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Hi, I'm Jim O'Shaughnessy and welcome to Infinite Loops.
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Sometimes we get caught up in what feel like infinite loops when trying to figure things out.
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Markets go up and down, research is presented and then refuted, and we find ourselves right back where we started.
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The goal of this podcast is to learn how we can reset our thinking on issues that hopefully leaves us with a better understanding as to why we think the way we think and how we might be able to change that to avoid going in infinite loops of thought.
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We hope to offer our listeners a fresh perspective on a variety of issues and look at them through a multifaceted lens — including history, philosophy, art, science, linguistics, and yes, also through quantitative analysis.
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And through these discussions help you not only become a better investor, but also become a more nuanced thinker.
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With each episode we hope to bring you along with us as we learn together.
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Thanks for joining us, now please enjoy this episode of Infinite Loops.
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Disclaimer: Jim O'Shaughnessy is chairman and Co-Chief Investment Officer of O'Shaughnessy Asset Management, where Jamie Catherwood is an associate.
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All opinions expressed by Jim, Jamie and podcast guests are solely their own opinions and do not reflect the opinions of O'Shaughnessy Asset Management.
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This podcast is for informational purposes only, and should not be relied upon as a basis for investment decisions.
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Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.
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Jim O'Shaughnessy: Well, hello everyone.
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It's Jim O'Shaughnessy with another episode of Infinite Loops.
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And today, one of my favorite people to talk to because he is a font of knowledge and he makes me smart, even if I don't get to ask him any questions, because I prepare with all of his work beforehand and I thought, oh, I forgot about that. Ooh, that's interesting.
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Hopefully today, we'll cover some of those.
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Jim O'Shaughnessy: My friend, Rory Sutherland is making his third appearance on Infinite Loops.
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He probably needs very little introduction, but I'm going to give him one anyway.
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He is the vice-chairman of the Ogilvy Group and author of a fantastic book, Alchemy, and another audio book that I generated quite a few questions from called Hacking the Unconscious. Welcome.
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Rory Sutherland: It's a pleasure to be back on.
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Always a joy, Jim, I have to say. A real pleasure.
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Jim O'Shaughnessy: And for me, as well, Rory.
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So on Twitter last night, somebody put up.
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David Ogilvy when he was 38, he didn't have a job.
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Three years later, apparently he was the highest paid writer of copy, essentially doing headlines and whatnot.
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Rory Sutherland: Certainly one of the most famous.
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I mean, it's a very interesting story.
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There's a book by Kenneth Roman, who was later on the chief executive of Ogilvy, which is a biography of David's.
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It's fair to say he was occasionally prone to exaggeration or myth-making, which is only consistent after all, if you're an advertising man.
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Rory Sutherland: But I think his career path involved being a chef in the Hotel Majestic in Paris.
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He was an AGA salesman, which is where he honed a lot of...
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You know what an AGA is, do you?
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It's a strange type of stove.
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It's kind of Anglo-Swedish stove which both heats your water and cooks your food.
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Still very popular actually, even today in particularly British country homes.
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Rory Sutherland: Then I think he worked for MI6 during the war in DC.
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Then he was a kind of failed tobacco farmer among the Amish in Lancaster County, Pennsylvania, I suppose it must have been.
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I think he attempted to be a tobacco farmer, although apparently the Amish interviewed said, we kind of thought of him as a man who owned a farm rather than a farmer.
3:53
And I think that's probably a useful distinction.
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Rory Sutherland: And then admittedly, with the help of his brother, his brother Francis Ogilvy ran what was then called Mather and Crowther in London.
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With a very small amount of funding, he launched an American arm of this British agency, or to be more accurate, it was a kind Commonwealth and Empire agency with outlets dotted- Britain, Australia, India, etc.
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Africa, much weaker in both Latin America and North America.
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Rory Sutherland: And what effectively happened is the American agency grew so fast, and of course the relative economic strength of the two countries in 1948 and thereafter meant that effectively the American agency ended up buying up the British one.
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And hence the Ogilvy name got banged on the door.
4:39
But Mather and Crowther was the fairly venerable, I think it's around about a hundred years old British agency, which provided him with what we would now call seed funding or something.
4:53
Rory Sutherland: And he was again, both a brilliant copywriter and a brilliant salesman and publicist.
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And actually it's a point worth making, in fact that we tend to denigrate salesmanship as a skill, but I would argue, I don't think it's a coincidence that Henry Ford, Edison for that matter, Jobs and Elon.
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They're great hucksters just as much as they are great inventors.
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It's something that's easily forgotten I think that the difference between an invention and an innovation is public adoption, which is a psychological skill which involves entirely different talents in some cases to the skills of physical invention.
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Rory Sutherland: But it is worth making this point because of course there's an asymmetry of perception in that when you're very good at salesmanship, nobody says, you're a great salesman.
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They say what a great product.
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People say I bought the iPhone because it's a great phone.
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They don't say because of the marketing.
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It's a little like the asymmetry of the famous Canadian's problem, which is that there aren't very many famous Canadians because if you're a Canadian and you become famous, everybody assumes you're American.
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And if you're a great product, which is brilliantly marketed, everybody just describes you as a great product.
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And so there is an asymmetry and perception and appreciation I think of the value that marketing plays in innovation that in many cases actually the real genius I think often lies in the salesmanship.
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Rory Sutherland: There's a wonderful book, which is yet to be published about the history of the car by Bryan Appleyard, who would make a fantastic guest.
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He's a brilliant journalist for the Sunday Times and brilliant writer in the UK.
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And actually, Benz's claim to the invention of the car was really down to actually his wife who effectively took the car and went on this heroic 35 mile journey to go and visit her sister.
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And effectively publicized.
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She was in a sense, a marketing genius. I never realized this.
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Rory Sutherland: And so you often get this Rolls Royce, for example, I mean, in the factory, they still refer to the cars as Royces, because Royce was the greasy handed engineer.
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He was the Brummie engineer who perfected the cars.
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Rolls was a posh boy, who was from my hometown, who was absolutely brilliant at selling them to exactly the right target audience.
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Rory Sutherland: And so the creation of the mythology goes alongside the creation of the product.
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But of course, the one is much more salient to us than the other.
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Jim O'Shaughnessy: Absolutely.
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And one of my favorite topics.
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I've been, as you know, I'm an inveterate rabbit hole diver, and one of the conclusions I am coming to to speak to your point is that it seems to me that everything and I mean everything, religions, societies, etc.
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begin as a marketing campaign.
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And when you look into the history of religion.
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Rory Sutherland: I'm going to say something.
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My wife is a vicar so I've got to be very careful saying this, but I always make the point that no one would have heard of Jesus if it wasn't for Saint Paul.
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Jim O'Shaughnessy: Exactly.
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Rory Sutherland: We also describe Saint Paul as a tentmaker.
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Now my modern interpretation of that is actually realtor or estate agent.
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He was basically flogging accommodation, wasn't he?
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So my hunch is- I've got to be a bit careful because my wife might come in and tell me this is all dreadful, but you're absolutely right.
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By the way, that applies to evil movements as well as good ones.
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Jim O'Shaughnessy: Oh, absolutely.
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Rory Sutherland: I think we ought to make that point.
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Jim O'Shaughnessy: Yes, and Paul is very interesting because after he converted, he was Saul before as you know.
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He converted and he was, I didn't realize this.
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Prior to him with his I think 129 precepts, which were actually memes, right?
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He was the first to generate memes that did not matter what tribe you came from.
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Christianity basically became the first religion that said, we don't care what tribe you're a member of.
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We don't care if you're black or white or you're a Roman or a whatever.
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You can convert and come and join us. Wow.
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Rory Sutherland: Interestingly if you read some of Paul's letters.
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Now again, I've got to be careful because my wife will go actually that letter is not now attributed to Saint Paul.
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But quite a lot of them are effectively dealing with marketing and innovation concerns.
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So if you take Raymond Loewy's point of maximally advanced yet acceptable in design.
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That the thing has to be a significant advance on what it replaces, but recognizable enough that people can make the comparison.
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Rory Sutherland: I think there were interesting discoveries with [inaudible] if you made a fan too quiet, people just assumed it wasn't doing its job and they actually hated it.
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There are all these weird cases like that.
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Rory Sutherland: Now actually what Paul did with religion was in terms of tweaking dietary restrictions, Sabbath observance, and of course the need for matrilineage to join a religion.
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He was effectively, I mean, it was DKNY to Judaism's Donna Karan. What would we call them?
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Is it an extension brand? Or a diffusion brand.
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Jim O'Shaughnessy: Diffusion.
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Rory Sutherland: Christianity was effectively Judaism's diffusion brand.
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Jim O'Shaughnessy: Right. Yeah.
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Rory Sutherland: I realize that I am scandalizing people here, but my job is kind of pattern recognition and it's impossible for me not to see these recurring patterns.
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Jim O'Shaughnessy: Exactly.
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Rory Sutherland: Christianity is Judaism's diffusion brand is probably the right way to look at it.
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Jim O'Shaughnessy: And another thing that I found very interesting and learned was that Muhammad, when he returned from his 30 days alone in a cave.
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One begins to hallucinate how many hours after being alone in any place?
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But he claimed that he saw the Angel Gabriel who gave him all of the new edicts, and he went back to his hometown of Mecca.
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Jim O'Shaughnessy: And interestingly, Mecca then was a very cosmopolitan place.
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And they didn't like his message at all, and he indeed had to escape Mecca because they were going to kill him.
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And he went to Medina where lo and behold, the people were far more interested in what he had to say.
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He marched back into Mecca with a massive army. And guess what?
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Everyone in Mecca thought, oh yes.
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No, that's a wonderful belief.
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Rory Sutherland: Very, very interesting the question of the cave, by the way.
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Because Matthew Syed, who you ought to invite on the program.
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Again, a British author, who's written a book called Rebel Ideas, which is very much about the case for diverse thinking in decision making, particularly the kind of diverse thinking that fills in blind spots because if you get too much homogeneity.
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Rory Sutherland: And he made the point that the extraordinary thing about missing the significance of Osama Bin Laden came about because a lot of quite often waspy, highly educated, hugely intelligent people who are intelligence analysts, would see videos of Bin Laden, and he was in homespun clothes and he was standing outside a cave.
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Rory Sutherland: Their natural Western reaction was to go, gee, this guy is living in a bloody cave and he's kind of dressed in rags.
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We can safely discount him I think as a possible threat.
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Whereas of course, to anybody versed in the life of Muhammad, the significance of the cave.
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And I think it was a magic cave, wasn't it, which rendered the inhabitant invisible.
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The significance of the cave and the significance of the homespun clothing was absolutely lucid and clear.
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It was a highly articulate message, which of course threw people.
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It was dog whistle politics.
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Anybody who wasn't in on the dog whistle because they'd been brought up in a Western tradition of thought was completely deaf to the significance.
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Jim O'Shaughnessy: Totally.
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Rory Sutherland: And I always find this question about blind spots that as we become more focused on conventional wisdom, to use that phrase, and as people are educated in a more and more homogeneous way, the gains to specificity and accuracy that you enjoy, and the gains to certainty, are offset in a way because everybody shares the same blind spots.
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Rory Sutherland: And it's a very good argument for diversity in hiring on a range of measures by the way, not just ethnic and gender diversity, but also cognitive diversity that other people see things that you never can.
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It astonishes me how blind I can become having been relatively prosperous for 20 years.
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Rory Sutherland: There's a wonderful example, again from Matthew Syed, when he says that they had a wonderful governmental idea in Britain to introduce spot fines, where if you committed some infraction, you'd be taken straight to a cash machine and forced to give up £50 in cash.
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Jim O'Shaughnessy: They do that here in the US as well, when you get stopped.
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They have a credit card machine with them.
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Rory Sutherland: They actually have...
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it's based on a fairly good premise, which is the more rapid the punishment, the more strong the lasting deterrent effect seems to be.
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So if you have a big delay between committing the offense and being punished for it, it seems from some research to have slightly less potency.
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There's great value just to rapid response.
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Rory Sutherland: But as someone pointed out, Tony Blair and a whole bunch of people in the room were very excited by this idea, until someone pointed out that in reality, the majority of the people committing those offenses don't have a cash card.
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And if they do, they don't have £50 pounds in their account.
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So the whole thing rather falls down on practical things.
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Rory Sutherland: And the extent by the way to which people, first of all, people who are educated in the same place, you earn the same amount of money and live in the same place, tend to essentially adopt the same belief systems, which then causes extraordinary blindness to other points of view.
14:32
If you think about it, I think there's a fault we make here.
14:36
Now have you read the book, The Master and his Emissary by Iain McGilchrist? Jim O'Shaughnessy: Yes.
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It's a favorite of another guest, Tom Morgan. Amazing book.
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Rory Sutherland: Extraordinary.
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John Cleese thinks it's the most important book he's read.
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Now, Iain is coming out with a bigger later book called The Matter with Things in a few months time, which I think is a double volume.
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I think it's about £90 for the book, but it's an absolute tour de force.
15:02
Rory Sutherland: And his point is the whole thing of brain asymmetry that he believes that the two hemispheres of the brain process things very differently and they're kept separate for an evolutionary reason.
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And the same dual brain structure is found in pretty much all animals.
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Certainly it's found in birds, it's found in reptiles, dinosaurs, etc.
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Rory Sutherland: And the argument is that they're probably sort of yin and yang reasons kept separate for a reason.
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And contrary to the standard belief that the left brain and the right brain do different things, it's much more of the case that they do the same things, but they do it in a different way.
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Rory Sutherland: And his great complaint is that the left brain deterministic reductionist approach culturally comes to enjoy an unwarranted dominance over the right brain approach, because arguably it may be better at winning arguments, even though it's worse at making decisions.
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For instance, now that's my gloss on it, by the way, and don't attribute that to Iain who is vastly more eminent than I am.
16:01
Rory Sutherland: But it always strikes me that the job of creative people, of artists, of entrepreneurs to an extent, is different to the job of scientists.
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The job of scientists is to take what is already known and to come up with convincing answers or recommendations to what the behavior should be in response to what is known, assuming that what you know is adequate.
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Rory Sutherland: The job of the artist or the creative person, or I would argue the comedian by the way, is to see things which nobody else has noticed.
16:33
They may be known once you draw attention to them, but they're just nowhere there in consciousness at all.
16:38
You know, that Canadian, not American, if you like.
16:42
Jim O'Shaughnessy: Right.
16:43
Rory Sutherland: And the interesting question I always ask is what we tend to do now is we go straight to the scientist for the answer, whereas actually what we need is a preliminary phase of artistry, where we say, before we start actually on the reductionist process, the induction or deduction from what is known, we need a process where we actually ask, what can we know? What can we imagine?
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What is there here that nobody else is seeing?
17:10
Rory Sutherland: And it occurs to me that in defense of my own profession, at a trivial level, at a consumerist level, that's what you do in the advertising industry.
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You try and do what a comedian does, which is to spot something which may be sitting in plain sight, but nobody's talked about it.
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Either because it's beneath their dignity to notice it, or because it simply doesn't fit into the standard issue mindset that most business people have.
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Rory Sutherland: And it's very similar.
17:37
I think my point is very similar to McGilchrist's in that it isn't necessarily just a question of what is the relative importance of these two processes.
17:44
The right brain, which is vastly more synthetic, it's much more to do with the synthesis than analysis.
17:50
It's also the order in which we deploy the skills.
17:55
Rory Sutherland: And I think that actually having a period of synthesis and wide exploration before you deploy the toolkit of reason makes very good sense.
18:04
It's also something better done by humans than machines, which is interesting.
18:10
And yet we seem to have bypassed this, possibly on the smug assumption that in the modern world, we already know everything there is to know.
18:20
Or that whatever data happens to be numerically expressible is adequate to the task of solving the problem.
18:24
Jim O'Shaughnessy: Right, and so this is the synchronicities here amazed me.
18:26
I just gave a salon last night, which you would be brilliant at, by the way.
18:32
And the title of it was called Clowns and Prophets, and we talked about The Master and his Emissary.
18:36
We talked about the absolute need for clowns, i. e.
18:43
comics who can safely because they're just joking after all, can safely say things that other people feel that they cannot say.
18:52
And it's a bit like the emperor being naked, isn't it?
18:59
Jim O'Shaughnessy: So they notice things.
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There's common knowledge and private knowledge, and people might know the emperor is naked, but they're terrified to say anything because he's the emperor.
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What is needed is an agent like the little girl in the story of the emperor who proclaims loudly, but he's naked.
19:19
And then all of the people who hear her immediately adopt the common knowledge, which they already knew already. And so we need both.
19:30
Rory Sutherland: We seem to have evolved this function.
19:30
Jimmy Carr makes an interesting point that apparently the Emperor of China who built the Great Wall, had a plan to paint it. Don't ask me.
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And no one could actually summon up the courage to effectively disabuse him of this slightly absurd notion, except for someone who had the role of jester, who basically used sarcasm.
19:51
Rory Sutherland: And there seems to be just as there was a court, this role of jester who was the one person allowed to insult the king as a necessary corrective.
19:59
There seems also to be an evolutionary mechanism, where we accept that you can say things in a funny way and the social response to that has to be different to if they are said seriously.
20:15
Jim O'Shaughnessy: Well, Billy Wilder said that, yeah, sure, you can tell the truth, but you'd better be funny or they'll kill you.
20:21
Rory Sutherland: That is absolutely, that is the perfect summation of that. It works in advertising.
20:23
There are advertising approaches that work because they're funny.
20:28
And if you actually strip away the humor, you actually...
20:31
Rory Sutherland: The Economist.
20:31
There was a famous British advertisement in the Economist.
20:33
And it said, I never read the Economist, management trainee aged 42.
20:37
Now the naked message reading the Economist will make you more successful at your job is a slightly odious and a slightly dubious claim, perhaps.
20:46
Jim O'Shaughnessy: Exactly.
20:47
Rory Sutherland: But you might argue, I might argue if I'm being absolutely humorous about it, if I choose to be humorous about that ad.
20:48
It's actually saying a horrible thing because I mean, 40% of the population would be pretty chuffed to be put on a management training course at the age of 42.
20:58
Jim O'Shaughnessy: Sure, sure.
20:59
Rory Sutherland: It's very much talking to a kind of graduate fast track audience, but nonetheless, the oblique way in which it's said, and the humorous way in which it's said, allows you to say something which would be impermissible, if you said it deadpan.
21:13
Jim O'Shaughnessy: And that gets us back to Ogilvy who was...
21:14
Rory Sutherland: Actually, humor as a vehicle for eradicating blind spots is very, very interesting.
21:15
And one of the things, there isn't a single leading comedian whom I wouldn't employ as an advertising creative.
21:24
Jim O'Shaughnessy: Exactly.
21:26
Like Ricky Gervais, just straight in.
21:26
Chris Rock, Dave Chappelle.
21:26
These people, this is the part that as you might know.
21:33
Rory Sutherland: You couldn't afford them. I'm not saying.
21:35
Jim O'Shaughnessy: Of course not.
21:38
My youngest daughter is a stand-up comedian, and I have given speeches, thousands of speeches to groups, varying in size from a couple of dozen to 10,000.
21:44
And when I went and watched her first five minutes set and she came down, I said, you are braver than I am because the terror, because you get immediate feedback.
21:54
If you're not funny, you bomb, and Lenny Bruce said, "Humor is actually the only art form. Why is that?
22:02
Because you can't fake it.
22:09
Try faking a laugh for an hour, fake three laughs.
22:09
You can't do it, Man," said Lenny Bruce.
22:16
And then you also get into the idea that they are in quotes, the truth tellers and eradicating some of those blind spots, what you call in your recent audio book, thought cages. I call them logic boxes.
22:30
Rory Sutherland: Logic boxes are the same thing.
22:32
They're things which are useful within a narrow domain, but which become prisons to thought, when applied too widely. Yeah.
22:41
Jim O'Shaughnessy: But back to The Economist advertisement. Why is that brilliant?
22:44
I think it's brilliant because the person who wrote that was A, was funny.
22:50
B, they understood who their audience was.
22:50
They understood that they were not writing to that 40% of the population who would be chuffed to get on that program.
22:56
They were writing to the aspirational people who would look at it as a travesty to be 42 and only in a management training program.
23:10
So sometimes as you yourself point out, you got to know who you're addressing.
23:15
So for example, Diamonds Are Forever.
23:15
You covered this in your Hacking the Unconscious.
23:20
That advertisement, written by a woman, interestingly enough, was not aimed at women. It was aimed at men. Rory Sutherland: Yeah. Ingenious, absolutely.
23:29
There's an interesting point I make about that campaign actually, which only occurred to me a few weeks ago.
23:33
It's in effect, category advertising.
23:33
Now it isn't, it's funded by De Beers, but the reason De Beers could advertise diamonds rather than De Beers Diamonds was that essentially, De Beers for peculiar historical reasons, holds a monopoly stranglehold over the world's diamond supply.
23:51
And so, creates artificial scarcity.
23:57
Now it occurs to me that there are a lot of category problems, which never get advertising, because no one has enough of monopoly.
24:02
It might pay Amazon to advertise the value of home delivery, rather than just Amazon specifically, but mostly, there's never a budget for category advertising.
24:12
I mean, there used to be, you used to get these trade bodies who did it.
24:16
In the US, you had, if you want to get ahead, get a hat. Is that right? Jim O'Shaughnessy: Yeah. That was very old. [crosstalk].
24:21
Rory Sutherland: Very old, but that was basically the hat makers and hat shops of America pool their resources and they promoted the category, not the individual brand.
24:28
And we're currently involved with the Institute of Practitioners in Advertising to do a campaign to encourage people to work in the hospitality industry, young people.
24:38
On the basis that whatever you think about working in hospitality, it is not boring.
24:43
Many, many downsides, but it isn't boring.
24:50
And it strikes me that there are far more problems that could be solved if the coordination mechanism existed.
24:56
Electric cars, for instance.
24:56
Tesla does it, I've just bought an electric car, Ford Mustang Mach-E.
25:00
I recommend it thoroughly to all your listeners, but there needs to be category advertising for electric cars, but there isn't, because all the advertising resides at the brand level.
25:11
Rory Sutherland: And actually, what you need is behavioral change at a category level.
25:13
Now De Beers could do that, did it probably more successfully than anybody else, bar, maybe, Marlboro and a few other advertising giants, but they created what Kevin Simler called social imprinting.
25:28
They just effectively created not only a belief in the customer, but a belief in the customer that everybody else believed the same thing.
25:36
That essentially the diamond, which was generally an accompaniment stone before that campaign, you might have a ring of diamonds around a ruby or a sapphire or an emerald, but the diamond was not the primary stone until that campaign kicked off.
25:50
And it ran worldwide and it created this universal belief that the diamond is the most prized among all gemstones, even though that isn't true, actually.
26:01
Jim O'Shaughnessy: Not even a bit true, and what it also hacked into, in my opinion, was our evolutionary human OS.
26:06
That's in our base code, that we need to make a costly signal, social signal.
26:12
And by making that very costly social signal, we have done our duty. And so...
26:20
Rory Sutherland: It's a commitment device, essentially it's upfront expense as proof...
26:24
I argue that engagement rings and advertising are both very similar, because they're upfront, nonrecoverable expense as proof of your long term intentionality.
26:35
If I were planning a one night stand, there are probably cheaper alternatives than going down to Tiffany and dropping two month salary. Okay? Right?
26:44
So it effectively says, "I have long-term intentions for this relationship."
26:48
And similarly, advertising a product says, "I have long-term faith and intentions for this brand." Jim O'Shaughnessy: Yes.
26:54
Well, and- Rory Sutherland: In software, by the way, it probably says, "We might actually support this for more than six months." Jim O'Shaughnessy: ...
27:00
And actually, the cardinal sin in software is not making it backward compatible.
27:00
And by the way, that's where, to get back to why you need creatives, engineers don't think like that.
27:13
I've met lots of engineers.
27:13
They do not think like that.
27:13
You need the creatives to say, "Whoa! No, no, no.
27:19
It's got to be compatible or they will hate us."
27:24
Rory Sutherland: Of course, you've got a problem if you're an engineer, if you're not...
27:25
There are exceptions, my friend Guru Madhavan, he's in DC.
27:25
And he's an engineer very interested in including psychology and what a friend of mine calls, effectively, anthro-complexity in the overall model. So engineers do do it.
27:37
Spotify did it, for example, when they said, the brief to the engineers was, "Make the songs start faster with less buffering."
27:46
And they got it down to 125 milliseconds.
27:46
And someone said, "Can you do better than that?"
27:51
And they said, "Yes, but there's no point because to the human brain, there's no real distinction between 125 milliseconds and instantaneous."
27:55
We just don't care beyond that point [crosstalk].
28:00
Jim O'Shaughnessy: Rory, hang on.
28:01
Actually, that was why Netflix exploded, because they understood that- Rory Sutherland: My God, didn't they just? Jim O'Shaughnessy: ... Yes.
28:09
The primary thing they needed was a kid in a basement with one bar can still play Netflix. Game over.
28:21
Rory Sutherland: Absolutely right.
28:21
And also the buffering, to the point now where, when you simply look at a film, the film kind of starts playing.
28:31
At least it does, now that may be because I've got reasonably fast broadband.
28:35
Jim O'Shaughnessy: It happens here too. It happens in the US. Rory Sutherland: Yeah.
28:37
Whether that doesn't happen if you've only got one bar and you're on a 3G connection, that's possible.
28:40
I don't know enough about the backend of what they're doing, but that is actually engineering in the service of psychology.
28:48
And it's what McGilchrist would say is, "It's a balanced consideration of the emotional, psychological and right brain considerations, alongside the left brain."
28:58
Rory Sutherland: Now, the tendency with engineers is of course, to value efficiency as a proxy for beauty, I think.
29:00
And that's slightly dangerous because humans respond to things which are gratuitous, pointless and inefficient, disproportionately more than they do to things that are necessary.
29:11
Jim O'Shaughnessy: Absolutely.
29:13
Rory Sutherland: And this is what I mean by Elon fart mode.
29:14
When I say that Elon is a brilliant huckster alongside, [crosstalk] Jim O'Shaughnessy: You're meaning it a compliment, right?
29:20
Rory Sutherland: I mean it as a compliment, a deep compliment. Edison was a shock.
29:22
I mean, the reason you had the electric chair, this is marketing at its nastiest.
29:24
Edison wanted electrocution as a form of execution in the United States, to prove that the Westinghouse AC system was dangerous.
29:36
Jim O'Shaughnessy: Right. Right.
29:37
Rory Sutherland: And so that was probably the nastiest marketing and PR campaign.
29:38
No, actually, the Nazis were worse.
29:44
Jim O'Shaughnessy: Well, yeah. Yeah.
29:45
Rory Sutherland: They're pretty good at branding skills and event management and so on, but- Jim O'Shaughnessy: I'm sorry, but I have to intervene.
29:50
That would make, it's just such a shame Monty Python isn't still together and several are dead, because that would be like a Life of Brian, the Nazi Party as an event planner and the uniforms and all.
30:06
They were very, very good at that, weren't they?
30:06
And it would be a classic Monty Python skit.
30:11
Rory Sutherland: There's a mischievous quote I very occasionally use, which is, "The most effective form of persuasion is when you're not aware you are being persuaded."
30:17
Which I think is very true.
30:20
The only problem is it originates with Joseph Goebbels, its providence is perhaps not the best, but it's actually something to bear in mind if you are a political campaign.
30:27
I think there's a with political campaigns, that the people who are most passionate about them seek to impress other people like them.
30:36
And as a byproduct, they tend to become deeply disquieting or off-putting to people further down the Bass diffusion curve, if you like, of beliefs.
30:48
Rory Sutherland: And you will have to tread very carefully here because if you occasionally criticize the actions of say, environmental protesters, people automatically assume that you don't believe in what they're trying to do.
30:57
And my point is just as you can have a bad product that's very well advertised, you can have a good product that's badly advertised and it's kind of our job to point out when a product's advertising doesn't live up to the actual promise of the reality.
31:11
And so if I criticize one of these current campaigns, I'm not making any judgment about the worthiness of the campaign.
31:17
Rory Sutherland: Generally, I think, most of these campaigns are well intentioned, certainly.
31:20
I do make a small point about environmentalists, that when I was at university in the 1980s. There were three things.
31:30
I had a very left-wing friend who lectured me against, support the miners, no nuclear power, and the third thing was the superiority of diesel vehicles.
31:35
So I had to listen to long lectures on these three things, support the miners, no nuclears, she was German actually.
31:47
And that diesel vehicles were much better than petrol vehicles.
31:47
All three of which I think, it's worth remembering, we only remember the campaigns that succeed.
31:56
If we tend to assume that all demonstrations are part of this heroic tradition, going back to the Chartists of the Tolpuddle Martyrs and those Americans in Boston who are very roots in British soldiers after some circumstances, completely unnecessary in my opinion anyway.
32:12
Rory Sutherland: But it's worth remembering, there were equally, in 18th century London, there were massive demonstrations against Popery.
32:15
The demonstration is not something with an absolutely unblemished history, but we tend, again, it's this Canadian asymmetry problem.
32:25
We tend to remember the worthy ones and not the ones that were less well-intentioned, perhaps. ...
32:30
Popery would be an interesting kind of thing to try.
32:34
You have those people who reenact the civil war, don't you?
32:39
Jim O'Shaughnessy: We do.
32:40
Rory Sutherland: We have a group called The Sealed Knot who reenact the English Civil War.
32:42
So they'll be Roundheads or, or they're either parliamentarians or Roundheads.
32:46
Jim O'Shaughnessy: I was just actually reading about Cromwell and I did not know his earlier history.
32:47
He was quite a insignificant member of parliament who had quite a nasty streak and then circumstances let him have what the book called, his Irish fantasy, because what he wanted to do was go to Ireland and take every bit of land there, and he pretty much succeeded at that.
33:07
But the whole idea, it also made me think when I was reading about Cromwell, about Guy Fawkes.
33:20
Have you seen the movie V is for Vendetta? Rory Sutherland: No. I'd love to see it. And it's my wishlist. Jim O'Shaughnessy: Yeah.
33:25
You definitely, you'll want to watch that, because it's quite, quite good.
33:25
It addresses a lot of these issues, but also, Edward Bernays, The Father of PR, I personally think he was a fucking horrible person, but that's just my point of view. Rory Sutherland: Yeah.
33:41
Very interesting question.
33:41
I mean, a very interesting person.
33:42
Jim O'Shaughnessy: Oh, no doubt.
33:44
Rory Sutherland: This is, by the way, mine is not a discipline which is by any means reliably on the side of the angels. I think [crosstalk].
33:48
Torches of Freedom would be slightly ambiguous now because it was encouraging women to smoke.
33:54
Jim O'Shaughnessy: Smoke, exactly.
33:56
Rory Sutherland: On the basis of sexual and gender equality, on the one hand, on the other hand, it was encouraging women to smoke.
34:02
Jim O'Shaughnessy: I totally stipulate his brilliance and I've read some of his books, Propaganda, et cetera.
34:09
He did not take a friendly view of, in quote, of masses.
34:09
He basically, I mean, his accomplishments are undeniable.
34:16
The United Fruit Company hired him to change the government of Guatemala's policy.
34:22
And he dethroned them without a shot being fired, just through his ability to persuade.
34:30
So I think you're absolutely right that we need to look and be very careful, because a lot of this stuff is not on the side of the angels. Rory Sutherland: No.
34:38
Equally, where I'm very interested in persuasion is those things, which are, it's always worth looking at.
34:41
In a sense, there's persuasion which operates at a kind of temporary level and there's persuasion where you can, I think, think of the consequence of benign, because no one who adopts the new behavior or the new belief reverts.
34:56
So this is the Bass diffusion curve, which tends to refer to technology.
35:02
And I'm very interested, where our defend salesmanship and huckster is, because there are a lot of products which once bought, you never go back.
35:07
I've got a Japanese toilet, I always give as an example, the air fryer, there are certain products which are actually harder to sell.
35:17
The loyalty, in other words, once you have bought them and experienced them, it changes your entire frame of reference.
35:22
So that actually, to use economic language, your entire preferences change as a result of using the particular product.
35:31
Rory Sutherland: Now, I've just bought this electric car, as I was saying, and one-pedal driving with regenerative braking is an extraordinary thing to experience, have you gone electric yet, Jim, or are you still killing polar bears?
35:41
Jim O'Shaughnessy: I'm still killing polar bears. Rory Sutherland: Okay.
35:43
I will get someone in the States to give you a nice test drive of the Mustang Mach-E, [crosstalk].
35:46
But what's fascinating about it, it's something that you could only experience, you can't really anticipate.
35:50
And one-pedal driving and regenerative braking is significant not only because it's a nicer way to drive, but it makes you a nicer driver.
35:58
And the reason for that is, previously, in an internal combustion engine, I'm going to make a challenge here to all your listeners.
36:08
I've never encountered irritating driving behavior from an electric car driver.
36:08
Now that might be demographic, that they're older, they're richer, but it might be something to do with the style of driving you adopt when you have an electric car.
36:20
Rory Sutherland: And one of the reasons is that if you are driving along the road at 50 miles hour and someone needlessly breaks in front of you to turn into and drive at a ludicrously slow speed, in an internal combustion engine, you actually feel you've been robbed of your hard-earned momentum and you feel a sense of resentment that this person has now cocked it up.
36:37
And I'm now going to stay end load of energy to get back to 50 miles an hour.
36:41
With regenerative braking, you kind of go, "No skin off my nose.
36:46
I've just squirted a load of voltage, wattage or whatever it is-" Jim O'Shaughnessy: Wattage. Rory Sutherland: ... "Back to the battery.
36:51
I've really lost nothing here.
36:52
And I will now cruise back with my high-end talk, back to 50 miles an hour with no sense of loss or resentment."
36:57
And so you drive in a remarkably, even in New York, which is a city, which is a lovely city ruined, I think by too much beeping, as a Londoner.
37:07
That's my one [inaudible] with New York, you beep too much.
37:11
Jim O'Shaughnessy: I couldn't agree more. Rory Sutherland: Yeah.
37:12
Try and throttle back the beeping a bit, but actually, even in New York, it'll be interesting to see whether, and actually, I mean, it's very, very interesting, the whole driverless car thing, because the real reason we want driverless cars are very long interstate drives, which are boring.
37:22
And actually being stuck in traffic in a city, stop-go traffic, the intermediate sort of driving, where you're on a winding road and choosing your own speed, to be honest, we'd rather do that ourselves, I think, because we enjoy it.
37:36
Jim O'Shaughnessy: Yeah, absolutely.
37:37
Rory Sutherland: And so I'm intrigued by this car because I absolutely love it.
37:38
And yet, everything I love it for was not in my selection set at the time I was deciding to buy a new car.
37:49
It was only a four-day test drive that created this epiphany.
37:49
And it seems to me, by the way, that there's something here we need to know about online choice architecture, because real choice is deeply recursive.
38:00
What's available changes what we want.
38:00
And it's actually a kind of iterative process where we explore the market and we might even have a salesman involved whose job is not necessarily to sell us what we think we want.
38:11
And we tend to see that process as annoying, but actually, given the, Okay.
38:16
If you look at your current spouse, I've only been married once.
38:21
I think you've only been married once, Jim?
38:24
Jim O'Shaughnessy: One time. Yep. One time.
38:25
Rory Sutherland: One time. Exactly. Yeah.
38:25
I'm willing to bet that your current spouse possesses very few of the attributes you would've defined as necessary in a spouse before you met her.
38:31
Jim O'Shaughnessy: Actually, that's not correct.
38:36
She actually possesses- Rory Sutherland: You actually wrote a list?
38:39
Jim O'Shaughnessy: Of course I did.
38:42
Rory Sutherland: You wrote a list of requirements?
38:43
Jim O'Shaughnessy: Yeah, and it wasn't a long list, but the top thing that were must-haves was she needed to be smart and she needed to have a great sense of humor. Rory Sutherland: Yeah. Those are deal breakers. I agree with that. I buy that. Yeah. Jim O'Shaughnessy: Yep.
38:55
The rest though, you're probably right.
38:57
Rory Sutherland: It's very interesting, the extent to which bookshops are really dating agencies in disguise.
39:01
Jim O'Shaughnessy: No question.
39:04
Rory Sutherland: It's driven by that smarts thing. Yeah.
39:05
Jim O'Shaughnessy: Absolutely.
39:08
And that is what makes me sad about the loss of so many of our bookstores.
39:14
So for example, The Strand in Manhattan is one of my favorite independent bookstores, but last time I was there, I made that very observation and I went back and I said to my wife, "It's going to just crush dating, if we don't have these bookstores."
39:30
Rory Sutherland: It's a very, very clever, oblique selection criterion in a sense that it's using literariness as a proxy for intelligence, which probably isn't entirely fair.
39:38
You'll probably miss out on a few high energy physicists that way, but on the other hand, how humorous are high energy physicists? I don't know.
39:49
Jim O'Shaughnessy: Richard Feynman, Richard Feynman.
39:50
Rory Sutherland: Feynman, absolutely.
39:51
Jim O'Shaughnessy: He had a good sense of humor, very good sense of humor.
39:52
Rory Sutherland: And I can also tell my one super intellectual joke, which is what does the B stand for in Benoit B Mandelbrot?
39:56
It stands for Benoit B Mandelbrot.
39:56
You could use that as a, you could use that...
40:03
But the interesting thing there with humor and intelligence, I agree with you is, those are deal breakers.
40:10
So those you might say are table stakes, not in everybody, but I think, actually a trophy wife, you probably won't look miserable all the time, I think. I don't know.
40:19
Maybe the criteria differ there.
40:19
I'm not sure, I've only done it once.
40:24
Jim O'Shaughnessy: There's a funny story about that.
40:24
I heard a joke where the guy was everyone. Very successful guy.
40:26
He had a beautiful trophy wife and he said, "She's not a trophy wife.
40:33
She's a lifetime achievement award."
40:37
Rory Sutherland: But there's a very interesting thing.
40:37
I'll tell you a story about David Ogilvy, how he ended up in the Château de Touffou.
40:40
And this is my point about choice being highly recursive.
40:44
And actually, the salesman, I spoke to the chief executive of a large realtor or estate agents as we call them in London.
40:49
And he said, "A good property salesman, a good estate agent will almost never sell the prospective customer a property with the conditions they've defined in advance."
41:02
Because part of the job is not only finding what does this person want, it's also what properties do I have in my book, which would disproportionately appeal to this person more than somebody else.
41:15
Rory Sutherland: So there are eccentric houses which possess no qualities that anybody would request in advance, but which once witnessed, would suddenly change your preferences to, "This is my dream home."
41:25
Despite the fact that it meets none of the criteria you might have laid down in advance.
41:30
So David Ogilvy starts out, he's retiring from New York because of the beeping.
41:34
Almost literally, actually.
41:34
He just found New York a bit frenetic and he wants to move to Paris.
41:38
And David's terrified of flying, absolutely petrified of flying.
41:44
So he crosses the Atlantic, as you did, aged eight, by ship.
41:49
By the time he gets to Paris, the house in Paris that he was intended to buy has sold to someone else.
41:53
And the estate agent bizarrely, gets David to get on a train, travels four hours by train out of Paris, and then 20 miles outside Poitiers, there's something like a 28 bedroom, 13th century French chateau on the banks of the...
42:05
I can't remember what the river's called.
42:10
It might be called the Vienne, I think.
42:10
Probably is a tributary of the Loire, but I might be wrong. Maybe it isn't. And he sells him that.
42:17
Rory Sutherland: Now, it's not in Paris.
42:17
David was planning to work at the Paris Agency, he was an early pioneer of flexible working, therefore. It has to be said.
42:24
In fact, to such an extent the [inaudible] telex machine and his volume of post was so great to the chateau, both in and out, and his volume of international correspondence were so high that the local French postman got a promotion and a brand new van on the back of David's volume of mail.
42:37
So, La Poste would just judge the importance and seniority of a postman by some French Napoleonic code of volume of mail, and so this chap ended up with a nice new van and a pay rise, on the back of David's post.
42:48
But at no point would David have said, "I'm looking for a French chateau."
42:55
Rory Sutherland: And so, it occurs to me that a lot of these things, Amazon or property websites, okay, we feel completely satisfied with the consequences of using them because they've given us what we want.
43:05
But there's a missing level of utility and value, which the salesman provides in selling you something you didn't want at all, or didn't know you wanted.
43:15
Or didn't know how to specify.
43:15
But not all property qualities, architectural, there isn't a Parker Score for architectural excellence in property.
43:21
Now, I'm very influenced by that.
43:21
There's a fantasy website by the way, in the US, called Wright On The Market, which shows Frank Lloyd Wright properties for sale.
43:30
Jim O'Shaughnessy: Oh, yeah, they're beautiful.
43:31
Rory Sutherland: To be honest, they're a bit of a structural nightmare.
43:32
Jim O'Shaughnessy: Oh, absolutely. Yeah.
43:33
I've been to Falling Rock. Yeah, amazing.
43:36
Rory Sutherland: Somewhere I think in Idaho, there's the world's only Frank Lloyd Wright gas station for sale for about half a million dollars.
43:39
And every now and then I'm tempted.
43:45
There's a British website called themodernhouse.
43:45
net, which only has homes of architectural distinction.
43:50
Architecture adds a huge amount of pleasure to your home, and yet it's not factored into search terms because there isn't currently a way in which you can differentiate for it very well.
44:01
Jim O'Shaughnessy: So, it seems to me, we talked about Spotify earlier and so I love music as I think you know, and I list to mostly classical, Bach is my favorite, during working hours.
44:09
And then I switch- Rory Sutherland: I'm with you on that.
44:15
I'm completely with you on the Bach front.
44:15
I went to a British church which did all six Brandenburg concerto on original instruments.
44:22
Jim O'Shaughnessy: Amazing.
44:22
My friend, Chris Hogwood, who unfortunately died.
44:25
Rory Sutherland: Oh, you know Christopher. Oh, wow. Respect.
44:26
Jim O'Shaughnessy: I know him very well.
44:27
Rory Sutherland: Fantastic.
44:28
Jim O'Shaughnessy: Well, now I've got to tell you this funny story.
44:29
So, when I lived in Saint Paul, Minnesota, I was on the board of the Saint Paul Chamber Orchestra.
44:34
We got a triumvirate after Pinky Zukerman left, and boy, stories there.
44:39
Anyway, Chris Hogwood was part of that triumvirate.
44:45
He and I hit it off immediately and became quite good friends.
44:45
And he was at my house and I said, "Christopher, I want to show you how incredibly sophisticated my dog is."
44:51
And I had a Kerry Blue Terrier, which I called a Kerry Blue Terrorist because he loved to bark.
45:04
Anyway, so I played- Rory Sutherland: He picks it up from the beeping, you see.
45:06
If he'd been a Minnesota dog, he would've been far more chill.
45:09
Do they beep in Saint Paul at all? Probably never.
45:13
Jim O'Shaughnessy: No, that would- Rory Sutherland: No, that would be a major social gaf.
45:16
Jim O'Shaughnessy: Absolute gaf, yes.
45:16
That would violate Minnesota-nice, never.
45:20
Rory Sutherland: By the way, the Midwest is the best place in the world in many respects.
45:24
Jim O'Shaughnessy: No question. [crosstalk].
45:25
Rory Sutherland: Because the combinations, I might have said last time, of material wealth combined with social capital is magical.
45:31
Jim O'Shaughnessy: It is truly. Yeah.
45:31
So, anyway, we had a cocktail party, Chris was there.
45:35
And as you know, he was noted and famous for playing on original instruments.
45:41
And so I had found out, while I was playing Pachelbel's Canon, and my dog just sat there, and I didn't even think about it.
45:47
And then Chris came out with a new version of it.
45:52
Obviously, I wanted to hear it.
45:52
And so I put it on and my dog, the Kerry Blue Terrorist starts howling. Only to Chris's version.
45:56
So, when Chris was there, I put on a different version, dog sitting there, does nothing.
46:07
And now I say, "Now, Chris.
46:07
I'm going to demonstrate that my dog is a huge Christopher Hogwood fan."
46:12
And I put on his Pachelbel's Canon, the dog starts howling, and I said, "He's giving you great praise here. He loved it."
46:24
Rory Sutherland: Fantastic.
46:26
So, what do you think it is?
46:26
Is it the original instruments? Jim O'Shaughnessy: Yes. Oh, absolutely.
46:29
It's absolutely- Rory Sutherland: So there's a frequency which the dog can somehow detect?
46:33
Jim O'Shaughnessy: Absolutely.
46:34
And so, I'm the former chairman of The Chamber of Music Society of Lincoln Center, and we were on a music tour in Italy.
46:39
And we went to the violin museum and I'm not recalling immediately what town it was in.
46:45
But I asked that very question, because I told the gentleman who ran the place that story. And he goes, "Oh, yeah. Completely different."
46:55
There are frequencies like Stradivarius for example, they've been arguing for centuries over why they are so great from the quality of the wood to other ideas.
47:01
But yeah, he confirmed it.
47:08
He was like, "Absolutely, original instruments, very, very different frequencies that animals can hear."
47:15
Jim O'Shaughnessy: But to get back to Spotify for a minute, because of the real estate thing.
47:16
So, Spotify has these brilliant AI generated playlists.
47:21
So, I used to just have my own playlist, was dominated by Bach for the morning, then in the evening it was rock and roll and everything, jazz.
47:36
So, one of the things that my son told me why the Spotify worked so well was because they mixed familiar songs with brand new ones.
47:44
So, what about a website, a real estate website- Rory Sutherland: Which throws in wildcards?
47:54
Jim O'Shaughnessy: Exactly.
47:55
Rory Sutherland: Absolutely right.
47:56
Jim O'Shaughnessy: Exactly.
47:57
Rory Sutherland: Absolutely right. It would massively...
47:57
And Amazon doesn't do this very well because I think it over assumes that you are preoccupied by price.
48:02
So I always have this problem with...
48:02
My issue is that if you only search for what you know you want...
48:05
Now, a retailer or a salesman, and this is a problem I think with procurement, by the way.
48:10
So, at the B2B level, I think procurement starts from the premise that you can define your needs adequately without reference to the manufacturer.
48:15
And you simply define what you need and then source it at the lowest possible price.
48:19
And Amazon tends to assume that you have the mentality of a procurement operative.
48:24
The example I always give is the toaster.
48:28
Now, do you have toasters in the US?
48:28
You're slightly weird, aren't you?
48:31
Jim O'Shaughnessy: Oh, of course. Yeah.
48:32
No, no, we have toasters.
48:32
Rory Sutherland: Have you got a kettle?
48:33
Jim O'Shaughnessy: Of course.
48:34
Rory Sutherland: You have. You've got a kettle. Well done. Okay.
48:35
Very peculiar thing that Americans regard kettles, which in Britain you'd have to be destitute before you didn't have a kettle.
48:45
And in the United States, they're sold as luxury goods.
48:45
But anyway, the interesting thing is there's a thing called a glass-sided toaster.
48:50
Now, if you want to toast crumpets or scones or muffins, it's fantastic, because you don't know what the correct setting's going to be for a whole load of different bake goods.
48:58
And so you can look through the glass sided thing and hit eject at exactly the right moment.
49:01
Now, if you don't know that exists, you'll never search for it.
49:05
Jim O'Shaughnessy: Right.
49:07
Rory Sutherland: Now, once I discovered there was a thing called a glass-sided toaster, all other toasters were dead to me.
49:11
And yet there is this fundamental problem that the value of the salesman, because we sell ourselves the myth that we know what we, the salesman seems like a distraction.
49:24
But actually the role of selling you things that you didn't know you wanted until you'd experienced them is actually a vital component of human progress in many ways.
49:32
Jim O'Shaughnessy: Oh, totally agree.
49:33
Rory Sutherland: The Japanese toilet is the example I always give, which is viewed as a ludicrous thing.
49:34
Once you've owned one, all other conventional toilets seem like something from the stone age.
49:42
Jim O'Shaughnessy: Exactly.
49:43
Rory Sutherland: In fairness, the whole Islamic world cleans its bum with water.
49:45
They have the bum gun, the Japanese have the shower toilet.
49:45
It's a peculiarity of the West, the Western hemisphere, that we regard dry paper as completely adequate. And it is.
49:55
And so there is this extraordinary thing of things where until you've experienced them, you can't possibly know you want them.
49:59
Rory Sutherland: And one pedal driving with an electric car is similar to that, because as I said, I understood it in theory, what I never realized there was a benefit that only emerged...
50:06
This is why, by the way, experimentation's also so important because you can't tell, you don't know what you want until you've tried it.
50:13
Rory Sutherland: One of the benefits of flexible working, which never occurred to me, I've been a huge proponent of some degree of flexible working because synchronous commuting seems to me to be pretty stupid in knowledge work.
50:24
But the thing I never anticipated was that it doesn't only make working from home more pleasant because you don't have to commute.
50:29
But when you do go into the office, everybody in the office wants to be there and it's 30% more sociable than they would be if they were there under duress.
50:39
Jim O'Shaughnessy: Exactly.
50:40
Rory Sutherland: So, actually, the level of sociability you enjoy in your office is much, much higher.
50:42
Now, that never occurred to me.
50:42
That actually you go in and you have a much matier, more collaborative time because everybody's there by choice.
50:51
Jim O'Shaughnessy: Exactly.
50:53
We went to work from wherever, at O’Shaughnessy Asset Management, and we have found exactly that.
50:59
When we have office days, everyone is delighted.
50:59
It's almost like a party. Rory Sutherland: It is. Yeah, no.
51:07
And it's because, at a party, everybody's there presumably voluntarily.
51:10
Jim O'Shaughnessy: Exactly.
51:11
Rory Sutherland: And also the people who want silence have cleared off somewhere else.
51:13
So, you've got a license to be a bit noisier, generally.
51:17
Jim O'Shaughnessy: Exactly.
51:17
And it's one of those things that I think you discussed brilliantly, which is, we literally don't know what we don't know.
51:28
So, the only way we can discover it is by experimentation.
51:33
Rory Sutherland: The value of, by the way, of flexible working, is that what we discover is something that never occurred to us, which is the perfect conditions for work are highly varied; they're not monotonous.
51:39
And what we did, in my book, it says, "Don't solve for the average."
51:44
And it occurred to me that the open plan office was an attempt to solve for the average and it ended up creating a space which was neither one thing nor the other.
51:53
It wasn't solitude and it wasn't sociability. Jim O'Shaughnessy: Yep.
51:56
And it was a huge mistake, and everyone thought, "Oh, why did this fail?"
51:58
Rory Sutherland: Terrible mistake.
52:00
Jim O'Shaughnessy: My friend, Alex Danco, who's on the program quite a bit talks about startup environments.
52:05
He's Canadian, by the way, and so in Canada, they had built this, to try to get people to go there to do startup companies, they built this beautiful structure, absolutely gorgeous, and Aleks got into a lot of trouble by writing a piece saying, "That will fail.
52:24
No startup will take up real estate there because they need an environment that is, quite frankly, rather ratty," and he talks about the environment of a startup.
52:30
They want to feel that they are pioneers in this, and that their dreams are the only thing that guide them and they can only afford this horrible, horrible- Rory Sutherland: So, the people who will buy the expensive real estate will be 50 year olds pretending to be startup guys.
52:50
Jim O'Shaughnessy: Exactly. Rory Sutherland: Got it. Got it.
52:52
Jim O'Shaughnessy: And that's exactly what happened.
52:52
And so, we got into this whole idea, which I think you would love, of how do you create a scene?
53:01
You know what a Schelling point is, right?
53:01
Rory Sutherland: Yeah, it's the complexity thing, isn't it? Where you...
53:06
Jim O'Shaughnessy: Exactly.
53:06
So, in Manhattan, if you and I were going to try to meet each other, but we didn't know when...
53:08
No, so we only know when, we don't know where. Rory Sutherland: Yeah.
53:13
Jim O'Shaughnessy: And we can't communicate, so it's a bit artificial, but where are we- Rory Sutherland: So it's going to be one of two places, I guess, it's under the clock in Grand Central Station.
53:19
Jim O'Shaughnessy: Number one. Rory Sutherland: Yep.
53:22
And number two would be the top of the Empire State Building probably, would it?
53:25
Jim O'Shaughnessy: Bingo.
53:25
And there's a number three.
53:25
Where do you think number three is?
53:27
Rory Sutherland: Oh, I'll have to think about that.
53:29
It's not the New York Public Library or something like that, is it? Or the post office, no?
53:33
Jim O'Shaughnessy: I wish it was.
53:34
It is under the jumbotron in Times Square.
53:39
Rory Sutherland: Ah, yeah. Good point. Yeah. Jim O'Shaughnessy: Yeah.
53:42
Rory Sutherland: So, that's a bit of a touristy point, isn't it?
53:44
Compared to the other two.
53:44
Jim O'Shaughnessy: Exactly.
53:45
So, no New Yorker would go there. Rory Sutherland: No.
53:47
Jim O'Shaughnessy: And that is the one...
53:48
Because I love this example of Schelling points, and so I'll ask friends, where would you go?
53:51
And, no New Yorker, no New Yorker says Times Square.
53:51
New Yorkers hate Times Square.
53:57
Rory Sutherland: There's a wonderful scene in The Office, the American edition of the office, where Michael Scott visits Times Square, which is his favorite part of New York before going off to Sbarro, which is his favorite pizzeria.
54:09
Jim O'Shaughnessy: Sbarro.
54:11
Rory Sutherland: Yeah, that's right.
54:12
Jim O'Shaughnessy: So, where would we do it in London?
54:14
I would say under Nelson's Statue in Trafalgar Square, might be open to consideration.
54:20
I would say parliament, that particular view.
54:20
That perfect view of parliament. Rory Sutherland: Yeah.
54:28
Big Ben would be a good point.
54:28
Jim O'Shaughnessy: Big Ben.
54:30
And, what would number three be? What do you think?
54:32
Rory Sutherland: I mean, Paris is unbelievably easy, isn't it?
54:34
Jim O'Shaughnessy: Oh, totally.
54:35
Rory Sutherland: Okay, Copenhagen would obviously be the Little Mermaid, I guess.
54:38
Jim O'Shaughnessy: Of course.
54:39
Rory Sutherland: Brussels would be the square, I guess.
54:43
Jim O'Shaughnessy: Moscow?
54:44
Rory Sutherland: That would have to be Red Square, wouldn't it?
54:46
Jim O'Shaughnessy: Absolutely.
54:47
Rory Sutherland: The GUM department store in whatever it is.
54:48
Jim O'Shaughnessy: Absolutely.
54:49
Rory Sutherland: London's a bit messier than most because, for tourists, you've got about three, haven't you?
54:55
You've got London Bridge. You've got Big Ben.
54:55
You've got Nelson's Column.
54:55
You might have Harrods for materialistic tourists.
54:59
Jim O'Shaughnessy: Definitely.
55:02
Rory Sutherland: But that is very, very interesting.
55:03
But what it also shows is that it's very similar to the Keynesian beauty contest, isn't it?
55:07
Jim O'Shaughnessy: Exactly.
55:09
Rory Sutherland: Where you are guessing what other people would guess.
55:10
The Keynesian beauty contest was that people would put their children into a newspaper and you have to decide who everybody else thought was the most attractive child in order to win.
55:19
And so it's a very interesting case of second guessing, which tends to lead to winner takes all, very extreme, winner takes all effects. Jim O'Shaughnessy: Yes.
55:29
Rory Sutherland: And a scene of course is often created by precisely that. Jim O'Shaughnessy: Yes.
55:33
Rory Sutherland: And if you knew, and I would argue, I think there's a real estate fortune to be made by people who know how to generate gravitational pull out of nowhere, and what the basic ingredients are for creating that.
55:45
Jim O'Shaughnessy: I completely agree.
55:45
And I think that our little idea, should we make this intellectual property and share it?
55:49
I think you're absolutely right.
55:56
Rory Sutherland: And one of the things you'd probably do as a property developer, if you wanted to do that is you'd actually leave deliberately, one, you'd demand that a few of the entities were open very late at night.
56:01
You'd also leave some property deliberately empty to be filled with surprising, but distinctive additions.
56:14
It's a bit like that paving the cow paths thing, where you wait to see where people walk and then you lay the concrete over the grass where people have trodden a path.
56:22
Jim O'Shaughnessy: Exactly.
56:22
And that is a very popular...
56:22
By the way, on the idea of the Keynesian beauty contest, John Nash, that's what made him famous, was, he solved for that.
56:30
Rory Sutherland: The Nash Equilibrium. Jim O'Shaughnessy: Yes.
56:33
But the Eisenhower, who I had to rethink when I was reading some of his stuff, because A, his farewell speech, the military industrial complex.
56:44
Rory Sutherland: Industrial complex. I know, yeah.
56:45
Jim O'Shaughnessy: Oh my God, he was prescient, a prophet.
56:48
Rory Sutherland: What was so extraordinary is he was a [inaudible] military man.
56:51
Jim O'Shaughnessy: Yes, amazing.
56:52
Rory Sutherland: Almost astonishing.
56:54
Jim O'Shaughnessy: But one of the things that he also did when he was working, or he was I guess on the board or the president of the university prior, and they were trying to lay it out and he said, "No, don't put any sidewalks down, wait for three months and then pave the path that the students make."
57:12
Rory Sutherland: Where the mud is.
57:13
Jim O'Shaughnessy: Yes, exactly.
57:14
And that's how Boston's laid out, by the way.
57:14
It is the path of least resistance.
57:20
Boston can be very difficult to get around because it's quite circuitous.
57:20
But it's because the cattle found the path of least resistance and that turned into Boston's roads.
57:31
Rory Sutherland: There's a road into London, the A2, which has, bizarrely, it's a roundabout.
57:35
I know you don't have them.
57:39
Jim O'Shaughnessy: Actually, we do, and I've been on the A2.
57:41
So, I know what you're talking about.
57:41
Rory Sutherland: I will make a point here, that the roundabout is vasty more libertarian than the extremely [foreign language] stop sign or the traffic light.
57:51
Jim O'Shaughnessy: Could not agree with you more.
57:52
Rory Sutherland: So, the roundabout is a beautiful triumph of individual decision-making leading to homeostasis and therefore should be adopted in the United States.
58:00
Whereas, actually it's the UK and France who have the largest adoption of roundabouts, but it's a wonderfully libertarian solution to traffic management.
58:06
I'm going to defend that.
58:10
Jim O'Shaughnessy: I would defend it as well.
58:11
So, Washington DC has quite a few roundabouts for the very reason that it was laid out by a Frenchman.
58:16
We are now in, the town I live in, in Greenwich, Connecticut, we are replacing the old stop signs with roundabouts, and everyone is really delighted with it, because as you say, it's libertarian.
58:29
Rory Sutherland: It is fair that...
58:29
It's an interesting thing because it requires, it's a bit like Zoom, it decries a degree of frequency before it becomes workable.
58:39
Because if a large percentage of people have never encountered one before, they'll mess it up. Jim O'Shaughnessy: Yes. Rory Sutherland: Okay.
58:45
So, until you reach critical mass, in terms of roundabout adoption, there'll probably be too many people who are unfamiliar with the concept to make it work.
58:49
But equally, we have in my local town, a mini-roundabout, it's a roundabout without even a raised center.
59:00
Where most of the people using it are local and it's used with an extraordinary degree of skill.
59:05
So, as soon as someone spots that someone is turning left, the other person will make a right turn in their shadow as it were, and it's a skill.
59:12
Rory Sutherland: I can remember, mini-roundabouts were new in my childhood.
59:15
They probably existed, but they were relatively recent.
59:15
And my mother for the first year or two absolutely hated them, "Stupid roundabouts. I can't stand them. It's confusing."
59:24
But nobody notices anymore because it's become second nature.
59:24
And it requires that degree of...
59:28
Jim O'Shaughnessy: And also a source of wonderful comedy, in European Vacation, Chevy Chase is stuck in a roundabout, and Eric Idle is in it, and he's brilliant in it, because he is the caricature of the typical Brit, "No, fine," and they hit him and they just do all these horrible things to Idle, and he just remains absolutely, "No problem. Cheers, mate." Rory Sutherland: Yeah.
59:53
But Chevy Chase just goes round and round the same roundabout, repeatedly.
59:58
Jim O'Shaughnessy: Yeah, exactly.
1:00:01
Rory Sutherland: No, it's interesting because the US, being very large, we're a dense...
1:00:02
This is a very interesting discussion actually about complexity theory in a sense because the US being geographically large, to achieve adequate penetration of roundabouts so that they become universally familiar is obviously a vastly more expensive undertaking than it would be in Britain or the Netherlands.
1:00:23
Rory Sutherland: And I had this interesting argument about electric cars where I said that actually, if you live in Britain, certainly, unless you live in the north of Scotland, range anxiety is pretty much a distraction because it's highly relevant to Americans, because one, you don't have the train alternative.
1:00:37
So, if I were to do a 200 mile journey and I was only staying overnight, I'd almost certainly go by train. I wouldn't drive.
1:00:45
Rory Sutherland: Now, there are a lot of drives Americans have to do where they don't have that alternative, but also there are drives through remote wilderness, where if your Electrify America charging station is out of action, you are fairly majorly stymied.
1:00:58
Whereas in Britain, you just turn off to another busy road, two miles to the west and you'd find one that was okay.
1:01:02
And so, it's very interesting if you look at it, by the way, there's a book called Scale by, I think, a guy called Geoffrey Woods.
1:01:09
Jim O'Shaughnessy: Yeah, I have it.
1:01:10
Rory Sutherland: Geoffrey West.
1:01:11
Jim O'Shaughnessy: West, right. I have the book.
1:01:13
Rory Sutherland: And he's kind of Santa Fe Institute guy. I looked at the figures.
1:01:15
The UK has, okay, we've got 60 million people.
1:01:15
We have 8,500 gas stations. The US needs 116,000.
1:01:22
And the reason is of course, we mostly have gas stations to serve a population.
1:01:28
Whereas you need gas stations to serve a geography.
1:01:31
Jim O'Shaughnessy: Yes, absolutely.
1:01:33
Rory Sutherland: In other words, if between Farmington, New Mexico, a journey I did once, [inaudible] in Farmington, New Mexico, where I drove for three hours without seeing a house.
1:01:40
Now if you're British, that's deeply terrifying, okay?
1:01:45
I mean, it's like, "What the hell is going?"
1:01:45
This is deliverance basically.
1:01:45
It's the motoring equivalent of deliverance.
1:01:49
Jim O'Shaughnessy: Indeed.
1:01:51
Rory Sutherland: Basically, we only have about three roads like that in the entire country.
1:01:52
Whereas in the US, that drive wouldn't be all that weird.
1:01:56
Jim O'Shaughnessy: Yeah, well.
1:01:59
And the scale as you point out of the US is unimaginable to people who've not been here.
1:02:04
And also, if you're going to adopt roundabouts, you could get it adopted here in the east coast because of the density.
1:02:11
You could get it adopted in the cities on the west coast. In the middle? No walk.
1:02:16
You're just not going to get it adopted.
1:02:16
And it's going to be difficult to adopt electric cars in the middle as well.
1:02:25
Rory Sutherland: There're a few weird ones, aren't there?
1:02:25
There's the Minnesota Zipper Merge. Is that right? Jim O'Shaughnessy: Yeah.
1:02:30
Rory Sutherland: Are you familiar with this?
1:02:31
Jim O'Shaughnessy: Mm-hmm (affirmative).
1:02:32
Rory Sutherland: Now, is that confined to Minnesota?
1:02:33
Jim O'Shaughnessy: That's a good question.
1:02:34
I do not know the answer to that.
1:02:36
Rory Sutherland: Because the Zipper Merge is a brilliant idea, which I think originated probably in the Netherlands.
1:02:39
But it would be a great practice to instill in drivers everywhere. Jim O'Shaughnessy: Yup.
1:02:45
Rory Sutherland: But again, it would require coordination.
1:02:46
Jim O'Shaughnessy: It definitely would, yeah.
1:02:48
Rory Sutherland: But there's something weird- Jim O'Shaughnessy: As far as growing up there, of course that's what I learned to drive on.
1:02:50
So, it was not foreign at all to me.
1:02:54
And when I got here, I was...
1:02:54
First off- Rory Sutherland: This is carnage compared to Minnesota, I bet. Yeah.
1:03:01
Jim O'Shaughnessy: Oh, absolutely.
1:03:02
And as a good friend of mine said, when he went back to Minnesota and was driving on a freeway, he said, "Minnesota is like a museum of what roads were like before cars."
1:03:12
Because it's just the density of the east coast here is- Rory Sutherland: Yeah, of course.
1:03:17
Jim O'Shaughnessy: Massive.
1:03:17
And so- Rory Sutherland: You see Midwesterners being highly resistant to electric cars to begin with. Yeah.
1:03:21
Jim O'Shaughnessy: Not because they're resistant to electric cars, but rather because they're resistant to...
1:03:26
They often have to drive 300 miles to get where they're going, and if there isn't...
1:03:31
The only way you solve this problem in my opinion is mass electric charging stations. Rory Sutherland: Yeah.
1:03:38
Jim O'Shaughnessy: And I think Musk has that on his to-do list.
1:03:40
Rory Sutherland: I mean, it's worth noting of course with an electric car, you generally set out from home with a full tank, metaphorically speaking, which is...
1:03:47
And so, I was talking to Nassim Taleb. He's a Tesla owner.
1:03:47
And he drove from I think New York down to Georgia and found it rather pleasant because he said all the charging stations for Teslas were in kind of slightly hipstery areas.
1:03:59
Jim O'Shaughnessy: Absolutely.
1:04:00
Rory Sutherland: Where you have a good book shop and a coffee shop.
1:04:01
And he found it absolutely no problem.
1:04:01
Jim O'Shaughnessy: So- Rory Sutherland: It is interesting.
1:04:05
Jim O'Shaughnessy: And that's another piece of actionable advice for our listeners.
1:04:06
I don't know if it's still true, but I was speaking to somebody talking about development in various places that are outside the city centers, right?
1:04:16
So all along the Hudson Valley river, et cetera.
1:04:16
And what he said was, "What you need to do is very simple."
1:04:22
He said, "Identify where gay couples are moving to because if you go and buy up that real estate and start all of that-" Rory Sutherland: So along with artists, they're kind of the shock troops of gentrification, aren't they? Yeah.
1:04:43
Jim O'Shaughnessy: Exactly.
1:04:43
And so if you can do the [Attaboy] artists, they're classic.
1:04:46
They had Soho and then the rents got...
1:04:46
Soho got so incredibly popular, they kicked the artists out.
1:04:50
Now, most of the artists are either in Brooklyn or the Bronx.
1:04:54
We were talking about someone I collect, Vic Muniz, who has a huge spot in the Bronx.
1:04:59
Rory Sutherland: Because there's a battle in property between rich and cool, isn't there? Jim O'Shaughnessy: Yes.
1:05:04
Rory Sutherland: And cool is in a sense, a clever reinvention of rich.
1:05:06
Jim O'Shaughnessy: Mm-hmm (affirmative).
1:05:07
Rory Sutherland: In other words, I've got less money, but I have more of something that you don't have.
1:05:12
Jim O'Shaughnessy: Exactly.
1:05:13
Rory Sutherland: It's a way we probably minimize our regret at not being as rich as our neighbors is to be cooler than them.
1:05:18
Jim O'Shaughnessy: Without a doubt.
1:05:20
Rory Sutherland: It works.
1:05:20
But there will come a point in which Brooklyn becomes a more desirable place to live than Manhattan, I guess.
1:05:22
Because the rich tend to drive out cool.
1:05:26
Jim O'Shaughnessy: They do.
1:05:27
Rory Sutherland: The unfortunate property of the wealthy in property terms is when an area becomes too rich, one, it becomes totally impractical because you can't buy a plug or any kind of practical thing.
1:05:38
Jim O'Shaughnessy: Very true.
1:05:39
Rory Sutherland: My brother ended up living in Knightsbridge for a time and he says, "It's wonderful if you want to spend $9,000 on a sofa or on a strange piece of sculpture.
1:05:43
But if you want to buy anything banal like a packet of cigarettes and a box of matches, you're faced with a bit of a problem."
1:05:52
And of course, that became even worse in parts of Manhattan because you had large numbers of buildings which were only occupied for part of the year, which then means that the amount of interesting economic activity they can support at the ground level becomes less and less.
1:06:05
Jim O'Shaughnessy: No question. Rory Sutherland: Yeah.
1:06:09
So it is very interesting, isn't it?
1:06:09
Because I must admit far-sightedly I visited Brooklyn for the first time in the early nineties.
1:06:13
And admittedly, it was Brooklyn Heights, so I wasn't doing the full tour.
1:06:16
But it struck me that, of course, having a view of New York in some ways is actually better than being in it. [inaudible].
1:06:24
Jim O'Shaughnessy: Absolutely.
1:06:24
And of course Brooklyn now, very little difference in prices of the best parts of Brooklyn where you were.
1:06:27
And if you keep going into Brooklyn, things change quite a bit.
1:06:33
I was visiting someone who works for me and she lives in the very far reaches of Brooklyn.
1:06:37
I was loving it because it was almost like an anthropological expedition.
1:06:44
It's like when I went to Mississippi, I loved it because nothing was familiar. Rory Sutherland: No.
1:06:52
Jim O'Shaughnessy: Their stores were different.
1:06:53
Everything was different.
1:06:53
And I just thought, "Well, isn't this fascinating?"
1:06:56
But you're right about Brooklyn.
1:06:58
Rory Sutherland: There's an interesting thing, isn't there?
1:07:01
Which I think Tyler Coen writes about this, which is in cheap real estate, you can take more of a risk.
1:07:06
Jim O'Shaughnessy: Oh, yeah. Rory Sutherland: Yeah? Jim O'Shaughnessy: Sure.
1:07:09
Rory Sutherland: If you've bought expensive real estate, you have to go with a formula restaurant which you know will pay, okay?
1:07:12
One extraordinary thing in Britain which is fantastic is the extraordinary geographical spread of very good Indian restaurants.
1:07:17
And it's often driven by a chef at a London...
1:07:22
In some cases, even Michelin starred Indian restaurants.
1:07:22
In my book, all Indian restaurants are Michelin star by default- Jim O'Shaughnessy: Right.
1:07:32
Rory Sutherland: Because Indian food is just better than other food, okay?
1:07:34
Jim O'Shaughnessy: Right.
1:07:35
Rory Sutherland: I accept that I'm slightly prejudiced in that, okay?
1:07:36
It's rather like all buildings built before 1700, a great one by definition in the UK.
1:07:40
But architectural preservation and all Indian restaurants have a Michelin star in my book.
1:07:45
But anyway, we'll part that.
1:07:45
Quite often, people from a genuine Michelin starred restaurant can't afford to open their own place in Knightsbridge.
1:07:54
So they'll go and take over a pub somewhere, sort of 50 miles from London.
1:07:59
And you end up with this utterly fantastic food.
1:07:59
And of course, their margins are pretty good. Jim O'Shaughnessy: Yep.
1:08:05
Rory Sutherland: The great thing with Indian food is it's a destination food, to a great extent.
1:08:06
You actually go there because you wanted Indian.
1:08:09
That always interests me actually.
1:08:09
There are types of food which you basically go, "This is what I want to eat and I'm going to go and get it."
1:08:18
And then, there's food where you kind of drift around between five equally sort of mediocre alternatives.
1:08:22
But they tend to do very well.
1:08:22
They pick up a name very quickly.
1:08:26
And so, the level of experimentation you can enjoy when you have...
1:08:26
I'm a Georgist basically.
1:08:30
I think Henry George was fundamentally right.
1:08:30
And that's why I like flexible working because I see it as a Georgist technology. Jim O'Shaughnessy: Yep.
1:08:37
Rory Sutherland: In that it removes the stranglehold the landlord enjoys over the performance of economically valuable activity. Jim O'Shaughnessy: Yes. No question.
1:08:45
Rory Sutherland: George's technology, there's a wonderful architectural writer who made the point that the first example of it was the chattel house in the Caribbean, and then later in the American south.
1:08:51
After the abolition of slavery, land owners would attempt to effectively create de facto slavery by charging you a rent to live on the land that was more or less equivalent to what they're paying you to work.
1:09:08
Jim O'Shaughnessy: Mm-hmm (affirmative).
1:09:09
Rory Sutherland: And the solution to this was to build homes that were portable.
1:09:10
So quite quickly, the neighboring landlord would offer you a better deal.
1:09:13
They're rather beautiful constructions actually.
1:09:19
Two people or three maybe, three or four, could pick up one of these homes and simply move it somewhere else.
1:09:23
So you are no longer in thrall to the landlord. Jim O'Shaughnessy: Yep.
1:09:28
Rory Sutherland: And I see Zoom as the 21st century equivalent of that. Of the chattel house.
1:09:31
Jim O'Shaughnessy: I agree.
1:09:33
And my wife is a street photographer and she's become quite unsettled because some of her favorite locations are, in her eyes, forever changed.
1:09:40
So, anything in Midtown she said is now absolutely dead.
1:09:46
And Manhattan has not yet seen a return of tourists really. Rory Sutherland: No.
1:09:54
Jim O'Shaughnessy: And nobody is in the office towers in Midtown.
1:09:58
Literally, they're empty.
1:09:58
And so, she's doing everything now downtown.
1:09:58
Chinatown is completely back to normal.
1:10:04
MacDougal Street was so crowded when I took my daughter's new in-laws to lunch that it was amazing, the crowds.
1:10:11
But you go to a club I belong to in Midtown, you could shoot a cannon through the street. Nothing there.
1:10:19
And I think the long term consequences will be really interesting to watch.
1:10:25
Rory Sutherland: Now, I think the way you should chance for parking is as we charge for train travel. We have commuters.
1:10:40
Commuting comes from the phrase you commute a ticket, and if you make a journey more frequently, they charge you less for it.
1:10:44
And in train travel, that's assumed.
1:10:49
I think it should also apply in parking, by the way.
1:10:49
I think if you're a regular user of a car park, or you're local, you should pay less per visit.
1:10:53
More annually, but less per visit than someone who's merely visiting.
1:10:59
Jim O'Shaughnessy: I agree.
1:11:01
Rory Sutherland: And you could solve that either with a local differential pricing scheme or with kind of Amazon Prime.
1:11:05
You pay 20 quid annually and then the parking's half price.
1:11:05
Because I think there's a fault in economics here in that it doesn't distinguish between 10 people doing something once and one person doing something 10 times.
1:11:19
Jim O'Shaughnessy: Right. Yeah, exactly.
1:11:20
Rory Sutherland: And the price sensitivity of one person doing something 10 times is going to be inordinately higher than 10 people doing the same thing once.
1:11:29
Jim O'Shaughnessy: Yes, absolutely.
1:11:30
Rory Sutherland: When I visit a strange town and I'm going to have a look at their castle or their local museum, I don't really care whether it's 10 pounds or four pounds to park there.
1:11:34
But at Seven Oaks, where I have to park a 100 times a year, that makes an appreciable difference.
1:11:43
Jim O'Shaughnessy: Oh, no question.
1:11:43
I- Rory Sutherland: And so, differentiating access by frequency of use seems to be inherently just.
1:11:46
But economics doesn't understand it. Jim O'Shaughnessy: No.
1:11:51
To close us out here because we could go all day, and we've already done an hour and a half, that is the brilliance of what we started our conversation with.
1:11:58
That we need to use both parts of our mind- Rory Sutherland: The brain.
1:12:05
Jim O'Shaughnessy: Of the brain.
1:12:05
Because if we don't, we will not come up with optimal solutions.
1:12:08
I passionately believe that.
1:12:13
Rory Sutherland: The creative brain, the humorous brain, the synthesis brain.
1:12:14
The value is in seeing things that are external to the model, which the other half of the brain will typically use.
1:12:20
Jim O'Shaughnessy: Exactly.
1:12:22
Rory Sutherland: That might be noticing surprises or imagining things.
1:12:23
I think it's Charles Saunders Pierce, isn't it?
1:12:29
Jim O'Shaughnessy: Mm-hmm (affirmative).
1:12:30
Rory Sutherland: Abductive inference. Jim O'Shaughnessy: Yes.
1:12:32
Rory Sutherland: Basically, it does that kind of job.
1:12:33
And the problem is we hand over to the reductionist school too soon.
1:12:35
Jim O'Shaughnessy: Totally agree.
1:12:37
Rory Sutherland: Not that they're not useful.
1:12:38
It's not that it's not necessary.
1:12:38
When it comes to making precise decisions from necessary amounts of data, it does a great job.
1:12:45
Jim O'Shaughnessy: Right.
1:12:46
Rory Sutherland: But the strange thing is, I mean, this has always baffles me about...
1:12:47
Okay, this is how government works, okay?
1:12:47
Legislation first, economic second, persuasion third, okay?
1:12:52
Jim O'Shaughnessy: Right.
1:12:56
Rory Sutherland: Now I know I'm not a complete libertarian, okay?
1:12:58
I'm what you might call a kind of compromising libertarian.
1:13:00
I simply think you should default to individual freedom when there's not a good case to do anything else.
1:13:05
Jim O'Shaughnessy: Same with me.
1:13:06
Rory Sutherland: Whatever you think, you should do it the other way around.
1:13:08
Let's see what we can get people to do voluntarily.
1:13:10
If that fails, we'll try bribing them.
1:13:10
And if that fails, well, we might have to bring in a little bit of compulsion.
1:13:14
Jim O'Shaughnessy: Right. Exactly.
1:13:16
Rory Sutherland: I mean, most of the reason we don't murder people is actually because of voluntary unwillingness to perform the act, okay?
1:13:21
Jim O'Shaughnessy: Of course. Rory Sutherland: Think. Right?
1:13:23
Jim O'Shaughnessy: There's a great- Rory Sutherland: [inaudible].
1:13:25
Jim O'Shaughnessy: I can't remember which comic it was, but he said something along the lines of, "Well, I think it's good that we have laws against murder because there'd be lots of murdering."
1:13:34
Rory Sutherland: The social science experiment you'll never get approved is you get rid of any penalties for murder for two days and see what happens.
1:13:43
As a randomized control trial. Jim O'Shaughnessy: Yeah.
1:13:45
And they actually make movies about that.
1:13:45
I've never seen them, but I I've heard of- Rory Sutherland: I can tell you a terrible story by the way about this, which is- Jim O'Shaughnessy: Please.
1:13:52
Rory Sutherland: From 19th century London, which is there was a pleasure steamer taking people on river trips I think it was somewhere between Windsor and London.
1:13:58
And this accident actually led to a huge amount of legislation about how many people you could have on a boat and so forth.
1:14:02
But it capsized and a huge number of people had drowned.
1:14:06
But ultimately, I think the number of people who turned up dead was suspiciously high because the bodies were being washed up on the Thames for a week afterwards.
1:14:16
There were bodies just turning up on the Thames mud from this hideous pleasure boat accident.
1:14:21
And the theory was that lots of people in the east end of London who had an unwanted business rival or relative, would simply basically take this as a convenient opportunity to hide the body and say, "No, haven't seen Aunt Ethel for ages.
1:14:31
Last I heard she was going on a pleasure steamer up to Windsor."
1:14:36
Jim O'Shaughnessy: It's so true, and it is hysterically funny.
1:14:39
Well, yeah, there is Lake Tahoe.
1:14:39
Are you familiar with Lake Tahoe? Rory Sutherland: Yes. Yeah, absolutely. Jim O'Shaughnessy: Okay.
1:14:48
So, you don't want to go scuba diving in Lake Tahoe because it was the convenient dumping ground for all of the murderers of that area for- Rory Sutherland: But it- Jim O'Shaughnessy: Forever, because no one was really there.
1:15:03
So they would kill the person, put them in Lake Tahoe.
1:15:03
And I'm sure that it will be a great book someday, but that is hysterical.
1:15:07
Well, Rory, I absolutely adore our conversations. Thank you so much...
1:15:14
Rory Sutherland: Huge pleasure. Absolutely.
1:15:16
Jim O'Shaughnessy: For enlightening me and you will no doubt be on again.
1:15:17
And we will solve some other problems of the world.
1:15:23
Rory Sutherland: Anytime.
1:15:25
Jim O'Shaughnessy: Because I think we solved some today.
1:15:26
Rory Sutherland: Absolutely. I've got a few more.
1:15:27
I must recommend John Cleese as well.
1:15:27
I think he'd love to go on.
1:15:31
Jim O'Shaughnessy: I would love to have him.
1:15:32
I'm going to need some of your pull there though, because- Rory Sutherland: That I'll- Jim O'Shaughnessy: I'm a huge Cleese fan. Love him.
1:15:38
Rory Sutherland: His book by the way, Creativity: A Short and Cheerful Guide, is exactly what it says, but it's magnificent as well.
1:15:45
Jim O'Shaughnessy: Yes, I know.
1:15:45
I- Rory Sutherland: So much about what struck me as weird about my work patterns only started to make sense when I read the book. Jim O'Shaughnessy: Yeah.
1:15:51
He's one of my comedic heroes.
1:15:52
Rory Sutherland: There you go. I'll fix it. Done.
1:15:55
Jim O'Shaughnessy: Oh, you are the best. That's fantastic. All right, my friend.
1:15:57
I will look forward to our next visit and if I do get to have John Cleese on, I don't know, I think I will owe you big time.
1:16:07
Rory Sutherland: Anytime.
1:16:07
And when you're in London, you will let me know? Fantastic.
1:16:10
Jim O'Shaughnessy: Of course.
1:16:11
Rory Sutherland: What a joy.
1:16:12
Jim O'Shaughnessy: And when you're in New York. All right.
1:16:13
Always a joy and thank you so much. Cheers.