What most people miss about marketing | Rory Sutherland (Vice Chairman of Ogilvy UK, author)

Rory Sutherland (00:00:00):
Steve Jobs was not a technologist. He was a pitch man. He was a brilliant salesman. He was a fantastic marketer. When products succeed, we forget the extent to which marketing was actually instrumental or decisive in their success.

Lenny Rachitsky (00:00:12):
You once said, "If you could imagine a stand-up comedian doing a routine about your product, then you're onto something."

Rory Sutherland (00:00:17):
You eed to preserve slightly odd things. Rolls-Royce's were the only cars which still had a pedal on the floor. Famously, Veuve Clicquot it's the one with a yellow name. Idiosyncrasies count double.

Lenny Rachitsky (00:00:29):
Do you have any advice for early stage founders to help build their brand?

Rory Sutherland (00:00:32):
Be consistent, be distinctive, and be famous. When you are not famous, you have to find all your customers. Suddenly you reach this magical escape velocity of fame where people start coming to you.

Lenny Rachitsky (00:00:47):
Today my guest is Rory Sutherland. Rory is vice chairman of Ogilvy UK. Author of the book, Alchemy: The Dark Art and Curious Science of Creating Magic in Brands, Business and Life, and the founder of Nudge Stock, the world's biggest festival of behavioral science and creativity. Rory is both an example and a huge proponent of thinking from first principles.

(00:01:08):
Through his speaking and his books, he encourages people to not think logically when solving problems, but to think psychologically using human psychology to inform how you design and build and market your products. Rory is full of amazing stories and ideas and examples and inspiration, which you'll get a sense of as soon as we start talking. I don't even ask him a question and he's already off to the races. This episode is for anyone who wants to think more creatively, help their team be more innovative and learn how to create more magic in your world. Rory has been one of the most requested guests on this podcast, and I can now see why. If you enjoy this podcast, don't forget to subscribe and follow it in your favorite podcasting app or YouTube. It's the best way to avoid missing feature episodes and helps the podcast tremendously. With that, I bring you Rory Sutherland. Rory, thank you so much for being here and welcome to the podcast.

Rory Sutherland (00:02:01):
It's a pleasure. It's an audience I don't normally speak to and it's an audience which I think is particularly valuable, particularly important, but also actually probably could benefit quite a bit from just a little bit of extra psychology. Not least by the way, a very simple observation, which is that do not think that good products automatically succeed or that bad ones necessarily fail. The other thing I'd say is that timing is so important that don't necessarily reject things simply because they failed in the past. One of the best products I've ever worked on in a professional capacity was Facebook Meta TV, the TV portal, sorry, Facebook, the Meta [inaudible 00:02:46] TV.

Lenny Rachitsky (00:02:46):
Oh, I love the portal, yeah. Big fan.

Rory Sutherland (00:02:49):
[inaudible 00:02:49] by Facebook and I bought it for about $120. It plugs into your TV. It allows you to do obviously WhatsApp or Facebook or indeed Zoom on your television with a fantastic face tracking camera. It really is sort of $500 worth of equipment, which they were selling for about $120. One of the best things I've ever owned, I owned about four of them. When I heard it was being discontinued, I bought another one because I think they're so good.

(00:03:16):
And yet for reasons I fully I don't really understand, apart from the fact that every single review said, "This is brilliant," effectively as a product, but the first seven paragraphs of the article weren't saying, "This is brilliant." They were saying, "Who would allow Facebook to put a camera in their home?" And so basically, it was nine paragraphs of privacy paranoia because you can turn the thing off after all, you don't have to leave it switched on, okay? But there were nine paragraphs of privacy paranoia basically followed by one paragraph saying, "As these products go, it's brilliant." And yet we still don't have video calling on TV unless you're willing to plug your laptop in or do something pretty fancy and complex. That seems really weird to me.

Lenny Rachitsky (00:04:08):
Let me actually read a quote from you around what good marketing often looks like. So you once said, "If you could imagine a stand-up comedian doing a routine about your product, then you're onto something. The urge to appear serious is in many ways a disaster in marketing." I'd love to hear your thoughts on that.

(00:04:25):
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Speaker 3 (00:05:42):
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Lenny Rachitsky (00:05:48):
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Rory Sutherland (00:06:58):
I've had a conversation earlier today with someone who's in the hotel industry and is in a particular, without giving away where he works, he's looking to reinvent the hotel. Arguing, I think with some reason, that it's one of those areas which is actually ripe for a good degree of disruption. There's a complicated thing, don't be too weird, okay? Don't be too strange because if the consumer... There's a wonderful concept from Raymond Levy course, the French designer called maximally advanced yet acceptable. In other words, there is a pace of change which consumers will accept, and generally they're more comfortable with evolution than they are with complete reinvention. There are exceptions to that. Well, actually even the iPhone, let's face it was preceded by the iPod. It wasn't a complete WTF moment. And consumers effectively like to migrate their behavior rather than reinventing their behavior. But nonetheless, one of the things I always point out is that idiosyncrasies count double.

(00:08:13):
The wonderful thing actually, years ago, back in the 1990s, Ogilvy won the Jaguar account and one of the things the creative director in New York said is that one of the things you need to preserve is slightly odd things. So in a Jaguar of the 1990s, you turned on the light above your head, the reading light or the central light with a switch that was actually on the central console. Every other car you reached up and you flipped the switch. In the Jaguar, you pressed the button at the bottom and the light came on the top and the creative director said, "Keep those things. Actually distinctiveness really matters." And they were actually really interested. They said, "Oh, that's interesting you say that because we're actually planning to get rid of it. We thought it was inconsistent.

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For years, I don't know if this is still true because I don't drive many Rolls-Royces, but for years, Rolls-Royce was the last car, now obviously now cars dip their headlamps automatically, or you have an automatic setting, but for years, Rolls-Royces were the only cars which still had a pedal on the floor, perfect for an automatic, not so good for a manual, but they had a pedal on the floor where you dipped and undipped your headlamps rather than having a stop. And those things, which I always cite things like the Double Tree cookie when you check in for example, a brilliant example of this, which when you think about it was extraordinary in terms of the attention it garnered. You probably remember MCI the American phone... No, you're too young.

Lenny Rachitsky (00:09:48):
Yeah, I do. Of course I remember MCI.

Rory Sutherland (00:09:50):
You do? Okay. They have the concept of friends and family where you nominated a certain number of calls, a certain number of numbers that you called particularly frequently, and you got 20% off calls to those numbers. I think it started off with 10%, and I think they eventually ramped it up to 25%, but actually most people, 90, it's a Pareto principle, most people make 80% of their calls to probably five or six numbers. Now, what was interesting about that was it garnered [inaudible 00:10:21]. It was in a sense irrational, but it garnered much more interest than if you'd simply reduced the cost of calls by 15, 20% across the board because you have to stipulate your numbers. And actually things that are slightly weird things that have a little bit of extra things that are slightly counterintuitive, sometimes the right thing to do is to get rid of them, sometimes you celebrate them.

(00:10:48):
And that's what I mean about the comedian. The comedian notices things that are slightly weird, notices things, and actually there was a great comedy routine When Friends and Family Came to the UK. It was introduced from MCI by a marketer called Ed Carter to BT in the UK. There wrote whole comedy routines about it, people going, "I suddenly realized I couldn't think of the ninth number," or, "It's basically my mum and nine adult lines." This was the kind of thing. But those kind of things, which actually they're a slight little splinter on the attention. In other words, it's something that slightly raises up from the normal shape or it's the step that isn't quite the riser. If you go down a flight of steps and one step is slightly... The sender is slightly out of whack. Those things have a place actually. Famously Veuve Cliquot, the French Champagne house, their labels ended up yellow by mistake.

(00:11:52):
I think there was some printing error and they thought, "Okay, we have these stupid yellow limos and we will send them to [inaudible 00:12:00] in England. We didn't want [inaudible 00:12:04] by selling them in France." And then the Brits said, "Okay, by the way, that champagne, can you send us more of the champagne with the yellow label? It's going down really well." And they said, "Okay, we're going to make it really yellow now," just almost as a kind of wind-up, I think. But of course, if you think about it, the entire identity of that champagne, you can't remember the name, it's the one with the yellow label. And so visual distinctiveness and other forms of what you might call UX distinctiveness, as I said, don't go crazy weird, but there's this concept of MAYA, which is maximally advanced yet acceptable.

(00:12:42):
There's a wonderful phrase which I'll share with you, which was there's an English guy who went over from the BBC for BBC 4, which is like the PBS of PBS, okay? It's the really niche, niche, educational hardcore factual British TV channel. And he went to see if there are any programs to buy from the Danish state broadcaster, and he ended up buying a series called The Killing. He bought the first season of The Killing went for 24,000 pounds, so about $30,000 he paid to run The Killing, which had aired on Danish television about a year and a half earlier and been quite successful in Denmark, but nowhere else. And he paid 24,000 pounds, $30,000 and aired it on BBC 4, and then it became hugely popular, and then it migrated to BBC 2, and then Netflix came along and bought the rights to the series. You'll probably remember this.

(00:13:41):
So actually the Danish state broadcaster ended up, he said, "There should be a statue of me outside this Danish broadcaster because I ended up making them tens of millions of pounds by both selling the rights to the original series and also by Netflix buying the rights to the basic storyline." I said, "Well, why did you do that?" I said, "What made you buy it?" And he said, great phrase. He said, "Well, if you're British," true also if you're American, by the way, he said, "If you're British, the great thing about Scandinavians is they're just the right amount of weird." So if you think about it, if you have to watch something set in Denmark and you live in San Francisco, it's not like watching something set in Korea or Somalia. You're not sitting there going, "What the hell is going on here? Why is this man doing this?"

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Basically, they're a bit like us, they're enough like us that we basically figure out what's going on, but they're weird enough to make it just that little bit more interesting. And I think that's part of the reason for the popularity of Scandi Noir and Scandi Crime is they're the right amount of weird, and I think that's true of product design. I think with Raymond Loewe, I think the thing was he made a fan, if I got the story right, he made a fad that was insanely quiet and people didn't believe it worked because it was just too quiet. And years later, I remember that story because there was a guy who had this extraordinary machine learning and AI device that was being used by engineers, and he was producing I think it was an electric toothbrush or it might've been a razor, it was either a men's razor, with an electric motor, which was they could somehow make it insanely quiet by using some weird machine learning algorithm about what caused the noise.

(00:15:26):
I said to him, "Look, be a bit careful because it's probably a good idea to make a razor a bit quieter, but if you make it too quiet, we genuinely won't believe it's working. Actually, it's the crackly noise whether you rub it over your face and it's the buzz of the thing and the vibration of the thing that actually convinces us it's doing a job. And you can overdo this. You can over optimize for things."

Lenny Rachitsky (00:15:52):
I love all these examples you're sharing of ways products stand out sometimes by accident, sometimes intentionally. If I were to zoom out and try to describe what you encourage people to do, you basically are intent on convincing people to think less logically, to think less rationally, which I think is pretty counterintuitive to a lot of people, especially in business where they're told, "Be more rational, be more logical."

Rory Sutherland (00:16:14):
I think what it is psychology is a branch of complexity theory, and there are lots of things in it which are nonlinear butterfly effects, small things that have a huge effect, and there are also lots of things which are, if you like yin and yang. In other words, what I say is the opposite of a good idea can be another good idea. I always say there are two great ways to check into a hotel. One of them is insanely high touch and the other way is no touch. It'd be pretty cool to check into a hotel where basically you just walked in with your mobile phone and unlocked your room. That'd be pretty cool. It's also pretty cool if you go to the Mandarin Oriental in Hong Kong that they take you up to your room, show you how to use the television, the shower, I hope, because that's always a baffling thing and that actually make you a cup of tea in the room while you're filling out the paperwork at your vast desk.

(00:17:07):
They're both pretty great ways to check into a hotel. They're complete opposites, but they are distinctive. I think understanding the fact that what we're trying to do is we're trying to run the world of business entirely to a reductionist kind of maths and physics and finance model where everything's linear and everything works in straight lines and everything's proportionate, and the opposite of a good idea is wrong, and the past is a fantastic guide to the future. We're basing our decision making on high school maths questions. It always bothers me by the way that intelligence tests are multiple choice. The SAT is a multiple choice in the US I think, aren't they? Very weirdly, a great aunt of mine actually, who spent some time in the US I think at Princeton, was actually involved with the guy who designed those early intelligence tests.

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By the way, she had her doubts. One of the things she commented on was that basically if they did an intelligence test in which white academics didn't come top, they rejected it as a measure of intelligence. So they found, for example, I think that Native Americans and African-Americans were, for instance, better at memorizing poetry than white people were, and all credit to my great aunt. They rejected this then as a measure of intelligence because it didn't fit their narrative. But the other thing that bothers me, I'm slightly proud of my great aunt for spotting this, calling this out as a bit of bullshit to be honest, but the other thing that always bothers me is that by definition, multiple choice questions have a single right answer. Theoretically, you could have multiple right answers and you simply have to choose one that is acceptable, but basically they've got a right answer and three wrong answers. That's how you do multiple choice questions.

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But real life decisions aren't like that. You can have multiple right answers, and also you don't have all the information you need to answer the question contained within the question. And some of the information you have, which you think is important, is actually irrelevant to answering the question. So we have this when you look at those intelligence tests, SAT measures, IQ tests, they're all two buses leave a bus station, one travels due north. They all have an assumption of complete proportionality and linearity. The buses are all traveling in a straight line. You have to calculate what time it is when the buses are a hundred kilometers apart and there's a single right answer. And all the information in the question is germane to the answer that generally there isn't any extraneous information which you have to ignore.

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And there was a famous experiment actually, which I think originated in France where they said, "This ship stops, 27 goats get on, three sheep get off, then they add 25 cows. How old is the captain of the ship?" And what they found is actually pretty intelligent kids would not give the answer, "It is impossible to tell." They'd assume that the information in the question, because it's in the question, had to be of use in formulating the answer.

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And you can Google it because it then appeared in a Chinese school exam and it was a very interesting experiment done I think by a French philosopher or psychologist, which is what happens if you actually just give people a load of data and then you give them a question? Are they so habituated by high school questions to assume that what's in the question must therefore give you a single right answer? And this is exactly what happened. If you look at real life, i.e business decisions, which anything that involves human behavior, it's simply all those conditions that we are expected to look for in something when we call it scientific. None of those conditions are met, single right answer, proportionality, the scale of the input being proportionate to the scale of the effect, none of those things are met in real world decisions, and yet we select and promote people on their ability to perform those artificial activities.

Lenny Rachitsky (00:21:31):
I'm curious if you've seen a company figure out how to do this better. So you clearly are incredibly good at out of the box thinking, thinking incredibly creatively. All these examples are examples of where something was not what you would expect. Have you seen anyone actually implement a way to operate where they allow their employees and companies to think this way?

Rory Sutherland (00:21:52):
Yeah, I've across a few really interesting stories of companies which have a much less top down. In other words, it's a much more... You know how in evolution, there's this theory of multi-level selection, which is we don't just select for individuals or genes, we select for groups, for example. Two examples I've heard of anecdotally, which are interesting, there's a British company called Octopus Energy, which also has a software division called Kraken, which it's effectively a way of managing utilities in a much more sophisticated pricing environment. And they have extraordinary tariffs where if you charge your car after midnight, you pay a tiny fraction of what you pay the rest of the time. It's very much about marrying supply and demand. The way they operate is almost multicellular in that you have lots of small autonomous teams. Their ultimate brief, what the objective of the company is is very, very clear, but actually they allow people considerable autonomy within teams of 10, 15, 20 people in terms of how they actually achieve their ends.

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The second example is Shopify, where their customer service teams are in groups of 10. And Toby Shannon, who is the chief operating officer of Shopify, modeled this on sports teams. He said, if you look at teams of people in sport, your typical sport will have somewhere between rugby might be 15 and soccer is 11, and cricket is 11. But generally teams have those double-digit team sizes, and he thought there was something meaningful about that.

(00:23:31):
And so although it meant in some ways a much less lean structure, because normally in a call center environment, you'd have one person managing 100 people, and you had effectively a team leader with a team of 10. And what was interesting that emerged from this is although he had to fight for this to an extent, these people were extraordinarily happy in their jobs and extraordinarily motivated, but also kept each other motivated because the teams were small enough where people felt debts of obligation to their other teammates. In other words, if you work for an organization of 100 people and you pull a sick day, you don't really feel terrible about it. But if your pulling a sick day means the other nine or eight people have to work quite a lot harder because you are not there, natural human instincts of reciprocation and obligation don't really scale up into... There's the Dunbar number famously of 150 people, which is the size of military units and Oxbridge colleges and so on.

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And there's that famous Dunbar number coined by Robin Dunbar once described as the number of people you know where you could join a conversation in which they were engaged with someone else without it feeling weird. Brilliant. And most people know about 150 people where effectively you're at a party, you see friend X who's one of your dumb bar number one of your 150 people talking to a complete stranger, and you can go over and join that conversation without feeling you're a bit of a wallflower or being a bit of an idiot by butting in. And that's the Dunbar number 150. There does seem to be some number around sports teams around 10. So that's a way of designing for humanity rather than designing for the organogram.

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And a third case would be talking to someone at a very successful British online retailer called AO, Appliances Online is what it stands for. And he said something fairly similar in terms of the brief to the staff is very simple briefs like, "Treat the customer like you treat your grandmother." And if you look at yourself in the mirror, the shave test, and you come home at the end of the day, would your mum be proud of what you've done? They actually said not those metrics of speed and efficiency and how many deliveries did you make, but the way in which they define customer service, and this would apply to call center staff as well, is imagine, treat the customer like you're talking to your gran. I said, "There are lots of different ways you might talk to your grandmother, you've all got different grandmothers, et cetera," but basically everybody knows what that means. And similarly make your mum proud is effectively the brief.

(00:26:31):
And I think undoubtedly, there are two great virtues to this, one of which is that the metrics often actually get gained or they lead to a complete distortion of behavior. The second thing with metrics is that either people gain them to their own advantage or they obey them, but find them stupid. But the loss of autonomy that results when you're simply chasing a few metrics. Imagine what it's like to work in a call center where you are basically incentivized to get the customer off the phone as quickly as you possibly can. The loss of autonomy and judgment, the tokens, I think, and that is deeply depressing. It's deeply demotivating. So a final case of that is Zappos. We're talking to the fantastic guy who is I think chief marketing or operating officer for Zappos.

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You won't believe this. I think that he refused to make speed a measure in the call center. He said, "The call is as long as it needs to be to solve the problem." And they had one extraordinary outlier, which was something like a customer service call, which was seven hours long. Now, I think it involved a couple of bathroom visits on both sides. I have no idea what the problem was that actually takes that, but that was almost a point of principle, that if it takes seven hours to solve the problem, that's how long we spend on the line. And so this business where in the urge for quantification and the urge for what you might call de-psychologization of problems, in other words, you define them by entirely objective, non-psychological non-emotional measures. We've eventually created what I call Soviet-style capitalism. It's deeply demotivating. It's all about of quarterly targets. At least the Soviet Union had a five-year plan. We've got these stupid quarterly obsessions with revenue for meeting our forecast for quarter two. And effectively people feel it's like metropolis and people feel fundamentally dehumanized by this.

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And the persistent cost-cutting has effectively destroyed much of the pleasure of the workplace because there's no discretion. There's no discretionary judgment allowed anymore because someone saw any deviation from this imaginary optimum as being a cost. And we go into work to some extent, to exercise our humanity. And that would include not only economics or reason or logic, it would also include things like ethics, for example, what's fair. And this attempt, the great [inaudible 00:29:35] Canadian philosopher, I didn't really know much about until I came across him in a festival in Wales where he was speaking called John Ralston Saul, who writes, he writes actually, I wish I'd known about this when I wrote my book because it is kind of... This book famously called Pascal's Bastards, Voltaire, sorry, Voltaire's Bastards.

(00:29:54):
And it's all about how effectively the French in the French as distinct from the Scottish enlightenment basically became fixated with reason, which is one of what he calls six human skill sets, ethics, memory, instinct, creativity. He lists about six human qualities. And what happened effectively with the French enlightenment was that they became utterly fixated with reason as a problem solving mechanism to the exclusion of anything else. And he said, "It's not designed to be used in isolation."

Lenny Rachitsky (00:30:31):
You've used this term psychological psychology, psycho-ology a few times-

Rory Sutherland (00:30:37):
Psychologic and psychological. In other words, there's a different mechanism for logic and decision-making within the evolved human brain, which is actually quite a lot more nuanced and more sophisticated than the mechanisms for decision-making that economists theorize because it has to account for imperfect information, it has to account for variance in outcome. It has to account for asymmetrical information, and it has to account for imperfect trust. So we've evolved to effectively operate in decision-making under uncertainty as Herbert Simon called it. And yet most of the actual design of procedures that we encounter are designed for effectively information decision-making under certainty. And that's a very special case, which actually never applies completely, I would argue, or certainly very rarely actually occurs in the real world. It mainly actually is found in economic models.

Lenny Rachitsky (00:31:45):
You have a really good insight into why we think in this irrational, illogical way, which I love. You talk about how if we were evolving in the savanna, if an animal's very predictable and very logical, they're a lot easier to catch. Can you just talk a bit about that because I think-

Rory Sutherland (00:32:00):
No, things like the ability to behave irrationally, okay, there's a claim, and by the way, of all the negative reviews I get, they weren't where I expected at all. There's about three pages in the book where I basically say, "Being a bit Donald Trump has its virtues," which is that no one's going to dick with you because they're not entirely sure what you're going to do. Now, bear in mind this does not mean I'm absolutely an uncritical admirer of the Donald, far from it. But the guy has operated in the new real estate scene for quite a long time, and one of the things you've got to learn in that business is no one's going to survive in New York real estate if they can actually predict what you're going to do. I imagine that is not a world where being completely, consistently logical, never losing your temper, never walking away from a deal, et cetera.

(00:33:05):
You have to be able to play those game theoretic kind of moves. And there were people who basically encountered this thing. Maybe I shouldn't put it right at the end of the book, and I put it somewhere early on who were then driven practically insane by this assertion. But the fact remains that there are certain circumstances in which the ability to behave irrationally is actually at the meta level, highly rational. The fact that, okay, if I'm never going to fight back against anybody who's slightly taller than me, it's very rational, but I'm going to spend my whole life being dicked around by people who are quarter of an inch taller than I. Very rational, they're bigger, stronger than me, never do anything to retaliate. But no, okay, we have to have some degree of, and Darwin spotted this, some degree of kind of random number generator in our maker.

(00:34:05):
And the most classy example of this, which is I learned from Robert Trivers, the evolutionary biologist, is that when a hare is being chased by a dog, it goes into this incredibly random pattern of movement where it will zoop straight up in the air. It will suddenly do a 90 degree turn to the right, it will then suddenly double back on itself at huge speed. And it appears, I don't know how they find this out, that it doesn't actually know what it's doing, that there's a random number generator and the hairs, I think it's called in submarine warfare, it's called doing a crazy Ivan, where you just execute crazy maneuvers. It was Russian submarines when being pursued by American submarines would do something called a crazy Ivan. And the hare has the equivalent thing, which is basically it just enters this random movement, high-speed mode.

(00:34:54):
And the point is, it can't consciously know what it's going to do next because the dog would then learn to anticipate what it was doing. It has to be random, and it almost has to be unconscious because the hare cannot give away any telltale signs of what its next move might be. And so if the hare knew what the next move might be, it would actually start to reveal preparatory muscular movements, which the dog could learn to read. But there are other reasons why we need to be irrational for far less controversial or far less survival dependent reasons than this. For instance, the exercise of social intelligence. We have two very strong inbuilt. We don't utility maximize. We have two very strong inbuilt default modes in the human brain, one of which is habit, do what I've done before, and the other one is social copying, do what everybody else seems to be doing.

(00:35:56):
And they make extraordinarily good sense in evolutionary terms because an organism that had to learn everything from first principles would eat a hell of a lot of poisonous berries. Rather than going, look, "I've always eaten the yellow berries. I seem to be fine. I don't have the shits. Let's just stick to the yellow berries." Well, unless there's a massive shortage of yellow berries, that's probably a pretty good idea. Or equally, if you find yourself in a new environment or new habitat and all the other primates are eating the purple berries and nobody's touching the yellow ones in that environment, it is probably a good idea to copy them because there's extra intelligence there. In other words, I can learn effectively from copying my past behavior or copying the behavior of others. Actually, it's a fairly low cost way of discovering low variance, low downside behaviors.

(00:36:50):
By the way, very interestingly, actually, it was an AI which actually went into investigating what would be necessary for more people to have solar panels and more people to have heat pumps. And it is not tell them the environmental benefits. It is not tell them how much money they'd save by having a heat pump. No. The single thing that would persuade people to have more heat pumps is if three people on their street had a heat pump. Now, to an economist, that drives them practically insane because they go, "No, no, no. The behavior of your neighbors should be entirely irrelevant. You should simply do the maths and calculate how much you'd save, compare that against the return you'd get in a high interest savings account and then decide whether the heat pump is worthy of the investment." But that's not how we work.

(00:37:38):
We're not prepared to be the first person with the worst solution. With electric cars, there's probably a very strong heuristic, which is every consumer's learned, whether it was computers or DVDs or cassette decks or fax machines or actually washing machines, but going back with anything electrical, it pays to wait because they get better very quickly and they get cheaper very quickly. So are people wrong, therefore, not to make that decision? Well, no. What they're doing is they're learning heuristic from past experience, which by the way, when it applies to anything with a plug, it's been pretty much proven. I have friends who bought the early flat screen televisions and they paid thousands and thousands of dollars for these things, and you go into their house, you go, "God, that's shit." So an awful lot of these things are instinctive intuition that we've just learned to experience, and we don't know what the future's going to bring, but actually it's what you might call decision-making based on a reasonable expectation of something.

Lenny Rachitsky (00:38:53):
This episode is brought to you by Coda, and I mean that literally. I use Coda every day to help me plan each episode of this very podcast. It's where I keep my content calendar, my guest research, and also the questions that I plan to ask each guest. Also, during the recording itself, I have a Coda page up to remind myself what I want to talk about. Coda is an all-in-one platform that combines the best of documents, spreadsheets, and apps to help you and your team get more done. Now is the perfect time to get started with Coda, especially its extensive planning capabilities. With Coda, you can stay aligned and ship faster by managing your planning cycles in one location. You can set and measure OKRs with full visibility across teams and stakeholders. You can map dependencies, create progress visualizations, and identify risk areas. Plus, you can access hundreds of pressure-tested templates for everything from roadmap strategy to final decision-making to PRDs.

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(00:40:21):
Why is this so important? So there's many ways to try to win in business. There's like the typical approach, just let's think and brainstorm and come up with our best ideas. Your basic premise is too many of these are just very rational, logical approaches to a solution. Why is it so important to think outside the box like this?

Rory Sutherland (00:40:42):
There's a joke in the UK it's less true that it used to be because there was a famous actor called Jean-Claude Van Damme, who was known as the Muscles from Brussels. But the old British joke 20 years ago was that there are no famous Belgians. And it's a bit weird. Why are there no famous Belgians? And it turns out it's a bit like why there aren't very many famous Canadians. And the reason is, if you're a famous Canadian, everybody assumes you're American. And if you're a famous Belgian, everybody assumes you're French, unless you're a painter from the Middle Ages, in which case you're not called Belgian at all. You're called Flemish. They are actually a lot of famous Belgians, but everybody assumes they're either French or they're called Flemish because they painted in the 16th century or something. And interestingly, for the same reason, there aren't very many famous marketing campaigns to launch new innovative products because when a product succeeds, everybody forgets the fact that it was the marketing that was instrumental to its success.

(00:41:45):
When I say marketing, I mean in its wider sense. I don't just mean the advertising, the communication, the positioning. We tend to look at great products. We go iPhone, the Ford Model T, and we tend to go, "Everything was a bit crap, and then Henry Ford came along, or Steve Jobs came along and they had this invention, and everybody immediately saw that this was brilliant, and they went and bought it." I've got advertisements from 1916 advertising the benefits of electricity in the home. In fact, that was an advertising campaign that went on for about 30 years. I spent an early part of my working career in advertising persuading people to get the Internet in the late 1990s, dial up Internet. Now, we forget all that because when we look back, we concertina history and we go, "There was no Internet. And then Tim Berners-Lee came up with a web and everybody wanted the Internet." No, it's 20 years.

(00:42:39):
The mobile phone was freakish because that was actually driven by social pressure in part. Even people who didn't really want a mobile phone ended up having to get one because you looked like a bit of an asshole when people said, "What's your mobile number?" And you couldn't give one. And also it became impossible to meet your friends because they said, "Okay, I'm not sure which pub we're going to, but we'll ring you on the mobile." If you said, I haven't got a mobile, people will go, "Well, sod you then." But most of these things including smallpox vaccination, Edward Jenner who basically came up with the cowpox as a vaccination against smallpox, which was the absolute plague of the 18th and possibly came from the New World, I'm not quite sure, but it was absolute plague of the 17th, 18th century, and he comes up with his basic vaccination thing, huge opposition, unbelievable skepticism, massive suspicion.

(00:43:34):
If you thought that anti-COVID vaccination was something, this was on a par with that. His marketing coup was getting the British royal family to vaccinate their children. Now, so what we're saying is that first of all, when products succeed, we forget the extent to which marketing was actually instrumental or decisive in their success. Steve Jobs was not a technologist. He was a pitch man. He was a huckster. I mean this as compliments. He was a brilliant salesman. He was a fantastic marketer. The tech people at Apple didn't respect him. They said, "I don't get what Steve even does. He can't even code." But he was absolutely brilliant at everything from product design to focusing on a limited number to extraordinary taste, to giving those presentations and selling things as a magician, effectively making everybody believe that Apple was capable of magic and therefore you didn't need the skepticism.

(00:44:38):
Now, so first of all, marketing plays and timing and luck, by the way, let's also include those, these other factors play a much greater role in both the speed of adoption and the success of adoption of anything remotely new, innovative. But in hindsight, we forget the marketing and we never say, "Because of the great marketing, I bought that product." We go, "I bought it because it was a great product." But we thought it was a great product because of the marketing. We had to persuade people to get interesting. We had to persuade people to vaccinate against smallpox. Penicillin came up against a lot of hostility in very early stages. Also, let's not forget, we're only looking at the successes. I think there've been great products, which are genuinely intrinsically a good idea. I mentioned Meta Portal TV. I'd also include Google Glass. I'd also include the wine box.

(00:45:36):
I'd include the Japanese toilet. I'd include the air fryer until recently. These are all utterly brilliant things, but it took in the case of the Japanese toilet and the wine box and Google Glass, something about the timing or the marketing, not the product. Something was wrong and the consumer basically never bit. It never reached critical mass. Somehow, they couldn't cross the chasm of the early adopter. I still think it's barbaric. I've got a Japanese toilet here. I don't have one in my other little flat. I think it's barbaric that the Western Hemisphere dry wipes. The whole of the Middle East has a bum gun. In Japan, your lavatory quite rightly cleans your rectum with water as God intended, and for some reason, we in the sophisticated West are there with a dry bit of paper, scraping it up over our anus. This is medieval.

(00:46:32):
Think about other things, house keys. You compare how easy it is to get into your car. You've got some keys somewhere in your person, in your handbag, in your briefcase. You're not really sure where the keys are. You walk up to your bloody car and you open the door. Your house, it's fucking 1720. You've got to rattle some metal things to get into the house. Why? House building, the way we build houses will be recognizable to a Roman. The Romans never invented the stirrup. Would you believe that? They didn't actually have a stirrup for horses, so you basically had to click on with your knees.

Lenny Rachitsky (00:47:13):
Oh my God.

Rory Sutherland (00:47:16):
How? Okay. So what's so fascinating, the wine box by the way really fascinating to me because in a logical... The Kindle has only really, it's taken up. I thought when the Kindle and tablet came along, I admit this, I thought, "Okay, well that's the end of the flaming line for physical books." In fairness, I travel a lot, so I have quite a lot of eBooks because I can then pack one tablet in my bag and I'm carrying a library around with me, which on a long plane flight, it's a lot better than having to pack eight books and decide which one you're going to read when you get there. But if you don't travel much people seem to refer physical books, for example. People like these things actually like what's that funny Scandinavian thing you write on, that pad thing?

Lenny Rachitsky (00:47:59):
The Remarkable tablet?

Rory Sutherland (00:48:00):
Remarkable. Okay, people like that actually because it allows you to do less. It allows you to concentrate because you don't get emails, you don't get distractions, et cetera. But the wine box should have basically... It keeps for weeks. It's got its own tap. You can have a glass of wine in the evening without opening a bottle and letting the other five glasses go off. You're not forced to become a raging alcoholic if you live alone, which you are with wine bottles. All of these things, vastly better keeping in the fridge. Didn't succeed. Entirely psychological. In terms of logical products, and it was fascinating. The Japanese toilet, why the hell is that? I looked at you recently at the most expensive flat in London, which is some place in Knightsbridge, which is going for $110 million or something and you're going to wipe your own ass.

(00:49:03):
It's 110 million for this place and the toilets, now, I imagine if there's a Middle Eastern owner, they'll go and retrofit some bum guns in there. How flaming weird is that? Seriously strange. And you realize that actually, I mean Google Glass, it was a kind of marketing. They launched a bit too soon. Then they only gave the bloody glasses to developers. Now with the best will of the world, developers probably aren't the world's coolest people. They're not the people you want to have walking around your bar wearing Google Glass. The user imagery wasn't that great. And so you have these really interesting phenomena. I would've bought Google Glass actually even at the insane launch price of about $1,000 because I would really, really like being able to walk around. Now, I don't know what I'm talking to you now.

(00:49:57):
I don't know what the time is. I don't know when my next meeting starts. I don't know what the weather's like outside. If I just had regular in eye updates, a heads-up display for shit that's going on in my life that just reminds me of stuff I'd easily pay, without having to look at a digital watch, which I've bought these bloody, both Android and Apple watches, and nah. I might as well get my phone out basically. I've got an ordinary analog watch here, but actually having something which you can wear, which just goes, "Your next meeting starts in five minutes. The guy you're talking to is called Lenny." All that stuff would be really, really good. I have no idea whether the Meta Portal TV apart from this business of the privacy thing with Facebook, but if any product deserved to succeed in the pandemic for crying out loud, it was video conferencing on your TV, and yet it just didn't.

(00:50:54):
The other thing I'd say is don't think because a product's failed in the past that you shouldn't try again, because you know that famous thing that the definition of insanity is trying the same thing again and again and expecting a different result? That's not the definition of insanity. That's the definition of a complex system that actually quite a lot of Internet ideas failed. Quite a lot of online ideas failed because they were just mistimed. Because typically some good ideas were too early.

(00:51:24):
Great little thing actually called the Chumby, which I had about three of them, and they were little Internet connected devices, and they just cycled through little screens, which would say... Little applets, like little kind of... You're probably an iPhone user, but what we call them Widgets on the screen, and they go, "These are the trains through a local station. They're on time, they're not on time, they're running late. This is the weather. This is the latest newsflash from the New York Times." And they just cycle through that stuff and they'd sit in a little cuddly little thing. I had about three of these. I thought they're fantastic. But again, I'll give you two examples of this about timing.

(00:52:06):
No, hold on. It's 1989. I sign out a mobile phone. It's like a brick. It's made by Motorola. Sign out a mobile phone from the office in 1989 because I'm going to a meeting somewhere off site and I need to be contactable. So you didn't have your own mobile phone. No. The office had about eight of them, and you signed one out and they were kept charging in the office. You signed one out, you told your team what your number was for the day, and you set out to your trip. So I'm walking down Oxford Street with this mobile phone and someone rings me, so I haven't got any choice. I have to answer it. So I'm speaking on a mobile phone in Oxford Street, one of the busiest streets in London in 1989, two people shout abuse at me from passing cars for using a mobile phone.

(00:52:53):
A second case, let me see if I can date this. It would be about 2000 and crikey, about 2003, 2004, there was a company started by some American expats called Food Ferry in London, and I think it was a hybrid CD-ROM. You actually had a CD-ROM of most of the stuff, and you went online, you ordered your groceries and they delivered them to you. And I mentioned to someone, it would've been the early two thousands that actually ordered my home groceries on the Internet, and they laughed in my face. Just literally, they went over, they said, "Hey, you'll never get this guy. He fucking orders his groceries on the Internet." And this is my point I'm saying is that there's this huge psychological hurdle to changing behavior or to getting people to adopt behavior which is slightly unusual.

(00:53:54):
One story, I then bought my own mobile phone. It was '89 I was borrowing the phone. It would've been about '95, '96 when I actually had my own mobile phone, maybe '94. I'm trying to work it out. And I'm on the top of a bus in London and somebody rings me and they ring me from the States. It's my friend Ted who was a biochemist pen, I think at the time. And I said something on the phone. I'm sitting on the top of a bus and I said something on the phone, which made it obvious I was speaking to someone in America. It was like, "What time is it with you?" Or, "What's the weather like over there?" Basically, it was obvious I was making an international call on a mobile phone at the top of the bus.

(00:54:36):
I actually thought there was a mild risk of physical attack because that was such an extraordinarily twatty thing to do. And I suddenly realize this because I'm old. I'm 58. I suddenly realized that a lot of younger people don't have the chronological context. They just assume that there was no Internet, and then the Internet came along, so everybody got it.

(00:55:00):
The smartphone was [inaudible 00:55:02]. The mobile phone itself was not rapid. They've existed for about 50 years. You had to be pretty rich, and they mostly were in people's cars. I saw someone with a portable telephone, I think in 1984, and that was a really weird thing for someone to have. They weren't fast. The smartphone was pretty fast. I grabbed that. That was a freak exception. Most of these things are really gone on slow, and also if you get your marketing wrong or if you miss time your launch, or if you just misjudge some aspect of your launch psychologically, you can take something which is intrinsically a brilliant product, and it will fail to bite. That's why I think this is really important because we have survivorship bias. We only look at the successes. No one's there going... Certain things, the fact that we still open our houses with keys for crying out loud, all that stuff.

Lenny Rachitsky (00:56:00):
I agree. I'm excited. I'm excited for the Tesla version of keys.

Rory Sutherland (00:56:08):
Yeah, completely. I'm completely.

Lenny Rachitsky (00:56:09):
You've shared all these amazing examples of products that are great but didn't work out. Many of the reasons that that happens is within a company it's very hard to share and suggest silly ideas as you describe. And you have this actually really cool suggestion that I wanted to highlight, which is first, share the logical, rational, typical answer and then create time to think about the silly, crazy idea. Can you talk a bit about that? Just how to operationalize this a little bit.

Rory Sutherland (00:56:37):
According to Herodotus writing in about, what is it? I suppose the sixth century BC, it was about the fifth, I should know [inaudible 00:56:46]. The ancient Persians, when they had to deliberate, they debated everything twice, once while sober and once while drunk. And only if they agreed in both states would they go ahead with the course of action.

(00:57:00):
Now, I don't know whether being drunk is just an opportunity to come up with a better idea or whether it's a question of does this appeal to us rationally? Does this also appeal to us emotionally? I don't know. There's something really, really interesting about having what you might call a two stage, a double lock of decision making, which is okay, there's this fundamental asymmetry, which is creative people have to present their ideas to rational people for approval. Okay, fine, don't mind that. Never happens the other way around. You never get engineers or accountants saying, "Well, I think the answer is 3.75, but before I go and present this, I'm going to share it with some wacky people to see if they can come up with a neater, more cunning idea." So that's one issue. The other issue would be, talking about products that failed by the way, Ford and Edison collaborated on an early, I think the first decade of the 20th century, an early electric car.

(00:58:00):
Watch this on Jay Leno's Garage, by the way. I think that Jay Leno is a greater philanthropist than Bill Gates. Bill Gates is quite useful if you're in Africa, if you've got malaria or something, but he's not much use to me. But Jay Leno on the other hand, takes a vast fortune, buys and restores amazing cars, and then shares videos about them on YouTube. Now, that's great if you're in Africa, and it's great if you're me. It's fantastic. I obviously adore this guy. Interestingly, the electric car, according to Leno and according to other articles I've read, was actually quite good. It was quiet, it was unbelievably good acceleration, and the range wasn't terrible. And for the time, the speed wasn't bad. What killed it, interestingly, user imagery. And the user imagery was because it was quiet, you didn't have to hand crank it.

(00:58:50):
It didn't give off fumes, it didn't make a loud noise. They were really popular with women and they became stereotyped as women's car. Meanwhile, all the people doing the jalopy racing and the customization, all the farm boys were using gasoline cars. Now, fast-forward, what's so fascinating, fast-forward to 2025. I'm quite pro cars. I've got two and my wife has one of them [inaudible 00:59:20]. And I like them both. I wouldn't go back to gasoline because I think they're great. They're lovely to drive. They're like a limousine and a go-kart. They have very few moving parts. They're incredibly quiet. They're just lovely. Just drive one and you'll see what I mean. And when I write in favor of electric cars, I get all these comments in the spectator comments below of people who really hate them. And when they write to me, what it boils down to is they think, it's user imagery like Google last, and actually there's a problem with all tech products because the first people to adopt innovative products tend to be slightly weird.

(01:00:04):
And weird people do not confer the reassurance of social norms in the way that adoption by conventional people does. If you've got your weird millionaire, rich nutter and he's got a wind farm and he's got a heat pump, it doesn't make ordinary people think, "Oh, I must do the same." Now what's happening here is I didn't realize this, but all the people who don't have electric cars see the people with electric cars and go, "Smug environmental tosser who's looking down on me because I've got a diesel and thinks he's saving the planet even though you've had to mine all this cobalt and lithium and whatever to produce the battery, what a twat." Now, interesting thing about this is that in very few cases I can encounter, I can remember is are the electric car owners actually very interested in the environment? They're not.

(01:01:01):
Similarly, when you meet environmental people, they don't have electric cars. They've always got some crappy excuse, "Yeah, but my wife needs to do the school run and so we decided we'd get a diesel." I don't know why. But you meet these people, you go to environmental conferences and you say, "So you're really keen on the environment. You've got an electric car?" "Well, we thought about getting one, blah blah."

(01:01:23):
Meanwhile, all the people in Essex, Jersey who just really like cars or really like tech are people buying electric cars. It's got almost nothing to do with environmental credentials. And yet by actually imbuing these electric cars with Prius style values of smugness, it's actually a huge obstacle to adoption because people just, "I don't want to be that kind of person." Now, actually, okay, when I had an electric car three years ago, there are fewer charging points than there are now, but what I noticed was really odd was that if you wanted to charge in Billariki in Essex, imagine New Jersey, imagine Trenton, loads of charging places there. You went somewhere really woke, you imagine, I don't know, Cambridge Massachusetts or whatever, nowhere to charge. Cambridge England, absolute desert for car chargers, Brighton, which is like the most right on city on the south coast of England, nowhere to charge at all.

(01:02:34):
But you went somewhere a bit bling a bit eh, loads of chargers. I don't know the hell's going on here. And to be honest what's happened is we've imbued electric car owners with this holier than thou aura, which causes other people to resent them despite the fact that incredibly few of them are really doing this for environmental reasons. They may be happy to have zero emission cars. I would like to get solar panels to charge my car. Not really to reduce carbon emissions, but just because it'd be really cool to have a car that runs on the sun. I quite like solar panels on my house, not really because I'm going to save the planet, but I like at dinner parties or rather lunchtime, to go to a picnic and go, "Oh look, I'm getting two kilowatts of my app."

(01:03:30):
To be honest, that's the kind of... And actually the reason most people adopt new technology is peacock's tail, it's showing off. The first cars weren't as good as horses and carts. They were done to show off. They were done for novelty seeking reasons or for reasons of status display. And that's what rich people are for. They provide the early stage funding for promising ideas before they really reach maturity. Famously, the argument is that birds evolved wings as sexual display plumage before they became large enough to function as a mode of propulsion. So birds, which seemed to have evolved from dinosaurs for the most part, the logic is that they first of all got wings as a form of sexual display. The peacock got the tail, but most other birds did the display with the wings to look cool because I think dinosaurs had feathers, didn't they? I think I'm right.

(01:04:27):
Okay, so there was a sexual display thing going on and eventually they thought, "Oh, actually I did this to show off, but I can actually get to that branch." And so there's that early stage funding argument and what actually provides the early stage funding for new promising ideas is quite often slightly [inaudible 01:04:45] people like me. But we've got to be conscious of the fact. And also if you really evangelize new things, I was an air fryer evangelist literally going back over 10 years. 15 years ago I was like the John the Baptist of air fryers and I'd occasionally say to an audience of 500 people, "Anybody here got an air fryer?" And there'd always be six people go, "Yeah, best thing I've ever bought." And it suddenly occurred to me that actually in a way that actually annoys everybody else.

(01:05:15):
It's not people going, "Oh, these with air fryers, they really like these air fryers. Maybe I ought to look at getting an air fryer." Instead, it's like, "These people are in a cult." What you have to realize working in marketing is that people in marketing are very high in openness, very high in openness to experience, very, very keen to stand out, very keen to be distinctive. The majority of the population are much lower on openness to experience. They're much more driven by habit and social norms and largely they want to fit in. They feel comfortable when they fit in with the people around them. It's a slightly unusual corporate environment where people actually want to effectively play constant games of one-upmanship with their workmates, which tends to happen in marketing and other functions and tends to happen actually at the higher levels of corporations. But it's actually slightly an unnatural state. You've got to be very careful working in a marketing department or being a person who works in marketing to continually remind yourself that you're an outlier.

Lenny Rachitsky (01:06:19):
One of my favorite stories from your book Alchemy, was the story of the Walkman and how the engineers, basically, they had the technology to add recording to the Walkman and they're just like, "Hey, of course we need to add a speech we can do it."

Rory Sutherland (01:06:35):
It would've cost 50 cents because apparently they built the first Walkman on I think it was a thing called the Sony Talkman, which was a dictating machine which had both a speaker and it had a microphone. And it would've cost 50 cents or a dollar per unit of the Walkman to add recording functionality. Of course later on, they did add that, much later on when people were familiar with the concept. But I think it was Marita, I think it was Accio Marita at Sony who was the instigator of the Walkman project, and he was the single driver who said, "No." And they all got very upset about this because they said, "Look, it costs nothing and it doubles the functionality of the device." And Marita said, "You don't want to double the functionality of the device. You want the device to have one function, which it performs very well," what Don Norman will call an affordance.

(01:07:26):
You don't want any ambiguity about what this thing's for. What this thing's for is for listening to high quality music while you're on a flight or on a train journey, and it's for that. It's a personal entertainment device and nothing else. Once people start going, "Is it Dictaphone? Does it have a corporate function? Should I use it to record concerts, et cetera?" Once it's got more than one function, people don't know where to start. And so I thought that was an absolutely inspired thing, which is actually in many cases, less is more. In other words, focus attention on one thing, the one thing that it does, it's really good at that thing. You don't have to worry about anything else. If you want to do that thing, then this is the thing for you. And if you don't want to do that thing, then don't buy it. Very simple binary decision.

(01:08:11):
The second you introduce complexity into the thing, logically greater functionality should mean greater utility, which should mean greater value. But sometimes as with the McDonald's menu, that was an absolutely beautiful case where they realized that, "Okay, it's partly about speed, it's partly about simplicity. It's partly about supply chain, but it's also about choice reduction. Do you want a big Mac? Don't you want a Big Mac?" Whereas the American Diner, which was the proceeding thing before the McDonald's brothers came and shook it all up with I suppose this Detroit model of production. The American Diner was, "How do you want your eggs?" Substitutions, over easy, sunny side up, poach, scramble, et cetera. The whole thing was about customization. And so this is what I mean. Sometimes customization is a great idea. Sometimes it's the opposite.

(01:09:07):
I think Tesla's quite clever in the choice architecture of Tesla's is just the right amount of choice. You don't want one color and you don't want one battery size, but equally they haven't gone silly. There are two interiors you can choose from two size of wheels, five colors, five basic colors and two premium ones. It's about right. That's about manageable. Whereas I had a look at customizing the new electric Range Rover today and it just, well, it drives you insane because you suddenly realize you're going to be spending basically the price of a house by the time you've added all the stuff you really, really want. You can't actually justify buying the vehicle.

Lenny Rachitsky (01:09:53):
Okay, so maybe a last question. We've covered a lot of stuff at this point, which makes me very happy. I asked people on Twitter what I should ask you when you were coming on the podcast and the most common question came around branding for startups. So say you're a startup, you're trying to figure out how do we build a brand for what we're doing? Do you have any advice for early stage founders to help build their brands, trying to get their brand over time? Something they could do early on?

Rory Sutherland (01:10:18):
Very simple. Be consistent, be distinctive and be famous. Now, often, we forget this, advertising often talks about brand in this incredibly nuanced way about differentiation and this and that and the other. You've got to be distinctive undoubtedly. You've got to be consistent for obvious reasons and you've got to stick at it visually without dicking around too much. But actually the reason advertising agencies never say, "We're going to make you famous is because it sounds too obvious." Okay, well yeah, obviously. Yeah, but let's not talk about fame. It is. It's about fame in that fame fundamentally changes the rules in completely non-linear ways. So first of all, when you are not famous, you have to find all your customers. Suddenly you reach this magical escape velocity of fame where people start coming to you and they start saying, "Have you thought of using this for this?" Of, "Actually, you didn't think of this as an application for your product, but I've actually got this, I actually use it for this."

(01:11:26):
And then you reach, these are levels of fame and they compound over time. It's not linear, it's not attributable. You can't really say... I joke about this, there are people who can attribute their fame to one single event, Monica Lewinsky perhaps being good example or serial killers. All right, okay. "If I hadn't killed all those people, no one would've heard of me." There are people for whom fame is attributable, but for most people it's a whole what you might call amalgam of different activities going back years. And actually in many cases we ask consumers, "How did you hear about this?" They don't actually know. They'll always put TV or something online, but actually they don't know how they heard about it. They just heard about it. And we know that people's brains react completely differently in terms of their level of comfort with things they've heard of before versus things that are completely new. It's almost similar to the heuristic of, is everybody else eating this? Have I eaten it before and have I heard of people eating this?

(01:12:41):
It's part of that same package of right in the motherboard at human psychology. So fame is completely, it basically changes the rules for everything. When your chief executive rings somebody up, they probably call back. If you're a famous company, if he's heard of you or she's heard of you, she'll call back. If they haven't heard of you, they probably won't call back. What's that worth? What's it possible? It's impossible to quantify the value of fame. People come and work for you for less money. People actually apply to you without you having to find them. People stay longer, customers come to you and give you the benefit of the doubt. You're allowed to cock up once if you're famous. People will give you, if you've got a great brand, the best definition of a brand is from the guy who's called Eric Johnson, I think, who wrote the book, Blind Sight and he's also written a book called Brands That Mean Business. It's a great book. It deserves to be much more famous actually.

(01:13:43):
And there's a sentence in that book which says, "Having a great brand means you get to play the game of capitalism on easy mode." And I genuinely can't think of a better definition than that. Now, the point about playing on easy mode is can you quantify the value of that? Well, no. Because you don't know what your score would've been if you were playing on hard mode or psycho mode. I'm not a gamer, but you know what I mean. Okay. Can you also say which of your various activities contributed to the building of that great brand? Well, no, you can't because it's actually not even an amalgam of things. It's actually a concatenation.

(01:14:26):
There are a host of elements here which are catalytic. They're not linear. And that's the other thing, which is that because it's not linear, attempts to evaluate advertising on short-term transactional metrics will always grotesquely undervalue the contribution of that activity to your ultimate business success. It's a bit like when I first got a pension for the first few years, brand building is a bit like a pension. For the first few years I had a pension. Oh God, I'm paying this guy a few hundred quid a month and look, half it's gone in commission and there was a lot of work and I'd rather have the money to have an Indian meal. I don't know why I'm doing this. Oh look, it's hardly gone up at all. What a bore, what a waste of time. I thought that for about three years. I'm 58 now and I've got a pension and I go, "Where did all this money come from? I don't remember paying this."

(01:15:25):
It really is like that. It's a compounding effect. And everybody effectively, because we have finance and ROI and all those things, everybody's using addition, multiplication, subtraction, and division to try and quantify the value of an activity, which actually is about power laws. It's not about that linear bullshit. It's really about power laws and non-linearities and all this kind of stuff. And so we are being judged by the wrong maths. We're being evaluated by the wrong maths and also we're being evaluated over the wrong timeframe. And consequently, my argument would be that at a very rough estimate, an awful lot of marketing activity is in reality four times as valuable. Four is, okay, I'm plucking that number out of the air, but four seems about [inaudible 01:16:25] is probably four times as valuable as people think it is when they measure its short-term contribution. Could be more of course

Lenny Rachitsky (01:16:32):
I love that because over time it will build and it compounds. It's like a drip. I love the three points you made about how to build a great brand consistency, distinctiveness. What was the third? It was be famous?

Rory Sutherland (01:16:44):
Yeah, consistency, distinctiveness, probably clarity.

Lenny Rachitsky (01:16:51):
Clarity.

Rory Sutherland (01:16:51):
Just be famous.

Lenny Rachitsky (01:16:53):
Great.

Rory Sutherland (01:16:53):
Yeah. Some sort of clarity of promise, I think.

Lenny Rachitsky (01:16:57):
Amazing. Consistency-

Rory Sutherland (01:16:58):
I think a good brand is a promise, but also the extent to which it contributes to trust, which is that if you met a celebrity on the street, I don't mean a serial killer celebrity, I mean a famous actor. One thing you wouldn't think about is are they going to steal my wallet? Are they going to mug me? Are they going to do anything weird? They may have lots and lots of vices, but generally people who have a lot of reputational skin in the game, who've invested a lot in building up a reputation over time are going to be much more cautious about disappointing their customers or risking negative feedback than someone nobody's ever heard of.

(01:17:45):
And let's be honest, I think it's even more extreme in the United States than it is in the UK. The relationship people have with celebrities is kind of pervy and weird. They imbue these people with superpowers. They're actors. They didn't actually fly through the air, but somehow people treat them with this reverence because they're just famous. And the point is, it's easy mode. If you are actually pretty famous, you are playing that game on easy mode because so many things which require massive reassurance, due diligence, checking, you take it to the board and three people on the board have never heard of the company so they want you to go back and check with so-and-so. And then you walk in and you're famous, the rules are different. When I say there are also these inflection points like escape velocity, I always say about Coke that Coke has reached a magical level of fame where it is your expectation that any shop or bar or cafe or bistro style restaurant will stock it.

(01:18:54):
I can ask for this anywhere, and if they haven't got it's their fault, not mine. Now that that's really mega fame. But equally in B2B, there's an inflection point in B2B marketing, which is that if no one ever got fired for buying IBM, we know the famous phrase, if you appoint Pricewaterhouse or EY or whatever to your audit and something goes wrong, everybody blames them. If you appoint someone nobody's ever heard of to be your auditor and something goes wrong, everybody blames you for not appointing Pricewaterhouse or EY. It's rather like one of the reasons I fly with... I wouldn't go on a business trip with Ryanair, even though they're actually pretty good and they're very punctual, is if the flight gets canceled or delayed and I ring the client and say, "I'm terribly sorry, the BA flight's been delayed." They go, "Oh, well, never mind you did your best." And if I ring up and say, "The Ryanair flight's been delayed," it's not quite the same, is it? I haven't necessarily tried. I've skipped on that. You see what I mean?

Lenny Rachitsky (01:20:05):
Yeah.

Rory Sutherland (01:20:05):
And so various things, it's not just what things are, it's what they mean. And we use brands as extended phenotypes to express ourselves in all kinds of ways. So this is the other thing with brands, it's not just a simple consumer. It's not just a simple business consumer relationship. There are all kinds of things as what does the brand I use say about me? It's do the people who know me know what this brand means? It's no good being a luxury car that only rich people have heard of. Because in order to convey prestige, it's necessary for you to know that other people know that BMW is a prestigious car brand and so on and so forth. So there are lots of things here which are second order, third order, non-linear compounding factors. We just have to acknowledge this is a different kind of maths and yet we're being judged on an X minus Y equals Z maths. Doesn't make any sense.

Lenny Rachitsky (01:21:12):
Maybe as a final question, is there anything you want to leave listeners with, folks that are building product? Any lasting piece of nugget or advice?

Rory Sutherland (01:21:19):
Try and do the psychological and the technological and the economic for that matter. In other words, the sweet spot is it works psychologically. It works technologically and it works economically. In other words, you can make money out of it. People want it and it allows them to do something significantly new by using some clever application of tech. Try and use those three things in parallel because I think what most businesses do is they try and do things in series and businesses borrow an awful lot from the Fordist Taylorist production line mentality of the process. And the process, we have to pretend that the process is linear, but the process of any kind of innovation or development is not linear. They're loads of products, which by the way have completely failed at first iteration, and then someone sold them in a different way and they then turn out to be completely successful.

(01:22:21):
The Pivot is an example of that. Famously Wrigley started off selling soap powder in Chicago. Then he started giving away baking powder free to sell the soap powder, and then realized he'd start making baking powder and selling that, and he gave away chewing gum that went on the baking powder as a gift. And then people liked the chewing gum a lot more than they liked the baking powder. So as a result, Wrigley became a chewing gum company.

(01:22:49):
But we're always trying to make this thing linear because when we tell stories backwards, we post-rationalize and we reverse engineer and we reverse engineer our actions to make it all seem perfectly linear and logical as a self-check. The real process is never like that. And I think you should have marketing. Marketing and innovation are two sides of the same coin. As I often say, you can either work out what people want to find out a clever way to make it, or you can work out what you can make and find a clever way to make people want it. And actually the greatest things manage to do both. Simple as that. Don't do it one than the other. Don't leave marketing to the last minute, but equally work in parallel as far as you can.

Lenny Rachitsky (01:23:35):
Where can people find your book and Nudgestock? Point them real quick.

Rory Sutherland (01:23:38):
Nudgestock.com. The book's called Alchemy and it's got a variety of subtitles depending on which country you're in. But if you look for Alchemy by Rory Sutherland, the audiobook is probably the best thing to buy because I actually read it myself and I rift a bit from that. But also available on Kindle and from all good bookshops and quite a few rotten ones. And there's also a book I've co-written called Transport for Humans co-written with Pete Dyson. If you're in the transportation industry, I'd recommend that one.

Lenny Rachitsky (01:24:08):
Amazing. Rory, thank you so much for being here.

Rory Sutherland (01:24:09):
Thank you for that. Always a joy.

Lenny Rachitsky (01:24:12):
Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcasts, Spotify or your favorite podcast app. Also, please consider giving us a rating or leaving a review as that really helps other listeners find the podcast. You can find all past episodes or learn more about the show at lennyspodcast.com. See you in the next episode.