
46:56market. And what ended up happening was
46:58in San Francisco alone, Uber tripled the
47:01taxi market within a couple of years.
47:04>> a very brilliant friend who had the idea
47:07for effectively a dynamic market in
47:09transportation before Uber. Actually, he
47:12patented something before Uber did.
47:16And he has a letter
47:18responding to his idea from Guy Kawasaki
47:22which said, "I can't really see this
47:24working in the United States." He said,
47:26"Americans don't take taxis very much,
47:29maybe in New York."
47:31And actually, when you think about it,
47:33pre-Uber,
47:34you know, LA was a motorist market if
47:37you were if you had a car and it was a
47:38public transport market if you didn't.
47:41It the taxi market was was relatively
47:43small.
47:44New York was an outlier. New York,
47:46obviously, the New York cabs were a
47:48major thing. But, you're absolutely
47:49right. Everybody was looking at it as if
47:51it was purely cannibalizing an existing
47:54market. Now, what the economists and
47:56what the Harvard Business Review would
47:57say is that they achieved this through
47:58lower prices. I don't think they did. I
48:01don't think Uber's actually reliably
48:02cheaper necessarily.
48:04>> Right.
48:04>> Okay? I think they achieved it through
48:06better psychology. And the example I had
48:09of what I call Uh uh
48:11these are the sort of fat tails. Jeff
48:13Bezos puts it very well. He says, you
48:14know, in baseball the most you can score
48:16is four, but in business you can hit a
48:18thousand.
48:20And I think that the fear of uncertainty
48:23and the and the unwillingness to
48:25experiment in business is causing people
48:28to endlessly try and sort of hit
48:30singles.
48:32And at the expense of occasionally
48:35trying to hit a thousand.
48:37>> But how do I like Shawn and I are both
48:39business owners. Like how do we go from
48:42being academic and also looking at past
48:44results to and analyzing past results?
48:47Because what's interesting is like you
48:48guys were talking about Uber. If you
48:50read their seed deck, even they said,
48:52they're like, we think that, you know,
48:54if we knock it out of the park, this
48:56might make a hundred million dollars a
48:57year, you know? Now they make hundreds
48:59of millions every week. What can you
49:01tell me where for the next week or two
49:03weeks I can shift my thinking and create
49:05a framework or something like that where
49:07I can go and deploy this stuff on my
49:10team.
49:11>> maybe a habit or a question I can start
49:13asking myself. An action I can take to
49:16get the sort of
49:18different type of thinking.
49:18>> I'll give you a real-world example. I
49:20worked on American Express, which is
49:22probably David Ogilvy always said, if
49:24you want to be a copywriter, spend the
49:26first five or six years of your life
49:28working in direct response because you
49:30learn what works, you also learn what
49:32matters. You also learn what not to
49:34leave out.
49:36I'll give you an example of that, you
49:37know, if you were selling a product by
49:39mail order and the coupon did not say
49:42somewhere, "Expect your product within
49:4428 days or it will be sent to you by
49:47post within 28 days." You'd probably
49:50halve the number of people ordering cuz
49:52you've now created uncertainty.
49:54You you've now created a degree of
49:55ambiguity. So, it also it also taught
49:58you attention to detail, actually, in
50:00advertising, which I think a lot of
50:02mainstream advertising misses, which is
50:05that's all very well and good. You've
50:06made a wonderful claim. You've changed
50:08people's minds about something, but
50:10actually, if you want them to act, they
50:12require a far greater degree of
50:14certainty than could often be achieved
50:16in just a poster or TV ad.
50:19So, it it it it was a bri- it was a
50:21brilliant training. Working on American
50:22Express was probably the best account
50:25you could possibly work on, um, in the
50:27sense that they do a bit of everything.
50:28It's a brilliant brand, but it also is a
50:31very, very professional direct marketing
50:33operation. And they do everything. They
50:35do member get member. They do card
50:37member communications. They do
50:38acquisition communications, you know,
50:40etc. You know, you know, all manner of
50:43stuff. Um, David Ogilvy, by the way,
50:45always wanted American Express to do a
50:47very simple thing, which they never had
50:49the courage to do, which was, uh, to
50:51write a letter which basically said,
50:53"Take out the American Express card, and
50:55if you aren't happy, if you don't want
50:57to keep it after your first year, we'll
50:59refund you double the fee." And nobody
51:02ever had the courage to do it.
51:05I still think it would actually it would
51:07work. But, here was the interesting
51:09thing working on American Express. There
51:11are little things that American Express
51:12did, like putting member since on the
51:14card, which cost nothing, but have been
51:17worth and American Express people have
51:19told me this, have been worth billions
51:21of dollars to American Express since the
51:22card was started. People are more
51:24reluctant to cancel,
51:26uh, because they don't want to, you
51:28know, rejoin and go back to year zero,
51:31if you like. You know, you know, I'm 60
51:33years old. If I had a card with member
51:35since 24 on it, it doesn't quite say the
51:37same thing as member since '93 or
51:39whatever. '95, I think. Okay. So, that
51:43was a tiny little bit of psychology,
51:44which cost absolutely nothing. But, it
51:47also is a testament to the kind of
51:49relationship they have, which is you
51:51where you know you are a card member, we
51:53don't just issue you a card from one
51:55year to the next. You know, we can see
51:57you know it's it's an intimation that
51:59they're in a relationship with you. But
52:01here's something that was a it was
52:02client's idea. I know I'm
52:03although the agency helped, but it was a
52:06client's idea.
52:07This is the late 80s, early 90s. We're
52:09encouraging people to get the American
52:11Express gold card, which was pretty
52:13expensive. I mean, you know, it was
52:14something like 80 pounds back in the
52:1680s.
52:17And we wrote long long letters
52:19explaining all the rational reasons why
52:21you want the gold card, you know, and um
52:24this client, I think, had the leap of
52:27intuition, which was
52:29people wanted the bloody gold card
52:30anyway. Okay, it's the late 80s, right?
52:32You know, it's a you know, an area
52:34a period of fairly conspicuous
52:36consumption.
52:38And is it they want this card anyway?
52:40You know, to be honest, we could just
52:41say it's a great looking card, you know,
52:43and people would apply. The reason
52:45they're not applying is fear of
52:46rejection.
52:48And so he managed to find a way in which
52:49you could actually say all you need to
52:51do to receive your card, not apply for
52:54your card, but receive your card, is
52:55sign your name on this form. What we
52:57know about you suggests you're virtually
52:59pre-approved for membership, and the
53:01reason we made this so simple is we want
53:03you as a card member. Now think about
53:05the difference there psychologically
53:07between
53:09applying to Yale
53:11and getting a letter from Yale saying we
53:13want you to apply. Right?
53:15Okay?
53:16Or or think of it in dating terms.
53:19You're interested in a girl or a bloke,
53:22okay?
53:23And the difference
53:25in terms of your thought patterns if you
53:28thought that person was interested in
53:30you. And by the way, there is I don't
53:32know if you've read The Rules by um I
53:34think I think it's called The Game by
53:35Neil Strauss, actually, about the pickup
53:37artist community. It's quite an
53:38interesting book.
53:39>> Brother, look at us. We've been we
53:42studied You should see us when we are
53:4414, okay? We Not only did we read that,
53:47there's more highlighted parts in there
53:48aren't.
53:49>> [laughter]
53:50>> But the interesting thing is, it's
53:51actually
53:53for most guys
53:54effectively propositioning everybody you
53:56fancy is a workable strategy.
54:00Most people can't bring themselves to do
54:02it because of fear of rejection.
54:05You know, fundamentally, it most people
54:07haven't got the, you know, the chutzpah
54:10to just chat up and proposition
54:11everybody they fancy because, uh, you
54:14know you'll get a 10% hit, maybe a 5%
54:1710% hit rate, which is of course all you
54:19need. But nonetheless, it comes at the
54:21cost of you know, significant dents to
54:24the, uh uh, the ego.
54:26>> I'm a very much, uh, an amateur
54:28historian and like two major takeaways
54:30I've had from reading hundreds of
54:32history books is human nature has been
54:36the same and will always be the same.
54:38And so, you can just copy the other
54:40people who have done something or been
54:41been heavily inspired by them. second
54:43thing is that, um, when humans talk to
54:45each other, we use these phrases like,
54:46"Well, just be rational. Just be that
54:48Like, don't be an animal. Like, just be
54:49rational." And it's like, well we are
54:52animals. We are not rational people. And
54:54therefore, you can't use logic in order
54:57to build something or you can't use too
54:59much logic in order to like build
55:01something great. Humans are like very
55:02irrational
55:04beings.
55:05>> It's very interesting because this idea
55:07that you should This is not to say that
55:09rationality isn't valuable. It's a
55:11question of when you deploy it. And, um,
55:14David Hume, the philosopher, said,
55:15"Reason is and should only be the slave
55:18of the passions." Now, there's a great
55:20book by a French mathematician called
55:22David Bessie called Mathematica, where
55:24he argues that very little progress in
55:26mathematics is actually made logically.
55:29What mathematicians do is they use maths
55:32to sense check their dreaming
55:35effectively.
55:36It's brought in to correct your
55:39emotional behavior
55:41when it goes wrong. But actually, the
55:44idea that in business that the
55:47explanation of a decision is more
55:49important than the outcome of the
55:50decision to your career.
55:53That the defensibility of a decision is
55:55what you're really focused on, not the
55:57act the quality of the outcome of the
55:59decision.
56:01What that means is that you're
56:03effectively saying you cannot use
56:05intuition, which is a bit like going to
56:07a detective and saying you can only use
56:09information which has evidential value.
56:12You can't use gossip, you can't use
56:14anecdote, you can't use intuition, you
56:16can't use a hunch, you can't use um you
56:19know, your sense of smell, as it were.
56:21You can only use evidential value to
56:24arrive at to actually um solve a crime.
56:27And it massively limits your ability to
56:30solve complex problems because what what
56:34your intuition is telling you to do is
56:36where to focus your attention. And in
56:38the case of you in the case of crime,
56:39you might ask a very open-ended
56:41question, "Did anybody notice anything
56:42unusual last night between the hours of
56:448:00 and 10:00 p.m.?" Now, very open
56:47question.
56:48All someone will say is a weird man
56:50drove past in a white van or something.
56:53Okay? Doesn't you know, no evidential
56:55value, but it tells you what to
56:56investigate next.
56:59And if you demand that every single
57:01business decision is based on stepping
57:04stones of pure pre-existing data and
57:06logic, you can only get to about five of
57:09the possible 25 places where a solution
57:12might be found. And the places you'll
57:14get to will all already be occupied by
57:17your closest competitors because they're
57:19using the same stepping stones you are.
57:21>> Why why didn't you ever want to start a
57:24your own company? You you you have all
57:25these like crazy cool ideas.
57:28>> Well, there is one which I did inspire,
57:30which is a coffee brand called flatwhite
57:32or [ __ ] off.
57:35>> Wait, wait, wait, hold on. Did you say
57:36you created a coffee called [ __ ] off?
57:39>> It exists. It It might currently be in
57:41some sort of legal dispute about the
57:43trademark. Not with me. I'm happy for
57:45them to take my
57:45>> Somebody trademarked a [ __ ] off?
57:47Somebody else had this idea?
57:49>> Let Let me Let me explain the idea.
57:50Okay. It's It struck me that there were
57:53places where you wanted a high-quality
57:55cup of coffee, but you didn't want to
57:57queue behind people who were all
57:58customizing their own bloody drinks. And
58:01the technology with contactless payment
58:03now allows you to basically tap, pick up
58:05a coffee which has been made in advance,
58:07and walk off. And my argument is that
58:09the flat white, which is a New Zealand
58:11{slash} Australian invention with which
58:14is I think the right ratio of coffee to
58:16milk and with micro foam as well. I
58:18think I think it's basically the you
58:20know, it's the happy medium of sensible
58:22coffee drinking. And this is quite
58:24interesting because my assumption was
58:27that the place to put this is They only
58:29have two versions. For the vegans,
58:31there's an oat flat white, and there's a
58:33regular milk flat white. You walk up,
58:35you tap your card, you pay £4, you pick
58:38up a pre-made coffee, and you walk off.
58:40And my logic was at the time train
58:43stations and um airports
58:46were the natural home for this thing. Uh
58:48they're expensive real estate, so the
58:50fact that you can sell more coffees in a
58:52given time, it's Henry Ford applied to
58:54coffee, basically. Okay? The argument is
58:56that Starbucks and the customization and
58:59the time is absolutely wonderful if
59:01you're in downtown Santa Fe near meeting
59:03a friend for 2 hours, but it's not
59:05suited to airports and railway stations.
59:07So anyway, this thing launches. It's
59:09only It's only at the trial stage at the
59:11moment.
59:12But something really interesting
59:13happened, which is shortly after we
59:16launched and got some publicity, someone
59:18came to us and said, "Actually, the
59:19natural market for this
59:21isn't even train stations and railway
59:23stations.
59:24It's conferences. Quite often, the
59:27coffee at a business conference is
59:28rubbish because it's it's badly made
59:30filter coffee because you have to serve
59:32a lot of people simultaneously.
59:34Or you have a customizable coffee thing,
59:38right?
59:39Where there's a massive queue cuz
59:40everybody comes out of the plenary
59:42session, they all want a coffee, so
59:44they've got something to hold in their
59:45hand and not look like an idiot, which
59:47is one of the reasons we buy coffee, by
59:48the way. Doesn't do with drinking it,
59:50it's effectively accessorizing
59:53ourselves, okay? And the point about
59:56flat white or off is it's high-quality
59:58coffee, not crappy filter coffee, that
1:00:00you can produce at scale by simply
1:00:02reducing the customization level. Now,
1:00:05here's where it gets interesting. Henry
1:00:07Ford was a brilliant marketer.
1:00:09Why did he say you can have every any
1:00:11color as long as it's black?
1:00:13Because at the time, paint dried at
1:00:16differing speeds depending on the color.
1:00:19And therefore, if you had a variety of
1:00:20paint colors on the Ford production
1:00:22line, it completely messed up the flow
1:00:24of the production line because some cars
1:00:26would take longer to dry than others,
1:00:28and it turned out that black was the
1:00:30fastest drying color, so they basically
1:00:32imposed black on the whole Ford fleet.
1:00:35So,
1:00:37it's absolutely fine not to give people
1:00:40something,
1:00:42to ask people to make a trade-off, so
1:00:44long as you make them aware of the
1:00:45trade-off in advance.
1:00:47Okay?
1:00:48That's why it's called flat white or
1:00:50off. It doesn't If you turned up at a
1:00:52branch of Starbucks and they said, "We
1:00:54we only serve flat whites, right?" You
1:00:56go, "What the What are you talking
1:00:57about? No, no, I want a Frappuccino
1:00:59with, you know, almond milk and blah
1:01:01blah blah." No, no. Okay? No, you can't
1:01:03have that. It's, you know. Now, the
1:01:05reason it's called flat white or [ __ ]
1:01:06off is it makes explicit the trade-off
1:01:10before someone turns up.
1:01:12So, you say If anybody The joke is if
1:01:14anybody turns up and asks for a
1:01:16cappuccino, you point to the logo and
1:01:18you say, "The answer's in the name,
1:01:20right?"
1:01:21Now, there's an example of this which
1:01:23always fascinates me. Are you a fan of
1:01:25the Moxy hotel chain?
1:01:27>> Oh, I stayed in once in New York.
1:01:29They're like a kind of upscale like kind
1:01:31of more modern contemporary type of
1:01:33chain.
1:01:33>> So, it's quite interesting because the
1:01:35rooms are tiny.
1:01:36There's no room service, there's no
1:01:38laundry, okay? But, the ground floor is
1:01:40kind of a bit like a
1:01:42well, a solvent WeWork.
1:01:44Right, I guess.
1:01:46And there's a 24-hour barista, there's a
1:01:49there's a
1:01:51usually there's someone making really
1:01:52quite good cocktails. You check in at
1:01:54the bar, you don't check in at the
1:01:56check-in desk. There isn't a concierge,
1:01:58none of that bollocks, okay? Don't go to
1:02:01stay there on your honeymoon, don't go
1:02:02to stay there for a week. But, if you've
1:02:03got one or two nights to stay in a
1:02:05place, it's exactly what you want, okay?
1:02:08It's small room, very good TV, very good
1:02:10Wi-Fi. The other great advantage is
1:02:12after you've checked out in the morning
1:02:14and had breakfast, to be honest, you can
1:02:16hang out there for another 5 hours if
1:02:17you want to, you know? Whereas, if you
1:02:19tried doing that in the conventional
1:02:21hotel, you'd you'd feel a bit unwanted.
1:02:24It's a It's basically a brilliant
1:02:26brilliant explicit trade-off. And they
1:02:29always said when I spoke to them, they
1:02:30said basically, 90% of our customers
1:02:33love this. And the reason they love us
1:02:34is either cuz they've stayed before,
1:02:36they understand the trade-off and they
1:02:38buy into it, or else they know about how
1:02:40the Moxy works and they get the deal and
1:02:43they've decided in advance, that's the
1:02:45trade-off I want.
1:02:4710% of their customers are expecting the
1:02:49Marriott and they're pissed off as hell.
1:02:53And it's a classic example of actually,
1:02:56you know, expectation minus reality, you
1:02:59know, is the formula that matters. You
1:03:02can provide less of something so long as
1:03:04you don't actually disappoint. Right.
1:03:06>> Have you seen the Slate Truck?
1:03:09>> Yes.
1:03:10>> What is it?
1:03:12>> So, it's an absolutely minimalist
1:03:14electric vehicle.
1:03:16It's It's $25,000.
1:03:19And you can effectively customize it
1:03:21with all manner of sort of automotive
1:03:23bling.
1:03:24>> But but but the the core trade-off is up
1:03:26front. They're like, "There's no heat
1:03:28seaters, there's no screens, there's
1:03:30just knobs. You got to crank the window
1:03:32yourself.
1:03:33Um it's basic. We're not filling it up
1:03:35with stuff, but it's If you want
1:03:36simplicity and you want the price to be
1:03:38It's a $25,000
1:03:40electric pickup. And you're just not
1:03:42going to get all this random junk that
1:03:44every car company puts in. We're not
1:03:45doing that."
1:03:46>> So it was absolutely explicit. And in a
1:03:48sense, that's what, you know, Avis did
1:03:50with "We're number two, so we try
1:03:51harder." This is, you know, "Don't do
1:03:54Okay, we don't have the scale of the
1:03:55other guys, but we make up for it
1:03:56somewhere else."
1:03:58And the consumer's very happy making
1:03:59trade-offs so long as they're explicit.
1:04:02The problem with a lot of kind of cost
1:04:03reduction and um you know, and uh
1:04:06efficiency pursuit in business is it
1:04:09isn't chosen by the consumer, it's
1:04:11imposed on them.
1:04:12>> Mhm.
1:04:13>> Which is a very very different thing.
1:04:15But now, the Slate truck is a brilliant
1:04:17example of what you might call explicit
1:04:20minimalism.
1:04:20>> But it But it's brilliant. They They
1:04:21underdid the competition where everybody
1:04:23else tries to overdo the competition.
1:04:26And they were just very explicit about
1:04:27it and it resonated like crazy. I mean,
1:04:29I put I don't even I've never I would
1:04:30have never bought a pickup truck. And I
1:04:33put a deposit in just cuz I
1:04:35>> Did you really?
1:04:35>> help it. I I loved what they I loved
1:04:37what they're all about.
1:04:38>> If I'm right, I think they'll discover
1:04:40something really valuable,
1:04:41interestingly, which is everybody's
1:04:44talking about the idea that cars become
1:04:46shareable.
1:04:48Now,
1:04:49I would share my Slate truck with
1:04:51anybody else, right?
1:04:53You know, what's the worst that happens?
1:04:54They vomit in it and I have to hose it
1:04:56down, right? I'm not going to share my
1:04:59my my existing car with anybody, right?
1:05:01I don't even don't even let my wife
1:05:02drive it.
1:05:05And so, you know, one of the What
1:05:07they'll do, when you do these eccentric
1:05:09things, as with discovering that F W or
1:05:12F O is a
1:05:15is a is an absolute godsend for
1:05:17conference organizers.
1:05:19What you often do when you do something
1:05:21eccentric is that you plan and you do
1:05:23your you know cost benefit analysis and
1:05:25your feasibility study. But generally
1:05:28when you do something unusual, you
1:05:30discover that your target audience is
1:05:32actually bigger than you expected. And
1:05:34also it's bigger than you expected
1:05:36because you don't have the same
1:05:37competitors that everybody else does.
1:05:39You know, if you think about the
1:05:40Marriott versus the Hampton Inn versus
1:05:42the DoubleTree versus the Hilton, it's
1:05:44all kind of like
1:05:46okay, right. Whereas the distinct Do you
1:05:48know what Moxy why the Moxy is called a
1:05:50Moxy? It's because the project was
1:05:52called Marriott on Generation X and Y.
1:05:56And so it was called Project Moxy and
1:05:58they never got round to coming up with a
1:06:00new name for it by the way. But the
1:06:02interesting thing is I'm old, right? I'm
1:06:0460.
1:06:05But my wife and I my wife is 61. Hey,
1:06:08cradle snatcher. And
1:06:11uh she you know, we both we both choose
1:06:14that yeah as I said, you know, five
1:06:16days, you know,
1:06:18you know, maybe five days a bit too long
1:06:20to stay at a Moxy. If you've got any one
1:06:22or two or three nights stay, it's what
1:06:23we go for because actually I'm not quite
1:06:26a boomer. I think I What am I? I'm
1:06:28probably I'm between Gen X and boomer or
1:06:31something anyway. But anyway, I'm way
1:06:32outside their intended target audience.
1:06:34And so you know, it's very interesting
1:06:36if you focus on one target audience,
1:06:38you'll general generally find there's a
1:06:40byproduct of your focus, you'll find
1:06:43incremental target audiences who by the
1:06:45way
1:06:46This is very interesting in terms of
1:06:48tech.
1:06:49Because there's a lot of tech out there
1:06:52which is really valuable to the old,
1:06:55okay? But the problem is you can't
1:06:57market explicitly to old people because
1:07:00then young people won't buy it. So
1:07:03cars from you if you take someone out of
1:07:05the Volkswagen Golf, the average age of
1:07:07a Volkswagen Golf buyer who's buying a
1:07:09new Golf is probably about 59.
1:07:12But when they advertise it, they don't
1:07:14show 59-year-old, they show, you know,
1:07:1628-year-old or a 33-year-old or
1:07:18whatever. And so, quite often, you have
1:07:21this very interesting thing that old
1:07:22people are quite badly served by
1:07:24marketing because marketing is always
1:07:26really eager to show the product in the
1:07:28hands of young people.
1:07:30And there are a couple several examples
1:07:31of this. One of which is um bone
1:07:34conducting headphones.
1:07:36I don't know. They're marketed at
1:07:38joggers and swimmers, and the idea is
1:07:40that if you have bone conducting
1:07:41headphones, when you go jogging, you
1:07:43don't lose all spatial awareness and run
1:07:45in front of a bus.
1:07:47Cuz your ear lug your ear holes are
1:07:48still open, and all the sound is
1:07:50transmitted through effectively the
1:07:52bones that's transmitted to the bones in
1:07:54your inner ear.
1:07:56Absolutely brilliant for people with
1:07:58hearing loss.
1:07:59Because it bypasses the stirrup and the
1:08:01anvil and whatever it is inside the ear,
1:08:03which are the bits that deteriorate when
1:08:05you get older, and the sound goes
1:08:07straight basically to your oral nerves.
1:08:10Absolute godsend to old people. No old
1:08:12people know about this. And the other
1:08:14one is um actually I've got one here. Uh
1:08:16the Samsung folding phone, okay? Sorry,
1:08:19bloody camera's wandered off. There we
1:08:20are. We've got that. Zooming in like
1:08:22something Okay. But this folding phone,
1:08:24okay? There's a secondary market there
1:08:26in anybody over 60 because the standard
1:08:29mobile phone's handset is too [ __ ]
1:08:31small.
1:08:33You know, once your eyesight is you
1:08:34know, goes a bit, I've had a cataract
1:08:36operation, okay? The standard phone
1:08:39handset is pretty much unusable.
1:08:42So, there's a whole lot of tech out
1:08:43there which really intrigues me because
1:08:45it's actually brilliant for older
1:08:47people, but they just aren't told about
1:08:49it.
1:08:50>> Hey, can I ask you one last question?
1:08:52You You're You seem very well read, uh
1:08:54very eclectic.
1:08:56Um I have this Ogilvy on advertising
1:08:59book, but if I wanted to get better at
1:09:02writing copy, but also coming up with
1:09:04ideas and frameworks, can you suggest a
1:09:06few books that I could read?
1:09:08>> Some of Okay, some of them are very old.
1:09:11Obvious Adams, Robert Updegraff,
1:09:13published in 1960.
1:09:15Where it You can read it basically on a
1:09:17single toilet visit. It's about 50-60
1:09:20pages.
1:09:21Um I'm delighted to say I think Amazon
1:09:23keep reprinting it or somebody keeps
1:09:25reprinting it.
1:09:26>> Obvious Adams, the story of a successful
1:09:28businessman.
1:09:29>> it. Now, when you first start reading
1:09:31it, you'll think, "Jesus, this is a bit
1:09:33corny."
1:09:34Okay?
1:09:35But it was one of David Ogilvy's
1:09:36favorite books. And it's actually about
1:09:38an advertising man and how his approach
1:09:41to problem-solving. And everybody It
1:09:43really delights me because every now and
1:09:45then I mention it on a podcast and it
1:09:47goes to like number one in advertising
1:09:49books on Amazon in the UK.
1:09:52I always I always take a bit of a thrill
1:09:54for this cuz this guy died in about
1:09:551948, you know? And his book's still
1:09:59influencing people. And um there's
1:10:01another great one called The Specialist
1:10:03by I think Charles Sale. These are some
1:10:06of these old American business books
1:10:07which are absolutely priceless.
1:10:09Scientific Advertising by Claude
1:10:11Hopkins, for example. There's a book
1:10:13called How to Become an Advertising Man
1:10:15by James Webb Young, who was at J.
1:10:17Walter Thompson in Chicago for many
1:10:19years. Now, there are other great books,
1:10:21obviously in behavioral science, Richard
1:10:23Shotton has written some superb books
1:10:25called, for example, The Choice Factory
1:10:27or The Illusion of Choice. And they're
1:10:29really, really worth reading in terms of
1:10:31understanding the
1:10:34uh counterintuitive aspects of human
1:10:36psychology, if you like.
1:10:39Okay? They're I really, really recommend
1:10:40them. Um I also recommend you just read
1:10:43widely. Um Nassim Taleb is one of my
1:10:45biggest influences because I think
1:10:47differently about statistical things
1:10:50now. I realize that the real world is
1:10:52actually fat-tailed, it's not a normal
1:10:54distribution, and that, you know, a
1:10:56small number of things have a
1:10:58disproportionate amount of power.
1:11:00In terms of writing, David Ogilvy's
1:11:02obviously anything by him is very, very
1:11:04good, not least because he's a very,
1:11:05very good writer of books as well as a
1:11:07very good writer of advertisements.
1:11:09There's also a thing which is
1:11:10desperately difficult to get a hold of
1:11:12called The Copy Handbook published by
1:11:14D&AD in the UK, but unfortunately I
1:11:16think you have to buy it on eBay and
1:11:18they never did a reprint. It is about
1:11:19300 quid, but see if you can find that.
1:11:22Cuz it's great copywriters describing
1:11:25how they write. Drayton Bird, um a
1:11:28British he's kind of the British version
1:11:30of Lester Wunderman in direct marketing.
1:11:33Various books, for example, Common Sense
1:11:35Direct Marketing. There's a great book
1:11:37published by Ogilvy called I think it's
1:11:39called How to Write. This is How to
1:11:42Write in Business from one business
1:11:44person to another. It's not so much
1:11:46about copywriting.
1:11:48But the guy there was Joel Raphaelson
1:11:50and Ken Roman wrote it. They were two
1:11:51Ogilvy very senior people. I knew Joel.
1:11:55The other reason I'm really I'm
1:11:56suggesting old books is that an awful
1:11:59lot of things in advertising
1:12:01stop being used.
1:12:03This is why I've suggested to anybody
1:12:06here listening to this who's an
1:12:07entrepreneur, go and look at some
1:12:08advertising archaeology.
1:12:11And the reason is that advertising
1:12:13people
1:12:14just as engineers want to impress other
1:12:16engineers, advertising creatives want to
1:12:19impress other advertising creatives,
1:12:20which means they want to do something
1:12:22that's brand new, never been done
1:12:23before, da da da da da.
1:12:26Actually,
1:12:27loads of things get discarded by the
1:12:29advertising industry which never stopped
1:12:31working. Long copy press advertising
1:12:33never stopped working. Direct mail never
1:12:35stopped working. Jingles never stopped
1:12:38working, although you have to call it
1:12:39sonic branding now.
1:12:41And one thing that's fascinating me
1:12:43which never stopped working, it just
1:12:45became unfashionable.
1:12:47If you go back to the 1950s, there are a
1:12:48lot of advertisements which are cartoon
1:12:50strips.
1:12:52Right?
1:12:53You know, they're like half-page,
1:12:54quarter-page cartoon stories with people
1:12:57speaking in speech bubbles.
1:13:00David Ogilvy always said, "Look, that is
1:13:02the single most readable form of print."
1:13:05If you put anybody down in with a
1:13:07newspaper, they'll read the comic strips
1:13:09first. And yet, for some reason, it was
1:13:12massive until the 1950s and even the
1:13:141960s, lots of advertising took that
1:13:16form where you told a story in print.
1:13:20And for whatever reason, nobody's doing
1:13:22it. Now,
1:13:24here's what's interesting, okay?
1:13:26What are kids into now? It's manga,
1:13:29right? If you actually want to reach
1:13:31young people, uh uh
1:13:33ironically, reverting to this 1950s form
1:13:36of advertising where it's effectively
1:13:39Okay,
1:13:40it'll have to be, you know, differently
1:13:42illustrated, maybe, but it's effectively
1:13:44manga.
1:13:46Would be about the coolest thing you
1:13:47could do.
1:13:48This is the fascinating thing, you know,
1:13:49as David Ogilvy said, "You're not
1:13:51advertising to a standing army, you're
1:13:52advertising to a moving parade." And new
1:13:55new customers, you know, new members of
1:13:57new target audiences uh uh are appearing
1:14:00all the time who aren't aware of the
1:14:03things that the people born 10 years
1:14:05earlier already know.
1:14:07And so, the opportunity, I think, to uh
1:14:09literally be innovative by simply
1:14:12learning from the past cuz the
1:14:13advertising industry is very bad at it.
1:14:15Now,
1:14:16as David Ogilvy would say, you have to
1:14:18you sometimes you have to break the
1:14:19rules, but you had to know the rules in
1:14:21order to break them, if you see what I
1:14:22mean. You had to be aware of the fact
1:14:24you're breaking a rule, and you had to
1:14:25have a good reason to do it. That was
1:14:27fine.
1:14:28>> You uh
1:14:30you're a fun ass hang.
1:14:33>> Well, I hope it's been useful.
1:14:34>> I feel like we did maybe 20% of what
1:14:38what I think we could have talked about.
1:14:40And so, I think that I think we'll
1:14:42>> do we'll do a repeat. I'm very happy to
1:14:43do a repeat.
1:14:45>> Dude, I have like all these notes. I'm
1:14:46about to like run to my marketing team
1:14:48and be like
1:14:50do all this. Bye.
1:14:52>> [laughter]
1:14:55>> That was awesome. Total pleasure and
1:14:57anytime. Really delighted.

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