Master Sales & Marketing with Rory Sutherland

What I think we're demanding of marketing is the same sort of accountability you demand of a salesforce. And I think it's a mistake because the way to look at marketing is the analogy would be it's less like bork site mining and more like treasure hunting. The reason you dig isn't because everywhere you dig you come up with some value. It's because sometimes when you dig you come up with something spectacular. In other words, 10% of what you do adds about 80% of the value.

The logic is when someone buys something, how long should they wait until they get value? Do you know what the answer is? Answer zero. It should be immediate. We need to stop pretending you can make this entirely predictable and simply learn to appreciate the fact that both innovation and marketing are really processes of discovery as much as they're processes of immediate return.

Well, what they're doing there is this is a terrifying thing which if we're not careful and I would actually support unusually for someone who tends to lean a bit libertarian. What's more important, sales or marketing? Um, they're not really separable. It's a bit like, you know, which is more important to the area of a rectangle. Okay? You know, the width or the height. Okay? It's one of those things that, you know, it's probably a false dichotomy. What I would say is that marketing can be supremely decisively important. Uh but it's sort of fat tailed.

I've been talking about this a bit recently, which is that what I think we're demanding of marketing is the same sort of accountability you demand of a sales force. And I think it's a mistake because in my experience of 35 years in marketing, 10% of what you do adds about 80% of the value. In other words, there there's incremental improvement which is fine and dandy and you have to do it and there's, you know, you'd be absolutely foolish not to do so. But every now and then there's a spectacular breakthrough and we should spend more of our time and resources looking for potential moonshots as I call them. You'd remember that Google phrase 10x and the moonshot. I think it came from Astroteller who you know at Google and I think we are probably making a mistake because we've been sold by the tech world on this idea of perfect accountability and you know where every you know every unit of expenditure is attached to a unit of uh revenue. Okay. And my view is that's the wrong way to look at it.

That actually the way to look at marketing is is a little bit it's in other words it's it's less like the analogy would be it's less like bork site mining and more like treasure hunting. The reason you dig isn't because everywhere you dig you come up with some value. It's because sometimes when you dig you come up with something spectacular.

How do you justify that to managers and clients and stakeholders and VCs? Um well VCs should probably understand the principle because their whole business depends on the fact that your 10% of successes effectively pay for the other 90%. Um and nonetheless and R&D innovation is exactly the same. Okay, it's an it's an inexact, nonlinear and kind of to some extent serendipitous process. Okay, I mean every drugs company would realize completely that um you don't expect every single line of inquiry to pay off. Every police investigation would understand, you know, I mean we it's it's actually a staple of cop dramas, isn't it? Which is, you know, the investigation makes a small breakthrough just as they're kind of running out of funding. Um uh uh but my only argument is we we we need to stop pretending you can make this kind of entirely predictable uh and entire you know and simply learn to appreciate the fact that both innovation and marketing are really processes of discovery as you know as much as they're processes of immediate return.

So I'll give I'll give you an example of that. Well two examples I always give but I've got more. Um actually I'll give you a recent one which really impressed me. So I was booking a hotel in Houston and normally when you get to choose hotel rooms uh you choose you know standard deluxe junior suite whatever it might be club floor. Okay the rooms are delineated basically by the status and size of the room. And I went on to book this room and and you could pay $15 a night extra for either what they called pool access or gym access. Now what that meant was the room was near the pool or the room was near the gym. Okay. Now what's extraordinary about that is it hasn't required any investment in building construction or anything of the kind. You haven't had to recarpet a single room. But you've created value just by describing something differently, just by defining something differently. Positioning effectively and you know I'm a kind of pool person as you might have guessed and so I go yeah is it worth 15 bucks you know a night for two nights to be uh within an easy walk of the pool yeah I think that is that's probably worth it um and now what you've done is you've created value out of nowhere just want to take one quick break to ask you one question have you been enjoying these episodes because if you have I'd really appreciate if you subscribe to the channel so that more people can see these episodes and be influenced to build an online business this year. Thank you. Let's double top on how you can do that, right? Because this is how you manufacture value or perceive value. Yeah. Because it's the perception of value of what makes it valuable. It's not necessarily buying the iPhone. It's what you can do with the iPhone, what it enables you to do. Yes. So, how do you how do you look at something objectively that's and instead of wrapping it up with, you know, putting uh lipstick on a pig, how do you do this in a proper elegant way? Right.

Yeah. I mean, the lipstick on a pig argument. I mean, by the way, you know, I I will freely admit that a lot of marketing activity isn't particularly effective. Uh um except to the extent that simple fame and familiarity uh make what you have to sell more salailable. Okay? At a very trivial, it sounds very trit, but you can't actually buy something if you don't know it exists in the first place. Okay? I know that seems absolutely obvious. Um most people don't market their stuff. So, and so I'll give you an example. If you when you next need to buy a toaster, okay, there is such a thing. I think Deu makes one and somebody else does, which is a glass-sided toaster so you can basically see when your crumpet or muffin is at the right level of brownness and hit eject at the opportune moment. Okay. Now, if you don't know now, having because I've told you that when you next buy a toaster, you will at least have a deco at the glass sided toasters and see whether they make financial sense. Um, I mean, one of them isn't particularly expensive, actually. If you don't know those exist, well, you're not even going to look in the first place. So, I mean, but also there are a whole load of reasons psychologically why people feel more comfortable buying things that are wellknown, familiar, or which appear to have uh, you know, a large customer base already.

So, an improvement offer effectively, right? So, something that's an improvement. I mean you are I mean I I mean I think we I think we made this fundamental mistake which is because we're demanding this perfect level of accountability you know this perfect level of quantification we're kind of suggesting now that every dollar invested in marketing has to be justified by uh measurable quantifiable uh and immediate or at least very shortterm return. Yeah. Now, undoubtedly some component of what you're doing probably works that way, but you might be woefully underestimating your investment if you invest in something and then only declare it valuable to the extent that it very quickly delivers the result that you were expecting in the first place.

A large reason to be famous. Okay, and you'll know this. You took the words out of my mouth. I was going to say podcasting is a large reason to be famous is actually nothing to do with what you're intending to do with your life. It's that when you're famous, people bring you opportunities that you never even knew existed in the first place. Okay. So, you will be asked to open if you are famous, people will ask you to open a supermarket. The exist Okay. But but I mean it it has a value in all kinds of ways, not all of which you can define in advance. In fact, the majority of which you probably can't define in advance. Um, and one of the things that does worry me is that in the advertising business, it seems a bit benal to go to someone and say, "We're going to make you famous." Um, but actually, it's a perfectly healthy aspiration simply because if you're not famous, you have to find all your customers, okay? Or viewers in the case of, you know, if you're a YouTube star, okay? If you're at the point where you are not famous, you have to find your customers. When you become famous, customers whose existence you never even envisioned will come and find you. That's a kind of escape velocity. That's a step change. And so my only argument is that we're we're developing a very instrumentalist approach to marketing which is the purpose of this thing is to achieve that and we will measure its success and justify its existence purely to the extent that it achieves some pre-ordained objective.

Now Nasim Taleb who I know well um fantastic guy. I mean, if you haven't read his books, uh, do because they're kind of, uh, you know, gamechanging and, um, you never quite see the world in the same way afterwards and you certainly don't see statistics in the same way afterwards. Okay. Uh, he he would undoubtedly say that a large part of what you're doing with marketing is, and this is a sort of fancy phrase, but it captures it perfectly, increasing your surface area exposure to positive upside optionality. 100%. And the optionality part means it's not that you have to take every opportunity that comes to you. It's simply that more opportunities will come your way from which you can choose.

Now um I I suppose you could say that that you know the point is it's a little like the you know the more I practice the luckier I get phrase which is always attributed to golfers or whoever it may be. In the same way, uh there are a lot of things you can do which aren't necessarily valuable in helping you attain some absolutely predefined end but will make it much more likely that you get lucky in some as yet unknown way.

Yeah. I think if you look at your friend Chris Williamson, perfect example, when Chris started his podcast, did he ever think he was going to have an energy drink? Of course not. No. Right. He was recording podcasts because he was genuinely curious in productivity, personal development, self-development. I was very early. I didn't know who he was when I first did a podcast with Chris. Um because I'm, you know, you know, after they turned me down for Love Island, I I just refused to watch it, you know. I just boycotted the whole show, you know. Absolutely. Um but um uh it was very, by the way, it was immediately apparent within I I didn't know who he was. Went on within about two or three minutes. It was immediately apparent that this guy is really good. Okay, you know, it wasn't one of those questions where where the hell did this come from? He is emphatically very very good and ex, you know, extraordinarily curious and actually has brilliant, I think, taste in kind of, you know, topics and questions.

That's where the compound effect has happened though, right? Because he's had so many reps plus a curiosity. Yeah. So, he's actually enjoying what he's doing and then therefore the luck happens because this is the big thing I have with uh so we run podcasts for people, right? and big companies, small companies. And I think when you come from an advertising background and a direct response background, you're so used to instant or whereas what you get from your podcast is longevity. Same with content content. By the way, in direct response, we were always under underestimating how successful things were. Okay. Um, and one of I mean I'll I'll tell you this goes back to about 1989 1990 which is banks used to send out local loan offers to their customers and then there was a sort of central direct marketing division which also did that and the banks effectively claimed that they were just as successful as the experts. So what on earth was the point uh in paying these experts? And the experts said to them, "Well, hold on. How do you measure how do you measure a response?" And they said, "Well, anybody who sends back the coupon or anybody who comes into the branch in the next uh in the following three months and asks to talk about a loan." Okay, they said, "What's the ratio of those two?" They say it's about 50/50. Just bear in mind this is 1989 where you actually talk to a human in a bag. Another chat. And these guys said, "Well, we've only been measuring the first half. We haven't been measuring the second." because there was the response as defined which is someone who immediately clicks returns a coupon makes a phone call and there's response as measured over the longer term and in this case I mean it will vary enormously it was about 50/50 so they were effectively underestimating the effectiveness of everything they did by 50% by defining it too tightly and I think that is worrying because I think uh digital advertising is grossly distorted Because people who find it very easy to attribute sales to ad spend, for example, someone selling direct can effectively outbid for attention anybody who sells through a retailer because the person selling through a retailer doesn't have the hard data of to what extent an individual ad generates sales. the person selling direct does and so I think we've got a massive distor I mean this is just a point I make which is I don't see ads online at all for consumer package goods now I spend you know weirdly I'm you know new man I do all the shopping um but you know I spend you know an appreciable amount of my money on shampoo dishwasher tablets etc etc etc and never see anything for them and my argument is is because what I will see ads for is high margin goods which are bought on impulse. Yeah. Um or things which have a very long lifetime value like signing up to a financial product. Yeah. Okay. That there the the value of an acquired customer is you know in three digits typically. Okay. If you find someone who buys high margin fashion okay if you're I don't know well Mr. Porter Neta Porter. Okay. Right. Finding a customer of that kind of thing is disproportionately valuable. Therefore, they can advertise to an insane degree versus people who are selling uh goods through intermediaries with no direct uh um uh with no direct attribution. And that does seem to me to be you know an interesting debate which nobody ever raises which is are you know are we distorting effectively the kind of things for which people see advertising.

It's funny because I've actually had the exact same discussion on attribution with my team. So we we have a big brand public brand but then we have advertising too okay and under a direct response we don't see the right metrics like metrics okay but what happens with us is that our keep it simple our cost to acquire a customer is around 1,200 USD okay but when people get to calls which is this what are you selling here so for context our programs our program is around 5,000 8,000 20,000 Got it. And your cost of acquisition is about 1,200. Got it. Got it. So again, that's probably like a 5 to1 L. But you of course you also have not much marginal cost. Uh no, exactly. So the fulfillment. So again, in your case, you can actually technically afford to spend 4,900 selling a $5,000 100%. We can It's an incremental sale, which is which is by the way a big if. Exactly. Okay. But the big thing is that these guys who've seen an ad, they've seen something and come into the ecosystem. They don't buy right now, but in 90 days or 180 days time, they will be on a call and they will say, "I remember seeing that video with Darren and Rory." They'll they'll bring something up like they'll say it to us saying, "I watched this. I watched that." And that's the awareness piece.

Well, well, Jerry Bulmore, um, wonderful, uh, he died, I think last year or the year before, absolute sage of the advertising industry. Um uh and um he had a friend who said um Jeremy he said you work in advertising don't you? And Jeremy said yes. He said well uh you you'll be amused to know that I've just bought an Aston Martin. It was presumably a rich friend. Um and uh he said it won't surprise you to know uh that I bought the Aston Martin because of an ad I saw. Jeremy goes no it won't surprise me. He said what might surprise you is that I saw that ad when I was 12 years old. Okay. Now, obviously that's anecdotal, but yes, undoubtedly there are ads which have extraordinarily deferred effects. And of course, the there are two problems with that. The longer the time frame, the harder it is to actually practice precise attribution, but also we're addicted to short-term response as a kind of crack hit because it justifies our activity.

Now, there are there are activities. So one of the effects of this is that almost every business will overinvest in acquisition relative to customer service and experience. Okay. And the reason is that customer service and customer experience is often very very important. It's very it can be quite decisive but its effects are slow. If your bank pisses you off, you don't actually leave the bank. You just become inert as a customer and don't buy anything else from them. Okay? And it would probably take you if you wanted to I'll give you an example of this actually. It's always struck me as very weird that nobody else ever anywhere has stolen the idea from Amazon, which is the call me back button. Okay. It strikes me as a major major um innovation in customer service. Uh which is you're on Amazon, your funny hat hasn't arrived because actually sometimes Amazon's pretty reliable. Often it hasn't arrived because actually your wife or husband has you know opened the package and you you didn't notice. Okay. But nonetheless, you have this problem. You go in, you say it knows who you are because you're logged in. See, you don't they don't have to ask your postcode and your email address and all that [ __ ] right? It knows what the problem is because you've just said, "My hat didn't arrive." And then you click the button, call me back. 3 seconds later, your phone rings and there's someone who's basically straight onto the pro onto the solution. Now, it's a bit difficult to find that button on Amazon if we're being absolutely candid about it, but you can find it. And it's an extraordinarily potent customer service tool, I would argue. What's weird to me is that nobody, you'd think a bank would have copied this. Talk to us about a loan. Talk to us about car insurance. You'd think that loads of people would have copied it. Now, why why should they have copied it? I'll tell you why they should have copied it. Because Amazon does it. And Amazon tests absolutely bloody everything. Okay? So if Amazon does something, they've got a reason. But also, Amazon, unlike a bank, is a fast feedback business where you can probably find out whether that pays off in terms of customer retention and and repeat purchase within months rather than years. And you can track that if you want. I'm sure Amazon does. I'm sure Amazon does. Yes.

Two things came up for me there on that side. So one on the customer support side, B TOC, so business to consumer. So, I worked at Revolute and uh Revolute is known to not have the best customer experience and they were trying to automate more things. This is before AI chatbots were a thing and they were basically optimizing for the wrong metric. They were optimizing for response rate, but people were getting super pissed off because you message, hey, I have an issue in my card and I'm in Bulgaria and then they want to speak to someone and they're just getting automated message. Got it. Right. So, they're making the issue worse.

Okay. Well, what they're doing there is this is a terrifying thing which if we're not careful, okay, and I would actually support unusually for someone who tends to lean a bit libertarian, I would support just as you need London black taxis to be regulated, okay? You can't just have anybody turning up in a black cab because if anybody could borrow a black cab and drive around and pick people up, I couldn't contentedly get into a black cab with a total random stranger. Okay? The system only works if you maintain. This is why medieval guilds came into operation. Okay, goldsmiths, etc. In other words, there's a high barrier to entry, which means that someone doesn't want to get kicked out of the guild, which means they have to basically play honestly because the long-term consequences of of being caught are more severe. If you've invested in getting the knowledge in London, okay, you'd feel a bit of a dick then throwing away two years of your life because you wanted to rip off an American tourist by, you know, taking them on a wiggly route. Okay, I'm sure they do that a bit, but surprisingly little compared to other countries. It's pretty, you know, I've had probably god in 30 something years in London actually. Really interesting question. I don't think I've actually had a dodgy cab driver. Okay. And that's because the system is policed so that you have enough trust for the business to exist in the first place. Okay.

Now, I think there's a there's genuinely a problem particularly with people as they get older where people will abandon highly efficient and and in many cases economically valuable uh online economic relationships simply because their expectation or well to use the phrase once bitten twice shy. In other words, you've had three bad experiences with Revolute customer service, then you need to make an insurance claim and they force you to do three hours work online rather than actually doing the work yourself. If you have four or five of these disastrous experiences or you get locked out of your bank account and there's no one to talk to to explain what's going on, okay, you will literally, and I think this will be even more pronounced among older and richer people. I'm not I'm not going to call it a it's not a boycott. It's not as coordinated as that, but people will simply drift back to face-to-face transactions. No turn 100%. And so, and the reason it needs to be policed is that my willingness to engage with someone online isn't driven by how good their customer service is. It's driven by my expectation of their customer service.

Now, I want to make this point. I've had uh hotels I'll name them because they deserve it. Hotels.com, Ford, and Zoom. Okay? Three cases where I needed to speak to a human being. Uh in one of them, two of them is live chat and one of them is voice where the experience was fantastic. Okay? And it can be really really good. But the point is my willingness to engage in that kind of relationship in the first place is driven not by the reality but by my expectation.

I had an issue with Stripe with that. Interesting. Go on. Tell me more. Sorry. So uh we do uh sponsorships. So she managed Chris Williamson and AG1. We place sponsorships on them. So my company is called VOX which is on top. So we worked with this company and they placed ads on one of our podcasts but they didn't realize that our company name was there. So they paid with a credit card. It was 10,000 USD. And then that company, who was a big agency, they just saw this company and they were like, "Oh, that wasn't me. It was fraudulent." So they went to their bank and they just said, "Hey, look, I don't recognize this transaction." So then Stripe blocked the account, blocked the the transaction and just put my account into restricted state. So nothing severe, but I went to Stripe and I went into their um customer support and immediately it was a human and I said, "Look, it was a mistake on their side." the their founder even got back and said, "Oh, dude, so sorry about that. Like, I made that mistake." We had to email mistake and then we sent it over and then the person in Stripe was like, "Yeah, perfect. Here's all the information. I'll get back to you in 48 hours." And 48 hours, the money was back in my account and my account was on back in normal back in everything was back to normal because it was it was a mistake on his site. But again, if I didn't have that expectation, I would be

I'll give you an example, which is we're reaching, you know, the idea of the subscription. Okay. Is a very very valuable idea. Okay. Um I I think it's slightly flawed, but I won't go into the whole details of the thing in that I think there's a limit to how many subscriptions people are prepared to have. This happened, by the way, in cable TV in the United States going back 20, 30 years ago. People would hit $50 a month and that was their basic ceiling. If they if they signed up for something new, HBO, they'd cancel something else to remain below that threshold. I think people also have if you add up their mobile phone, their broadband, okay, their Netflix, their Amazon, their Disney Plus, their kids mobile phones, the you know, if you add up all those things, we're in danger of reaching a world where people's salaries and your landlord, okay? Right. We're in danger of reaching a world where people's salaries simply go into their bank account and walk straight out again. Okay? Um, now the extent to which I think and I I regard this as again an area where I would support legislation, the extent to which you can sign people up. Now, if you you'll notice this, nobody ever signs someone up for a subscription by direct debit. Do you know why they don't do that? Because you can go to your online banking app, have a look at all your direct debits, and if you're having a bit of a lean month, you can just go down the list and cancel them. with a credit card, you have to go back to the original entity and ask that they cancel. I think that's unethical. I think it's wrong. Okay. I think that you should on your credit card app be able to basically cancel a recurring payment uh on the credit card app. I think those payments should also be listed separately at the top of your bill. Okay? and you should be given some degree of control because this business of you know I mean I literally found myself paying for my kids Club Penguin account or something when they were practically at university right this is [ __ ] okay and by the way companies that are reliant on that need to be very very nervous for two reasons okay one of which is that there's the danger of legislation which is starting to happen in the US and starting to happen in Germany which basically says you it has to be as easy to cancel an online subscription as it was to actually set one up in the first place M Richard Thaylor calls this a sludge. You know, you make it very easy to take up the free offer, then they start charging you, and then you decide, I don't want this anymore, and it, you know, it they demand, you know, some ludicrous number of hoops to jump through in order to cancel. You know, the reason I think that's bad, okay, and some of our clients may going, Rory, what are you doing? This is our business model. The reason I think it's bad is because it's actually making people pre-in naturally reluctant to engage in that kind of transaction in the first place. even with honest actors a culture there's a culture it's a cultural thing which is I'm I'm just not doing that again there's actually a whole economic paper behavioral economics paper about this which is that people are to use my phrase once bitt and twice shy that they they know I'm not going to get round to cancelling this so they automatically are aware of their own limitations and therefore don't subscribe the other risk is technological so um the reason it's a techn technological risk is that um cancelling direct debit it suddenly became very easy when online banking came along. Um I mean there's also there's also a problem with security okay which is the sudden rise in two-actor authentication it's a great thing at the level of the individual business but for a consumer who's a heavy internet user. Okay. Okay. The fact that actually you need to consult your phone for a six-digit code practically every time you do everything. we're actually eroding, you know, a significant part of the advantage of transacting online in the first place, which is that it was bloody easy. And so, so someone needs to clean this thing up. I mean, it's part of a wider thing called inchitification, okay, which is a cory doctor phrase, but someone does need to come in and basically clean up this mess. You know, there needs to be a better system to do with passwords and identification. Um and and I would argue that this would be a perfectly legitimate role of government just as it's a perfectly legitimate role of government to regulate London black cab drivers. Okay. Um in that the system can only work if it I if effectively there is a way of excluding dishonest actors. And I think that's part of the it's the attitude and behavior that's the biggest thing right is people are skeptical to do things. I think about online education like people are skeptical to buy into online education because they've been burnt in the past which is a valid point but to your point it's like you know some people make the mistake when they make a mistake initially but then they're making a second mistake when they're not fixing that mistake by moving forward you got it and that's a behavioral thing right so I'm very conscious of my own behaviors that like am I fixing those behaviors previously that got me caught and that got me that got me stuck so how do you how do you do that from a marketing perspective like how there is an odd thing which is having worked in marketing all my life If I I've often wondered in retirement whether I should just do informal advice on uh consumer protection, a bit of an Elizabeth Warren, you know, I don't know if you know Elizabeth Warren, but uh uh and because my general impression of 30 36 years in marketing is that most marketers are actually to some extent on the side of their customers and they want to do a decent honest job of it. They're prevented from doing so uh sometimes by financial constraints which is that you know it is often more lucrative to be dodgy than it is to be honest. Okay, we should chat about that. Okay, we'll chat about that. But a very simple thing. Okay, so I'll I'll tell you a story about that. Um and I I genuinely think that consumer protection when well enacted can benefit both consumers and honest actors at the expense of dishonest actors in any marketplace.

Now, let me give you an extraordinary thing. Um, interestingly, by the way, I give I I was chatting to a guy, wonderful guy who f who's who's founded a kind of meta search engine um called kaggi.org. Cool. K A GI and it's a payto-use search engine which is not advertiser funded and it's a bit like using Google 10 years ago in that it gives you what you want to find rather than what somebody else wants you to see. Now, you know, I'm a very very big fan of Google. I'm not I'm not, you know, in the sense that they do do quite a lot of useful things. Okay, Gmail, Google Maps, etc. Certainly much more of a fan than I am of Facebook, which seems to have, you know, swallowed trillions of dollars without actually coming up with a second idea, to be honestly honest. We're being really, you know, come on, Mark. You know, right? Um, but I was in a hotel a couple of years ago in France and I had COVID. That's why I was in the hotel. I couldn't leave. And so I wasn't on my agame, but at the time I thought, well, I'll get some admin done while I'm stuck in a French hotel room. And I knew that in a few months time I'd need to go to Canada. So I went and applied for this Canadian equivalent of an ESA, which I think it's called. I can't remember what it's called, CTA or something. Canadian transit something. Now I go into Google and search for it. As I said, I'm not on my aame. I click on what looks like a totally plausible um thing, which is not a.gov.ca CA website, but it looks official. I go and pay $50. And sure enough, actually, they do actually deliver this um permission to travel. It's a in in in that sense, it's not a complete scam. They do deliver it. The actual cost if you go to the Canadian government website is 14 Canadian dollars. Okay. Now, right, I'm going to say Google, come on, mate. Right. It's perfectly obvious what this problem is, which is that someone who is making $50 profit or whatever it might be from selling access to Canada is always going to outbid the Canadian government, okay, for those search terms on the ground that the Canadian government is probably making $2 to zero on issuing this thing and they're making a profit of effectively whatever it was, 62 minus $14 minus their payment to Google. Now, you're living off immoral earnings there, mate. Right? I mean, you know, you should you have to be alert to the fact that someone who is a dishonest actor will always find it more profitable to acquire a customer than someone who's an honest actor. Okay? And you have to be alert to this. And it strikes me as completely bizarre that um they were happy for those search terms to appear at the top. M you you're not you're not you know now a print publication right would not have taken those advertisements would it

How do you think about scarcity and urgency that's been manufactured it's not really I mean in a sense so I mean at the very simplest level I've spent a years and years studying this when I see the sentence only three seats left at this price it does make me book the goddamn ticket okay um I mean a certain part of marketing is just overcoming inertia and then reminding people that the thing may not be available if you're in it is worth noting by the way if I can put my Elizabeth Warren hat on briefly that it says only three seats available at this price that does not specifically say that the subsequent price won't be lower. It implies that subsequent prices for you know for seats on that flight will be higher and probably the balance of probabilities is that they will be okay at least until very close to the date of travel okay they probably will be higher most people never go on to check what they would have paid if they'd paid five weeks later by the way so it's a slightly weasly formulation of the words on the other hand um at some level it is at least true okay you know there are only X seats available at that price. Um well I mean uh it's been true in my experience where I've actually gone and checked it. You could just lie. I'm absolutely right. Um is that an ethical thing to do? Probably not really actually.

Can I put a line right? Obviously I mean some things are sold on the basis of scarcity you know I mean you know there are some things where the value entirely depends on their scarcity. Now I mean that's an interesting question because luxury goods to some extent okay you could argue from a strictly economic point of view that for example the luxury handbag manufacturers who will literally burn and destroy $30,000 handbags rather than sell them at a discount. Okay. All right. and and you know there are documented cases of this happening um patently okay the the value of that thing to the owner depends on its perceived and signaled rarity right and on the fact that you obviously have paid £30,000 for it because you know uh much you don't get much Hermes on TK Maxx right okay um the the scarcity value there is a psychological thing. It's nothing to do with I I mean uh it's nothing to do with the utility of the item itself. It's to do with what the item the ownership of the item conveys. And it's also about the implied status as a result. If you're wearing a nice watch, right? If you're wearing a Rolex watch and it's like a Daytona watch and there's only a few of them literally built the entire collectibles market is in some senses. Yeah. Exactly. So it's like it's in some sense it's completely deranged. And they've actually done experiments for this by the way in online games which are quite interesting. So there was an one of those games where I I to be honest if I didn't have a job I'd probably be into that stuff. I haven't got time for all those [ __ ] orcs and wizards and things, you know. I bet you'd love it. I probably I probably would. Maybe that's why I stay away. It's a bit like crack, you know. You know, just don't take it. Yeah, we know we'd like it. Right. And they they they had a particular weapon, okay, which you could buy with an extraordinarily large number of credits which was quite ornate, but had remarkably little value at actually killing orcs. In other words, its value was entirely in its display and signaling value, not in its um uh use value. Okay? And what they found is sure enough that people would pay an extraordinary amount for this weapon basically because it made them look cool in the game rather than because the weapon had any real functionality in terms of killing you know uh uh your enemy. Similarly, when the I think I've got this right. For a very brief period, there was an app on the um Apple store which was called I am rich and it was just a shiny diamond gemstone thing that rotated on your screen and the app cost $20,000. Now Apple for whatever reason took it off. was Apple actually took it off. But this was a thing which was I think the app was just called I am rich and it was pure costly signaling. The the value of the thing was that people knew you'd pay $20,000 to have it. You I mean you could argue okay that okay it has conversational value of course in fairness and actually it probably has fame value because word of your possession of this ludicrous thing would spread far and wide. It might have a certain dating value. You know, if you want to show off the fact that you have discretionary wealth, the best way to show off show off that you're rich is to waste it. Right? Just to be clear, I mean, I made this point once which is that, okay, coach drivers and lorry drivers don't you own a quarter of a million pound vehicle, right? But we wouldn't attach anything of the same significance to someone's ownership of a coach or a or a truck. Okay? Because that truck has a use and they make money from it. Right? If you own a Rolls-Royce Cullinan, okay, that's probably about the same price to buy as a top-of- the- range motor coach or a really really cool truck. I I don't know how much those huge things go for, but it's going to be in the order, you know, the same kind of order. Okay. Half a million. But but the the Rolls-Royce has a status value precisely because most of what it offers you is unnecessary whereas because the coach or the bus is necessary to your employment and is actually a source of revenue uh it it carries status. So the very very gratuitousness of the expenditure and by the way I'm totally conflicted on this. I mean I'm like I'm I've worked in advertising for 36 years. Would I like to work on luxury fashion? No, not really. I've spent most of my time working on things like, you know, broadband and mobile phone networks and things. Um, there's something about this which is undoubtedly economically unattractive. Okay? Because if you think of what else you could do with that money in terms of philanthropy or whatever, it's not great, it appears to be somewhat innate uh to humans. I would also make a weird perverse argument which is that in some ways as a status except at the ridiculous extremes. Okay, in some ways consumerism uh isn't a terrible form of status signaling because it's a game anyone can play at any time. Now, the fact that, you know, you know, let's go back to the 80s metaphorically, the fact that in the 80s a really good plasterer or a really good plumber could have a better car than an average doctor, right? Okay. M if you look at status aortioned that way, it's actually a game that allows more diversity of opportunity than a status system which we seem to be having where status is actually allocated by prestige or elite universities at the age of 22 after which you can do nothing about it. If you think, okay, if you think about it, a Harvard degree and a guy who speaks very widely on this that the elite American universities are luxury goods brands. Oh, for sure. Okay. And so a Harvard degree and let's say you know a Louis Vuitton steamer trunk are in a way serving a similar purpose. Okay. And I the only thing I would say is there are aspects in which the consumer good which can be bought at any time and acquired late in life and da da da da and also you know a really good scaffolder can aspire to the same [ __ ] as an average doctor that's not it's not there there are aspects to that world which are not altogether actually unattractive.

I think there's a there's the ex there's the other factor materialism bring back shallow consu it's almost like the anti trend right it's it's the opposite so I'm just giving an example so let's say like a plaster an average guy normal guy making 50k a year let's say he does save that money and then he finances a Rolex and now he's wearing that Rolex and his friends at the pub think he's cool but he he's not in the right economical state to be able to fund that. If you flip that, you see many wealthy people actually taking the opposite effect now, walking around with like no sho shoes on, living on an island, and you do you wouldn't tell that they have any money, right? Driver said to my brother-in-law driving through Shoritch, he said, "What the hell's happened to this place?" He said, "It used to be genuine cockleys here. Now it's just rich people pretending to be tramps." Exactly. Right. So, is there is there an aspect of virtue? Yeah, that's counter signing. Counter signing. It's kind of it's um in other words uh by the way it's interesting because I it it seems to be only humans who do this which is in other words you very very ostentatiously refuse to play a game. You can only get away with that if you are very strong in some other status currency. Okay. So I've made this point that if you if you're the mayor of London or whatever, actually I don't think actually Sadi doesn't actually cycle, does he? But Boris did. Okay. If you're the mayor of London, you cycle to work. If you're the prime minister and you you know, you wear scruffy clothes. Okay. Yeah. Um it's basically saying I have so much status accorded to me in one particular field through reputation or credentials or whatever it may be that I don't need to play these games. you know, bass players in a band, you know, basically dressing scruffily and neglecting basic bodily hygiene says that my playing abilities make me so sexy, I don't actually have to bother with this other stuff like Adam Sandler. Uh, yeah, you got it. Adam Sandler's clothing. Yeah, you got it exactly. Okay. Now, if you The point is if you don't have any state, you can't play those games. Okay. Unless what what you're effectively doing is it's a currency exchange thing. Okay. There are different status currencies and there's an exchange rate. Um now it would be a bit weird probably um you know there are certain people where it would be very weird if the prime minister let's say appeared with a massive pair of machino sunglasses with machino written on them

In two-inch high letters. Okay. Um, you know, because it would be kind of like, well, what, why do you need to try? Okay. Um, but status signaling, but counter-signaling can be kind of a bit mean. Okay. And the point I make about that is that, you know, for example, you know, Londoners who have quite well-paid jobs, who ride to work on a £3,000 titanium bike, getting very disdainful about cars. Okay. Okay. Right. Oh, why do all these people want cars? But the fact is, if you, you know, if you work at a pizza restaurant, okay, if you turn up to work by bike, it doesn't mean I have made an active decision to cycle, it means you can't afford a car. Okay. So the meaning of these things varies depending on the context in which they're displayed and and and and viewed. You know, Alex from Aussie, yes, very well. Yeah. Alex has a great point, which is if you haven't made it yet, if you're just getting started, you dress up, you wear the suit, you cut your hair, you, you're in good shape. But then when you've made it, you dress down. Uh, the famous example of that is academia, where tenured professors would dress like tramps. Uh, they'd also tend to have really [ __ ] cars. I had a wonderful experience once where, being a bit of a flash Harry, I turned up to visit a friend at the University of Pennsylvania, and I thought, let's go and rent some, it was a Lincoln Town Car or something a bit blingy. It was nothing outrageous. I wouldn't let a Cadillac Escalade, you know. Um, and I turned up and, um, uh, my friend meets me at the car park and then introduces me to, uh, someone who was just walking out of the building, who, it turned out, was the first person ever to genetically modify a plant. Okay. So I can't remember whether he had a Nobel Prize or not, but it was something like this. And then this guy gets into a kind of battered Japanese car and drives off, and I'm there by Lincoln Town Car, to be honest, feeling like a bit of a prat. Okay.

Um, and so famously, tenured professors, it's a way of saying, effectively, uh, I think at Microsoft, they used to have a t-shirt that said something like, which stood for, it's an acronym, [ __ ] you, I'm fully vested. In other words, they got their money. Uh, you know, it effectively is, you know, [ __ ] you money. Okay. And it is worth noting that some of that stuff, counter-signaling, is really, really interesting. Okay. It's a really fascinating phenomenon. It seems to be unique to humans. It's the, the idea that you conspicuously don't try. Los Angeles is very interesting because you have two industries. The big one, which is the film industry, which is all about beautiful people. And then there's the Los Angeles music industry, which effectively positions itself against this film industry by being really, really scuzzy. Yeah. Okay. It's like, we're nothing to do with those guys. Okay. And it's, it's a really, it is interesting. The only point I would make is, it's not, it's not always as virtuous as the people practicing it like to think it is. Yeah. And it's also a position. I don't need a car in London, you know. And it's kind of like, well, I remember this guy. There was this development. I went, I went to judge some architectural awards. There was this development where it originally had car parking in the middle, and they'd got rid of the car parking. Okay. I went to talk to the people who were living there. A third of them were Uber drivers, right? That was their [ __ ] livelihood. And they now, because the counselor had got rid of car parking in the middle of the development, they now had to park around the corner. About once every 3 months, their car will get vandalized, which would mean they're off the road for 3 days. Okay. I mean, actually, it, it made a load of people feel good, you know, basically denying, you know, parking to the people who lived in this particular housing development. So actually, when you, when you looked at what the people there actually needed, it was a shitty thing to do. It's all, it's as you said, context. Yeah.

What I'd love to ask you on is about guarantees. Do you think guarantees are [ __ ]? No. Um, they are actually legally. Well, this is an interesting case. They have to be legally protected because you can't just claim [ __ ] guarantees. So, okay, a large part of why people buy brands is that brands have reputational skin in the game. They've invested a lot of money acquiring a certain reputation and degree of fame. The fame makes them more vulnerable to shaming. Okay? Right? If you were really, really badly treated, um, if you were really, really badly treated by, um, let's say, you know, a small, crappy airline, okay, people would go, kind of, yeah, what do you expect? Whereas if you're really shabbily treated by Lufthansa or BA, the level of outrage, in other words, would be greater. So they're more vulnerable to shame, but also they have more reputational skin in the game. So they have to be at least practice some reasonable degree of property. Okay. Now, one problem might be that actually they, you, those large companies use technology to shield themselves from their obligations, their, their moral obligations to their own customers. In other words, what we won't do is refuse to pay out the guarantee. What we will do is we'll make it unbelievably difficult to claim on this guarantee, so that actually 30% of people can't be bothered. That would be an example of a shitty thing to do. So, you're still within the letter of the law in that had the person jumped through 17 digital hoops and had, you know, two-factor authentication five times in a row, yes, you might have issued a replacement, but you're making it really, really hard to do so. And it's, you know, one worry about AI is what the hell is the AI optimized for? Is it optimized for justice, customer experience, fairness, uh, you know, and and empathy? Or ultimately does it end up getting optimized for profit maximization at the expense of customers? And I think the conditional, so what you're just kind of describing is a conditional guarantee, like they need to do the 17 different bells and whistles. And I'm also kind of more thinking about it from a consumption perspective, right? Because there was someone that really, really popularized guarantees, and with your product, with your service, you should have them. But then they became more and more wacky. It was like, Rory, you have to do XYZ, jump through this, attend this, and if you don't get the result, we'll offer this to you. But it seems to have left a bit of a bad taste with people. And I'm trying to, so he's pretty damn wise. I mean, I regard him as extraordinarily interesting, um, in that he seems to have an absolutely instinctive understanding for, uh, marketing and salesmanship, you know, which and, um, uh, is also a fascinating character. Yeah. Oh, he's absolutely smashed it, right? In terms of what he was able to do in different industries. So before he had the private equity firm, he had Allen, the software, he had a supplement brand. That's right. Jim, Jim software was the, it was Jim Launch was the licensing, and then he had a software on top of that, which was, I think it was Allen, and then he had the supplement brand. So he's been able to, he's been able to crack acquisition and retention in many different industries. And I think it's the, you know, he's, by the way, the whole of Netflix exists because somebody understood this stuff. Okay. Netflix was a marketing breakthrough, not a technological breakthrough. There's nothing particularly innovative about, I'm talking about the original. Sorry, you're too young. DVDs through the post. I remember that. You remember it? Yeah. Okay. I remember it. You know, Extravision, or is that just an Irish thing? Uh, that was there was another one which was called, there was Netflix and there was the competitor, Love Film. Okay. That was the UK one. Okay. Okay. And what it was was that originally it was just, you, you requested a DVD, they sent it to you, you watched it, you sent it back. And the two founders were in a warehouse one day. This is, this is why I always defend Blockbuster Video for not buying Netflix, because at the time, Netflix wanted $50 million for their idea. They hadn't cracked the acquisition and the retention problem. They cracked that by almost in desperation coming up with three DVDs at any one time. Change them as often as you like. No late fees ever. $19.95 a month. $19.95 actually was helpful because it was a price that was not unadjacent to the price of buying a single DVD. So you kind of looked at your own budget and thought, well, I probably do buy a DVD every month. Okay. M therefore, for what I'm spending already, I effectively get access to, uh, a postal library of every DVD. So, but that, that was that was the idea that that cracked that, that enabled them to crack the whole business. And it happened that one of the two founders was one of the biggest experts on subscription marketing, as well as, you know, who is that? I, it's the guy who isn't the, Oh, Cy, what, who you got? You got Reed, haven't you? Mark Randall. It could have been him. Mark Randall is a guy that's pretty known. He's a CEO. Oh, no, no, he, the guy's left now, amicably, I think. But he was one of the two co-founders of this idea of DVDs by post, and it was this idea of effectively having three. The insight, in a sense, psychologically was, nobody knows what film they want to watch tomorrow. Okay. It's one of the reasons you have sandwich shops, which is that people don't know at breakfast what they want to eat at lunchtime. And people don't go, "Actually, on Friday, I'd really like to watch How to Train Your Dragon." Okay? You know, you don't know. But when you have three at any one time, the odds are that in that three, when you feel like watching a film, one of those three films will appeal to you. M um, and so it was that the kind of epiphany was apparently when they looked at one of their warehouses and thought, wouldn't it be better if we could store these videos in our customers' homes rather than storing them in a warehouse and waiting for people to ask? No fulfillment. And well, they kind of realized. Now, it was a brave move because if you think about it, and there probably were people who did this, there might have been people who watched 15 films, you know, a month, and you lost money on those people. But you were making the same bets you make when you open a gym, which is that people won't come as often as they think they will.

So we have something similar in our company. So, in the, in the agency side of our business, we have like unlimited podcasts that someone can release a month. Okay? So, let's say that's like $8,000 USD. Got it? And you have unlimited amount of podcasts you can release. But business owners and people never ever ever go above six. They just don't because it's too much threshold. Whereas they have the option, and they, they are willing and able, and they want to pay more so that they have it as an option. But then everyone knows that even like statistically, your views will go down, the energy will go down, you'll start to hate it. And they will say, oh yeah, I'm happy to do six, seven, maybe five next month. But they almost like the variability. No, no. I mean, there are people, optionality. I mean, the interesting thing is, there are people on pay-as-you-go mobile tariffs who'd be better off on a subscription, and there are people on subscriptions who'd be better off on pay-as-you-go. 100%. Okay. Yeah. Um, a large part of your preference for that isn't strictly speaking kind of economically rational. It's temperamental, uh, or emotional. Um, and I, I would argue, okay, um, I would argue, interestingly, that the reason Klarna is so powerful, okay, pay in three, interest-free. Now, you know, someone who is strictly economically rational will go, you are getting an interest-free loan for three months. Okay. Uh, in other words, it's a lot better than putting it on your credit card because you, you know, you won't end up paying, you know, 19.9, 23.4% APR thing. Yeah, all of that's true. I agree with that. Okay. It is economically rational, but a large part of that is an emotional thing, which is that something that costs £450 quid and something that costs three payments of £150, fundamentally those are different things. Now, I had the weirdest experience. I joined a little organization which I think is about £200 a year to join. 240 actually to make the math easier. And I was offered, you can pay £20 a month. You can pay, um, uh, you can pay £60 a quarter. Okay. Or you can pay £240 in one go. So it's identical, effectively. Okay. Don't ask me why. Okay. I don't know. I had a massively strong preference. Okay. Okay. My cash flow isn't so constrained that, you know, you know, I really need to defer. That massively strong preference for paying quarterly. Don't know what. And actually, so literally, if you sell the same thing, I mean, literally, if you sold Big Macs, okay, and it said, you know, split, split pay, people who would otherwise not buy a Big Mac will buy a Big Mac because the act of purchase feels different. But you're saying that they would specify the split pay, right? Is that correct? Or just in general, split pay makes? So Richard Thaler, um, who wrote Nudge, and actually subsequently won the Nobel Prize for Economics, he coined a phrase which I think is really useful, which is called transaction utility. Which is there's the thing, there's the cost of the thing, i.e., the money that goes out of your wallet, okay, in order to acquire the thing. And there's transaction utility, which is how it feels to pay for the thing. Okay. Now, by observation, in terms of, you know, human behavior, obviously it varies depending on people. There are, I mean, one famous behavioral scientist did work and found that just as there are spendthrifts, there's a percentage of the population, about 25%, who basically like spending money too much. You know, there's also, by the way, there's a slightly larger group of people who were designated as skinflints. This is George Loewenstein, if anybody wants to research the work. And they find the act of payment, even if they want the thing and it's worth the money, they find the act of payment just really discomforting. Just the feeling of money going out of your wallet, you know, basically, you know, and we all know people a bit like that, you know, who, you know, buying a round in a pub, you know, you or I, I hope, okay, would basically go, look, okay, it's my turn to buy the round. This is going to be £30. This is just part of the whole game. I'm not actually pained by handing over the the £30, okay? Because it's just, I kind of mentally prepared for that when I came and went out drinking with these people, and you know, that's the cost of the evening's remorse. But there's a certain, there's a percentage of people who, you know, an extremist would like when it was their turn to buy the round, would mysteriously disappear to the toilets for like 10 minutes. Okay. So, you know, it varies obviously by person, but also it varies by how you pay. And there must be a bunch of people who hate the idea of a mobile phone subscription because it's commitment. Okay? And they're also convinced they won't use the phone that much. And they're equally people who don't like pay-as-you-go because they're frightened of getting a £100 bill, or they don't like the variability, and they just like the one-and-done nature of a subscription, which is, I pay this, I get that. I never have to think about this [ __ ] again. Done deal.

I wonder, is there, so I have this debate a lot of times on my team, which is, if you have the one price, let's just keep it simple, it's $5,000. And you present that as a price. But then, would you make more, would you sell more if you just presented one price versus the options versus the array of options, right? So let's say if it's, let's say if someone's process bought, it's 5k. Um, but then if their investment kind of 50/50, then there's a split pay, 2500 by two, or 2600 by two. Or if you keep presenting more split pays, is that going to decrease just the decision to buy? This whole thing needs much more exploration in marketing because I think marketing got infected by economics where people started to think the price is the price is the price. Okay. I think the, uh, idea of transaction utility, which is how it feels to buy something, is quite fundamental in a lot of, in a lot of areas. Okay. I, I'll tell you the experiment. There's a thought experiment which he actually was admittedly tested on students, but it's kind of interesting. Okay. Which is, you imagine you're on a beach, which for you isn't difficult because you live in Bali for [ __ ] sake, okay? But you, you're on a beach, okay? And your friend says, there is a place X, a 100 yards down the beach, okay, which is selling cold Heineken, okay? You are thirsty. You would like a beer. You're on the beach. I will go down there and see how much it costs. Tell me how much you're prepared to pay for a bottle of cold Heineken to consume on the beach. Okay. And in the first condition, the place selling the cold Heineken was a boutique hotel, five-star hotel, whatever. Okay, blinged-up place. In the second one, it was a beach shack. What he found was that the amount people were prepared to pay was significantly higher for the blingy venue than it was for the beach shack. Now, since the beer was to be consumed 300 yards away from the hotel, you weren't gaining any benefit from proximity to one or other of the locations. Your utility from drinking the cold Heineken was exactly the same regardless of where it came from. But we were kind of happy with the decision to buy, to pay, let's say $5. The experiment was done in the '90s, so it's the prices are much lower. We're probably happier paying $6 to $6, say $7 for a bottle of Heineken if we know it's a boutique hotel with high overheads and dy da da, and that's just what those things cost there. Whereas if it's a shack, we would feel ripped off. And even though the utility we gained from drinking the drink would be identical in either case, there's no status to be gained, there's no, you know, locationational significance because both locations were described as being somewhere off down the beach. Okay. Fundamentally, how good it felt to buy the thing was different. Okay. And so, you know, trans, I think transaction utility is a really, really important concept because it suggests that when we engage in exchanges with people, it's we are second-guessing to some extent. Okay? You know, we're, we're asking, first of all, we're asking questions of basic fairness. We don't like being ripped off, even if the beer would be worth it. Okay? And also, we do have a kind of appreciation of what's, what the other party is, uh, is doing.

Are you familiar with the time to value ratio? Are you familiar? I, I've heard you. For the benefit of the listeners, I think I know what it is, but I might have got it wrong. So, so help us both out. So the logic is, when someone buys something, how long should they wait until they get value? Do you know what the answer is? Go on. Answer zero. It should be immediate because immediately when they pay, they should get immediate value. So to optimize that, to avoid buyer's remorse, is whether it's a program, a product, a service, immediately to eliminate buyer remorse. We want to bring that down as fast as possible. So let's give an example. Let's say you buy a program online, $5,000. When you pay, you go straight in. You start the journey. When you get the beer, you get the beer. Now, when you're in that scenario, it like eliminates that because the value that you derive, or the perceived value, is determined based on speed. The, the entire mail order industry in the UK, interestingly, now obviously with mail order, with with software, the delivery can be instantaneous. Exactly. Yeah. Mail, not exactly. There is, I think, a reasonable understanding. So you might argue that it isn't actually zero. It's as fast as possible because nobody expects when you order a book from Amazon for it to materialize in their front room instantaneously. But imagine if you got a PDF and a short little video intro as to how the book will help you and so on, and you buy, and you get redirected to a page, and now you're watching immediately video. You made a very interesting observation there, which is, um, uh, there's no reason why, when you book a hotel online, uh, you shouldn't actually be treated to a little video of your room or something of that kind. 100%. 100%. We do, I do that. We do that on purpose. So you want people immediately to get, it's called a quick win. So immediately, whether they book a call, whether they send a message, they get something that makes them win in their brain. In, you probably just about old enough to remember this, but the old norm for anything you ordered remotely was allowed 28 days for delivery. Yeah, I remember that. And eBay, in some cases, that me, by the way, eBay does a very strange thing, which is its estimate for delivery speed is always insanely pessimistic. Have you noticed that? Yeah, it's always done. Now, I wonder if they're using the wrong metric there because they're actually, they're losing sales to reduce customer complaints. Okay. So somebody there must have been given the metric on eBay, oh god, we're getting too many customer complaints about things not arriving. It's a total nightmare dealing with these. I know we'll solve this problem by getting everybody to give a ridiculously pessimistic estimate of how soon the thing's going to arrive. And the only problem with that is, there seems to me that seems to carry a pretty large hidden cost in that people go, look, I don't mind waiting three days for something. I'm not waiting [ __ ] nine days for some [ __ ] to arrive. Apart from things I don't like existing in a state of uncertainty, right? Um, I think there's also a terrible mistake. So the mail order industry always did this, allow 28 days for delivery. In some cases, I think it's because they order the stuff only when they knew what the volume of orders was. So they were effectively reshipping. Okay. I think the term is, isn't it? You get a whole load of people on Amazon who are basically re, you know, re, I mean, I think reshipping is basically where you never actually touch the goods yourself at all. You just place the order and it arrives from somebody else. And, um, um, the allow 28 days for delivery, uh, lost far more sales than people realized because it was just too slow. Okay, that's a month for crying out loud. I mean, imagine, imagine a world where you ordered a clock radio, say, and then, you know, literally it would be now, you know, okay, it'll be June the 29th or something, this thing would arrive, and you've forgotten you'd ordered the thing practically. Okay. Yeah. It's like, it's like having a t-shirt, right, that says a disclaimer, you may not be beautiful with this t-shirt. Like, why would you point this out? You know, if you take the flip example, we were chatting about crack earlier, like crack is the time to value ratio on crack is instant. So it changes the frame, right? So it's how do we create things that have that instant dopamine, that instant result? And yes, of course, a product can be delivered and so on later, but I think that's what customer experience is, right? It's what are the subtle nuances adjacent to the main benefit? Yes, you've got it exactly. Yeah. And a lot of those are to do with, you know, framing, but they're all, they're all psychological in a sense. Always. Always. Um, I mean, one of the things I think is a mistake made by nearly all online retailers is I would display right up front that you can choose who delivers your goods. Okay. If I'm paying, good point. Right. For P&P, as we used to call it. Do you remember that? No. Postage and packing. Okay. It was always, sorry, just for the, they now call it delivery, but in my, in my childhood, it was 1995 plus 395 P&P. I remember actually. Yeah. Okay. Now, if you're paying for it, I think you should choose who delivers it. Now, that decision in most online retailers is undoubtedly made by procurement, who want to channel everything, channel everything through the same supplier so they get the maximum volume rebate. Okay? Because that's how the procurement person justifies their existence. The procurement person is not held responsible for volume of sales. They're simply held responsible for cost reduction per sale. Okay? I would argue that a significant percentage of people don't buy things online because they hate one or two of the distribution companies. And by the way, whether your distribution company's good or not depends often on your local driver. It's very, very patchy. Okay? I mean, I, I spoke to, I've never had anything other than brilliant service from UPS, but weirdly, when I was talking about this thing last night, there was somebody there who, for whatever weird reason, hated UPS. I found them absolutely superb. Okay. I, you know, maybe I don't know where he lives. I mean, maybe his UPS driver is like, you know, got, I don't know, you know, memory loss or something. Um, but I think if you said, you can choose, if you want these delivered by, I think on Amazon, if I order a USB cable, I don't want a van coming up to my house, right? Put in the [ __ ] post. The postman's coming anyway. Put it in an envelope. I'll pay you a pound extra. Just put it in the [ __ ] Royal Mail and put in an envelope. Okay. Right. I don't, you know, I don't need a van to deliver a USB cable. Let me choose. Several advantages to this. If it goes wrong, I won't blame you to the same extent. I'll blame the distribution company because I chose them. Okay? And I might even blame myself for making the wrong decision. I won't blame you. Second thing is, um, the, the, the speed and nature of the delivery at the point of purchase matters disproportionately. Okay. So, I had something I needed very, very urgently. I desperately was, was wonderfully happy when they said, we're sending it by Royal Mail something or other, next day, 24. Okay? Because my postman knows who I am. He knows all my neighbors. He knows exactly what to do, where to leave it. D, you know, I mean, he's, you know, I've known him for 20 years, okay? And, um, I don't want a weird stranger turning up being unable to find the house. I can't take that risk. Now, I think that's a classic case where there's, you know, there's inordinate value in just, just as there was inordinate untapped value in mail order in the 1970s and '80s in just delivering things faster. Okay? Right? There's nothing, I mean, the Royal Mail was a next-day service in the 1970s. Britain isn't a very big country. I don't know. Okay. Secondly, I think there's inordinate hidden value in giving customers control over who delivers. It shares responsibilities. It creates responsibility in the purchaser. And also, by the way, you now get information about what people are willing to pay for. Yeah. Which you don't get. Okay. And you might actually find that there's a whole chunk of people from whom you can make a little bit of incremental profit because they really love Royal Mail Special Delivery, or they really love UPS, or whatever. 100%.

Rory, big thank you, sir. You're a legend. I really appreciate it. A pleasure. It's been a very, very strange conversation, but the, the, the underlining theme is that there is a lot of undiscovered psychological value which we haven't tapped simply because we're much more wrong about psychology than we're wrong about physics, and therefore there's much more progress to be made in actually uncovering what it is that people really want. Well, that's why, that's why you've made such an indent and why you've had such amazing results because you don't follow the rulebook. That's the big thing. That's why I want, that's what I want to get from the very beginning. You don't follow the rulebook. So, as a result, you've broke, you, you understand the laws, you broke the laws, and then you rebuilt it in the way you want to do it. Well, I think, to be honest, I was in a privileged position in some ways of, I, you know, I had a job for 35 years where you didn't have to continually prove how rational you were. Yeah. And you bear, bear in mind, bear in mind that, you know, that is what most people in most jobs most of the time spend a lot of time, often unnecessarily, okay? That's why you get in management consultants, right? It's not because it changes the decision you make, it's, it's to give your, your decision the appearance of deep rationality. Okay? And most people are in that position of having to continually prove that everything they do is based on data and highly rational. And I was in the highly privileged position working in advertising where I was in a job where, actually, to some extent, it was about how signaling how lateral you could be, not how literal you could be. Love it. Big thank you, sir. It's a joy. Thank you very much indeed. What a pleasure. Thank you.