The Wisdom Wall

“At the very least, you'll have to show them three or four or five skiing holidays from which they choose. Because we can't really choose in the absence of comparison.”

“my argument is that marketing is actually fat-tailed. So is innovation, and R&D, pharmaceutical research, science, ok? In other words, five to 10% of what you do delivers perhaps a 110% of the value, and therefore paying people by the hour and demanding that every quantum of effort has to be matched to a quantum of…”

“50, 50% of your effort in life, once you ensured the fact that you're not going to starve to death, die, etc., you know, you've looked after your children... Should be attempts to get lucky. In other words, what Nassim would say, I love this phrase, uh, increasing your surface area exposure to positive, positive upside…”

“quite a large part of this stuff is actually signalling to ourselves. Which is, you know, uh, because I'm worth it. I deserve this. I'm the kind of person who drives this. Uh, it provides me with a kind of ego boost, a sense of reassurance, whatever it may be.”

“if you haven't got much money, TV as a source of long-term entertainment is spectacularly cheap. So having a really good television on which to enjoy it, because you're not going to go Porsche racing at the weekend, you know, you're not going to be there, you know, effectively going to Glyndebourne or popping up to the…”

“big innovative new ideas don't require less marketing, they require more. Because you're asking people to, at the initial stages, you're asking someone to do something that nobody else has done, and you're asking them to do something they haven't done before.”

“the lesson of all tech is that loads and loads of geeks compete through, for technological numerical superiority by some measure or other, And then someone else comes along with a cute user interface and makes all the money. It's basically Steve Jobs. Yeah. Nobody's done that yet for AI.”

“And so their failure to understand the wider context within which they were operating, which is the job of marketing, Is exactly the reason nerds hate marketing, because they think in a perfect world, nerd metrics win out. But the consumer is much more bothered by the fact that when you get to the bottom of the iPhone…”

“do not define an objective which is designed to serve human beings without considering psychological factors, because you might be able to solve your problem very, very cheaply and efficiently by changing the psychology, not by changing the technology.”

“the biggest source of economic waste is when people produce something that's objectively brilliant, or they produce an invention which should be life-changing, But then they tell the wrong story about it, and it doesn't sell.”

“This is a criticism I have of Silicon Valley, that what they often do is they take something that a human does, they define its role very, very narrowly, devise an algorithm or a technology which replaces that very narrow role, and then assume that the human being has become redundant.”

“So that's why there are only four big accounting firms in the world, ok? If you appoint one of the big four and they cock up, everybody blames PWC or E&Y or whatever, ok? If you appoint a small boutique accounting firm, it may be better, but if they cock up, now they blame you.”

“You actually invite the client in and you pretend that you arrived at this, um, insight or, or flash of imagination through the deployment of sequential logical thought. And of course the whole thing is a complete misrepresentation of what happened. What you did is you instinctively felt there was something in this…”

“it was really the hobbyists and the neophiles and the kind of weird, um, people who are doing it for all manner of non-utility based reasons, who are the people who are probably essential if you're to get out of kind of local Local maxima in innovation in a way.”

“And so that hunch that actually what we're doing when we make decisions is looking for ways to minimize the worst case scenario. Reliable signals that the worst case scenario isn't going to be that bad or that likely. Almost more than we're attempting to maximize our expected outcome. And that suddenly, once you…”

“Actually having an arbitrary head of state is actually really good, because it means that if the election doesn't go your way, it doesn't force you to reassess your loyalty to the country. The fact that, I mean, the beautiful phrase also used by, I think it's one of the Hitchenses, is that the monarch plays exactly the…”

“within an institutional framework, the urge not to break ranks and not to be considered possibly wrong, you know, it's much easier to get fired for being illogical than it is for being unimaginative.”

“One of the things that I don't think is understood by tech nerds, and if I'm being really cruel, you know, males in general, in many cases, is the extent to which in evaluating any business or experience, the human component of it, the face-to-face component, Does really, really heavy lifting.”

“Also, your call center is Is the only way you can find out the problems that people can't solve anywhere else.”

“This is what's weird about working in advertising, by the way, and I think it's probably similar to theoretical physics, and it's probably similar to entrepreneurialism, ok, which is what's unusual about those fields, is that rationality is the bronze standard. In advertising, if someone says, you know, uh, this is the…”

“In some ways, you could argue it's an ingenious marketing strategy, which is that you press the hot buttons of one percent of the population, so they then repeat your message accompanied by their own Signaling outrage. Meanwhile, you get free media coverage practically everywhere.”

“Because in the sparkling, in the champagne business, It doesn't matter how good the drink is. If people think you've bought it for eight 95, it's not doing the job it's supposed to do, which is to signal generosity, to signal hospitality, or to mark your special occasion.”

“Because it's, it's always much more acceptable To spend money on infrastructure than it is to spend money on psychology.”

“intangible value is the most environmentally friendly way of creating value. You don't have to chop down any trees. You don't have to burn any coal. You generate value simply by getting people to look at something that already exists in a more favorable light.”

“we intrinsically tend to think that marketing value is kind of cheating, whereas engineering value is the real deal.”

“marketing would make a lot more sense to everybody, because a very large part of marketing is really costly signaling. So, you know, the cost of something Um, particularly the upfront cost of something which may only pay off over time is a very, very reliable gauge of commitment.”

“if you're prepared to spend four years becoming a cab driver, And four years of your life which you'll never get back is spent reaching that level of qualification. You're patently committed to the job. Secondly, you have a lot of skin in the game because it's not worth risking losing that badge which took you four…”

“it's impossible for anything rational, To successfully evolve, because the byproduct of being rational and efficient, optimally rational and efficient, would be that you'd be predictable. And if you were completely predictable, you'd be dead.”

“If you're an academic, your job is to try and be right, unambiguously, completely, absolutely right about something. In business, if only 30% of people do a weird thing 20% of the time, there's still a business opportunity in that.”

“Just as in individual behavior, the big driver seems to be avoidance of regret. In corporate settings, the big driver is avoidance of blame.”

“The problem with the kind of control economy is that you invest money according to how good people's reasons are, rather than according to how good the results are.”

“But then the other explanation is that in terms of cosmetics and in terms of fashion, You're doing it to signal to yourself that it enables you to feel confident in a way that actually you cannot will into existence. So you, you cut now in order for that to work, it obviously has to be expensive, um, you know, because…”

“particularly with low cost items, effort can destigmatize low price.”

“I think that an awful lot of human innovation has been made possible by really a combination. Now, Jeffrey Miller agrees with me on this, but he, I mean, he's much better thinker than this than me, obviously, but that to some extent, sexual signaling or costly signaling sometimes provides a The early stage funding for…”

“we instinctively know as human beings that the importance of a communication is proportionate to the cost of its generation and transmission.”

“When Joel said to David, I don't think people buy brand B rather than brand A because they think brand B is better. I think they buy brand B because they're more certain that it's good. In other words, they're considering not only the expected utility, but the variance.”

“Nearly all middle class values, if you think about it, from everything like education is very largely a commitment device. Our preparedness to engage in, kind of, costly commitment devices or signaling Is basically in sort of indication of middle class probity.”

“Because the tribal thing is, if you want to signal your membership of the in-group, the best way to do that is by focusing on those things which are disproportionately annoying to the group that don't agree with you. And so there's probably an element where political consensus becomes harder and harder, simply because…”

“Nothing in marketing always replicates, because context always matters.”

“if you test counterintuitive things, it's much more valuable when they pay off. Because as I always say, test counterintuitive things, because your competitors won't.”

“artificial certainty is less valuable in the, in the modern digital age than it was historically, and yet weirdly people are cleaving to it more.”

“when you pursue efficiency, generally you start looking at numerical or mechanical factors. And of course, in the process, you disregard psychological factors where the greater gains may be found, and so you focus too heavily on cost reduction and too little on value creation.”

“Various real estate agents have said to me that every estate agent does their utmost to make sure that until things are signed and sealed, the vendor never meets the buyer and vice versa. And the reason for that is if one of them doesn't like the other, they won't buy or sell.”

“it seems to be the case that if you meet the, the vendor, and you basically don't trust them or think they're a bit shifty, it doesn't matter what the price is, it doesn't matter the condition of the house, suddenly you revise your valuation of the house downwards if you don't like the person selling it to you.”

“actually, someone who's invested 15 years in doing up a house probably cares about what the person buying it is going to do to the house.”

“your readiness to pay changes partly in accordance to what you imagine to be the overheads of the establishment selling the good. Even though the, even though the utility of the beer, as distinct from the, how good the transaction feels. The actual utility of the cold beer is identical in both cases.”

“We're not trying to optimize. We're trying to reduce the risk of downsize, downside variance, you know. And that's true in all sorts of things, investment strategy, etc. You know, the barbell approach. You know, first of all, make sure you don't, don't do anything disastrous. Then after that, try and get lucky.”

“the queue for The priority lane in security is longer than the queue for the amateur lane, but frequent business travelers will still join the priority lane on the assumption that the people in front of them are more competent.”

“the job of the real estate agent is to some extent to be the person who stays behind in the place where the house is sold to suffer the reputational consequences of, you know, of anything outrageous. Because the vendor of the house isn't really reputationally vulnerable if they're moving 300 miles away.”

“A really, really good service organization allows for very streamlined, efficient service for people who know exactly what they want, and extremely empathetic service for people who are undecided, uncertain, or find themselves in an unusual situation.”

“Now, don't get me wrong, all that bottom-of-the-funnel short-term transactional stuff is very important to get right. I'm not, I'm not disparaging it, but it's only a third of the game.”

“And there are a whole bunch of people who are employed, not always by the government, just as much by the private sector, who are much more interested in adherence to, uh, approved procedure than they are in quality of outcome.”

“First of all, an awful lot of quality human decision-making of necessity has to be tacit and instinctive, not regulatory.”

“Don't benchmark against your most obvious competitor. All you'll do is make, make yourself a copy of them.”

“I think also a lot of valuable goods are affordable now by everybody because they started as luxury goods.”

“So you use generally verbs of movement. You use verbs in preference to adjectives, and adjectives in preference to adverbs, I think. You tend to use Anglo-Saxon words rather than the Romance words For the most part, without being silly about it, you convert a feature into a benefit.”

“And so sometimes in marketing, all you've got to do is tell people a fact. It's not always about persuasion. It's not always about getting people. It's simply putting people in a, you know, a state of knowledge or belief or conviction that this thing can make a difference to their lives.”

“You know, the brand power you have, you see, you know, if you're Apple or Ford or whatever, people will buy a weird product from you much more readily than they will from Alfa Romeo. Right. Because they go, well, if Ford is doing it, you know, it must be ok. Right. So one of the gifts of having a strong brand is your…”

“an awful lot of German businesses are driven by sibling rivalry. So Puma versus Adidas. Aldi North versus Aldi South. There's a whole weird family rift in the German car industry which is too complicated for me to understand about Porsche and the family who own Pinschitrieder.”

“undoubtedly, if you can harness other motivations alongside the profit motive, most people working for a company, unless you've bought them off with massive stock options because they're in the senior management, most people don't get up in the morning to enrich the share owners.”

“when you're looking for a house, don't optimize, because everybody will want that house. Instead, find something the house has, which most people won't like, but you don't care about.”

“The enjoyment of a restaurant, the value created by a restaurant, is a product of, and I probably mean product almost in the mathematical sense, the intrinsic qualities of the food that's being produced, and the context in which you consume it.”

“by getting us to shift our focus to what's good about something rather than what we assume to be bad about it, you can synthesize happiness out of nowhere.”

“a large part of the reason for air travel is not that you couldn't do what you do in a phone call. It signals through both the cost of the tickets and the effort required to make the journey the importance of a client's business.”

“one of the reasons as humans we need to be, we need to be capable of rousing to anger is to stop people dicking us around.”

“if you offer, you know, if you offer a web page and a phone number, you will sell a lot more than if you only offer a web page.”

“there's, in other words, there's the value we get from the ownership or consumption of an object, and there's the immediate positive or negative feeling we get from how much we pay for it and under what circumstances.”

“the most extreme case is sometimes in the art world, where someone says, if, if a product, if a painting doesn't sell in the window of your gallery, um, if it hasn't sold after three months, double the price. And part of the reason for that is someone who's looking to buy a 10,000 pound painting doesn't want to buy a…”

“Um, that that's how you've made your decision, or that that's how, now, what happens is, often that's how a good way to justify a decision, but it's imagination that gets you to the hypothesis in the first place. So in mathematics, someone instinctively believes something, and then they set about to prove or disprove…”

“Because when you look at supermarket shelves, we instinctively derive social information from the relevant prominence and proliferation of dry versus wet paper. And so we look at a supermarket shelves, we go, well, basically, there are a ton of dry Toilet rolls all over there, stretching as far as the eye can see. On…”

“we're not really a rational animal, we're a post-rationalizing animal. And that most of the time when we give a reason for an emotional state, it's a plausible sounding, um, narrative that's actually, um, Invented in the aftermath of us experiencing that emotion”

“No, I think there's an evolutionary thing, which is, if you want people to believe that something has medicinal or psychotropic powers, It has to taste a bit weird.”

“there are whole technologies which before they reach proper sort of Model T, um, realization, have to go through these painful early stages, which in themselves don't make sense purely in terms of utility.”

“the great problem of information is it's easy to create and hard to trust.”

“Anything that costs now and only pays off in the long term is a reliable signal of a business or an individual who's playing the repeat game, not the one-off game.”

“you essentially trust a kebab shop more than the kebab van. Because the kebab shop has sunk costs. If he loses his reputation, he'll have to up sticks and start a new kebab shop somewhere else at inordinate expense. The kebab van can just go, looks like Sevenoaks is a bummer. I think I'll move to Oxford and poison a…”

“airports are schizophrenic, in a way, because the clientele of an airport is, roughly speaking, a fifty-fifty mix between people who fly a hell of a lot, and just want to get through the damn thing as quickly as they can, And people who only fly once a year, who regard the trip to the airport as part of the holiday,…”