How To Influence People: Marketing Secrets Behind The World’s Biggest Brands - Rory Sutherland

Rory Sutherland 0:00 Averagely good statisticians, particularly if they're confident, are actively damaging and dangerous. If you fundamentally get it wrong, this is a case where you, you can be not just a bit wrong, you can be unbelievably orders of magnitude wrong about the assumptions you make.

Ali Abdaal 0:16 Hey, friends, and welcome back to Deep Dive, the weekly podcast where every week it's my immense privilege to sit down with academics and authors and creators and entrepreneurs and other inspiring people, and we find out how they got to where they are and the strategies and tools we can learn from them to help us build a life that we love. Rory is the vice chairman of Ogilvy UK, which is one of the biggest marketing and advertising companies in the world. He's the author of the book Alchemy: The Surprising Power of Ideas That Don't Make Sense, and he's got some absolutely sick TED Talks that have been viewed over 7 million times.

Rory Sutherland 0:43 There will be so much suspicion that we've got ChatGPT to write our thank you letters that the only way to overcome this is to actually fill our thank you letters with profanities. So, "Thanks very much for the fucking dinner party. It was totally boss. Viva Il Duce." All our personal correspondence will have to become kind of, you know, absolutely profane in order for it to seem sincere.

Ali Abdaal 1:05 We talk about the psychological value of products and how to create value from thin air and the power of surprising ideas in the world of marketing and advertising.

Rory Sutherland 1:13 If you can imagine a standup comedian doing a routine about your product, then you're onto something. The urge to appear serious is in many ways, I think, a disaster in marketing.

Ali Abdaal 1:24 And Rory's just an incredibly interesting and inspirational person with so much life experience and so many stories. So I hope you enjoy this conversation as much as I did. At the moment, according to YouTube analytics, 81% of you who are watching this on YouTube have not yet hit the subscribe button. And so if you're, for example, in the now 81% of people who are watching this on YouTube but who are not subscribed to the channel, I would love it if you could do so and it would be awesome to get that number down to 50%, and it would be cool to get like 50/50 sub/non-sub ratio just, just for fun. Rory,

Ali Abdaal 1:52 so you studied classics at Christ College-

Rory Sutherland 1:54 Yep

Ali Abdaal 1:54 ... uh, if, if your Wikipedia page is to be believed. Um, I was just down the road at Emmanuel and I wonder why classics and what did you learn doing classics? 'Cause it seems, seems a bit rogue to go from classics to advertising.

Rory Sutherland 2:06 Uh, well, it, it was a bit more rogue than that 'cause I made the short-term mistake and, uh, long-term success, I think, by choosing as A-levels, um, uh, maths, further maths, Latin and Greek. And it was a total mistake at the time because the people doing physics, chemistry, maths were effectively, um, you know, uh, doing interconnectedly the same thing, whereas I had to have this slightly schizoid thing where you had to go from sort of translating Homer to doing, uh, you know, some advanced statistical modeling or something, and it was difficult. And at the time, I think it was a mistake. Um, in the longer term, I think it was a great decision because one of the things is you only have to have fairly good statistical understanding, um, for it to be a superpower in the workplace. So I st- bizarrely, my brother's an astrophysicist. I'm still, uh, very interested in science, particularly, uh, you know, the, the, both the potential and the ills of quantification. Um, big book recommendation to start with, Algorithms to Live by and The Alignment Problem-

Ali Abdaal 3:13 Mm

Rory Sutherland 3:13 ... both by Brian Christian. I really highly recommend. So I, I read a lot of science. I read an awful lot of evolutionary biology as well, um, because it's a new way to think. Um, so but the classic side was, to be honest, what classics is, okay, is it's modern languages for nerds.

Ali Abdaal 3:31 [laughs] Okay. How so?

Rory Sutherland 3:32 So there's quite a high correlation between people who are fascinated by class- classics and people who are fascinated by, say, sci-fi because it is, if you like, an alternate civilization. Um, and also the fact that you don't actually have to speak to it because everybody involved is dead probably appeals to people who are slightly on the spectrum. So if you're one of those people who are undecided between science and the arts, um, classics is actually bizarrely a kind of weird kind of compromise. What were you doing at E- Emmanuel?

Ali Abdaal 4:00 Uh, I studied medicine.

Rory Sutherland 4:01 You did medicine? Ah.

Ali Abdaal 4:01 Yeah.

Rory Sutherland 4:02 Fantastic.

Ali Abdaal 4:02 So kind of six years of medicine, two years of working, and then switched into this kind of YouTuber, podcaster career thing.

Rory Sutherland 4:07 What's interesting is that they limit the number of people who can study medicine in the UK, and I think that's the BMA, which pretends to be a scientific organization, but is really a trade union for doctors if I'm-

Ali Abdaal 4:19 Oh, yeah

Rory Sutherland 4:20 Yeah.

Ali Abdaal 4:20 I mean, they're gonna be striking in the next few weeks.

Rory Sutherland 4:21 Yeah.

Ali Abdaal 4:21 [laughs] But-

Rory Sutherland 4:22 Uh, exactly. Now interestingly, there seems to be a premise then, I, I accept that it's very expensive getting a medical qualification because you actually need corpses and stuff, which you don't need for classics by and large. Um, but there seems to be an axiomatic assumption there that you only need to train in medicine that number of people you need to be doctors. Now it strikes me that that's a fundamental, fundamentally wrongheaded idea, that actually having surplus people with medical qualifications would actually be, despite the cost of training, would actually be valuable. It might be valuable to the pharmaceutical industry. It might be valuable to overseas, for example. But actually having a surplus of trained doctors, uh, would actually be valuable in all kinds of unanticipated knock-on ways. Just as actually, you know, you don't have to, and obviously I didn't become a classics teacher. I nearly did, but I didn't in the end. Um, what happened, I actually trained as a teacher after I finished and then I had a kind of panic attack because I realized if I went straight into teaching, my entire life would be school, university, school. And I thought spending your entire life in educational establishments was just a bit too limiting.

Ali Abdaal 5:32 Mm.

Rory Sutherland 5:33 And then I started applying to ad agencies, and whereas the conversation in the staff room was kind of Noggies Minor has been smoking behind the bike sheds, the conversation in the ad agency was, I think I was waiting for my interview at Ogilvy and someone came in and said, "No, it wasn't that great because I had to change planes in Addis Ababa or something."

Ali Abdaal 5:51 [laughs]

Rory Sutherland 5:51 I remember thinking this, you don't get that in the staff room. This sounds a bit interesting. And you know, it was the late '80s and we were all materialistic as hell, and advertising did have that kind of Venn diagram overlap between pretty interesting, reasonably lucrative.

Ali Abdaal 6:05 Okay.

Rory Sutherland 6:06 Um, but, but, but I mean, it, it is interesting how there is a kind of shallow logic Which often pervades decisions. You know, the assumption that you only train as doctors that number of people you need as doctors, uh, strikes me as a fundamental mistake. There's an opportunity cost there that we're probably not noticing.

Ali Abdaal 6:26 Yeah. And I think in the medicine path, there's also, so there, there's also like weird, weird bottlenecks in the system. So for example, last year there were more people graduating medical school in the UK than there were foundation year junior doctor jobs available.

Rory Sutherland 6:41 Right.

Ali Abdaal 6:41 But then as you go further down the path, there are a lot of specialties that are... Or most specialties are also oversubscribed in that applying for specialty training is competitive further down the line. And yet there are still loads and loads of rota gaps, and every single medic in every hospital would say, "Oh, like a third of our rota or a quarter of our rota is not filled."

Rory Sutherland 6:58 Ah.

Ali Abdaal 6:58 So there's some kind of supply demand mismatch for certain, for certain roles that is not being fulfilled, while at the same time the positions in specialty training are still oversubscribed.

Rory Sutherland 7:10 Also, having people with the confidence to speak about medicine. You know, you could have a managerial role in the NHS where someone who is medically qualified patently has some sort of credibility that, uh, you know, an average, you know, a box ticker wouldn't have. I mean, they're all, you know, they're all kind of value. The idea I think, I think we have a very u- sort of weird utilitarian view of education-

Ali Abdaal 7:32 Mm

Rory Sutherland 7:32 ... which is that everything has to be directly to serve some particular need. I completely disagree with this. I mean, in, in, in a sense, doing maths and classics was fantastic training for going into direct marketing because you could write. I mean, one thing about classics is it teaches you to write, basically because German would be the same. The understanding of grammar means you can look at a sentence and confidently say, "That's okay." Quote of Sir John Plum, I think, "Nothing blocks the creative mind more than fear of a solecism or something." But, but the, um, the, the fact that you can confidently write a sentence and go, "That's okay," combine that with... To be honest, okay, my, if I were in charge of maths education, and Rishi seems to be promoting it into the sixth form, which I don't think is a bad idea. A lot of people in the creative industries are going, "Oh, dear," you know. But actually provided it's a different kind of maths, in particular, um, statistical understanding. Because even highly educated journalists are obviously total idiots when it comes to the interpretation of statistics.

Ali Abdaal 8:34 What do you mean?

Rory Sutherland 8:35 Kathy Newman.

Ali Abdaal 8:35 [laughs]

Rory Sutherland 8:36 Um, I mean, you know, okay, her argument with Jordan Peterson, which is, you know, in other words, you know, univariate analysis of gender, of, of gender differentials, which no one in the social sciences would dream of doing. Okay? I mean, you know, a lot of journalists are obviously statistically completely illiterate. If you look at something like the, uh, Meadows c-case.

Ali Abdaal 8:55 What's that?

Rory Sutherland 8:55 Um, okay, the s... It, it was, um, uh, it was a, it was a case where a fairly eminent medic, uh, posited that the chance of two cot deaths in a single household could be determined by multiplying the odds together as though there were no external factors, either genetic or environmental. Failing to actually, u-um, accept the fact that they're both deaths were male, which also increases the probability of cot death. But also failing to do the elementary thing of comparing the probability of a double cot death with the probability of a double infanticide, which is what you actually have to do. Which changes the odds from something like overwhelmingly guilty, um, with a wrong statistical model, to most likely innocent, literally only more than fifty percent chance of innocence once you compare the two probabilities. Not effectively essen-essentially saying, uh, "Well, if it, you know, if it isn't accident, it's murder."

Ali Abdaal 9:53 Right. Yeah.

Rory Sutherland 9:53 It's completely imbalanced. But, but, but people with, literally people with Oxbridge degrees who are eminent in the medical fraternity made that mistake. Barristers, judges made that mistake. So if, if this extra maths is largely around statistics... I mean, I've never needed in my entire life to, to work out the surface area of a cone, and if I needed to do that, I think it is a third pi. What, what would it be? It'd be a third height times pi R squared of the radius of the base. I'm guess-

Ali Abdaal 10:21 Sounds about right. [laughs]

Rory Sutherland 10:21 Something bullshit like that. Okay? I've never needed to do that, and if I did, I'd Google it or I'd ring up somebody who knew.

Ali Abdaal 10:27 Yeah.

Rory Sutherland 10:27 Okay? On the other hand,

Rory Sutherland 10:29 basic appreciation of statistics, um, I use pretty much every day to a point where it's a kind of superpower. And so just having done what you might call, you know, statistics to A-level standard and having a basic grasp of "yes, but" actually, um, is unbelievably valuable in business or in virtually any other context.

Ali Abdaal 10:51 How so? Like what, what do you mean that statistics is a superpower?

Rory Sutherland 10:54 Um, well, well, it stops you being stupid, um, uh, is, is one of the things. Um, it also makes you understand, uh, really important concepts like the tr- you know, the trade-off between... Well, the explore/exploit trade-off is a really interesting concept which appears in AI, but it also appears in things like the studies of animal foraging.

Ali Abdaal 11:17 Okay.

Rory Sutherland 11:17 So there's a trade-off, effectively. If you're a foraging animal, or for that matter, you're an algorithm, um, there's a trade-off between exploration and exploitation. Which is, um, you know, obviously you're a total idiot if you don't exploit what you already know. Okay? If you make no use of preexisting, um, knowledge. But you're equally foolish, albeit in the slightly longer term, if you don't keep exploring, but simply exploit what you know on the assumption that it will never change and your knowledge is utterly complete and incapable of, uh, improvement or enhancement or, or adaptation. And so understanding a few basic mathematical concepts, I think, um... You know, I, I'd make Algorithms to Live by, uh, you know, one of the set texts for sixth form maths, um, is really, really useful. I d- I don't buy the, um... A-actually, the other thing I don't buy is I don't buy the... A, a few creative people in advertising got really annoyed at more people being forced to do maths because they'd say, "I would have left school earlier. I can't stand maths." Depends on the maths, because I mean, it's worth noting that, um, you know, solving mathematical problems by effectively rewriting the question Or, you know, redefining the problem.

Ali Abdaal 12:34 Yep.

Rory Sutherland 12:34 Okay? Which is what an awful lot of advanced maths is, is actually a highly creative act, and you could actually make maths teaching a- a- actually almost a form of, um, creative teaching-

Ali Abdaal 12:47 Yeah

Rory Sutherland 12:47 ... if, if you got it right.

Ali Abdaal 12:49 You mentioned that you wouldn't be surprised if marketing was, uh... became mostly female in the future.

Rory Sutherland 12:53 No.

Ali Abdaal 12:53 Why? Why is that?

Rory Sutherland 12:54 Um, s- partly just plotting the direction of travel, okay? Um, partly that, um, uh, generally, as of now, I'm not suggesting it's innate, uh, women seem to manifest, uh, a preference for working in people businesses slightly more. Not suggesting it's innate. It could be culturally inculcated, but doesn't really matter because that seems to be happening. That point, you know, I don't... don't, don't wanna go all Jordan Peterson on that.

Ali Abdaal 13:25 [laughs]

Rory Sutherland 13:26 But the weird thing that when you actually make employment, uh, you know, more and more a matter of choice, weirdly, uh, in some cases, gender differences actually increase rather than reducing. Um, uh, uh, also, also, I mean, for example, I think there, there'll be a very, very substantial, um, uh, Indian, uh, contingent in marketing and advertising.

Ali Abdaal 13:49 Why?

Rory Sutherland 13:49 Uh, because in India, it's, it's very high status. You have these extraordinary kind of universities, extraordinary high level of education around marketing, um, not only in universities, but places like Unilever, Hindustan Lever, which are kind of almost universities in themselves. And you can simply see the extraordinary talent, the extraordinary marketing talent, um, that's been produced. I mean, what, we have the head of Ford North America, Indian, MasterCard, both I think the CEO and the marketing director. You know, you go, you go on and on and on. And, and, um, uh, it, you know, it- it's absolutely clear-cut that, um, there's... And, and, okay, okay, let's not, let's not neglect the base rate, okay? [laughs] There are 1.5 billion people, okay? Which kind of helps. [laughs]

Ali Abdaal 14:38 Yeah, fair play.

Rory Sutherland 14:38 Um, uh, but, but I, I, you know, I, I, I just find it interesting because I think what often happens, if you're bad at statistics, you're not wrong to be angry about these things, but either you get angry about the wrong thing or you have the wrong idea about how to solve the problem. Okay?

Ali Abdaal 14:55 Okay, yeah.

Rory Sutherland 14:55 Because, you know, some degree of disparity will emerge from preference-

Ali Abdaal 15:01 Yep

Rory Sutherland 15:01 ... s- because preference emerges from circumstance.

Ali Abdaal 15:04 Yep.

Rory Sutherland 15:04 Okay? And therefore, if different groups actually grow up in different circumstances, uh, you would expect their preferences to differ.

Ali Abdaal 15:13 Hmm.

Rory Sutherland 15:13 And so if you don't account for that, and you suggest that every single disparity is the role of either active or unconscious prejudice... I'm not saying you're wrong-

Ali Abdaal 15:23 Yeah

Rory Sutherland 15:23 ... to discuss prejudice. I'm merely saying that you're miscalibrating it.

Ali Abdaal 15:28 In that there are other factors going on-

Rory Sutherland 15:29 Yeah

Ali Abdaal 15:29 ... that we need to take into account.

Rory Sutherland 15:30 Yeah. And it worries me a bit because, you know, uh, you know, a lot of this is kind of HR dominated and, um, uh, you know, HR isn't necessarily the, um, epicenter of sophisticated statistical understanding-

Ali Abdaal 15:48 Hmm

Rory Sutherland 15:48 ... if we're, if we're to be blunt about it. And so, you know, we've gotta be... we just... We just... I mean, as with, um, the Sally Clark case, you know, uh, the, the cot death case.

Ali Abdaal 15:58 Oh, yeah.

Rory Sutherland 15:58 Um, getting statistics wrong is really goddamn dangerous. Um, and actually, I mean, I was watching... I'll, I'll just give you an interesting point here, which is that w- it's worth noting that if the data you collect is unrepresentative, then the conclusions you will draw will be similarly biased.

Ali Abdaal 16:18 Sure.

Rory Sutherland 16:18 Okay? And first of all, which is a kind of quote of mine which gets adopted by other people, all big data comes from the same place, the past. Okay? And it's only reliable, um, even if it's representative of what you truly need to know, which is a big if. It's only reliable if you can actually confidently say that the future's gonna be very similar to the past, okay? Which in the short term may be a safe assumption. Over a decade, mm-mm, not so much, okay? Um, I was talking to someone last night who had worked for, um, a big dairy company which delivered milk and, um, they had things down to an absolute fine art until suddenly the law changed and it was, you were now allowed to buy milk from a supermarket. I mean, I've no... I, I think I can dimly remember when that happened, but it might have been, it might have been earlier actually. It might have been the early '60s before I was born. Now, you know, at that point, everything you think you know, you know, is no longer reliable as an assumption. And, um, the point I'm making there is that, um, if you, um, if you don't actually understand the limitations of your data or the biases of your data-

Ali Abdaal 17:30 Yep

Rory Sutherland 17:30 ... I mean, obviously quantification bias, uh, it's much easier to get data on things which happen to be, you know, numerical or measurable in terms of SI derived units.

Ali Abdaal 17:40 Yep.

Rory Sutherland 17:41 Okay? But if, I mean, if, if you fundamentally get it wrong, this is a case where you, you can be not just a bit wrong, you can be unbelievably orders of magnitude wrong about the assumptions you make. And one of the things that worries me, okay, is let's assume that the quality of people's statistical understanding [laughs] is on a bell curve, okay? Um, then, you know, with, with a, you know, a, a, a little tail of very, very good statisticians and then, then there are people who just know nothing on the left-hand side. Don't... Not too worried about them. People who don't know anything don't possibly, let's hope, won't pretend to know anything. But what that does mean is that averagely good statisticians are gonna massively outnumber really good statisticians, okay? Well, that's true in lots of fields. I'm sure that averagely good plumbers, okay, uh, massively outnumber really, really good plumbers. But averagely good plumbers are still useful. They still do a good bit of plumbing from time to time.

Ali Abdaal 18:36 Yeah.

Rory Sutherland 18:36 And assuming the job isn't like, you know, the cooling system for a nuclear power station, they're probably good enough, okay? Whereas, okay, averagely good statisticians, particularly if they're confident- Are act- actively damaging and dangerous

Ali Abdaal 18:52 Hmm. Yeah

Rory Sutherland 18:53 And so, you know, it's something we got- it's something we gotta be really, really alert to because-

Ali Abdaal 18:56 Yeah. It's like if you, if you overlay the bell curve onto the Dunning-Kruger curve-

Rory Sutherland 19:00 Yes. Yes. [laughs]

Ali Abdaal 19:01 ... you'll end up with a very large proportion of very confident but very, uh, ill-informed people about statistics-

Rory Sutherland 19:06 Yeah

Ali Abdaal 19:06 ... and almost anything else.

Rory Sutherland 19:09 Yeah. And, and particularly if they're confident or if they're simply overly preoccupied with the neatness of the model-

Ali Abdaal 19:15 Yep

Rory Sutherland 19:15 ... not with how the model actually differs from reality. Um-

Ali Abdaal 19:20 Hmm

Rory Sutherland 19:20 ... 'cause you occasionally get this kind of pure ... Now, actually, let's be fair, a lot of very good statisticians absolutely ring what they say with qualifications. But then unfortunately they're reporting to people who don't have the same nuanced understanding.

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Rory Sutherland 23:26 Mm. Mm.

Ali Abdaal 23:26 And so at the risk of asking what potentially is a stupid question, um,

Ali Abdaal 23:30 what is marketing? [laughs]

Rory Sutherland 23:31 Well, one-

Ali Abdaal 23:32 Like, to- [laughs] Sure

Rory Sutherland 23:33 ... Dominic Cummings was regarded as being a bit of an arse, okay, by people in the civil service for continually asking why.

Ali Abdaal 23:39 Hmm.

Rory Sutherland 23:40 And it was regarded as childish. It's absolutely not childish. It's actually a very, very intelligent approach. Because generally what happens is that intermediate objectives start dominating the, um, uh, uh, dominating b- what you might call attention-

Ali Abdaal 23:58 Yeah

Rory Sutherland 23:58 ... at the expense of what is the ultimate objective, okay? And so at ... That business of going, "Why?" five times in a row, which apparently within Downing Street the sort of senior civil servants regarded as, you know, practically as if you were banging knives and forks on the table going, "Me want din dins," okay? Um, it's not ... It's ... It looks childish. It's not necessarily a high-status behavior. And this is one of the most interesting things, I think. I think in complex systems, um, okay, uh, in, in understanding of complex systems, in understanding of w- Newtonian systems, there's a kind of hierarchy of importance. There's the big stuff which has big effects, and there's the small stuff that has small effects, okay? And therefore, you know, if you pretend that the economy or that your business is a sort of Newtonian reductionist model, which I think management consultants do 'cause they come from engineering-

Ali Abdaal 24:55 Hmm

Rory Sutherland 24:55 ... and when they want to model anything, they tend to model it as a machine. Okay? Now in a machine, for example, everything tends to have one function, and therefore you can define what something is for. This is what I call the doorman fallacy. I don't know if you've come across this. No. What is that? Okay. So the doorman fallacy is you get a bunch of consultants into your five-star hotel and they go... They define the doorman's function as opening the door, which is notionally what a doorman was for, uh, in the days before automatic doors. Of course, it's a, you know, it's, it's really just a, you know, linguistic convenience. Doormen do many, many other things, quite a lot of them tacit. You know, recognition, security, gossiping with other doormen, you know. Um, actually just maintaining the status of the hotel, 'cause if you want to charge 400 quid a night, you kinda gotta have a doorman. Them is the rules, right? And what the consulting firm do is they go in, they define the doorman's role as, um, uh, opening the door, and then they say, "Well, look, with our tech partners," who are probably paying us some sort of commission, "we'll replace your doorman with an automatic opening sliding door with an infrared, you know, human recognition mechanism. And s- you know, over the next five years, that's going to save you X." Hmm. And everybody in the procurement and logistics function all clap and go, "Marvelous. We've secured this saving." And off the consultants go, okay? And then five years later you discover the rack rate's now fallen by 50% and there are vagrants asleep in the hotel entrance because the doorman was doing lots of other things which weren't captured by your mo- your mechanistic model of the world. Yep. Okay? And I see that happening a lot when tech replaces, um... Uh, uh, generally, I'm pretty happy when tech augments the options of a consumer, you know. You know, when, when pay by smartphone app at pa- car parks came along, I was ecstatically grateful 'cause car parking was now typically costing six quid and having six pound coins or whatever was, you know, bloody painful, okay? [laughs] So, you know, okay- Yeah ... as an option, as an alternative, that's great. Yeah. Then what you notice is unless you've got a smartphone, you can't park, which effectively means that my dad, who's 92, can't use a car park- Hmm ... if we're not careful. Okay? And so one of the things I think we've gotta be really careful of is that fur-lined trap where something comes along as an option, you know, live chat, you know, uh, onscreen help, whatever it may be, comes along as an option. We're all unbelievably grateful for it and love it because it's an option. And then it's a bit like New Coke, Classic Coke. You know, the, the, the... I think this is probably, um, uh, this is probably, um, anecdotal, but one of the research me- mistakes they made with New Coke was they didn't explain to people that this would replace Old Coke. Hmm. So people go, "I quite like this. Yeah, okay. I'm all in favor of having a new variant of Coke." It was only when they realized that Old Coke, Classic Coke was being withdrawn that they suddenly went, "No, no, I don't like this at all." Hmm. Okay? Now, what you no- what you see I've done there is, okay, is I think that in complex systems it's kind of fractal. There are recurring patterns, and the patterns recur at a small scale and at a big scale. So you can take something from the sale of chocolate bars, okay, and you can apply it to a tax system. Okay? You can take an insight from, um... Well, actually, okay, you can take an insight from a supermarket loyalty program- Yep ... okay, and you can, uh, you can give advice to the treasury on how they should design taxation. How? How? [laughs] Okay. Very simple. Uh, let's take the Boots Advantage card. You get... Marvelous thing, by the way. I helped launch it. Oh, okay. Um, yep. Absolutely. My mum is a big fan. [laughs] No, no, actually fantastic thing. Well, there, there,

Rory Sutherland 28:40 there, there's some fascinating things about the Boots Advantage card, one of which is in defiance of, um, logic, uh, or economic logic rather. What quite often happens is wife gets ill. Typically m- more, more female than males have a, an Advantage card, just to be... I'm not being sexist, okay? Wife gets ill, okay, says to husband, "Ooh, I need some Nurofen and some whatnot," okay? "Can you go to Boots and buy me these various medical provisions?" And just as he's leaving, okay, she says, "Oh, by the way, take my Advantage card so you'll get the points." He goes along, picks up the Nurofen and, you know, whatever else, goes to the till, hands over the Advantage card, at which point the, the, the person at the till says, "Actually, you can buy these all on the points you've got on the card." And he goes, "Ka-ching. Brilliant. Okay." [laughs] And goes back to wife, says, "Um, I, uh, ma- I didn't actually pay for any of this. I got it all with your points." And she's furious, right? Now you're gonna go, "Well, okay, what the hell is going on there?" Because it's immaterial in economic terms whether you spend the points on Nurofen or whether you spend it on a Chanel Number 19. However, we prefer buying indulgences on points than with money- Hmm ... because it's less guilt inducing. Hmm. Okay? It's rather like, you know, it's a lot less painful going business class using your Avios points than it is using your money, [laughs] okay? Yep. Um, and even though the Advantage points actually have a cash value, okay, nonetheless, there's a very clear demarcation in the mind, cookie jar accounting Richard Thaler calls it, between what you, you know... We actually apportion different forms of money towards different ends. Okay. And therefore, if you use what's the treat budget for the staples purchases- Yeah ... it violates some basic sense of, of internal mental accounting. Okay. Now, the other one that's interesting is that let's imagine that instead of launching the Advantage card, Boots had simply dropped all their prices by 4% rather than giving 4% back in the shape of points, okay? Um, uh, three years, three years later, everybody would've forgotten about it. Nobody would've noticed much at the time, actually, okay, except the really anally retentive kind of, you know, value chasers. Yeah. Okay? And everybody would've forgotten about it six months later. Yeah. The points retain their salience, God, what is it? Getting on for, I don't know, must be 15, 20 years after that card was launched. Now here... Okay, so here's my suggestion, right? We should never, ever cut taxes. We should pay people a rebate when it's possible. Because a reduction in the tax rate basically loses meaning. It has a half-life of about 12 months-

Ali Abdaal 31:16 Yeah

Rory Sutherland 31:16 ... in terms of its meaning and significance. A- an annual tax rebate, A, a lump sum will be appreciated far more than just a, a reduction in your ex- your outgoings.

Ali Abdaal 31:27 Yeah.

Rory Sutherland 31:27 Okay? Secondly, it will retain its salience in perpetuity. Thirdly, because it's mentally framed as a bonus, not a price cut, okay? Under exceptional circumstances, e.g., someone invades a neighboring country, okay, there's a massive hike in the price of fuel, there's a problem with the tax take for a short term, you can withdraw the rebate much more painfully... much more painlessly than you can actually increase taxes.

Ali Abdaal 31:54 Mm.

Rory Sutherland 31:54 Okay? You can say, "For this year only."

Ali Abdaal 31:58 Yeah.

Rory Sutherland 31:58 Okay? Whereas we tend to feel, I think, if tax rates go up, that it's a ratchet. It's gonna be a long, long time before they go back down again.

Ali Abdaal 32:05 Yeah.

Rory Sutherland 32:06 So this business where you can literally take psychological insights from a loyalty program-

Ali Abdaal 32:11 Yeah

Rory Sutherland 32:12 ... and deploy them at a com- in a completely different domain.

Ali Abdaal 32:15 Hmm.

Rory Sutherland 32:15 And now what m- militates against it is this status idea in conversation, okay? Where important people talk about big things like interest rates, you know, and the Fed.

Ali Abdaal 32:28 Yeah.

Rory Sutherland 32:28 Okay? And you delegate small things down to junior people.

Ali Abdaal 32:33 Yeah.

Rory Sutherland 32:33 Now, I have this, I have this mantra which is, "Dare to be trivial," because I argue that in complex systems, the interesting pattern is just as likely to reveal itself at the level of chocolate bars and loyalty programs. Okay?

Ali Abdaal 32:47 Yeah.

Rory Sutherland 32:47 Um, I'll give you another beautiful example of, of, of this, okay? Now, those of you who are older listening will remember a thing called BT Friends and Family, and that's where you nominated 10 of the people you called the most, and you got 15% off those calls. Now, stand-up comedians talked about Friends and Family. People in the pub talked about which 10 numbers, and it was a bit embarrassing because actually one of their friends and family [chuckles] was, you know, I don't know, a sex line or whatever it might be.

Ali Abdaal 33:14 [laughs]

Rory Sutherland 33:14 Okay? But that, that achieved a level of mental saliency. Now, it was 15% off 10 numbers. Now admittedly, if you chose your top 10 because of the Pareto effect, that was probably like a 10% discount. People were engaged with Friends and Family over 10 years. If BT had simply dropped their call prices across the board by 15%, everybody would've forgotten about it almost immediately. Now, here's why I say dare to be trivial, right? If you want to understand patterns that are telling, there is no telling... Because it's kind of fractal, there's no telling at what scale the pattern is going to be most salient or most visible.

Ali Abdaal 33:52 Yep.

Rory Sutherland 33:53 Okay? And it is absolutely foolish to view the study of supermarket loyalty programs or chocolate bar promotions as being lower status than talking about Janet Yellen and the fucking Fed. Okay? And let me explain why with a very simple point. Okay. If you had gone to the Galapagos Islands in the early 19th century, you would've seen a bearded guy in an enormous hat wandering around measuring the beaks of finches, okay? And almost anybody would've looked at this [laughs] and thought, "What a twat." Okay? However, it was in those telling details, you know. I mean, you can't get much more anal than, you know, finch beak comparison, right?

Ali Abdaal 34:33 Yeah.

Rory Sutherland 34:33 I mean, I would regard discussing loyalty programs as, you know, comparatively high-minded pursuit [laughs] compared to that.

Ali Abdaal 34:39 Sure.

Rory Sutherland 34:40 And yet, that, that's where the shit reveals itself.

Ali Abdaal 34:43 Yep.

Rory Sutherland 34:44 And so I think this business of status where status is appropriate where big things have big effects and small things... In, in the real world, because the human brain... Creative people, okay, creative people are annoying to ordinary people. I, I suddenly realized my daughter has, um, one of my daughters has sort of ADHD, and it's mostly hereditary, and I suddenly realized when I looked at the diagnosis of it that I'd had it myself, and one of the things it creates is a kind of incomprehension with people who don't have it-

Ali Abdaal 35:14 Hmm

Rory Sutherland 35:14 ... because you don't have a sense of proportion in some, some respects.

Ali Abdaal 35:18 Okay.

Rory Sutherland 35:18 And then it occurred to me, in complex systems, in dealing with complex systems problems or creative problems where there are potential butterfly effects, you're right not to have a sense of proportion because the solution is just as likely to lie in something seemingly trivial or tangential as it is in something notionally important. Okay? So actually, the sense of proportion and the status around what you might call the higher twaddle, which is it's high status to talk about interest rates, and then what you end up with then is your insistence on only talking about what you might call high-end things, like the inflation rate, the interest rate, blah, blah, blah, blah, blah. Okay? What that does is it massively limits your creative solution space because you're left with a tiny little Overton window of a few seemingly big things that you're allowed to tweak.

Ali Abdaal 36:09 Hmm.

Rory Sutherland 36:10 And ac- actually, loads and loads of really interesting solutions that lie elsewhere are totally unexplored because they're beneath your dignity.

Ali Abdaal 36:19 Yeah. W- okay, where's the, where, where's the balance here? Because traditional business advice is, let's say you're the CEO of the company. You focus on the big picture stuff, the mission, the vision, the values, the stuff where it will, by changing the course 1%, that multiplied out over the 100 people you've got in your company means that the company will change direction. Um, but then you get stories of people like Steve Jobs getting involved with like line height and letter spacing and font choice and all that stuff-

Rory Sutherland 36:44 [laughs]

Ali Abdaal 36:44 ... which is completely counter to what a CEO of a company should be doing.

Rory Sutherland 36:47 Uh, uh, uh, uh, uh, uh, uh, uh, uh.

Ali Abdaal 36:49 In theory. [laughs]

Rory Sutherland 36:50 Okay.

Ali Abdaal 36:51 What do you reckon?

Rory Sutherland 36:51 I, I, okay. I, I did go and see a talk by Jony Ive once, and I must say there, there was more discussion of bezels than I thought was altogether healthy. Okay. But, um- Well, let me, let, let me tell a story, okay, which is that in, uh, I think practically, you know, two weeks before the launch of the iPhone, Steve Jobs had an, a, a, you know, an early prototype in his pocket with a plastic screen. And, uh, he kept his keys in the same pocket, which frankly is stupid. I, you know, uh, you know, get, get a grip, Steve. You know, keys in the left pocket, phone in the right. It's not difficult. But anyway, for whatever reason, Steve [laughs] kept his keys in the same pocket as his phone, and the screen was scratched. And more or less with, you know, weeks to go, he just went, "Okay, can the screen... We're going for Gorilla Glass." Okay? And I think it was actually a bit unpleasant because the first delivery of Gorilla Glass turned up with Foxconn at 2:00 in the morning, and all the workers were basically turfed out of their beds to start assembling [laughs] iPhones, okay? Um, but nonetheless, okay, very, very few people would've done that, would've had that perfectionistic urge. And actually, you know, art, artistry, craftsmanship is to some extent about a lot of proportion. In other words, you know, God is in the details, as... I think it's Mies van der Rohe, isn't it? You know, the fact that I- I mean, service to some extent, okay, any service business to some extent achieves its distinctiveness in trivial details-

Ali Abdaal 38:28 Hmm

Rory Sutherland 38:29 ... um, every bit as much as it does in, uh, you know, uh, setting service level agreements, which are... Because let's face it, if, if, if, if your, if your table stakes are the same as everybody else's table stakes, no one's really gonna comment or notice.

Ali Abdaal 38:42 Yeah.

Rory Sutherland 38:43 Whereas you have that extraordinary place, the, um, I think it's called The Magic Castle in Los Angeles, which is a pretty unprepossessing hotel, which always seems to be in the top 10 hotels in, on TripAdvisor. And one of the reasons is, not the only reason, I'm sure the staff are pretty great as well, they have this popsicle hotline, which is your kids are by the pool, and they pick up this red phone and go, "Popsicles, please." And someone comes out... They're ice lollies to a British audience. And someone basically comes out with a tray of ice lollies for free. Now, it costs them almost nothing, but actually directing service gestures towards people's kids is a particularly clever thing to do actually. Uh, you know, a good bit of evolutionary psychology here. But making a fuss of people's kids actually gratifies the parents more than if you make a fuss of them.

Ali Abdaal 39:30 Hmm.

Rory Sutherland 39:30 Great bit of advice from, um, a great man called Mr. Sridhar who ran Ogilvy in India, was always, you know, "When you buy a present, buy it for the client's children." Um, you know, good Darwinian stuff. Um, and, um, uh, but you know, I, I, I stayed in a hotel in Portugal once, which was a pretty good hotel, but then when, because we had young children, uh, every day we came back to our room, the, um, uh, the people doing the room had turned the towels into an elephant or a swan or something like this-

Ali Abdaal 40:00 Yeah

Rory Sutherland 40:00 ... which my children at the time, you know, were absolutely ex- They were six. I mean, they're not 20.

Ali Abdaal 40:05 [laughs]

Rory Sutherland 40:05 Okay? Uh, you know, they were absolutely ecstatic about it, okay? You know, that sort of s- stuff is, in many ways, it's, it, it's very diff- You can't formularize it because the very fact that you're doing something personalized and discretionary is what gives it all the meaning, you know?

Ali Abdaal 40:21 Hmm.

Rory Sutherland 40:22 The degree of personalization and the degree of discretion. You know, no one would ever say, "I thought that was an extremely unsatisfactory hotel because they failed to fold my towels into, uh, strange animals," okay? That's exactly the point. That's why it seems amazing because politeness, good manners are to some extent discretionary effort. You know, holding a door for someone, writing a thank you letter-

Ali Abdaal 40:42 Hmm

Rory Sutherland 40:43 ... et cetera. I do have an interesting debate about that in this week's Spectator, which is that, um, there will be so much suspicion that we've got ChatGPT to write our thank you letters-

Ali Abdaal 40:52 [laughs]

Rory Sutherland 40:52 ... that the only way to overcome this is to actually fill our thank you letters with profanities.

Ali Abdaal 40:57 [laughs]

Rory Sutherland 40:58 So, "Thanks very much for the fucking d- dinner party," okay? Uh, "It was totally boss. You know, viva Il Duce." 'Cause of course, ChatGPT can't say anything right-wing and it can't say anything rude, okay? And it can't say anything opinionated. So what we'll have to do is all our personal correspondence will have to become kind of, you know, absolutely profane-

Ali Abdaal 41:18 Hmm

Rory Sutherland 41:18 ... in order for it to seem sincere.

Ali Abdaal 41:21 This episode is very kindly brought to you by WeWork. Now, this is particularly exciting for me because I have been a full-paying customer of WeWork for the last two years now. I discovered it during, you know, when the pandemic was in, on the verge of being lifted, and I'd spent, like, the whole year just sort of sitting in my room making YouTube videos. But then I discovered WeWork, and I was a member, me and Angus, my team members, we were members of the WeWork in Cambridge, and they have, like, hundreds of other locations worldwide as well. And it was incredible because we had this fantastic, beautifully designed office space to go to to work, and we found ourselves, like, every day just at 9:00 in the morning just going to WeWork because it was a way nicer experience working from the co-working space than it was just sitting at home working. These days, what me and everyone on my team has is the All Access Pass, which means you're not tied to a specific WeWork location, but it means you can use any of their several hundred co-working spaces around London, around the UK, and also around the world. And one of the things I really love about the co-working setup is that it's fantastic as a bit of a change of scenery. So these days I work from home. I've got the studio at home. But if I need to get some focused writing work done and I've been, uh, I'm feeling a bit drained just sitting at my desk all day, I will just pop over to the local WeWork, which is about a 10-minute walk from where I am. I'll take my laptop with me. I'll get some free coffee from there. I'll get a few snacks, and it's just such a great vibe, and you get to meet cool people. I've made a few friends through meeting them at WeWork, and it's just really nice being in an environment almost like a library but kind of nicer because there's, like, a little bit of soft music in the background, and there's other kind of startup bros and creators and stuff in, in there as well. And it's just my absolute favorite co-working space of all time. It's super easy to book a desk or book a conference room using the app, and it's a great place to meet up with team members if you're gonna collaborate and you all live in different places. They've got unlimited tea and coffee and herbal teas and drinks on tap, and they've got soundproof booths in which to take Zoom calls and meetings. Anyway, if you're looking for a co-working space for you or your team, then I'd 100% recommend WeWork. Like I said, I've been a paying customer for theirs for the last two years, which is why it's particularly exciting that they're now sponsoring this episode. And if you wanna get 50% off your first booking, then do head over to we.co/ali, and you can use the coupon code ALI at checkout, A-L-I, to get 50% off your first booking. So thank you so much, WeWork, for sponsoring this episode. I was at this, uh, marketing mastermind conference type thing in Miami last week. Uh,

Ali Abdaal 43:19 and one of the guys gave a really good talk about, um- Word of mouth marketing

Rory Sutherland 43:23 Yeah

Ali Abdaal 43:24 Uh, and one of his main points was that the reason, the w- the way you get word of mouth is by having these kind of talk triggers-

Rory Sutherland 43:31 Yeah

Ali Abdaal 43:31 ... having certain things about the service or something that are remarkable and therefore worth remarking on

Rory Sutherland 43:37 Purple Cow, I think that's a book by Seth Godin, where he almost suggests, I think Purple, in Purple Cow, you build talkability into the product

Ali Abdaal 43:45 Mm. Yeah

Rory Sutherland 43:46 And I often say that if you can build something into the product and imagine a standup... We've, we've got a... Funnily enough, there's a, um, a, a, a brilliant creative approach I can't tell you about that Ogilvy's just come up with for the mayor of Lo- the, the Mayor of London, okay? And it meets this perfectly, which is if you can imagine a standup comedian doing a routine about your product-

Ali Abdaal 44:11 Mm

Rory Sutherland 44:11 ... okay, um, then you're onto something. You know, you know, in, in other words, if it, it almost requires you to, uh, you know, sacrifice your own, you know, some of your own seriousness. This is what I mean about status, okay? The urge to appear serious is in many ways, I think a disaster in marketing because marketing, marketing looks at the world from at a 90-degree angle to the rest of the organization. The rest of the organization looks at it through an efficiency lens, actually an exploit lens, not an explore lens.

Ali Abdaal 44:45 Mm.

Rory Sutherland 44:46 And everything is an optimization problem-

Ali Abdaal 44:48 Yeah

Rory Sutherland 44:48 ... okay? We look at things through the consumer's own eyes over time. They look at things as a snapshot aggregate-

Ali Abdaal 44:57 Yeah

Rory Sutherland 44:57 ... okay? As a result, their view of the world is when it comes to customers, very stupid because the snapshot aggregate doesn't tell you anything about your customers. In fact, it's woefully misleading because the average customer probably doesn't even exist, okay? And so I'll give you a perfect example of that, which I've been ranting about repeatedly, which is High Speed 1 is a fantastic idea. By the way, it took a long time to get off the ground. And I used to use it in the early years, and you practically got a carriage to yourself.

Ali Abdaal 45:26 Yeah. Oh, I wonder if you can give some context on that for the international audience. Yeah

Rory Sutherland 45:28 Sorry for the... Oh, gosh. International audience-

Ali Abdaal 45:30 [laughs]

Rory Sutherland 45:30 ... my goodness. Okay. So High Speed 1 runs from Kent, which is a count- a very big county, uh, and gloriously beautiful, um, he says, as a Kent property owner. Um, uh, the, um, but it's adjacent to London, but it's, it, at its furthest point it's about 60 to 70 miles from Central London, okay? Think of it as kind of Connecticut plus the southern bit of, what is it? Massachusetts. I don't know.

Ali Abdaal 45:54 Yeah

Rory Sutherland 45:55 Some- something like that. What they did is they built on the back of the Eurostar. They wouldn't have built it out otherwise. But since there was a high-speed line going to Paris, uh, from St. Pancras to the coast in Folkestone, they decided that the Eurostar didn't generate enough traffic to justify this line on its own, so they ran, uh, local, effectively commuter services at very high speed. So suddenly you could get from Ashford, uh, to London in 37 minutes or 30 minutes to Stratford, would you believe it? Um, whereas previously it had taken, uh, I think 90, if I'm right. It might have been slightly less. Um, it, it was certainly over an hour, okay? Now, if you think about that, what that means is that someone in Ashford who decides to work in London effectively saves an hour a day, 200 times a year, probably a bit less with flexible working, but you get my point. Okay? H- now, what the people who design railways do when they make a justification for the investment in time saving is they basically give an economic v- opportunity cost to all time spent on a train, okay? And they calculate the value of the time saving by the assumption, which is ludicrous by the way, that all time spent in transit is economically unproductive.

Ali Abdaal 47:16 Mm.

Rory Sutherland 47:16 In fact, as anybody who works on a train knows it can be the best moment of your... I fantasize about three-hour train journeys-

Ali Abdaal 47:22 Same. [laughs]

Rory Sutherland 47:22 ... because you can actually get your shit done, right?

Ali Abdaal 47:24 Exactly. [laughs]

Rory Sutherland 47:25 So, so the whole premise is fucking stupid to begin with, okay? But anyway, even on that premise, okay, it doesn't distinguish between one person saving an hour 200 times a year and 200 people saving an hour once a year.

Ali Abdaal 47:39 Sure.

Rory Sutherland 47:40 Now, High Speed 2, which runs from London to Manchester, we're not gonna get... Not many people can afford to commute from Manchester to London, and so it's not the same as Canterbury, Ashford, Folkestone-

Ali Abdaal 47:51 Yeah

Rory Sutherland 47:51 ... Ramsgate, okay? It's not the same as those places where you could conceivably work in London at least three days a week, maybe five, and pay the commuting cost, okay?

Ali Abdaal 47:59 Yeah.

Rory Sutherland 48:00 This is a journey which all but a very, very few people take once a year, nought times a year, maybe in my case, four times a year.

Ali Abdaal 48:09 London, London-Manchester.

Rory Sutherland 48:09 London-Manchester.

Ali Abdaal 48:10 Sure. Yeah.

Rory Sutherland 48:10 Okay? Now, saving a lot of people an hour infrequently looks the same to the statistical model as saving a few people an hour every day-

Ali Abdaal 48:21 Mm

Rory Sutherland 48:21 ... or very frequently, okay? I would argue that in psychological and behavioral terms, these things, although mathematically identical in the aggregate-

Ali Abdaal 48:29 Yeah

Rory Sutherland 48:29 ... are totally different. One of them means, "Hey. Wow, I can now get a job in London," or for a Londoner, which wouldn't be a bad move by the way, "Hey. Wow, I can move to Canterbury." Right? All right? Or the seaside, Deal, you know, Walmer. Sorry, I'm, I'm just helping out the local real estate-

Ali Abdaal 48:45 Of course

Rory Sutherland 48:45 ... you know, right.

Ali Abdaal 48:45 Absolutely. No, yeah. [laughs]

Rory Sutherland 48:46 Okay. Right. Okay. Deal, Walmer, Sandwich, okay, Broadstairs, Winstable. Okay? Now, uh, the interesting thing there is I, I, I think it's absolutely fallacious to treat those things as if they're commutative, as if 1 times 100 is the same as 100 times 1.

Ali Abdaal 49:03 Mm.

Rory Sutherland 49:04 And what a marketer would do is a marketer would say, "Well, how is this gonna change behavior looked at through the eyes of 20 different people?" And they might look at High Speed 2 and go, "Meh." And they might look at High Speed 1 and go, "Actually, that's a bit of a game changer."

Ali Abdaal 49:19 Yeah.

Rory Sutherland 49:19 Okay, it's a niche audience, but it's a hell of a game changer. This will actually change... Bear in mind by the way when it was built, just to be clear, um, East Kent was, although, you know, one of the home counties, it was the only part of the Southeast England where average property prices were less than five times average income. It was to some extent economically Uh, a little deprived. And therefore, uh, you spending this money was not an unintelligent thing to do at all. So what I'm saying is that as a marketer, you will always be at odds with the rest of the organization because you're looking at things at literally orthog- or, or actually, um-

Ali Abdaal 49:57 Let me get it out. Yeah

Rory Sutherland 49:57 ... perpendicularly to them. They're looking at aggregates 'cause they're reporting up to the shareholders.

Ali Abdaal 50:02 Yeah.

Rory Sutherland 50:02 Okay? And they're interested in just aggregate figures, how does this all add up, and where necessary we'll take an average. What we're doing is actually taking the consumer's eye view, which is literally at 90 degrees. So this idea, by the way, that data is objective is absolutely untrue. What data tells you entirely depends on the context and the angle at which you look at it.

Ali Abdaal 50:25 Mm.

Rory Sutherland 50:25 So quite often, um, sequential, um... What, what, what's the correct term for it? Cohort data or, um, longitudinal data, okay? Tells a very, very different story to comparisons of snapshot data.

Ali Abdaal 50:39 Yeah.

Rory Sutherland 50:39 So now, now just to be clear about this, okay, I'm not saying that in- wealth inequality isn't a problem, okay? But I'm saying that if you want to solve the problem, you've got to actually define it properly.

Ali Abdaal 50:48 Mm.

Rory Sutherland 50:49 And one of the interesting things is that actually quite a few people will go from the poorest quartile to the richest quartile of the population in the course of their lifetime. Most data on wealth inequality, on widening wealth inequality just compares the top and bottom quartile at one point to the top and bottom quartile at another point without not acknowledging that they're not the same people.

Ali Abdaal 51:12 Mm.

Rory Sutherland 51:13 So for example, a newly qualified barrister, probably very heavily in debt, probably qualifies as being notionally in the poorest decile of the population. Now, nobody thinks of that guy as poor 'cause his prospects are pretty good. In fact, banks will lend the guy probably pretty readily, okay? But it's vi- it's vitally important that we, we... The idea that when you have a chart or when you have data that it will deliver objective information regardless of how you actually interrogate it-

Ali Abdaal 51:42 Mm

Rory Sutherland 51:42 ... is complete nonsense. You can take exactly the same data, and if you want to, you can use it to tell two completely different stories, you know. Quite a lot of people... By the way, I mean, you know, one facet of wealth inequality is simply that old people are richer than poor people 'cause they've bought, they've accumulated more shit over time, okay?

Ali Abdaal 52:01 Yeah.

Rory Sutherland 52:02 Now, you know, now you might argue, you could actually... Interestingly, you could have a society where everybody was getting poor, wh- which was getting poorer on average over time, but where everybody was getting richer over the course of their life, okay? Now, that actually might be a weirdly relatively contented society, whereas a society which was getting richer on average, but where everybody was getting poorer over the course of their life psychologically would be a completely different thing. They're both possible, by the way. And they're, they're both unusual-

Ali Abdaal 52:33 Yeah

Rory Sutherland 52:33 ... but they're both theoret- both, both situations are theoretical.

Ali Abdaal 52:36 I'm struggling to imagine this in my mind. Can you-

Rory Sutherland 52:38 Yeah, no, no, no

Ali Abdaal 52:38 Oh, yeah. [laughs]

Rory Sutherland 52:38 So you just have... In other words, you have young people who are getting much, much richer all the time, and then just going into sort of total decline, okay-

Ali Abdaal 52:46 Okay

Rory Sutherland 52:46 ... over, over life. But nonetheless, the aggregate population is getting richer. I mean, there are-

Ali Abdaal 52:51 Okay, fine. Yeah

Rory Sutherland 52:52 ... there are oth- there are other debates which no one can touch, um, statistically, which is, uh, everybody treats equal opportunity as though it's one generation at a time, okay? In other words, that your... In other words, your prospects should be independent of your parents' wealth-

Ali Abdaal 53:11 Yeah

Rory Sutherland 53:11 ... means.

Ali Abdaal 53:12 Sure.

Rory Sutherland 53:12 Okay? And it's axiomatic that equality of opportunity means that.

Ali Abdaal 53:18 Yeah.

Rory Sutherland 53:18 Okay?

Ali Abdaal 53:18 Yeah.

Rory Sutherland 53:19 However, I think we would find such a society almost intolerable.

Ali Abdaal 53:24 Oh, how so?

Rory Sutherland 53:25 Well, i- i- if in other words, you could go from, you know, very rich par- uh, this must have happened in Cambodia under Pol Pot, I'm guessing, okay? But if you had that thing where you, you know, literally people with, you know, wealthy middle-class parents were forced to work in a lathe factory regardless of what they wanted to do, et cetera, in the interest of fairness, okay? Because undoubtedly, your upbringing has some bearing on your preferences.

Ali Abdaal 53:49 Yep.

Rory Sutherland 53:49 You know? Uh, and actually, th- this is an interesting case because what we regard as statistically desirable might actually not be very pleasant in reality simply 'cause you could fall to... You've got to remember that for people to rise fast... Okay, different to the 1960s. You had massive expansion of the middle class, right? So you could have an awful lot of people could be upwardly mobile-

Ali Abdaal 54:10 Yep

Rory Sutherland 54:10 ... at that time. Unless you actually expand the middle... I, I would argue the middle class is already uselessly [laughs] large in many respects, okay? But unless you, unless you continue to expand the middle class to, to the point of absurdity, um, you, you're not gonna have that. That's not gonna... That's a one-off. That's not a, you know, uh, uh, that's not a, um, an eternal, uh, opportunity. And actually, uh, you might argue that the price in, in how far people have to fall in terms of loss aversion would actually outweigh the pleasure of the people who gained.

Ali Abdaal 54:44 W- what is marketing and, like,

Ali Abdaal 54:48 what got you interested in it in the first place?

Rory Sutherland 54:51 Um, right. Well, very interestingly, I... As I said, there was this, you know, slightly banal end of the '80s, here's a job which isn't boring like banking-

Ali Abdaal 55:00 Mm

Rory Sutherland 55:00 ... uh, and yet it's reasonably lucrative. It's not totally, you know, penurious like, um, uh, you know, publishing or something, okay? So that, that drew me in. And then by ha- very, very happy accident, I didn't get a job in a conventional ad agency. I nearly did at two of them. Just missed out and ended up getting a job at a place called then Ogilvy & Mather Direct, which was a direct marketing agency, which is selling off the page direct mail, um, telemarketing, okay?

Ali Abdaal 55:29 Okay. Where you're sort of-

Rory Sutherland 55:31 That, that was my graduate training job. And David Ogilvy actually-

Ali Abdaal 55:35 Yeah

Rory Sutherland 55:35 ... um, recommended that anybody who wanted to be an advertising creative should spend their first four years in direct marketing learning what actually works.

Ali Abdaal 55:42 So, so what is direct marketing as distinct from other forms of marketing?

Rory Sutherland 55:45 So, well, actually, most digital marketing would probably be defined as direct marketing by the, you know, definition of the time.

Ali Abdaal 55:50 Yeah.

Rory Sutherland 55:50 But back then you didn't have email. I suppose you had fax marketing, telephone marketing because- Um, uh, or it was anything which effectively sought to, uh, build a relationship with the person you're selling to. So you found their name and address at the time, which meant you could send them direct mail, or you mailed them for acquisition, you used direct mail for acquisition, or you, um, uh, uh, you know, or, or you operated a call center. So it was anything where there was a one-to-one contact direct because as distinct from marketing products which are sold through intermediaries like supermarkets. Okay? Okay. So like a, a TV ad is- So if, if Dove, if Dove writes to a consumer- Yeah ... that's direct marketing. Yeah. Okay? If Dove places an ad on TV and you walk into Tesco's and buy some Dove- Yeah ... that's not. Okay? Oh, fine. You got, got it? Yeah. Got it. Mm-hmm. So a Facebook ad would be, uh, well, if it's like a- Yes, it probably is because you know who it is, who's... Yeah. Yeah. Uh, we, we never realized we were gonna create that monster, uh, in a way, and it's gone from being, um, direct marketing's probably gone from being underused to overused, actually. Oh, okay. How so? A typical neophilia. You know, when a new product, when a new, um, medium comes along, we tend to overweight the things the new medium allows you to do that the old one didn't. Yeah. Okay? And we underweight things that the old one did that the new one doesn't do very well. Sure. It's rather like the Kindle. You know, when a, when, when the Kindle first came along, I naively said, "Oh, this is just gonna replace books." Hmm. Now, of course, it doesn't replace books because, okay, probably about 40% of books are bought as gifts- Hmm ... in, by volume. Yeah. I don't know about by value. Okay? Um, you know, Christmas is a huge swathe of the publishing game. Hmm. The biggest categories in books are kind of, well, cookery, gardening, lifestyle, architecture, that kind of shit, which requires really high-quality photography. Yeah. Okay? Um, so actually, you know, the Kindle isn't gonna do either of those two jobs just, uh, just from the off. If it's purely textual non-fiction reference, huge advantages there. If the person buying the, the book travels a lot and loves the fact that they can be sitting at 35,000 feet and over Wi-Fi can buy a copy of a novel, that's miraculous, okay? And don't get me wrong, it's a fantastic advantage over conventional books. But equally, uh, we're in danger of throwing the baby out with the bath water, which I think we're doing with marketing as well to the same extent. We're forgetting what w- w-- In other words, being able to measure and to quantify and to justify your spend in direct media, which was always what made them different to some extent. There was a direct attributable measurement of behavioral change- Yeah ... as a result of your particular, um, uh, your particular piece of stimulus ad. Yeah. Okay? Um, uh, actually by the way, it was not nearly as direct and attributable because obviously if you're doing direct marketing for a strong brand like American Express, which was a big advertiser- Hmm ... you've got a proportionally much bigger response than if you're advertising for someone, uh, on behalf of someone they'd never heard of. So it was a bit of a nonsense to claim that the, uh, the, you know, the value of the, uh, of the acquisition was entirely attributable to the letter you sent the customer. Sure. Okay? Um, but nonetheless, you know, that measurability was valuable, but unfortunately people have got so obsessed with it that they're now unable to do anything that you can't perfectly quantify. Yeah. And actually, there are quite a lot of valuable marketing activities which I would argue are actually probabilistic. Oh. You know, you just make a load of noise because I can't tell to a great degree of exactitude who my customers are going to be in five years' time, so the best thing I can do is make sure they've heard of me so that should they enter the market for the product I sell, they at least consider what I have to provide. Yeah. Okay? And it's doing it in backwards. In other words, let's not try and find the customers, let's make sure the customers know a lot of, enough about us that they'll come and find us. And they're, they're complimentary by the way. You know, you can do both. They're not mutually exclusive. Hmm. But because the one is both harder to measure and slower to reveal its results- Yeah ... than the other, we've disproportionately favored what's quantifiable over what's important. Because it's quantification bias again, it's that same thing all over again. I mean, sometimes called the, um... Who the hell was the guy who kind of, um, was behind the Vietnam War, metrics in the Vietnam War? Which w- it- it's, it's occasionally called... I'll remember his name in a second. Um, the, the problem it creates, there are many, many long-term things which will never be measurable or attributable simply because in between the initial stimulus and the eventual purchase too much happens. Yeah. I mean, famously someone said to, to Jeremy Bulmer, they said, um, a great, wonderful advertising guru who died earlier this year at 92. They said, "It w- you know, I've just bought an Aston Martin. It won't surprise you to know I bought the Aston Martin as the result of an advertisement I saw. What may surprise you is I saw that advertisement when I was 12 years old." Okay. And so, you know, a large part of this stuff is probabilistic. I'll-- Well, the, the perfect demonstration of this to me was if I'd sat down and said, "Who is the target audience for my book, Alchemy?" I would've defined it in terms of people interested in marketing, people interested in psychology, people interested in behavioral science, and those people, it's true, are disproportionately interested in this kind of thing. But outside those areas of interest, there are probably another million people who would be, who would quite enjoy reading the book out of curiosity. Yeah. And one day, it was June, I think in about 2018 if I got this right, might've been, yeah, um, I appear on the Chris Evans Breakfast Show, audience of about a million people, and Chris Evans interviews me about the book. Um, uh, and you know, I give a reasonably good account of things. What I didn't know is that Chris then went to the beach 'cause it was being broadcast from Cannes for the advertising festival, and one of Chris' assistants had just read the book and said- Hmm ... "Chris, you'll like this, and this guy's probably in Cannes 'cause he works in advertising." You see. Hmm. The following day, which I didn't know 'cause I was pottering around, obviously not listening to Virgin because I was in France, okay, Chris had finished the book and was raving about it, quoting from it and everything else. The first I got to know about this was I went onto Amazon to look at the sales ranking, okay? And I was outsel- I outsold J.K. Rowling for about a week. I outs- so I couldn't outsell The Book of Nom. Um, I outsold the Hi- the Highway Code, and I outsold The Hungry Little Caterpillar for a day, I think, okay? Um, okay.

Ali Abdaal 1:02:33 Mm-hmm.

Rory Sutherland 1:02:33 Uh, but what was interesting was that it was entirely the result of the radio program reaching audiences you n- in other words, you never would have defined in advance, okay? And I was, I think I was number eight on Amazon overall for a few days. And I suddenly realized, okay, you know, there are two directions. Th- this is what bees do, you know. There's exploit, explore.

Ali Abdaal 1:02:55 Mm.

Rory Sutherland 1:02:55 There's we know where the pollen is, let's go and get more of it, and there's this supply of pollen, um, is not the sum total of available resources-

Ali Abdaal 1:03:05 Yeah

Rory Sutherland 1:03:05 ... we need to explore elsewhere partly to future-proof the hive-

Ali Abdaal 1:03:09 Yeah

Rory Sutherland 1:03:09 ... against, you know, a sudden depletion of your existing supply, okay? And partly, by the way, just for the chance of getting lucky.

Ali Abdaal 1:03:16 Hmm.

Rory Sutherland 1:03:17 You know? If you don't actually invest a certain amount in explore rather than exploit, you'll never have a kind of big bonanza upside discovery. You'll never have a pleasant surprise.

Ali Abdaal 1:03:27 Mm.

Rory Sutherland 1:03:27 You'll only have nasty surprises.

Ali Abdaal 1:03:30 Yeah.

Rory Sutherland 1:03:30 Which is interesting because when you think about it, most businesses are optimized around exploit.

Ali Abdaal 1:03:35 Yeah.

Rory Sutherland 1:03:35 Once they pass the entrepreneurial phase, it's okay, we know what we're doing now, let's just do more of it more efficiently.

Ali Abdaal 1:03:41 Hmm.

Rory Sutherland 1:03:42 And in the short term, of course, it's great that, you know, if you got rid of the random bees who troll around looking for pollen at random, yep, in the short term, your pollen and nectar collection figures would look more impressive. The problem is, is that it's downhill from there on.

Ali Abdaal 1:03:57 Hmm.

Rory Sutherland 1:03:58 You know, you can't cost cut your way to growth, putting it another way.

Ali Abdaal 1:04:02 All righty. So on this point about kind of defining your audience,

Ali Abdaal 1:04:06 um, we were having, honestly, like sort of, uh, before you came here, we were having a bit of a dilemma tr- tr- trying to figure out, like, who is the target audience for a conversation like this, and then that got us thinking who's the target audience for the podcast because we have, like, an average of, like, who I kinda think is the person who watches, watches this podcast, which is probably male, probably in the West, probably a few years younger than me, so maybe in like early to mid-20s, probably has like a normal job, normal job. Uh, probably is keen to start some kind of side hustle 'cause they like the idea of financial independence. But that's, like we have a huge audience on the YouTube channel and the podcast, which is all over the world-

Rory Sutherland 1:04:41 Hmm

Ali Abdaal 1:04:42 ... round about 60/40 male/female, like all sorts of age groups, uh, people from, you know, I get emails from people who are in their 60s who listen to the podcast.

Rory Sutherland 1:04:49 Oh, absolutely. Yeah. Yep.

Ali Abdaal 1:04:49 And it's like, like so h- any, any ideas on, on how to strike this balance between it's worth defining a target audience versus it's not worth defining a target audience? [laughs]

Rory Sutherland 1:04:58 Uh, one thing that people get muddled up with is user imagery versus target audience.

Ali Abdaal 1:05:02 Okay.

Rory Sutherland 1:05:02 Because if you look at ads for small cars, they will almost certainly show the car being driven around by a sort of 32-year-old, 28-year-old, typically female person, which is the user imagery, okay? Overwhelmingly, all new cars are bought by the relatively elderly, all cars bought from new. Uh, I think the average age of a Volkswagen buyer is probably about 54. New.

Ali Abdaal 1:05:27 Oh, wow.

Rory Sutherland 1:05:27 A new Volkswagen.

Ali Abdaal 1:05:28 Okay. Yeah. Sure.

Rory Sutherland 1:05:29 I mean, you know, I, I've only had two new... No, I've only had one new car in my entire life. In fact, I'm 57, okay? Maybe I've had two, okay? Now, the difference there is that, um, if there are some wealthy, uh, you know, 28-year-old females who are buying brand-new Peugeot, you know, 201-whatevers, okay? Now, the reason you use them as the user imagery is if you show 27-year-old girls driving the car, um, 58-year-old or 64-year-old retirees don't mind buying it. But if you show the car being driven by 65-year-olds, you'll entirely lose your 28-year-old audience.

Ali Abdaal 1:06:08 Yeah.

Rory Sutherland 1:06:08 So there's a kind of interesting idea of who you're talking to, okay? Or who you feature as your user imagery, but that don't let-- don't ever get confused that that's actually your target audience.

Ali Abdaal 1:06:22 Ah, okay.

Rory Sutherland 1:06:23 Okay? And actually, by the way, if you look at the work of Byron Sharp, uh, if you look at the marketing work of, um, uh, also probably Mark Ritson and other people, uh, also Burnett and Field, I'm quoting sort of, uh, pretty good academics. Uh, most, most brands are actually bought as part of a repertoire, and what distinguishes leading brands is that more people buy them sometimes, and the people who buy them sometimes tend to buy them more often.

Ali Abdaal 1:06:53 Sorry. More people buy them sometimes?

Rory Sutherland 1:06:54 Yeah. So okay.

Ali Abdaal 1:06:55 [laughs]

Rory Sutherland 1:06:56 I've got a perfect expression for this-

Ali Abdaal 1:06:57 Yeah

Rory Sutherland 1:06:57 ... which is my favorite end line of all time in advertising,

Rory Sutherland 1:07:00 which is the most interesting man in the world for Dos Equis who says, uh, "I do not always drink beer, but when I do, I prefer Dos Equis."

Ali Abdaal 1:07:08 Okay.

Rory Sutherland 1:07:08 "Stay thirsty, my friend." He's kind of Hemingway-esque character, okay? Now, of course, the most interesting man in the world wouldn't only drink beer, [laughs] okay? And he wouldn't even stick to one brand of beer.

Ali Abdaal 1:07:18 Hmm.

Rory Sutherland 1:07:19 But what he does is he doesn't always drink beer, but when he does drink beer, he tends to drink Dos Equis.

Ali Abdaal 1:07:24 Okay.

Rory Sutherland 1:07:24 And if you have more of those people than your competitors, then you're the leading brand. It's not a matter of perfect loyalty-

Ali Abdaal 1:07:30 So it's like the hype me too

Rory Sutherland 1:07:30 ... in most categories. E- e- exactly, yeah.

Ali Abdaal 1:07:33 [laughs]

Rory Sutherland 1:07:34 And so that-

Ali Abdaal 1:07:34 Yeah

Rory Sutherland 1:07:34 ... you know, it's important actually to understand these things. I mean, one of the things I don't think is understood as well is that, um, one thing that's increasingly interesting me is what are the products that nobody wants but that once you've experienced them, they fundamentally, um, create a, a convert or a-

Ali Abdaal 1:07:56 Hmm

Rory Sutherland 1:07:56 ... um, uh, even an evangelist.

Ali Abdaal 1:07:58 Japanese toilet seats.

Rory Sutherland 1:07:59 You've got it exactly.

Ali Abdaal 1:08:00 [laughs]

Rory Sutherland 1:08:00 Japanese toilet seat one. Air fryer's probably another, okay, where weirdly nobody wants the thing. Everybody goes, "What the hell are you talking about?"

Ali Abdaal 1:08:06 Yeah.

Rory Sutherland 1:08:07 And then anybody who owns one, of the people who own them, about 50% of people effectively become swivel-eyed and slightly-

Ali Abdaal 1:08:12 Yeah. They evangelize the product

Rory Sutherland 1:08:13 ... evangelize.

Ali Abdaal 1:08:13 That's why I bought an air fryer. [laughs]

Rory Sutherland 1:08:15 And it occurred to me that one of the important roles of advertising... And by the way, this is much, much easier for products you use frequently than products you use infrequently.

Ali Abdaal 1:08:24 Hmm.

Rory Sutherland 1:08:24 One of the things, I was watching, um, on YouTube- Little, little listener tip. YouTube Premium, nobody has it, but it's

Rory Sutherland 1:08:33 the best value thing you'll ever buy

Ali Abdaal 1:08:34 I know it. Absolutely incredible

Rory Sutherland 1:08:35 Okay. Ad-free YouTube. We, we didn't, we didn't buy it when YouTube first came out because YouTube was full of slightly grainy, shot on a wobbly phone-

Ali Abdaal 1:08:42 Yeah

Rory Sutherland 1:08:42 ... you know, kind of low-resolution stuff. I mean, huge swathes of it are now kind of 4K broadcast quality, watch it on your 55-inch telly. And it's only a year or two away from becoming Wikipedia with video.

Ali Abdaal 1:08:55 Hmm.

Rory Sutherland 1:08:56 Because the volume of what's on YouTube is now so unbelievably kind of comprehensive that actually you can use YouTube pretty much in the way that you'd use Wikipedia, in fact.

Ali Abdaal 1:09:06 Hmm.

Rory Sutherland 1:09:06 Okay? Um, but anyway, sorry, park that. Um, I was watching a YouTube video, which was a kind of cut down of the Dragon's Den, which for American listeners is known as Shark Tank in the US. Um, it featured the, the worst mistakes that the dragons had made. Okay? The Trunki suitcase, the ride-on suitcase was one. Okay? Uh, I can't remember the other one, but the most egregious one was effectively a, a, a brand called Hungry House, which ended up being sold to a German company and then sold to, to Just Eat for, I think, 220 million pounds. Okay? So missing that was clearly a mistake. Okay? And they were all having arguments. This is this exactly back to this point about the, uh, is it 100 people doing... Is it 100 people doing something once or is it one person doing something 100 times?

Ali Abdaal 1:10:03 Yep.

Rory Sutherland 1:10:03 Okay? And I, I kind of went and analyzed this. By the way, I don't, I don't want you to think that I regard, you know, Dragon's Den or The Apprentice as k- somehow emblematic of business. They're extraordinarily ridiculous.

Ali Abdaal 1:10:15 Yeah. [laughs]

Rory Sutherland 1:10:16 I mean, I, I worry about it actually, the extent to which most people's view of free market capitalism must be colored by the Dragon's Den or The Apprentice-

Ali Abdaal 1:10:24 Oh, yeah

Rory Sutherland 1:10:25 ... which are, you know, absurd, I mean, in many ways. Okay. They're wonderful, but they're absurd.

Ali Abdaal 1:10:28 I mean, we... Uh, uh, just on that note, um, the person we interviewed last week, um, made it to the final, like, 10 for The Apprentice, but they said her business plan was too good and she should just get investment and start a business, which she did-

Rory Sutherland 1:10:39 [laughs]

Ali Abdaal 1:10:40 ... uh, rather than actually go on the show.

Rory Sutherland 1:10:42 Rather than actually winning the program.

Ali Abdaal 1:10:43 Yeah, because the, the, the... Because they said to her, "Look, we're gonna be honest, the show is entertainment. Your business plan's too good, uh, so just execute on that." [laughs] And so she wasn't on the show.

Rory Sutherland 1:10:50 Brilliant.

Ali Abdaal 1:10:51 But, yeah.

Rory Sutherland 1:10:51 Now, the interesting thing there is that I looked at this and thought, how did you miss it? And they were having an argument with Deborah Meaden having an argument with, you know, um, I, I think it was Bannatyne-

Ali Abdaal 1:11:02 Yeah

Rory Sutherland 1:11:02 ... about, you know, how... Now, bear in mind, this was in the either late '90s, early 2000s. There was an argument about whether people would actually order takeaway food for delivery or collection over the web at all. Okay?

Ali Abdaal 1:11:13 Yep.

Rory Sutherland 1:11:15 Sounds ridiculous now, but there was an early attempt to do pizza ordering online in the late '90s which failed-

Ali Abdaal 1:11:21 Hmm

Rory Sutherland 1:11:21 ... because people said, "Well, I'll just pick up the phone." 'Cause their level of confidence in it was so low-

Ali Abdaal 1:11:26 Yeah

Rory Sutherland 1:11:26 ... that you'd typically order your pizzas online and then ring up the pizza place to go, "Did you get my internet order?" Okay.

Ali Abdaal 1:11:31 Yeah.

Rory Sutherland 1:11:31 Well, that's clearly not a benefit to anybody. Okay? But anyway, it suddenly occurred to me that the question they failed to ask the people who are running Hungry House, which was the only question that mattered, was this: When people use your product or service once, do they go on using it? Or a secondary question, which may be a catch, you know, kind of safety net: When people use your product three times, do they go on using it? In other words... Now, this comes to a fairly philosophical point in both economics and anything else, okay, which is that there are certain things which it is pointless to speculate about in advance because the act of owning them or using them fundamentally changes your utility function and your preferences. Okay.

Ali Abdaal 1:12:17 Mm-hmm.

Rory Sutherland 1:12:17 Now, the most extreme case, and Russ Roberts of the utterly brilliant, um, EconTalk podcast.

Ali Abdaal 1:12:24 Mm.

Rory Sutherland 1:12:24 Okay. Russ Roberts talked about this, having children, okay?

Ali Abdaal 1:12:27 Yeah.

Rory Sutherland 1:12:28 Um, from the point of view of a single couple or a single person, it's an utterly stupid decision having children, okay? Because all the things you enjoy as a single person become either impossible or really expensive. You know, every time you stay at a hotel, you're paying for t- two rooms out of one salary when you were paying for one room out of two salaries. So now staying at the Travelodge is probably more expensive than staying at the InterContinental before. You can't go out to nightclubs without getting babysitting. All the shit you really enjoy is more or less destroyed, and the buggers are really, really expensive, okay?

Ali Abdaal 1:13:01 [laughs]

Rory Sutherland 1:13:01 It's a terrible decision having children except for the fact that once you have children, thanks to evolutionary psychology, all your preferences, your priorities, and your idea of utility completely changes.

Ali Abdaal 1:13:13 Yeah.

Rory Sutherland 1:13:14 Okay? So that those things become comparatively much less important-

Ali Abdaal 1:13:19 Hmm

Rory Sutherland 1:13:19 ... and the, you know, the wellbeing and happiness of your children become correspondingly more important.

Ali Abdaal 1:13:23 Hmm.

Rory Sutherland 1:13:25 Now, at a kind of slightly banal level, a Japanese toilet is the same, okay?

Ali Abdaal 1:13:28 Hmm.

Rory Sutherland 1:13:29 That until you've actually tried it-

Ali Abdaal 1:13:31 Yeah

Rory Sutherland 1:13:31 ... once you've tried a Japanese toilet, okay, going back to a basic Western toilet is as yawning a gulf as going from a Western dry wipe toilet to shitting in a hole in the garden.

Ali Abdaal 1:13:42 [laughs]

Rory Sutherland 1:13:42 That's, that's about the comparative distance in terms of perception, okay? Um, now similarly, an air fryer, once you've had it, no going... Multi-channel TV, mobile phone.

Ali Abdaal 1:13:52 Hmm.

Rory Sutherland 1:13:53 Probably the electric car, interestingly.

Ali Abdaal 1:13:56 Hmm. Yeah.

Rory Sutherland 1:13:56 Now, it strikes me that one of the things we fail to do with a lot of dotcom ideas is ask how frequently will this be used? Because those things, mobile phone, multi-channel TV, electric car, air fryer, uh, Japanese toilet, are all things which by definition, assuming you've got reasonable bowel health, you're gonna use every day.

Ali Abdaal 1:14:17 Yeah.

Rory Sutherland 1:14:17 Okay? Or at least every two days.

Ali Abdaal 1:14:18 Sure.

Rory Sutherland 1:14:18 Okay? All right? Now, those things change your... Fundamentally, if s- if you do something differently frequently... I park a lot at the station, so the parking app kind of changes my whole view of parking, okay? Um, if you only park once a year, I would argue that, you know, uh, actually a, a, a parking app is a pain in the arse. Okay? Yes. If you only, if you only actually park in a station car park once a year, the fact that you now have to, um, use an app to park there- Mm. For my dad who doesn't even have a smartphone, it's actually a, a, a complete obstacle. For other people, it's a monstrous pain. Yeah. And by the way, we're not treating the elderly very well with tech. Mm. Okay? We are ab- Tech should be enabling people to stay in their homes for longer, and if anything, it's creating actually, uh, you know, unbelievable obstacles. My, my dad was selling books in his mid to late 80s, was selling books on Amazon, okay? He's not a techno, um, Luddite by any means, but he says at the age of 92, he said, "I've just got to a point where resetting my password is..." He doesn't say mind fuck, but that's what he means, okay? And, um, you know, we haven't, we haven't thought those things through adequately at all. But that frequency thing really interests me because I see a lot of dotcom ideas and I go, "Well, this is a great idea in theory, but actually it's a, it's, it's 100,000 people doing something once." Yep. What you really need is actually to get something started, it's, uh, 10,000 people doing something once a week or once a day. Because rather like having children, those are the things where once... To quote the V-

Rory Sutherland 1:16:00 the Vauxhall end line of the 2000s, "Once driven, forever smitten." That the act of owning it, of doing it... Nobody in Britain wanted multi-channel TV back in the, um, 80s and 90s. They all went, "A stupid American thing. There's just a load of rubbish on." You know, "What's wrong with four channels?" Yeah. Okay. But nobody who had multi-channel TV ever went back. Mm. And I don't think we ask this question, what I might call the, the longitudinal question, nearly enough because everybody's looking at the sales, the aggregate sales figures for electric cars. Okay? The real question you need to ask if you want to predict where the market's going is, of the people who buy electric cars, how many of them revert? Mm. In other words- Yeah ... is this a one-way street where once owned, your fundamental preferences- Yeah ... are so changed by the experience of the alternative. One thing I always thought was a bit like that, if I'm being absolutely candid about it, which had a lot of resistance but nobody ever went back, was driving an automatic. Okay. Yeah. Okay? And loads of Brits used to go, "Oh, bollocks. No, I miss the sense of control." Yeah. [laughs] You know, all that sort of stuff. Now, the reason Brits didn't drive automatics was that many American... Sorry, many British cars of the '50s and '60s were so bloody weedy, okay? You needed a manual transmission just to get up a bloody hill. Mm. Okay? Uh, and also automatics only had typically three speeds. Now, a big American V8 had no trouble handling that, but a Morris Minor would've basically ground to a halt. Yeah. Good bit of trivia, by the way. The Morris Minor, um, if I've got this right, engine- Mm ... the 1200cc probably engine, was also the starter motor, um, for the Centurion tank. [laughs] Oh. Okay. Right. [laughs] So, okay, that's a, that's a good bit of trivia. Lovely. So it was so fe- it was so feeble in a sense- Yeah [laughs] ... that it was actually when you put it in a tank it was merely the starter motor. Yeah. But, um, uh, but actually everybody talks this crap about automatics, but everybody who drives an automatic goes, "Oh, sod that manual for a game of soldiers." You know, very- Mm ... you know, because... Now, don't get me wrong, if I lived in the north of Scotland just off the A9, okay, and I had long, glorious, winding open roads, I'd probably revert to a manual for the pleasure of kind of, you know, you know, gear changing and control. Yeah. Most of my driving is either on a motorway where you just drive along at a constant speed or I'm stuck in traffic. Yeah. Now, in both those situations, or actually even more extreme, I'm maneuvering in a car park- Yeah ... where I much prefer the creep that you enjoy through an automatic- Mm ... 'cause you can maneuver at very slow speeds without running over dogs and things, okay? Yeah. [laughs] Now, you know, I think that's a typical case where nobody wants it, but once you've experienced it- Yeah ... what you want fundamentally changes. So there's probably an important role for advertising in just generating trial and accelerating take-up, because the two big forces in human instinct are social copying, do what everybody else does; and habit, do what I've done before. Okay. Yep. And as a result, behavior change tends to take on a sigmoid curve shape. And it occurred to me that people who don't know this may have been writing off lots of products too early because they failed to realize that most new significant ideas are very slow to take off at the beginning. I mean, there were mobile phones in Britain in the 1970s. My father's business partner had one, uh, where, uh, you basically radioed a great big aerial and you said, "Can you please put me through to- Yeah ... Raglan 201." And someone would put... But it was a car phone. Yeah. Okay? And so those things existed for years, and then, okay, part of it was technological improvement, part of it was just- Yeah ... people then experienced them. People who a year earlier had said, "Why would I want to make a phone call in the street?" Mm. I, I used a mobile phone in Oxford Street, 1989. Two people rolled down the windows of taxis and shouted abuse at me. Oh, wow. Okay? 1989. Yeah. Someone s- visibly using a mobile phone on Oxford Street. Yeah. This wasn't, you know, this wasn't in the depths of the countryside where they thought it was witchcraft. Yeah. [laughs] It was in Oxford Street. And they actually pulled down a taxi window and went, "Wanker." Okay? Yeah. Right? Now that, uh, it was only, okay, it was seven years before, you know, to take that technology to the mainstream. Yep. But it, you know, it always occurred to me, I think they, I think they, they bailed on Google Glass much too early- Mm ... for example. Yeah. You know, four years later, three years later, I would've been pissed in an airport and I would've just bought, bought it, you know? And I, you know, I think it's very important we realize this because if you think that adoption of things is linear, you will often give up too soon. The question you need to ask is not how fast are we growing, it's how sticky is this product? Yeah. Um, what are your thoughts on-

Ali Abdaal 1:20:53 Brand redesigns. 'Cause we're having this issue, well, yeah, a bit of an issue right now in that for the YouTube channel and for the podcast and stuff, we've done a bit of a rebrand and I think, I think the new one looks pretty sick. But there's a lot of people on our team being like, "Oh, it doesn't look as friendly or as nice as like the old one did." And it strikes me that I remember-

Rory Sutherland 1:21:09 Is there a-

Ali Abdaal 1:21:09 Yeah

Rory Sutherland 1:21:09 ... recognizable line from one to the other? Is this a refresh or a rebr- complete rebrand?

Ali Abdaal 1:21:15 Um, I think there is a little bit of a recognizable line. It's like, okay, I can see that this is, this rebrand or refresh is, uh, sort of making everything a little bit more consistent.

Rory Sutherland 1:21:23 Mm.

Ali Abdaal 1:21:23 Whereas previously it was a bit of a hodgepodge of different things. And it kinda got me thinking about when, back when Facebook was a thing-

Rory Sutherland 1:21:29 Be really, really careful, by the way-

Ali Abdaal 1:21:30 Yeah

Rory Sutherland 1:21:30 ... because the extent to which we select icons, and often we select a podcast through a kind of icon-

Ali Abdaal 1:21:38 Mm

Rory Sutherland 1:21:38 ... okay? The extent to which that's an unconscious thing-

Ali Abdaal 1:21:42 Yeah

Rory Sutherland 1:21:42 ... which will be completely, you know, kiboshed-

Ali Abdaal 1:21:46 Yeah

Rory Sutherland 1:21:46 ... by, by too great a change of color.

Ali Abdaal 1:21:49 Yeah.

Rory Sutherland 1:21:49 You g- I think you've gotta be really goddamn careful there.

Ali Abdaal 1:21:52 Mm.

Rory Sutherland 1:21:52 Um, particularly given the kind of choice architecture around which podcast shall I listen to now?

Ali Abdaal 1:21:57 Yep.

Rory Sutherland 1:21:59 Um, so, you know, you might want to look at a migrat- a slower migration.

Ali Abdaal 1:22:03 Mm.

Rory Sutherland 1:22:04 Oh, it's always notable that at no point does anybody come... Although I think it's becoming increasingly a terrible site, by the way. No one's ever turned up at the Amazon website and thought, "What the hell's going on here?"

Ali Abdaal 1:22:14 Yeah.

Rory Sutherland 1:22:15 Okay. You know, the, the whole thing has been an evolution.

Ali Abdaal 1:22:18 Very slow changes over time.

Rory Sutherland 1:22:20 I think, I think if I'm right, they basically allow, which is a mistake by the way-

Ali Abdaal 1:22:24 Mm

Rory Sutherland 1:22:24 ... they allow algorithms pretty much to, to determine the site now. So there's continuous testing on the background of small things. That does mean that there is ultimately the opportunity for someone to come along and completely wrong-foot them. I mean, it always baffles me, by the way, that, uh, that Shopify hasn't created a search engine.

Ali Abdaal 1:22:45 Yeah, they really should. [laughs] Yeah.

Rory Sutherland 1:22:46 It's weird, isn't it?

Ali Abdaal 1:22:47 Yeah.

Rory Sutherland 1:22:48 I did ask the guy once, and they said, "Oh, we, it would be unfair because it would mean we're discriminating between our customers." And I thought, well, the customers would much pre- prefer to get five times the business and for a competitor-

Ali Abdaal 1:22:58 [laughs]

Rory Sutherland 1:22:58 ... to get seven times the business than to stay along in this kind of, you know, in what you might call egalitarian obscurity.

Ali Abdaal 1:23:04 Mm. Like, it's so nice when something is on Shopify and has Shop Pay as an option.

Rory Sutherland 1:23:09 Yes, isn't it just? Yeah.

Ali Abdaal 1:23:09 Like card details say.

Rory Sutherland 1:23:10 Yeah.

Ali Abdaal 1:23:10 Oh, it's, it's almost ea- it's almost easier than Amazon [laughs] at that point.

Rory Sutherland 1:23:13 But also, also the ability to select by, um, I mean, this is something that's really fascinating.

Ali Abdaal 1:23:18 Mm.

Rory Sutherland 1:23:18 The whole question of choice architecture is one of the really, really robust findings of behavioral science.

Ali Abdaal 1:23:25 Mm.

Rory Sutherland 1:23:25 And the way you present a choice to people, okay, uh, will f- and the order in which they're asked to eliminate things by attribute, okay, will have an enormous effect on what they end up choosing.

Ali Abdaal 1:23:38 Okay. What do you mean the order in which they-

Rory Sutherland 1:23:40 Uh, right. Well, an example would be, um, let's imagine, okay, we bought art the way we bought property. So alongside, say, Prime Location or Rightmove, there was a thing called RightArt. Okay? And you went, "I'd like something about five feet by three feet, um, featuring two goats and a cow, uh, mostly blue, but with a smattering of pinks," okay, "between these two price points."

Ali Abdaal 1:24:07 Yeah.

Rory Sutherland 1:24:07 Okay? In that world, Picassos would be really cheap because they'd hardly ever show up.

Ali Abdaal 1:24:12 Yeah.

Rory Sutherland 1:24:13 Okay? And now obviously we don't buy art like that, but is it right that we buy property with aesthetics and design because they're harder to quantify so far down the decision tree that all you end up doing is you go location, price, number of bedrooms. Number of bedrooms is a terrible metric, by the way, because it means that every single person dealing property has an incentive to provide lots of totally s- tiny bedrooms.

Ali Abdaal 1:24:39 Yeah.

Rory Sutherland 1:24:40 Okay? And as a result, we have too few toilets, too few bathrooms.

Ali Abdaal 1:24:44 Yeah.

Rory Sutherland 1:24:44 Uh, you know, and instead of having what every house needs actually is one really big room.

Ali Abdaal 1:24:49 Mm.

Rory Sutherland 1:24:49 Okay? Right? Instead of that, you know, you have, you have l- too many rooms that are too small and too few rooms that aren't bedrooms, arguably, okay? And so that's a distortion. I mean, in Europe and the US, they tend to do it by square footage or square meterage. But then, okay, what if you, what if you change things? Now, okay, there's a website that does this, the modernhouse.net, okay? And the modernhouse.net basically makes some sort of architectural distinction a prerequisite for appearing on the site.

Ali Abdaal 1:25:20 Yeah.

Rory Sutherland 1:25:21 Now, if you had a Parker score for a... This is my weird observation, that architecture's the cheapest way to buy art because really good architecture for a given location and size of property only adds about 1% or 2% to the price of a house.

Ali Abdaal 1:25:35 Mm.

Rory Sutherland 1:25:36 There's a place actually at The Isokon up in Hampstead. I think it's a one-bedroom flat. Uh, absolute, you know, kind of a modernist masterpiece, okay? Uh, there's a place near Tunbridge for sale, which is actually by Gropius and Fry. No premium as far as I can see over any house nearby. Now, you know, that's weird, right? Okay? And it seems weird to me-

Ali Abdaal 1:25:57 Mm

Rory Sutherland 1:25:57 ... that, you know, people will pay an enormous amount of money to own a painting by a great artist compared to an indifferent artist. I live in the roof of a Robert Adam house. My next-door neighbor in the flat next door is an economist. I said, "How much do we actually pay as a premium for the fact that this is a Robert Adam house, uh, rather than just some random piece of shit of the same location?" He said, "I wondered about that." He said, "Somewhere between nought and 2%." Now, that's crazy, right? Because presumably aesthetics, you know, unless I'm wrong about everything-

Ali Abdaal 1:26:28 Mm

Rory Sutherland 1:26:28 ... aesthetics and design can contribute quite significantly to happiness.

Ali Abdaal 1:26:32 Yeah.

Rory Sutherland 1:26:33 We'd much rather own a house... Or you could argue, by the way, the right, the best measure on Rightmove would be how attractive the house opposite is-

Ali Abdaal 1:26:39 [laughs]

Rory Sutherland 1:26:39 ... 'cause that's what you're looking at.

Ali Abdaal 1:26:41 Yeah.

Rory Sutherland 1:26:41 Okay?

Ali Abdaal 1:26:41 Yeah. [laughs]

Rory Sutherland 1:26:42 I, I lived in Westbourne Park Villas when I first moved to London in a place backed, backing onto the Paddington railway tracks, which was, to be honest, a bit of a shithole.

Ali Abdaal 1:26:49 Mm.

Rory Sutherland 1:26:49 But we woke up in the morning and looked at a sort of £1 million house on Westbourne Park Villas.

Ali Abdaal 1:26:55 Yeah.

Rory Sutherland 1:26:55 And I always felt sorry for them because they'd paid £1.4 million to look at us. Um, but- What I'm saying is that in many cases, the way we choose is based on kind of arbitrary, um, uh, you know... I mean, one of the most peculiar things that's happening in property at the moment, by the way, uh, is that you must never, ever try and sell a house for £675,000.

Ali Abdaal 1:27:19 Right.

Rory Sutherland 1:27:19 Because all the property websites have at that price point, it's £650,000, £700,000, I think.

Ali Abdaal 1:27:28 Mm.

Rory Sutherland 1:27:28 It might be £600,000, uh, uh, £700,000, but I think they stop at 50,000 increments.

Ali Abdaal 1:27:34 Yeah.

Rory Sutherland 1:27:34 If you price your house at 25, you're in between two.

Ali Abdaal 1:27:38 Mm.

Rory Sutherland 1:27:38 And so the people searching, uh, 600 and up, or the people searching 650 and down are less likely to find you.

Ali Abdaal 1:27:45 Yeah.

Rory Sutherland 1:27:45 And so your house won't sell. So now you don't have a price-demand curve. You have a price-demand ziggurat.

Ali Abdaal 1:27:50 Yeah.

Rory Sutherland 1:27:51 Okay?

Ali Abdaal 1:27:51 Yeah.

Rory Sutherland 1:27:51 That's the example of how, how you present choice will distort a market.

Ali Abdaal 1:27:56 Yeah.

Rory Sutherland 1:27:56 The reason, by the way, these Amazon brands are all called Wglulu, um, Amazon Marketplace brands, right? Do, do, do you know why?

Ali Abdaal 1:28:03 No. Why's that?

Rory Sutherland 1:28:04 'Cause I was going, "Jeez." I go... I'm thinking, "I'm gonna emigrate to Shanghai and just become a branding expert by saying, 'Next time, rather than using a set of Scrabble tiles to, to name your brand, why don't you actually have something that's memorable and suggests you're actually on the business of building a brand reputation rather than just using random vowels and consonants like a really bad round of Countdown?'" Okay?

Ali Abdaal 1:28:28 Yeah.

Rory Sutherland 1:28:28 You know, "Uh, a vowel, please, p- um, Carol. And another vowel, and another vowel." [laughs]

Ali Abdaal 1:28:32 Yeah.

Rory Sutherland 1:28:32 Okay, vo- okay, Carol. I said Carol.

Ali Abdaal 1:28:34 Oh, of course. Yeah. [laughs]

Rory Sutherland 1:28:35 My God, I'm showing my age there, aren't I? Okay. It's Rachel. Is that... Sorry. Um, um, now here's what's really weird about this, okay? Which is that the algorithm gives priority to brands, inverted commas, which are trademarked in the US.

Ali Abdaal 1:28:53 Oh, okay.

Rory Sutherland 1:28:54 It's much easier and much faster to try- trademark a random collection of consonants and vowels-

Ali Abdaal 1:28:59 Yeah

Rory Sutherland 1:29:00 ... than it is to try... I- if I tried to trademark, you know, Sutherland Camping Equipment, okay? It would probably take me ages and then some lawyer would pitch up from fucking Wyoming going-

Ali Abdaal 1:29:10 [laughs]

Rory Sutherland 1:29:10 ... "There's a Mr. Sutherland here who runs a fucking tent shop." And, you know, you know, you can just imagine the whole thing.

Ali Abdaal 1:29:15 [laughs]

Rory Sutherland 1:29:15 Okay? Whereas if... It's extremely unlikely anybody's gonna challenge your right to call yourself Gglupu, right?

Ali Abdaal 1:29:22 Yeah.

Rory Sutherland 1:29:23 So but all they're doing is creating a name that's really easy to legally trademark so they can game the algorithm.

Ali Abdaal 1:29:28 Yeah.

Rory Sutherland 1:29:28 It's not in the interest of the consumer at all.

Ali Abdaal 1:29:31 Mm-hmm. Yeah.

Rory Sutherland 1:29:31 Right? What's in the interest of the consumer is recognizable brand names like, you know, even if they're Amazon-owned brands like Anker or whatever-

Ali Abdaal 1:29:38 Yeah

Rory Sutherland 1:29:38 ... or Ugreen.

Ali Abdaal 1:29:39 Mm.

Rory Sutherland 1:29:40 Which we can buy more of if we like what we buy and buy less of if we don't like it. Brands are basically the units of selection in the evolutionary marketplace, which is consumer capitalism, okay? And a brand name allows you collectively and individually to reward a good experience with future business and to punish a bad experience with a future boycott.

Ali Abdaal 1:30:04 Mm.

Rory Sutherland 1:30:04 So anybody who's interested in the longevity of their business will try and live up to their promises if that promise is attached to a brand, okay? If that promise is attached to Gglugu, right? You won't, because you've got no investment in that. You... It's just one of 47 other-

Ali Abdaal 1:30:21 Yeah

Rory Sutherland 1:30:21 ... Scrabble tiles that you've got. Now, this fact that brands are actually essential to the workings of consumer capitalism because they're the units of selection is totally overlooked as far as I can see. Brands actually lead to better products.

Rory Sutherland 1:30:37 The absence of brands often destroys markets because nobody can confidently make a decision-

Ali Abdaal 1:30:43 Yeah

Rory Sutherland 1:30:43 ... within them.

Ali Abdaal 1:30:44 Mm.

Rory Sutherland 1:30:44 Okay? And it strikes me that Amazon, by making that thing, is it a registered trademark rather than is it actually a pronounceable word-

Ali Abdaal 1:30:53 Mm

Rory Sutherland 1:30:53 ... okay, uh, is doing a complete disservice. Uh, it's, it's, it's contributing to the, I think, I think if I remember right, it's Cory Doctorow calls the enshittification. You know, ju- he, he... Various people have started writing in The Atlantic about something I noticed about a year and a half ago, which is that quite a lot of mainstream massive things, Google, Facebook, Amazon, which for the first 15 years were extremely admirable, okay? Have started to get worse.

Ali Abdaal 1:31:24 Yep.

Rory Sutherland 1:31:26 Google started to get worse because, uh, patently the ads used to be on the right and the, and, and the native search used to be on the left. Now, if you try and find out the phone number of a hotel, it's a living bloody nightmare, right?

Ali Abdaal 1:31:39 Mm.

Rory Sutherland 1:31:39 Because 76 competing hotels will start appearing all over the place.

Ali Abdaal 1:31:43 Mm.

Rory Sutherland 1:31:43 Right? That's enshittification because it's moved from serving the consumer to serving the advertiser and then eventually you stop serving even the advertiser and you just start serving yourself. Uh, Amazon, I think, you know, if I search for Samsung televisions, mate, okay? Imagine a human being, I go into Currys right now, "I'd like to look at Samsung televisions, please." Now, he is perfectly at liberty to say, "Well, if I were you, I'd have a deco at LG as well." Okay? That's within his rights as an expert salesman perhaps.

Ali Abdaal 1:32:13 Mm.

Rory Sutherland 1:32:13 But okay, if I search for Samsung televisions, I expect my search to include some Samsung televisions.

Ali Abdaal 1:32:19 Mm.

Rory Sutherland 1:32:19 How fucking ridiculous... It's hardly a, you know, too much to ask, is it, right?

Ali Abdaal 1:32:23 [laughs] I feel like when a lot of people hear the word marketing or advertising-

Rory Sutherland 1:32:26 Mm-hmm

Ali Abdaal 1:32:26 ... they're immediately... The, the... It gets their hackles up, uh, 'cause it feels salesmany, and even the word sales feels like evil in some way. How... Like, as someone who's worked in marketing for the last, like, I don't... 40 years or so, like, what's, what's your take on why that is and-

Rory Sutherland 1:32:41 Now, the funny thing is, um-

Ali Abdaal 1:32:42 ... what's going on there?

Rory Sutherland 1:32:43 The bits of advertising that really annoy people mostly aren't produced by advertising agencies. So if you get the accusation, "It makes people want things they don't need-" Well, that's a bit of a complex point anyway because on an average day, a human being needs about 1,500 calories, okay? Um, you know, I don't know, 120 liters of air and a warm, dry place, okay? Everything else is a want- Yeah ... at some level, [laughs] okay? So the whole thing about want ... I mean, it's very interesting, by the way, to read, um, uh, there was a left-wing anti-advertising pamphlet from the 1960s, and it said, you know, "In many ways, advertising has obviated many of the great achievements that we've had in enriching the working class because it turns out that the working class just spend their money on pointless luxuries," wait for this, okay, "like washing machines." [laughs] Okay, I ... Okay, hold on a second. Okay, if you're a working-class family in 1960, your mum would've had some sort of tub mechanism with a mangle, and a whole day of her life would've been spent doing [laughs] the household laundry, and yet you're referring to a washing machine as a pointless luxury. You know, this is a ... You know, I mean, it's worth noting that one- you know, what, uh, you know, in the 1960s a washing machine was seen as a massive extravagance, you see? Mm. And, and therefore for some reason the working classes weren't supposed to buy them. I mean, out- outrageous kind of nonsense. Mm. So anyway, never mind. Then we've got to ask this question of what's a want and what's a need. Most of the luxury good stuff is done in-house, and quite a bit of it is done to keep, uh, luxury goods publications happy. It's not only to reach the consumer- Right ... it's also to ensure if you advertise extensively in fashion publications, you'll get featured a bit more. Hmm. Okay? So there, there, there are all kinds of other things going on. Uh, for example, the vast majority of my time, which hasn't been in B2B marketing, some of, some of it has, the vast majority of my time spent in advertising has been, um, uh, uh, okay, promoting broadband for BT, promoting the American Express card early on, um, uh, promoting vaping or alternatives to smoking, okay? Yeah. So any form of behavioral change, whether for good or bad, does require, um, communication. Yep. Okay? It's, you know ... Uh, at the very least it might happen anyway, but it'll happen more slowly if you don't advertise it- Yep ... for example. And, um, uh, you know, actually most advertising now is compare the meerkat. You know, okay, there's a certain amount for alcohol, there's a certain amount for, you know, luxury goods. What advertising agencies are mostly doing is ... By the way, most people in ad agencies lean left wing, by the way. You wouldn't expect this in drama in kind of, you know, in, in the kind of what you might call the dramatic depiction of an ad agency. Yeah. It's a load of cynical right-wing bastards. Yeah. Most people are pink ... I mean, most people, you know, most of my young colleagues are way to the left of me, and generally they don't have a problem with what they're selling. Right. Yeah. You know, even Gen Z go, "Okay," you know, "Okay, electric cars, another thing I'd be engaged in." You know, so that, now that's interesting because in the electric car world, for example, let's look at it as a category, not just as individual brands. Hmm. To an enormous extent, okay, range anxiety, which is the big obstacle- Yeah ... and the thing ... Now, individual brands are always talking about range- Yeah ... because that's the thing they've got to actually convince the consumer about. Yeah. And that's how they compete with other electric car brands. The only problem is that the universal conversation about range is actually in a sense creating a fear- Yep ... or magnifying a fear that doesn't need to be that present, okay? Now let me explain why. Okay. Um, so I don't have car charging at home. I'm going to get it, but I haven't got around to it. Yeah. My wife has a mini electric which has about 100 miles range. I've got the Ford Mustang Mach-E, which has about 250, the extended range, okay? What I suddenly realized once you own an electric car and once you actually overcome this anxiety is that ... Now, this wouldn't be true, okay, just to be, just to caveat it, if you lived in an obscure part of North Wales or- Yeah ... somewhere weird in Scotland this may not be true. But for most Brits most of the time, range anxiety is a perfectly rational American fear- Yeah ... which doesn't apply to the UK really, okay? Not a very big country, okay? You know, in, in America it's not uncommon for your parents to live 400 miles away, okay? And you've got to go and visit them over a weekend because let's face it, you get no bloody vacation. Yep. Okay? Right? That, that's ... By the way, if I'm an American- Yeah ... okay, uh, my plan to stand for president of the United States is slightly kiboshed by the fact I wasn't born there. Although funnily enough, Woodrow Wilson is something like my second cousin. His mum was born in, in England. Oh. He's actually my second cousin three times removed or something. I was a bit of a freak. Um, but all I'd stand on is a platform of four weeks paid vacation. Hmm. Wouldn't bother with any of the other stuff. We're talking electric cars, range anxiety. Yeah, electric cars, range anxiety. 400 miles. Yeah. So we've got trains as an alternative. If I had to go to Manchester for the day, I wouldn't drive anyway. Yeah. If I had to go to Manchester overnight, I probably wouldn't drive. Hmm. Okay? If I've got to go to Manchester for five days, I wouldn't drive, but then it's a leisurely trip up and I'm gonna stop somewhere and, you know, go and visit a country house or something or, you know, whatever, okay? And I'm gonna find somewhere to charge. And also, uh, I can't ... In, in the UK driving, traffic density being such, you can't really drive for three hours without taking a break anyway. It's not healthy or sensible to do it. You can on an, a interstate in the US because it's just such a chill experience by contrast. Secondly, when I get to my dad's house, he's got 240 volts. Now, it's not seven kilowatts, but it's three, three and a half, and actually if I arrive with a 50% tank and I plug in to his ordinary outdoor socket, I'll be up to about 85% by the time I leave in the morning, okay? Well, that's way more than enough to get me to the next rapid charger should I need one. We don't have really extreme cold very often, okay? Uh, as I said, we've got three kilowatts at home. We have the alternative of a train. We don't do very long drives. And also this is a very high density country. Hmm. So in the US you need ... gas stations to serve a geography, not just a population. Okay? Because if you're halfway between, say, Taos, New Mexico, and Farmington, if you don't have a gas station somewhere en route, nobody can actually make the journey.

Ali Abdaal 1:39:14 Yeah.

Rory Sutherland 1:39:15 Okay? Now, in the UK, I did... I, I went and checked this out. Okay, the UK has about 8,500 petrol stations. In the US, they got about 116,000, and the reason they need a multiplier more proportionate to the population is 'cause of the geographical coverage.

Ali Abdaal 1:39:31 Yep.

Rory Sutherland 1:39:32 Now, in the UK, it's not like, "Oh, shit, we're on the I-40 between so and so and so and so, and if the next charger's out of action, we're basically gonna have to spend the night in an Idaho truck..." No, that's not on I-40, is it? Okay, don't know what that is. I- something else, 80. I don't know. Okay. Well, you know, gonna have to spend the night on, in an Idaho truck stop in the freezing cold while the radio tells us that a serial killer's just escaped from the local penitentiary, okay? In Britain, it would be, "Oh, dear, this charger is broken. Oh, look, there's another one two miles down the road-

Ali Abdaal 1:40:01 Yeah

Rory Sutherland 1:40:01 ... next to a tea shop, so we'll stock up on scones and buns, okay, uh, while the car's charging."

Ali Abdaal 1:40:08 Yeah. [laughs]

Rory Sutherland 1:40:09 It's a different kind of thing, okay?

Ali Abdaal 1:40:10 Mm.

Rory Sutherland 1:40:10 You're not in the middle of nowhere in Britain. Um, okay? And so actually, what we've done is we've imported a fair into the Netherlands and the UK in particular, which is perfectly relevant to Americans, and I, I, I get it.

Ali Abdaal 1:40:23 Mm.

Rory Sutherland 1:40:24 Okay? Actually in the UK now, nah.

Ali Abdaal 1:40:28 Yeah.

Rory Sutherland 1:40:29 Okay? I've got a, I've got a cafe with a charger 50 feet away, rapid charger. I've got a Waitrose with a couple of them. I've got a Tesco with a couple of slow chargers. I've got an Indian restaurant with a rapid... Well, actually that's all you need.

Ali Abdaal 1:40:42 Yeah.

Rory Sutherland 1:40:42 Actually, an Indian restaurant, a rapid charger, job done, basically.

Ali Abdaal 1:40:45 [laughs]

Rory Sutherland 1:40:46 Yeah.

Ali Abdaal 1:40:47 How did we get onto this? Um, we were talking cars-

Rory Sutherland 1:40:49 I think I was talking about that ratchet effect where, uh, w- you know, one important thing is that there are products which actually change-

Ali Abdaal 1:40:55 Oh

Rory Sutherland 1:40:55 ... your whole-

Ali Abdaal 1:40:56 Yes

Rory Sutherland 1:40:56 ... your whole outlook.

Ali Abdaal 1:40:57 Um-

Rory Sutherland 1:40:58 So once experienced, actually, your entire kind of preferences and utility function gets reset-

Ali Abdaal 1:41:05 Yep

Rory Sutherland 1:41:05 ... because the experience effectively rejigs in your mind what's important.

Ali Abdaal 1:41:11 Yeah.

Rory Sutherland 1:41:11 Yeah.

Ali Abdaal 1:41:12 Yeah, and, and we were also talking about kind of advertising and marketing being seen as that.

Rory Sutherland 1:41:15 Oh, yes. Yeah.

Ali Abdaal 1:41:16 Yeah. And, and so you've said that-

Rory Sutherland 1:41:19 Yeah, I mean, I-

Ali Abdaal 1:41:20 Yeah

Rory Sutherland 1:41:20 ... I've spent most of my... I, you know, I, I don't really... I'm, I'm very, very proud of the work on vaping, by the way. I mean, that was probably the most im- you know, most valuable thing I did in my life-

Ali Abdaal 1:41:30 Mm

Rory Sutherland 1:41:30 ... was getting to the government's behavioral insights team and saying, "There are these things coming along called electronic cigarettes, one."

Ali Abdaal 1:41:36 Mm.

Rory Sutherland 1:41:36 "Because they mimic the habit and experience of smoking, they're probably a major gateway off cigarettes."

Ali Abdaal 1:41:44 Mm.

Rory Sutherland 1:41:44 Okay? Two. Three, and this was actually the more important psychological insight, "My hunch is that almost everybody in the health... in what you might call the, the health industry-

Ali Abdaal 1:41:54 Mm

Rory Sutherland 1:41:54 ... is gonna try and ban them."

Ali Abdaal 1:41:56 Okay. Yep.

Rory Sutherland 1:41:56 Okay? What I would say is go to the gov- And they did this. David Halpern went to what was then the Cameron government and said, "We think these electronic cigarettes are gonna be useful rather than..." You know, or at least it's harm reduction whose benefits outweigh the costs.

Ali Abdaal 1:42:11 Yep.

Rory Sutherland 1:42:11 Let's put it like that.

Ali Abdaal 1:42:12 Sure.

Rory Sutherland 1:42:12 Okay?

Ali Abdaal 1:42:12 Yep.

Rory Sutherland 1:42:13 Okay, it's not perfect. Perfect is everybody going cold turkey. I get that, but the perfect is often the enemy of the good.

Ali Abdaal 1:42:20 Yep.

Rory Sutherland 1:42:20 And actually, the UK and Sweden, which have the lightest touch regulation on alternatives... In Sweden, of course, it's the pouches, the nicotine pouches they put in their... Which, to be honest, give me the shits, but I mean, they're, they're pretty potent. Uh, but, but... And in, in the UK, it tends to be a very liberal approach to e-cigarettes and vaping.

Ali Abdaal 1:42:40 Yeah.

Rory Sutherland 1:42:40 And those two countries seem to have the lowest rate of smoking in Europe. So, you know, there is, you know, not... Okay, correlation is not and all that. But, um, that was the one thing where, you know, of all the things I did in my life which was probably valuable, I think it was that.

Ali Abdaal 1:42:53 Sure. How, how,

Ali Abdaal 1:42:55 how do you feel about the sort of... You've talked, I think, in, in Alchemy and in some other things around psychological value.

Rory Sutherland 1:43:01 Mm.

Ali Abdaal 1:43:01 Um, and it almost strikes me that psychological value, the fact that we're calling it psychological a- al- almost makes it distinct from actual value. Um, what's your, what's your take on-

Rory Sutherland 1:43:11 Well, it, it's, it's completely wrong because if you're, if you're an Austrian School economist, value is all psychological. The only definition of value they accept is your willingness to pay for, for something. And they also argue that, um, interestingly, this is why Austrian School economics never got mathematical because just for, as a detail, they also argue that, um, actually preference is ordinal, not cardinal. Okay?

Ali Abdaal 1:43:37 Uh, what does that mean?

Rory Sutherland 1:43:38 Well, okay. So they would, they would look at a choice in the Austrian School and say, "You prefer an iPhone over an Android phone."

Ali Abdaal 1:43:48 Sure.

Rory Sutherland 1:43:48 Okay? Um, they would not... Now, economics, in order to have this idea of utility, has to have the idea that you actually value the a- the, the iPhone at 1.374 times more highly than the equivalently priced other phone.

Ali Abdaal 1:44:03 Okay.

Rory Sutherland 1:44:04 Okay?

Ali Abdaal 1:44:04 Right.

Rory Sutherland 1:44:05 Now, Austrian School economics, or at least Ludwig von Mises says it's a nons- you either prefer it or you don't. That's what determines your behavior. It's a nonsense to actually suggest that we're going around optimizing all the time-

Ali Abdaal 1:44:18 Yep

Rory Sutherland 1:44:19 ... uh, for, um, uh, you know, our utility function.

Ali Abdaal 1:44:22 Sure. Like the sorts of people that would spend 18 hours researching a phone might care about the Snapdragon processor, but most people don't.

Rory Sutherland 1:44:28 No, no, absolutely.

Ali Abdaal 1:44:29 Yeah.

Rory Sutherland 1:44:29 And, and, and, I mean, that, th- those are int- that, that's an interesting question, which is the misalignment often between the metrics which phone developers or technologists pursue-

Ali Abdaal 1:44:38 Yeah

Rory Sutherland 1:44:38 ... which tend to be SI derived units like speed, time, processor power-

Ali Abdaal 1:44:41 Yeah

Rory Sutherland 1:44:42 ... what is it? FLOPS or something, is it?

Ali Abdaal 1:44:43 Yeah. TeraFLOPS or whatever.

Rory Sutherland 1:44:44 Okay. TeraFLOPS or whatever.

Ali Abdaal 1:44:45 Yeah. [laughs]

Rory Sutherland 1:44:45 Okay, right. And the actual consumer experience, what the consumer wants.

Ali Abdaal 1:44:51 Yeah.

Rory Sutherland 1:44:52 And I'm sorry to bore people who've heard me before, but I always cite the Uber map as a work of psychological genius, which is that, yes, we prefer taxis to turn up earlier rather than later. I buy that. But within a reasonable margin of error, like the difference between 5 minutes or 10 minutes, or the difference between 7 minutes and 12 minutes, what we actually care about much more than punctuality is actually uncertainty.

Ali Abdaal 1:45:14 Yep.

Rory Sutherland 1:45:15 And what the map does is it doesn't necessarily re- well, it doesn't reduce the quantity of wait time.

Ali Abdaal 1:45:21 Yeah.

Rory Sutherland 1:45:21 It transforms the quality of wait time because we're no longer in a state of not knowing, a state of panic, a state of what if he's already left, I bet they were lying, they always lie. Oh, they probably haven't sent a taxi at all. And it replaces it with, "Oh look, there he is. I guess he'll be here in another three minutes. I'll have another pint." Well, it's probably half.

Ali Abdaal 1:45:39 [laughs]

Rory Sutherland 1:45:39 Another half.

Ali Abdaal 1:45:40 Yeah.

Rory Sutherland 1:45:40 Okay? And so, you know, it, it... A- a- and so that's a beautiful, beautiful case of literally conjuring up emotional value out of nowhere.

Ali Abdaal 1:45:49 Hmm.

Rory Sutherland 1:45:50 Now, you could do a predictive algorithm which routes cars to where you anticipate high demand and da, da, da. But there are downsides to that. It's expensive to do, it requires a large amount of scale-

Ali Abdaal 1:45:59 Yeah

Rory Sutherland 1:45:59 ... to do it. And also what I suspect would happen if you did that is every time you got it wrong and you sent a driver to a place where there was no demand, they'd get really pissed off.

Ali Abdaal 1:46:10 Yeah.

Rory Sutherland 1:46:10 You know, your algorithm would say, "Oh, there's a fantastic nightclub there and there's always a lot of demand at two o'clock in the morning," right? But, you know, they're closed for repairs, right?

Ali Abdaal 1:46:19 Mm.

Rory Sutherland 1:46:19 And so suddenly 17 taxis are sent to some weird alley in Shoreditch-

Ali Abdaal 1:46:24 Yeah

Rory Sutherland 1:46:24 ... at two o'clock in the morning and there's nobody there.

Ali Abdaal 1:46:26 Yeah.

Rory Sutherland 1:46:27 Okay? They're not gonna be happy. The map's perfect because actually the one thing they don't have is people ringing them up going, "Where the hell are you?"

Ali Abdaal 1:46:34 Yeah. Yeah, it's like when you order from Domino's, you get-

Rory Sutherland 1:46:37 Yeah

Ali Abdaal 1:46:37 ... I don't know if you've seen, you get that thing where it's like your pizza's in the oven and we're now doing the thing, and it probably bears no resemblance to reality, but this-

Rory Sutherland 1:46:43 But I've heard, I've heard con-

Ali Abdaal 1:46:44 Yeah. [laughs]

Rory Sutherland 1:46:45 ... I've heard contrary views about that.

Ali Abdaal 1:46:46 Oh, yeah.

Rory Sutherland 1:46:46 Some people say that actually no, the Domino's thing is quite honest.

Ali Abdaal 1:46:49 Right.

Rory Sutherland 1:46:50 Other people have said that actually it's kind of, um... There are, there are things which hack it. A lot of door close buttons on elevators, um, and I think a lot of buttons on pelican crossings are actually-

Ali Abdaal 1:47:04 Yeah

Rory Sutherland 1:47:04 ... kind of, um, placebo buttons.

Ali Abdaal 1:47:06 Yeah.

Rory Sutherland 1:47:07 They're there to give you something to do if you're impatient for the, the elevator to leave.

Ali Abdaal 1:47:10 Yeah.

Rory Sutherland 1:47:12 But they're not actually connected to anything at all.

Ali Abdaal 1:47:14 Hmm. Yeah, I find that when I order from Deliveroo or Uber Eats, the fact that like, "Oh, your rider has arrived at the restaurant. Oh, your rider's waiting..." It just sort of those, those extra touch points make me look forward and anticipate [laughs] like, "Yeah, food's on the way. I don't need to worry."

Rory Sutherland 1:47:27 I, I want to confess this.

Ali Abdaal 1:47:28 Yeah.

Rory Sutherland 1:47:30 Um, there's a wonderful model by David Rock, a neuroscientist, called the SCARF model.

Ali Abdaal 1:47:34 Oh.

Rory Sutherland 1:47:34 Stands for status, certainty, autonomy, relatedness... Call it reciprocality, probably better, and fairness.

Ali Abdaal 1:47:41 Okay.

Rory Sutherland 1:47:42 Okay? And there are five things, okay, which matter hugely to humans on an emotional level, but which economics doesn't understand and which we can't really quantify.

Ali Abdaal 1:47:56 Hmm.

Rory Sutherland 1:47:57 And I always joke that the Uber map also has a small status dimension, which is that I like to time my departure from the building onto the sidewalk-

Ali Abdaal 1:48:07 [laughs]

Rory Sutherland 1:48:08 ... to coincide exactly, particularly if it's Uber Lux, by the way-

Ali Abdaal 1:48:12 Yeah

Rory Sutherland 1:48:12 ... to coincide exactly with the car drawing up, 'cause it makes me feel like Keyser Söze at the end of The Usual Suspects, you know?

Ali Abdaal 1:48:19 [laughs] Yep.

Rory Sutherland 1:48:19 It makes you feel like Louis XIV. The, you know, it makes you feel... You know, walking out of a building and having a car draw up feels really cool. Standing in the rain going, "I wonder which of these is my car, or maybe none of them," you know?

Ali Abdaal 1:48:31 Hmm.

Rory Sutherland 1:48:31 You wouldn't get Snoop doing that, would you?

Ali Abdaal 1:48:32 No.

Rory Sutherland 1:48:33 You know? Right? And so there are other details and I think there's a little bit of a fillip when you just get out of the car without having to do any transactions.

Ali Abdaal 1:48:40 Yeah.

Rory Sutherland 1:48:41 Thanks very much. Feels like a chauffeur rather than a taxi.

Ali Abdaal 1:48:44 Yeah. Um, changing gears a little bit, uh, one

Ali Abdaal 1:48:47 thing that I heard you briefly mention a- in one of your talks is kind of the psychology of happiness.

Rory Sutherland 1:48:53 Hmm.

Ali Abdaal 1:48:53 And it strikes me that you come across at least as a very kind of happy, cheery kind of guy.

Rory Sutherland 1:48:58 Not always.

Ali Abdaal 1:48:59 Um, but at least in the, I guess in the public, uh, the, the, the, the public perception. Um, what are your thoughts on, I guess, how the lessons from the world of advertising and marketing can be applied to something like happiness?

Rory Sutherland 1:49:10 I think, by the way, when you first start seeing the world as a complex system rather than a kind of deterministic, mechanistic thing, I think it makes you happier in the long term, but sad in the short term.

Ali Abdaal 1:49:24 Okay.

Rory Sutherland 1:49:24 'Cause, you know, I was cast into a kind of depression when I first read things like The Selfish Gene.

Ali Abdaal 1:49:30 Yep.

Rory Sutherland 1:49:31 Going, "God, shit, this is actually plausible. It really is just that fucking [laughs] random," okay? Um, you know, uh, you know, there is no particular narrative arc-

Ali Abdaal 1:49:40 Hmm

Rory Sutherland 1:49:40 ... that's actually, you know... Or, or as someone said, you know, a very, very profound but seemingly banal statement about evolutionary biology, which is things are the way they are because they got that way.

Ali Abdaal 1:49:53 Yep.

Rory Sutherland 1:49:54 And there isn't necessarily a plan, and actually the need to see everything, um, as purposeful, okay, probably messes up economics actually. You know, because a very large part of economics is probably driven by luck, happenstance, serendipity, fluke. I'll give, I'll give you... Well, I'll give you an example. Penicillin, okay? The whole of medicine would probably be different, um, uh, if, uh... By the way, [laughs] if you want a real worry, um, on the day the discovery of penicillin was made, um, uh, Fleming was kind of working from home. Uh, he had a cottage somewhere in Suffolk-

Ali Abdaal 1:50:32 Hmm

Rory Sutherland 1:50:32 ... and wasn't supposed to come into London that day, but happened to go into London and noticed that all the bacteria surrounding this patch of random mold that had blown through the window had actually died.

Ali Abdaal 1:50:43 Hmm.

Rory Sutherland 1:50:43 My guess would've been that he did briefly consider [laughs] just chucking it in the bin and starting again. Now, okay, you're saying, "Oh, well, we would've discovered penicillin anyway." Possibly, but there was work at the time on a thing called, I think, salt supersulfides or something, which were an alternative kind of antibacterial agent. Without penicillin, you know, you would've possibly made enough progress with those supersulfides, okay, to stop looking elsewhere.

Ali Abdaal 1:51:09 Yeah.

Rory Sutherland 1:51:09 So, you know, I mean, an awful lot of this shit really is that goddamn random. I mean, God, you know... I mean, you know, Mick and Keith meeting on a train and, what was it? Mi- I think Mick happened to have a load of blues records-

Ali Abdaal 1:51:22 Hmm

Rory Sutherland 1:51:22 ... which got Keith, or the other way around, got one of them talking to the other, okay? You know, the great bands, you know. Um, what is it? I mean, Roxy Music and Brian Eno. I think it was a Tubes platform, wasn't it?

Ali Abdaal 1:51:33 Was it? Okay. [laughs]

Rory Sutherland 1:51:34 I mean, what, what, what the hell were The Beatles-

Ali Abdaal 1:51:36 Yeah

Rory Sutherland 1:51:36 ... doing going to the same school?

Ali Abdaal 1:51:37 Yeah. [laughs]

Rory Sutherland 1:51:37 You know, all that stuff, right? I mean, a huge amount of this stuff is spectacularly random-

Ali Abdaal 1:51:42 Hmm

Rory Sutherland 1:51:42 ... and very, very path dependent. You know, I mean, one of the most interesting things reading that book by Yuval Noah Harari, you know, is the view, which I'm not sure about, but that actually the invention of agriculture was kind of a disaster.

Ali Abdaal 1:51:59 Hmm. Yeah.

Rory Sutherland 1:51:59 Because it forced everybody either, either get overrun by your agricultural neighbors, who can basically outpopulate you by a factor of about 20, or give up and n- you know, or effectively get with the agricultural program-

Ali Abdaal 1:52:13 Yeah

Rory Sutherland 1:52:13 ... and engage in suddenly hierarchical societies-

Ali Abdaal 1:52:16 Yeah

Rory Sutherland 1:52:16 ... you know, all manner of kind of oppression and, um, control. You know, I'm, I'm n- I, I mean, w- yeah, I kind of... Yeah, I mean, I, I... I mean, you know, it's that fantastic thing, isn't it? That, you know, it was an arbitrary thing i- the initial evolution of the eye-

Ali Abdaal 1:52:32 Yeah

Rory Sutherland 1:52:32 ... whether it was convex or concave.

Ali Abdaal 1:52:34 Yeah.

Rory Sutherland 1:52:34 Okay? And insects like flies have a convex, um, shape to the eye to give it some sort of resolution and directional imaging.

Ali Abdaal 1:52:42 Hmm.

Rory Sutherland 1:52:42 And it so happened that, you know, our ancestors had a concave shape. The concave shape can involve into a lens, okay? The convex shape never can.

Ali Abdaal 1:52:51 Yeah.

Rory Sutherland 1:52:52 So yeah, I mean, you know, when you, when you realize that, it is kind of depressing because you realize there isn't a kind of, you know, Whig theory of history where everything gets better and better and better, and actually there's a whole load of random shit going on of, you know ... I, I was amazed, by the way, at the ... I mean, I voted remain, but the confidence of remainers in pronouncing it a bad decision-

Ali Abdaal 1:53:14 Hmm

Rory Sutherland 1:53:14 ... struck me as ... I mean, you really know enough about the future to, to confidently-

Ali Abdaal 1:53:18 [laughs]

Rory Sutherland 1:53:18 ... pronounce it as a bad decision?

Ali Abdaal 1:53:20 Yeah.

Rory Sutherland 1:53:22 You know, I mean, you also look at it... By the way, I, I also made the point that, okay, let's say you thought the EU was pretty good as it currently stands-

Ali Abdaal 1:53:30 Hmm

Rory Sutherland 1:53:30 ... okay? But you thought that in the next 20 years ... Bear in mind, older people are slightly more conscious of the direction of travel of the EU, okay?

Ali Abdaal 1:53:39 Yeah.

Rory Sutherland 1:53:39 Because they've been around for longer, they've got more chronological context. Let's say you thought there was a 20% chance that, um, uh, the EU would morph into something highly unattractive or inescapable or whatever, you know, or just, you know... A- a- and actually, or just a kind of bureaucratic, you know, nightmare because you don't have enough cohesion between the 27 countries for them ever to get rid of the governmental class simultaneously.

Ali Abdaal 1:54:03 Yeah.

Rory Sutherland 1:54:03 Okay? In the UK, every 10, 15, 20 years, there's a kind of political earthquake. Same in the US, okay? And the entire government class gets replaced.

Ali Abdaal 1:54:12 Yeah.

Rory Sutherland 1:54:13 Run out of ideas, become corrupt, whatever it may be. Now, that's impossible in the EU, particularly with 27 countries and, and ... So you know, there's the possibility ... By the way, the idea that groups of people make better decisions is, is very, very unsafe.

Ali Abdaal 1:54:28 Okay.

Rory Sutherland 1:54:29 Okay? There are all sorts of things like the Abilene effect, where you can get collective insanity, where all 27 people go along with something they don't really agree with for fear of looking like a party pooper-

Ali Abdaal 1:54:40 Yeah

Rory Sutherland 1:54:40 ... for example. That, that's called the Abilene effect. You can look it up on Wikipedia.

Ali Abdaal 1:54:43 Hmm.

Rory Sutherland 1:54:43 So if you thought, okay, yeah, I just think the EU is a bit dangerous because everybody in the governmental class is far too committed to this idea of, you know, gains to scale.

Ali Abdaal 1:54:53 Yeah.

Rory Sutherland 1:54:54 They're far too committed, often for status reasons, to the idea of general cosmopolitanism and, and you know, and the eradication of national boundaries and differences. Then you have to ask the problem, okay, I think there's a 20% risk. This wouldn't bother me normally, but when ever again will we get a chance to leave?

Ali Abdaal 1:55:13 Yeah.

Rory Sutherland 1:55:14 And the likelihood would've been this was your ... If you believe that the EU is risky and might head off somewhere dangerous, you had to ask, is it, you know, if you're looking at this decision objectively-

Ali Abdaal 1:55:24 Hmm

Rory Sutherland 1:55:25 ... um, I don't really want to leave now, but I know that it's only a matter of time before you get a Eurofile government which wants to join the Euro, then you know, then you can never leave, then da, da, da, da, da, da, da. Um, I don't really wanna leave now, but I have to leave now because I have no idea of the direction of travel of this vehicle.

Ali Abdaal 1:55:44 Yeah.

Rory Sutherland 1:55:44 But all I know is this is the last, this is the last station at which I can get off.

Ali Abdaal 1:55:48 Yeah.

Rory Sutherland 1:55:48 Okay? Now, to make that decision is not irrational. Okay? It's absolutely nonsensical to say that's irrational.

Ali Abdaal 1:55:55 Hmm.

Rory Sutherland 1:55:55 You may disagree with it. And by the way, I'm to- I'm totally happy listening to both sides of opinion who acknowledge, you know, that it, you know, there is a trade-off involved.

Ali Abdaal 1:56:04 Yeah.

Rory Sutherland 1:56:05 But this idea that you were mad, racist, and horrible, and there was no other possible reason why you'd do this-

Ali Abdaal 1:56:10 Yeah

Rory Sutherland 1:56:10 ... those people ... I mean, have you genuinely thought... You know, have these people genuinely... Are they incapable of thinking in things in more than one way?

Ali Abdaal 1:56:18 Hmm.

Rory Sutherland 1:56:18 In other words, are they so infected by the kind of Davos groupthink-

Ali Abdaal 1:56:22 Hmm

Rory Sutherland 1:56:22 ... that they genuinely can envisage no other alternative future?

Ali Abdaal 1:56:26 Yeah.

Rory Sutherland 1:56:26 'Cause if that's the case, then I want, I want these people gone, you know?

Ali Abdaal 1:56:30 [laughs] I think that's a great place to wrap this up.

Rory Sutherland 1:56:32 Hmm.

Ali Abdaal 1:56:32 Um, final thing I'd love to ask, any book recommendations?

Rory Sutherland 1:56:36 Lots.

Ali Abdaal 1:56:36 [laughs] We've talked about a few already, um, throughout this conversation, but yeah. I would just... What's, what are some books that

Ali Abdaal 1:56:44 you find yourself-

Rory Sutherland 1:56:44 Uh, anything by Richard Shotton is pretty good.

Ali Abdaal 1:56:46 Okay.

Rory Sutherland 1:56:46 Um, uh, he's written lots of books about behavioral science. If you want to become a rapid practitioner, Richard Shotton's the first place.

Ali Abdaal 1:56:52 Okay.

Rory Sutherland 1:56:53 Obviously Cialdini, Kahneman, Thaler, et cetera, the what you might call the canon of behavioral science.

Ali Abdaal 1:56:58 Yeah.

Rory Sutherland 1:56:59 Um, uh, also Dan Ariely.

Ali Abdaal 1:57:01 Yeah.

Rory Sutherland 1:57:01 Um, a lot of these people hate each other, uh, but that's 'cause they're academics and they're weird. Okay? Um, you know, the whole thing's whack. Um, uh, the um, uh, um, uh, great book I read recently, um, I mean, Algorithms to Live by. Um, Seeing Like a State, which by the way, I think is also a warning not only to government that their weird, average-y way of making the populous comprehensible-

Ali Abdaal 1:57:29 Yeah

Rory Sutherland 1:57:30 ... actually destroys understanding in the process.

Ali Abdaal 1:57:34 Okay.

Rory Sutherland 1:57:34 Uh, I think it has enormous implications for large dotcom entities.

Ali Abdaal 1:57:38 Hmm.

Rory Sutherland 1:57:38 Which is that what happens when the person- Who has the problem, the customer who has the problem fundamentally cannot get in touch with anybody who has the power to solve it.

Ali Abdaal 1:57:49 Mm.

Rory Sutherland 1:57:51 Okay?

Ali Abdaal 1:57:52 Okay.

Rory Sutherland 1:57:52 Which you could argue is a little bit of an argument for Brexit, but it's certainly an argument for localism.

Ali Abdaal 1:57:57 Yeah.

Rory Sutherland 1:57:57 Okay. Which is actually let's keep the, you know, let, let's maintain this principle of kind of subsidiarity-

Ali Abdaal 1:58:03 Mm

Rory Sutherland 1:58:03 ... where decision-making is devolved as low down the organization as is possible and as close to the consumer as possible.

Ali Abdaal 1:58:10 Yeah.

Rory Sutherland 1:58:11 Okay? Um, so that's Seeing Like a State by James C. Scott. Um, I'm gonna ... This is gonna be a slight cross-section of interesting books. What I'm currently listening to is Drayton Bird's book, You Did What? Which is his life in direct marketing, which is fantastic. He's now in his 80s, but he was ... When I joined Ogilvy & Mather Direct, one of the decisive people in my life other than my parents, a guy I knew at university who was a mature student called Ray Foulke, who'd, who was studying architecture at Christ's in the '80s, but had previously been the, um, uh ... He, he and his brothers had organized the Isle of Wight festivals in the, uh, what, '60, '68, '69, '70.

Ali Abdaal 1:58:49 Uh-huh.

Rory Sutherland 1:58:49 So when he was in his early 20s, he was kind of negotiating with Dylan and, um, uh, you know, The Doors and everybody else like that. Utterly fascinating guy, entrepreneur, huge influence. But Drayton Bird was the third great influence, I suppose, along with a few of the other people who were, if you like, acolytes of Drayton Bird.

Ali Abdaal 1:59:08 Okay.

Rory Sutherland 1:59:08 Um, but, uh, he was an extraordinary man who was the chairman of Ogilvy & Mather Direct when I first joined.

Ali Abdaal 1:59:13 Yeah.

Rory Sutherland 1:59:14 And was utterly, you know, really fantastic influence. And so I'm just reading his, uh, memoirs at the moment. Um, I mentioned Algorithms to Live by and The Alignment Problem. Uh, I ... That ... Those are two interesting books I've read recently. There's a great book called Unreasonable Hospitality, which has just come out, which is a, a restaurateur from New York-

Ali Abdaal 1:59:33 Yeah

Rory Sutherland 1:59:33 ... uh, with a very interesting philosophy on hospitality and/or service.

Ali Abdaal 1:59:38 Mm.

Rory Sutherland 1:59:40 Um, uh, you know, I, I, I'm a big fan, by the way, of, of effectively, as I said, the recurring fractal patterns model of how life works. Reading about a completely unrelated business-

Ali Abdaal 1:59:52 Yeah

Rory Sutherland 1:59:52 ... uh, and saying, "What is ..." You know. Well, I'll give you, I'll give you an example of this, okay? Airlines have spotted the fact with loyalty programs that if you're a frequent flyer, uh, your, um, utility function, if you like, your preferences are different to infrequent flyers. Okay? If you're an infrequent flyer, you fly once a year, actually queuing for eight minutes to check in-

Ali Abdaal 2:00:14 Yeah

Rory Sutherland 2:00:14 ... isn't that much of a burden. If you fly every week, it drives you insane. Okay? And so they spot frequent flyers, and they treat them differently. No railway's done this-

Ali Abdaal 2:00:26 Hmm

Rory Sutherland 2:00:26 ... when you think about it. Okay? Now, what if you actually made a third of the carriages on a typical train, or 40%, first class, and the people who could use the first class passage, uh, carriages were people who bought a first class ticket, one, people who had a season ticket, who have more right to a seat than an occasional traveler.

Ali Abdaal 2:00:47 Yeah.

Rory Sutherland 2:00:47 Okay? Because having to stand once every three months is a bit of a bummer, but it's no big deal. Having to stand every day for three months is intolerable. You feel totally, you know, robbed-

Ali Abdaal 2:00:59 Mm

Rory Sutherland 2:00:59 ... really. Okay? Uh, anybody with an old person's rail card, uh, and anybody who's a frequent traveler just gets a slightly better class of seat.

Ali Abdaal 2:01:07 Mm.

Rory Sutherland 2:01:08 Okay? Now, th- th- the airlines have been doing that. Okay, so even if you're flying in economy, if you're a frequent flyer, you get the business class experience at check-in. Uh, you get the business class experience at boarding. You know, the, the airport ... And the lounge. The airport experience is business class. It's only in the plane you're in economy.

Ali Abdaal 2:01:27 Mm.

Rory Sutherland 2:01:27 Okay? That's what, that's what they've done for ages with air. Now, nobody ... Now, they're not exactly wildly different industries, right? They're both in transportation, but nobody has asked the question, "Well, what if we could take that and transplant it?"

Ali Abdaal 2:01:41 Mm.

Rory Sutherland 2:01:42 I think there are probably, you know, I don't know, 10% of businesses out there that could steal the idea of Amazon Prime, for example.

Ali Abdaal 2:01:50 Yeah. I recently signed up to the Pret coffee subscription.

Rory Sutherland 2:01:53 Ah.

Ali Abdaal 2:01:53 It's so good. It-

Rory Sutherland 2:01:54 So tell me how it works. How much a month is it?

Ali Abdaal 2:01:56 So it's £12.50 for the first month, 25 pounds a month thereafter, and you get up to five free coffees every day, um, with like-

Rory Sutherland 2:02:03 And can that can be obviously for your friends, 'cause five for yourself might be a bit excessive, is it?

Ali Abdaal 2:02:07 Uh, it can also be for your friends, but yeah, there's gotta be at least 30 minutes between each order.

Rory Sutherland 2:02:10 Got it. Yeah. Yeah.

Ali Abdaal 2:02:11 And so what that means practically-

Rory Sutherland 2:02:12 Oh, I see

Ali Abdaal 2:02:12 ... yeah.

Rory Sutherland 2:02:12 Oh, I see. Yeah.

Ali Abdaal 2:02:13 So you can't get five all in one go.

Rory Sutherland 2:02:15 You ... Can you get two in a go? No, just one.

Ali Abdaal 2:02:16 No, just the one.

Rory Sutherland 2:02:17 Just one. Just one.

Ali Abdaal 2:02:17 But you can go-

Rory Sutherland 2:02:18 You've gotta have 30 minutes

Ali Abdaal 2:02:18 ... five times a day if you really want to.

Rory Sutherland 2:02:19 Right.

Ali Abdaal 2:02:19 So now p- part of my routine is, well, there's like loads of Prets nearby. Instead of making a coffee at home, I'll just walk to the nearest Pret. I get some fresh air, I go to Pret, and usually while I'm there ask the team, "Hey, anyone want anything?" I end up buying a bit more. Maybe I'll get a box of fruit.

Rory Sutherland 2:02:33 Well, yeah.

Ali Abdaal 2:02:34 And now I, I do not go to any coffee shop other than Pret purely because they've got the Amazon Prime model. [laughs]

Rory Sutherland 2:02:38 Exactly. Exactly. Yeah.

Ali Abdaal 2:02:39 Just like-

Rory Sutherland 2:02:40 I've always wondered why no hotel chain has done it, where I live in Sevenoaks or just outside, um, and, uh, it, it ... Basically a taxi home from London to Sevenoaks is about 100 ... It used to be famously £7 an oak to Sevenoaks. That's what the black cab-

Ali Abdaal 2:02:55 Yeah

Rory Sutherland 2:02:55 ... drivers would always quote, but it's now more like 120.

Ali Abdaal 2:02:58 Yeah.

Rory Sutherland 2:02:59 Uh, maybe a bit more actually. And I mean, Uber would be a bit less. Um, uh, but, um, uh, the interesting thing to me was why isn't there a deal where I can pay like Marriott or InterContinental Hotel Group and I go, "Look, here's the deal. I pay you 100 quid a year."

Ali Abdaal 2:03:14 Mm.

Rory Sutherland 2:03:15 Okay? After 10:00 PM, I, I've missed my train, okay, I can check into any hotel where you have a vacancy and pay 50% of the thing. Okay? Now, you know, um, uh, interestingly, um, I was talking to someone who worked front of front desk at one of the most expensive hotels in London who said, "Funnily enough, we always used to give the upgrades to the- Business travelers

Ali Abdaal 2:03:41 Mm

Rory Sutherland 2:03:41 ... because two things. They only stayed for one night, so you're only giving away the upgrade for that night. But also they didn't hang around all day demanding ancillary butler services.

Ali Abdaal 2:03:50 Yeah.

Rory Sutherland 2:03:50 So they're actually comparatively cheap to serve, you see?

Ali Abdaal 2:03:53 Yeah.

Rory Sutherland 2:03:53 Now, that arrangement would seem to me obviously sensible because, you know, what's the worst that, uh, were going to happen? Well, okay, you've got the... I suppose you've got the, uh... Okay, you have to change the bedding and stuff, but that's probably 20 quid, 30 quid room turnover cost at the max, okay? Now, that would strike me as an obvious kind of symbiotic relationship between hotel chains and people who live in, you know, Tunbridge Wells.

Ali Abdaal 2:04:17 Mm.

Rory Sutherland 2:04:18 You know, or people who live... And particularly, you know, if people are moving out to, uh... If you think about it with flexible working, if people are moving out to York, well, there's no way you can get a taxi home to York.

Ali Abdaal 2:04:27 Yeah.

Rory Sutherland 2:04:28 That would be a pretty damn good deal, wouldn't it? Okay, you've got your, you know, your crash pad. And yet nobody's done it. Costco's done it. Amazon's done it.

Ali Abdaal 2:04:36 Yeah.

Rory Sutherland 2:04:36 Ocado's done it, okay? It seems weird to me that, you know, too few people have done it. Why don't you... Now, actually, Tesco's now doing it with Clubcard, I think, aren't they? Where you pay a bit extra-

Ali Abdaal 2:04:47 Mm

Rory Sutherland 2:04:47 ... but you get either discounts or perks on top.

Ali Abdaal 2:04:50 Yeah. Yeah, like the Waitrose card, I mean, the only reason I got that was because you get, like, 30% off the fresh produce or fresh-

Rory Sutherland 2:04:57 Ah, got it. Yeah

Ali Abdaal 2:04:58 ... thingy, and it was like, it immediately pays for itself. [laughs]

Rory Sutherland 2:05:01 Of course. Of course.

Ali Abdaal 2:05:01 Not like the train rail card or anything like that.

Rory Sutherland 2:05:03 But again-

Ali Abdaal 2:05:03 Yeah

Rory Sutherland 2:05:04 ... it's back to that psychology of, you know, friends and family that I beg- mentioned at the very beginning of the talk as well.

Ali Abdaal 2:05:09 Yeah.

Rory Sutherland 2:05:09 You can make the same discount seem very, very different.

Ali Abdaal 2:05:12 Yeah.

Rory Sutherland 2:05:13 Even if it's identical, uh, economically-

Ali Abdaal 2:05:15 Yeah

Rory Sutherland 2:05:15 ... you can make it very, very different emotionally. And that's, that's all, that's all I'm saying, really, is that the, the economics... Uh, the economic wellbeing does not translate into emotional wellbeing very well-

Ali Abdaal 2:05:29 Mm

Rory Sutherland 2:05:29 ... especially if we insist on using, um, numerical metrics, okay?

Ali Abdaal 2:05:35 Yeah.

Rory Sutherland 2:05:35 In order to construct some model, okay? Okay, the... What you gain is an artificial kind of certainty, and what you lose is the fact that in many cases, the model barely has any resemblance to what's really going on in real life.

Ali Abdaal 2:05:47 Nice. Rory, I think that's a fan- a fantastic place to end this. Thank you so much.

Rory Sutherland 2:05:50 Absolute pleasure.

Ali Abdaal 2:05:51 Uh, where can people learn more about you? Uh, we'll obviously put links to everything down below.

Rory Sutherland 2:05:54 My trillione is @RorySutherland. Uh, all one word. Um, uh, uh, the books are, um... Now, I'm gonna actually say thank you to Amazon because although the book sold about 70,000, uh, WH Smiths have never stocked it, even as a Penguin paperback.

Ali Abdaal 2:06:08 Mm.

Rory Sutherland 2:06:08 And so loads of people go, "Oh, dear, dear, Amazon are killing the bookshops." Well, yes, but equally, bookshops weren't doing any favors to anybody other than the most mainstream authors. So, you know, I'm always very, very keen, by the way, in taking an opposite side of what you might call the middle class default position. Because middle class people are basically sheep, okay? It's, you know, in other words, they're so status conscious that actually, uh, they say things for what they imply, not for, not for actual validity.

Ali Abdaal 2:06:40 Yeah.

Rory Sutherland 2:06:40 Okay? And one of the things I often do is defend chains. So I'll launch into a passionate defense of things like Holiday Inn Express, Premier Inn, and Travelodge. Let me explain why, okay? Those things did a fantastic favor to the UK hotel industry by setting a floor, okay?

Ali Abdaal 2:06:59 Mm.

Rory Sutherland 2:06:59 They're basically pretty good or better. If you want to open a hotel, you've got to be at least that good or you go out of business. Therefore, I can confidently book a hotel, whether it's a Travelodge or a non-Travelodge, and know it's gonna be at least about as good as a Travelodge.

Ali Abdaal 2:07:14 Yeah.

Rory Sutherland 2:07:14 Okay? Now, in the age before you had chains like that, the same goes for coffee, okay? Uh, every time you bought a coffee, every time you, um, you checked into a hotel, you were basically, you know... It, it was a massive gamble with a fairly high chance that it was absolute shite. And so it's worth noting, okay, that actually there's a value, a huge value not just to raising the ceiling. There's a huge value to raising the floor.

Ali Abdaal 2:07:39 Love it. Yeah. [laughs] That's a good point. Yeah.

Rory Sutherland 2:07:43 So, you know, I know. Um, there was a great guy who was an independent coffee shop owner who said, "I'm not gonna diss Starbucks," he said. "It was those guys who made it possible for me to charge £3 for a coffee [laughs] in the first place."

Ali Abdaal 2:07:52 Yeah.

Rory Sutherland 2:07:52 You know, he said, "If it weren't for Starbucks, I wouldn't have a bigger business. I wouldn't have a business at all."

Ali Abdaal 2:07:57 Yeah.

Rory Sutherland 2:07:58 Fair way of looking at it.

Ali Abdaal 2:07:59 Absolutely. Right. Rory, thank you so much.

Rory Sutherland 2:08:00 Absolute pleasure.

Ali Abdaal 2:08:01 All right. So that's it for this week's episode of Deep Dive. Thank you so much for watching or listening. All the links and resources that we mentioned in the podcast are gonna be linked down in the video description or in the show notes, depending on where you're watching or listening to this. If you're listening to this on a podcast platform, then do please leave us a review on the iTunes store. It really helps other people discover the podcast. Or if you're watching this in full HD or 4K on YouTube, then you can leave a comment down below and ask any questions or any insights or any thoughts about the episode. That would be awesome. And if you enjoyed this episode, you might like to check out this episode here as well, which links in with some of the stuff that we talked about in the episode. So thanks for watching. Uh, do hit the subscribe button if you aren't already, and I'll see you next time. Bye-bye.