S2 Ep6: Psychology Hacks of the World's Best Advertisers - Rory Sutherland

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Rory Sutherland is one of the most respected minds in advertising.

He's a bestselling author and a pioneer in showing how psychology shaped business, teaching us why people make choices that defy logic but still make perfect sense. At the moment, In marketing, you can come up with a brilliantly rational argument for doing something boring, stupid, and utterly pointless, and you'll keep your job. It's kind of pissing in the Pacific. It's improving things a bit. It's justifying your existence. But every now and then, you stumble on something which is of disproportionate and enduring value. Now, let me tell you a story of this, okay? People have always ridiculed poor old Blockbuster Video for refusing to buy Netflix for $50 million. And my argument is they were right not to buy them for $50 million, 'cause at the time, Netflix hadn't had the big idea. Sometime after, one of the two founders of Netflix said, 'Oh shit, if we turn this into a fucking business,' suddenly they'd hit the consumer sweet spot. On the basis of that idea, they're worth half a billion. On the other hand, the honest truth is what actually matters about human behavior is how something makes someone feel. I've got a Japanese toilet. Have you done that? No, you'd never go back, okay? I mean, dry wiping is fucking, you know, barbaric, right? The point I'm making is that innovation and marketing are two sides of the same coin, or arguably the same thing.

But how do young people now structurally teach themselves to think like that?

I want to democratize the way of thinking, and to do so requires three sources of kind of creative strategizing, which are—

Hi everyone, did you know that 85% of people who watch the podcast aren't even subscribed to the YouTube channel? Now, I don't like asking people to subscribe to the show, but honestly, it is the single greatest thing that you can do to help us grow our podcast. If you want us to keep bringing you these conversations, the kind of stuff that you simply cannot Google, then do us a favor, hit the subscribe button and let me know in the comments who you want me to interview next. It helps us to grow the channel, reach more people, and get the best guests in the world. So let's get into the show. Well, welcome to the show. Thanks so much for coming on. I wanted to start by saying, in my 20s, I ran an agency, uh, marketing agency. So we did like marketing, uh, strategy, creative, and then we would deliver it for them. And so we always had those moments where we would go into brands and deliver our creative ideas And I can still remember—

Back in the day when creative was actually treated as a primary—

Oh, yeah.

Because what has happened is the media people have turned this into some sort of totally dreary numbers game.

Which I definitely think I was part of.

Which has fucked the whole business, in my view. Yeah. You were part of that conspiracy where you said, let's pretend this is a commodity play.

Yeah.

OK. Now, my point about that is it's a very— it's an important business. I mean, continual incremental improvements in the optimization of marketing efficiency. It's a billion-dollar business. It's totally worthwhile. What you're turning your back on is that 80% of marketing is fat-tailed. Right? Let me explain. Okay. That the real value of marketing isn't what you do day to day. It's the fact that every sort of 6 months or a year or every 18 months, you stumble on something which is of disproportionate and enduring value. It's a discovery, if you like. It's a Treasure find. Okay. Now the problem is we're no longer trying to do that. We're no longer looking for treasure. We're just mining ore. Okay. And it's fucked the whole business. To explain the difference between thin-tailed and fat-tailed, thin-tailed is stuff where you basically improve it a bit on average. There's no big downside. There's no big upside. You can ignore the outliers because nearly everything is within a narrow kind of Gaussian range of expectation. Right? That's like shopping at Lidl. Okay? Which I, by the way, except for the middle aisle at Aldi. Okay. Right. So, so what I'm saying is that thin tail things are, I need this stuff, let me procure it as effectively and in, in as good a combination as I possibly can.

Mm-hmm.

Okay. That's grocery shopping, Sainsbury's. Right. I would say 70% of the value of marketing isn't like that. It's not like Aldi or Lidl or Asda or Sainsbury's, it's like TK Maxx, right? You go in and some of the time it's a total waste of time and every now and then you go, fuck me, I wasn't expecting that.

Yeah.

Right. So TK Maxx is fat-tailed retail. Sainsbury's or Asda, thin-tailed retail. Aldi, interestingly, is thin-tailed retail on the edges, but fat-tailed in the middle aisle. Right. Which is, yeah, I need some milk and, you know, oh, better go and buy some. Oh, they got cheddar. That's quite cheap. Oh, we'll buy that. Oh, fuck me, a wetsuit. Right. Okay. Right. You didn't know you wanted a wetsuit. You hadn't planned to buy a bloody wetsuit or one of those power sprays. Right. And that's the fat tail bit.

Yeah.

And I think what's happened with marketing is it's been taken over by consultants and tech people and nerds who've turned it into a narrow incremental improvement game. Okay. Which is missing the point. Drayton Bird, very hardheaded, great guru. You must know him. The great guru of direct marketing in Britain. He actually said something very surprising. He said, you don't do direct marketing. This is back in the days. You don't do direct marketing to make money. You do it to learn. And what he meant by that was that actually the information you derive from creative testing, that's the really valuable thing because you can then replicate it. But what you are not trying to do is necessarily make money in the short term. You're trying to make a discovery. Now, let me tell you a story of this, okay? Which is a perfect example. It's always— people have always ridiculed poor old Blockbuster Video for refusing to buy Netflix for $50 million.

Famous story.

And my argument is they were right not to buy them for $50 million because at the time Netflix hadn't had the big idea. Okay. They were DVDs by post.

Yeah.

Right. Now, first of all, Blockbuster could have replicated that business in a heartbeat. Okay. It hadn't hit the secret sauce because secondly, It's actually not that good an idea because generally people don't know on Wednesday what film they want to watch on Saturday. Mm-hmm. Right. Anyway, sometime after they'd failed to sell to Blockbuster, they were in a state of some desperation and they were looking around the warehouse. Now, one of the two founders of Netflix was also— happened to be the world's leading expert at the time on subscription marketing.

Right.

And they're looking at their warehouse full of DVDs And one of them said, "Isn't it a pity we're paying to store these DVDs in a warehouse when really they should be stored in someone's home?" Hmm. And the other guy said, "Well, actually, there's a way you could do that. You let people have 3 DVDs at any time. Instead of paying per rental, they pay a monthly subscription, and they can circulate." And that was the promise. $19.95 a month, no late fees ever, 3 DVDs at any one time, change them as often as you like. Okay. That was the breakthrough idea. That was the discovery. That was— it wasn't DVDs by post, right? It was, oh shit, if we turn this into a subscription business, suddenly they'd hit the consumer sweet spot. Now, at that point, they're not worth $30 million as they might have been when they were talking to Blockbuster. Suddenly, on the basis of that idea, they're worth half a billion. Now, risky decision because theoretically people could have decided to watch 20 DVDs a month. And it would have cost them a fortune in postal fees, and they never would have made money. But they could test that, and they tested it. Yeah, inertia generally sets in. Okay, it's a bit like gym membership, you know. No, people might have actually— I think when I first joined LoveFilm or Netflix, I probably did watch about 7 films in the first month or something, 5, but it settles down. It's also a brilliant price point because it was about— £19.95 a month was about the price of buying a DVD. Yeah, exactly. So you kind of go, well, if I'm for the price of buying one DVD a month, I can watch loads of them. Because films aren't like music. You don't really— I mean, there are— there's a proportion of films which we watch again and again, but it's about 1% of all films made. Interesting. Hitchcock scores very high on rewatchability. Well, just for interest, what are your re— I always ask people, what are your rewatchable films? The one— in other words, the film where you basically, if it's on the TV, even though you can watch it anytime you like, you still watch it through to the end?

Something like Waterworld.

You're totally obsessed with that, are you?

I've watched it 100 times. I don't know why.

Because I've got various ones. That's fascinating.

But like The Godfather, Ferris Bueller's Day Off, you know, all the famous ones.

Probably a third of Hitchcock, The Third Man, you know. But equally, there are great films I've never had the urge to watch. Citizen Kane a second time, you know. Weirdly, Narcos was one of those. So I rewatched Narcos to such an extent that Netflix actually started to think I was Spanish-speaking and started to serve me up, like, telenovelas and things.

Breaking Bad, maybe?

Yeah, no, no. Well, weirdly, I haven't— I'm saving that up because I enjoyed it so much. I hadn't got time to get into it. Yeah. And so weirdly, I haven't finished that because I'm actually saving it up to a time when I can really—

Good discipline.

Yeah, which is a huge self-discipline required. That's fantastic. So those are the kind of things. So anyway, but with that thing, that's one idea that happens in one moment in time. It's worth $300 million. That's the point about marketing. Okay? Okay. It justifies its continued existence by doing the kind of grind. Okay? But that's not the purpose of marketing. The purpose of marketing is to make a breakthrough. Which gives you disproportionate return.

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I mean, I hate to say this, but I mean, I wrote a book for this reason. I want people— not all the time. I want to democratize the way of thinking that is encouraged, which I would argue is generally suppressed in most areas of business, with a few notable exceptions. Fairly low on the hierarchy, I'd put the advertising industry, and I love the advertising industry. Entrepreneurialism generally thinks that way. So the weirdest thing I got is that entrepreneurs and weirdly people like venture capitalists love that book. I didn't expect that necessarily. The worst review I got was from a romantic novelist for some weird reason. I mean, the audience for that book and where it's popular has continually surprised me, but then subsequently it makes sense. Entrepreneurs are always basically thinking like game theorists. In other words, it's not what is commonly known in the sector, what is best practice, what is the benchmark? It's, What do I know that nobody else does? Or what does everybody else think that I can safely ignore? Okay. I call this reverse benchmarking. It's you don't make yourself like your competitors. You find out one thing your competitors are weirdly bad at and you double down on that.

Yeah.

And I noticed this pattern, everything from Apple to Buc-ee's, the convenience store gas station chain in Texas, to the Moxie Hotel. All of these really successful innovations are a product of reverse benchmarking. We'll take the opposite of what other people are doing and the thing they do badly, we'll do really well and we'll just basically focus all attention on the thing where we're disproportionately good and we'll merely be okay everywhere else.

Hmm.

And I, so I think there's actually a kind of replicable, I think there's a replicable series of patterns to be found by reverse engineering successful brands and successful businesses. That they tend to break the rules in certain common recurring ways.

What's an example of that?

Okay. Real apologies to people who've heard this story because I've told it on a few podcasts. So the story I love is a guy called Will Guidara who writes a fantastic book called Unreasonable Hospitality.

Brilliant book.

Fantastic, isn't it? Okay.

And slow build as well.

It's— but what you realize, of course, is the restaurant business is a fast feedback business. It's like comedy. Mm-hmm. Okay. And I would place, you know, the restaurant business, you know, I said there are certain industries where this kind of thinking is not suppressed. You know, it's highly suppressed. I imagine if you're an actuary, okay, or you're an accountant, not always. Okay. It generally is encouraged. For example, the comedy circuit would be a very high manifestation of think differently. Mm-hmm. And the advertising industry creative departments are part of that where it's the kind of place where you get fired for coming up with an obvious logical solution. I mean, you know what I mean?

Yeah. Yeah.

Yeah. Okay. Which is, yeah, that's fine, but it's not what we pay you for.

Yeah, exactly.

And entrepreneurs generally won't invest in something unless it contains some aspect. There's a brilliant investor in Silicon Valley who goes, I basically now do not invest in a business unless it contains one component that at first face seems slightly silly. Mm. And so anyway, Will Guidara, 11 Madison Park, number 50 restaurant in the world, San Pellegrino Awards, wants to get to number 1. Don't know why, to be honest. If I'm number 50, I'd just go, basically, that'll do, you know? But there we go. I'm not Will. Okay. He takes his whole team out to the number 1 restaurant in the world, another Michelin-starred restaurant, I think also in New York, if I remember rightly. And everybody starts making lists of what they do really well so they can copy them. Will goes, "Not interested in any of that." He goes, "They're already doing it, so what's the point?" All we're doing is doing something that nobody will notice because they've come across it. So let's ask a different question. We've just been to the best restaurant in the world. What didn't they do well? Now, obviously, it's not very easy to come up with things that are shit about a really, really good restaurant. Nassim Taleb and I went to a Michelin 3-star restaurant once, and the bread was cold. That was the weirdest thing. Okay. Right.

Yeah.

But I don't think that's normal. Anyway, they come up with two things. Okay. The coffee was nothing special. And because they'd taken a lot of chefs along. One thing about chefs, they're totally honest about their preferences. Okay. There's no pretension with chefs. If a really good chef— do you remember that chef who said the best pizza you could buy was the American Hot at Pizza Express? They get sort of— you know, it's a wonderful thing on YouTube. Yeah, I always go, I love this guy because it's just everybody else is thinking, I need to come up with a really kind of an answer that makes me look really sophisticated, and this guy just tells the fucking truth. Yeah, it's kind of true. It's a bit like the best cheese, cheddar, right? Okay, let's not fart around with all this fucking foreign stuff, okay? Let's be honest, if you're on a desert island, you could only have one type of cheese, Cheddar, right?

Okay.

Anyway, so this guy, the chefs, a lot of them drink beer, not wine, cuz being honest people, they think that beer's a great drink and wine's a load of wank. Mm-hmm. Not always true, but there's an element to that. Okay. And so the beer was disappointing, coffee was disappointing. So he goes back to his own restaurant and says, right, you guy who's a coffee nut, you are now the coffee sommelier and your job is to make this the best coffee experience I don't know if he included tea, but it's the United States, so you wouldn't have to. Best coffee and tea experience, let's say, in any restaurant in the US. Okay. So, you know, you actually go, you know, I'd like coffee, please. Do you have any roast preference? You know, et cetera. And the other guy who's a thick guy from the kitchens, who's a total craft IPA or craft ale nut, is the beer sommelier. And so not many people in a Michelin 3-star restaurant are for beer, but they're just expecting nothing. They expect, yeah, we got this on draft and we got this in a can. And instead they get this guy coming over with suggested food pairings going, look, if you're having the halibut, you know, this particularly grapefruit-flavored IPA from the Moscow River or whatever is utterly fantastic, right?

Yeah.

Now, okay, it's only 20% of people, but mind fucking blown, right? It's true. Right? Now, I think that's reverse benchmarking. I think that's what the Moxie does. Have you ever stayed in a Moxie hotel?

I have, yeah.

What do you think?

Yeah, I feel like I, I feel like there were no staff in the one I stayed in.

Well, downstairs there's no room service. Yeah, there's no laundry service. The rooms are small. They're good rooms. They've got a good telly, they've got good Wi-Fi. The ground floor, on the other hand, you have a 24-hour barista there. You check in at the bar, there's a whole load of, you know, their whole load of board games kicking around. Even after you've checked out, you basically feel you can hang out there and get on with a bit of work or even hold a meeting without feeling like a dick. So it's a reversal of the hotel, which is let's ignore the rooms, downsize the rooms Don't stay there for a week, by the way. The Moxie wouldn't suggest you stay there for a week. Okay. But if you're only staying for 1 or 2 nights in Cannes this year, I went and stayed in the Moxie above because it was €250 a night, which, by the way, sounds a lot, but compared to the price down in Cannes, yeah, it was a fucking bargain. And I spent the money on hiring a Cadillac Lyriq, electric Cadillac, which you can't get in the UK anymore. Oh, well, yet they're planning to introduce it. 'Cause American cars, the only way you can get decent air conditioning in France, 'cause I don't know what it is about the French, but they suck at air con. I mean, they really fucking suck ass when it comes to HVAC, okay? I think it's partly 'cause they're cheap and partly 'cause they're frightened of drafts. The French are brought up to go, if you sit in a cold breeze, you're gonna die or get a crise de froid, something like this. Bollocks, anyway. But anyway. But the Moxie is great because actually the people there are genuinely cool and French because it's out of town. And the vibe is just really pleasant because you can hang out there even after you've checked out and you're made to feel completely at home. The ground floor is like a kind of cooler WeWork, basically. Yeah. Solvent WeWork. And so anyway, that's reverse benchmarking. Apple's reverse benchmarking, right? Everybody was concentrating on technological capability of the devices. And Steve said, okay, we need to be up there, but what you've all completely ignored is aesthetics and usability. So we're going to actually basically sort of sub-match you on all the things all you nerds have been competing for, like RAM and processing speed and bullshit like that. And we're going to basically knock you out of the park on the aesthetics and the usability. I think the really decisive products there were things like the iMac and actually the iPod.

The iPod, yeah.

Were the actual game changers. That was the second coming, really.

I mean, the iPod versus— at the time, the Walkman. It just was the sexiest experience ever, wasn't it?

Here's an idea, right? Okay, someone can nick this. I want a car rental company at big airports. Don't care about small airports because renting a car from a small airport is fine. Car rental company, big airport. The deal is I pay you an extra— don't rip me off on all the fucking collision damage waiver and the things. I want to pay you an extra 60 quid and someone meets me at the fucking arrivals gate with the key, walks me to the car, tells me how it works, 'Okay, this is 10 minutes, I'll happily pay, you know, 10-15 minutes, I'll happily pay 60 quid for that,' because that's the worst part of fucking car hire, right? It's finding your car, you know, standing at a fucking desk while someone types War and Peace, despite the fact that you've input all your fucking license plate details in advance, okay? And then walking in baking heat with heavy luggage through a completely unnavigable car park. Often, by the way, not their fault, which is the airport determines the signage, not the car hire company. And so quite often the car hire company is driven practically insane because they go, can you please put up a sign here that says Avis? And it takes like 2 years for them to get it through airport fucking bureaucracy. So, but anyway, my point is I would willingly pay for that service because that takes the worst part of car hire. Now you pay for a £60 taxi from Gatwick, someone meets you at the fucking gate and walks you to the car.

Yeah.

Okay. If I'm hiring a car for 10 days and paying you £700, why don't I at least get that level of service? And it's partly the reason you don't get that level of service, because of fucking tech people who regard it as absolutely unthinkable to develop a product or service which actually involves carbon-based life forms adding value in any shape or form. Yeah. Now, if I, if I went to a fucking load of investors and said, I've got this car hire robot which meets you at the gate and you follow it to the fucking car. Right. I'm sure I get a load of investors if I suggested a business that actually involved employing human beings and the performance of a useful function. Forget about it, because the whole investment world has been captured by human-hating autistic nerds. But there we go.

My parents have decent money as they're retiring, and they hate— it's not that they hate technology. They hate the idea that the human experience has been taken out of hotels and taken out of so much.

No, and actually, I think— by the way, I think there are two— the weird thing about hotels, I think the opposite of a good idea is another good idea. There are two ways you can run a hotel. Totally no touch, which is you use your mobile phone to open the door. Yeah. Okay. And very frequent users like that. Okay. Because if you stay in a hotel 50 times a year, the last thing you want is to queue at check-in for the 17th time. The alternative is very high touch, where they take you to the room and explain how the bloody TV works. But I completely agree with you, by the way, which is the wealthiest segment of the population, whether they deserve to be the wealthiest segment of the population, is a different question. But the wealthiest segment of the population, which is the pension-owning, property-owning, paid-off-a-mortgage, kids-left-home, parents-just-died segment of the population, right, um, is very underserved by all this.

Totally.

Now, in fairness, I'll give my dad a lot of credit. He died last year, he was 93. And up until his 80s, he was selling books on Amazon. He became actually basically an extraordinarily enthusiastic internet user.

Amazing.

In his 80s. He was the person who first told me about Google. You believe it? Okay. So he was at the time, I suppose he would've been in his late 70s, early 80s. Yeah, late 70s, mid-70s.

Innovator.

But he was absolutely fantastic. But by the time he got to about 88, he said, I can't cope with this shit anymore. Once there's two-factor authentication, I'm fucking giving up. It ruined everything. It ruined everything, didn't it? Okay. And that's one of those cases which we have to be really alert to, this business of two-factor authentication. I like to— when I get home, I put my mobile phone in a different room. I don't want any of that fucking shit coming in and beeping at me, right? I'm home now. Okay. I grew up in the '80s where when you left the office, no one could fucking get a hold of you at all. Right? And now I have to move to this, you know, in later in life when I should be taking it easy. I have things going beep and ping 24 hours a day. Fuck that, right? So I leave my phone in a different room. Every time I then go online and want to accomplish anything, I've got to wander back into the room where my phone is charging and bloody well put in Optiverify or some goddamn text code. Yeah, like, I'm fucking sick of it.

Yeah.

Can nobody come up with a better solution to fucking authentication, for fuck's sake? Okay, um, uh, you know, for crying out loud. Okay, yeah, um, but also it's a problem because at the level of the individual actor, the individual online retailer or the individual card payer, it's a rational security procedure, which makes sense. At the category level, it's actually making just like those cookies, it's making the— by the way, after Brexit, Dominic Cummings made the point that the whole cookie click thing.

Yeah.

Okay. Is European Union legislation. We've been out of the fucking European Union since 2016. Okay. Can we not at least get rid of that fucking bullshit? Right. Okay. Where every website is rendered basically— now what I like to do is I delete all my cookies about every 2 months. I go, okay, the short-term ones are useful, I don't want any long— every time I do that, the web becomes unusable for 2 weeks because every goddamn site demands that I click the same authorization thing all over again. Okay, um, I mean, can no— I mean, Cummings himself was rendered absolutely speechless at this because he said if there's I mean, this is an extraordinary— across the entire category of use of the platform, the level of the individual actor, what they're doing is legally necessary, or in the case of authentication, it makes rational sense. The problem they're not spotting is that it's one of those things that when everybody does it, OK, you've created actually a fundamental sludge in the entire experience of the whole medium. It's a bit like— I'm very, very conscious of the fact that we should legislate much more for dodgy subscriptions, which are difficult to cancel. Because my argument is there are legitimate actors in the subscription space who will now find it impossible to sell subscriptions because the consumer is once bitten, twice shy. There's actually a whole academic paper about this, which is, I'm going to assume the worst here and assume this is one of those subscriptions which is easy to sign up to, but an absolute toss to actually cancel. Mm-hmm. And the reason you actually need regulation in those fields, it's very similar to London taxis, okay? You would only need 4% of London taxi drivers to be dodgy for the entire business to collapse, okay? If you imagine, okay, if you imagine that you shopped on Amazon and 1 in 20 things didn't arrive. Now, if you're being completely economically rational, you'd say, well, if Amazon was 7% cheaper, but 5% of the things didn't arrive, I'm still quit. No. Human trust does not work like that. It isn't. It's much, much more binary. Okay? There's a wonderful Caribbean proverb that says, trust grows at the speed of a coconut tree and falls at the speed of a coconut. Okay? And the point I'm making there is there are lots and lots of markets where you only need a percentage of bad actors or a percentage of bad experiences, and you don't just kill the individual brand, you kill the whole category. And that's why you need regulation of black cab drivers to a very high degree, because the system only works if the consumer can basically assume, as I did when I was like a dad, I'm still a dad, but when my kids were 10, I could put both of them into a car driven by a total stranger and say, "Take these small sprogs to this place," and I wouldn't have to give it a second thought. You only need, you know, tiny percentage of bad apples. Yeah. And you can destroy the whole category.

I wanna go back to that example you gave of the, I dunno if you just came up with that, but it was quite, I had a really bad rental car experience recently. And so I wanna come back to that thinking of how an entrepreneur or a marketer tries intentionally to think non-rationally about the improvement of their business.

It's often can be post-rationalised, but it can't be pre-rationalised. In other words, it isn't the product of a rational, sequential, data-driven set of information. And this is Roger L. Martin, my own personal Svengalian guru, who's a Canadian business writer. He was the dean of the Rotman School in Toronto, big advisor to Procter Gamble. In my opinion, he's the heir to, the pupil of and the heir to Peter Drucker in marketing speak. And I think if we made reading Roger Martin compulsory in the UK, in the UK business community. We put 5% on GDP.

Go on everyone, get the book.

And one of his books is, by the way, A New Way to Think: Overcoming America's Obsession with Economic Efficiency, because he argues that the pursuit of efficiency is very rarely argued against because it seems so logical.

Yeah.

But it often actually is driven by informational asymmetries. So you're optimizing for the past rather than for the future. You're underinvesting in exploration and overinvesting in exploitation and so on and so forth. But the interesting thing there is that when I'm talking about being non-rational, you can't be completely rational about the future, as Martin says, because there's no data about the future. All big data comes from the same place, the past. Consequently, there are cases where you can extrapolate or you may be able to make some sort of forward predictions, although those are dangerous actually in many cases. At some point, at some level, your approach to the future has to be experimental. And he sees three things. I would argue that humor is a fourth, by the way, that comedy and humor are fourth. Three sources of kind of creative strategizing, which are anomalies, analogies, and contradiction and trade-offs.

Okay.

So you either spot an anomaly and it's not normally a rigor— not normally a kind of robust data thing. It's just an anomaly. You spot something that's unusual. Mm-hmm. Then there's analogy, which is you look at a different category and transfer what they do into your category. It's a bit like the famous elevator pitch for Alien, which was Jaws in space.

Okay?

Yeah. In other words, you take something from one setting. By the way, you could take something quite easily from the hotel industry and apply it to the airline industry or the rail industry. Now, you'd think that the rail industry and the air industry are both in the transportation sector. But there are an awful lot of things they've discovered in one that took them years to translate or they've never translated to the other. Okay. You know, there are usually things. So that's analogy. And then the third one is take something that everybody assumes is a trade-off and prove that it isn't.

What does that mean?

So we tend to assume that you can have either or. And sometimes there's an ingenious way of having both. Mm-hmm. And to do so requires a kind of creative mindset, or at least an abundance mindset, not a scarcity mindset. Now, I've just come up with one of those things which occurs to me, that you could reduce the accident rate in London, reduce the maximum speed of cars traveling in London without any significant increase in journey time. You think that's impossible, right? If cars are going slower, journeys are going to take longer.

Yeah.

Actually, a bit, right? But here's the thing. The reason your journeys through London in a car are so fucking slow is only a tiny bit to do with whether you're going at 20 or 30 miles an hour. Mm-hmm. Traffic lights and traffic jams are actually the main source of delay. What's weird about this psychologically is I've been guilty of this myself. I sit at a traffic light for 4 minutes and I go, well, this is fine. I'm just at a traffic light. It's red. I'm used to this. I've been doing this for 30 years, 35 years of driving, right? No particular surprise here. Sit at a traffic light. I'm not angry, am I? I'm not going, "This is fucking state intervention," right? Actually, if we're all driving at 20 miles an hour and not 30 miles an hour, you can replace a lot of traffic lights with mini roundabouts. And mini roundabouts, this is a Woodrow Wilson quote, "The highest form of efficiency is the voluntary cooperation of free people." A mini roundabout has what you might call— I think it's not called homeostasis. Maybe it is. I don't know. But it's a self-regulating mechanism. You never have to stop at a mini roundabout unless there's a reason, which is another car using the mini roundabout first. Quite frequently, you have to stop at traffic lights for no reason at all because they're red, and then nobody goes through, or the twat who pressed the pedestrian crossing button has already crossed, leaving you to sit there like a dickhead. By the way, someone ought to really punish that. You know, I think if you're going to press the fucking button, okay, you wait for the green man. Anyway, the point I'm making is it is actually possible. Now, just to be clear, it drives me nuts driving at 20 because I'm used to waiting at traffic lights. I've been doing that for 35 years. Driving down the South Circular at 20, you must do the same thing because you're that part of London, right? And there's stretches of the South Circular, you go, this is fucking funereal. This is just so tedious. Like it's 11 at night. Yeah, now just a few caveats. We should not give taxi drivers penalty points on their license for going 25 in a 20 limit, okay? They're professional drivers, they drive all the time, they're driving on unfamiliar routes all the time. That isn't fair, and particularly because it's a total fucking mindfuck as to whether it's 20 or 30 anyway, okay? So we should not use this. Secondly, I'm not sure you should actually get 3 penalty points for driving at fucking 24 at 11 o'clock at night. I think we should mediate this. Maybe the limit should be 25. We can debate all those things. But nonetheless, it's worth noting that this should bring a sizable reduction in both road accidents involving pedestrians and cyclists and significant injury to pedestrians. We'd always assume that the downside is, but journey time is going to become longer. Well, actually, if you use the reduced speed to increase the homeostasis solution through mini roundabouts and reduce the number of extremely costly dirigeants. I teased Richard Thaler, who's got the Nobel Prize for Economics about this, because Americans can't really cope with roundabouts. And I said, I don't want to be rude, Mr. Thaler, but America is supposed to be the land of the free, but you have the state telling you when you can drive or when you have to stop. We have the roundabout, which is a beautiful, self-regulating, self-organizing emergent system.

I was just, just in the States and my— with my brother who lives there, and all we kept saying is this should be a roundabout. Of course it should be around.

Yeah, I know. No, no, I know. I think there's one state where they have a lot of them. Is it Massachusetts? I don't know, I can't remember.

Sure.

Yeah, but no, no, I mean, they don't— I mean, you're looking there, what the fuck is this? They do have one good thing, which is that thing late at night where you have the flashing amber versus flashing red.

Yeah, and you can turn right on red.

And you can turn right on red except in New York City, I think. Yeah, yeah. Is that right? Yeah, it is, I think. Yeah. But you might actually be able to achieve a trade-off there.

Yeah.

And so in other words, we tend to assume trade-offs because it's a nice either-or solution and creates a simple mathematical optimization problem between the two extremes. Okay. But actually, creatively, you can— okay, I'll give you the perfect example. Of reframing the value of something psychologically. Psychologically, a lot of advertising takes a trade-off and redeems it. We're number 2, so we try harder. That's Avis. Okay. Reassuringly expensive. Stella Artois. You take a negative and explain it's actually a benefit. Expensive but good. Okay. Small but cares. Right. And psychologically, you can resolve trade-offs like that. In advertising slogans, Guinness, good things come to those who wait. It's a much better slogan than it's bastard slow to pour. Right? And I think there's a beautiful example which just astounded me because I was on the plane and it happened, and it's happened to me once since. So I don't know whether this has gone a bit viral. So I'm on an EasyJet plane, it lands at Gatwick, and it's about 11 o'clock at night and the engines wind down and there's no airbridge. We're like parked on the apron somewhere. And you can see some sort of fairly shitty little steps being prepared. And everybody on the plane has the same thought. Oh, fuck, it's going to be a bus. And the pilot comes on over the air and says, I've got some bad news and some good news. Bad news is I haven't been able to get you an airbridge today. But the good news is the bus will take you all the way to passport control, so you won't have far to walk with your bags.

Perfect.

Now, that's just— that doesn't work at London City Airport. Okay. Really? Because obviously London City Airport But at a large airport, what happened is we went from going, "Fucking hell, we're on a bus. This is so shit," to, "Think of all the distance I don't have to walk." And when we were dropped off right by passport control, we didn't just go, "Oh, that's a bit of luck." We went, "Oh, that's actually a benefit of the bus." Because you'd moved our attention. So we saw the bus, we'd previously seen the bus as an inconvenience, and now we saw it as a conveyance. It was actually removing a whole heap of schlepping Because you've been on a plane, it's 11 o'clock at night, the last thing you want is a 2-mile walk. And so we were almost grateful for the bus because its function had been reframed in our minds. And my point of view is you can't generally resolve trade-offs in physics or chemistry, although you can sometimes. I mean, catalysts and things like that are an example of that. But mental catalysts, i.e., things which make you go, "I used to hate this, but now I think about it differently. I think it's great." You can do those all over the place. Well, since they create huge value at minimal cost, why aren't we trying to do it more often?

Yeah. I think that entrepreneurship these days is so competitive in its, its—

Yeah.

When I first started entrepreneurship, I feel like a good idea was kind of enough, whereas now everything moves so quick that I feel like when I rewatched your talk on perception versus, you know, the value. I remember thinking, I wonder how many products and services nowadays are competing for the 1 or 2%, but are just forgetting that you can present the same information in a different way.

I think there are, I mean, personally, okay, first of all, innovation and marketing to me are actually the same thing. I think it's an unhelpful distinction. I think you should judge the efficacy of your marketing the same way you measure the efficacy of your innovation. I don't think you should do this stupid fucking performance marketing thing of going, Okay, this quarter you spend X and you brought in X plus 7%. Whoop-de-fucking-doo. Okay? Because that's setting the ambition bar far too low. What you should be doing is with innovation, imagine a pharmaceutical company which went around its labs going, which blockbuster drugs did you invent this month? None. Oh, you're fired. Right? I think we should look at marketing in the same way we look at innovation, which is every now and then it produces something of enduring recurring value. And you should be able to claim the credit for inventions you had in the previous quarter. Okay. We had an idea for an airline early in the days of the behavioral science practice, which to this day makes them £10 million a year in incremental high-margin revenue. It was a UX idea, a web design idea. I later went into the airline and said, "The UX people should be the highest-paid people in the building," which I still believe because they can make you £10 million in an afternoon, which lasts forever. Right? And they're gonna be making that £10 million as long as they continue with this new unit.

What is the change?

I can't tell you. Now, do you know what we got paid for that? £25,000.

Yeah. Okay.

It cost them £25,000. Do the following year, do they say, well, we're gonna put £1 million into you to thank you for the good idea that is still— This is like saying to J.K. Rowling, yeah, you can have royalties, but only on the first edition. Right? And so marketing is treated in this unbelievable penny-pinching way, which if you applied that same approach to R&D, you'd never do. Do shit. The majority of people working in pharmaceutical research spend their entire working lives without ever working on a drug that makes it into market. Now, I'm not suggesting marketing should be given those long time horizons, but I'm saying somewhere between that and a quarter would be nice, right?

Yeah. But it's also why small companies can beat big companies.

Yes, that's absolutely true, because they're willing to do things that you could never get approved by a big company's general finance function.

And the culture of innovation isn't that same.

Very good question for an entrepreneur. Could I get this approved in a large company? No. Let's do it.

Well, exactly.

Okay?

Yeah.

And actually, what you can get approved in a large company, family-owned companies are totally different here because they have a different timeframe. And because they don't have shareholders, they're focused on the customer, not on the shareholder. The shareholder is a complete distraction in the pursuance of a reasonable business. And the shareholder value movement. By the way, which fucking shareholder? Over what time frame? Yeah, right. Secondly, do you mean the shareholder or do you mean the shareholder? Because the shareholder probably has a reasonably long time frame. The share— the shareholder is desperate to justify their own investment strategy week by week.

Yeah.

Okay. Back in the 1960s, the reason America grew well in the 1960s is the majority of shares were owned by private individuals. Who just thought IBM looks a reasonably good company. They didn't have to present to their family every fucking quarter as to why they were keeping the shares. And so family-owned companies innovate. 4 out of the 5 gold winners at the IPA Advertising Effectiveness Awards, I'll list them, roll of honor. McCain, family-owned Canadian company. Lathwaite's, British family-owned wine company. Specsavers, family-owned franchise, but chain of opticians, family-owned. The fourth one was Yorkshire Tea, family-owned branch of Betty's Tea Rooms. Right?

Yeah.

Fifth one was Guinness. Okay. Those are the five Advertising Effectiveness Award winners. Four of them are family-owned businesses. Wow. And, you know, if you go to the— you go to the— you go to Texas, and I kept coming across things. Have you ever been to Texas? I haven't. Okay, go. It's like California was in the '90s. It's just basically the most dynamic, inventive, fantastic economy. Okay? Everything's just happening, but it's happening fast. That's the difference. Okay? And you keep coming across these places. There's a place called H-E-B, retail chain, so good that Walmart didn't bother to compete with them. Okay? Family-owned. Buc-ee's, extraordinarily eccentric chain of monster gas stations, which have turned gas stations into a destination. The psychology behind it is absolutely ingenious. Their entire business model was basically based on the human bladder. Okay, so the logic is, why do people stop at a gas station? Well, actually, it's not really to get gas, it's because someone needs it. Yeah. They then made the decision that that decision was probably female-driven, as more often than male. They said the only way we can, um, the only way we can actually get more customers than any other gas station, rather than just— is to make people hold on longer because they're willing to hold on for an extra few miles to go to a better gas station. The way we do this, if it's a female target audience, is— I'm totally oversimplifying— the guy called Beaver, I can't remember, his Christian name is actually Beaver, and the logo of Buc-ee's, his real Christian name isn't Beaver, but he's always known as Beaver. But the logo of Buc-ee's is a massive, great beaver. It's fantastic. Okay, so, okay, how do we get women to prefer our gas station to other gas stations? Well, we're going to have the best restrooms in the business because everybody else's restrooms are disgusting. So the female person in the car, more likely than the male, but possibly the male, will hold on for an extra 20, 30 miles if there's a better gas station restroom ahead. In order to have 24-hour cleaning in the gas station, we've got to be really big because we can't afford the— otherwise the economics don't make sense. So we're going to have barbecue. We're going to sell this. We're going to sell deer corn. We're going to have— You know, absolutely massive, you know, retail thing. And then they did a really radical thing, which is everybody else was obsessed with selling gas to trucks. They basically don't allow trucks to use Buc-ee's because they said, actually, the presence of massive great trucks creates a kind of family unfriendly, female unfriendly environment. Mm. So we're just gonna sell to people in cars.

Mm.

There are literally 100 gas stations and like 25 rapid electric car charging stations at every one. The posters will say, "Bucky's 126 miles, you can hold on." Okay? So it's basically the complete— it's a perfect piece of reverse benchmarking. There's a thing called TRIZ, which is in the field of engineering, which is a Russian Soviet era kind of what you might call a categorization for innovation. They looked at British and American and Western patents and they reverse engineered them and said, "There are these common characteristics." I think it's possible. I don't think I'm up to it on my own, but I think as a collective effort, we could produce a triv for marketing psychology. Here are 27 things which basically are common shared characteristics of 90% of really innovative marketing ideas. I genuinely, I think that's possible. I don't think it'll cover the whole waterfront. I don't think Tris, I think Tris said the same thing, a guy called Altschuller, I think, who basically then said to Stalin, I've got this great idea, we could be better at innovating. And his reward was like 5 years in the Gulag. Okay. But I think it's possible to do a kind of marketing tris.

Yeah.

And I think if you look at Buc-ee's, you look at those family-owned companies, McCain, what a brilliant advertiser, right? There's no way they'd do those if they had some wankstain shareholder fucking analyst meeting every quarter.

They have to present on their numbers and as a result, they'll never They'll never tear up existing profits for the future growth.

All the really smart people think the shareholder value movement is utterly fucking stupid. Right. Okay. You've got John Kay, you've got Roger L. Martin, who I mentioned. Most people in business think it's also turned businesses into basically the most prized skill in a business is like your ability at quarterly forecasting or some bullshit like that. Okay. And it's distracted businesses from their customers, which are the one proper focus of business, because those are the people who give you fucking money. Yeah, right. Okay. The other people are just basically lending you money with menaces. Right. Hmm. And it's a completely moronic, utterly moronic business doctrine which has done almost unimaginable harm. And by the way, one of the reasons why I think innovation is so important to my family-owned businesses is so important. And a few other businesses like purpose-driven or possibly, what are they called, B Corp businesses are vitally important, is actually because the shareholder value movement has created companies that are so moronic that it's left the field open for anybody else.

It's a really great time to be alive as an entrepreneur.

Come to think of it, actually Tata is family-owned, isn't it? So Jaguar Land Rover.

Yeah.

Brave marketing move. I heartily approve. I know I'm in a minority.

Very much minority.

My argument there is that this— it's all very well saying this is classic brand management, which I approve of a lot of the time if you're an established and successful brand. Okay. You're Louis Vuitton or something. Okay. You don't suddenly reinvent yourself around something. Mm-hmm. This is actually what you might call electrification has created total, total disruption and disturbance, kind of, you know, in the entire brand hierarchy of the automotive industry. All right. So have you gone electric yourself? Mm-hmm. Okay, let's talk about— actually, fuck this. Let's just talk about cars for a bit.

Well, I worked for Aston Martin Bugatti as my agency.

Interesting. Yeah.

And Louis Vuitton.

So actually, Aston Martin, I think, what you might call the British Bentley, Aston Martin, Jaguar GT car, Yeah, can actually electrify much more easily, I suspect, than something like Ferrari, can't it? Yeah, it can, because it was always about something which electric cars do really quite well, which is the grand tourer thing. Okay, there are certain car brands, you know, where it's more problematic, I think, probably. Yeah, but I mean, you probably contemplated buying a, um, uh, you might have got to play by a Korean car, right? Which you wouldn't have done 10 years ago.

Exactly.

Okay. So there are people who are trading from a Skoda, from a, from an Audi to a Skoda Enyaq. Okay. So what I'm saying is that the normal, what you might call— I mean, if you think about it, it's particularly terrifying for the German car industry, whose great moat was always their ability in powertrain. Okay. I would argue that the great Jaguar Land Rover thing inarguably is their interiors.

Mm.

You know, I think their design and aesthetic of those things is frankly superior to anything else out there. Okay. You know, in that it, you know, it actually, you know, seeing what, you know, the new Defender, for example, just brings joy to your heart.

Yeah.

Even if it's some other bastards.

Yeah.

You know, they're actually a contribution to the beautification of the environment and So actually, it's really, really interesting that you can't afford then effectively as Jaguar to say, we're going to have the same target audience. By the way, it's not like all these people who claim to love the brand were buying the fucking thing beforehand, is it? Okay. Right.

I think it's brave of them in a, in a world where things are changing so rapidly as an existing company to make a change. I feel like technology enables new businesses. You can't build certain businesses now, which you will be able to build in 5 years. And 5 years ago, you couldn't build the businesses you're building now. And so it's amazing that an existing brand—

but the heritage, if you think about it, of that brand is obviously super, superb engineering, breakthrough cars like the XK120, the E-Type, etc. I'd try and include the XJS in that, you know, sympathetically. And of course, the XJ, OK. It was also aesthetics. I mean, what was it? Enzo Ferrari said the E-Type was the most beautiful car ever designed. That's pretty high praise from Enzo. And by the way, I think that's OK. Because if you think about it, we're entering this very strange world where— and I've often wondered, should somebody buy something like Gordon Keeble or one of those kind of— great car brands? Because will we be braver in terms of the brands we buy simply because reliability and performance are now a given? So what did you go for? Or do you not want to tell the—

I know I bought— I got a Tesla in the end.

So which one?

I got the, the X, the bigger one, with the gullwings. Yeah. No, no, I didn't get—

Yes, yes, yes, yes. Yeah.

And it's the best technology I've ever used. I mean, I don't know what I think—

I completely agree. Yeah.

I don't know what I think about the brand or the—

That's a really interesting thing, the psychology of technological adoption. You young people forget this, but virtually every single— so I've told this story before, but in 1989, I used a mobile phone on Oxford Street. Two people shouted abuse at me from passing cars. That was a massive great brick. I hadn't instigated the call because it was actually embarrassing to use a mobile phone in public in 1989. But when someone bloody rang me and I had to answer, two people in taxis pushed down, because they weren't electric then, pushed down the rear window and went, "Wanker." Right? Okay. And there was a whole— we forget this because when we concertina past history, we tend to think there weren't mobile phones, then they were invented and everybody bought one. Okay? Actually, flat-screen TVs, there's a 10-year thing. Actually, the iPhone didn't sell spectacularly to begin with. It's called the Bass Diffusion Curve. It's a sigmoid adoption curve. It applies to everything. And what's so funny about humans is that they don't like being told that something new is better than something they've already done. Okay? So you get people who go in air fryers. What's, you know, look, the air fryer's just a fucking brilliant thing. Stop, you know, stop fucking pushing back. Okay? The classic one with Brits, which I always give as an example, is literally— I don't actually— Germans as well, okay? The hostility to automatic transmission, okay? Which is back in my childhood. I couldn't possibly have an automatic, I lose the sense of control, you know, all that sort of stuff, right? First of all, actually, when you drive an automatic, weirdly, you learn to control the gear it's in because you develop this intimate bond with the accelerator pedal, and you can get it to kick down and, you know, do all the other things by actually, you know, by sort of seductive maneuvers with your right foot. But nobody who bought an automatic ever went back.

Yeah.

Nobody who got an air fryer ever abandoned it. No one who got, you know, mattress toppers. I've got this whole list of things. And electric cars are the same. I don't think anybody— it's ultimately the marketing challenge is one of speed of adoption, not adoption. And that's simply because it's one of those things which is once you go there— I've got a Japanese toilet. Have you done that? No, never go back. Okay, I mean, dry wiping is fucking, you know, barbaric, right? And there are these various technologies. Yeah, I don't know, I mean, ridiculous. Okay, I mean, the whole of the Middle Eastern world has a bum gun, you know. The Japanese have a proper, you know, bidet toilet. It was actually invented by the Swiss, by Geberit, by the way, not by the Japanese. But we always call them Japanese toilets because Toto seemed to dominate the whole thing. But the fact that wealthy— a friend of mine sent me the prospectus to One Hyde Park where the apartments cost $120 million or something, right? And he pointed out, he said, you still have to wipe your own ass. Now, given that it's probably not going to be a British buyer for that apartment, yeah, how on earth could you put bathrooms into a $100 million apartment where you still have to wipe your own ass? I mean, what sort of nonsensical fucking 19th century crap Japanese toilets marketed well? I don't know that much about the— okay, well, um, I've actually got the Geberit, um, the fairly basic— I didn't go for the front bottom attachment, um, which is optional, and I didn't go for the heated seat. I went for something pretty basic, but it's basically a thing— a proboscis comes out, cleans your ass for you, uh, with, uh, water that's pleasantly at kind of body temperature, and you just remain seated after you've done your business and press the button to the side, or Or you can use the remote control if you put it on your phone.

God, I'm missing out.

Oh no, no, no, you know. Now interestingly, there's technology which I'm really intrigued by— Eight Sleep. By the way, I'm not being paid to plug this, although if they want to send me one for free, of course I'm perfectly happy. Have you come across this Eight Sleep thing? So it's the thing you put over your mattress in your bed, and the most sophisticated one, it basically monitors your sleep. The more sophisticated one, if you start snoring, will lift you up a bit to stop you And it keeps you cool if you're hot and warms you up if you're— so it's basically, if you think it's an electric blanket that went to university, basically is the way to think about it. Now, I know it's a few thousand quid. It strikes me as pretty wacko expensive.

Premium. Yeah.

But A, it occurred to me it's cheaper than air conditioning in your bedroom, right?

Yeah.

Okay. Two, it might pay for itself because I don't need to heat the bedroom very much anymore. I can just buy the thing that heats the bed. I don't know if you know this, Germans tend to sleep in very cold rooms. They wrap up warm, but they leave the windows open because they believe it's healthy.

Is it healthy?

I don't know, to be honest. But it might be conceivably better for you to sleep in a cool room in a warm bed. I don't know the answer to that, actually. But all I know about this Eight Sleep thing is Chris Williamson, Jimmy Carr, everybody you speak to, and it's one of those things a bit like the air fryer 5 years ago, where if you mention it, people go all swivel-eyed and evangelical. And that might be one of those things which is, once you have it, you don't go back.

Right.

Um, and by the way, I'm not being paid to say this. Another one, a Quooker tap. Have you got one of those?

I do have one of those.

Fucking—

But I have it because I wanted sparkling water, cold sparkling water.

Yeah, it pays for itself actually, doesn't it?

And it's a kettle.

And it's a kettle.

And filtered water.

And it's cold filtered water. So I always fill my Nespresso machine from the filtered water.

It is a ridiculous purchase. However, after a while you think to yourself, I don't know if I could go back.

No, I agree. It'd be like the fucking Stone Age for me.

I'd need a kettle. I would need some sort of cooling device for my filtered water. And then I would need bottles of sparkling water.

So no, I mean, I think, by the way, also they're interesting because I think they're a family-owned company.

Really?

OK. Actually, I'm going to create a directory of family-owned companies so people can just patronise them.

You should. It's something that I think—

You could live entirely off family-owned companies. I think that—

more entrepreneurs should study companies that don't have to report on profits so rigorously.

What is it that every entrepreneur says the best moment of their life is when they finally pay off their debts, isn't it? So they don't have to justify themselves to anybody else anymore.

Yeah.

And since the reason you became an entrepreneur was presumably because of some sense of autonomy. But the great advantage of an entrepreneur is because you don't have to justify every decision to somebody else using foe rationality or big data or some other bullshit. You are free to use tools of the human mind, which evolution has gifted to us, like intuition. And you're also free to experiment where you reasonably get to capture the gains of success without being punitively judged for the cost of failure. Whereas in most large organizations, Failure is punished. And actually, so just to be clear, okay, there's an idea which I loved because I discovered it by accident. I'm booking a room at the Intercontinental. I'm a big fan of the Intercontinental because it's always an 8, right? The Intercontinental Hotel.

Is it an 8?

It's like 5. Yeah, yeah. No, you know, I don't want that weird shit going on, but it always does what it does pretty well. So yeah, I'm staying for 2 nights. Anyway, I'm booking a room at the Intercontinental in Houston. And good tip, by the way, to avoid this car hassle, what you try and do is when you arrive at a place, particularly in the US, get a taxi to your hotel and then book a rental car the next day from a downtown location, which is actually a vastly better experience than trying to pick up the car at the airport when you've just spent an hour and a half going through Homeland Security. Don't tip them, by the way. I know you should tip everybody in America, but not them. I was trying to start a rumor that you should tip Homeland Security. You see, you see what I mean? Just to get a load of people arrested. But I realized it'd be malicious. Um, uh, but anyway, that's a good hit. But anyway, I'm staying there and I'm choosing the room, and normally the room is like basic, you know, whatever it is. In America, you often get a room with 2 double beds or 2 queen beds. What is it, deluxe junior suite? And they have these 2 other categories of room, which are pool access and gym access. They're just rooms that are really close to the pool, or rooms that are Now, those rooms always existed. All they've done is given them a new designator, which means I'll pay $20 a night more for them. The pool, not the fucking gym. I'm on holiday, for crying out loud, right? But I'll pay $20, $30 to be either with a terrace facing the pool or a short walk from the pool, because I don't want to wander through the bloody hotel with a toweling robe on, as I said, looking like Jeffrey Epstein. So what's genius about that is someone has had that idea. Now that's worth, that's worth, I don't know, 100 million a year to the hotel industry, 200 million a year in terms of just going, hold on a second, rather than describing rooms by the rooms, let's get people to pay a premium for a location. Okay. Now that's money from nowhere. It's brilliant. Now the person who had that idea Are we paying them a million a year? No, we're not. It's a brilliant idea. It's literally a perfect case of alchemy where you're basically constructing value not by what something is, but how you describe it. Okay? Now, my point is that in a family-owned company, you get to keep the gains and you're held responsible for the losses. But quite a lot of this stuff is very asymmetrical because you make 3 losses, they cost you 10 units each. Maybe your fourth success, it's a bit like the drug industry or the film industry, maybe you hit 400, you know, on your 10th experiment. Okay. And if that 400, like that idea is a recurring idea, you need to be given credit for the recurring lifetime value of that idea. Mm-hmm. You don't need, whereas at the moment in marketing, all it means is you get to keep your job for the next quarter. Now that is not a symmetrical risk and reward model for marketers. Okay. Where basically if you do anything different or experimental, uh, if it fails, you get all the blame. If it succeeds, you get to claim a small amount of credit over a very short time period. That's not a realistic way to actually assess the value of marketing.

Bearing that in mind, you obviously have been in the marketing agency space, as have I. Where do you think that space is going now?

Oh Christ. Um, I think it's actually— unless it can find a new way to charge for what it does. Okay. I think it's doomed. And the reason is, I think any business is— I think it all went wrong. I think it's been disguising its bad business model for 20 years. Longer, actually, probably ever since they separated media from creative. A certain part of the rationale for the business, i.e., gains to scale, got lost. And the relative importance of media versus creative has become skewed. It was skewed in one direction to begin with. It's now skewed to the other direction. Okay. Fundamentally, however, I think the problem is that if you're paid by the hour, but you're a fat-tailed business, by which I mean 10% of what you do delivers 90% of the value. Which is basically true of most. You only realize this if you've been in marketing for 6 years. You basically realize that all this other stuff is just, yeah, it's kind of pissing in the Pacific. It's improving things a bit. It's justifying your existence. But every now and then, there was a guy on American Express, and I can't remember his name except it was Paul, and he moved down to Devon. And I realized years later that this guy had come up with an idea. He was a client, had come up with basically a direct marketing idea, which was 3 times as effective in terms of acquiring new card members. Than anything they'd done for the previous 5 years. And that's the kind of way marketing works, that somebody has one idea.

Yeah.

And it's— Bezos says this, he says, in baseball, the most you can hit in a single shot is a 4. In business, you can hit 120. Okay. And the problem with the advertising business is we're being paid by the hour and judged by the hour, and every unit of cost that we incur we're held responsible for. But we can't claim credit or any kind of value from what you might call the times you hit 27.

Yeah, from the enduring value.

The enduring value of an extraordinary idea, which may have only taken someone 10 minutes to actually conceive.

It's why I didn't like running an agency.

That's what you hated. A friend of mine said, that's why I got out of the agency business and got into venture capital.

Yeah.

Because he said, you basically, if you do something amazing, Now, if you're paid by the hour, right, fundamentally what that means is that the thing that makes you money is totally misaligned with the thing that actually creates value.

Yeah.

And any business where your incentives are fundamentally misaligned with your form of value creation, okay, is ultimately a business which is doomed to be incentivized into irrelevance. And so my argument would be, now, previously we had that system. We are paid on commission. You had media and creative in the same shop, right? If you came up with a really good long-running campaign, okay, you got 15% of the media spend on that campaign for as long as you were the agency of record. Okay? So doing those big out-of-the-park home runs makes sense, was commensurately rewarded.

Yeah.

Okay. I mean, there were cases where, you know, being honest, it was money for old rope because you'd come up with a pretty good idea and it ran for 7 years. And, you know, they'd ring up and say, we want to run the campaign again next year. And I don't want to— I'm not suggesting that media buying is merely making some phone calls, but you got paid a 7-figure sum for— but that was recompense for coming up with the idea in the first place and making it a long-running idea. Once you're paid by the hour and you can only— you are held responsible for every quantum unit of cost, but you can't lay claim to the value of anything you've done beyond a very narrow time frame. It's just a badly incentivized business.

I remember always thinking—

By the way, management consultants and lawyers make it work by a form of bullshit, which is the person's really paying for the partner. The partner is probably only 20% billable, but his 7-figure salary is justified by having a load of drones working 96 hours a week, being billed out at sort of £600 an hour. And effectively, it's a leverage game. So effectively, what you do is— that's why everything management consultancies do turns into a 700-page deck. To be honest, they'd be pretty happy if they could just buy the partner and 2 sidekicks. Yeah.

Just to justify.

Procurement would never allow you to pay £70,000 to chat to someone for a day. So what you do is you create it into this massive heap of basically, you know, of PowerPoint-led bullshit in order to effectively ramp up what the most senior person could earn, which they couldn't charge individually.

I think that became a lot of the problem with a lot of the agencies my friends and I ran, is that We were delivering amazing ideas every now and again.

Yeah.

That would changing businesses completely. We had obviously like our whole teams behind us.

And then procurement got in and you couldn't make money outta the other stuff to, to make it all worthwhile.

Next year.

Yeah, that's pretty much true.

Next year they're going, where is the next business changing idea? It's like, well, I haven't had one for 3 or 4 months, but the, the last one is still really going.

Well, just to give you an idea of how fat-tailed this is, David Ogilvy himself, in his autobiography or one of his books said, "In my entire working career, I only had 4 or 5 really big ideas." Now I think he's doing himself down there. Okay. And one of his big ideas was the culture he created at Ogilvy. One of the other big ideas were the books he wrote. Okay. I think he had about 10 or 15. But the stuff you do that really makes a difference is, as I said, this is what's called a fat-tail distribution where you can't discount the outliers. A thin-tailed distribution, you can discount the outliers because they're rare and don't make that much difference. In a fat-tailed distribution, it's the outliers that carry most of the freight. And so, I mean, procurement's also a problem, by the way, which I genuinely think done well, it's— just to be clear, I've got to be clear because my wife used to work in procurement. Just to be clear, done well, procurement is a strategic, highly creative, and very, very valuable discipline.

If done well.

If done well, which is a very, very big if.

Mm-hmm.

Okay. I have a fundamental problem with it, which is that it effectively makes it very difficult for a B2B company to be innovative because a genuinely innovative company will generally be spiky in terms of how it compares to its competition.

Mm-hmm.

And therefore by procurement turning something into a benchmarking exercise, okay, they'll say, we're not interested in your interesting idea because your interesting idea makes it difficult to compare your costs with the other 4 people bidding. And therefore, can you please merely put in a proposal for the same boring idea we've all had in the past?

Completely.

Now, I'll give you an idea of something which I think is killed by the procurement mentality. It's one of my favourite things, the Heathrow Pod. Have you ever been on it? Pod parking, Terminal 5.

It's quite good, isn't it?

It's fantastic, right?

But I've never been to it, no.

OK, so next time you go to Heathrow Terminal 5, OK, book yourself into pod parking.

My brother's done this.

Yeah, OK. You park your car, there are two little ends to the car park, A and B, and there's a pod waiting for you because it's got a bit of a predictive algorithm. And you press the button, open the door, get in with your luggage, and basically it drives you to Terminal 5 over a kind of little elevated concrete track. And they're really cute. Okay? Now there's one really important discovery about the pod, which I don't think anybody's clocked adequately. And it's this. The Heathrow Pod Parking car park is about a mile from Terminal 5. The price of parking in Pod Parking is practically adjacent to the price of parking in the short-stay car park. Similar car parks, which are a mile away but connected by bus shuttle, are charging half the money. The conclusion you can draw from that is people hate buses and love pods.

Yeah.

Right? Now, I know this because I had a colleague, serious guy, who was the creative director of Ogilvy Europe. He was about 60. 3 at the time. He turned up at pod parking in his Jag, okay? And, um, they said, I'm terribly sorry, Mr. Smith, uh, I'm terribly sorry, but I'm afraid the pod parking is actually full, but we've upgraded you to the short stay at no extra cost. His reaction was, but I wanted to ride on the pod. He felt actually bereft.

Yeah.

Now here's the important thing, right? I think there's an amazing discovery in the Heathrow pod which is that literally, if you're a railway station, let's say you wanted to create a Parkway station, okay? Let's say you wanted to create a shopping center. I think you could actually put the car park 2 miles away in an area which is less ugly, okay? And you could connect the various car parks to various parts of, let's say, Bluewater, okay, by pod. And people would deliberately park further away to ride the pod because they love it, okay? I got upgraded to first class on British Airways I think the last 2, 3 times when I've did. And I was treated to fine wines and Belgian chocolates and all that shit. But still, the best part of the journey is actually the bit on the pot, to be absolutely honest. Okay? Right. It's that enjoyable. Okay.

Right.

Now, here's the interesting thing. Okay. I think there's a really important discovery there, but it's not a numerical discovery. It's an emotional discovery, which is that for some reason, people regard a shuttle bus as being fundamentally ghastly. Whereas the pod is fundamentally mob.

So cool, yeah.

And I think it could transform urban infrastructure. I think the idea, because it's not a centripetal thing, you can technically go use the pod system to go from anywhere to anywhere because you travel as an individual in your own pod. At the moment, you can only go from Terminal 5 to A or B. They're two ends of the car park. Or if you're being perverse, you can travel from one end of the car park to the other just for the lull. Now, if you tried to pitch for any urban transit project as Heathrow Pod, you'd go, look, people fucking love the pod. And they go, that isn't on our key performance indicator, balanced scorecard, wanky procurement shit, right? Yeah. Likability doesn't count. We notice that you actually carry less capacity than a shuttle bus. Okay. And your journey time is slightly slower than a shuttle bus. Therefore, there's no way we can possibly actually allow you to pitch for this project because you lie out of our current metrics. But then we go back to how innovation really happens, which is Apple, which is reverse benchmarking.

Yeah.

Which is don't do the thing that everybody else is doing a little bit better. Do those things a tiny bit worse.

Mm-hmm.

Find something else and be brilliant at it. OK, that's how— now procurement couldn't cope with that because as soon as you're incomparable, they can't compare you.

Yeah.

So there are literally cases, I'm sure, in the NHS. I came up with a guy who basically said we can solve a lot of problems with the NHS with A&E or something else with basically massive great trucks that turn up and do something. I can't remember what it was. And of course, the RFP when it goes out will be for a building project. So you come along and say you don't need to build anything. My huge fucking trucks can park in your car park.

Yeah.

And we can sort the whole thing. You know, straight off the bat and incidentally be here ready next Thursday. Okay. And they'll go, well, I'm afraid we can't compare you to the 7 building contractors who are building this new, you know, wing of whatever it is. Okay. So therefore, anybody innovative tends to be one of a kind. One of a kind doesn't satisfy procurement's need for justifying their own existence by claiming fairly meager cost savings, by treating suppliers like shit. And so procurement is probably what they call, I think, commissioning or something in the NHS. Probably a massive obstacle to innovation and improvement.

The biggest pitch I ever lost was, uh, for Rolls-Royce and the cars, for the cars. And I had been talking to Rolls-Royce, the marketing team for 6 months, had created this incredible creative campaign, and they put the pitch on because they wanted to work with us. But because they put the pitch on, they had to compare us. And so we got downsized from creative agency to media agency, and then we went up against the biggest media agencies in the world and lost. And the team was like, whoa, whoa, whoa, whoa, whoa.

So you're just a pure creative agency at this point, right?

This is before we went media. Yeah.

And then effectively the entire pitch became about your media buying chops and your media costs.

Yeah.

And probably whether you take 180-day payment terms.

Exactly.

So it didn't matter, your creative idea could have been the fucking cure for cancer and the, you know, and, and the, uh the holy grail of creativity.

Yeah. And the whole thing—

You would've lost because you couldn't buy media.

And so the team said, we put on the pitch to work with Verb, and then—

Procurement, which by the way, why can't you allow people to fucking apply? The whole point of being in a high-trust economy like the UK is that people can make subjective decisions without treating them to the kind of scrutiny that you'd have to apply if you're in a really corrupt economy, okay? I mean, corruption in this country, for all its faults, okay, Everybody laughs at this. What was our biggest corruption scandal in politics in the last 10 years? Someone bought a motorhome, right? If you went to 70% of the countries in the world, okay, and say this politician might have claimed for a motorhome, okay, um, they're probably okay with that, you know. People would have gone, that's not really corruption, that's just, you know, getting a bit of value for money out of your government job, yeah, right? And so it's genuinely a country with fairly high levels of probity. And yet we behave with all these weird checks and balances and the cost of them. I wrote about this in The Spectator. I call it the tantric sector. There's the public sector, there's the private sector, and then procurement and compliance and HR are the tantric sector, which is— it's not that they're not worth it, by which I'm not saying they don't justify their salary. But if you're to calculate the cost of those entities, The real cost isn't in how much you pay them or the office space they occupy. It's the effect they have in slowing down almost everything. It's the tantric sector because the purpose is to make everything go on for ages and ages without actually reaching a climax. Okay. Right. And this is a fundamental problem with British industry, which is that it's not that the economy is inefficient, it's too fucking slow.

Yeah.

Right. What they did when they actually renovated Notre Dame Cathedral, They realized this is going to take fucking ages, right? They said, okay, we're going to get rid of all the regulations around renovating a cathedral with one exception, which is health and safety. And by the way, I'm going to make a brief defense of health and safety here, which is for some weird reason, of all the bureaucratic functions of business, health and safety gets the most grief, doesn't it? Oh, it's health and safety gone mad, right? But health and safety is health and safety, right? Now, you know, I think it's pretty important to renovate the cathedral, but I don't want people to die in the process, right? Trying to put on a bloody flying buttress or, you know, get a gargoyle replaced. I don't want people to die doing that, you know, right? And so of all the things I'll kind of defend a bit, it is health and safety, which is— people not dying is generally a reasonable aspiration for any corporation. But this tantric sector, what was it? I mean, I don't know, something like X billion has been spent on High Speed 2 before a mile of track is laid. And it's come about because we've effectively tried to reduce everything to a process because we have a pathological fear of anybody using common sense, intuition, or instinctive thinking. And the reason you can't use those things isn't because they don't lead to good outcomes, it's because they put you at risk of blame.

Yeah.

Okay. Which is you can come up with a brilliantly rational argument for doing something boring, stupid, and utterly pointless, and you'll keep your job. Okay. If you do something imaginative and it goes slightly wrong, you're exposed. You put your head above the parapet. And it's a massive asymmetry in business decision-making, which is we judge things not by the quality of outcome, but by the quality of reasoning which arrived at the decision. It's, uh, it's fundamentally un-Darwinian. Yeah, un-Darwinian, because Darwin doesn't give a— Darwinism doesn't give a shit about why the mutation occurred. Okay, it only judges by the consequence.

But it crushes— like, I have ADHD and was diagnosed at a very young age, and so my whole life I have known And so I was undiagnosed.

I almost certainly have it. My daughter has it. Yeah, it's both a bit of a pest and a bit of a superpower.

Well, totally. And so the superpower would be if I have something to do, it's probably going to happen in the last few hours before that thing needs to be done. But your powers of concentration in those last few hours are super, you know, like superhuman.

Yeah.

And so when it came to a creative pitch, if I knew that the creative was worth doing, it would come out of me. I would, you know, I would like lie on the table.

What was your Rolls-Royce idea? I'd love to know what the idea was. So long ago now.

I can't. I couldn't even— but it was to do with interiors. It was to do with trying to make a greater sense of the push button for the umbrella to come out. And there was like a lot more to do with making it more lifestyle, but I can't exactly remember. But my creativeness would have come out and I would have lied on the floor, I would have sat there, I would have drunk 100 Diet Cokes, but the creativity would have come out. But as time went along, people just didn't value that, you know. The, the creative became a You know, I want incremental gain on my PPC or my—

Absolutely.

Paid social media.

So that was what you were reduced to, which is—

Over time.

As a consequence, you see, what you're doing is you're shopping at Asda, you're not shopping at TK Maxx. Procurement are always shopping at Asda. They don't understand TK Maxx. That's the fundamental truth of it. TK Maxx is a fat-tailed retail experience. Okay. You go in, you don't really know what you want to begin with, okay? You go— I mean, I love to— are you a TK Maxx fan?

I love TK Maxx.

Yeah, exactly. Yeah, very weird, but very weird because it's surprising. You've got it exactly. So you go, fuck me, right? That's how it basically—

you might buy a suit occasionally.

Yeah, yeah. You come out of it with nothing you ever envisaged. And I've got friends who don't understand TK Maxx. They go, I can never find anything I want there. That's not the fucking point. You don't go into TK Maxx wanting something specific. You go in like a shark and you basically kind of cruise. It's the game. Right? Now, I would argue that marketing is much more— should be correctly done, is probably what ratio? Maybe 50/50. It's 50% Asda, 50% TK Maxx. Right? And what's happened is these tragic fucking nerds, both from tech consulting and everybody else have come in and said, no, it's got to be treated like it's all Asda. And you go, will you never find a bloody pair of Versace underpants for £12.50, will you? And they go, we don't care about the Versace underpants. We're only interested in buying Cathedral Cheddar at 3% off. And then we wonder why we've got no economic growth.

But why? My wife, for example, treats TK Maxx as a an activity.

It is, it's a sport.

It's a sport. It's not— it's—

do you remember This— what was it— This Country, that fantastic comedy series set in the West Country?

Yes.

Where he was obsessed with getting the vicar to drive him to TK Maxx on Thursday because that's when all the best stuff comes in. All the new stuff comes in on Thursday. You don't know how fantastic.

Yeah, it's, it's an interesting thing when you think about marketing nowadays. I, I saw you talk about once, um, that Red Bull, despite tasting like shit, is the best marketing tool ever, or that San Pellegrino is fundamentally just a lemonade but it looks fancy.

Well, no, the, the foil lid, which I think they're bringing back, I hope, at my behest.

Has it gone?

Uh, they've taken it off some of the cans, almost certainly because of procurement, uh, or finance or something.

It's cleaner.

Tragic. But hey, there is, there is a— usually for these things there's a kind of what you might call vestigial rational reason. It was always the case— there's an Italian drink called something, Cinotto, I think it's called, which the cans always had the foil lid. And there is an argument that it's hygienic, which I think is what you might call the vestigial rationalization for the foil lid. The foil lid really acts as an axis all areas pass for the drink. In the— if you've got cans with a foil lid on, you can serve them at a wedding, you can serve them at a board meeting, you can serve— you see what I mean? Whereas, you know, with the best will in the world, and I love the stuff, you know, you wouldn't serve, um, uh, Tango, okay, at your wedding, cans of Tango. Whereas cans of— no, don't get me wrong, it's high quality water, and I'm not suggesting that it's all smoke and mirrors, but it nonetheless— that foil lid serves a function. Okay, which is it changes the, it changes the context within which the drink can be displayed and consumed, and indeed the price at which it can be sold. But no one's measuring that, they're just measuring the cost of the file.

Is the price— I can't even— is the price of San Pellegrino high?

I think one might say that it probably commands a price premium, and I certainly would pay more for it. Yeah, yeah. And the lid, the lid was, I mean, it's, uh, as someone said, it's, you know, it's kind of, um, uh, you know, it's Tango went to college, you know. It fundamentally changes the, um, uh, the, the milieu within which that can is comfortable. I can't even believe I said that.

Obviously right now if you're in marketing, you are exposed to an insane movement of AI.

Yeah.

And I suppose being someone that's been in marketing for a while as you have, what are your—

Well, first of all, we better stop charging by the hour, hadn't we? Because something that makes a lot of things that were slow quite fast.

Yeah.

Isn't necessarily fantastic news for a business that charges by the hour. Secondly, I would like to see AI deployed primarily not to reduce the headcount of the people who actually produce the valuable work, but to reduce the size of the administrative body which leeches off it.

Mm-hmm.

And so, but thirdly, there are two ways in which I think you can use it, and I think this is always true. Okay. There's the replication of mediocrity or the amplification of brilliance.

Okay.

Now, if it's used, if we still seek breakthroughs and then wish to amplify them rapidly, I think AI can do that job very, very well. I think the interesting thing with AI is it can explain jokes very well, but it can't come up with a joke on its own. Now, if you regard the joke as somehow emblematic of a really big creative idea, as of now, and I'm willing to be proved wrong, I've tried to get AI to come up with a joke and they're appalling. They're nonsensical. Yeah. Okay. So I asked AI to explain a joke which I'd come up with. It's not a very good joke. I'm not gonna take it on the Northern Club circuit or anything. I think. But the joke was, what do you call it? Joke I used to tell my kids when they were young. Okay. What do you call a pub with no toilets? The Turtle's Head. Okay. Now what's amusing is I ask it to explain that joke and it understands the joke completely. See? And it describes the joke in slightly purselipped Californian precious. It is extremely vulgar joke reliant on toilet humor. Well, whoop-de-fucking-do. Okay. But it does understand the joke. And then I say, can you come up with a similar joke? And he goes, what do you call a Japanese restaurant with no toilets? The standing eel. What? Okay, no fucking sense at all, right? Yeah, it's just utter garbage. It's just randomly taken a kind of Bayesian approach to the structure of a joke, inserted random words. Okay, so my contention is if you can't come up with a really good joke, you can't probably come up with you might be able to help people come up with, or you might be able to act as a sidekick for someone who can come up with that kind of idea. But I don't think you can do it on your own.

Okay.

On the other hand, the capacity perhaps once it's grasped the core concept of the idea, its ability then to amplify that might be really rather spectacular. Okay. So, you know, this is a really important distinction, I think, between the amount of business we devote to explore and the amount of business we devote to exploit. And I think we can use AI to exploit what we've already discovered fairly well. There's an interesting question which I'd ask too about— now, in defense of AI, right? A lot of people criticizing it. And someone rang LBC the other morning and said, well, it kind of saved my daughter's life. That they'd had a daughter who'd been— they'd failed to diagnose, I think. She was always tired. There are a few other symptoms. And I think they'd failed to look for leukemia.

Oh, wow.

They would have found leukemia eventually, but they were exploring other things first. And of course, it's all a bit of a— now he goes home and he types in the symptoms, and like number 3 comes up as leukemia. And he rings up the doctor and says, did you test? No, I haven't tested for that. I was thinking of doing that a bit later, but first we're testing for this. He goes, I'd like you to test for this. They test for it. That's what she's got. As a result, the intervention is probably 6 months or a year earlier than it would have been otherwise, uh, you know.

So Amazing.

I'm not going to listen to stories like this and be wholly negative about something because patently, as a checklist, by the way, I think it's really, really useful at preventing you from overlooking things you can easily forget. So I think it has lots and lots of really useful functions. I think it's kind of interesting in that, will we allow people to make subjective decisions for which they can't provide a rationale in business? No. Will we allow a computer to do it? Apparently yes. Okay. So we are according the AI a kind of decision-making magic, which we wouldn't accord even to a really experienced human being. Okay. We demand that human beings provide their reasonings and workings out along with their answer. But weirdly, we don't seem to demand this, although it can provide them if asked. Yeah. Weird kind of way.

I feel the problems we were talking about earlier are compounded by the, the AI in that I do a lot of work with, you know, new-ish entrepreneurs and their lack of creativity because they do all of their rational thinking. They do their thinking within the AI. And so they do their brainstorming within the context window. And so sometimes they really struggle to have any form of new idea. Because everything follows the same law.

That's interesting because you are— okay, there's a really interesting analogy I use, which is in any process of decision-making, which is don't be like a scientist, be like a cop. Let me explain. The police, when they're investigating a crime, they're dealing with imperfect information of all kinds. They don't know what they really need to know, who did it. And some of the people who are going to be providing them with information are going to be lying. Okay, now the police operate effectively on a two-stage process, which is investigative and then evidential. Just find out who did it, prove they did it. Okay, what we are doing, if we're not careful, is we're not allowing the investigative phase to make use of any information which doesn't have evidential value. Now, in solving major crimes, what you notice is that quite often it's what Roger L. Martin calls an anomaly. What's the typical cop question? Someone gets murdered, someone goes missing, they go around the neighbor's house and they go, did you notice anything unusual between 8 PM and 10 PM on the evening of so-and-so? Now that's totally open-ended question. The answer to that question will have no evidential value, but it helps them know where to focus their attention next. So it might be a man in a white van drove past suspiciously 5 times, something of that kind. Case of the Yorkshire Rippers, he parked the, the wrong way around. Okay, he had fake plates, etc. Now, eventually you've got to get to the evidential phase, but you don't make evidence a prerequisite of the information you use while you're investigating something. In fact, you might investigate something which was purely anecdotal. Um, uh, you might investigate, uh, something which was, um, purely, for example, speculative. Okay? Son of Sam got a parking ticket on the evening he committed one of his crimes. Now, you can't imprison someone for life for getting a parking ticket in close proximity to a major crime scene, but it does suggest maybe it's worth having a looky-loo at this bloke to see if there's anything more. And I think what we're doing, and this is something, if you look at his Nudge Stock speech, Roger Martin inveighs against, is we're teaching everybody at Harvard Business School that every decision you make has to be based on data. And the more of it, the better. And it's an inappropriate use of data because the data is not representative because it all comes from the past. It's also not representative because you usually have a ton of data about certain aspects of a problem, i.e., typically what you might call the numerical or the physical. Okay? But you have no data about the emotional. And actually, research data is absolutely very valuable in some cases, but you should never take it literally. One of the best researchers I ever knew said, the fact what they're saying is irrelevant, but the fact they're saying it is important. Okay. I can imagine a cop saying the same thing. I'm going to ignore what this person is saying, but I'm really intrigued as to why they think they have to say it. Okay. And consequently, okay, we're making decisions on the basis of a completely biased data set. Now, in physics, you have all the information you need in numerical form to solve the problem you need to solve, which is why things like rocketry tend to be quite successful at deploying the scientific method. In making a decision where you have imperfect and unrepresentative data and where the future is not necessarily the same as the past, the laws of gravity are going to be the same tomorrow. We can reasonably assume that. If not, we've got bigger problems than worrying about measurement and quantification. The laws of human behavior are not the same. How many smartphones were there in 2001? Zero. Okay. Right. That changes everything. Consequently, I think this idea that what we're doing is we're teaching people how to win an argument, not how to solve a problem. And the skills you need, the skill set you deploy for solving a problem is very, very different and much more multifarious and much less seemingly scientific than the skill set you use if you want to win an argument. That's why economics has a completely distorted influence in political decision-making. Not because it's very good at solving problems. It's very good at helping you win an argument by reducing the number of variables to a small enough number that you can construct some sort of stupid model from which you can then turn it into an optimization problem and claim that the optimum or the optimand, uh, is, you know, therefore your right answer. Okay, but I'll give you an example. One thing I like about the United States, they have two temperatures. Okay, there's the temperature, the weather, and the feels-like temperature, right? And that the feels-like temperature is how hot a day it really feels like. Now, 77 degrees is the temperature of, you know, let's say a thermometer sitting in a funny little case somewhere. That is the temperature as far as a physicist is concerned. As far as a human being is concerned, it's affected by the breeze, the level of humidity. Okay. So I don't know, I'm a fat Celt, so I find hot, humid weather, I find intolerable. Okay. But I wander around Phoenix, Arizona when it's 105 degrees and I'm as happy as Larry because the levels of humidity are so low. And if there's a bit of a breeze, I'm even happier still. There are a few other factors, by the way, the feels-like temperature. I think it's also the temperature a certain distance from the ground is upweighted. So heat rising off the— I can't remember, but it's fundamentally a formula that's derived, which is much more accurate to whether I need to wear a coat or not, or whether I need to actually turn the aircon on. The feels-like temperature is a much better guide than the actual ambient temperature. And generally, though, we don't have much data around how things feel. Only two SI units, I think the lumen, and there's one other one, there's an SI-derived unit. Well, I suppose, I suppose the sievert would be another one, really consider humans in the actual measurement, human perception. Is considered as important. The rest of them are just objective measures for the purpose of performing physical activities in physics and chemistry. And yet what actually matters about human behavior is how something makes someone feel, not what the objective characteristics are of the product at all. It's how the product makes them feel.

I thought a really good example of this in— I mean, you've said it before, but in day-to-day businesses that rationally you are told to, or you think to compete on price, but often by increasing your price and focusing on other elements of your business, you immediately are perceived a different way.

If you underprice something, it's a doubly catastrophic activity rather than overpricing something.

Yeah.

Because you sell less and you make less margin on the things you do sell. Yeah. And there are significant products. I'll tell you a lovely story about this. Okay. There's a brand called— someone told me this story. We'll need to verify it, but nonetheless, bloody good story. There's a brand you probably know called Yeti. And what happened with Yeti is that I think they were a bunch of fishing enthusiasts or outdoor enthusiasts who thought that coolers were a bit shit and they wanted to make a cooler that was strong enough to sit on, stand on, that could take some really hardware. So they eventually find this Chinese manufacturer that will produce unbelievably high-quality coolers and other accoutrements, okay? Like cups and so forth. And then the manufacturer gets into trouble with somebody or other in the Chinese administration and is forced into administration or goes out of business. So they have this problem. It's going to take them 6 months to find another manufacturer who replicate the same quality. Meanwhile, all they've got is a warehouse full of shit. No, brilliant, high-quality, extreme— not when I said shit, I mean a warehouse full of high-quality product. Okay. And they go, well, we don't want this to sell too fast or it'll sell out, so let's ramp the price up. And they put the price up intending to actually slow the outflow of goods from the warehouse. And demand went up massively because it turns out there are a load of people who don't want to pay £20 for a water bottle, but they do want to pay 45.

Yeah.

Okay. And by the way, all of us do that sometimes. We think when we buy a car, there's a car that's commensurate with how much you care about cars. There's one exception to that, which is property, which is a market which is totally fucked. And the reason the property market is totally fucked is everybody has the mentality, spend as much as you can possibly afford.

Yeah, bankrupt yourself.

So basically every single person approaches the property market.

Why is that?

Uh, it's because we've been taught that it's the only tax-efficient form of leverage investment we can make in our lives, and therefore it's the only chance of a significant lottery win. So go in full. Now imagine if we bought cars like that. Okay. I'd go down the car dealership and go, right, I reckon I can scrape together 150 as a deposit. And I reckon if I didn't actually eat much in the way of food for the next 15 years, I could probably get— I actually did do this for the LOLs, by the way. I went into the business leasing section of the website for the Rolls-Royce Spectre, which is the new electric Rolls-Royce, which looks, by the way, like a work of art. It looks absolutely fantastic. And what's quite amusing about that, of course, is everything's priced by the month, which is kind of strange. So you find yourself adding something like an optional extra. And I don't know, I'm just trying to think what some of the extras are. They are quite bizarre. I think there's some sort of chrome chamfer for the indoor umbrellas or something.

[Speaker:WILLIAM GREEN] Yeah, exactly. Yeah.

And you go, 1995 a month. And now expressed, maybe expressed as 800 quid, you go, yeah, go on, I'll have the champers. You say, when it's expressed as a monthly recurring payment on a lease car, you kind of go, yeah, it's kind of Netflix, right? I mean, you know, one of them is a panoply of extraordinary entertainment which might entertain me, and the other one is some things around the umbrella on the doors. Yeah. Um, but you would— I mean, we'd all be driving a Bugatti Veyron, wouldn't we, if we actually bought property the way we bought bloody houses, bought cars the way we bought houses, you know, but that's how everybody buys them. Will young people eventually game the system and go off-grid? So I've always wondered, you know, eventually there comes a point where you would be materially much better off if you said, I'm going to put $1,000 a year into, you know, $1,000 a month, $2,000 a month into a pension. Then I'm going to buy a large American motorhome, park it in a, you know, Park it effectively in a wood in Kent.

Okay.

Rig up me Elon thing on the roof, you know, because the electric motorhome—

people are doing it.

Yeah. I mean, the electric motorhome. Have you bought one of those 1,000, um, 1 kilowatt-hour massive batteries that DJI make? 500 quid, you've got a whole kilowatt-hour in the thing right now. I keep it in the back of my car. I've got a load of solar panels. Okay. Come the zombie apocalypse, I'm going to be fucking laughing. But I can actually run a fridge off it. So I read a lorry driver, right? Always, if you want to innovate, the great book by a woman called Helen Edwards, and it's basically called, I think it's called something like Start at the Edges, which if you want to understand innovation, look for extreme use cases. And this truck driver goes, this is fucking brilliant. I got it in my cab. Okay? Every time I stop the truck, I put my Starlink Mini on the roof of the truck so I've got high-speed internet and I can run an air fryer off it. Okay? And I'm kind of going, "Picnics are never going to be the same again." Right? Because if I've got a kilowatt hour in this thing with two 240-volt outlets, solar in, you had to pay extra for that.

Yeah.

Okay? And I've got a 160-watt solar panel. I think I'll buy another one as well, you know, in case the zombie apocalypse happens. And I suddenly go, we can actually have a picnic with a fucking Nespresso machine.

Yeah.

Now, I don't know why the car manufacturers haven't played with this quite enough, which is if you have 120 bloody kilowatt hours underneath your motorhome, okay, you can live off the grid with that, particularly if you don't need heating.

Yeah.

You can live off the grid off that for a few weeks. You know, your flat-screen TV doesn't use that much. You'd have a projector anyway, probably, wouldn't you? 'cause then you could watch out of doors. You know, you've got your Nespresso machine, you've got your, you know, so if you've got a big battery, you've got some solar, you've got effectively mobile internet. My advice to young people would be actually investigate investing in something other than property. Now the only problem is you probably can't pull if those are your living arrangements. Because anybody saying, come back to my woodland abode, okay, is gonna go, fucking hell, this guy's a nut. Nutter. Okay, he's probably gonna say how cool that is. Yeah, you know, look at my collection of surgical gloves, you know, look at my bottle of bleach on the side for the DNA. You know, that's not a good look.

No, but we—

I've debated this, by the way, which I was talking, um, absolutely to Russell this morning, Russell Howard, about this, which is young people could get on the property ladder either by not living in London. Okay. Or by being prepared to do something which nobody's prepared to do, which is to live outside London in a flat. Because that's the one category of property which, A, isn't going up. It's actually fallen. It's actually underpriced relative to utility. Because everybody who leaves London has this fantasy about living in a detached house. Therefore, nobody leaves London with the aim of living in a flat. I own two flats outside London. And the reason I've lived— that's what I own. Is because I think I want property for utility, not for investment value.

I saw a long time ago now you talked about you wouldn't mind— this is when I think I first started liking you— you said, I wouldn't mind living next to a pub garden.

No, no, this is another tip which a lot of people have come up to me since and said, you helped me find a house, which is don't ask for what you want because if it's what everybody else wants, that's expensive. You're competing for the same thing. Instead, ask what you either want or don't care about that other people really don't like. And so next to a railway track, a lot of people hate it. Okay.

Yeah.

There's actually a section in Nick Hornby's Fever Pitch where he has this plan to move next to the Arsenal Stadium because he goes, most people would really hate being next to a football stadium, but I can't think of anything better. I mean, if you're a plane spotter, right? Go and live in the Heathrow flight path because the houses are really cheap. Everybody else hates the fact there are planes going over, but you'll be there with your nerdy little radio tuning into the bloody, you know, tuning into the control tower, and you'll be like a pig in shit, won't you, going, oh, Speedbird 450's got rather a lot of flap down, right? Okay, find out what makes you different from other people and use that in your property hunt. And one of my great complaints about the property market is that Rightmove doesn't have space for negatives. —so, you know, if I— my kids are 20— what are they, 23 or something? I don't know, what are they, 23 going on 24? Yeah. Okay, well, they've left. I'm not planning to have any more kids. Okay, so if I'm in the catchment area for some crackheads' academy, that's fine with me, right? Because, yeah, school district— why on earth would I pay for that?

God, negatives is an interesting way of thinking about that. Well, there's a—

there was an estate agent I write about, this guy called Roy Brooks, 1960s and '70s. Who only advertised in the Sunday Times and the Observer, and his whole shtick was he was unbelievably rude about the properties he was selling. And it was all a list of the negatives. But it actually became a badge of honor that you'd bought a Roy Brooks property. Okay? And there are books of his ads. You can actually go and buy them on Amazon for a few quid. Roy Brooks. One of them is called, I think, Former Brothel in Pimlico or something like that. Okay? This is literally how he describes the property. And it occurred to me that there's a valuable service to be done, which is you can't even use Rightmove to search for a fixer-upper. Yeah. Now I've got a friend, very, very clever, very clever woman I worked with for a few years, and they bought this place with a pool in the Surrey Hills. Okay. And they bought it for the same price they sold an apartment in. Croydon, I think it was. And I said, look, I've got to ask, why do you think you got it so cheap? It's very simple. Okay, when, um, in a way, you should ignore the photographs of interior decor when you look at a property, because what you're doing is you're trying to effectively imagine the previous occupant and deciding whether they're similar to you in taste. And to some, it's irrelevant. Well, it's not totally irrelevant in a sense that I suppose— you see what I mean? Yeah. Okay, if, if you knew that Rick Rubin had lived in a house, you'd probably buy it sight unseen. So the previous occupant isn't totally irrelevant, right? I have actually been to Rick's house, and as you might imagine, it's just insanely perfect to a point of view where, um, I felt I was defiling the place by my very presence. A gorgeous place, absolutely lovely. Um, but Um, you can't even look for a fixer-upper. Now, this place, they said it had a few things like— it's lots of— they said basically it was full of old lady furniture because the previous occupant had been quite elderly, as is generally the case with 5-bedroom homes in Britain. They're usually occupied by a single geriatric. Yeah. And then we wonder why we've got a property problem. But anyway, let's, let's not go there. Um, but, um, actually, you're probably over-influenced by the decor even if you're planning to redecorate yourself anyway. Okay, you're over-influenced by something like about that. And actually, the interior is largely irrelevant. You should consider location. I'm not suggesting that's irrelevant, but again, you can game location. Okay? There are plenty of ways in which you can game that by going, well, look, actually, to me, there was a pub, a house next to a pub in Deal, which came on the market very cheaply because right outside is a massive beer garden, which is heaving in the sun. Now, two things. I don't care about noise at all. Noise of people getting drunk or drinking is to me music. It's— now, 90% of people would find it intolerable. Yeah. Okay. And to me, this was either neutral or a benefit, and being next to the pub was a benefit. Okay. And it occurred to me there would— there were— there was an upside and there was a risk. Okay. So my plan was— I never got around to it because it sold quite quickly. My plan was to go to the landlord and go, okay, here's the deal. I will never complain about anything you do— late opening, noise, whatever, okay? You could actually build a massive extension, you know, you can, you know, you can do anything you like, okay? On two conditions. One, you deliver beer to the house, and two, no techno, okay? That was going to be my one condition, okay? Because there's a measure of radiation exposure called this— I think it's called the Sievert. Okay? Which is the amount of radiation you can be exposed to as a human being before it becomes dangerous, life-threatening, et cetera. And I think there's a similar unit for techno. You can only be exposed to so much bleepy music before you basically go insane. So those are my two conditions. You deliver beer to the house, and maybe I would've pushed for food as well. So basically, you've got room service in your own house, right? I mean, who can beat that? And then the other condition was no techno, which I think is— Do you think that's reasonable? Are you one of these young people who likes nothing more than standing in a fucking field listening to techno?

No, no. Repetitive bleeps. Delivery beer and, you know, normal music sounds pretty great to me. I think when I first saw the clip, I was like, I like this guy because he likes beer and normal music.

No, no, no, no, it was weird. My techno thing's a bit weird, which is I wouldn't mind Norwegian death metal, you know, that'd be fine, you know, that— okay, I can cope with any music. That guy, by the way, you know, the guy whose submarine sank Okay, going to the Titanic. Didn't want to explode it. Well, imploded, yeah. Yeah. Um, he— you had— you brought your own soundtrack along in exchange for £100,000, but his condition was no country. Hmm. Now, I think that's a red flag right there. I'm not— I'm not taking massive risks with somebody who doesn't like country music. Okay, sorry. Yeah. Okay, think about it, okay? Which— which pilot do you really want if the engine catches fire? You want a guy who's actually quite into a bit of country. I agree.

But I wanted, I said I have two, two questions while I have you. The, the other day I was sitting there thinking, how is my dad ever gonna interface with AI? And I kind of came to the conclusion that he probably won't. And so I, I then started on this like almost reverse technological advancement where I reckon they're gonna be communities of people where you just don't have AI and tech in the same way. You have a community that sort of looks like it's from the '80s and people live incredible simple lives. But you almost have to sort of buy into this community and then people take care of you from the outside.

So I would sit in this community and I go, I think I quite fancy so-and-so, so-and-so tomorrow. Yeah. And then basically they would use the— someone out of sight would use the AI to prepare the recipe and to cook the bloody thing.

And you just live in this beautiful village that felt like it was from pre-AI era.

Or even the pre-web era.

Yeah, exactly. I'm sort of imagining, uh—

no, no, no, no. So actually, this is quite interesting. I mean, I always find it interesting that Simon I mean, I'm sure that Chairman Cowell doesn't have a mobile phone. He has people around him who carry mobile phones who relay the necessary information. But that actually what you've created is effectively a filter. And so you could create a kind of interesting one-way filter where effectively you gained all the benefits of this technology without— and you'd simply pay to buy off the downside. Exactly. Because there is danger that all— I mean, there is danger that this creates actually woeful distortions in decision-making. Equally, there's the possibility that it makes people— it actually amplifies people's imaginations. I think there are two ways you can use this, and it's true of quite a lot of technologies which promise efficiency gains in one shape or other. You can either use them to kind of amplify brilliance, or you can use them just to replicate mediocrity. Yeah.

I do worry about the fact that you have a lot of people right now saying AI's gonna bring about, you know, best standard of living ever, et cetera. But all the AI companies are private companies. And so I've never really seen that many companies go about their business to optimise towards ordinary people's better welfare. I've normally seen private—

they do to begin with. So I think this is what enshittification is about. You start off by desperately needing to acquire customers, then network effects kick in so you can basically take your customers for granted. A bit like Facebook or WhatsApp or anything else. Because you simply have this network effect, which is that eBay effect, the place where the most buyers attracts the most sellers. So what you do is you start off by focusing on the consumer, then you next move to the person who pays you money, which in the case of eBay would be vendors. And then the third phase is where you can afford to neglect both of them because you're a two-way business. And you entirely focus on your own self-interest to the detriment of both. So the vague pattern would be you start off by building houses, which attract people. And then you get Waitrose in, and you get Marks Spencer's in, and so on, which attracts more people. And of course, the people shop at those stores, okay? And then you effectively can rip off both of them. So you move from property— you move from house builder to property developer to slum landlord, effectively, in those three stages. And it's unusual because, of course, network effects effectively absolve you from the normal competitive threats that bedevil most organizations. If you look at Unilever or Nestlé or Coca-Cola or whatever, they have certain entrenched advantages in terms of distribution and scale and everything else, but they're permanently at risk of being effectively de-positioned or outcompeted. And it generally keeps them fairly rooted in the real world and it helps them focus on the important question of what other people actually want, what the customer actually wants. And the extent to which there are, I think there are, by the way, I think a very large part of social media is either benign or beneficial. But I think there is a component of it which is slightly terrifying.

I, I'd say the same with the AI businesses. Yes, I think that's fair. People are starting to rely on them so heavily and then companies are building on top of them. And so there's probably only going to be maybe 10 incredible models.

Or, or is it a business where you can't make any money out of it? Because Scott Galloway believes that it may be one of those things like Wi-Fi. Which is very important, but nobody can actually monopolize it sufficiently. I mean, you could argue that it's the hardware, it's NVIDIA or whatever who monopolizes it. Yeah, yeah. Even then, you know, that's probably true in the medium term. But there is the perfect possibility there. This is the weird thing, by the way, that there are— the difference between being a billionaire and being mildly, just mildly wealthy isn't really the economic value of your invention. It's the extent to which you create a defensive moat around it, or the extent to which you choose to. Okay. So I was having this debate earlier this morning, and my debate was that one of the reasons I support wealth taxes on the super wealthy is that you should take a certain proportion of their wealth and then 10% of that you should give out in the shape of prizes to people who've done something astoundingly valuable which you can't monetize. Now, let me just give an example of that. Tim Berners-Lee, logically, okay, his idea, chose not to patent it because, of course, if you patented it, it wouldn't have worked. Okay. But there's no possible just universe in which he isn't richer than Mark Zuckerberg. So who built what he did on the back of it? Okay. Take a more extreme example. The person who I met— I met the daughter of one of the three, Florey, Chain, and Heatley, who basically enabled it, made it possible to manufacture penicillin. Okay. So those three people combined with Fleming were basically the parents of antibiotics. Yeah. Now, Yeah, she was patently not bankrupt and lived in the Cotswolds, okay? But equally, she wasn't— nor was she— her father was dead, okay? Nor was she living on a 900-foot yacht kind of cruising the Caribbean, which by all reason— I think I've got a vague idea that Chain or Florey, I can't remember, probably Chain, did want to patent the drug, but the rest of them thought that it was basically immoral to seek to make money out of a life-saving medication at the time. That's That's how it worked back then. Okay. I've got a funny story, which I told this morning, which is in 1981, we got the first school computer, which I think was a Research Machines ZX something or other, 5000.

1981?

Yeah, I think '82 it might have been. Okay. And being a bit of a nerd, every single break time, I was one of the 10 people hanging around this thing, generally nerding out on the whole And 3 of us, back in '82, invented the game Snake. Right. Which you may remember was on every single Nokia phone. Now, by the way, just to be absolutely clear, I'm sure other people invented this game as well, because if you were dicking around with cursor controls, it didn't require spectacular machine— you know, coding skills to do. And I'm sure other people had the idea. Okay? What was funny about it, looking back, was not for one microsecond did any— we did it to impress our friends. And because it was a laugh. Not for one microsecond did it occur to any of us that we could make any money. Yeah. Okay. Now, given that it ended up, you know, had we managed to somehow get a lawyer involved, looking back, well, probably the school would have claimed the bloody royalties back then. But nonetheless, you know, that would have been a multi-million-dollar idea, undoubtedly. Okay. Just didn't occur to us. Okay. And so, and I always joke about the guy who, um, invented nachos, who's actually a guy called Ignacio Flores, I think it is, running a restaurant in Mexico, just south of the border with Texas, who gets 4 American servicemen's wives in sometime in, I think, the 1950s, and he's run out of food. Right. Nacho is the shortened Italian— shortened Spanish, sorry, shortened Spanish form for Ignacio. Okay. So I think his restaurant was called Nacho's Cafe. And so he cuts bits of bread into triangles and chucks a load of stuff on top and heats them in the oven with a bit of cheese and a bit of this and that and probably a bit of guacamole and invents nachos.

Right.

Now, again, in a just world, I'm not saying he'd— well, he'd be of Zuckerberg levels of wealth as you consider the value that his invention contributed to Mexican restaurants everywhere, combined with a load of other restaurants. Okay. That's a billion-dollar idea. Now, I think he ended up okay. You know, he's famous. I don't think they ended up skint. But one of the arguments I'd make for a wealth tax is that I think 10 to 20% of the money raised from basically people who've bought a house and enjoyed capital gains on it should be redirected to extremely lavish prizes towards people who've had a brilliant and significant idea, but failed to see any of the economic gain. And the reason I make that point is there is that argument that like Wi-Fi, I think it was invented by some Australians, have I got that right? Yeah. Vague idea, they were Australian physicists or something like that. And everyone uses it. Now, that's more valuable than Facebook. Let's be absolutely honest, okay? It's proved vastly more valuable and important than being able to look at someone's cake. Okay? And yet I don't think they made any money. At least I've never been in Monaco or Portobénus and like— you know, 600 people come in slugging Krug out of the bottle and they go, it says fucking Australian physicist. Yeah. And so, so, you know, let's be honest about this. We're fetishizing a system where the incentives for value creation are far from perfect. Mm. And, you know, I mean, in a way, if one's to be really picky about Warren Buffett— Warren Buffett, who I absolutely venerate, by the way— I mean, what he spotted was not that you need to own a particularly valuable business, it's you need to own a pretty valuable business with a moat of some kind.

Well, that's the challenge, isn't it? Create the value and then protect your value from—

But under my system, you see, you would have an incentive to create really useful ideas and give them away because you would have the reasonable prospect of a few million quid reward just for having a really good idea.

Do you think more millionaires than today would leave?

Oh, bollocks to that. I mean, first of all, there is a proportion of very rich people who are just spectacularly stingy. There's nothing you can do to attract them because they will always move to the lowest tax jurisdiction they can find. And on all kinds of levels, the UK cannot compete with Dubai for those people. The answer, of course, is actually a land value tax because that's a tax that's inescapable. If you want to own land in this country, that's what you pay for that. I won't go into this because I go into the Georgist thing quite a lot. But the great thing about that is it's a beautifully inescapable tax because you are owning something which is both scarce and which you can't disguise. But I broadly speaking, there are philosophical reasons to support wealth taxes, one of which is simply, of course, that an incremental dollar makes much more difference to the happiness of someone poor than it does to someone rich. [Speaker:CHRIS DONNELLY] I can see. [Speaker:ANDREW NORTON] And so there's simply a utilitarian argument for redistribution. But I also think there's an economic one as well, which is at the moment we have a younger generation of people who pay tax twice. They pay income tax on what they do, and then they go home and they pay a second tranche of tax to their buy-to-let landlord who has basically, by dint of living in an older generation, has bought the right to extract wealth from the young through the ownership of property. They haven't done anything particularly creative. All they've done is gain control of a scarce resource. Yeah. And my argument is, and I don't understand this while I hold a bottle of Coke I don't understand why Coke and Unilever and Procter Gamble and BT and other organizations don't campaign for a more equitable distribution of wealth, which I mean lower income taxes, higher wealth taxes. Mm. There isn't that much income inequality, right? I know that sounds a ridiculous thing to say, but between minimum wage and people at Goldman Sachs, it's a factor of 100 or so, granted. Okay. But there are very few people who earn such a high income they could walk into a football stadium and significantly raise the average the income of everybody in the stadium. In terms of wealth, that's a completely different level of variance. So there are people who can walk into a football stadium and everybody immediately becomes a multimillionaire within that stadium, okay? On average. And that's a single individual. Now, we already quite rightly compensate for income inequality. We do absolutely nothing to compensate for wealth inequality. Now, when that wealth is actually earned as the product of taxed income, well, you could argue you already paid tax on that. I'd say it's a spurious argument because we pay tax on our income and then we pay tax when we buy something through VAT. So the perfectly healthy economic activity of going out, doing something useful, earning money and buying stuff, which is how an economy works, is taxed to buggery. Whereas buying a house in 1985 and sitting on it, okay, which is a completely worthless, indeed worse than worthless, It's an extractive rent-seeking activity. Okay, we don't tax that at all. Now, this doesn't make any sense. I don't know what— I don't know what— I don't understand is why consumer goods companies who, let's face it, what Coke need is quite a lot of people, okay, who can afford to buy a Coke when they feel like it. Okay, it's absolutely no use having super wealthy people if you're Coca-Cola because Jeff Bezos, you doesn't buy any more Coke than the next guy. Yeah. There are very large parts of the economy which would benefit significantly from a more equitable distribution of wealth. And strangely, the companies that operate in those sectors of the economy never make this case. And I don't understand why not. By the way, the place you want to live is not a place where you're vastly richer than everybody else. Mm-hmm. Okay. There's no point. What you want is a place where you are comfortably above the median income for the surrounding area. In other words, you can do the things you like a bit more than your neighbors can, but your neighbors are not so significantly poor that you find that there are no decent restaurants, coffee shops, or anything else. Okay. So a large part of what you might call the public realm is co-funded. Mm-hmm. Pubs are co-funded, coffee shops are co-funded. Okay. We don't think of it like that because we think of it at the level of an individual transaction. But, okay, this is the way I look at it, okay? Very simple analogy. I don't know if you watch Downton Abbey, right? But it did occur to me that the Marquess of Downton and his family, they're very, very rich, but 90% of the time they ate food cooked by the same woman in the kitchen downstairs, right? They had a cook, wonderful, not much variety. And it occurred to me, if I'd be the Marquess of Downton, I would triple the salaries of everybody working in the Abbey. Okay, all the servants and the various people. That way, a nice Indian restaurant would've opened in the nearby town. And when you felt like a decent Ruby Murray, you could probably get one delivered, which would've made a change from Mrs. Miggins or whatever her name was who operated in the kitchen. So, you know, a large part of what makes us happy in life is actually co-funded by our neighbors or by, you know, other members of the same interest group. Okay. Cars are massively co-funded. By other car enthusiasts. And consequently, being inordinately richer than other people in your group is actually basically bad news for your quality of consumption.

Yeah. Thank you very much for coming on.

Huge pleasure. Absolute delight. That was awesome.

Fantastic. Thank you so much.

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