Rory Sutherland - Mad Men

Full transcript: Rory Sutherland on London Real

6:30 Brian Rose: This is London Real. I am Brian Rose. My guest today is Rory Sutherland, who is the vice chairman of Ogilvy and Mather Group UK, one of the largest marketing communication companies in the world. You write for the spectator under the wiki man column and you’ve given multiple TED and TEDx talks around the world, such as life lessons from an ad man and perspective is everything. I just saw you speak right around the corner at the technology event Digital Shortage, where you talked about blazing new trails, shaking up the model of agency, startup and brand.

7:00 Rory, welcome to London Real.

7:01 Rory Sutherland: Thank you very much indeed. It’s a pleasure.

7:03 Brian Rose: It’s very nice to have you here. There’s something about an ad man, I think, that always fascinates us.

7:08 So I want to get kind of into your head later. But you said that advertising adds value to a product by changing our perception rather than changing the product itself. It’s something I saw in one of your TED talks and I was wondering if you could tell us more about that concept.

7:25 Rory Sutherland: It’s an important point because we like to think, and neoclassical economics insists that we think, that products have a kind of intrinsic objective value, and the truth of the matter is they don’t.

7:37 A huge amount of the value of a product is resident in simply the frame by which we perceive it. Whether things are expensive or cheap or not, for example, is determined simply by our frame of reference or comparison. And a very good story I can tell about that, which always fascinates me, is a friend of a friend of mine joined a club in London called the RAC Club, which is fantastically expensive to join. I think it’s something like £2,500 a year.

8:02 Brian Rose: It’s on Palm Isle, right? Beautiful club.

8:04 Rory Sutherland: Fantastic place. And most of his friends slightly ridiculed him and said, what on earth are you doing? What an insane amount of money to spend. He said, no, no, no. He said, there’s no check I write every year that I’m happier to write than my membership fee to the RAC Club.

8:17 He said, what on earth do you mean? He said, well, I know about the country, but I need to go into London quite regularly. I need to stay the night there maybe once a fortnight or maybe once a week. And my alternative, he said, is to buy a crappy flat in London. Now, if I buy a rubbish flat in London, the council tax alone is going to cost me about £3,000 a year.

8:36 And for that, all I get is a fairly rotten flat in London with a bedroom, a kitchen and maybe a slightly dismal bathroom. He said, with this, I pay £2,500 a year and I get something like five squash courts, four full-size billions tables. I get a swimming pool, a Turkish bath, five restaurants, four bars, a library. I can stay there overnight in what is sort of five-star accommodation for a trivial amount of money. I even have 20 staff on call and my own post office.

9:05 And with the additional benefit with the club, of course, unlike a flat, that nobody rings you at two o’clock in the morning and says your immersion tanks just burst. You need to come over and fix the leak. There is no work, no redecoration, no effort required. You write the check. So framed as an alternative to actual accommodation, suddenly that club membership is not a gratuitous extravagance.

9:26 It’s in fact a bargain. And so even things you would think of as fundamentally as sort of objective as the price of something entirely depends on how, you know, the frame of reference which is applied. And likewise, the way we value things may depend entirely on the frame of mind that we actually bring to them.

9:47 Brian Rose: Aren’t we always taught, like, you know, all the classical economists that things have this value because of this and that and there is this inherent value in, say, a commodity, food, oil, you know, a place of a plane ticket.

10:02 Rory Sutherland: You get all sorts of weird views on value. I think there was an earlier school much derided called the French Physiocrats who believed that the only place where value was created was when you extracted something from the land. It was, as you can imagine, it was very popular with the aristocratic movement because it suggested that farmers, landowners and the owners of quarries were the only people who generated economic value. And in fact, if you took wool from a sheep and transformed it into a hat and sold it for a markup, you were actually exploiting the sheep farmer.

10:36 So bizarre views of value have pervaded. I suppose Marxism has the labor theory of value, for example. But there is this very strong belief that what you have has a value and that there is a right price for it. The Austrian schools dissents here and they’re very, very clear. There’s a whole discipline called Praxeology.

10:57 And in the books of Ludwig von Mises, they’re absolutely clear that the value of something purely depends on the context in which we consume or enjoy it. So there’s a wonderful phrase in Ludwig von Mises which says that you can’t objectively say that the man who cooks the food in a restaurant creates more value than the man who sweeps the floor. Because one person produces the good, the other person produces the environment in which it’s possible to enjoy it.

11:22 And so the reason he says that is he’s actually making a defense of advertising and marketing by saying that there is the production of something and there’s the creation of the environment in which that thing can be appreciated and valued. A restaurant that produces Michelin-starred food but which smells of sewage, to take an extreme example, is rather like a very good product that’s badly advertised. And you have that all the time, I think. I think genuinely, I think there are great businesses that fail not because the product they produce has anything intrinsically wrong with it but because they’ve never worked out a way to sell it.

11:59 Brian Rose: Can you see those products a mile away sometimes?

12:02 Rory Sutherland: Well there’s a very interesting case a few years ago which I always harken back to which was that the Royal Mail, which you’ve lived here in the UK, it’s actually pretty good. It’s impressive. I can’t think of an instance where a letter of mine has gone missing actually in the last ten years. It’s a very interesting question by the way. Is a stamp good value or not?

12:25 Well compared to taking it there yourself, as someone once beautifully said at the price of a stamp. So let me illustrate. You’ll take my letter, overnight you’ll take it all the way up to Glasgow, find the house of my best friend and pop it through the door and for that you want 60p. You greedy bastard. Actually the value of it is rather remarkable.

12:45 But they decided for some bizarre reason that they wanted to get, the percentage of first class letters delivered the next day in the UK. Admittedly the UK is not really big. This probably excludes the north of Stockton by the way. But effectively it’s around about 97%. Okay, get there the next day.

13:03 And they wanted to get it up to 98. Now they more or less broke the royal mail in this effort to increase next day delivery of first class mail from 97% to 98.5. And it imposed huge costs on the system. And no one noticed the fundamental problem which is the value of a first class stamp doesn’t depend on the probability that the letter will arrive tomorrow. It depends on my belief that it will.

13:31 Now if you think about it, no one will ever notice, unless you’re mad enough to post 200 letters to yourself every day and keep a record, no one is ever going to notice the difference between 97% and 98. So the interesting thing was if you went and asked people what percentage of first class letters arrived the next day, typical answers ranged from sort of the most pessimistic being 40% to people saying 70 or 80. Nobody said 98. Now here’s the von Mises point if you like which is you’re producing great food but the restaurant smells bad.

14:05 If perception is much worse than reality, what the hell are you doing trying to improve the reality in a way that’s more or less unnoticeable? You need to be improving the perception. Now what you could have done is simply advertised the fact that it’s 97% and people would have said, wow that’s much better than I expected. Well done. They did something even better than that actually. They advertised the fact that the British Postal Service is more reliable than the German Postal Service.

14:27 And in Britain we have a very simple heuristic, if we’re doing something better than the Germans it’s probably good enough because we see the Germans as anally-retentive perfectionists and therefore if we’re actually outperforming them we’ve probably got it sussed. And so the very simple system one message is the British Postal Service is better than the German one. Now that is a much more important thing than improving the reality, simply changing the perception.

14:51 And I think there are cases where if you have that wonderful restaurant producing Michelin-starred food but there’s an unpleasant smell in the restaurant because there’s a sewage leak. There’s that danger that what the Royal Mail was at first trying to do was let’s make the food even better. No, no, no. Get rid of the smell.

15:06 Brian Rose: Do you see that disconnect happening a lot with these emerging digital technologies with what you do with Ogilvy Change?

15:12 I mean do you think when a product all of a sudden becomes popular oftentimes very little thought was put into marketing?

15:19 Rory Sutherland: What digital does is it provides you, I mean I see the principal excitement of the digital revolution to me is psychological not technological. And advertising is all psychology. Oh yeah, I would like to return to the days of the Mad Men era where there are actually psychologists knocking around in ad agencies. And we have actually within Ogilvy Change. We employ six recent graduates. I think there’s one social geographer and five psychology graduates.

15:47 And I’m delighted by that reversion to the early Don Draper era. No apology for that.

15:51 Brian Rose: I want to ask you about Don later.

15:53 Rory Sutherland: Absolutely. I’m not really much of a body double for Don. I’ll be absolutely candid with you.

15:58 But the fascinating thing I think there is that I think there are cases where there are wonderful products which simply because of a tiny psychological snag or error in the way they’re presented, the way they’re named, the way they’re designed completely fail simply because System One. I’m borrowing from Daniel Kahneman here just to explain the background.

16:18 Brian Rose: Please explain the System One and Two. You just talked about it.

16:22 Rory Sutherland: Kahneman quite rightly says this is not actually a fundamental truth about the structure of the brain but it’s a useful fiction.

16:29 It’s a useful verbal device which is to say that there are decisions the brain takes which are effectively System One, which is effortless, very fast, largely unconscious, based on instinctive, kind of deep, deep-rooted, lizardy stuff. Which, by the way, is 99% of the work our brain does. One plus one, two. That’s a kind of System One thing. It’s become automatic.

16:54 Dance players actually subtracting from 501 is automatic. That’s System One. But if I said to you, what, 17 times 27, then suddenly your brain starts whirring, your eyes roll upwards in your head. That’s a System Two consideration. Broadly speaking, if you don’t make the act of buying something attractive or at least at the very least non-repellent to System One, you can advance all the rational arguments you like but you probably won’t win the argument any more than you can actually seduce someone by the use of purely rational argumentation.

17:29 Brian Rose: Right, which we’ve all tried to do.

17:31 Rory Sutherland: You know, broadly speaking, you can’t argue someone into going home with you. It’s as hopeless as that. And so, a better understanding of System One, one of the things that excites me is I think that the digital age will just give us, because, unintentionally, everything from sort of user experience design, website design, interface design, actually things like aircraft cockpit design, if you want to extend this out, are well-funded behavioral experiments into the workings of the deeper human mind.

18:05 And I think through this, we will learn important lessons about how System One works and how it really makes decisions using a kind of, a mathematics and a kind of algorithms which are very, very different to the ones which are used when we make decisions rationally.

18:21 Brian Rose: Right, and as a group, because I think you had said that, for an admin, the digital technology, it makes you have to understand the human mind even more.

18:30 Rory Sutherland: Yes, because… It’s less of a group think and it’s more…

18:34 Because actually, one of the fantastic things I always say is that the digital world is like the Galapagos Islands for the understanding of evolutionary psychology. The little foibles of human behavior that crop up in online, for example, are very, very telling, I think, in what the deeper human mind really cares about, what it finds attractive, more important, in fact, what it finds repellent. Because I think actually the System One brain is more about the avoidance of catastrophe than the attainment of perfection.

19:04 I’ll give you an example of a product which I haven’t told a client this, so I hope he’s not watching. There’s a brilliant, brilliant product which I recommend you buy. I’m shamelessly plugging one of our clients’ products here. It’s called the Philips Air Fryer and it’s a device that effectively fries food of any fat. You put maybe two or three drops of olive oil on something, whether it be French fries, uncooked French fries, whatever it may be, simply to create the aroma of oil and then you put it in a drawer and in a very short period it blasts superheated air at the food and produces food that’s warm on the inside, crispy on the outside, with no fat being involved at all.

19:42 It’s a miracle product. Not just me, I bought one for my father who’s 84 for his birthday and he became a complete convert and evangelist as well. And I simply couldn’t understand why this product was less popular than it deserved to be. And then I probably realized that actually it’s called Fryer and middle class people believe they don’t eat fried food. And so this is my latest hypothesis.

20:06 I’m intrigued in looking at things because I generally believe an awful lot of our contentment and happiness resides actually in the darker parts of the brain, the parts of the brain that aren’t really connected to speech. So the interesting thing about System 1 is that System 2 does most of the talking. What System 2 is mostly doing is actually post-rationalizing decisions taken by System 1. Jonathan Hight, a professor at the University of Virginia, an author of a book which is called The Righteous Mind, which I would argue is one of the best books I’ve read in the last 10 years.

20:37 I plug that unashamedly, along with books like Nudge, for example, and Thinking Fast and Slow. And I think he uses the analogy that the in a sense, the conscious part of the brain thinks it’s the Oval Office when in reality it’s the Press Office. It thinks it’s making the decisions. In reality, the decisions are being made elsewhere in the brain. And the conscious, talkative part of the brain is simply cobbling together hasty post-rationalizations to make sense of, narrative sense of a decision that was taken somewhere else, which is what a Press Officer does, being slightly harsh.

21:17 And that actually there’s a large amount, and this has huge implications for market research, that actually the reasons we say we like something or the reasons we say we don’t like something don’t bear much relation to the real reasons. Now, I gave an example in my talk earlier, which is if I had gone into that hall, which I don’t plan to do at any time soon, and started throwing human feces around the room, most people would have regarded my behavior as completely disgusting and revolting and would have presumably left or even pilloried me in some way. If I’d asked them why was that a bad thing to do, they would have said, and this is probably sort of the right answer, it’s because there’s a risk of germs and infection and it’s really unhygienic and so forth.

21:59 But actually, if you look at the human brain, we needed a mechanism that made us avoid poo for the two million years before we discovered germ theory in the late 19th century. And that mechanism is system one, visceral disgust at human, particularly carnivore feces. We’re slightly less disgusted by herbivore feces. I’m Welsh, so that might be dangerous revelation. Maybe other people don’t think like that.

22:25 But generally, sheep poo or cow poo isn’t that unpleasant to us. But carnivore poo, cat poo, is really, really horrible. And the reason is that we have that system one, revulsion, which exists and still exists in us and it’s a product at the time when we didn’t know about germs so we needed a mechanism to encourage us to avoid them. And the brain is full of those evolved million-year-old mechanisms which cause us to do things. Now, here, because we’ve discovered germs, we probably give a fairly accurate explanation.

22:54 You know, poo is bad because of the risk of infection. If you’d asked someone in the late 16th century, they would have said that it was sacrilegious or barbaric. But their explanations would have been the best attempt at explaining an emotional reaction to a visceral reaction. And I think a lot of what, when you research people’s behavior now, I think it’s equivalent to explaining why you didn’t like poo in the 16th century. So, one of the things that fascinates me is things that people hate and they don’t quite know why.

23:25 And people really, really hate airport security. You probably fly quite a bit.

23:30 Brian Rose: I do, yeah.

23:31 Rory Sutherland: The yanks are getting better. Marginally, but that business of going through the security line, people find disproportionately distressing.

23:39 And to be honest, if you ask them why, they don’t really know. They’ll come up with, well, it’s humiliating, I don’t, you know, blah, blah, blah, blah. Now, interestingly, when I last went to Heathrow, and I don’t know whether this is some good psychologist getting involved, you know, six of you, when you reach the front of the queue, six of you stand there in parallel against a table, and in your own time, you divest yourself of metallic objects, put your laptop into a tray, then when you’re ready, and in any order you choose, you pick up your tray and put it on the conveyor belt and it goes through the x-ray and you walk through the machine that goes bing.

24:17 Now, what I immediately noticed is that is much less stressful than the previous system. There is an instinctive human thing which is I don’t want to look like a fool in front of a queuing crowd of people. So, when I arrived at the front of the queue, when it was the standard system where it was one at a time in order, I had the fear that I would mess up, forget my belt, forget my watch, look like an idiot in front of other people, and that was making me anxious, but I didn’t really know the reason for the anxiety.

24:44 What’s interesting is that when you change the system so that a mistake on my part doesn’t actually delay people behind me. The anxiety disappears, but you couldn’t have relied on people’s explicit explanation of the problem to solve the problem. What you need to do is come up with hypotheses about why people are stressed, and then come up with a solution which solves it, which indeed that system does. Now, interestingly, I knew a little bit about this anxiety because I’ve worked a little bit with the fast food industry and there’s a known moment of what’s called menu stress, which is you’re in front of the queue at KFC and you’re blithering or dithering over your choice and you can feel kind of the laser eyes of the six people behind you going, get a move on, you tosser, I want to order my food.

25:25 And so I find the whole thing very, very interesting because when you design an object, this is the phrase I always use, the comparison I always use, when we design physical objects, we design car steering wheels, the handle of that kettle over there, a mug, they’re designed to work with our evolved physique. So the mug fits nicely into my hand, the steering works well with the hands I’ve got. Now, we didn’t evolve hands for holding mugs or for steering cars, patently.

25:53 Totally different reasons, holding weaponry, swinging from trees, whatever theory you want to advance, but not for driving cars. But when we design physical objects, without any effort required, we design them to work with our evolved physique because that makes sense. There’s no point in designing a car you steer with your nose. And so when we design experiences or when we design choices or when we design websites for that matter, it makes perfectly good sense also to design them to work with our evolved psychology.

26:22 And what we, I think, sometimes do is we design products for what Richard Taylor calls econs, which is a completely imaginary species which has never existed that probably wouldn’t have survived had it sprung up by chance, which is that completely rational man, beloved of economic models, which would be, in my view, completely hopeless in any real world.

26:45 Brian Rose: So you’re saying a lot of people sell to the frontal lobe when they should really be thinking back here.

26:52 Rory Sutherland: So the frontal lobe, to be honest, it’s probably our amygdala that keeps us alive most of the time.

26:58 And the way in which homo sapiens makes decisions is different to the way that homo economicus, or the econ, as Taylor calls it, makes decisions. These aren’t economists. I mean, Taylor coined this fantastic phrase, and someone else coined the phrase homo economicus, which is the imaginary species of human that inhabits only economic models but actually does not exist in the wild.

27:22 Brian Rose: You don’t like economists much, do you?

27:24 Rory Sutherland: No, no, no.

27:25 Actually, good economists define the problem of economics, if I can digress a bit, is that when I talk about econs, when I talk about these naive models of human behavior, what I’m not doing is talking about Joseph Stiglitz or Gary Becker, even possibly. The problem is that this very bad shallow view of economics infects things like business schools and MBA programs, and then infects the world of business. And my view is that there’s an imbalance between what you might call, because the financial function in business has become disproportionately powerful, particularly in the UK, actually, over the last 15 years, then there are quite a lot of business decisions taken effectively by finance people who believe that neoclassical economic theory is also a guide to likely human behavior.

28:12 And that does disturb me. Because you see where the rubber hits the road where they actually don’t… So actually, the extent to which people are massively price sensitive, for example, may be untrue. So there’s a tendency, I think, that the economic world prizes only one thing in a business, which is efficiency. And it pursues efficiency at all costs without actually arguing, but efficiently producing what?

28:40 You can efficiently produce something which doesn’t actually arouse much gratitude or enjoyment in its recipient. And what you’re doing is totally pointless. Now, I’ll give you a wonderful example of this, pursuit of efficiency, okay? Which I gave today, and I’d like to thank a guy called Sam McNerney from New York, who gave me this example on a phone call we had recently. Very, very good, wild writer, by the way.

29:03 If you go into Five Guys, the splendid burger chain, and you’ll typically order a burger and probably a drink. You order the fries, and there are three sizes, small, medium and large, and they come in a cup, respectively a small, medium and large sized cup. And they will take a great big scoop of their fantastic fries, or indeed Cajun fries, and they will fill the cup. And then they will take another scoop and chuck a load of extra fries into the bottom of the brown paper bag.

29:30 Now, you could say this is kind of, in keeping with the Carnot model, which is a fantastic thing, we proportionately appreciate the things which a business gives us, which it doesn’t have to. Those things which are kind of the extra mile or the guilt on the gingerbread that a business does. I’ll give you an earlier example. I was staying at the W Hotel in the late 90s. This is before the days of Wi-Fi, and the typical thing you’d always forget would be your modem cable back in the mid to late 90s.

30:04 And when I opened up the mini bar in the W Hotel in New York and the McDonalds and spirits, goodness knows what else, there was, admittedly for $10, but there was a modem cable. And that didn’t have to be there. And the kind of, wow, this is a good hotel effect, was 10 times greater from that than it was from the Johnny Walker Red, which kind of has to be there. And the extra fries are the fries we really appreciate. That’s why we actually psychologically just go woo and go slightly gooey in the presence of five guys.

30:36 Now, you bring an economist and the first thing they cut, the first thing they cut are the fries you don’t have to give people. But the fries you don’t have to give people are probably where the majority of the system one emotional value in the transaction actually lies. Think about it, if you buy someone a particularly generous present, what’s the default human response? You really didn’t have to. Now, you can understand why in an evolutionary setting we might judge people and their behavior not purely by the extent to which they’re prepared to give us a little bit extra than was necessary, the baker’s dozen.

31:14 If you go back in history as an example of this. And the typical accountant will go in and go, well, the product is basically medium fries, burger, drink. So let’s go into five guys. We’ll get rid of the free peanuts, which is another Carnot detail. We’ll get rid of the surplus fries.

31:32 We’ve now actually, we’re going to meet our quarter three 2015 targets with money to spare, except suddenly no one wants to go there anymore. It’ll take time, by the way. It’ll take years for people to spot because system one probably operates on a slightly slow… Their models don’t appreciate those Carnot curves. So likewise, the example I gave today was Sarchi’s under the director Tony Kay produced a fantastic advertisement for Intercity Trains in the later 80s, which showed people playing chess, reading novels, relaxing.

32:06 That was what system one really likes about a train journey. The quiet time, the relaxing time. And actually, if you’d said actually, okay, the competitive set here is aircraft and it’s cars. Let’s not obsess about speed, as with high speed too, because if you really want to get to Manchester in a hurry, you’ll fly anyway. The fact, by the way, that you can’t fly to Manchester except from Heathrow on feeder flights suggests that the pre-existing demand to get to Manchester really quickly is not all that high.

32:40 But let’s park that fairly obvious market example. The point of a train, okay, isn’t to be faster than an aircraft, it’s to be preferable to an aircraft. And the great thing about a train is that you get on the train and you spend an uninterrupted period of, say, two hours getting on with whatever you like, reading, being relatively undisturbed. Nowadays, of course, the ad was made in the late 80s. Nowadays, you’d be people watching films on a tablet, DVD player, people sending emails, people using Wi-Fi, whatever.

33:10 Now, the problem with the railways is that because they’re run by disproportionately male people with exclusively a kind of system-two background in finance and engineering, they think the way to improve a railway is through objective numerical measures. You know, journey time, speed, you know, duration, all that kind of stuff. And actually, my view is, no, no, actually, the reason people go by train rather than flying or rather than driving is probably not much to do with that at all.

33:44 There are a few exceptions. Commuting into London from the outside, it’s much faster by train than driving, but it’s also much less stressful as well, incidentally. And if you design railways for system one, at least to a degree, you know, what you’d have by now at the table and there’d be a little ledge so you could prop your tablet up against the back of the seat. There would be probably Wi-Fi on the trains or at least some sort of entertainment system with a few terabytes of films I can download.

34:13 You know, we would have done all that stuff and we would have said, okay, and actually the seating would not be regimented like an aircraft. It would be highly varied with little curved seats, you know, occasional little sofas, a bit like the new cinemas. More and more cinemas are actually producing varied seating. But the economists and engineers are just thinking about the marginal return. The economists and engineers are absolutely preoccupied with effectively find a numerical engineering metric, which is maybe, may correlate with system one preferences, not at all.

34:43 Brian Rose: I mean, aren’t we obviously candid? I’d rather light the journey up to manage tonight. It’s about two hours, ten. It’s the perfect train journey, you know. Just making it more comfortable.

34:53 Rory Sutherland: Slightly different if I’m a commuter. There are two things which make it different, okay? Make city pairs like Lyon and Paris, where high-speed rail, the TGV, changes the journey time from four hours to two. That’s what I call a significant, you know, there’s a kind of tipping point there. Now I can actually go Lyon and Paris and back for the day.

35:10 I don’t need to stay in a hotel, you know, and do that usual palava when it’s a four-hour journey. I can just, you know, effectively go there and back in the day. Four hours to two, Kyoto or Osaka to Tokyo. Their high-speed rail makes a kind of complete order of magnitude change in the actual nature of the journey, if you like. If you reduce a journey from two hours and a bit to an hour and thirty-seven, then on a commuter route that might be quite significant.

35:42 Because if I commute in from Canterbury, which with high-speed one it’s now 40 minutes faster in each direction, maybe a bit more, okay? Saving 80 minutes a day, okay, 210 times a year, 220 times a year, is quite a big deal. But that’s one person saving 80 minutes a day, 200 times. 200 people saving 80 minutes once is not the same thing psychologically. So although the reduction in journey time may be comparable, the actual effect it has on behaviour and preference is relatively trivial.

36:12 I don’t get a Manchester often enough to care about the journey time to that degree. That’s the third point. There may be people who commute from Manchester to London, but they don’t need a train.

36:23 Brian Rose: You made your point. Let me ask you a question.

36:26 You once joked in one of your TED talks that you said savings is just consumerism postponed. And it was very funny. I worked in banking for 10 years and people used to always say, the 10-year-old on the street would say, what are you doing banking? Do you steal everyone’s money? And I would try to explain that I actually did this and did that.

36:44 Do you ever get the 10-year-old asking you as an ad man, what do you do as an ad man? Because some people think that it’s about selling people things that they don’t want, but now you’re telling people that you might not even know about a product because you don’t know how to understand that product.

37:01 Rory Sutherland: No, no, no, no. You could produce a brilliant life-enhancing product, market it badly, and as a result, either fail as a business or completely, and likewise, completely underserved the public simply because you had failed to make the product comprehensible.

37:16 Now, there’s some really fantastic little experiments here in the behavioral sciences, which is one example is, if a product just seems slightly dissonant, if it doesn’t quite make sense, people won’t buy it. Now, I’ll get a lovely example. The lovely experiment is, you go to people and say, here are 10 Sharpie pens, all black. How much will you pay? And you average the amounts out, and maybe probably it can be about $8 or $9, I guess, and then you show a similar, an identical group of people, 10 black Sharpie pens and one yellow one or one green one.

37:53 The amount they’re prepared to pay is less because the addition of the rogue color makes the product, the 10 black pens and one weird colored one, just is not cognitively comfortable for me to process. Now, if an ad man came along, what he’d do is he’d say, 10 Sharpies, free highlighter pen. Now, the second you’ve done that, that’s just kind of Don Draper, kind of insight. The second you do that, now the yellow pen makes sense to me and I’ll pay more than I would for the 10 black Sharpies on their own.

38:26 So that’s a case where you can have products which are just cognitively dissonant and fail, even when they objectively contain more utility than the alternative. Now, there’s a beautiful example of this from product design, which is a case where you have to worship the man. It’s a character from Sony, and he commissioned the Sony Walkman and he had a slightly selfish motive behind his desire for a Sony Walkman, which is he wanted to be able to fly from Tokyo to Los Angeles, I think, and listen to a whole opera on the flight.

38:57 And the guys came back with the first Walkman design to his specification, and they’d added something, they’d added record functionality on the first Walkman. And he said, why did you put the record functionality on? I know, but we looked at the basic costings, and you can basically add recording functionality to the Walkman for literally, it’s going to be a dollar per unit or some trivial amount like that. So why wouldn’t you do it? And he said, get rid of it.

39:26 He said, but it’s a dollar, it’s nothing, and it lets you record, get rid of it. And the engineers went away in a sulk, but he was absolutely right, because he said, if the Sony Walkman will play but will not record, everybody can understand what it’s for clear decision, okay? Which is, okay, it might be quite nice to listen to music while I’m mowing the lawn or whatever it may be or while I’m on the train to work, I get that, I get that thing. The second you add record functionality, that’s the weird yellow pen.

39:53 And it’s people thinking, what is this, is it kind of dictaphone? Is this for office use? You know, should I use this when I interview people as a journalist? What the hell is going on here? So in fact, removing what is objective utility from a product can actually make it more desirable.

40:09 Brian Rose: In tech these days, you gave the example of Google in some of your previous speeches. It stripped things out. The whole process of who’s the dominant factor, you start off with, I guess, AOL, which is online access, dial-up, a walled garden, and search functionality. And then you strip out the actual, the connectivity, it becomes Yahoo. And then you strip out the information and reduce it right down to search, and then suddenly it becomes Google.

40:39 Rory Sutherland: Or Altavista, they’re just high-five.

40:41 Brian Rose: I’ve had tech founders in here before, they say every week we delete a feature, and see how the consumer reacts, and if we don’t see a drop-off, we delete another one to try to do one thing well.

40:54 Rory Sutherland: And there’s probably in System 1, there’s a kind of jack-of-all-trades heuristic. In other words, we like implement, we don’t really like Swiss Army knives. We want one thing to do.

41:06 Traditionally, in the Cayman days, in our amygdala, that’s how it worked, and that’s how it’s still, in our mind, needs to work. It’s in a sense, a dilemma for anybody. You can see it with Uber, who quite understandably, and not insanely, are thinking of making little forays into things like pastel delivery or ice cream delivery or whatever. And it makes sense for them, once they’ve got a large user base, to broaden the possible uses. But there’s a risk attached to that as well, which is it becomes a bit more fuzzy.

41:34 And what Uber is now is perfectly clear. By the way, I have a really important point. Actually, I’ll raise this question now. I don’t know who my audience is going to be, but I’ll raise it anyway. There are two things I don’t understand as a marketer, okay?

41:46 And I think this is where the pernicious influence of accountants, and particularly labor market theorists, is becoming damaging. Amazon doesn’t seem to treat its warehouse workers very well. Notoriously, they charge for aspirin, I think. Jeff Bezos is a hard-ass on his employees. Okay, your lavatory breaks are timed, aren’t they, I think.

42:05 So if you had a particularly tough on the British ones, you might have had a curry the night before. But my answer is, what proportion of Amazon’s actual costs are really labor costs? I imagine when I buy a typical Amazon product and I pay, you know, £9.47, what proportion of that is labor? My guess is it’s a bloody rounding error, right? Why would you do that?

42:29 If you look at the great entrepreneurs of kind of the early pioneers of Unilever who created Port Sunlight and actually Henry Ford, in a sense, created the two-day weekend and I think he doubled all his workers’ salaries more or less overnight. So you have these people who basically were so keen to demonstrate the superiority of their model that they demonstrated that it was superior not only for the customer and for the owner, the share owner, but also superior to the employee. Why would you not replicate that rather magnificent Victorian thing and move backwards to a kind of mill-owner mentality?

43:03 I can argue this rationally anyway because, one, what’s the really big existential threat to Amazon? Well, surely it’s that someone dies in a warehouse and there’s a mass boycott, okay? That’s the existential threat, is mass human behaviour. Uber is now getting greedy with its drivers. Now, Uber, okay, has the potential to become an insanely dominant and wealthy organization for the simple reason that it’s a psychological, it’s a screen business, not a taxi business.

43:31 It removed the uncertainty. My System One used to suffer between ordering a cab and the cab arriving, which is, where is it? They said 10 minutes, he still hasn’t arrived. Is he around the corner? Oh, God, can you go out in the street and see if he’s gone?

43:46 Oh, God, maybe he’s left. Now, I just look at the map and go, oh, look, he’s stuck at those traffic lights. I’ll have another pint. So Uber solves this problem beautifully. Because the more you use it, the easier things come.

43:59 That’s something about System One, that it loves habit, it loves ritual. It’s incredibly redesigned. Amazon’s never had a revolutionary redesign of its page because we just love familiar shit. System One just loves, you know, oh, I know this, I can do it automatically. Don’t need to engage System Two straight in, okay?

44:17 Now, my question is for Uber, why is it getting, you know, it’s going to make a bloody fortune because it’s hacked this fantastic thing, it’s got magnificent kind of, you know, ability to scale up. The costs must be absolutely trivial. You know, the one thing that might stop me is the driver grumbling to me about how there are a bunch of bastards, and I want to use Lyft.

44:39 Brian Rose: All right, that’s an open question. You can tweet him at Rory Sutherland.

44:43 Rory Sutherland: I want to hear answers to Uber and the Amazon. But I’ll give an extra question, which is that a lot of these people, okay, I’ve got a client I can’t name. The reasons will become obvious in a second. And they’ve got a brilliant call center. I mean, it’s like fantastic.

44:57 So the people who ring it up are absolutely delighted. You know, the customer service ratings are through the roof. The people are really knowledgeable, helpful, and smart without naming the business. I said, why is that call center so good? He said, do you have to be honest?

45:09 He said, I think we overpay them. Now, that is a perfectly good strategy in a call center, which is to overpay people a bit. Why? One, there are an awful lot of hidden costs to labor costs, which include the cost of training, the cost of recruitment, okay, and the cost of people being generally pissed off and trying to leave, or the cost of people who are very recent joiners who don’t know what they’re doing, okay? Those are all costs which don’t appear on the conventional balance sheet.

45:35 So if you overpay people, they stay for ages, they get really good, they’re really, really committed. You have zero recruitment costs because they find one of their mates. If anybody leaves, they’ve got five people to go, well, actually, my cousin would love to work here, and she’d be really good, et cetera, okay? And there’s also the value of the customer being absolutely delighted and going, actually, I’m not going to get involved with another competing business because I like this call center experience so much.

46:01 It’s a value that doesn’t appear in a separate column on a balance sheet. It’s just under revenue, right? And, actually, they’re probably doing… Now, if you’ve gone in bloody McKinsey or something, I’m probably slightly maligning them, right? But the first thing they do is go, okay, we’ll put the people on zero hours contracts, we’ll cut them down to minimum wage, ooh, look how much we’ve saved, look straight to the bottom line, isn’t it wonderful?

46:24 And then all the costs start either… Well, they actually either never appear because they’re not really properly accounted for or they appear in four months’ time when suddenly people stop calling the call center because it’s a bit crap. So you have a different way of looking at business. Okay, John Spen Lewis, who’s the founder of the John Lewis Partnership, Great Welshman, and also the founder of a really successful cooperative business entity, he made the simple point, which is I try to bring the mind of a naturalist to the management of business.

46:54 And the mind of a naturalist is more subtle and more open to complexity than the mind of an economist or the mind of an accountant. That’s what I’m saying. There are nuances there which any naturalist will understand that, in fact, treating your staff as though they’re a fungible commodity and their time is a fungible commodity and their loyalty and commitment is worth nothing is not actually intelligent. It’s merely numerate. And that’s not the same thing.

47:24 Brian Rose: That is a fascinating point, and I would like to talk more about that in a bit. I want to ask you a question. You’re an ad man. Ogilvy, highly respected, world-renowned creator, some would say, of the modern advertisement. You went working there straight out of university.

47:40 Don Draper has been mythologized with the Madman series. What drew you to being an ad man? What is it like, and what is a real ad man like that we don’t ever understand behind the scenes?

47:52 Rory Sutherland: The first thing is, I think, that the real value of advertising agencies to their clients is probably not principally that they make advertisements. I think that the process of having to make an advertisement, even if the advertisement never runs, is of huge value in both focusing the mind and also in forcing the mind to think elsewhere about their core values and what they’re trying to communicate.

48:17 In other words, is a train, this is what Satchis did within Citi, is a train really about speed and punctuality and really about the fact that the time you do spend is potentially better than that you spend in a car. Asking questions like that. The second thing an advertising agency provides, and this is why I was initially drawn to it, as someone who’s naturally a bit of a gadfly and mischief maker, is it’s a corporate environment where you can make stupid suggestions and still get promoted.

48:45 I mean that absolutely seriously because the freedom to be slightly silly and irreverent or actually the freedom to be slightly stupid, I mean there’s a value by the way in business to stupidity, which is probably not accounted for, which is that some of the most great business successes come about because someone’s too dumb to realize what the best practice is and they stumble on something which is accidentally successful.

49:12 Brian Rose: Inserted technology company here.

49:14 Rory Sutherland: No, no, absolutely.

49:15 Because actually they didn’t know enough to be boringly conformist. They sort of blundered in in their glorious way. Now, those people will fail more often, on average, but when they succeed, they succeed big. So, you know, quite a lot of, Nissim Taleb makes the wonderful point that the great thing about capitalism is it doesn’t just reward intelligence, it also rewards luck and opportune stupidity. Now, the great problem with communism is you actually had to have reasons to be successful, whereas you can stumble on a product like Red Bull, which is expensive, comes in a tiny can and doesn’t taste very nice.

49:53 Now, Soviet communism wouldn’t have produced Red Bull if you give them 500 years to do it, okay, because it doesn’t have a mechanism, a feedback mechanism for rewarding dumb luck. Now, that’s not me, that’s Nissim, who’s read his book Antifragile, fantastic thing. And so part of the role of an advertising agency is actually to be a bit dumb, is to be a bit, you know, and you kind of see that with Mad Men actually, it captures some of that. And also, it’s, there’s a problem you get within large organizations, which is they become reputationally paranoid, which is that, you know, one stupid suggestion can kill your career, right?

50:32 And I noticed this, I can’t name the people, but I went in and we raised the question, which is quite an important psychological question, can you design tax in a way that people want to pay it? Now, that sounds like a weird thing. In ancient Rome, there were super taxes for the wealthy, which the wealthy volunteered to pay simply because you got your name on a marble column. And there were people who came out of the woodwork and said, no, no, I’m much richer than you think.

50:58 Look, look, I’ve got all these fields here, you know, I really deserve to pay this tax and to be celebrated in marble. And I jokingly said, I said, look, you cannot get people to pay more voluntarily, you just need a tiny token of recognition, and quite a lot of marketing, is made for that. There are certain people who will pay a great deal more for something if it is merely slightly visible that they have done so. I mean, you know, the luxury goods industry is, you know, absolutely rife for that kind of thing.

51:27 You must read those various magazines if you’ve been in the city called sort of Hedge and things like that, which are full of deranged kind of high-end stuff. I’ll state my objection to that in a second. But I jokingly said in this meeting, without a government people present, if you pay the highest rate of income tax, you should be allowed to drive in the bus lanes. Now, I didn’t mean that as a sensible suggestion. What that is, is quite often, if you want to have a new idea, you climb Mount Silly before you can get to the sunlit uplands that lie beyond.

52:00 And you get to interesting ideas via Silly. And that’s what a good agency promotes. And a good agency allows that silliness, it allows that rogue bee to wander off and ignore the waggle dance and go somewhere silly. Most of the time, silly is just silly, but sometimes silly leads to amazing.

52:15 Brian Rose: Sounds like somewhere between art and engineering somewhere.

52:18 Rory Sutherland: Yeah, I think, I think the point about that was, what was interesting when I said that meeting, is I suddenly realized everybody in the room went white. And the reason is that government implies it was terror of the Daily Mail, because they knew if that idea, if someone just misunderstood the idea, went to the Daily Mail and said that the government are discussing allowing higher rate taxpayers to drive in the bus lanes, then both newspapers on the right and left would go completely deranged for the next sort of week, and everybody’s time we spent trying to calm down the, now that’s a problem because there needs to be space in politics actually, the Overton window is the technical term, for wider areas of discussion, which aren’t really about serious implementation, they’re simply about mental exploration.

53:01 I don’t agree with Russell Brand about very much, but I think he’s certainly right that the Overton window in politics is a bit too narrow. Okay, where you can brainstorm and throw out ideas. Weird ideas about what if we had a tax system like this,

53:17 And actually also just going and exploring ideas from around the world, it’s an interesting thing in Denmark there’s a property tax, but if you’ve retired you can roll your property tax up into an inheritance tax. Now interestingly, if you look at the UK tax system, every year is free standing, and you have your tax obligation for 2013, you have your obligation for 2014, and there’s no carryover allowed. Well that suddenly you look at something slightly eccentric and go you could actually produce a tax system where wealth that has already been taxed as income is left alone, but wealth which appears to come from nowhere, do you see my point?

53:58 Wealth taxes drive people practically crazy because they say well I’ve already paid tax on this because I earned it a salary and now I’ve saved it all up, you’re planning to tax it.

54:07 Brian Rose: Yeah, it’s a very creative tax system, I think in Sweden a guy just got a speeding ticket and they charged him based on his annual income. It happens in Finland as well, very senior people from Nokia in the old days or someone like Kimi Raikkonen I think, he was towing a trailer without an adequate brake light and was fined half a million euros or something.

54:26 Rory Sutherland: But I mean creative use of that stuff is worthwhile and having a space where you can go silly without actually being ridiculed, and the advertising agency is partly there for that space.

54:37 Brian Rose: How’s it changed in the last 25 years? I mean, you know, you’re a bit old school, what has it been like? Is it used to be like Draper? Was it kind of the hard charging, hard drinking, we caught up on the show at Vitaly?

54:49 Rory Sutherland: I was never there in the early Draper era or indeed the late one.

54:53 Brian Rose: You were there in the late eighties?

54:55 Rory Sutherland: I joined in the late eighties. Interesting talking to people who knew it and knew the American scene. You get very, very different stories.

55:03 Some people say yep, it was basically exactly like that. And there are other people, like Wilmore, who knew J. Walter Thompson in New York extremely well in the, certainly in the late fifties, early sixties. When there were people from J. Walter Thompson who attended the J. Walter Thompson Christmas party, the staff party in London, there were comments from the New Yorkers that there was quite a lot of lascivious dancing, by which they did not mean, by the way, twerking.

55:28 I don’t think there was any twerking going on in the JWT staff party in 1958. They meant simply people ballroom dancing, which they can, so some of the agencies were very, very moralistic. A lot of them, the series didn’t make clear that a lot of them wouldn’t take tobacco accounts or alcohol accounts at all. And that’s going back decades before the series started. So it’s complicated.

55:52 There was undoubtedly this kind of, you know, there was an element of it which was possibly close to the wolf of Wall Street where there were businesses that were just doing remarkably well. And of course if you think about it, you had a bunch of creative people suddenly found themselves by accent or design earning a lot of money. You can imagine the kind of wonderful stuff you could have when you didn’t have tedious shareholders and all that nonsense of the shareholder value movement to make you boring.

56:18 Brian Rose: It looked like the place where the action is. In Mad Men it seems like it was advertised in the 60s, oil in the 70s and 80s, Wall Street in the 90s, these days now it’s tech.

56:26 Rory Sutherland: Dallas was set in the oil industry for a reason, wasn’t it? And actually, I’m very glad they didn’t set in an accountancy firm in the late 50s because that would have been extraordinarily dull. But Madison Avenue was where all the action was.

56:38 That’s where a young guy could go to make his millions. So you have this mixture of kind of waspy Ivy League folk and that’s still, by the way, that’s still true. One of the things that’s sort of still true is it’s a very weird mixture of the kind of conventional people who could have been working in, possibly working in banking, but they’d find it too boring or something. But the interesting thing that would still be true is that a really successful ad agency is a very, very strange mix of people.

57:07 So it’s not remotely homogeneous because this is a business where diversity isn’t just a politically correct watchword, it’s a sort of competitive advantage. So having diversity of thinking is a real plus. That’s the first thing. And you want diverse thinkers. So you absolutely need a few beard-stroking Oxbridge types or chin-stroking to be less gender-specific.

57:29 You need a few chin-stroking Oxbridge types. And a few beard-stroking hipsters. And a few hipsters, though those would be moustache twirling hipsters. But you also need actually a bit of a geezer who’s starting in the post room. So the mix of talent, you need people who are entrepreneurial, you need people who are highly artistic, you need people who are highly mischievous.

57:51 But it’s always going to be quite a good recipe for a TV drama simply because you will capture a wide range of temper. You can see it in the early tensions between the media guy and his love of computers. In Mad Men, of course.

58:05 Brian Rose: And a lot of the things you’re describing I see in the series, the diversity, the certain agents are this, or certain agencies are more this and that kind of thing.

58:15 Rory Sutherland: I have met people, by the way.

58:17 There was a guy in Ogilvy a few years ago who was effectively Roger Sterling. And that, by the way, that kind of cynical wise-cracking guy is, in a weird way, a kind of essential ingredient. I remember going on a pitch where I was actually terrified. And there was a guy also fairly similar to Roger Sterling. He was traveling down on the train to this pitch somewhere near Southampton.

58:39 And it was my first major pitch as creative director. I was in an absolute state. And this guy suddenly appears clutching about 15 sandwiches, throws them on the table. He’s a big fat guy like me and says, oh, thank God we’ve got some food now. Rory and I were about to go hypoglycemic.

58:54 And having that presence in the midst of it all, of someone who’s effectively the Roger Sterling character, they’re kind of like the control rods in a nuclear power station. It’s almost Darwinian. They’re there for a reason. They’re there for a reason. Group selection in the ad agency would be a brilliant Darwinian thesis.

59:14 Brian Rose: Let me ask you a question. You deal with these young startups with Ogilvy change, and you must have 24-year-olds that come in and say, Rory, I’ve got this great new app, and it does this and this and this, and we’re going to scale it and raise money like Uber, and we’re going to be the next thing. And they look at you, and you look at them, you must have a standard piece of advice that you just try to give them. Or I’m wondering what’s most commonly missed in this digital startup world.

59:42 Is there a big piece of the picture that is just not obvious, that’s obvious to you?

59:47 Rory Sutherland: There’s a huge thing in digital startup world to understand, I think, after a time, which is you need to be totally unrealistically optimistic in order to succeed. In reality, the role of luck is enormous. Now, if I can do my third book recommendation of the day, Robert H. Frank, who’s a brilliant writer at Cornell, I think, who I admire enormously, written a fantastic book called The Darwin Economy.

1:00:11 He’s writing a book precisely this, about luck. And in fact, if you look at Silicon Valley, I mean, the whole Microsoft IBM thing, Microsoft was probably the product of some extraordinary astute decisions, but also a degree of fluke. Great book about that called Big Blues. Of course, Big Blues, fantastic book. So you can’t, this is actually, it is not in our evolutionary interest to be objective.

1:00:35 So we need to be quite unrealistically optimistic to have this chance of massive disproportionate success. On the other hand, there needs to be a component of that thing which recognizes that the things that will make us successful will probably fall down to chance in this business, and maybe something we didn’t even intend. I mean, right. Funnily enough, there are earlier cases of this, way before the dot-com era. Wrigley’s was actually a soap powder manufacturer in Chicago, which gave away free chewing gum.

1:01:08 So rather like Twitter, which almost emerged from the ashes of another business, Wrigley’s was a guy who was selling soap powder, realized that the market was a bit too competitive in soap powder, but that his free chewing gum went down really well. So he just effectively did a 180 reverse and turned it into a chewing gum company. The old school pivot. So you try to let these companies know that there will be a lot of randomness and luck and to try a lot of different things.

1:01:36 Brian Rose: I interview these people every week on Silicon Real. I liken them to fighters, and the guys that get in the boxing ring or get in the cage with mixed martial arts, it’s an unreasonable idea of your success in order to put yourself in those positions.

1:01:50 Rory Sutherland: Absolutely right. Otherwise you wouldn’t succeed. There’s the George Bernard Shaw quote about the unreasonable man.

1:01:56 And there’s also the point Naseem Talib makes, which is that an entrepreneur whose business fails is no less of a hero than a soldier who dies in battle, which is a very, very fair point. They’ve all tried, they’ve taken this bold step, they’ve put skin in the game.

1:02:12 Brian Rose: They’ve put Roosevelt in the arena, right?

1:02:15 Rory Sutherland: Yeah, got it exactly. So that point is really, really important, which is why of course Silicon Valley in the US has that extraordinarily tolerant approach to past failure.

1:02:25 Brian Rose: And it promotes risk taking.

1:02:27 Rory Sutherland: And it promotes risk taking. I have one worry about it, which is too much of that is probably in too few parts of the economy. By which I mean is the kind of entrepreneurial urge to now, I certainly wouldn’t have said this in 1993 or something, or 1995, but is too much of it focused on innovation in the area of what you might call media consumption? Because I have to make this brutal point, which is I quite often get people coming to me and saying we’ve got this new way of consuming, you know, televisual media.

1:03:05 Brian Rose: Which is what we’re doing right now.

1:03:07 Rory Sutherland: How dare you? But the one brutal thing I have to say is I do not get home in the evening and I go, oh no, I’ve got nothing to watch. I’ve got a Skyplus box where if I wanted to watch everything I’d recorded on the one terabyte Skybox, I’d have to take a week off work. Not to mention YouTube.

1:03:25 I’ve got Netflix, I’ve got YouTube. I don’t really have a shortage of televisual entertainment.

1:03:30 Brian Rose: But you need curated content. No, I don’t know. I’ll defend this very heavily because this does seem to add something.

1:03:36 Rory Sutherland: And also of course I hope, I don’t want to big up this talk too much, you’re also creating something of lasting value. The interviews, this is a comparison which I’m ashamed to make. There were John Morgan interviews in the late fifties. You can find them on BBC, iPlayer, under BBC Four. And they’re kind of interviews with Jung and they’re interviews with, now those things are still national treasures.

1:03:58 I’m not making any attempt in comparison here by the way. This is merely, I am an impresario. I am not a significant figure in the world of behavioural science. I’m merely there to popularise it, okay. I’m a vulgar impresario, just lacking the spangled jacket.

1:04:12 So I’m making no claims to my own particular importance in the field. But what I’m saying is that you can create things which have a value which endures. So here’s an interview with Jung which I watched for example. God knows. That must have been early sixties I guess.

1:04:26 It’s worthwhile a piece of content. Now nobody is watching episodes of the Golden Shot from 1962.

1:04:31 Brian Rose: Yeah, it’s something fascinating about an interview with the right person that’s just timeless. And I have to say I feel like I’ve actually conducted some of those and I don’t know if it’s a snapshot, it’s a way to capture their personality at that point in time and it’s, I don’t know, there’s something right about that.

1:04:47 Rory Sutherland: No, I mean the other thing I find very interesting, a very important invention by the way before I does everything, Google Chromecast, is your content Chromecast-able yet?

1:04:56 Brian Rose: Well, we’re on YouTube, so yes. Unsurprisingly, Google does… Some people get up every morning and have a temple with the Buddha. I get up every morning and I pray to YouTube.

1:05:06 Rory Sutherland: The importance of that is interesting in that, what fascinates me about that is that first of all, there was a problem with consuming certain forms of content on your laptop for the simple reason that while you’re watching it, it disabled your laptop.

1:05:20 And most people I think watch TV and make occasional Wikipedia searches or whatever it is to complement the content that’s on the screen. The importance of that by the way, I don’t think I could cope mentally with Game of Thrones. I watch Game of Thrones with my thirteen year old daughter, except it is totally inappropriate that she’s watching this. But I need her there with me to explain what’s going on, because I’m forty-nine and the onset of slight senility means I keep going, hold on, the Boltons now, do they?

1:05:46 It’s bloody complicated. So there’s a Game of Thrones wiki, which I occasionally consult. And I consult my daughter, who’s much better at this stuff than I am. She shouldn’t be watching it, but I need her there. So the Chromecast does that magical thing that by saying, oh that looks interesting, I’ll throw that onto the tele and I’ll continue using my laptop, which is propped on my armchair, is an interesting and highly significant change.

1:06:10 Which means that, for example, if you take content like this, but I watch… First of all, basically it causes a lot of my TV viewing to bifurcate Chromecast. So I probably watch an hour a week of Russian dash cam scratch videos, which are damn good. It does totally distort your view, because of course…

1:06:30 Brian Rose: You think everyone in Russia drives a truck?

1:06:33 Rory Sutherland: I’m terrified of going to Russia, because as soon as I get into a taxi in Russia, I’m going to be convinced that some lunatic train is going to fly across… And of course it’s not actually, there’s a selection bias.

1:06:46 Brian Rose: Very much so, and a media bias too.

1:06:49 Rory Sutherland: And a massive media bias. But if I put Russian pop music on my car stereo, I’d be convinced I was about to suffer a hideous accident.

1:06:57 I love those videos. I watch lectures from Yale or something like that. There was a talk given Richard Thaler hosted it, a very good guy called Raj Shetty, I think his name is, a fantastic behavioral science talk. And I sort of sat down and watched 90% of it, you know, you’re flicking away some of the time, in a way that wouldn’t have happened, I think, before. So that is really, really important.

1:07:22 Brian Rose: You have lots of options there. Roy, I just wanted to ask you some about your own success secrets, some of your personal habits that kind of got you where you are today, for good or bad. Is there any part of your daily routine that you just make sure you repeat every day, something in the morning, or something you make sure you do or don’t do?

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1:08:01 Now back to the rest of the show.

1:08:04 Rory Sutherland: I’ll tell you the other thing is, I like to be in an environment where I can kind of, you know I was earlier criticizing those publications for the super wealthy? Yes. And I went to the Caribbean recently, and I went to one sort of old-fashioned Caribbean hotel, and I went to a sort of, just to visit, I was staying in a villa, but I went to visit a kind of super high-end Caribbean hotel. And the first one, which was kind of a tiny little bit short, shabby, and a little bit run-down, a little bit old-fashioned, but you have the feeling there, okay, that, here we are, you decide what a good life is, and you use the hotel to enjoy it, you know, enjoy that as much as you like, according to your own definition of what a nice day is.

1:08:59 And the other one was what I call kind of high-end fascism, which is, this hotel has a very clear idea of what the good life consists of. You know those magazines where everything’s about sun-sea-he-yachts and watches, okay, and golf, okay? Well, the great thing about, I mean, the great thing about being a creative person, this actually wraps the conversation very nicely, is that once you realize that value is subjective, and you also realize that there’s a huge risk, interview Peter Thiel about this if you get the chance, of what’s called mimetic desire, that you want things simply because other people want them.

1:09:37 And what you notice in the financial industry, which was always a problem, was that there was huge mimetic desire, which is everybody wanted the shit that other rich bankers wanted. And it became a very dangerous metric because you were allowing other peoples, I mean, it wasn’t even clear who originated these ideas of the good life. What the hell is a bloody 50,000 pound watch doing? What a crock of shit. You know, what a load of bollocks, honestly, okay?

1:10:02 Don’t get me wrong, I’m pretty materialistic, okay? But I look at certain things, you know, and you just go, this is just total toss. And the nice thing about working in advertising is that although you earn less than banking, you are much, much richer in one way, because you can kind of decide what your idea of a good life is. Because you know the game being played. Because you can see the game, and first of all, you don’t get trapped in an awful thing of I must have, you know, yacht, I must have watch, I must have suit.

1:10:29 Which is, what’s the point of being rich if actually the area of your expense or your expenditure is entirely constrained by the needs of the people around you and the idea of the people around you about what constitutes a good thing. You’re not making choices anymore. A very, very interesting one is one of the things, you know, I live, I suddenly decided that everybody had got property wrong and that the best thing to spend money on in property, which has enduring value, okay, isn’t an extra bedroom.

1:10:56 It’s quality architecture. So when I moved out of London to the countryside, I said, okay, I’m going to reverse the usual location, location, location thing. It’s going to be architect, architect, architect. Now, look at it like this, okay. The ability to actually reframe and determine your own idea of value rather than allowing what is success to be imposed upon you by the kind of weird consensus of other people, as you would get if you read the FT’s what to spend it, okay.

1:11:25 What to spend it if you’re a wanker would be the full title, okay. So I moved out, I sold a two bedroom flat in Bayswater, which was itself a grade two listed Sir Kenneth Frampton 1960s building and I bought the roof four bedroom flat for not much more. It was 300 and something thousand when I bought it, okay, of a Robert Adam grade one building with grounds by capability brand. Now, let me tell you this, okay. You go your flash bastard, former home of Napoleon III, all that stuff.

1:11:57 Which is where you are now. I stayed there for 13 years. The architecture still gives me pleasure every time I go home, okay. If I had bought a flat of identically the same size but by an indifferent architect in the same location, it would have cost me about 20,000 quid less. That’s all. Literally, I mean, a few percentage points less.

1:12:20 Now, if you buy a painting that’s six foot by four, buy a shit artist, it costs you 50 quid. If you buy the same thing like Picasso, it’s 160 million. The same rule does not apply in architecture. Don’t ask me why. It’s basically its mimetic desire or some sort of crap like that, okay, which is a property by a brilliant architect only costs five percent more than property by a crap architect.

1:12:43 Don’t ask me to explain this. Just exploit it. So, if you can, the one great thing about working in this business is that advertising people are natural kind of property developers. They want to see something that’s underrated by other people, okay. That’s the natural entrepreneurial urge.

1:12:58 It’s finding something that’s someone else under rates. If you make a huge amount of money, but your idea of what success is, is fundamentally constrained by the opinions of other highly conventional and homogeneous people. You’re not rich, you just have a lot of money, but you’re actually quite poor. And you’re not even making your own decisions. You’re not even making your own decisions because, oh shit, I’ve got to buy…

1:13:18 By the way, I met a guy in the high-end luxury yacht business who’d worked in high-end yacht brokerage for years and he said it was a very, very valuable experience because it taught me, however rich I am in the future, I will never buy a high-end yacht. The first yacht apparently does give you a bit of fun. What people then do is they assume that the yacht that’s twice as big will be twice as much fun. It’s actually, it’s probably five percent more fun and five hundred percent more grief.

1:13:41 Brian Rose: Last part of that series is, who comes to mind when you think of the word successful?

1:13:51 Rory Sutherland: Oh, God, you’re being a bit American there. Because, you know, blimey.

1:13:59 Who would I really… I suppose, actually, it’s weird people, weird people who are… I suppose I’ll kind of refer to my previous answer, which is people who’ve been highly successful while carving entirely their own path, I guess. And, you know, there are quite a lot of those. You know, someone who died recently who you have to regard as remarkable.

1:14:27 It would be Felix Dennis, the creative… But, you know, he was kind of a poet and he created Oz and he created a fortune in future publishing. And, you know, just someone who effectively was remarkable. There is one other criterion, by the way, which I think I look at. Now, I don’t have any knowledge of football at all, or much interest in it.

1:14:51 But I’m always kind of weirdly impressed by Gary Lineker. It’s a very strange answer coming from me. Not interested in soccer at all. Because he was a really good footballer, but he’s also a really good commentator. Now, OK, weirdly…

1:15:06 I don’t know anything about your apologies. I have a strange fetish for Ronald Reagan. Because he was actually pretty good at four different things. And there is a thing which I really admire, which is someone who does something pretty interesting in two areas. Closely related or unrelated.

1:15:23 I kind of rank higher than the specialist. And it’s a bit of advice I give our young graduates, which is… OK. If you want to be the best in the world at one thing, like soccer, you’ll almost certainly fail, because there are millions of people trying to be the world’s best soccer player. But if you want to be the best chess player at boxing, or whatever it is, if you can actually be…

1:15:45 There is actually a sport, isn’t there, chess boxing? But if you can actually combine two things that are related, and try and be pretty good at both of them, in a sense, that wonderful thing of behavioral economics came out of an economics faculty that happened to be next to a psychology faculty. And the real progress now doesn’t come from over-optimizing in one field. It’s discovering the overlap between two. And I think that’s my weird Ronald Reagan fetish.

1:16:12 Brian Rose: What sort of things did he do well?

1:16:14 Rory Sutherland: He was an actor. He was governor of California and president, and did them brilliantly, fantastic speaker. And actually, he was TV, of course. He took every single medium that you could have taken from radio when he was a baseball commentator, and he kind of was pretty damn good at all of them, and then became president.

1:16:35 And there’s something there. I know it’s not a conventional view, but I’m kind of in awe of people who can do kind of two things.

1:16:42 Brian Rose: That’s kind of what I’d expect to hear from you, quite honestly. And you talk about perception being everything. Almost sometimes when you talk, sometimes you sound very Zen, you know, and very Buddhist, because you’re saying it’s not what is happening, it’s your perception of it.

1:16:57 Rory Sutherland: Paul and I, I don’t want to create a property gold rush here, but we both moved down to Deal, and we said that we’ve got little homes in Deal, not our main homes, little places on the Kent Coast, and we said, you know, the brilliant thing about Deal is it’s probably about the eighth best seaside town in Britain, which makes it the best, he said. The point is, the best seaside town in Britain is welcome, okay? But there, you’ve got loads of people with a mimetic desire who are maximizers, and they all have to have a house in the best seaside town in Britain, which means the bloody house costs 1.5 million, and when you go down there, you’re surrounded by maximizing wankers, who make your life a misery by trying to make everything perfect.

1:17:34 And actually, there’s a very, I mean, if you think about that system, one thing about satisficing, the people who satisfy, who go, I want to be pretty good here, are actually significantly happier than maximizers, and the choices we make when we satisfy. If you’ve ever met anybody in your time in the city, you’ve probably met somebody who bought a really high-end car. It’s a catastrophe.

1:17:54 Brian Rose: Yeah, and a high-end anything.

1:17:56 Rory Sutherland: Yeah, really, really high-end anything.

1:17:58 It’s a disaster. So, you know, there’s an element where actually learning to satisfy and also learning to reframe is a really, really useful exercise. Nassim also talks about very interesting things about framing, which is, I ensure myself against paranoia following Nassim’s advice, which is, now, Seneca, who is the richest guy in Rome, used to spend two weeks, I think, every year, where he’d travel with only about five possessions, admittedly with a couple of slaves, but that was considered traveling light back then, and he’d effectively reduce himself to effective penury for a couple of weeks every year and live very simply, to remind himself that he could still be perfectly content without all the wealth, you see.

1:18:41 And one of the things I think is an interesting thing is, you know, I plan for myself a relatively modest retirement in a small property, good architecture, mind you, but a small property somewhere relatively normal, on the grounds that if you can remind yourself that you can be 99% or even more content in that state than you will be in wealth, then it actually takes away the sting of potential loss and the fear. I think that was Seneca’s great insight.

1:19:09 Brian Rose: Yeah, one of the great Stoics, wasn’t he?

1:19:11 Rory Sutherland: Yeah. That’s a pretty good, I mean, the Stoics and the Epicureans, I was a classicist originally. There’s some pretty damn good lessons there.

1:19:19 Brian Rose: There’s a great book called The Obstacle is the Way by a gentleman by the name of Ryan Holiday who wrote Confessions of a Market Manipulator or something, but yeah, he talks all about Seneca and the Stoicism as opposed to the Epicureans and how Epicurean nations die and their built-on Stoicism died on Epicureanism. And maybe America is one of those.

1:19:38 Rory Sutherland: Yeah, that’s an interesting one, by the way, which is the US political scene does kind of worry me a bit, actually, because the problem you have is you don’t have a proper monarchy.

1:19:50 Brian Rose: Do we have one here?

1:19:52 Rory Sutherland: No, no, no. Okay, if you’re a genuine empiricist, there’s obviously an ideal form of government, which is constitutional monarchy and a democracy, because if you take a cross-section of those countries which follow it, Canada, Australia, New Zealand, UK, Denmark, Sweden, Holland.

1:20:11 They’re all happy. They’re all pretty nice, Spain, Japan. They’re all pretty stable. Now, there’s some sort of kind of release valve there or some kind of ballast which is created when you have that system. And Americans are missing that.

1:20:28 Brian Rose: Yeah, now, I don’t see any hope in reversion, unfortunately. It’s not looking good. That’s why I left.

1:20:34 Rory Sutherland: No, but I mean, truly, I wouldn’t have been remotely worried about it until 10 years ago, but there’s something there that’s kind of weird.

1:20:43 Brian Rose: And it might be going from Stoicism to Epicureanism.

1:20:46 Rory Sutherland: Possibly, yeah.

1:20:47 Brian Rose: Interesting. Rory, I always ask a few questions at the end to all my guests, and I’m going to hit you with these. If you could make a phone call to the 20-year-old Rory and give that young man a bit of advice, what would you tell him?

1:21:03 Rory Sutherland: I was absolutely skint when I was 20. So, one of the things would be probably, yeah, I probably spent too much time in a sense, I should have spent a bit more money and been a bit more extravagant and got into more debt then, actually, because the amounts of like 1,000 pounds I was in debt, it actually filled my waking hours worrying about this thousand quid I owed. And I probably would have told myself to relax about that because, you know, actually, you know, there are interesting things there.

1:21:38 Looking back on the things you worry about at the time, which prove to be relatively trivial in retrospect, I think that’s an interesting one, undoubtedly. Unfortunately, you know, we don’t have that much control over what we worry about. I mean, the wonderful lessons from Paul Dolan, this book about, you know, we do have control over our attention. One of the things, you know, which I think is important is that news media are problematic here, by the way.

1:22:09 I mean, first of all, we’re given, you know, we’re designed to live in a community of 150 people and there would be a limited amount of bad news. Now we get all of the world’s worst news in real time. We’re not really evolutionally equipped for that kind of thing. But also, some of the religious messages of being thankful, you know, saying grace before meals aren’t necessarily a bad idea because, you know, if you’re listening to the political debate in the UK over, you know, particularly on the left, which seems to be like, they seem to have gone into a kind of mental China syndrome when the Conservatives got a majority as though this was immediately going to become kind of Putin’s Russia or something.

1:22:47 Basically, whoever got in, this is still a pretty nice place, you know. You know, I can’t imagine anything worse than being exiled from here. And there are only about six countries that I could tolerate going to. And those are all pretty similar countries. As I said, Scandix, you know, Australia, New Zealand, I guess.

1:23:05 This is pretty fantastically nice in lots and lots of ways, which we take completely for granted. And I do feel there is something about that kind of doom-mongering message of the left, which, you know, I mean, it’s not really that bad, is it? Okay? And I don’t know what’s really going to change, you know, with a Conservative or a Republican. So that’s the other thing, is actually being more thankful and enjoying more what you have at the time, which you don’t realise.

1:23:30 Brian Rose: Right. Good advice to any young woman. Best advice you’ve ever received. I always ask this question.

1:23:36 Rory Sutherland: One other bit of advice, by the way.

1:23:38 There is a very narrow period in your life when the gas bill doesn’t hurt. Because until you get to about 35, it hurts paying it. And when you get to 42, it hurts picking it up off the mat. So enjoy those seven years where the gas bill doesn’t hurt. Play them mentally or physically.

1:23:56 So that’s the other bit of advice.

1:23:58 Brian Rose: I love that. I’ve heard that before. Best advice you’ve ever received. Part of me wants to ask about that one piece of advice you got in that smoky room in Ogilvy about being, you know, an ad man.

1:24:09 But any, it could be best advice you’ve ever received about anything.

1:24:18 Rory Sutherland: Bloody hell.

1:24:19 I’m actually going to, I’m going to, sort of, like, shoot a question. A few people I’d just like to thank here, as sort of, someone alive. When I was a student, there was a mature student who was a contemporary of ours, a guy called Ray Fauke, who had previously organized the Isle of Wight festivals. And the influence of having someone, we called him Gramps, even though he’s considerably younger than I am now, but of course we were 19, so he was known as Gramps as the mature student.

1:24:43 But having someone who was in their 40s around as a student, he would, you know, who’d actually, you know, I mean, he’d run these fantastic festivals. He’d been an Art Deco furniture dealer, et cetera. I’m really, really in favor of lots of people going back to university later in life and not making it a norm that everybody in the university is young. Because the value of having someone like that, you know, in my, you know, he was the first person who just, you know, for example, you know, young people like music because it’s kind of badge value and an identity thing.

1:25:13 And he liked everything, Beethoven, Dylan, obviously, you know. So, you know, totally eclectic music tastes. And actually, he was very, very formative. Drayton Byrd is another person I always thank, who is the first creative director and chairman when I joined as a graduate trainee at Ogilvie and made the direct. And one of the great gods still is of direct marketing and, you know, really a brilliant behavioral scientist, Avon Lalet, to use that phrase.

1:25:38 Brian Rose: What does that mean?

1:25:39 Rory Sutherland: Before the phrase was coined. And so he would be another person I would always, you know, along with, you know, I mean, Mike Sim, Randy Handfeller, et cetera. Loads of other influences at work. And, of course, my wife, without whom nothing would have happened.

1:25:54 Seriously, I wouldn’t even have got out of bed with him. My dependency there, I can’t even overstate it.

1:26:01 Brian Rose: I trust you on that, but no specific gem, no, the customer’s always right or the customer’s always wrong or marketing is simple.

1:26:09 Rory Sutherland: There are a few. Dare to be trivial, which is sort of, you know, I’m not sure where it came from.

1:26:15 And test counterintuitive things because no one else will. It’s, you know, a few of those lessons. The other people I’ll talk about, because I’ve talked a bit about behavioral science, is that spend a bit of time reading about evolutionary psychology because without the understanding of evolution, there are a lot of things that simply make no sense. You know, there are a ton of things in advertising in life which make no sense unless you’ve read. And I’m a massive critic of Dawkins, but he’s a brilliant writer.

1:26:44 And his early work has, you know, has been absolutely huge. He’s bonkers on religion, by the way, totally deranged. But nevertheless, his early work was life-transforming for me.

1:26:56 Brian Rose: Evolution. No, that’s what I’ve learned today.

1:26:59 Rory Sutherland: Look back to the evolution and look at the lizard brain. There are a lot of things which appear irrational, which make perfect sense once you realize the environment we’ve had to survive.

1:27:12 Brian Rose: Last part, to the 20-year-old that’s listening to us, watching us somewhere around the world, Brazil, Japan, China, who wants to grow up and be just like you,

1:27:23 Rory Sutherland: don’t do that, don’t do that, don’t copy. Do your own thing and find a place where you’re happy inside your own skin and where, how would I put this?

1:27:33 There’s a very blurry line between, if you can find any area where you’re not really sure whether you’re reading for work or for pleasure, stick with it.

1:27:42 Brian Rose: Interesting.

1:27:43 Rory Sutherland: You know what I mean? I don’t really know whether when I read a book on behavioral science, whether it’s, whether it should go down under work or entertainment.

1:27:53 Brian Rose: I’ve never heard that. I love that.

1:27:55 Rory Sutherland: And actually, you know, that’s a really interesting thing. I’ve talked to liars by the way. It’s a very sad thing I always heard from a liar where they said, you have to read so much that the tragedy of becoming a liar is that you can no longer read for pleasure. Wow. Because you know, you spent 14 hours of the week reading, you know, Rex V So and So in 1936.

1:28:14 And you know, you can’t really stomach picking up a book for pleasure anymore. And that would kill you because you killed me.

1:28:20 Brian Rose: Yeah, yeah. You love diving into the ideas. Rory, thank you so much for your time.

1:28:24 Rory Sutherland: It’s an absolute pleasure being in the light.

1:28:26 Brian Rose: I was just, when I had this opportunity, thanks to you being a digital shortage, immediately I just thought we really need to sit down with you and have a proper discussion. So, you know, luck again for both of us. And we bring back the smoking interview as well. Back from the late 50s.

1:28:41 Back from the 50s, you and Young. So no, it’s fantastic. People want to find out more about you. You’re avid on Twitter. It’s at Rory Sutherland.

1:28:47 Rory Sutherland: And also at Ogilvy Change, which is, if you want the interesting behavioral change stuff, shod of my random suggestions on life or what I happen to be eating at the time.

1:28:57 Brian Rose: Yeah, and it’s fascinating. It’s still stuff we didn’t talk about. A lot of your thoughts, your TED talks are amazing if they want to check those out on YouTube. And you have a lot of very fascinating messages I didn’t even get.

1:29:10 Rory Sutherland: One other thing. Life’s complicated, okay. Most Londoners always use the tube map until they think the tube map is London. The truth of the matter is, have enough of a kind of mental map cupboard or map draw, I think is the correct thing, chart draw, that you have several different maps and ways of looking at things. You know, there’s an evolutionary map, a behavioral map, you know, whatever.

1:29:37 Collect multiple maps, that’s the first thing. Don’t always use the same one, but also don’t always use them in the same order. Okay, okay. So, you know, when you’re trying to buy a house, don’t effectively do location, location, location, which is the standard first. When people do elimination by attribute and they buy a house, they go, okay, first of all, there’s a postcode, then there’s a number of bedrooms, then there’s a maximum price I’m prepared to pay, then there’s some shit like I want a balcony, okay.

1:30:03 Don’t always do that in the same order. Say, okay, what would happen if I went, instead of going to and typing in the postcode first, I went to themodernhouse.net, or my other favorite website, Right on the Market, which is Frank Lloyd Wright Houses for Sale. They’re all in the US, of course, you never build it, a few in Japan, I guess, but they’re none of them in the UK. But, you know, don’t always choose things in the same order of comparative preference.

1:30:31 Just go and experiment, what happens if I do this backwards? Yeah, sometimes I get that wrong. My wife finds me a pain in the ass because she sent me out to get a, let me get this right, she sent me out to get a fat toaster that would take fatter slices of bread, and I came back with a bread slicing machine because I said, we don’t need a fatter toaster, we need thinner bread, and actually that was stupid, okay, we needed a fatter toaster. But nonetheless, occasionally just going, okay, let’s basically look at this through five frames and apply those frames in varying orders, and that’s basically a trick that won’t let you down.

1:31:02 Brian Rose: Right, introduce some randomness into your life, think anti-fragile, even if it’s just a little on the periphery, it will…

1:31:08 Rory Sutherland: Yeah, it gives you the chance to get lucky.

1:31:11 Brian Rose: Right, no, that’s a great takeaway. Roy, thank you so much for being here. As we say on London Real, it’s about the journey.

1:31:17 We also say this place is all about people worth watching, and you’re one of them, so…

1:31:21 Rory Sutherland: It’s been a great journey, thank you very much for doing it. And I believe in 60 years from now, someone will be watching this, you know…

1:31:28 Brian Rose: Maybe one person.

1:31:29 Rory Sutherland: God, I can’t believe they smoked back there.

1:31:31 Brian Rose: I don’t, I don’t, yeah. Fabulous. Awesome, all the best, thanks so much.

1:31:49 Rory Sutherland: Thank you very much, thank you.

1:31:56 Brian Rose: Fabulous, thank you.