Killer marketing secrets that always work (ft. Ogilvy Adman, Rory Sutherland)

$1M Attention Guide: 15+ ways to get eyeballs on what you're building https://clickhubspot.com/tkwc Episode 845: Sam Parr ( https://x.com/theSamParr ) and Shaan Puri ( https://x.com/ShaanVP ) talk to marketing legend Rory Sutherland ( https://x.com/rorysutherland ). — Show Notes: (0:00) Intro (1:44) Horsepower (12:15) Reverse benchmarking (17:38) Pay attention to what irritates you (21:47) Ogilvy secrets (27:28) Marketing hacks used by Apple, UBER, McDonald's (36:35) direct response marketing 101 (1:08:50) Recommended reading — Links: • Alchemy - https://www.amazon.com/dp/B01F1HOAWA • Illusion of Choice - https://www.amazon.com/dp/0857199749 • Nassim Taleb books - https://www.amazon.com/stores/Nassim-Nicholas-Taleb/author/B000APVZ7W • Ogilvy on Advertising - https://www.amazon.com/dp/039472903X • Writing That Works - https://www.amazon.com/dp/0060956437 • When More Is Not Better - https://www.amazon.com/dp/1647820065 • Scientific Advertising - https://a.co/d/0ixEJA1B • The Choice Factory - https://a.co/d/0ixa769O — Check Out Sam's Stuff: • Hampton (joinhampton.com): My community for founders. Average member does $25m/year. Many of the guests are members. Get after it...apply: http://joinhampton.com/mfm — Check Out Shaan's Stuff: • Shaan's weekly email - https://www.shaanpuri.com • Visit https://www.somewhere.com/mfm to hire worldwide talent like Shaan and get $500 off for being an MFM listener. Hire developers, assistants, marketing pros, sales teams and more for 80% less than US equivalents. • Mercury - Shaan uses Mercury across all of his companies. you can too: http://mercury.com/ Mercury is a fintech company, not an FDIC-insured bank. Banking services provided by Choice Financial Group, Column, N. A., Members FDIC • I run all my newsletters on Beehiiv and you should too + we're giving away $10k to our favorite newsletter, check it out: beehiiv.com/mfm-challenge My First Million is a HubSpot Original Podcast // Brought to you by HubSpot Media // Production by Arie Desormeaux // Editing by Ezra Bakker Trupiano /

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  There are two ways of making money. You can either make desirable things or you can make things desirable. And there's not much you can do about the laws of physics, whereas the laws of psychology are magnificently malleable.

• 0:22Sam Parr?

  We know about you, but do you know what you're getting into at all?

• 0:26Speaker 00

  Up to a point. I know of the podcast quite well.

• 0:29Sam Parr?

  I know that you're like recently a kind of a social media star, even though you've been killing it for decades. I've heard a story about how someone just started like uploading some of your talks and it went viral and then you said, maybe I should do this.

• 0:41Speaker 00

  It happened, I think, accidentally. And I've kind of reversed engineered what happened, which is that most marketing people talk about what they do. And my argument is of necessity, I started talking about how we think. And consequently, you know, the willingness to accept the fact that surprisingly arbitrary seeming trivial decisions may have a monumental effect on is actually necessary to have a proper understanding of living in a complex interconnected system. If you believe there are important strategic things, and then there are trivial things which you delegate down to junior people and in which you have

• 1:23Speaker 00

  no interest whatsoever, fundamentally, I think you're missing the point because the real world isn't like that. It's, you know, it's full of butterfly effects, silver bullets, you know, you know, small things, alchemy, I call my book, because you can turn lead into gold. You can literally take something which is seen as a product disadvantage and turn it into a strength.

• 1:46Sam Parr?

  I think you had a good example of that with, have you ever heard Sean, the story of how horsepower kind of came to be?

• 1:53Speaker 00

  No.

• 1:55Sam Parr?

  Tell that story.

• 1:57Speaker 00

  So one of my, one of my great contentions is that when we look at great entrepreneurs or great inventors, Jobs, you know, if you say Edison, Ford, Watt, Bolton, they tend to be written up as historians as inventors. And my argument is that an invention isn't an innovation until it changes behavior. I think it's Stuart Butterfield of Slack who said something very similar, you know, the only real measure of the effect you're having on innovation is the extent to which you change behavior. And you can invent anything you like, but if you can't get anybody to adopt it, it's an invention, but it's not an innovation. And Watt was selling steam engines to mine owners. And the purpose of

• 2:41Speaker 00

  the steam engine was to replace the horses they used to walk round and round in circles, draining the mines so that miners could go in and effectively mine coal slate, gold, whatever, without drowning. What he realized is that you could, as an engineer, you could talk around, you know, the calorific capacity of the boiler or the length of the piston stroke or whatever. And these people didn't want to know. So Watt and Bolton amongst themselves said, well, what do these people really want to know before they're prepared to buy a steam engine? They said, they want to know how many horses they no longer need to feed if they buy a steam engine. How many horses can I get rid of if I buy the steam engine? So Watt went out and invented a unit we still use today, which is called the horsepower.

• 3:25Speaker 00

  And the reason it's not named after a famous scientist like the Ohm or the Newton or the Coulomb or the Watt, for that matter, or Celsius or anything of that kind, is because it's a marketing unit. It was invented for marketing purposes because he could then go and say, if you buy a 25 horsepower steam engine, you can actually get rid of 75 horses because I think the horses worked in shifts. So it does the work of 25 horses, but it does it 24 hours a day. So you can now get rid of 75 horses. And these people would go scribble, scribble, scribble, scribble, scribble, cost of horses, cost of feeding horses, cost of looking after horses. And, you know, on the back of an envelope, they could then go, we'll have two of those. By the way, it went even further than that. I mean, the industrial revolution was a marketing revolution, every bit as much as it was an

• 4:10Speaker 00

  industrial revolution, because there was no point in being able to produce things in abundance if you couldn't create corresponding demand. So, you know, one of the things about the 18th and 19th century in England was it was absolutely pioneering period in terms of how people marketed things. And that included the steam engine where Watt and Bolton would go to a mine owner. Now, let me get this right. Some people were already using Newcomer engines, which were less efficient steam engines than the Watt engine. And Watt and Bolton would go along to the people who were already using these inefficient steam engines. And this is how they priced their, their own steam engine. They said, we'll supply

• 4:49Speaker 00

  it for free. You pay us a third of the money you save on coal. So it was literally hardware as a service. Bear in mind, this was 1775. I mean, years later, Rolls Royce started charging airlines for jet engines in the same way, effectively. You pay us for every hour the engine is in service. Now, what was ingenious about that was of course, it aligned the interests of the people selling the steam engines and the people owning the mines, because the people in the country where coal was most expensive, most needed to make money, to save money on coal, that was Cornwall, where there were tin mines quite a long way away from any available coal field. So coal was more expensive there.

• 5:30Speaker 00

  And so the first Watt engines tended to be installed in places where coal was most expensive, which meant that mine owners saved more money and Watt and Bolton made more money. So they were actually capturing the upside. Whereas if all you done is said, yep, it's 100 guineas for a steam engine, you wouldn't have been capturing any of the upside. I mean, this was, you know, I have to say, this, this was pretty smart stuff. I mean, one of the worst mistakes you can make is thinking that people 500 years ago, 300 years ago, 200 years ago were thick. They were very, very clever. And probably they had less time staring at smartphones and more time to be clever, to be absolutely honest. But something I discovered the other day is the Orson Strait in Denmark. The Danish

• 6:15Speaker 00

  Crown wanted to charge effectively customers duty on any cargoes passing through the straits of Denmark. And they had a kind of stranglehold over it. And the original thing was they'd send people on board and say, we'll estimate the value of your cargo and we'll charge you 10%. And they thought, this is a lot of bother. So they said, they said to the people passing through the Orson Strait, this is like 1350. Okay. You tell us what your cargo is worth. Okay. We'll charge you 10% on that. And by the way, every now and then, we'll randomly buy your cargo at the price you quoted.

• 6:51Sam Parr?

  Dude, that's like how we pay taxes.

• 6:54Speaker 00

  It's ingenious, isn't it? Yeah. You could do property valuation that way, you see? It's simply says, you tell us what your house is worth. And the only deal is we have the right to buy your house for that amount of money.

• 7:04Sam Parr?

  What's funny is, um, I think that in America, I think it's like, I think 0.4%. I could be getting the numbers off it, but it's like between 0.4 and like 2% of Americans get audited every year. And like, if you do the math, it's like, I don't know, man, it might be worth pushing it and just get audited once every 30 years.

• 7:24Speaker 00

  You're absolutely right. Yeah. Having said that, an IRS audit, from what I've heard, is a living nightmare, isn't it?

• 7:29Sam Parr?

  Yeah, yeah. I'm not actually being serious.

• 7:32Shaan Puri?

  You know who needs the modern day horsepower is all of the AI products. You know, if you, if you have Claude and you have chat GPT, essentially they're all making the same looking product, right? It looks like a chat interface and then you type something and then it gives you something back. And so they're not differentiated in the experience or the, the look and feel of the product that much. And then they come out with these models and each one has a different, you know, Opus 3.0 light, heavy, X Pro Plus. And you're, you have no idea which to use. And then they use benchmarks that are, it's like on the crud lightweight benchmark of coding expertise, we're at 3.779. Why don't they just have the equivalent of horsepower? Why don't they just write IQ?

• 8:17Sam Parr?

  Yeah. Or when like Apple was like, uh, the iPhone, instead of saying like it's X amount of megabytes of gigs, they said, a thousand songs in your pocket.

• 8:25Speaker 00

  A thousand songs in your pocket. Now, this is the classic thing, which is that engineers...

• 8:29Sam Parr?

  I've talked to hundreds of entrepreneurs on this podcast and I've got a bunch of takeaways, but one of the big ones, one of them that shocks a lot of the people out there who are product nerds, which frankly I am myself, is that oftentimes in order to turn something that's going kind of good into something that's absolutely amazing is to fix the marketing, not the product. And in particular, fix how many people know about the product. That's like the big thing. It's called attention. Say it with me, attention. And so this team at Starter Story, they put together a free guide. They call it the $1 million attention guide. It's this pretty amazing 39 page document that's filled with 15 tactics to get eyeballs on what you are building. And so there's a, even a 30 minute recording from Pat, who's

• 9:12Sam Parr?

  the founder of Starter Story. He has interviewed hundreds and hundreds of entrepreneurs. So he's able to put this together through a bunch of research and experience. And so if you're interested in getting more attention, which frankly you should be, everyone should be, then you should click the link below in the description or scan the QR code right here.

• 9:28Speaker 00

  Engineers, whether they know it or not, deep down, just want to impress other engineers. Okay. And so a psychological solution in their engineering community will be seen as cheating. So I make the same point about electric cars, which is you have this thing called range anxiety. And we're spending billions and billions of dollars a year trying to produce batteries with a higher energy density. It's a really good thing. I'm not, I'm not saying, hey, engineers, you're wasting your time. But isn't it cheaper just to reduce anxiety rather than to increase range? Because if the way to reduce range anxiety is always to increase range, we'll end up with electric cars being heavier than they need to be, more expensive than they need to be. And, you know, with 50 kilowatt

• 10:12Speaker 00

  hours sitting outside your house, 95% of the time effectively doing nothing. So reducing anxiety, and I realize by the way, how irrational this is. I'll explain the story, which is, it fascinates me because one of the things I think that helps, if you want to do this, is to have some degree of metacognition, which is you don't just think, you think about your own thinking. It's apparently true of fighter pilots. The really good fighter pilots have good cognitive skills, but they also have good metacognitive skills. They don't just go, I'm going to do that instinctively, but they also ask, is there a reason why I shouldn't be doing that in this instance? Okay. Or this time it's different, as it

• 10:52Speaker 00

  were. And so my wife's car is a Mini Cooper Electric and it's got about, I guess it's about 28, 30 kilowatt hour battery and a range of about 100 miles. And I've got the Lotus Electra, which is a hundred and twelve kilowatt hour battery. It ranges about three hundred miles. And I got back from quite a lot of driving. I'd been down to Wales and back. And the car's down to sixteen percent. Okay, I'm going, and all the lights have gone amber because it's at sixteen percent. So I'm, I'm, I'm going white knuckle on this. I'm going, gone, I'm down to, I'm sixteen percent. Oh, my goodness, I was down to sixteen percent. Then I look at the actual range and it's about fifty eight miles. Now, my wife's car, that's fifty six percent.

• 11:36Speaker 00

  Okay, in my wife's car, we drive around at fifty six percent, i.e. with a range of fifty six miles all the time, without the slightest smidgen of anxiety. But when that's expressed as sixteen percent, not fifty six miles, okay, I'm suddenly having conniptions and really panicking. Now, what that suggests is that range anxiety is much more a factor of psychology than it is of physics. And the problem with trying to increase battery range is that laws of physics are actually kind of set in stone to a large part, okay? There's not much you can do about the laws of physics, whereas the laws of psychology are magnificently malleable. And so that's the thing that really interests me because we spend a lot of time effectively trying to

• 12:21Speaker 00

  uh work within the laws of physics, which are immutable. When it would be a lot easier just to say, actually, you know, why don't we, why don't we take this undesirable thing and make it cool?

• 12:35Speaker 00

  You know?

• 12:35Shaan Puri?

  This is the uh elevators need to go faster. No, no, no, just put a mirror in the elevator.

• 12:40Speaker 00

  Put a mirror, just put a mirror.

• 12:41Shaan Puri?

  People will be happy looking at themselves.

• 12:42Speaker 00

  People will be happy. And it's actually, by the way, it gets quite philosophical this because you suddenly realise that literally trillions of dollars of effort are invested by businesses every year in pursuit of metrics which the customer may not notice or care about. Whereas at the same time, no money is spent on things which would actually make a huge difference. There are relatively easy wins here for both government and the private sector in saying, I'll give you an example of this. So I call this reverse benchmarking. In other words, you look at all the metrics that everybody cares about in the category.

• 13:22Speaker 00

  You find a metric that's been completely and ridiculously neglected and you double down on that thing. Now, I first came across this in Will Godaro's fantastic book, Unreasonable Hospitality. He goes to the number one restaurant in the world. All of his team say, we ought to copy this. We ought to do that thing with the napkins. I really like what they do in the bathrooms with the scented joysticks. Let's copy that. And Godaro goes, not going to copy any of that because two, one, we can't afford to, and two, they're already doing it. What I want to know from you is what out of this evening at the world's best restaurant, Michelin three star restaurant somewhere, what was a bit disappointing, what was a bit meh? And they said the coffee was a bit average, you know, it was nothing special.

• 14:05Speaker 00

  And the beer drinkers, probably the chefs who'd gone along, got treated really crappily, shabbily compared to the wine drinkers. So he goes back to his own restaurant and he appoints a coffee sommelier and a beer sommelier. And he says, your job is not just to benchmark against these people, it's to hit it out of the park. Now, if you think about it, taking something that's bad about the category, not, not saying we need to raise our level to the category average, but instead doing it spectacularly well, something that nobody's expecting. That was what Apple did, I would argue, okay? That's what Buc-E's did. I don't know if you're Buc-E's. Where, where are you in the US?

• 14:46Sam Parr?

  Yeah, I lived in Texas. We, we were big Bucky guys.

• 14:48Speaker 00

  Yeah, okay. It basically started with an insight around women's restrooms. Now, you could have just had averagely clean women's restrooms. You would have benchmarked, no, no, no. They're like the bloody hall of mirrors at Versailles, right? I mean, I haven't been in them, but the men's restrooms are pretty good, but the women's ones are apparently sensational. And my argument is that, you know, if you, let's say you're a hotel, okay? Everybody will focus on the rack rate and the this and the size of the room and, you know, so on and so forth. Have you ever had a ho, even in a really expensive hotel, a laundry experience that isn't a bit of a pain in the ass? You know, you've got to fill in a form, you've got to put it in a bag. By the way, if you get your laundry back, they never replace the bag the second day.

• 15:32Speaker 00

  So if you want a second lot of laundry, you've got to ring up and ask for another bag and another form. Okay, now, what would happen if a hotel, if I stayed in the hotel, which was, I'm not saying you could be totally shit. Okay, as a hotel, as long as you have a brilliant laundry service. You know, Apple is, you know, on a par technologically with other entities, but it's sensationally good at the emotional component. You know, Buc-E's is what, it's, it's a thing apart. You know, Uber doesn't have cabs that smell of urine. I'm not suggesting you can neglect the other stuff. But I think what you can do is that when you cause the customer to pay attention to something, it consequently becomes more important.

• 16:14Speaker 00

  Because it's surprising and because it's attention grabbing, it therefore suddenly uh uh causes the consumer to completely reweight their utility function. Now, one of my examples would be car rental. I don't, I don't know if you rent cars at airports, presumably occasionally?

• 16:32Shaan Puri?

  Hate doing it, yeah.

• 16:33Speaker 00

  Yeah, exactly. Hate it. Now, once you've driven out of the car park, it's the same shit. It doesn't really matter. Maybe, maybe you can make rental return a bit better, but let's not worry about that, okay? I just ask the question, why is it that when I book a taxi for a hundred dollars to pick me up from the airport here in London, they meet me at arrivals and even push my trolley of luggage to the car park? Okay, but if I rent a car for six hundred dollars, I've got to find and queue at the car rental desk. Then I've got to go and find, often in like hundred and ten degree heat, I've got to go and find the car. And then, by the way, there is, there isn't even a laminated sheet of A four paper in the car saying,

• 17:13Speaker 00

  this is how you open the fuel filler cap. This is how you release the handbrake. You know, there's nothing, right? Once you're in the car, about ten, twenty minutes in, you start to enjoy it. But that initial bit, which nobody seems to be measuring, is the bit that's terrible. Now, in some cases, I would literally happily pay a hundred quid if the deal is, we meet you at arrivals, okay? We take the luggage to the car, we hand you the keys, we answer your questions about how the car works. If, by the way, they also turn the air, now, you could do this with electric cars, if they also turn the air conditioning on ten minutes in advance, okay? Now you've done something which is, now, there's that thing, what, what's that funny thing, Turo, isn't there, I think?

• 17:56Speaker 00

  Which, because it's humans, might, might be able to create something a bit like that.

• 18:01Sam Parr?

  Yeah, they, I, I use Turo all the time. They have a thing where it will, the, the loner will drive to your home.

• 18:08Speaker 00

  And because of that, by the way, when I rent cars at large American airports, say Phoenix or someone like that, I actually arrive at Phoenix, take a taxi to the hotel and then book the car the next day. Because the downtown experience of car rental with no luggage is so much better than the airport experience with luggage.

• 18:27Shaan Puri?

  You know, we asked you a question earlier of like, so how do you do it? And it sounds like one thing that I'm picking up is, you know, you pay attention to what irritates you. And instead of just complaining about it, that's a great source material. I think Jerry Seinfeld says irritation is innovation. I think when he was creating his uh, his talk show, it's because he had been, for years, he'd been famous. He got invited on late night talk shows and he would go. And it's just every, if you look at every late night talk show, it's the exact same. There's the guy at the desk, there's the cheesy music, there's the band guy that they have, you know, sort of forced laughter with. And when he created comedians and cars getting coffee, it was the equivalent of a talk show. He's like, what's the opposite of everything I hate about those things? And then he created something and I think licensed it for like a hundred million dollars to Netflix, starting with irritation at the way that this thing always works.

• 19:12Speaker 00

  There's a British show, I don't know if this exists in the US, called Room One O One.

• 19:16Sam Parr?

  I don't know it.

• 19:17Speaker 00

  Room One O One is, I think it's from Orwell. It's the room to which you'd badish things that you really want to get rid of. And people will come in and just have a rant and it will be everything from, you know, uh potholes, slightly boring choice, to cummerbunds or something similar like that, you know? Something that people just think is utterly unnecessary and needs to be eradicated. And you're absolutely right, irritation is innovation. And so one of the things is that I would argue that um there are, in a sense, there are two really valuable things. One of which is what you might call the meta stuff, which is, what are you really in the business of?

• 19:56Speaker 00

  Now, you know, Nassim Taleb and I had this conversation about why you actually buy the things you buy. And my joke is, you know, my jokes were, the reason you have a swimming pool isn't to swim in it. It's so that you can walk around your garden in a bathing costume without feeling like an idiot, okay? So on a hot day, you can walk outside and, and lie outside without wearing many clothes, without feeling stupid. Okay, and a dishwasher isn't principally valuable because it washes your crockery and plates. It's valuable because it keeps them out of sight. But when you, when you look at these things and go, maybe it's not about this, maybe it's all about that. What you have to acknowledge is two things, I think.

• 20:37Speaker 00

  One, you've got to let go of two handholds at once, which is what makes it difficult. One is economic logic, you know, if we reduce the price, more people will buy it. Economic logic is, has very bad predictive value, I think, in the, you know, in consumer behavior. And the other thing you've got to, you've got to partly abandon is conventional approaches to market research, where you, you think that we've asked the customer what it is they want, and they will tell us. Because most of what we feel isn't even thought, let alone spoken. And, and also, there are very, very large areas of consumer behavior, which are, they

• 21:17Speaker 00

  may be meta rational at some level, but nobody will ever tell you, I would buy that product if it were more expensive. But there are plenty of documented cases of exactly that happening.

• 21:31Sam Parr?

  I think you, your buddies with the, Daniel Kay.

• 21:35Speaker 00

  Cardman.

• 21:35Sam Parr?

  Yes.

• 21:36Speaker 00

  Yeah.

• 21:37Sam Parr?

  And he, in his book, Thinking Fast and Slow, I don't know if you've read that, Sean, but one of his, like, one of the famous examples was The Economist, I think it was, or something like that.

• 21:45Speaker 00

  Yes, that's absolutely right, the decoy, the decoy.

• 21:47Sam Parr?

  Yeah, they like do this thing where they say, you can get The Economist for $20 a month, and you get all of these things. And if you get the other version of The Economist, you get all of these things plus digital access.

• 21:59Speaker 00

  Paper, paper only, paper plus digital, and digital only. And paper only and paper plus digital were the same price. So you looked at that, and your mental frame was, if I get the, if I get the paper version, I'm getting the digital one for free. Vanishingly few people ordered paper only. Now, if you remove the paper only one, so you, you know, effectively, you had digital or digital plus paper, vanishingly few people chose the one in the middle. But the presence of the middle option increased by about 200 or 300% the number of people who subscribed to paper plus digital instead of digital. It, I think it shifted the ratio from one direction to the other. And by the way, that's pretty valuable to The Economist, because my hunch is that their

• 22:43Speaker 00

  paper circulation is much more valuable in terms of advertising revenue than their digital circulation is.

• 22:49Sam Parr?

  One of the best Ogilvy ads, my favorite ad, is David Ogilvy writes this letter, and it's, I think it's called How We Write Ads at Ogilvy. And he like has this like long, maybe 1,000 or 2,000 word essay on like the 18 points on how they create ads that are effective. And some people might be like, well, why would you give your secret away? And he was like, well, I'm gonna teach them how we think.

• 23:13Speaker 00

  There's also a really interesting aspect in business, which is, if you give your secrets away, you assume that people will copy you. And the odd thing is, they don't. And quite often, the reason is, they're just culturally incapable of doing it. So for example, if you point out that physical direct mail is very successful for a business, you'd think that your competitors would go, well, that's a useful learning, I must do some more of that. What you then discover is, no, actually, they're culturally, they just find using, for example, an old fashioned advertising medium, simply too difficult to justify, or too unfashionable, or whatever it may be, to be comfortable with it.

• 23:55Speaker 00

  And so even if you just give away the evidence of how you do what you do, what you find is that you're copied much less than you'd expect.

• 24:04Shaan Puri?

  Hey, let's take a quick break. You know that feeling when strategy is done, the brief is written, everyone's aligned, and you realize someone still has to sit down and actually create all the content? That someone is usually you, and it's due tomorrow. Well, the Breeze assistant from HubSpot can help. It works right inside HubSpot. You can draft a campaign copy, blog posts, emails, all in your brand voice, all using your actual customer data. So you don't create just content, you create content that converts. Check out hubspot.com, the agentic customer platform for growing businesses.

• 24:32Shaan Puri?

  You said you study how we think, or you like to talk about how we think versus what you do. Let's break that down. Okay, so if I just asked you a very simple question, that's probably very broad, and you could take it any direction you want. How do we think?

• 24:47Speaker 00

  I think what happens is that small businesses, family owned businesses to some extent, founder led businesses are an exception here. What's interesting is simply being able to understand that value is not really produced in the factory, it's produced in the mind. And that there are two ways of making money. You can either make desirable things, or you can make things desirable. And each of them is as profitable as the other. For some reason, once a business fit hits a certain size, it gets focused on what it does, not what it means. And I think there's a kind of invisible loss there.

• 25:29Speaker 00

  Now, similarly, at the same time, I think those businesses lose the capacity to innovate as well. Something, something rather depressing happens, which is, you effectively get caught in a mindset where you probably have a mental metaphor for your business. You're looking at it as if you're an engineer looking at a piece of machinery. And it's reductionist, it's about optimizing the parts rather than optimizing the whole. And at some level, I think, that model becomes unhelpful. But also what happens, I think, is that you become more and more uncomfortable with uncertainty. And this is where it gets quite interesting.

• 26:14Speaker 00

  There's a wonderful story I always tell, which is Richard Thaler, the Nobel Prize winning economist and behavioral economist, the author of Nudge. He once spoke to a board of about 10 people, very large company. And he goes to the eight heads of the largest divisions of this company, and he asked them all simultaneously a question. Would you take a decision if it had a 50% chance of increasing your profits next year by 50%, and a 20% chance of reducing your profits by 30%? And six out of the eight of them said, no. And Thaler goes back and says, well, you know, you're all good enough mathematicians, I assume, to realize these are highly favorable odds.

• 26:56Speaker 00

  To a gambling man, you know, this is a very, very good bet. And yet you decline to take part. Why is that? And they reply, six out of the eight of them, because 20% of the time, or 30% of the time, I'd lose my job. And then the interesting thing happens, which is the chief executive is sitting at the end of the table and looks aghast at the eight people and goes, but I want all of you to take those odds. Because net, net, in aggregate, we'd almost certainly end up massively better off. Yes, two divisions, one division might have a slightly disappointing year, but four of them would perform spectacularly.

• 27:36Speaker 00

  And you realize that the way that businesses are structured, as you push responsibility and accountability further and further down the organization, they become more and more risk averse, and they become more and more uncertainty averse. So they would prefer a definite 5 to 10% to a probabilistic, a 50% chance of 50%. And what happens then is that you, fundamentally, you become highly conservative. You're more worried about downside avoidance than you are upside opportunity. And as a result, obviously, both innovation and marketing, I would argue, are fat tailed activities, where 10% of what you do is probably more valuable than everything else.

• 28:21Speaker 00

  You know, you can't tell in advance which 10% it's going to be. They are processes of exploration and discovery. And what you do is you get rid of the discovery layer in the pursuit of efficiency. And in the short term, it looks like a great idea. But in the longer term, it's, it proves fatal, I think. Because you've lost the capacity to adapt, to reinvent, to reposition in pursuit of the occasional, the occasional breakthrough.

• 28:51Sam Parr?

  We, we have a very startup oriented audience, of which a lot of people are founder led businesses, or they want to be. So we could talk about like how big companies turned around, but what's an example of a startup or small company that you look at and you're like, oh, they nailed it, and here's why they nailed it, even though if this was pitched at a big company, this would never have worked, but here it is, kicking ass?

• 29:14Speaker 00

  I mean, the example that I always feature in my book is Red Bull, which is an example of a business that makes no sense. In other words, you could only really justify Red Bull on the basis of intuition. There was some pre-existing popularity in Thailand, where I think it was bought by lorry drivers to keep a wake in night, okay? But someone there was capable of making the leap of imagination into, into an uncertain future.

• 29:42Speaker 00

  Where a drink which cost a lot of money came in a tiny can and research told them consumers basically found mildly repellent. Okay. In defiance of all the rational odds, this had potential. And it's worth noting that generally, there's always a lot of data from the past because all big data comes from the past. There generally isn't much data about the future. There are two problems there, one of which is if you insist that every single decision is based on data, all your decision making has a status quo bias because all your data comes from the past. There isn't any data about the future. The second problem that happens is that the things you tend to focus on tend to be

• 30:24Speaker 00

  the same things that all your competitors are focused on, which means that you unwittingly perhaps become more and more similar to every other business in your category, which means you become more and more indistinguishable and less and less distinctive, which effectively means you get involved in a kind of race to the bottom. You create kind of red water competition. And one of the things I would say is an almost unfailing trick to innovate, both to innovation and to brand building, actually, is to find the metric which your competitors have neglected, which they don't even bother to measure, or which is difficult to measure. Quite often, it's an emotional metric rather than the, you know, a time, space, cost, price, distance metric.

• 31:10Shaan Puri?

  What's an example of that?

• 31:11Speaker 00

  Well, Apple, in that everybody was asking the question, what can a computer do in Silicon Valley, you know, in the 1970s? And Steve asked the question, yeah, but what does it feel like while you're doing it? He asked aesthetic and emotional questions in an industry where everybody was focused on technological questions. But in another example, the Uber map is an example of that, where riding in an Uber is more or less the same as riding in any other taxi. What Uber completely transformed was the experience of booking and waiting for a taxi. And by the way, at the other end of the journey, the experience of paying for it. So the Uber map, whether this was intentional or whether it was just some software guys

• 31:54Speaker 00

  thinking it'd be a cute thing to do, when you booked a taxi by telephone, you rang up having no idea of what the likely availability or wait time would be. In many, in many cases, they say, yeah, we'll have a car for you in 10 minutes. You kind of go, it's too early, you know? You had no idea. You had no expectation of car availability. And then when you booked the car, you had no idea when the car was going to show up and you'd have to hover around on the sidewalk, you know, waving at any likely looking passing car that appeared to be looking for your address. Suddenly Uber changed all that because it gave you an estimate of availability, it gave you an estimate of price, it approved your payment in advance, and then it showed you on a cute map what the license plate number was of the car and where it was and how long it was going to take to get there.

• 32:39Sam Parr?

  The funny part is, I think, I remember Sean and I lived in San Francisco when Uber first came out and you would pull up your app and be like, all right, you'd see the cars driving around you and you'd be like, oh, there's one nearby, maybe I could snag it. And I don't think that was even real. I think those were fake.

• 32:56Speaker 00

  I've also heard the same thing about pizza delivery, which is when they say it's in the oven, you know, it's, you know, it's being prepared, it's in the oven.

• 33:06Shaan Puri?

  You just have to add probably, it's probably in the oven.

• 33:09Speaker 00

  To be honest, I don't think they're actually scanning a barcode on every pizza that goes in. There is a component to it, however, which is that if you feel that progress is being made, McDonald's probably and KFC probably make a mistake here in that if you order on screen at McDonald's, it basically says, in preparation, ready for collection. And they could probably play a game there where they say, you know, being prepared, you know, on the, you know, on the tray, they could give you an impression of forward movement because it's all to do with dopamine and, and sort of effort and reward. And consequently, it's a little like if you imagine a chimp hacking away at a termite

• 33:53Speaker 00

  mound, if it comes across one or two little termites, you know, just small pieces of reward, it'll keep going, it'll feel content to keep on going. Whereas if you have a long period of effort without any, any seeming reward, fundamentally, the experience is very, very different. I mean, I remember a brilliant case of this, and it's simply, you know, it's, it's mind hacking, I make no apology for it. I probably would defend in court the practice of Domino's creating somewhat fictitious delivery cycles on the grounds that it simply makes people feel better. Now, the, the, having the cars circling around, I've heard both stories that they are to

• 34:35Speaker 00

  some extent accurate, or they're kind of what you might call they're figurative. So they, they, they show you car density without actually showing you the accurate, accurate location of a car. I've heard various stories about this. There are also, by the way, elevator buttons, door close, which are placebo buttons. So they don't actually speed up the closing of the doors of the elevators at all, but they give impatient people in the elevator something to do.

• 35:01Sam Parr?

  Is that true or is that a rumor?

• 35:03Speaker 00

  No, no, it's effectively the illusion of agency.

• 35:08Speaker 00

  And I'm, I'm kind of mixed on this because my argument, this gets very complicated. I mentioned this in my book, which is that Neuraphen, which is kind of like Advil, and there were various variants, more expensive than the standard variant, which were, you know, Neuraphen for period pain, Neuraphen for cold and flu. And these were formulaically, in some cases, identical to the base product. And my problem there is that the psychology of pain relief is so full of placebo effects that taking something that says for period pain and costs a little bit more will actually

• 35:49Speaker 00

  reduce your period pain more, even though the chemical constituents of the drug are more or less the same. But there are debates about the placebo effect and, you know, all the way from people who claim that you can do placebo surgery. I mean, there are people who claim that if you actually attempt to fit a gastric band, then you don't fit the gastric band for whatever reason, the person will still lose weight. I mean, so there are people who are absolute placebo effect fundamentalists, all the way to people who are fairly skeptical, but where it's universally agreed is in the area of kind of analgesics and pain relief, psychological factors, perception plays a massive role.

• 36:31Speaker 00

  And of course, there are forms of pain which are enjoyable. This is where it gets stranger still. So if you have, if you have a cut on your, your chin, say, and you put some sort of antiseptic on it, you want it to sting in a way because the sting is evidence of efficacy. The fact that it's hurting proves it's working. And so your reaction to this stinging pain is not entirely discomfort because you've reframed it as this is proof that it's doing its job.

• 37:04Sam Parr?

  Yeah, it's like burning off the, the.

• 37:06Speaker 00

  Burning off the bad things, et cetera. And so, you know, this is where it gets really strange, but my argument is that nearly all organizations, and this is where innovators and, and family owned businesses have an advantage because family owned businesses are, for example, privately owned businesses, founder led businesses are free to use intuition in a way that publicly held companies aren't because most people in a publicly held organization feel that everything they do has to be rationally justifiable from the get go. Now, what you do has to be justifiable eventually. There's no point in doing something which fails decade after decade. I get that.

• 37:48Speaker 00

  But the freedom to actually act on hunches, to act on intuition, to place bets for which there isn't much pre-existing evidence is an advantage to the entrepreneurial business over the established business because they can explore a much larger solution space.

• 38:05Sam Parr?

  Hey, can I ask you a question on how you got good at this stuff? Because I know that you're a thought leader when it comes to this stuff, but you were a practitioner for years and I think you're a direct response copywriter.

• 38:16Shaan Puri?

  Well, well, the story's even better. I think you were not in copywriting, got fired and came back into the copywriting department and went to the top, which is probably a lesson in fit and knowing your strengths and your nature rather than just thinking I'm good or bad.

• 38:31Speaker 00

  Now, I have to admit, it wasn't an accident in that from about week three, working as a graduate trainee in Ogilvy May the Direct, which was the direct response wing of Ogilvy. David Ogilvy was a massive advocate of direct response advertising because he believed that you learnt what works.

• 38:51Speaker 00

  And he was absolutely right.

• 38:52Sam Parr?

  Really quick, define direct response to people who don't understand it.

• 38:55Speaker 00

  Okay, so historically, and back in 1988, when I started work, when there was, there was an internet technically, but there was no web, it typically meant direct mail and couponed press advertisements, or more late, or later advertisements with a coupon or a phone number. But it was an advertisement which invited the consumer, buyer, customer, interested party to respond directly to an identifiable advertisement.

• 39:25Sam Parr?

  So for example, like here's one, it's like an ad for something and there'll be a letter. And at the end, there's like a coupon and it says, fill this out and tell us you want to buy this vacuum.

• 39:35Speaker 00

  And the coupon would have a dotted line around it with a pair of scissors to encourage people to cut it out, or indeed to rip it out and put in their pocket. What would happen is on that coupon, there would also be a code. You'd be asked to quote the code if you telephoned, which related both to the creative execution and the media placement of the ad. Now bear in mind, in I think certainly in the 1920s, possibly in the 19th century, long before medicine and science had grasped that there was such a thing as a randomized control trial, the advertising industry had started testing this kind of thing ages ago.

• 40:18Speaker 00

  Direct response copywriters would, for example, test headlines by running small classified advertisements at very low cost, each with a different little headline in a, you know, in an ad the size of a couple of postage stamps. And they would, they would learn which one got more responses. And they would therefore, when it came to doing more expensive, large, full page advertisements, they'd use the headline that had worked in miniature. But what had happened, and I assume this was at the behest of advertisers, but I don't know for sure, is that newspapers in the United States and the United Kingdom, when they produced newspapers,

• 40:59Speaker 00

  they were printed on two or sometimes four parallel presses, just to produce the number of newspapers you needed. Now, when these newspapers came off the presses, they were interleaved. So it wasn't all the newspapers from, from printing press A went to North Boston and all the, all the newspapers from printing press B went to South Boston. The output from the two presses was interleaved, a bit like shuffling a deck of cards. What that meant was you could run one advertisement in, on press A and a different advertisement on press B, and you'd created a randomized control trial where effectively which of the two advertisements you saw was effectively random.

• 41:43Speaker 00

  In other words, you and your neighbor might well get a different advertisement. But it solved that problem where had you not done that interleaving, you might have had a case where all the rich people got one advertisement and all the poor people got another. And of course, statistically, then the result wouldn't be very, very valid. And because of this, direct response advertisers endlessly tested both creative changes and indeed media selection. They'd find that one medium would work, you know, four times better than another, and one creative execution would work twice as well as another. And sometimes very, very small changes would make enormous differences. So for years, this would have run from something like the 1930s to the 1950s.

• 42:26Speaker 00

  There was an advertisement for a correspondence course, which basically taught people to write more dramatically. And the headline was originally, do you make mistakes in English? Then someone added the word these, do you make these mistakes in English? Which then piques the curiosity of the reader, so they want to know whether the, whether they're the mistakes that they're making. And then somebody else added the word, do you make these common mistakes in English? Which de-stigmatized the idea that if you're making these mistakes, you're an ignoramus. And so you would actually have in direct response businesses, levels of testing at that level of kind of detail.

• 43:08Speaker 00

  And the reason that's so important is that what you realize is that in psychology, there are butterfly effects all over the place. You can do surprisingly small trivial things, and they make an inordinate difference to how people respond, how they emotionally respond and consequently how they behave. And in many cases, that means whether they buy or whether they don't buy. And so consequently, long before there was behavioral economics, there was direct response advertising. And in fact, anybody who'd worked in direct response advertising would have gone to one of those early practitioners in behavioral economics and said, yeah, we've done that for years. Right, oh, and I'll, I'll give you an example.

• 43:53Speaker 00

  This is, it's something like 1991, 1992, and I'm working on direct response advertising for the phone company. And we simply were offering people the chance to pay a couple of pounds a month extra to receive what we called star services, I think in the United States, network services, which is you could have call diversion, you could have call waiting on your phone, and you could have something else, wake up call or something like that. And if you've paid a certain amount monthly, these facilities were added to your home phone line. And we wrote people letters and it said, either send back the pre-laser coupon below in the, in the postage paid envelope, or call this number and quote this code. We gave them the choice of post or phone.

• 44:38Speaker 00

  And we had a slightly bonkers client who didn't want to offer the postal response. I don't know why, I have no idea why to this day. Okay, and so we said, well, let's test it. Let's not just get rid of a coupon response, because that's dangerous. Because, you know, if, you know, if you don't test this rigorously, you could end up effectively damaging your business quite significantly on a whim. And so we tested three kinds of letters, 50,000 people each, randomized, completely randomized selection, as with the newspapers. And one lot got postal only, one lot got phone only, and one lot, as before, got the choice of phone or post.

• 45:18Speaker 00

  Post only 5% response rate, phone only 2% response rate. When you offer people a choice, it was just, it was 7%. Not quite, but almost nearly, I think, the sum total of the, of the two independent response rates. That, that may not surprise, strike you as all that weird. But to an economist, this would be completely baffling, because it would suggest that the more important factor affecting whether you bought the product was not what the product was or how much it cost, but how you were able to actually order it. And from that moment on, I remember thinking, okay, this is extraordinary, because

• 46:00Speaker 00

  every now and then, there are almost certainly brilliant businesses which are failing because they've failed to unblock some sort of psychological bottleneck. In this case, the psychological bottleneck might have been that, you know, all, you know, people just hated using the phone to order something. And you could have rationally spent millions and millions and millions of pounds trying to improve the product, or to spend ages demonstrating what a great product it was. And yet, if you fail at one psychological hurdle, you can doom yourself. And so it's very painful. When people say, how do you get good at this stuff? I'll tell you, I'll tell you my one trick, which is I think I have ADHD.

• 46:43Speaker 00

  Broadly speaking, I'm not very interested in the middle of things. So I'm interested in looking at a question from a deep philosophical level, and I'm interested in trivia. I'm not really interested in the, in the, in the middle, because I think in complex systems, there are two things you can do. You can tinker with the details and achieve surprisingly valuable responses, or you can effectively come up with a new paradigm for what you're doing. Very similar to direct response advertising, where the rule is you either test one thing or you test everything. So in direct response advertising, this would go back to the 1920s, the 1930s, people like, you know, Claude Hopkins and the early kind of practitioners of scientific advertising,

• 47:26Speaker 00

  as they like to call it, which is, you know, you either test the single word or you come up with a completely different advertisement with a different visual. If you test five things, you can't be sure which one of the five is making a difference.

• 47:39Sam Parr?

  Okay, so you've probably have heard this on the podcast, but if you're running a company, I think that the number one attribute that will determine if you are going to succeed in business is how fast you can learn from others, specifically how fast you can learn from other entrepreneurs. But there's a problem with that. I have this problem, and in fact, you probably have it too. That's one of the reasons why you listened to my first million in the first place. The problem is that finding other successful entrepreneurs to learn from, it's a pain in the butt. And so that's why a few years ago, I started a company called Hampton. You can check it out at joinhampton.com. We have thousands of members and they exist for this exact reason. So here's how it works. If you're a founder that does at least three million in revenue and you make it through our incredibly thorough vetting process, we

• 48:20Sam Parr?

  then match you and put you in a group with nine other entrepreneurs. You meet in real life in your city, once a month, and it becomes your peer group that will frankly change your entire life. It's changed mine. I'm in a group as well. And so if you're a founder that does at least three million a year in revenue, check out joinhampton.com. Again, the URL is joinhampton.com.

• 48:42Shaan Puri?

  You know, you've said a couple of things that I think are pretty fascinating. The first one that I wrote down was competing on a different dimension. So you mentioned the taxi versus Uber example. And I love this because if you just sat down with a piece of paper, you gave somebody a creative assignment, you said, hey, make a better taxi. They would almost always focus on the ride. The cost of the ride would be the first. If I could make it way cheaper, that would be great. If I could make it way faster, that would be great. If I could make it way more premium in some way, the ride. And what you pointed out was that there was a psychological bottleneck that was preventing people from doing it. When Uber first came out, I remember people thought it was overvalued. And I was living in San Francisco, they were raising money, and they were doing this analysis

• 49:23Shaan Puri?

  of what percentage of the taxi market, if Uber made up 25%, if it took 50% market share of the taxi market. And what ended up happening was in San Francisco alone, Uber tripled the taxi market within a couple of years.

• 49:38Speaker 00

  I have a very brilliant friend who had the idea for effectively a dynamic market in transportation before Uber. Actually, he patented something before Uber did. And he has a letter responding to his idea from Guy Kawasaki, which said, I can't really see this working in the United States. He said, Americans don't take taxis very much, maybe in New York. And actually, when you think about it, pre Uber, LA was a motorists market if you had a car, and it was a public transport market if you didn't. The taxi market was relatively small. New York was an outlier. New York, obviously, the New York cabs were

• 50:21Speaker 00

  a major thing. But you're absolutely right. Everybody was looking at it as if it was purely cannibalizing an existing market. Now, what the economists and what the Harvard Business Review would say is that they achieved this through lower prices. I don't think they did. I don't think Uber is actually reliably cheaper necessarily. Okay, I think they achieved it through better psychology. And the example I had of what I call, these are the sort of fat-tailed, Jeff Bezos puts it very well. He says, you know, in baseball, the most you can score is four, but in business, you can hit 1,000. And I think that the fear of uncertainty and the unwillingness to experiment in business is causing people

• 51:02Speaker 00

  to endlessly try and sort of hit singles, and at the expense of occasionally trying to hit 1,000.

• 51:11Sam Parr?

  But how do I, like, Sean and I are both business owners. Like, how do we go from being academic and also looking at past results and analyzing past results? Because what's interesting is, like, you guys were talking about Uber. If you read their C deck, even they said, they're like, we think that, you know, if we knock it out the park, this might make $100 million a year, you know? Now they make hundreds of millions every week. What can you tell me where for the next week or two weeks, I can shift my thinking and creative framework or something like that, where I can go and deploy this stuff on my team?

• 51:44Shaan Puri?

  Maybe a habit or a question I can start asking myself, an action I can take to get this sort of different type of thinking?

• 51:52Speaker 00

  I'll give you a real world example. I worked on American Express, which is probably, David Ogilvy always said, if you want to be a copywriter, spend the first five or six years of your life working in direct response, because you learn what works, you also learn what matters. You also learn what not to leave out. I'll give you an example of that. You know, if you were selling a product by mail order, and the coupon did not say somewhere, expect your product within 28 days, or it will be sent to you by post within 28 days, you'd probably halve the number of people ordering because you've now created uncertainty. You've now created a degree of ambiguity. So it also taught your attention to detail, actually, in advertising, which I think a lot of mainstream advertising

• 52:37Speaker 00

  misses, which is, that's all very well and good. You've made a wonderful claim. You've changed people's minds about something. But actually, if you want them to act, they require a far greater degree of certainty than could often be achieved in just a poster or a TV ad. So it was a brilliant training. Working on American Express was probably the best account you could possibly work on, in the sense that they do a bit of everything. It's a brilliant brand, but it also is a very, very professional direct marketing operation. And they do everything. They do member get member. They do card member communications. They do acquisition communications, you know, et cetera, you know, all manner of stuff. David Ogilvy, by the way, always wanted American Express to do a very simple thing, which

• 53:22Speaker 00

  they never had the courage to do, which was to write a letter which basically said, take out the American Express card, and if you aren't happy, if you don't want to keep it after your first year, we'll refund you double the fee. And nobody ever had the courage to do it. I still think it would actually, it would work. But here was the interesting thing, working on American Express. There are little things that American Express did, like putting member since on the card, which cost nothing, but have been worth, and American Express people have told me this, have been worth billions of dollars to American Express since the card was started. People are more reluctant to cancel, because they don't want to, you know, rejoin and go back to year zero, if you like. You know, I'm 60 years

• 54:07Speaker 00

  old. If I had a card with member since 24 on it, it doesn't quite say the same thing as member since 93 or whatever, 95, I think. Okay. So that was a tiny little bit of psychology, which cost absolutely nothing. But it also is a testament to the kind of relationship they have, which is, you know, you're a card member. We don't just issue you a card from one year to the next. You know, we can, it's an intimation that they're in a relationship with you. But here's something that was, it was client idea, although the agency helped, but it was a client idea. This is the late 80s, early 90s. We're encouraging people to get the American Express gold card, which was pretty expensive. I mean, you know, it

• 54:47Speaker 00

  was something like 80 pounds back in the 80s. And we wrote long, long letters explaining all the rational reasons why you want the gold card, you know? And this client, I think, had the leap of intuition, which was, people wanted the bloody gold card anyway. Okay, it's the late 80s, right? You know, it's an area, a period of fairly conspicuous consumption. And he said, they want this card anyway. You know, to be honest, we could just say, it's a great looking card, and people would apply. The reason they're not applying is fear of rejection. And so he managed to find a way in which you could actually say, all you need to do to receive your card, not apply for your card, but receive your card,

• 55:29Speaker 00

  is sign your name on this form. What we know about you suggests you're virtually pre-approved for membership. And the reason we made this so simple is, we want you as a card member. Now, think about the difference there psychologically between applying to Yale and getting a letter from Yale saying, we want you to apply. Right? Okay. Or think of it in dating terms. You're interested in a girl or a bloke, okay? And the difference in terms of your thought patterns, if you thought that person was interested in you. But by the way, there is, I don't know if you've read The Rules by, I think it's called The Game by Neil Strauss, actually, about the pickup artist community. It's kind of an interesting book.

• 56:13Sam Parr?

  Brother, look at us. We've been, we studied, you should see us when we were 14, okay? We, not only did we read that, there's more highlighted parts than there aren't.

• 56:23Speaker 00

  But the interesting thing is, it's actually, for most guys, effectively propositioning everybody you fancy is a workable strategy. Most people can't bring themselves to do it because of fear of rejection, fundamentally. Most people haven't got the, you know, the chutzpah to just chat up and proposition everybody they fancy, because, you know, you'll get a 10% hit, maybe a 5%, 10% hit rate, which is of course all you need. But nonetheless, it comes at the cost of, you know, significant dents to the ego.

• 57:00Sam Parr?

  I'm very much an amateur historian, and like, two major takeaways I've had from reading hundreds of history books is, human nature has been the same and will always be the same. And so you can just copy other people who have done something or be heavily inspired by them. And the second thing is that when humans talk to each other, we use these phrases, like, well, just be rational. Just be this. Like, don't be an animal. Like, just be rational. And it's like, well, we are animals. We are not rational people. And therefore, you can't use logic in order to build something, or you can't use too much logic in order to like, build something great. Humans are like, very irrational beings.

• 57:38Speaker 00

  It's very interesting, because this idea that you should, this is not to say that rationality isn't valuable. It's a question of when you deploy it. And David Hume, the philosopher, said, reason is and should only be the slave of the passions. Now, there's a great book by a French mathematician called David Bécy called Mathematica, where he argues that very little progress in mathematics is actually made logically. What mathematicians do is they use maths to sense check their dreaming, effectively. It's brought in to correct your emotional behavior when it goes wrong. But actually, the idea that in business,

• 58:19Speaker 00

  that the explanation of a decision is more important than the outcome of a decision to your career. That the defensibility of a decision is what you're really focused on, not the quality of the outcome of the decision. What that means is that you're effectively saying you cannot use intuition, which is a bit like going to a detective and saying you can only use information which has evidential value. You can't use gossip, you can't use anecdote, you can't use intuition, you can't use a hunch, you can't use, you know, your sense of smell, as it were. You can only use evidential value to arrive at, to actually solve a crime.

• 59:01Speaker 00

  And it massively limits your ability to solve complex problems. Because what, what your intuition is telling you to do is where to focus your attention. And in the case of, you know, in the case of crime, you might ask a very open-ended question, did anybody notice anything unusual last night between the hours of eight and 10 P M? Now, very open question, all someone will say is a weird man drove past in a white van or something, okay? Doesn't, you know, no evidential value, but it tells you what to investigate next. And if you demand that every single business decision is based on stepping stones of, of pure pre-existing data and logic, you can only get to about five of the possible 25

• 59:44Speaker 00

  places where a solution might be found. And the places you'll get to will all already be occupied by your closest competitors, because they're using the same stepping stones you are.

• 59:55Sam Parr?

  Why, why didn't you ever want to start a, your own company? You, you, you have all these like crazy, cool ideas.

• 1:00:01Speaker 00

  Well, there is one which I did inspire, which is a coffee brand called Flat White or F off.

• 1:00:07Sam Parr?

  Wait, wait, wait, hold on. Did you say you created a coffee called F off?

• 1:00:13Speaker 00

  It exists. It, it might currently be in some sort of legal dispute about the trademark, not with me, I'm happy for them to take.

• 1:00:19Sam Parr?

  Somebody trademarked a F off?

• 1:00:20Shaan Puri?

  Somebody else had this idea?

• 1:00:22Speaker 00

  Let me, let me explain the idea. Okay. It's, it struck me that there were places where you wanted a high-quality cup of coffee, but you didn't want a queue behind people who are all customizing their own bloody drinks. And the technology with contactless payment now allows you to basically tap, pick up a coffee which has been made in advance and walk off. And my argument is that the flat white, which is a New Zealand slash Australian invention with, which is, I think, the right ratio of coffee to milk and with microfoam as well. I think, I think it's basically the, you know, it's the happy medium of sensible coffee drinking. And this is quite interesting, because my assumption was that the place to put this is, they only have two versions.

• 1:01:04Speaker 00

  For the vegans, there's an oat flat white and there's a regular milk flat white. You walk up, you tap your card, you pay four pounds, you pick up a pre-made coffee and you walk off. And my logic was, at the time, train stations and airports were the natural home for this thing. They're expensive real estate, so the fact that you can sell more coffees in a given time, it's Henry Ford applied to coffee, basically. Okay? The argument is that Starbucks and the customization and the time is absolutely wonderful if you're in downtown Santa Fe and you're meeting a friend for two hours, but it's not suited to airports and railway stations. So anyway, this thing launches, it's only, it's only at the trial stage at the moment.

• 1:01:46Speaker 00

  But something really interesting happened, which is shortly after we launched and got some publicity, someone came to us and said, actually, the natural market for this isn't even train stations and railway stations. It's conferences. Quite often, the coffee at a business conference is rubbish, because it's, it's badly-made filtered coffee, because you have to serve a lot of people simultaneously. Or you have a customizable coffee thing, right? Where there's a massive queue, because everybody comes out of the plenary session, they all want a coffee, so they've got something to hold in their hand and not look like an idiot, which is one of the reasons we buy coffee, by the way. Nothing to do with drinking it, it's effectively accessorizing ourselves, okay?

• 1:02:28Speaker 00

  And the point about Flat White or F off is it's high-quality coffee, not crappy filtered coffee, that you can produce at scale by simply reducing the customization level. Now, here's where it gets interesting. Henry Ford was a brilliant marketer. Why did he say you can have every, any color as long as it's black? Because at the time, paint dried at differing speeds, depending on the color. And therefore, if you had a variety of paint colors on the Ford production line, it completely messed up the flow of the production line, because some cars would take longer to dry than others, and it turned out that black was the fastest drying color, so they basically imposed black on the whole Ford fleet.

• 1:03:09Speaker 00

  So it's absolutely fine not to give people something, to ask people to make a trade-off, so long as you make them aware of the trade-off in advance. Okay? That's why it's called Flat White or F off. It doesn't, you, if you turned up at a branch of Starbucks and they said, we, we only serve flat whites, right? You go, what the hell are you talking about? No, no, I want a Frappuccino with, you know, almond milk and blah, blah, blah. No, no. Okay? No, you can't have that, it's, you know. Now, the reason it's called Flat White or F off is it makes explicit the trade-off before someone turns up. So you said, if anybody, the joke is, if anybody turns up and asks for a cappuccino,

• 1:03:50Speaker 00

  you point at the logo and you say, the answer's in the name, right? Now, there's an example of this which always fascinates me. Are you a fan of the moxie hotel chain?

• 1:04:00Shaan Puri?

  Oh, I stayed at one in New York. They're, they're like a kind of upscale, like kind of more modern, contemporary type of chain.

• 1:04:07Speaker 00

  So it's quite interesting, because the rooms are tiny, there's no room service, there's no laundry, okay? But the grand floor's kind of a bit like a, well, a solvent we work, right? Okay. And there's a 24-hour barista, there's a, you know, there's a, usually there's someone making really quite good cocktails. You check in at the bar, you don't check in at the, at the check-in desk, there isn't a concierge, none of that bollocks, okay? Don't go and stay there on your honeymoon, don't go and stay there for a week. But if you've got one or two nights to stay in a place, it's exactly what you want, okay? It's small room, very good T V, very good wifi. The other great advantage is after you've checked out in the morning and had breakfast, to be honest, you can hang out there for another five hours if you want to, you know,

• 1:04:52Speaker 00

  whereas if you tried doing that in a conventional hotel, you'd, you'd feel a bit unwanted. It's, it's, it's basically a brilliant, brilliant, explicit trade-off. And they always said, when I spoke to them, they said, basically, 90% of our customers love this. And the reason they love us is either because they've stayed before, they understand the trade-off and they buy into it, or else they know about how the moxie works and they get the deal, and they've decided in advance, that's the trade-off I want. 10% of their customers are expecting the Marriott, and they're pissed off as hell. And it's a classic example of actually, you know, expectation minus reality, you know, is the formula that matters.

• 1:05:35Speaker 00

  You can provide less of something, so long as you don't actually disappoint.

• 1:05:38Shaan Puri?

  Right. Have you seen the Slate Truck?

• 1:05:41Speaker 00

  Yes.

• 1:05:43Sam Parr?

  What is it?

• 1:05:45Speaker 00

  So it's an absolutely minimalist electric vehicle. It's about $25,000. And you can effectively customize it with all manner of sort of automotive bling.

• 1:05:57Shaan Puri?

  But, but, but the, the core trade-off is upfront. They're like, there's no heat seaters, there's no screens, there's just knobs, you gotta crank the window yourself, it's basic. We're not filling it up with stuff, but it's, if you want simplicity and you want the price to be, it's a $25,000 electric pickup, and you're just not going to get all this random junk that every car company puts in, we're not doing that.

• 1:06:19Speaker 00

  So it was absolutely explicit, and in a sense, that's what, you know, Avis did with, we're number two, so we try harder. This is, you know, don't, okay, we don't have the scale of the other guys, but we make up for it somewhere else. And the consumer's very happy making trade-offs, so long as they're explicit. The problem with a lot of kind of cost reduction and, you know, and efficiency pursuit in business, is it isn't chosen by the consumer, it's imposed on them.

• 1:06:45Sam Parr?

  Hmm.

• 1:06:47Speaker 00

  Which is a very, very different thing. But no, the Slate Truck is a brilliant example of what you might call explicit minimalism.

• 1:06:54Shaan Puri?

  But it, but it's brilliant, they, they underdid the competition where everybody else tries to overdo the competition. And they were just very explicit about it, and it resonated like crazy. I mean, I put, I don't, I would have never bought a pickup truck, and I put a deposit in.

• 1:07:07Speaker 00

  You put a deposit down?

• 1:07:08Shaan Puri?

  I couldn't help it, I loved what they, I loved what they're all about.

• 1:07:11Speaker 00

  And if I'm right, I think they'll discover something really valuable, interestingly, which is, everybody's talking about the idea that cars become shareable. Now, I would share my slate truck with anybody else, right? You know, what's the worst that happens? They vomit in it and I have to hose it down, right? I'm not going to share my my existing car with anybody, right? I don't even don't even let my wife drive it. Right? And so, you know, one of the what they'll do when you do these eccentric things, as with discovering that FW or FO is a is a is an absolute godsend for conference organizers.

• 1:07:53Speaker 00

  What you often do when you do something eccentric is that you plan and you do your, you know, cost benefit analysis and your feasibility study. But generally, when you do something unusual, you discover that your target audience is actually bigger than you expected. And also, it's bigger than you expected because you don't have the same competitors that everybody else does. You know, if you think about the Marriott versus the Hampton Inn versus the Doubletree versus the Hilton, it's all kind of like, eh, okay, right? Whereas the distinct, do you know what Moxie, why the Moxie is called the Moxie? It's because the project was called Marriott on Generation X and Y. And so it was called Project Moxie and they never got around to coming up with a new name for it, by the way. But the interesting thing is, I'm old, right? I'm sixty.

• 1:08:39Speaker 00

  But my wife and I, my wife's sixty-one, eh? Cradle snatcher. And she, you know, we both, we both choose, as I said, you know, five days, you know, uh, you know, maybe five days is a bit too long to stay at a Moxie. If you've got any one or two or three nights stay, it's what we go for. Because actually, I'm not quite a boomer. I think, what am I, I'm probably, I meant between Gen X and boomer or something, anyway. But I mean, I'm way outside their intended target audience. And so, you know, it's very interesting. If you focus on one target audience, you'll generally generally find that as a byproduct of your focus, you'll find incremental target audiences who, by the way, this is very interesting in terms of tech.

• 1:09:23Speaker 00

  Because there's a lot of tech out there which is really valuable to the old, okay? But the problem is, you can't market explicitly to old people because then young people won't buy it. So cars from you, if you take someone out of the Volkswagen Golf, the average age of a Volkswagen Golf buyer who's buying a new Golf is probably about fifty-nine. But when they advertise it, they don't show a fifty-nine-year-old, they show, you know, a twenty-eight-year-old or a thirty-three-year-old or whatever. And so quite often, you have this very interesting thing that old people are quite badly served by marketing because marketing is always really eager to show the product in the hands of young people.

• 1:10:03Speaker 00

  And there are a couple, several examples of this, one of which is bone conducting headphones. I don't know, they're marketed at joggers and swimmers and the idea is that if you have bone conducting headphones, when you go jogging, you don't lose all spatial awareness and run in front of a bus. Because your ear like, your ear holes are still open and all the sound is transmitted through effectively the bones, it's transmitted to the bones in your inner ear.

• 1:10:30Speaker 00

  Absolutely brilliant for people with hearing loss. Because it bypasses the stirrup and the anvil and whatever it is inside the ear, which are the bits that deteriorate when you get older. And the sound goes straight basically to your aural nerves. Absolute godsend to old people, no old people know about this. And the other one is, actually, I've got one here, the Samsung folding phone, okay? Sorry, bloody cameras wandered off. There we are. God, that's zooming in like something, okay? But this folding phone, okay? There's a secondary market there in anybody over sixty because the standard mobile phone handset is too fucking small. You know, once your eyesight is, you know, goes a bit, I've had a cataract operation, okay? Your standard phone handset is pretty much unusable.

• 1:11:15Speaker 00

  So there's a whole lot of tech out there which really intrigues me because it's actually brilliant for older people, but they just aren't told about it.

• 1:11:24Sam Parr?

  Hey, can I ask you one last question? You, you're, you seem very well-read, very eclectic. I have this Ogilvy on advertising book, but if I wanted to get better at writing copy, but also coming up with ideas and frameworks, can you suggest a few books that I could read?

• 1:11:42Speaker 00

  Some of, okay, some of them are very old. Obvious Adams, Robert Updegrass, published in nineteen sixteen. Where you can read it basically on a single toilet visit. It's about fifty, sixty pages. I'm delighted to say, I think Amazon keep reprinting it or somebody keeps reprinting it.

• 1:12:00Sam Parr?

  Obvious Adams, The Story of a Successful Businessman.

• 1:12:03Speaker 00

  You got it. Now, when you first start reading it, you'll think, Jesus, this is a bit corny, okay? But it was one of David Ogilvy's favorite books. And it's actually about an advertising man and how his approach to problem solving. And everybody, it really delights me because every now and then I mention it on a podcast and it goes to like number one in advertising books on Amazon in the UK. I always, I always take a bit of a thrill for this because this guy died in about nineteen forty-eight, you know? His book's still influencing people. And there's another great one called The Specialist by, I think, Charles Sale. These are some of these old American business books which are absolutely priceless. Scientific Advertising by Claude Hopkins, for example.

• 1:12:46Speaker 00

  There's a book called How to Become an Advertising Man by James Webb Young, who was at J. Walter Thompson in Chicago for many years. Now, there are other great books. Obviously, in behavioral science, Richard Shotten has written some superb books called, for example, The Choice Factory or The Illusion of Choice. And they're really, really worth reading in terms of understanding the counterintuitive aspects of human psychology, if you like. Okay, there, I really, really recommend them. I also recommend you just read widely. I mean, Nassim Taleb is one of my biggest influences because I think differently about statistical things now. I realize that the real world is actually fat-tailed, it's not a normal distribution

• 1:13:29Speaker 00

  and that, you know, a small number of things have a disproportionate amount of power. In terms of writing, David Ogilvy, obviously, anything by him is very, very good, not least because he's a very, very good writer of books as well as a very good writer of advertisements. There's also a thing which is desperately difficult to get a hold of called The Copy Handbook, published by DNAD in the UK. But unfortunately, you have to buy it on eBay and they never did a reprint and it's about three hundred quid. But see if you can find that because it's great copywriters describing how they write. Drayton Bird, a British, he's kind of the British version of Lester Wunderman in direct marketing, various books, for example, Common Sense Direct Marketing. There's a great book published by Ogilvy called, I think it's called How to Write.

• 1:14:15Speaker 00

  This is how to write in business from one business person to another. It's not so much about copywriting. But the guy there was Joel Raffelson and Ken Roman wrote it. They were two Ogilvy, very senior people. I knew Joel. The other reason I'm really, I'm suggesting old books is that an awful lot of things in advertising stop being used. This is why I suggest to anybody here listening to this who's an entrepreneur, go and look at some advertising archaeology. And the reason is that advertising people, just as engineers want to impress other engineers, advertising creatives want to impress other advertising creatives, which means they want to do something that's brand new, never been done before, da, da, da, da, da.

• 1:14:59Speaker 00

  Actually, loads of things get discarded by the advertising industry which never stop working. Long copy press advertising never stopped working. Direct mail never stopped working. Jingles never stopped working, although you have to call it sonic branding now. And one thing that's fascinated me, which never stopped working, it just became unfashionable. If you go back to the nineteen fifties, there are a lot of advertisements which are cartoon strips, right? You know, they're like half-page, quarter-page cartoon stories with people speaking in speech bubbles. David Ogilvy always said, look, that is the single most readable form of print. If you put anybody down with a newspaper, they'll read the comic strips first.

• 1:15:44Speaker 00

  And yet, for some reason, it was massive until the nineteen fifties and even the nineteen sixties, lots of advertising took that form where you told a story in print. And for whatever reason, nobody's doing it. Now, here's what's interesting, okay?

• 1:16:00Speaker 00

  What are kids into now? It's manga, right? If you actually wanted to reach young people, ironically, reverting to this nineteen fifties form of advertising where it's effectively, okay, it'll have to be, you know, differently illustrated maybe, but it's effectively manga, would be about the coolest thing you could do. This is the fascinating thing, and as David Ogilvy said, you're not advertising to a standing army, you're advertising to a moving parade. And new, new customers, you know, new members of new target audiences are appearing all the time who aren't aware of the things that the people born ten years earlier already know.

• 1:16:41Speaker 00

  And so the opportunity, I think, to literally be innovative by simply learning from the past, because the advertising industry is very bad at it. Now, as David Ogilvy would say, you had to, you sometimes you had to break the rules, but you had to know the rules in order to break them, if you see what I mean. You had to be aware of the fact you're breaking a rule and you had to have a good reason to do it. That was fine.

• 1:17:02Sam Parr?

  You, uh, you're a fun-ass hang.

• 1:17:06Speaker 00

  Well, I hope it's been useful.

• 1:17:08Sam Parr?

  Well, I feel like we did maybe twenty percent of what, what I think we could have talked about. And so I think that, I think.

• 1:17:15Speaker 00

  Well, we'll do, we'll do a repeat. I'm very happy to do a repeat.

• 1:17:18Sam Parr?

  Dude, I have like all these notes, I'm about to like run to my marketing team and be like, do all this, bye.

• 1:17:28Speaker 00

  That was awesome. Total pleasure and anytime, really delighted.

• 1:17:42Shaan Puri?

  All right, let's take a quick break to talk about a podcast. Because if you're listening to this, you like podcasts. And what's better than one podcast? Another podcast. And let me tell you, another podcast you should check out, it's called Success Story. If you like hearing about different success stories and hearing Q and A sessions with successful business leaders or hearing keynote presentations or just checking out conversations about sales and business and marketing tactics, this is a great podcast for you. So check it out wherever you get your podcasts.