Rory Sutherland: Why The Dumbest Ideas Make the Most Money

What was your experience in Australia? Was it what you expected?

Yeah. Um, uh, it was better than I expected. I expected it to be pretty good to begin with. Uh, the food was sensational. Uh, wonderful, incredibly friendly. Uh, uh, astonishingly beautiful. I mean, Sydney is genuinely remarkable in that there aren't that many places in the world which would be astonishingly beautiful and impressive if there weren't a city on top of them. And then on top of which has been built a really great beautiful city. Chicago would be another one I guess you know to a degree San Francisco uh you know but in other words the combination of just astonishing uh natural features and a really really great city was totally magical.

Do you do you think weather plays a role in kind of you said the people were great there and the experience were lovely.

Yeah. Yeah. No, no. I mean, the funny thing is for about I don't think this happens anymore, but 10, 15 years ago, there was a thing called the cultural cringe, and all Australians were obsessed with the idea that British people were patronizing. What they failed to realize is that those British people had been watching it neighbors and home and away for the previous 10 years and in fact envied them. They didn't nobody was patronizing anybody by that stage. Uh it was a complete uh uh effectively complete um uh envy and jealousy.

It's interesting seeing I guess the difference in how people perceive people on the other side of the world. So say Americans right they think Australia is just Steve Owen crocodiles uh and punching kangaroos when they're not getting it muddled up with Austria which also happens. Have you heard that?

No. There was a wonderful thing the Sydney Olympics did which was a compilation of the dumbest questions uh asked by tourists who are proposing to visit the Sydney Olympics and more than one person asked where can I get to see the Vienna boys choir. Okay. Because a significant number of people I'm not making this up muddle up Austria and Australia and think they're the same place.

Maybe because they're spelled very similar.

Yeah. Yeah. No, in fairness and actually they have exactly the same Latin root. Um uh so uh yeah um in fact Australia probably would have been called Austria if Austria hadn't already existed. But um no um you're you're absolutely right. I mean, it's it's uh I suppose America but what what is interesting about it is that like the UK actually there are obviously stereotypes of the country but they're highly varied you know so you have you know uh you know you know obviously very fine architecture and a bloody great opera house and things like that but you also have that outback culture and punching kangaroo stuff.

We don't have that.

No, it doesn't really. Although I mean I mean there are far more kangaroos than British people expect. There aren't that many koalas, are there? I mean, have you ever seen a koala? You probably at a zoo. You've only seen a koala at a zoo. At a zoo. So, so one of the weird things in which this is a classic example in behavioral science of kind of salency bias, which is I think I think British people would kind of assume that because they're both equally famous that there are equal numbers of koalas and kangaroos. Okay. But in fact, kangaroos are insanely common, right? I mean, you'll drive through the countryside and they're hopping around all over the place. Koalas, not so much.

The thing I really want to see when I next go, which you've probably seen as a casawary. It's that big bastard bird. It's like basically it's the it's the punk of the bird world. It's a flightless bird with I think massive spurs on its feet. It kind of looks prehistoric, unbelievably spooky eyes, and actually is seriously dangerous. I mean, they'll kill people's dogs. I definitely want to see one of those because I, you know, that that's one of those little bits of kind of surviving prehistory that I'd really like to have a look at along with the stroal lights.

One, one thing you would love to see is this frozen yogurt place called Yochi. So, there's a frozen yogurt place called Yochi, and I'm blown away by it. I'm consumed by it as well. But basically, it's this it's this new idea, and it's taken Australia by storm. It's a normal frozen yogurt place. There's lines for hours waiting. Clever rebranding of ice cream, by the way, frozen yogurt, isn't it?

Yeah. Because Well, it's not real cream, so you can't, you know, but one of the one of the interesting things about it is that I mean, one of the strangest things I think about human behavior is that we eat so little ice cream cuz we all really really like it. Okay? I mean, there are I've met weird people or people with hyper sensitive teeth who don't like it, but everybody loves ice cream, okay? As a food stuff. And yet one, we don't really eat it very often because there aren't that many social occasions in which it's kind of permitted. And uh you know, you see, and I was I always ask people, you know, you wouldn't really bring an ice cream into the workplace, for example. It would just seem weirdly childish. Well, it melt. And then you get some another weird phenomenon which is quite strange, which is uh that um uh the the biggest ice cream consumption in Europe is in I think Russia and Sweden. Now, you'd automatically think it would be Italy or somewhere with a hot climate. But actually, the thing that drives ice cream consumption, quite interesting, bit nerdy, but interesting, uh isn't temperature, it's sunshine. So, if you live in a culture where it's only occasionally sunny, sunshine prompts people to buy ice cream. You'd think it' be temperature, it isn't. So the Swedes, the Scandinavians are actually the biggest consumers because uh you know when the sun breaks through briefly, they immediately go wild, take off all their clothes, sunbathe in the middle of Stockholm half naked and go and buy an ice cream. Very strange. I mean, it sounds fun to be honest. Let's not knock it. It does make sense.

But this Yochi chain basically what happens is is I think I think frozen yogurt's kind of a clever way of creating adult ice cream in a way.

Yeah. Well, I think that there's this whole experience aspect of it. So, you wait in this line. There's two staff members. They do thousands of ice cream, right? You wait in this line. The you get then get greeted at the door with a with a person that says, "Hey, have you been here before?" If not, then they'll go and help you try out some stuff. You then go and make your own meal. So, you then go and fill up the ice cream. You then choose your toppings, everything. You then get to the counter. There's the second staff member. And you put your thing on there. They weigh it. They press a button. They charge you. You walk out excited, love it, and you come back every other day. And I'm a victim of this too. I go there. I was when I was living in Australia, I was there like once a week. And there's two staff members, an hour long line, and everyone is obsessed with it. I suppose you have there's an American thing called Pink Berry. I don't think I've ever been there, which is probably a similar kind of idea.

One of the things I did notice about Sydney was the extraordinary level of innovation. Is there still a place called Wings and Tins? I'm not sure cuz I know there's a guy who's a kind of serial entrepreneur in the food space. Uh there obviously a lot of them. Uh but Wings and Tins was a place which only sold two things which is wings obviously and tins of beer. And I'm intrigued. I I find the whole sort of quick service restaurant food culture really really interesting because it's well I actually this is a opportune moment in which to mention my late colleague uh fellow Australian of yours called Sam Tatum who tragically died about um three weeks ago two two weeks ago uh and uh I watched his funeral online I couldn't make it out there in time he was an author of a book called uh Evolutionary Years and he like me I worked with him. He was an absolutely brilliant man. This book is fantastic by the way. Uh you should automatically buy it because it's it's brilliant. But he like me was absolutely obsessed with what you might call experimentational kind of Darwinian. I I suppose you might say the restaurant business is Darwinian. It's variation and selection. uh on the site of nearly every very easy by the way to look at restaurants and go c look at all these successful restaurants this restaurant business it's a piece of piss but on the site of every successful restaurant four restaurants have failed previously it is absolutely you know variation and selection it's it's quite rapid feedback and every now and then like yochi you stumble on either intentionally or you know in some cases I think accidentally You stumble on a new formula which really works and effectively you discover some unmet human need, unvoiced human need.

And what the hell was that bloody quason come bagel thing?

Cronut. Yeah, that kind of weird thing. I don't, by the way, I don't like the the New York uh food scene nearly as much as say the Sydney or the London scene because it's too fatty. Okay, if you're in New York, you're, you know, New Yorker will say, "Where are you eating this evening?" And you tell them, they go, "Oh, that's really last year." Yeah. Really bothered about, you know, how hot this place is or how likely it is to get Instagrammed. I'm kind of interested in the quality of the food to be absolutely honest. But, uh, I absolutely I'm absolutely fascinated by by experimentation in the hospitality industry. you know, weird things like how did Waga Mama I don't know if you how well you know that, but it somehow got away with getting people to share tables and benches who weren't in the same party, you know.

But so this this Yi idea though, I'm I'm thinking about it is because people now have replicated it. So the the the business model is genius because the biggest overhead for hospitality businesses is their staff and their team, right? They're employing two people basically. They probably don't have much waste, do they? Because the stuff's frozen.

No, it's all frozen, but And it's expensive. You get a tub of thing, it cost you like $20 if you fill it up. And people are stoked and happy and they get to choose all it is. And I'm thinking about it. It's the experience. Self-s serve. It's all self-s serve. The whole thing is self-s serve. Um, we might have a third person topping up the toppings when they run.

Bloody hell. This is We're overegging the old wage bill here, aren't we?

Exactly. Right. But but I'm thinking about it and people have gone and applied it to other businesses. There's been a uh one where there's like a loaded fries version of it where you can put in a dispenser and the fries will come out um in Australia and it blew up on social media and it's gone crazy. But I want to know the the psychology behind the consumer here. What is making these things so fascinating? Do you have any idea on why the experience plays a big role?

There's a lot going on. Okay. So it's I think it's an absolutely fatuous mistake to approach uh uh marketing or entrepreneurialism or innovation from an exclusively rationalist perspective. And there are so many reasons why that's a mistake. By the way, one, we don't know what we want uh genuinely, or rather a lot of our needs are actually unvoiced, unthought. They're only really discovered when we experience them. Um, and I'd also argue, I always make the point that you don't find entrepreneurs in chess clubs, you find entrepreneurs in casinos. That there's an element to this game which has to be probabilistic. You have to accept the fact that luck plays quite an, you know, quite a significant role. Okay? And also that um, uh, every single innovation involves an element of a leap into the dark for a very simple reason. And, and Roger L. Martin, one of my business gurus, makes this point. uh there's no data about the future. So if you're one of these people who goes we can't and this is common now in finance in compliance in large parts of business we can't do anything unless it's unless we have data to prove it. Okay. Uh you are setting the bar for proof ridiculously high because you're basically dependent on evidence from the past but of necessity. Anything you do that's significantly new or innovative will have no supporting data to begin with. What you're doing is what the police do. You're not assembling evidence. You're creating evidence. You're trying something to see what happens to inform what you do next. And by the way, I mean, this is something where I occasionally wind people up, but it's sort of true. I think the over reliance on the scientific method in fields where it's totally inappropriate is rubbish. And I'd apply that by the way to COVID, okay, which is genuinely why was it that a assemblage of many of the brightest minds in the world who were I would argue over reliant on robust evidence and under reliant on anecdote and experimentation. Why did it take them a year and a half to spot that COVID was airborne in its transmission? Okay, we were washing our hands and doing weird things like that. It wasn't a bad I mean that's perfectly reasonable precautionary measure. Okay, but genuinely, you know, there are world world health organization tweets saying offic, you know, official definitive co COVID is not airborne. It was [ __ ] airborne, right? The transmission was airborne. And the problem was they were looking at all the evidence about other pandemics, but the virus was novel. Okay, novel corona virus that means something about which there isn't much evidence. And so this I I know that sounds silly to bring up COVID at this point, but this also besets business and governmental decisionm where if you're only allowed to do something you can prove up front, you'll never find anything new.

Yeah. Well, so this is this concept around logic. You talk about this a lot. You say that a lot of people get trapped solely making their decisions based on logic. And obviously when you're when you're making your decisions only based on logic, you can't create anything new. And so you're never going to be different. Also, the logical ideas have all been tried.

Mhm. So there's a very interesting I can't remember his name, but very interesting Silicon Valley investor who says, I'll only really invest in something if it has an element of stupidity to it. If there's some component of it which seems a bit ridiculous. And I, you know, I would argue that, you know, everything from sort of, you know, Tik Tok to, uh, Red Bull, you know, the really the really interesting breakthrough innovations we see, uh, also true, I think, of government policies, by the way, often have an element of the slightly ludicrous. And the reason is the fact that they seem slightly ludicrous explains why no one's tried them before. So it is, I think, an evidence point that you might be trying something that nobody's been offered before. If you do things that are logical, it's highly it's highly likely that the reason that there's nobody in that space already when something's logical is simply that uh there may be a gap in the market, but there isn't a market in the gap. That for whatever reason, Red Bull, you know, I always make this point. I sort of went viral on it. If you were trying to compete with Coca-Cola, what chance is it that a large public held corporation would go, I know what we're going to try. We're going to try a ludicrously expensive drink in a tiny can that tastes kind of disgusting. Okay? Right? None of those things in itself is properly aligned with standard economic theory that people want great value for money, a large quantity of a refreshing drink, and one that tastes nice. M and so no I I mean what's interesting about that frozen yogurt thing is and bubble tea. Who the hell saw that coming? Matcha like drinking grass. Here's the strangest one which is matcha is like snogging the underside of a lawnmower. But but I I drink quite a lot of it. And there's undoubtedly I think something of course in the human brain which thinks that things that taste weird have some somehow have medicinal or healthgiving properties. that we do have this idea that something that's wholly enjoyable and this may explain why frozen yogurt succeeds where ice cream doesn't which is that ice cream is too tasty. I know that sounds ridiculous if if we've been kind of educated partly to think that you know we expect our medicine to taste horrible. In fact, if it doesn't taste horrible we don't really trust it.

Do you think if matcha wasn't green people would drink it?

Um uh if you've ever tipped, by the way, a whole matcha latte, uh in the side of your car, I have once. Okay. Uh you are not very grateful for the fact that matcher is bright green because trust me, the cleanup, you practically need one of those crime squads coming around in hazmat suits to get your car back to normal again. Um but yeah, it's weird. I mean, apparently there's sort of worldwide matcher shortage. Very interesting thing. Tea, by the way. You know the interesting thing about key the plant the tea plant camilencensis is the [ __ ] same everywhere right there it's it's okay genuinely one godamn plant that's it okay and everything that makes different tea is different by which I mean tea is made from I'm not talking about you know um Roy Bosch or something that is a different plant pretty much everything matcha is produced from the same plant that produces you know lapsang suong gray green tea tea is produced from the same goddamn plant that produces black tea. Uh I think there are white teas again they're they're the same plant. It's all about how the actual thing is is treated. So why is there a shortage of the one that's making matchup? Well I think no one no one predicted. So I I to be honest I have no idea. I there's often a wonderful marketing thing. Have you noticed this by the way? Ceremonial grade matchup. Okay. Now, I assume that in Japan this means something which is the ceremonial grade is the one where you get out the whisk and dick around for a while. Okay, to be absolutely honest, okay, that could have been invented by a marketing guy. I have absolutely no idea whether in Japan there really is ceremonial grade tea. But the great thing about positioning anything as Japanese is we'll accept any any level of weird [ __ ] Okay, you normally go, hold on, does this make sense? What's going on here? I'm confused. But simply by going, "No, it's Japanese." We go, "Yeah, fine. Fine." You know, you know, you know, weird school girls in with enormous eyes being molested with school by sea creatures. That's a bit odd, isn't it? Oh, no, no, no. It's okay. It's Japanese, right? Wonderful. Wonderful. I mean, seriously, it's got an extraordinary national brand in that respect in that it can get us to accept. By the way, sometimes I think there's an awful lot of fake uh Japaneseeneseeness. So, in London in the 1990s, there are a lot of Mexican restaurants. People loved a Mexican restaurant because an authentic Mexican restaurant kind of had plaster peeling off the wall and it had a you know, a stupid handpainted thing of a man in a banelier on the wall and it was in the basement. So, a Mexican restaurant in the n late 1980s was a great way of taking absolutely [ __ ] real estate and pretending it was authentically Mexican. And it occurred to me that if you're actually in Mexico, a really good Mexican restaurant will actually have quite a nice interior. Okay, I always tell this story. Okay, so I go to a business conference in Mexico. It's in Montterrey. And this is this is a wonderful lesson in context. Okay. So, I basically am packing my suitcase. I'm flying out via Houston to go to Mterrey and I'm thinking I'm going to Mexico. Mexico. I got to go to Mexico. Mexico. Got to go to Mexico. I'm going to go to Mexico. Okay. Now, as a result, I attend the business conference wearing a white suit. Okay. Now, what I never occurred to me is that if you live in Mexico, you don't wake up every day and go, "I'm in Mexico. Mexico. Oh, look. I'm in Mexico." Right? You think I'm going to a business conference? Every single person except for me attending that business conference wore a dark suit. Okay. Tie, white shirt. Wouldn't have mattered that much except they took a bloody group photograph afterwards and I look like the [ __ ] man from Del Monte. Okay. They're literally 120 people in dark suits and this [ __ ] English idiot in the middle. I wasn't actually wearing a Panama hat, okay? Or a sombrero. I managed to escape those two absurdities. Okay. But it is literally the most ridiculous photograph you've ever seen. And it's always worth noting that people come to things from a completely different context. If you're actually a Mexican, you don't want a restaurant with the plaster falling off the walls. Okay. And I think there's also a lot of fake Japaneseeneseeness. So Waga Mama in the UK kind of convinced us that this business of the food arriving at in at a random order, which of course massively helps their kind of Henry Ford production efficiencies was authentically Japanese, you know. Well, you just to understand we do this in the traditional Japanese way. So the food arrives fresh and ready, you know, fresh fresh from the kitchen as soon as it's ready, not necessarily in the order you requested. They'll go, "That sounds good." I then spoke to people in Japan who said, "No, no, no. That doesn't happen in Japan at all. They're actually quite regimented in the order they bring you the food, but you can basically get away with anything under the um wonderful eges of of pretending to be Japanese."

I think, let's talk about logic. Let's go back to this. Actually, Australia has a great national brand. We given you've got presumably still an Aussie audience, you have a fantastic national brand. No doubt about that.

Yeah. I wish that the Australians uh were proud to be Australian and that they represented us.

Sorry, Australians aren't proud to be Australian. Are you [ __ ] insane? No, they're not patriotic at all. But you've created Okay, let's just look at this dispassionately. Okay, you haven't got a huge population. Admittedly, we handed you a continent on a plate, so I'll take the credit for that. Okay. Um although you didn't always go voluntarily, but you've created two and a half worldclass cities. Okay. Out of a population of what, 30 something million people?

27.

27. How the [ __ ] do you do that? I mean, you know, they are on a par with, you know, uh, you know, you know, I would probably rather go to Melbourne or I've never been to Melbourne, but it looks fantastic. Uh, Melbourne or Sydney. Uh, you know, I pro, you know, I'd place that above what I consider to be the greatest large American city, which is Chicago. Okay. I mean, look at that. How? You're in the middle. You're in the middle of [ __ ] nowhere.

Yeah. And And I guess I guess there's no disregarding. How on earth are you not Are you completely insane?

No. Well, I that's what I think. If I were Australian bragging about the bloody thing all the time. Yeah. And I think that there's this this nature um which total cultural powerhouse. I get annoyed when I get invited to speak in Australia because I go, "Why are you flying me out from London? there are indigenous Australians who are more interesting than me and you could just ask them along. I would argue that the kind of intellectual and uh culture in behavioral science which is my own particular field. Uh I you know I'd probably put Sydney up there with any city in the world in terms of both the practice and understanding of behavioral science. You have fantastic advertising industry. That's what I know well. Highly creative advertising industry.

Uh what what's the difference? The only thing I get, okay, cuz I used to ask Sam, who I mentioned, the author of evolutionary ideas, why the hell you move to [ __ ] London, okay, if it weren't for our family and friends, do you think anybody would be living here if they had the option? I mean, there is a there is a plan, but have you come across KNOK? So, it's a kind of movement, which is quite interesting, which is completely free movement between Canada, Australia, New Zealand, and the UK. And it it basically plans to create a kind of uh completely uh uh free trade and free movement zone. What is interesting about it, by the way, is it has majority popular support in all four of those countries. Interesting. But I used to ask Sam, I used to say, look, this is a bit of a one-way street, isn't it? We get to go and live there and all you do is get to come here here and look at some cathedrals for a while. Okay. I don't really get how this is a fair exchange. The one thing I do understand which Australians explain to me is that uh you've got to fly you've got to sit on a plane for eight hours before someone's speaking a foreign language. I not that not strictly true because there'll be a lot of people speaking a foreign language in Sydney but in order to go and discover a different culture we only have to get on a train and go under the channel. You've got to sit sit in your ass in a plane for 8 hours. I can get and so it's a perspective piece though. It's like they just don't know what else is out there for them to truly appreciate what they have because I think there is a lack of appreciation and a lack of people loving where they live in Australia.

Look, look how this is a country where Starbucks completely failed because your coffee was already too good. Okay, I mean I love that. I love that fact. There's a lovely one where McDonald's failed in Barbados. It's always lovely to look at these big multinationals and look at places where they failed. I think there are about three Starbucks in Australia. One of them mainly at the airport. Is that right? For transiting Americans or something. No, it's weird to go to a Starbucks. You do not go to a Starbucks in Australia.

I I want You didn't invent the flat white though. That was Kiwis. But I just thought I'd wind you up there just to just a bit of deliberate provocation. I want to go back to this uh Okay. Okay. Sporting achievement absolutely off the charts in terms of uh uh you know, Olympic medals per head population.

Yeah. Per capita. Yeah. I mean uh as I as I made the point I think um you know some of the most interesting thinkers Steve Keane the economist have you ever interviewed him? You ought to definitely interview him. Uh there's also I think an advantage I have this theory I'm Welsh so I would believe this but actually more interesting ideas tend to emerge on the fringes of things. I think being slightly isolated uh effectively it's a little like your flora and fauna. Okay. The reason you've got weird flora and fauna um is because you're a long way from anywhere else for a very long time and things evolved in isolation. And I think there's something true about that about sort of intellectual and cultural things that actually being right in the middle of things is sometimes an advantage and sometimes it's the opposite. You actually just get swept along in whatever mainstream [ __ ] happens to be prevalent.

Yeah. You you said if you never do anything differently, you reduce your chances of enjoying luck accidents.

Yeah. No, no, this is really important, which is something like 80% of really major scientific discoveries don't really happen intentionally. No one was planning to do the thing at the time they made the discovery. Um, penicellin is obviously the most famous one where someone notices there's a petri dish and the bacteria have weirdly died where some little fungal spore has landed in the dish. Viagra famously was they were testing the thing for um uh some sort of heart condition um and it didn't work and they said, "Okay, the trial's over. uh um all of you, can you just return your tablets and um uh we'll just abandon the trial uh to just hand hand back your unused pill? No. People noticed and someone just noticed, well, that's never happened before. I wonder what that means. And uh there's a brilliant guy, I mentioned him before, Roger L. Martin, who says, "If you look at real real strategic breakthroughs, they're the same as real scientific breakthroughs. Most of them happen. I would actually add humor as a fourth possible route. Okay? Because humor is a kind of non-logical mental gift which humans possess which for some reason we don't think might be valuable in the workplace when it obviously might be. Okay? But I'll park all that. Um anomaly spotting an anomaly making an imaginative analogous leap saying you know effectively what's you know what's the red bull of hotels if you like. All right, that's that's an analogy. And the third one is you take it you find a trade-off and and find a creative way of resolving it which is often done sometimes done in advertising and marketing. Uh an example of that would be reassuringly expensive. You know we in other words uh you know normally people you know we can take a weakness which is it's expensive and turn it into a strength. Sometimes you do the opposite. I think sometimes restaurants actually deliberately amplify a negative, i.e. we you know sort of we won't serve ketchup famously that kind of thing and sometimes you actually do something that's counterintuitive as proof of authenticity. But it's it's it's very very interesting because most scientific breakthroughs don't really happen through an in you know through deliberate intent. they happen because of a a fluke observation, an outlier, an unusual event which then encounters someone with enough scientific mouse and vision to investigate it. And I would argue that real life is most of real life by which I'd include business. I'd include your own personal life and I'd actually include a large part of science should be practiced much more akin to detective work rather than what you might call evidential uh science. And detective work I make the distinction I made this point quite a lot. If you have a c Do you want to learn a true life crime? cuz there come on come on that's another thing you can be proud of in Australia case files some of the best bloody uh serial killer podcasts going do you not listen to them uh the Australia is practically the world capital of really cool like Gary Jubeland the Killers podcast he's got big show see you're not making enough of this anyway um uh the um uh what happens is you have a crime you know that you're dealing with imperfect information unless the killer confesses and the killer who confesses really is the killer because people are lying to you. You don't have all the information you uh need to make a a a completely objective judgment most of the time. And so what you often need to do is either wait for evidence to emerge or create evidence or notice something or have an insight. You then so what I'm saying is you have an evidential phase which is later that's in court. That's when you have to prove the person did it. Okay? But before that, you have an investigative phase where you're making use of totally imperfect information. Sometimes you're generating evidence rather than finding it or being presented with it. And it's a it's a period of total uncertainty. And we're uncomfortable with this to the point where after we find the killer, we pretend all this messiness never happened. We rewrite the the narrative. Peter Medawir has made this point about science, by the way. When we make a scientific discovery, we write it up as though it were what we were planning to do all along and as though we knew this was going to succeed when we started. That's how a scientific paper basically appears. That's not necessarily what happened. There's a whole period before that which is much much messier. And our addiction to the pretense of of what you might call uh being scientific causes us to I think misrepresent how progress really happens.

Yeah. Well, it's it's tying back into that logic piece of like you're boxing yourself in and you're not allowing any creativity. But what stems up what's upstream from creativity because it's easy to say, "Oh, we just need to be more creative and not as logical, right?"

in like no no I mean there's nothing wrong if you are using logic appropriately I mean in engineering in rocket science uh where there are very large number of atoms involved where you know as Aristotle put it this is again Roger Martin uh the future will be the same as the past gravity okay we're not expecting a sudden gravity disruption uh halfway through the afternoon here but in areas like human behavior or indeed actually probably epidemiology or biology ology. This idea that you can proceed with complete certainty in the same way that you can with an engineering problem or a physics problem is just complete overreach. It's it's not realistic. So when I say be one of the things I think I think it's really important is we've always tended to put creativity in opposition to reason and logic, but they're they're in many ways sort of parallel streams. They're two strings to your bow. you should deploy them in parallel because um and and you know the same would apply to a you know uh one one of the most important things you can do both in a police investigation by the way and in science is to ask the question what if we're proceeding on the basis of an incorrect assumption. You know what if this person didn't do it? Um uh you know what if everybody's wrong about this? And the question what if is fundamentally it's a creative question. Okay, it's not inductive logic. It's not deductive logic. I think there's a technical term which is something like um abductive inference or something. This is all from some philosopher in the 19th century called I think Charles Saunders purse. But the point is it is an an awful lot of human decisionm involves effectively a degree of what you might call speculative thinking. What if what would have to be true if what if this isn't true? You know, what if the Yorkshire Ripper doesn't have a Jordi accent? Okay. uh you know uh what what if we've got a very big one in the UK at the moment um uh involving a nurse who was convicted of a series of murders on a neonatal ward uh and the real what if there is which some statisticians have advanced is what if there weren't any crimes committed in the first place it's happened before in in um and so this idea one thing to be very cautious of by the way is that the more data we have the more the easier it is. Trust me I worked in advertising for 36 years. Okay. And one thing you learn very quickly is you can take the same information and present it in 15 different ways and get a completely different emotional response depending on how you present it and what you choose to lose you lose out what you choose to leave out and what you choose to highlight. Even even if you don't highlight one thing and leave out something else, uh you can uh you know 75% of people will survive, 25% of people will die. They're both the same thing, but people respond differently because there's an implicit uh sort of social context contained within the framing of the of the figure. And and by the way, you know, um in Australia, I think I know New South Wales has a really really good uh the government has a really good behavioral science um uh thing. Very very good has done some very good work in that area. Um this is vital because the idea there is no point in simply providing people with objective information when they won't consume it in an objective fashion because we're incapable of doing so.

Yeah. So you need to have this fine balance between using logic, science, and creativity and kind of using them both as a superpower. If you lean too far to one side, it gets too extreme. If you lean too logical, you're not really creating any room to be able to grow. But then if my brother's an astrophysicist, I don't go around his house and go, you're getting it all wrong. Okay, there are fields in which it is entirely appropriate to use these methods. Definitely. But what happens is that in business, what you really need to do is what you really get rewarded for is not solving a problem. It's winning an argument. And the easiest way to win an argument is to pretend there are very few answers to begin with. I.e. you close down creativity. And then you pretend that of those three answers you have isolated. Okay? One of them is clearly superior to the other two. Slam done. Nothing to see here. Move on. All approved. Signed off. And if everything turns tits up as a result, you won't get blamed for it because you apparently were making the decision under the influence purely of the rational scientific approach. So a large part of the use of science which is actually scientism. It's something with the appearance of science which isn't is actually done for the purposes of blame avoidance.

I I want to ask covering. Yeah. I want to talk about this piece you were saying before around how in advertising you can say one thing, word it in 15 different ways and get 15 different emotional reactions. How massive is capturing emotion in advertising? And I guess the follow on part of that is if we're capturing emotion in advertising, are we trying to attract more emotional beings to have more influence when we're advertising something specifically? Like are we trying to use emotion to influence more than most things?

Uh, if you want to change behavior in the same way that you can't reason someone into sleeping with you. Okay. Well, you probably could. No, no, no, no, no. I I Okay. What I mean, what I mean is if you want someone to change their behavior voluntarily, which is ultimately in a free and democratic society what we need people to do to a large extent, okay? Willingly and voluntarily. That's at least the first port of call before you resort to legislation or economic incentives is can we just change people's minds so they do this naturally. It is not really possible uh it is not really possible to get someone for rational reasons to do something which they're emotionally illposed to do.

What do you mean?

Well, um I find the adoption of electric cars and the hostility they arouse very very interesting because for example, I think there's a large group of people who don't buy electric cars because they don't want to be identified with a tribe of what they imagine to be tree huggers and patronizing kind of uh you know upper middle class uh you know environmental people uh and that is literally a tribal behal behavior. It's to do with, you know, kind of in-groups, outgroups, who you want to identify with, who you don't want to identify with. And I think you could sit down with those people and talk to them about kilowatt hours and energy efficiency and talk vectoring and everything else for hours and hours and hours and unless you can change the essential tribal unless you can get rid of the essential tribal instinct. Okay. I mean, okay, someone who was a someone who was a Spurs fan would experience something not unlike physical pain if you forced them to walk around in an Arsenal shirt, right? They'd probably rather go naked to be absolutely honest. So, what I'm saying is that we're we're monkeys, okay? We have for good and ill brought with us most of our mental hardware was realistically speaking optimized for circumstances very different from those in which we find ourselves in not least we're optimized for groups of 150 people you know probably not for groups of 7 million.

Do you think that consequently sometimes our hardware actually sometimes our hardware does an extremely good job and we don't realize why. You know there there's an awful lot of tacit knowledge and wisdom in human instinct which seems irrational to economists. The fact that for example uh a lot of suboptimal seemingly irrational behavior as defined by economists is perfectly intelligent if you look at it in a wider context. Um I I'll give an example of that. Okay. I'll say you know I where I'm a bit of a Darwinian. How do we get people to save for their pensions when they're younger? And I came up with various suggestions, some of which I think might have helped. But at some level, I said, what you got to remember is that if you're 25 years old, in both a rational and an in an evolutionary context, one of the priorities of being in your 20s or perhaps early 30s is finding a reasonable quality life partner. Okay? And if you find that actually buying a nice house or um a nice car or spending money on your wardrobe is a more reliable route to that end than investing in a pension because let's face it, I don't think many people in their 20s on Tinder talk about their pension provision. Right? I bet there are a load of guys in their 60s and 70s on Tinder who would talk about how good their pension is quite a lot, but I don't think many people in their 20s are doing that. Therefore, you know, what is financially rational, okay, in terms of your long-term provision for the future, um, uh, may be actually fundamentally suboptimal in the society in which we find ourselves. And consequently, you know, I it's extremely it's extremely difficult, I think, um, to tell other people what to do because if you're not sitting in their shoes and you don't face the problems they have, uh, fundamentally second-guessing what they're trying to do and then optimizing for other people. This is why I'm a little bit libertarian, okay? optimizing for other people's best interests without really understanding those people. Uh which I think by the way uh the political class has been doing for a long time under the I think the malign influence of lawyers and economists uh is a is is tends to lead to well an upsurge in populism uh which in many ways actually makes perfect sense. The populist um uprising makes perfect sense if you understand that these people have been saying things for many years and have been ignored because those opinions are deemed to be unfashionable, economically illiterate or not in keeping with some legal mechanism by the people in charge. So what do you expect people to do if effectively uh their opinions are ignored not for a year not for you know 3 years but more or less in perpetuity and then the news media have also connived in that by suppressing opinions which make people working in the media uncomfortable.

Do you think that the people that people's opinions though um maybe they're being formed and influenced by something that maybe deep down doesn't even serve them and so then they start making decisions in their life not really based on what they truly want to do. They've just been influenced by other people.

I would argue this idea which I think is highly prevalent that uh workingclass people for example or people uh you know less educated are somehow massively manipulable and in the grip of totally ridiculous forces. Do you really think middleclass educated people aren't in the grip of ludicrous social conventions and constraints? I'd say they're more so. I think you get you get independent opinion from workingclass people and you get it from aristocrats who don't give a [ __ ] I think the upper middle class in the UK is reputationally paranoid, is incapable of expressing opinions that might get them disinvited from dinner parties. This idea that there's this weird sort of, you know, manipulation going on uh among ordinary people and they're being completely misled, okay? Or, you know, in in the grip of demagogues where somehow everybody who's got some fantasy dan degree is wonderfully objective and wise. Absolute [ __ ] Middle class people are incapable of independent thought because they're so reputationally paranoid and so fragile in terms of their careers. It's very difficult for them to actually uh it's what I call you know mental nudism. Um I always ask the question it purely interests me. Okay. How many people do you think would be naturists if there were no social constraint on the behavior? But and I'm not talking about wandering around a shopping mall with no clothes on, but at the beach, I don't know, quite a lot of people, right? The reason we don't is that is not because we wouldn't enjoy it. It's because of the social constraints on the behavior or the associations. So why why do people live in this lens of having these constraints? Um I it's called the Overton window in politics that there's a very narrow area of acceptable discussion usually defined in

Legal or economic terms, and, uh, anything. There are various phrases, if you think about it, which have emerged. There's the Overton window. There's the third rail. I don't know if you have that phrase in it. It means the electrified rail that you can't touch. You see, it's by analogy with railways. I, I'm not sure how electrification works in the Australian rail network, but in, in, in many parts of the UK, you'd have the third rail, which is the two rails which carry the train, and the third one, which provides the electric power, and if you touch that one, you're dead.

Um, and you get, and effectively, I would argue that, um, a cabal of lawyers and economists have constructed a self-serving, seemingly consistent kind of mental framework for government and politics, uh, which has led the practitioners of those disciplines to think that others outside those fields can be safely ignored.

Well, let's go to these middle-class people, though, by the way, and just to be clear about this. Okay, I'm undoubtedly in the quintile, probably, of the UK who is most in favor of immigration of the right kind, personally. Okay. However, I also accept the fact that if you live in a democracy, one of the, um, one of the constraints and requirements of living in a democracy is that you actually pay heed to the opinions of your fellow countrymen when they disagree with you in large numbers. And by the way, and there's a reason for that, which is I'm not, I'm not affected by migration in the same way that everybody else is. You know, some [ __ ] in London with a, you know, with a Polish cleaner, right, is not sufficiently qualified in terms of the objectivity of their experience or the representativeness of their experience to lay down stipulations about what the overall migration rate should be in a country. And people presumably want to move here because it's democratic. One of the requirements of being democratic is that you accept votes that don't go your way.

I mean, my, my political opinion is a total [ __ ] mess. By the way, I'm in favor of, uh, wealth taxes to a large degree. Um, I'm in favor of land value tax. I'm a Georgist. And would I have been a Georgist in 1975? Possibly not. Am I now? Yes. Why? Because things have changed. Let me explain. My father was a landlord. Okay? He, we lived in a bloody big house which he bought for not very much money and done up, uh, in the 1960s. And it was split into six apartments, effect, or six blocks, and we lived in one, the biggest one, and five other parts of the house were rented out to tenants back then. This is in the Welsh borders. Probably four out of those five tenants could have bought a home if they wanted to. They just chose not to. So they were renting. The act of renting the property was a voluntary action, a voluntary engagement with my father, who provided them with flexibility and, you know, a degree of maintenance and everything else in exchange for them having a slightly easier or more flexible life. Kind of win-win.

In London or Sydney now, okay, if you own a house and you're renting to five people, the odds are that none of those people can buy a house. So the rent is no longer a choice. What you have done is effectively reduced five people into a form of serfdom. It's different. Okay. It's one of those things which is highly problematic because it's one of those things where you can't generalize, uh, except you, you can't generalize irrespective of degree or duration.

I, I'll give you another example of something where you have to be ambiguous. And what we seem to have done, you see, we've created, um, a political and legal class of decision-makers who are deeply uncomfortable with ambiguity. And they would prefer to be theoretically consistent in ter, in terms of how they feel inside their own heads and how they present their argument. They would prefer artificial consistency to realistic messiness.

I'll give you another example. Airbnb. Is it a good thing or a bad thing? Now, I'll be realistic in your opinion. You're from Queensland originally. You're now living in Austin. Uh, you've also lived in Sydney, right? Well, in certain circumstances, I regard Airbnb as a great blessing. Okay. If you're a Welsh farmer, you've got some crappy stables which no one really would want to live in, but they make a great weekend holiday. Let whoop-de-doo, everyone wins. Okay. Banging a bit of electric car charging in a dishwasher. You've got a new source of revenue to add to farming revenue. You know, you're now a little less at the vagaries of climate or harvest or whatever it may be, or, you know, lamb prices generally. I think, and the people from London can get out and actually spend a, you know, decent amount of time in a civilized country like Wales. And by contrast, central Barcelona, nah. Right. Because someone who owns a two-bedroom apartment in central Barcelona can make more money renting it out to some tourist on a city break, 14 weekends of the year. They'll probably make more money, certainly 15, 16 weekends of the year. They'll make more money doing that than they would renting 365 days a year to someone who actually lives in Barcelona. At some point, Barcelona is no longer Barcelona, right? Because you're sitting outside a cafe, no one's speaking Catalan, okay? It's just a load of other Airbnbers. And you sit there listening to a load of French people and Americans and everybody else outside your cafe and you watch people wheel bloody wheelie luggage across the cobbles. Well, that's not why I went to Barcelona. And so tourism, you know, massively problematic because you get these winner-takes-all effects. You get, um, and fundamentally trying to navigate life of almost infinite complexity by over-reliance on some utterly simplistic theories just isn't going to play.

But I guess, I guess the Airbnb example, right, is what's the alternative? Because if you don't have the Airbnbs, are people just not even traveling there in the first place and not experiencing it? Um, think about how much tourism increase. He always got by with hotels, okay, which, you know, employ more people. Uh, I mean, do you think the travel? I also, I also think, by the way, that there, Australians did this with wine, by the way. They could have probably taken over pretty much the whole of the UK wine market, but they got a bit too greedy, a bit too soon. All right. And I would argue that Airbnbers, there is a danger there that they're all getting a bit greedy because they're charging effectively hotel prices. Now, okay, if they're a group of six of you, there are advantages to being a place if you're staying for a longer time. Their advantages, to be honest, you don't want to stay in a hotel for 10 days. It's kind of a bit weird. All right. But Airbnbers are starting to charge prices not unadjacent to hotel prices without providing any of the services or facilities that you would reasonably expect even from a modest hotel. Yeah, I'm paying way more in Airbnb fees than than a hotel fees.

What, what is an experienced good? Oh, that's very interesting. Um, I would argue that most innovations start as one of two things. Um, in other words, we don't, the things we already knew we wanted, we probably already have. Okay? Because we've said so and people have responded by making them. So, a lot of innovations will start either as a status good, which is the car was to a great extent for, for the early years of its existence, it was a rich person's toy, which they used to show off and because, because they had basic neophilia and because it was, it was a status good. There's this extraordinary piece written by Woodrow Wilson when I think he was the, um, president of Princeton University before he became president of the United States, um, where he denounces the car. He later became quite an enthusiastic car user. Very keen cyclist. Um, he denounces the car because he said it's going to lead to socialism in the United States because all these rich people swanning around with gay abandon enjoying their cars are going to annoy poor people. Now, the idea, when you think about it, that in the United States, the advent of the car would somehow bolster left-wing opinion is so bizarre. But at the time, that's how it seemed. Okay.

Now, by contrast, okay, um, uh, so, uh, uh, so most innovations will often start as a rich, the flat-screen TV was a real bling-ass when I was young. It was a real bling-ass thing to have, you know, they were really, really expensive and they were sometimes done for reasons of status. Sometimes very rich people bought them. Uh, you know, uh, sometimes. But there are also things which aren't necessarily expensive or status goods which, um, effectively the only way you can describe them is you can only describe, discover how good they are by actually using them. Now, an example of that would be when you were young, beer, right? When you first took your first sip of beer, you probably didn't like it very much. Okay? And then over time, you realize and learn to associate the perfectly healthy consumption of beer with, you know, being in a better mood. And then you start enjoying the taste. Just like matcha. Matcha would be similar. I mean, that's an interesting question. It also, you know, that some of these things are probably, you know, ineffectively, we're building neural pathways of association with something.

Now, there are a lot of things which I always, which always fascinate me because I think marketing becomes more and more difficult because saying you've always wanted this thing and here it is is, is a rarer and rarer occasion. More and more of the things we're trying to persuade people to do are things which you only fully appreciate once you've done it. Now, I'll give you a great example of this. Did you grow up in Australia? Was there a big tradition of having manual stick shift cars? Yes. Yeah. And everybody in Australia, as it, as it was in Britain, we go, "No, there's no way I'd have an automatic." You know, you lose the control. I need the sense of control. However, virtually everybody who ended up with an automatic car never went back. Okay, that's a classic experience. Good.

I argue, and the late Sam Tatum, your fellow countryman, one of the greats, commemorating him here, he made the same point that electric cars are very similar to that. That the statistic to look at with electric cars is not the pace of adoption because that will always be slow to begin with because adoption paths tend to be S-curves. The question to ask, and by the way, I think it's a question every business should just ask all the time: What's our rate of repeat purchase? Because that's what really, that's the metric that really matters, not your conversion rate, cost per click, [ __ ] like that, okay? What really matters in a business is: Do your customers stay with you? Do they come back for more? And ultimately, I suppose, the absolute, uh, apotheosis of that is: Do they recommend you to their friends? So you don't even need to do marketing at all. And a lot of things are like that. Auto, that automatic, you must have grown up with a lot of Australians berating the automatic. And what you knew is that once they actually had an automatic, I mean, don't get me wrong, if I moved to, okay, if I moved to like the north of Scotland and I lived a mile away from the A9, you know, an empty winding road going through glorious mountain passes and I could pretend I needed a double D clutch and do a load of fancy [ __ ] with a car, I'd probably go back to a stick shift. Okay? Most of the time I'm stuck in traffic, or I'm on a motorway, or I'm stopping at goddamn traffic lights every bloody 2 minutes, the automatic wins. And there are a lot of things like that which you only really discover the virtues because the, the virtues of the product are felt. They're not thought. Goes back to feelings again.

Mattress toppers. Have you got a mattress topper? By the way, in Australia, fascinating. Do you call a continental quilt or duvet a doona? A doona. It's a doona. Ah, right. And why is that? I don't know. So, you know, the continental quilt versus the blanket. Okay. It's one of those things. I, I mean, you're probably way in advance of us, but for a long time in Britain, you know, if you went to anybody, anybody else elderly's house, they still do that folding the bed thing, okay? You know, tucking in the corners, [ __ ]. And then once you have a duvet, you never go back. And once you have an air fryer, you never go back. And once you have a mattress topper, you never go back. So what about a doctor? Once you have one of those taps, you got one of those [ __ ] taps which produces boiling water and sparkling water. Okay. I mean, rationally I'm there going, I'm paying 800 quid for a [ __ ] kettle, you know, but actually, but you can't go back. You can't go back.

Yeah. So what's this, this rate of adoption then? Like, I think what we see is is America would lead the way in the sense of how quickly they adopt things. Would you say? Yeah. That's interesting. One of the reasons America's rich is because they are the world's most active consumers. If I'm being a bit snarky, okay, if I was snarky, I'd say they're slightly more credulous than Brits or Australians are. But if I'm being honest, they're also much more adventurous. So in America, you are almost brought up with this idea that life is capable of almost continual improvement. They don't have that equivalent of the sort of conservative British or Australian cynicism, which is, "It was all right 10 years ago. It'll do me fine." Right. What's wrong with that? You Gen Z wankers, in your [ __ ] matcha, right? Okay. Why are you drinking bubble tea? Okay. So, we don't have that to the same extent. Um, uh, and, yeah, I think that's fair that what we, we never, economists, weirdly. Okay. Econ, the whole joy and the glorious kind of Galapagos Islands of marketing, human behavior, perception, which I tend to kind of float around in. Okay. You know, if I try and model myself on science, it's it's Darwin, not Newton, right? Or technically, technically, since he was born in my home village, um, it'd also be Alfred Russel Wallace. All right. He's born in the same village as me. He, he was the other guy who got less famous, but was actually equally, I think, credible. In other words, look at things and see what you can infer from it rather than theorize and try and find applications. And economists just have a get out of jail free card because they make the assumption that everybody is operating in a world of perfect information. Yeah. [ __ ] right. Right. Okay. Right. Yeah. I mean, seriously. Okay. Can you imagine an assumption in physics that's as absurd as that? You know, any assumption in the world of physics or engineering which is, "Well, we'll imagine that boulder is just as strong as concrete and then we'll proceed from there." [ __ ] off, you know, seriously, right? Okay. No one in engineering, in any other discipline, will be allowed to make the [ __ ] assumptions.

Gary Stevenson, Gary's economics makes the point that they, they deal with single-agent models. So you treat the average as being representative of everybody. So you optimize for an economy as though everybody is an average person. Which means that if 10% of people get massively rich, you deem it to be the same as if everybody had got a bit richer. But obviously, in terms of societal and all manner of other factors, those two outcomes are totally different, to the extent of being opposite. Okay? So they make these utterly, utterly ridiculous perfect information, perfect trust. Yeah, right. Again, [ __ ] off. Okay? I mean, seriously, these people should be laughed out of court. But they get rid of all the interesting psychological stuff by setting it all to zero. You know, we all perce, we all know exactly what we want. In fact, I grew up in, no, no, in fact, not even that. I was born wanting a mattress topper, apparently, right? Because somehow I'm possessed of this spectacular, uh, informational capacity to know what I want in advance. Uh, we all completely trust the person who is selling it, and we're trying to buy it at the lowest possible price because we have no social intelligence to realize that sometimes it's worth paying more for something for reasons you don't understand at the time. Okay.

What do you mean? Well, to, okay, I often give this example. Apologies, by the way, uh, to people who've heard it before, and I need to come up with perhaps a new or new or better example. If you imagine you're going in to buy a Bluetooth speaker at an airport, just to give a sort of kind of, by the way, again, you probably already have four Bluetooth speakers, but somehow the coincidence of being at an airport convinces you that you need a fifth one. Do you ever notice this? One bit of economic advice to all of you folks: don't buy anything in an airport. They turn your brain to mush and you end up buying [ __ ] for no reason at all and coming home going, "Why did I buy that?" Okay, but airports for some reason have this power to turn people into basically super consumers. No sense whatsoever. But anyway, you got these two Bluetooth speakers. Okay, one of them is bigger than the other. It seems to have, uh, you know, a couple more woofers or something than the other, right? And it's also cheaper than the other one. Now, to an economist, you go, higher utility, lower price, easy decision, buy the cheaper one. What the human brain would do is it would actually operate social intelligence. It's actually capable of putting itself in someone else's shoes, unlike economists, apparently, because the human brain'd go, "Well, that's funny, because if that were really the best Bluetooth speaker or the better of the Bluetooth speakers, surely they'd charge more for it. So, the fact that it's cheaper must mean that in some unspecified or unknown way, it's either a mark of lack of seller confidence or maybe it's a bit [ __ ]." And you might well end up buying the more expensive one with fewer features. I would. Yeah. Okay. Now, we use those heuristics, not all the time because that would be silly, but there are heuristics we use very frequently like that which are completely in conflict with, uh, neoliberal economic assumptions.

Now the problem is, okay, here's a point of difference I have with behavioral scientists. Have you come across Homo economicus? No? Right. Homo economicus is, uh, I think it's a coinage of, uh, Richard Thaler, which is the kind of organism that inhabits economic models but is never found in the wild. In other words, it's the person who goes, "You know, more woofers, lower price, I'll buy that one," without making, without deploying any kind of social or second-order intelligence at all." Okay. And the standard claim of behavioral economists is that Homo economicus doesn't exist. And by the way, I don't think there's anybody who's Homo economicus in every respect. But in quite a lot of markets, Homo economicus does exist. Okay? It's your worst customer. Right? So here's the thing, right? So bluntly put, Homo economicus does exist, and he's a [ __ ]. Okay? Right? This is the person who literally doesn't care about the relationship, doesn't care about the brand, doesn't care about your reputation, is only interested in how many features. First of all, if there were lots of people like that in a category, products would be very, very bad. All right? Because they'd be, but they'd be judged by a very narrow set of criteria.

Quick one. When you took out your motor insurance, do you pay a bit extra for a recognized brand? Uh, yes. Yeah. Now, interesting. I mean, obviously young people, 17-year-olds don't do that because they can't afford the insurance anyway and it's a legal requirement. Most of us do that. We'll go basic. We won't go silly about, I'm not going to pay double. But I went, "Never heard of them. Admiral, 70 quid more." Bingo. Right. And also their call center was in Wales, so I basically would have paid anything they asked for 'cause I like talking to Welsh people. But, um, but, but people who don't have those instincts are actually very stupid consumers and they're very unpleasant, and they're the last people you should attempt to build a relationship with because they're incapable of reciprocation. You know, they'll sue you if something goes wrong. They're, they have no give and take. They have no wiggle room. Now, most businesses are run by a finance function which is optimizing that business for its worst customers. Okay? So what you're doing if you're a procurement person or if you're one of those people who's like in finance who's going, "What the, the main function of a business is to increase operational efficiency so we can reduce cost," rather than the purpose of a business is to discover new forms of value exchange so we can charge more. Right? That's what I think a business is for. That's what Herbert Simon thought a business was for. It's a total sort of Friedmanite load of bollocks to think that the purpose of business is to, you know, is effectively an efficiency optimization thing. If you're playing that efficiency optimization game, you're going, "How can we create a company that's really appealing to people who are cunts?" Okay. I mean, seriously. Okay. That's not going to YouTube. Do we need to re-record that? No, we're good. But, but, you know, it is literally saying, "Okay, our target audience is [ __ ]. Proceed from there."

I, I want to touch on this cynicism piece because I think, I think this is fascinating when you're explaining, like, obviously the different, I guess, like the, the different operations people are doing in businesses, but what I'm more fascinated in is from a consumer standpoint, the, we're talking about adoption before and talking about like how quickly people adopt and the, the, the reason someone takes longer to adopt is because of their cynicism. Explaining like how, but if we have like Australians or people in the UK, because Americans, I mean, one of the reasons I've got a very, I've got a few really dissident economic theories. One of them is that gold arose as a currency, um, because it was a means of paying for prostitution, okay? Which is, think about it, okay? You're a, you're a sort of bloke hacking at rocks and occasionally hunting some mastodon or whatever it might be. And you discover this metal which is totally useless for tool-making because it's completely soft. Okay? It's absolutely crap for weaponry, right? Compared to anything else, but you can turn it into really great jewelry, okay, to attract the opposite sex, right? That is my deeply cynical. It is what I call it's what I call an anti-theory in that however true it might be, no one will ever accept it because it's just too discomforting to believe it might be true. So there is some evidence of it, by the way, which is that when you teach bonobos, I think, to use currency, uh, prostitution rackets start, you know, within a matter of days. They work out that, why would I just pay for bananas when I could? Okay. So anyway, that's one of my totally mischievous theories. Um, my other mischievous theory is that America didn't have a lot of cars after, um, after World War II, and because, uh, because it was rich, I think it got rich because it had a lot of cars, and that is because America.

Can I, do you want me to explain Georgism here? Yeah. Yeah. So, Georgism is the belief that you should basically be very free market, uh, with relation to all productive economic activity, but you should effectively, to some degree, treat land like a socialist. So that everybody pays tax according to the value of the land, not the property, because the property is the work of human labor, but the land which they occupy. And the argument of Georgism is, whenever you have any form of economic activity which is somehow dependent on location for its performance, you know, whether that's a high street, an airport, retail experience, or a central business district, the gains to that activity increasingly go to the landowner in the form of rent rather than going to reward and incentivize the person who's doing something useful. One of the reasons I hated back-to-the-office mandates was back-to-the-office mandates were really a large company saying to its staff, "It's more important that we funnel money to the Duke of Westminster, okay, or to our landlord, than it is that we give disposable income and freedom to our employees." So as a Georgist, I found back-to-the-office mandates really, really offensive. The argument is that you can escape this, as Singapore has done, by effectively having land value taxes. And Singapore is extraordinarily rich and combines unbelievable wealth with the avoidance of insane property prices for the majority of the population, which is like, basically, that's kaching. All right. The other way you can escape it, if you don't adopt the one true Georgist faith, is that you discover a frontier. In other words, a way of escaping location. The United States obviously started with a frontier, which is you could just move west. Um, slightly mischievous, but the, the Declaration of Independence was as much about real estate interests as it was about freedom and pursuit of happiness. But as a Brit, I won't go on much too much about that. A large number of the people who signed the Declaration of Independence were principally pissed off that the king was preventing them moving into Native American land. All right, it's in there. Nobody knows. It's in the Declaration of Independence. "Why won't you take these? Let us take these people's land. I'm standing to make a fortune here." It's okay. Right. So, the, the Declaration of Real Estate, self-interest, as I prefer to call it. Um, okay. So, it's a frontier, right? We can just move west and move to California. Get out. Go and find some low-cost land. All right. Then another frontier can be created by technology. Now, interestingly, what would happen to Sydney real estate prices if you had single-person pilotless drones where you could just go and live out in the suburbs or, you know, right by a beach 50 miles away and just fly into town? Okay. It would, it mean you could escape from the need to live further in. And the railway provided us with that. The canal arguably provided us with it to a degree. All right? Because it, it made things highly movable. Um, but the railway was a frontier. The frontier was a frontier. The car was a frontier. Arguably, I would say there should be a Zoom frontier being created. M so there's, okay, do you see what I mean? Which is the freedom to pursue perform useful remunerative activities free from the depredation of a landowner or or landlord. I undoubtedly contributes extraordinarily to economic growth because it, it basically decrements wealth rather than concentrating it.

But how important would community be? Because when you start separating really far, then there's isolation, wouldn't there be? Because like, if we look at where people are migrating, yeah, they're migrating for work, for opportunity, to do things on the land, but then the people that they're with is so important as well. And even if we tie in before about this happiness pillar and stuff, would you not say that being alone, escaping California for Austin? Okay. Which I don't think you're the only person to move to Austin in the last year. One of the appeals, by the way, is because Texas has quite high land, they're actually property taxes, but they should be land taxes, but they're property taxes, much higher than California. The property is cheaper. So you effectively pay tax. Obviously, it's terribly bad news for landowners if you, if you put up the, the property tax. But for young people who want to buy a property, right, it's a tax you don't have to pay because you get your money back in the shape of lower property prices. But then when everyone migrates there, it just starts skyrocketing again because you have an advantage in Austin, by the way, as you do in Phoenix, Vegas, and a few other cities, which is those are American cities which effectively got big after the car was invented. Okay. And to be honest, I don't know where you live in Austin, but if you wanted to live 15 miles from Austin, you could drive to work, right? Yeah. London doesn't have that luxury. Edinburgh does. Amsterdam probably does. Okay. So it wouldn't really matter if you want, if you were somehow, you know, keen rancher. All right. Have you bought a pickup truck yet? Apparently it happens to everybody. All people arrive. Of course, it's a youth for you, but apparently all Brits arrive in Texas, they spend the first three months disparaging the pickup truck culture, and the next thing they know is they're queuing at a GMC dealership or whatever it is because it gets to you. It's again, it's an experience. It's getting to me. I'm looking at those, those Tacomas, the Toyotas. I want to talk about the UK Ford F-150 Lightning. Yeah, it's a bit big for me. I think the one that's coming, I'm talking to the people who are doing this, is the Slate. Have you seen this? No, I haven't. It's a kind of $20 to $25,000 totally basic vehicle which you could, which is designed for pimping. So, it's totally plain. It's a rear-wheel drive pickup truck. Okay. Without even a radio. It's got wind-up windows. It's made in Indiana. I think Warsaw, Indiana, I think their factory is, is planned to be. And the idea is it's a totally basic vehicle, but you can convert it into a five-seater. You can convert it into anything just by basically, you know, add-ons. If you want, if you want a, a radio, there's there's a space for your mobile phone. It's got all the safety equipment. Okay. But if you want a radio, you just plug one into the face here. You just open a kind of glove box, plug in the radio. But if you don't want to pay for a radio, you don't pay for it. Okay? That's that's that's a really fantastic innovative idea if you're if you're into that. Unfortunately, I don't think they make them yet. But actually, if you drove one around Austin, you'd be the coolest guy in town. So, um, let me talk to the people and see if I can get you a trial. Talk, talk to me about the UK. And I want to share, actually investing in it, by the way. Quite interesting. Well, there you go.

I, I want to talk about my experience in the UK. It's my first time here. First time in London. I get off the, uh, the plane. Yep. And I've been told that there's this thing called the Tube and everyone takes the train everywhere, right? And, you know, public transport's pretty popular in Australia, but it's, it's, it's in Sydney. It's pretty good, isn't it? Sydney, it's good. Um, I have never really had, I've always had a bit of a sour taste for for public transport. Haven't really loved it. Anyway, I thought, okay, I'm in London. We, bet, apparently the Tube's quicker than than taking a car for most, most instances. Yes. Actually, by the way, in a way that we don't often realize. One of the things I campaigned for with Transport for London is speedometers in Tube carriages because no one's really, because you can't, you know how it is, okay? When you're, you can't judge speed between different modes of transport, right? If you're going at 120 mph in a car, it feels like a white-knuckle experience. In a train, because in Australia you have the beautifully named Very Fast Train, don't you? Is that, is that what it's seriously called? I thought there was, I thought there's a train between Sydney and Melbourne or something maybe called the Very Fast Train. Well, I mean, I don't catch the, the public transport. Oh, you never use it. No. So, if you're in a speedboat going at 30 mph, it's really exciting. If you're in a jet ski going at 15 mph, it's quite exciting. If you're in a car, it's only exciting, you know. So, we don't really know how fast we're going by looking out of the window because there are a whole load of other kind of sensory inputs. Now, my argument is, in the Tube on the Central Line, you're, you're driving down Oxford Street at 70 mph. I've always wanted Transport for London to produce a film of a car traveling through London at the speed of a Tube train to make salient to people how fast the Tube is. So, maybe this, the speed is what you're referencing here. I'm talking about like the time, right? So, okay, it's going to be, it's going to take me an hour to get to central London or whatever. Um, if I catch an Uber, it might take an hour and a half. The train. Okay, it says 40 minutes on my, my app. Let's just take the train. So, I proceed to go and figure out how to get to this damn train from Heathrow. And did you take the Heathrow Express or did you take the Piccadilly Line or did you take the Elizabeth? Heathrow Express. That's probably the best way to do it. Yeah. Okay. Well, I'm glad that, I'm glad that my horrible experience was the best way to possibly take the transport. Why was it horrible? Well, I'll proceed to explain. So, so I, I get off and now, if I'm sounding like a wanker saying this, then please tell me. I get off. There's there's like one, one of the, uh, elevators that goes down was out of action. So, I think there was two elevators and just so many people chock-full, just next to each other, shoulder to shoulder, waiting to go down this elevator to go to the train. And I'm waiting and just, there's a sign just over there that says Uber pickup. I'm just going, "So, I can just walk down those stairs and get in an Uber and go straight to my thing, hassle-free." But everyone's telling me to take the train. So, I'm like, "Okay, I'll go on the train." Wait in this line. Every time the, the elevator opens, they're like squeezing and barging in, and they fit like six people with their suitcases, and then, like, you're waiting again. Everyone around you is all angry and pissed, and then you kind of get down onto the train.

What you got to remember here, just, just to caveat this. So, Sydney must have about the lowest population density of any city in the world. Okay. See, one of the things I loved about it is you don't really do crowds, do you? At all, really, unless there's a sports game or something. You don't really have, unless you're in the CBD, like you're in the city, and it could be quite crowded, but nowhere near like. No, no, no. Nowhere near like that. No, no, no. And you know it's not, and Japan will be more extreme still, you see, in terms of tolerance of close proximity to other people. Apparently, it's a cultural, kind of a cultural norm arises about how close people feel is unnaturally close. So in India, people will, you know, be in very close proximity to other people. Uh, you know, uh, but the population density, Paris is very dense actually. London's less dense than Paris, I think, at least in the middle. Um, uh, Paris tends to have, you know, what, eight-story, seven-story buildings as a norm. Um, uh, but Sydney, Sydney is is freakishly low. So, but, but, so I, I want to tie this into my, it's like Chicago versus New York. Okay? You know, Chicago basically, they had a fire. So they rebuilt the place with actually a bit of space around the place. Chicago also has a big, um, advantage over New York, which is they rebuilt the place where every building has a kind of back access path where the trash gets taken out, the stuff gets delivered. So you don't have that weird thing you get in New York where you're sitting outside a Michelin-style restaurant and there's a garbage truck, like, and a rat, like, four feet away from you. But, but the, so the, the problem I had with the Tube and the train, and and to fast-track my experience there, you had like one train that got you there, and then you went to another train, and then I finally got into the city, and then I had to find my way around. That's fine. My problem, and and what I didn't like was the people that I was surrounded by. This this concept and the whole visual. I'm not sure if you've seen that video of the rat race where it's titled on YouTube, Happiness. If you just look up Happiness, it's like this video of like people going to their work and they're, and there's all these rats, and they're hopping on the train, and everyone's in there, and they're on their phones. My problem was what I noticed was it was muscle memory for everyone on the trains to be on their phone. They would know exactly where their stop is. The door would open. They would like barge through everyone still on their phone and like muscle memory walk their way through. It was like they were fully out of the moment. No one was looking up at anything. And I went, like, what is the attraction to the train? Is the main thing the financial savings you're getting from catching the train?

Look, I'll be absolutely candid. Uh, you didn't go into Terminal 5. You presume Qantas, did you, or did you fly Emirates or who do you fly? Uh, I was with United from. Okay. You would be okay. If you'd been at Terminal 5, there's a little thing called the Pod, which I think is one of the greatest forms of transit invented. Uh, and it's a little, they're little autonomous battery pods which drive you to a car park about a mile away. Anybody, by the way, listening who ever lands at Heathrow Terminal 5, just, if you've got half an hour to spare, it's free. Just take the pod to the car park and ride it back again. Okay? Um, because it's beautiful. Bluntly put, I think people would, given the choice, prefer to be in a private space than in a, you know, than in a crowded space. There are a few problems you're encountering here, by the way, which are unusual. One, I do think that since COVID, people somehow lost the skill of navigating spaces, uh, in the presence of a lot of other people. I think the quality of what you might call, of, uh, crowd, how would I, how would I describe it, kind of voluntary cooperation within crowds, uh, has deteriorated since COVID a bit. I, it's purely theoretical. Airports are weird, by the way. Airports are totally weird for a very interesting reason. You have a lot of people. Okay. Most cultures have a norm which is, if you're two approaching two people approaching on a pavement, in many countries, people will default right. In other countries, they default left. And it's a, just as we drive on the right or drive on the left, it's a universal, usually unconscious, uh, and unknown rule that just gets normalized over time. Obviously, this varies from country to country. I think in Korea they do it the opposite way round, probably in Japan, they almost certainly do, or something else happens. So both the direction in which you go, if you, if you're anticipating a, um, a collision, as it were, both the direction in which you go and the distance at which you make the evasive maneuver are culturally dependent. So an airport, which is a complete assemblage of lots of people from lots of different cultures, is fundamentally very dysfunctional in terms of the movement of people because everybody's operating unconsciously to a completely different rule in terms of both when they make the evasive maneuver and in which direction they go. In, in air travel, you, there's a rule, um, funny enough, there's a very famous air crash which was caused because there were two conflicting rules. It was a cargo plane and a flight with a load of, I think, an Air France flight and a cargo plane. And there was kind of a bit of an air traffic control mistake. But what really caused the crash was that there were two conflicting rules as to, in, in the event of an impending crash, do you go up and to the right, down and to the left? And airports are like that all the time. And, um, it's, it's kind of interesting because that does make them unusually dysfunctional. The Tube, the Tube has completely different social rules. There's, there was a comedian, I think called George Mikes, who was Hungarian, and he used to do this comedy routine called Advice for Foreigners in Britain, where he deliberately gave foreigners totally inappropriate advice for how to behave in London. And one of his recommendations was, "On entering a London Underground carriage, be sure to introduce yourself to all of the passengers." Okay. Um, there, I mean, the cultural, there's a cultural, I would love that. Yeah. I don't know. No. Well, in Australia, that wouldn't be, I would imagine on a longish train journey, people would actually make themselves known to other people. Yeah. That would be deeply weird in the UK. We assume you're a serial killer or something. Yeah.

Here's the thing that, I, northerners, northerners do that. In Britain, there's a north-south divide. There's a Welsh-English divide. In terms of, uh, interaction with you. In Sydney, there's a bridge divide where the north and the east, they're like, "Oh, you're on the dark side if you, if you live over there. It's, it's a whole, whole thing around. If you never cross the bridge, if you cross the bridge, you're on the dark side." And each isn't that the best place to live? Well, depending on which bridge, which cross you're referencing, right? Right. But, but my thing is, is I mean, look, I'm just stripping it back on a bit more of a deeper level when it comes to like fulfillment, um, having connection in your life, and and really, um, enjoying the days that you're spending, right? I just truly believe that saying hello to someone and stopping their their disrupting their pattern of automatic programming that they're just going through the motions can really impact someone in a positive way more than we know because you never really know what someone's going through. And the amount of times that people are just ordering their coffee, uh, based on the same coffee at the same time at the same place every single day. They don't even say hello to the barista and how they're going. You never know what someone's going through, and you never know what impact positively you can leave on someone.

I think, I think economic efficiency exacts a price on our souls, which is I always distinguish between two forms of capitalism, which is transactional capitalism and relational capitalism. And the efforts of people like management consultants and procurement and everybody else have been towards what is the theoretically greater efficiency of transactional capitalism, where you optimize the value of each standalone exchange without reference to the future or the past or to the possibility of investing in a relationship. Now, I just, to give an example of how this varies. I grew up in Wales. Uh, by the way, Australia, New Zealand, and Canada are not actually very English countries. They're quite Welsh, Scottish, Irish in terms of some facets of the sort of egalitarianism. For example, low status distance, right? New Zealand's the lowest status in in Hofstede's measures. New Zealand is the lowest sort of country in the world in terms of levels of difference. You know, um, I love flying as a Welsh person. I grew up in Wales. I'm 38, Welsh. I love traveling on Qantas because I don't like Middle Eastern airlines because they grow. I get it. I'm paying for the [ __ ] ticket, right? You know, but we're, we're all on the same plane here. I love Qantas because it's like matey and helpful and competent without being obsequious. I, I don't like, I don't like this. I mean, some people love it, right? You know, some people, it's always the difference between people who go to the Caribbean on holiday and people who go to Asia. The people who go to kind of Southeast Asia, the people who want people to bring them stuff on their knees, you know what I mean? [ __ ] off, right? You know, you know, I'm paying them. They're doing a job. That's fine. You don't have to turn this into a kind of deference competition. I, I like that, you know, that sort of easy, you know, relation between people. And relational capitalism is effectively what you find in a pub which you go to regularly, where, um, I'll tell you a very interesting story which always interested me because I used to go to a shop every day. I used to smoke back then, and I used to go to a shop every day and I'd buy a newspaper because this is the 1990s, early 90s, uh, probably a pack of cigarettes, box of.

matches. I go there every day, and one day I go into this shop, and I, and I suddenly realize I haven't got money for the tube to get to work.

Um, I go, "I'm terribly sorry. Could you just, I had 50p, but I didn't have £1.10." Or terribly, "Could you, could you lend me 60p, and I'll come, come on the way home, and I'll pay you back?" No. Never went there again. Went out of my way. Went to different shops. Bought cigarettes somewhere else. Never went there ever again because they'd violated an unwritten, un, you know, unlegislated rule that if you're a regular customer, some degree of give and take forms in the relationship. And you accept the fact that there are parts of the, if I, um, you know, if I get my car serviced at a place regularly, I accept the fact they should accept the fact that one time in five, they're going to have a transaction with me that loses them money. And in return, I'll be grateful for that and bring them five future transactions. So, you're there optimizing for the, the lifetime value of the relationship.

In transactional capitalism, you're trying to get as much as you can because you're never going to see them again, and you don't give a [ __ ] if they choke on their sandwich after they bought it. Right? And nearly all economic models don't really understand the deepening bond of trust and reciprocation that forms with each subsequent transaction. So, 10 people buying something once isn't the same as one p, one person buying something 10 times in a row. It's different. And yet, most economic models don't actually understand that distinction. And it creates a form of capitalism where you feel the, and you often get this because the call center person feels bad about it. Okay. But there's nothing they can do. They instinctively go, "This isn't a nice way to treat customers." But the rule is, we can't do this unless you know, because you know, there's one rule. In other words, the rules for a regular customer, exact. If you went to a restaurant, you know, once every, uh, you, once every week, right? And they get you a table. I'm not expecting good fellas, you know, that scene in Goodfellas, okay? It's, it's, it's a signal. Take, obviously the guy's a member of the local mafiosi, so the rest returned doesn't have much choice in the matter. But you would expect that the nature of each subsequent transaction changes as the relationship forms. And you know that they know that you are a source of significant future revenue. And you expect them to respect that in your dealings. Do you think it's, uh, when that respect doesn't appear, okay? Um, you feel violated? Yep. So it needs to be earned. Do you think it should be given straight away, or do you think it's the more you build these relationships?

Acts of symbolic, almost trivial discretionary generosity have an extraordinary effect on trust. I'll give you an example of this. Um, uh, if one of the things I think that small acts of generosity probably signal in human exchange is, "I'm not a psychopath." What's one thing that women would find a massive turnoff in a guy? Okay. If he suggested splitting the bill. Okay. A colleague of mine was dating a cop, right? And cops get, I didn't know this, but if you work for the police, you get lots and lots of special offers, specially for cops. And, uh, this guy would literally say to her, "I can't meet you on Wednesday evening because the special offer at TJ Fridays doesn't start off Thursday." She ditched him. Okay. And you understand why? Because someone who is so optimized around the transaction doesn't seem to be capable of understanding the kind of relationship you might want if you're going to move in together. Fundamentally, a marriage involves an awful lot of reciprocal, but what's the Polanyi phrase? Um, tacit. Okay. It's, it's reciprocal, tacit, reciprocal effort on, but on the part of one person for the other. And someone who is optimizing for the transaction, I mean, put it this way, you know, they may have, they may make a fantastic procurement officer, right? But again, it's that little thing. These people do exist, but you don't want to do business with them. It's exactly the same as homo economicus. Homo economicus in your category does exist. They're the last people you'd want as a customer. Yeah. Because the second somebody else comes along who's 3p cheaper, they'll go there. Yeah. So, this is this interesting thing. We, we apply like, we don't like that in personal life. We don't like it when someone's complaining about. Yeah. But, but, but perhaps we're not applying this in business enough. And we're not using that lens of, "Okay, personally, we don't like this." But then in business, it's like, well, we don't like that either. We don't like the people that are fixating on money.

I'll give you a beautiful example which comes from Ogilvy, my very own agency, which I think is a work of art. Uh, which is I can actually show you. Should be able to. Here we go. Please God, say they haven't got rid of it. Yeah. Member since '95. American Express. Right. Wow. I know from people at American Express, that was an Ogilvy person, I think, who had the idea, which is we put your date of membership in, partly because you feel very reluctant to cancel because if I ever cancel my American Express card, I then go back to member since, uh, you know, '25 and relatively look like a bit of a loser. Right. Okay. But what it also says is, "We know how long you've been a customer of ours." It's somewhere on record because we put it on the card. In the case of American Express, every now and then, this is what I mean about you only really learn what you're doing when you make a mistake or you stray off the narrow path or you deviate or you have a lucky accident. Every now and then, American Express [ __ ] up and a load of people will upgrade, say from the Gold Card to the Platinum Card, and they send them Platinum Cards and say, "Member since '25." I'm speaking in 19, 2025, just to make clear. Okay, "Member since this year." I can't remember the exact percentage. It's in high double digits, the percentage of people who ring up and say, "My card says member since '25. I've been a member since '95." And they get their card replaced. Now, there is no material difference between those two relations. This is the point that when humans are actually making financial transactions, financial transactions are just a highly refined form of of a social transaction, but with numbers attached. Okay. Now, you know, financial transactions, me going to a shop is a subset of all the evolved mental mechanisms I have for dealing with other people. Um, when you, uh, when you engage with someone, at some level, brands are, are sort of proxy people. We personify brands, right? Uh, the way in which the brands treat us as people has a far greater effect on our, our perception of that brand than, you know, nougatry things like whether something costs £3.95 or, you know, whether something costs £5.95. In many ways, how you treat me as a person, in other words, are you in my group or not? We also understand things which we intuitively understand. Okay, let's imagine we're here, and I, someone I know, John Cleese, comes in. Okay. Now, would you happily leave valuable laptop equipment, etc., with John Cleese? Yes, you would. Right. Not for a millisecond would it occur to you that John Cleese was going to nick your laptop. Why? One of the reasons, and there are many, okay, you know a bit about him, etc., etc., but one of the reasons is John Cleese is quite famous. So, it'd be deeply embarrassing for him to be caught nicking a laptop. We understand this with brands. We understand the fact that something that's famous, that has a lot of reputational capital invested in it, has more to lose from treating us in an unreasonable way. We can effectively create more shame, uh, in the instance of dealing with a famous brand than we can with an obscure or unknown brand. We instinctively understand that, and therefore we pay a premium for brands because we know that it is much more costly for Samsung to sell a [ __ ] television than it is for you. You know, those brands on Amazon which are like a scrabble row of scrabble tiles. You wouldn't buy one. I mean, okay, if I'm really skint, I'll take the risk. Okay. Um, if I'm buying a thousand televisions, I might take the risk because the savings are so significant. I'm buying one television, matter of fact, or LG, Samsung, Aldo, and if it rocks up, you get the Amazon one. We're right. Because if you imagine, okay, imagine you're Samsung and you've made a batch of a thousand [ __ ] televisions. What do you do? Well, you either trash them because the reputational damage from selling [ __ ] televisions outweighs the the nougatry profit you might make from from selling them. If you're some random manufacturer, why would you give a damn? It's not like, "Oh my god, it would be damaging the WooGu brand," right? [ __ ] So, we trust brands. Perfectly rational.

Now, again, because economists assume perfect trust. I always give this example, and apologies, this is in my book. So, you're turning up to buy a secondhand car. All right? And you go and look at the car. It's parked outside the house. You quite like the look of the car. You think you might pay three or £4,000 for it. And then you ring on the doorbell of the person who owns the car. Now, in one situation, the cars, the doors open by a vicar. Okay, let's say, or rabbi, it doesn't matter. Okay. Uh, in the other situation, the doors open by a bloke in his underpants. Now, the amount you're prepared to pay for that car probably goes up in the first instance and down in the second instance because one person has shown themselves immune to shame and therefore unconcerned with reputational considerations and therefore inherently less trustworthy. The other person has a lot of reputation invested in their, um, perception of general property. Uh, so they're more trustworthy. It's like an unc, it's like an unspoken about insurance. Do you want a lovely story about this? So, British friend of mine moves to, moves to Australia, right? And he wants to buy a car. And the guy suggests meeting him in a supermarket car park with the car. And this British guy goes, "Well, that's a bit odd, isn't it? I don't really feel very comfortable about this, right?" Because, you know, you know, in Britain, you go around someone's house to buy a car from them, right? But he wants to meet in a supermarket car park. And then he goes, "Maybe that's what Australians do." It is. You do that, do you? So many times I've bought a car in a car park. And, but he's really uncomfortable because he, now, incidentally, the car was a total bloody dog. Okay. And his whole, because his whole thing was, you know, maybe there's, you know, maybe just Australian car parks do double duty as like car dealerships. What the hell's going on? But how funny. But you see, you never do that in the UK, that. Well, you conceivably, if you live 200 miles away, you might meet halfway, but it's a weird thing to do. And funny enough, of course, what you're doing there, and what he, what made him uneasy, was the fact that you're trying to make an anonymous sale. You're trying to detach the sale of the car, uh, from the, um, you, uh, from from you and your reputation and where you live. You actually do that? No. Well, just come to think of it, the one car I bought in a car park was an absolute [ __ ] show. Never again, you see. Make sure. And also, it may mean that their house is an absolute bloody disaster with like rusting heaps up on. I remember I bought this old Subaru, and, uh, the clutch went on it two weeks later. So, um, you see, this is a wonderful one because who's, if you don't, my mom, extraordinary woman, she grew up on a farm, she had more, uh, psychological, uh, perception than anybody else I've ever met. In that she didn't know much about cars, but she knew a hell of a lot about people. I always joke, she could spot someone having an extramarital affair at like 500 paces. You know, that kind of stuff. And I always ask this question. If you gave 10 people like my mom £5,000 to spend on a car, and you gave 10 qualified engineers £5,000 to spend on a car, my mom would use entirely social heuristics to buy the car. I don't know anything about this car, but I know a lot about the person who's selling it, and I'll rely on that as a proxy for the quality of the car because so-and-so wouldn't have filled the, the, um, gearbox with sawdust. Uh, you know, it's not going to be a cut and shut. I'm going to use the effectively the, the perceived property and reputational fragility of the seller as the proxy for the quality of the car. In other words, I'm going to optimize for trust. The engineers would all ignore all that stuff and focus on the car. I'd love to do that experiment because I think the 10 people like my mom would overall end up buying fewer, not necessarily better cars, but they'd end up buying fewer terrible cars than the engineers would. Yeah. Well, I mean, because they've got more reputational costs, right? The, Yep. Like the, the friends, local, I just bought a Lotus Electra. You're a car fan? No. And I'm looking at loads of cars. It's actually pretty reasonably priced. Then I see it's down the road from me. I go, "Okay, decided." Okay. I'd much rather buy from someone 10 miles away from me than someone 100 miles away from me. Nothing to do with the convenience of collection. Entirely to do with the fact that they don't want me. I know they don't want me swanning around Tunbridge saying, you know, "They didn't play fair with me." I've got the potential for reputational retaliation. They're lovely guys, but I'm not suggesting they're dodgy, but this is just an additional, um, additional facet of reassurance. Yeah. Rory, I, I really want to understand. It's good having a big social media following too for the simple reason that no one can treat you totally like [ __ ]. Yeah. And you can't treat other people like [ __ ] either because you've got the reputational. It's a double-edged sword. This is exactly true. You see, this is the thing with Samsung. The reputation is a double-edged sword. They can charge a premium for the level of trust they inspire in their buyers. But they're also much more vulnerable to reputational harm in the event that people, that they let people down. So they follow through more. So that, that is the one pain. You must have the same thing in Oz, presumably. In Oz, you can go around behaving like a total [ __ ]. Can you? Because everyone's new. Because every, everyone is new. Okay. But in Sydney, my guess is you were famous enough that, uh, did, what, what was your level of fame when you were back in Oz? Oh, it's just like, get stopped on the street a few times a day. Yeah. Yeah. That's, that's. But you can't. The tragedy is, if I started having a total hissy fit at an airline check-in desk, there'd be six people bloody filming me. Yes. Yes. You can't do that. You can't do that. I miss that. Yeah.

I want to know about you, Rory, because like, we've obviously been rolling for however long, a couple of hours, and you could just talk for for hours, and it's, you've got this really contagious energy about you. It's, it's really cool. It's really inspiring. Do you, can you pinpoint where this comes from? This nature from you to be able to just kind of talk and have such good energy for for such a long period of time? I think it's the product actually of, um, like all things, I think I have corresponding massive mental weaknesses. What do you mean? Um, there are certain things at which I'm absolutely terrible. So I've probably overinvested in my, just to give a trivial example, uh, anything to do with dates or time. Anything to do with chronology, diary entries. If, if you said, "I don't know what the date is today." I think it's September. Is it the first? It's the first. Okay. Okay. But I mean, you know, I have, you know, those things I find unbelievably painful. Anything to do with, um, I'm probably, you know, dyspraxic in some way. Um, but also it was an upbringing in an entrepreneurial household. Uh, my father was a self-employed business person, and I always say if you grow up in like a shop or a restaurant, if you do, if you work in a shop or a restaurant, it's like a free MBA. And you realize effectively that no business is all about one thing. No, the businesses get reduced to silos where everybody is employed to optimize one thing to the disregard of everything else. You know, whether it's finance or procurement or legal or whatever. That's why that's why there's no economic growth. Okay. If you live in a, you know, if you grow up in a shop, you realize all those things are interconnected and there are trade-offs or indeed complementarities all over the place between them. And what we do is we create these large organizations and we devolve responsibility to people who are typically rulemakers. And that's why we've just basically created what I call Soviet-style capitalism, which is like totally artificial bureaucracy. And to be honest, I work in advertising because it's a great way to monetize ADHD. If you want me to be absolutely honest, I don't have a sense of proportion at all. You know, people will be having some discussion about something and I will look at the most trivial element of that problem and become fixated with it. Uh, which means that 90% of the time I'm a pain in the ass, but sometimes I'm unusually right. Yeah.

This is interesting. And do you feel like with that nature of you where you're you're very passionate about the things, you're very kind of sure in the way that you approach things? No, no, I'm not. I'm only sure about being unsure about things. Yeah, but that's, but the way you deliver it is in so much shity and and I, and it's this, it's this element of it's, it's really cool, but I feel like you've got to be so switched on with it. Do you feel like you get a bit drained when it becomes time being alone after spending big days with people? Brilliant point. You must find, my guess is you're the same thing, which is that in your spare time, you're surprisingly introverted. Is that fair? Very introverted. Yeah, same thing. Uh, by the way, also true of a lot of stand-up comedians, which is everybody imagines that stand-up comedians come off stage and basically are the life and soul of the party and are buying rounds of drinks, whereas not all the time, not all the people, but many of them basically then retreat to a hotel room and, you know, watch Sky News in their underpants. Um, and, um, I recognize Sky News in Australia means something slightly different, but you get my point. Um, the, um, uh, the whole thing there is that, yeah, I, um, I basically, there's a probably a little bit of a male-female divide there in, uh, whether it's cultural or genetic, I don't know, but the difference between high-intensity bursts of activity interspersed with, uh, periods of dullness, um, you know, in other words, you're either on or you're off. There's a debate about this in education, by the way, because guys in education, and I'm not saying this is genetic or is, indeed, in, you know, unalterable, but guys tend to do well in an exam environment and girls do better in a continuous assessment environment, which is there's something about the guy, which is do bugger all then mug up, you know, over three sleepless nights, you know, three days before the exam. No, I'm not saying that's particularly healthy, but, um, I mean, you know, in, in animal behavior, you see this. There are animals which are basically continually munching at things, you know, gathering, and there's the hunter mentality where, as I can see, see anybody actually on a wildlife documentary, has anybody actually seen a male lion doing anything? Because they seem to sort of, I mean, they seem to assemble a pride of female lions who then do all the hunting. Do, do they actually have they actually do anything at all? Um, I'm not quite sure. But, but, but there is that fundamental difference in temperament between, uh, you know, between, you know, what you might call, you know, do nothing and creativity. By the way, John Cleese wrote a fantastic book called, um, Creativity, A Short and Cheerful Guide, and he quotes research from a guy called Donald M. Something or other at Berkeley, uh, in the 1950s on what makes creative architects different from uncreative architects. In particular, he did lots of other research on creativity. And obviously, what he did is he took 10 really first-rate architects and then he took 10 architects who are nominated anonymously as being pretty work-a-day and uninteresting. And he looked at their working patterns. And of course, everybody's different. There are late birds, there are people who are early birds, there are people who move around a lot, there are people who don't. Only one thing divided all 10 of the interesting architects from all 10 of the boring architects. The interesting architects didn't start work straight away. They didn't put pen to paper. Now, what you're doing there, I think unconsciously, as a creative person, you are, and there's a good book by Margaret Heffernan on this called Embracing Uncertainty. You are content in a space of not knowing. In other words, you're emotionally content. I mean, I have sort of weird, I don't know if you have, have this. Are you married or anything like that? I'm not married. But my wife is much keener on like knowing what's happening on Saturday than I am. I don't know. We'll just wait and see. You know, we might get lucky. You maybe we'll do nothing. Maybe we won't feel like doing anything. A, it's embracing uncertainty. There's a second thing you're doing, which is you're just waiting to get lucky, which is, I'm not prepared to start work on this until something remarkably interesting has stimulated me into doing something different. And you need free space to be able to invite that stuff in. I feel like the, this surrendering to like, I don't have a plan. John Lennon said, "Time spent doing nothing is very rarely wasted." Yeah.

Well, I mean, to, to close us out, there's, there's two things that Oprah Winfrey says. She talks about luck. Oh, come on. You can't bring in, you can't go from Lennon to Winfrey. No, we. Well, you're talking, you're talking about you're talking about luck here. You're talking about. I'm a Stones fan. But even so. God. Well, well, she, she says that that luck is just preparation meets opportunity. And that's not bad, actually. Fair enough, Oprah. Okay. You're back in the wrong. Okay. But then, but then what she also does, right? I mean, there's a great phrase from Crick or Watson, I think it was Crick, where he said, "It's true that by stumbling around, we discovered gold," talking about DNA, but we were looking for gold. Yes. So there was the preparation. But when we talk about this space thing, the other thing that she does, you find great quote of mine, by the way. You don't find entrepreneurs in chess clubs. You find them in casinos. Okay? You find them playing backgammon. You find them playing poker. You find them playing games which involve an element of chance and where the future is, you know. Whereas chess, although it requires unbelievable feats of intelligence, right? One, you can't win big. You can be the most. Okay, you win a chess game, you get one point. Okay. Poker, you can win small, you can win big. You can lose small, you can lose big. It's a difference of degree. Secondly, the skill in poker is to some extent how you respond to random events, not about preparation. Yeah. Yeah. And then I guess the, just tying into that, is just that that free space to be able to invite the in creativity and the things into your life. I think is really important, and we're suppressing it. The point about creativity is not that, you know, people are, you know, more creative or less creative to a degree. I think there's there innate factors or there are environmental factors we can't do anything about. But the real question is, why are we creating the environmental conditions that make creativity disproportionately difficult? Ogilvy itself, my own ad agency, which is, you know, should and mostly is intending to be a creative entity, made the slightly awkward discovery when it looked back on the best work it had ever done, which is that in every case, we produced something really remarkable, someone had broken the rules. In which case, maybe it's the rules that are a problem. And then I, I think the, the powerful thing about this is, can we assess our life holistically? Let's just remove business for a second. Let's remove our job titles and our careers and actually just think about all of the imaginary or perceived rules that we're placing in our life. What is our life rulebook? And are they serving us or not? And is the rules that we're placing in our life ones that are actually getting us closer to a life that we want to live, or a job that we want to achieve, or an outcome that we want? Be very careful, by the way, about planning. Um, uh, at no point did I ever plan to become big on TikTok. Yeah. So, what Nassim Taleb would say is, a lot of what you should do in life is not actually pursue a very narrow goal. It's increase your surface area exposure. I wait for this. Increase your surface area exposure to positive upside optionality, which is in other words, maxim. There's a great book written by David Cleveland, who's a British entrepreneur, it's called Serendipity. It Doesn't Happen By Chance. And it sounds like a contradiction in terms, actually, a very serious point that you can make actions that will increase your chance of getting lucky. Take that Zoom call from someone you've, you know, you've never heard of, every now and then, okay? Because if you don't do that, if you're so narrowly focused on, you know, what you think you want to become, one, that's all you can possibly become, and secondly, you'll probably fail anyway because there are loads of other people trying to be those things. See what I mean? Yeah. Okay. I mean, don't, I mean, I always joke about this, but I, I make a massive divide between, I think sports which people intrinsically enjoy and activities which people intrinsically enjoy, where commercially they're probably going to fail. You know, there's room for a hundred rich tennis players in the world. You're not going to be one of them statistically. But if you really enjoy tennis and you'll enjoy, you know, getting to number 3,420, that's fantastic. You know, you're not going to be the next U2. But if you really enjoy playing instruments, brilliant. Go right ahead. M but what really worries me is people who are fixated on some very commonly held end goal where the cost of entry actually outweighs the prize and where the odds of success are appalling to begin with. Yeah. And, and I think that's, that's the same with everything. But also there's this element of of die trying because because what's the point of not even giving anything a crack anyway in the whole first place? Like, let's, it's the journey. It's the pursuit of it. But I, I, um, just in respect of time, I, I want to commend you and just, Yeah, I thank you for your awesome insight. It's a wonderful pleasure. Enjoy Austin, too, because it's a fantastic city. Absolutely amazing city. It's beautiful. I love it. Have you been to a H-E-B yet? I've actually not been to a H-E-B. That's, that's your, that's your next job when you get back. Seriously. I've not been to the H-E-B, but I've, I've heard you talk about H-E-B a fair few times, actually. But you shop at H-E-B, do you? Yeah. Well, I learned it's H-E-B, not H-B. We say H-E-B. Yeah. Um, because the Americans, they say H-B-O, but anyway, no, I'm, I'm a Whole Foods guy. I kind of, which started in Austin. Fantastic. It did. The original. I think I went to the number one Whole Foods. Yeah. Yeah. It's quite a cool destination spot we can take people, right? It's one very interesting thing is how many of these brilliant businesses are family businesses? H-E-B, HB, etc. And one of my contentions is that we don't compare family-owned or privately owned businesses like for like, uh, with publicly owned businesses because they don't issue the same financial reports. I would think if you looked at it, what you'd find is that family businesses are focused on the customer. They care more. And fundamentally, uh, uh, we've created effectively a kind of a plutocracy in publicly run businesses where they're effectively run to optimize financial metrics, and that those metrics do not really reflect the real world. Yeah. Yeah. And I think we're, I think that there's trends trending toward more towards people buying people and people wanting to be connected to the thing that they're transacting on as well. And I do see that go down into people, um, and especially even with people like having influence online, being more inclined to buy from some person they follow online as opposed to the Nike or the, the reputational skin in the game. I, I'm very skeptical about the money that's been funneled into digital performance marketing. Um, I'm generally big, or I'm, I'm generally encouraged by influencer marketing because I think it's, it goes back to what David Ogilvy said. If someone provides a testimonial where they have, what you might call, reputational skin in the game in the field in question, it's a very reliable form of information. I don't think, um, digital, uh, or email marketing from someone from whom you have, with whom you have a relationship might be okay. All right. But I don't, I don't think a lot of performance marketing, uh, satisfies the criteria for, uh, being what consumers believe to be fundamentally a reliable source of information. I don't think there are enough checks and balances there. Thank you for coming on the show, man. It's a joy. What a pleas. Thank you so much. See you in Austin. I think I'm back there next year. Well, so remind me. I, I'd love to meet up around two. Thanks so much, Rory Sutherland. Appreciate you coming on the show, and we're signing out. We'll see you guys very, very soon. Bye-bye. Bye-bye. Thank you.