Archive for the ‘Thoughts’ Category

On the Manchester Arena bombing

Friday, June 2nd, 2017 | Thoughts

I, like everyone else, was shocked and appalled to see the pictures coming out of Manchester after the terrorist attack at Manchester Arena. Not in the hyperbolic sense: there was a literal shock (well, not shock, but shock) and appalling. That someone would do that for a concert aimed at children genuinely takes you aback.

It’s the kind of propaganda you might expect to have spread during the Second World War. Goebbels would have been proud to convince his citizens that the enemy was deliberating bombing children. But here was someone so brainwashed by a political-religious ideology that they were actually doing it. At the M.E.N., a place where so many of us in the north have pleasant memories.

I would like to say I was inspired by the reaction of the community in supporting the victims. But the truth is better: I wasn’t surprised because that is just standard. Of course, people rushed to help, gave people rides, took them into their houses. Who was surprised by this? When did we set the bar so low? Not us.

Why Ocado (and Amazon Fresh) are doomed

Thursday, May 25th, 2017 | Thoughts

Remember when supermarkets started doing online deliveries? And it turned out that they just had people going around their own stores picking out items to send to people?

Oh, how we laughed. “What a silly way to do it” we jeered. “Why don’t they have one central warehouse where they can do everything efficiently?”

I don’t think supermarkets did it this way because they thought it was the best way. I think they did it because of path dependency: they already all of these stores and it was the easiest way to do it. However, here we are a decade later, and it turns out that their approach is the best.

In fairness, I’m being overly provocative with my headline. I’m a fan of Ocado. You can read my review of Ocado here. But my guess is that if they want to build on their success in the long-term, they have some fundamental business challenges to overcome.

This is why…

Why is Amazon looking for retail space?

The story starts as many do, with some fascinating insight from Scott Galloway. He said that Amazon would eventually buy a large department store.

Why? Because such a company would have stores in every major city. This is important because it allows Amazon to deliver products quicker. One of their big problems is time: I can drive to the shop and buy something instantly. And customers love instant gratification. Amazon cannot deliver that, which is why they are spending time messing around with drones.

Jeff Bezos has always wanted to find a better way to do this. In Bezos’s biography, The Everything Store, Brad Stone talks about how Bezos wanted to hire college kids to keep a stock of Amazon products in their bedrooms and cycle them round to customers the minute they ordered.

Short of that, Amazon needs a distribution facility in each area to allow them to get products to customers quickly. That is tough when you operate a huge monolithic centre. But way easier when you have loads of local stores.

What does this mean for Ocado?

Ocado has the same problem that Amazon does. They operate out of a giant warehouse down south. This means that you have to pick the orders there and drive them to every corner of the country. Doing this is expensive for Ocado and slow for consumers.

Compare that to the major supermarkets: Sainsbury’s have their warehouse located literally only a few miles from my house. And everybody’s house. And running this warehouse costs them practically nothing because the stores are profitable in themselves.

Therefore, even when you add the cost of an inefficient system in which employees go around the shop picking out items like an in-store customer would, it still produces a business model that works and works well.

What can they do about?

Ocado needs to find other ways to compete. Amazon was successful in competing against existing high street stores. It did this in two ways. 1) it offered cheaper prices and 2) it offered a way bigger selection. Their tagline is, after all, “Earth’s biggest selection”.

Ocado doesn’t do this. Their prices are more expensive. Their selection is good, but not amazing. Take fish, for example. The selection at most supermarkets is rubbish: cod, salmon, seabass, maybe some tuna or another white fish if you are lucky. Morrison’s is a bit better. Ocado better still: their selection is maybe twice as big.

But, as Peter Thiel points out in Zero to One, if you want to do the same thing as everyone else, you can’t be 2x better: you need to be 10x better. Leeds Fish Market is 10x better. I can get maybe 100 different specifies of fish and seafood there. So I go. Just like Amazon offered way more books than my bookstore.

Summary

Traditional supermarkets have a huge advantage over online ones because they have a far better distribution network. This is important because that is all a supermarket essentially is: they buy other people’s food and distribute it to people before it goes off. If the online world wants to compete, it needs to offer an experience that is so much better you cannot possibly not switch. Ocado and Amazon Fresh do not yet do that, in my opinion.

This is why men still pay for internet pornography

Friday, April 21st, 2017 | Thoughts

A phrase I hear a lot (because apparently, my friends are the kind of people who have those conversations) are “why would anyone pay for internet pornography when there is so much free stuff available?”

But if nobody is buying online porn anymore, someone should probably tell the industry. Because they seem to be bringing in as much revenue as ever. In fact, adult industry revenues continue to grow.

It would seem, then, that men are still paying for porn. Here is why.

There is too much free porn online

Have you ever bought a book or a course? Probably. It’s just a generic statement that everybody will have done. The question is, why, though. All the information is on the internet. There are trillions of pages out there, a lot of it valuable stuff.

So why would you spend £10 on a book when you can find it free online? Why would someone spend $1,000 on an online training programme when all of the information they need to learn any skill is already there in Google, and YouTube, and Wikipedia, and so on.

It comes down to this: have you tried finding it?

There is so much information online that we were saturated a decade ago. Finding all of the information you need, curating it together and forming it into a structure that teaches you a topic or skill is a nightmare. It’s so bad that we would rather pay an expert to do it for us.

Which is why we’re still buying books. And courses. And porn. Why waste your time searching the internet when you can just pay a company £15 to deliver it to you. People’s time is valuable and we live in the rich west. It’s a fair trade.

You get higher quality

Sure, there is loads of free stuff out there. But how much of it matches the quality of the stuff being put out by Digital Playground or Kink.com?

None of it. The 2005 film “Pirates” had a reported budget of over $1 million. It’s 2008 sequel, “Pirates II: Stagnetti’s Revenge”, spend over $8 million. No two-bit operation cranking out free stuff is matching those production values.

That’s not to say that people don’t indulge in the free samples as well. But for those times when you want to eat gourmet, you have to put your hand in your pocket.

The industry has evolved

Revenue is up overall. However, admittedly, it is down for some of the traditional studios. But this matches media in general.

It used to be that bands made an album, and made all their money from the sale of that album, and toured to make sure that people bought the album.

Then digital piracy arrived, and everyone realised they could get it for free. Or pay Spotify £10 per month, which the arts see very little of. Spotify pays the record labels £7 of that money, but somewhere before reaching the artists it mysteriously goes missing.

So, now bands make very little money off the albums, but a lot of money from selling their £70-per-ticket arena tours. And because they are dependent on ticket sales, they now play all of their classics, rather than that new shit that nobody wants to listen to. The bands are still making money, and we’re getting the songs we want live. Everybody is a winner.

The music industry evolved.

So did the porn industry. It used to be that if you wanted to spend £20, you could buy a VHS of a dirty movie. Now you can spend that £20 to dictate to a Romanian woman exactly what you want her to do on a live webcam.

Sure, you might have to book in advance and pay a little extra if you want her to cover herself in yoghurt. But she will. And it’s a way better experience than watching a pre-determined movie in which the plot is “everyone loses their clothes and has sex for no reason”.

You avoid all of those horrible ads

Have you seen TV advertising? It’s awful. Nothing is relevant. I’m not looking for a new car, or to compare meerkats, or for a new brand of washing powder. In fact, it’s so bad, that the only way it can be made economical is for the TV channel to show us a solid 14 minutes of adverts per hour.

Then Netflix came along and said, “you can pay us £6 a month and make all of that nonsense go away”. And 93 million of us did because £6 a month is nothing and 14 minutes of our lives (per hour!) is loads.

We made a similar trade with the adult industry.

Trawling through free porn sites means enduring a deluge of irritating ads. I have no interest in a penis enlarger pump. I am perfectly happy my existing penis enlarger pump.

You can try and install an ad blocker. But it won’t work. The porn industry were the people who invented online video streaming in an age when it didn’t exist. They know their stuff. They know how to avoid your ad blocker even though nobody else has managed to launch a pop-up in ten years.

Who would endure that when a small amount of money makes it go away?

Conclusion

Men pay for internet pornography because the adult industry has continued to provide enough value to make it worth paying for. Whether it is providing higher quality, more niched, fewer ads or live webcams, they make a product which is good enough to make people pull out their wallets.

This should come as no surprise. How do bottled water companies make money when the stuff literally falls from the sky? Or newspapers continue to profit when you can get all your news from blogs and Twitter? The answer is a product that people think it worth paying for because it is better.

As long as they continue to do that, men will keep paying for it.

P.S. If my wife is reading this, you should note that this article is really about marketing and consumer behaviour, rather than watching porn.

5 reasons your community group should NOT use Facebook ads

Saturday, March 25th, 2017 | Thoughts

You’re on the committee for a community group and you have a big event coming up. Someone suggests you should do some advertising as it would be a great chance to get some new people in. Someone else suggests “let’s do some Facebook ads”.

It is understandable why this suggestion would be made. Flyers are a massive waste of money. Plus, everyone is doing Facebook ads now. It seems like a great way to go.

It isn’t. Stop right now and make sure you can answer all of these objections before proceeding.

Your copy sucks

The art of writing sales material, known as copywriting, really is an art. It takes years to become good at copywriting. I’ve spent the last three months working on it, including buying expensive courses from some of the best copywriters around and my copy still sucks. Not just a little bit: it’s rubbish. It doesn’t convert.

And whether you are a business selling a product, or a community group selling an event, you need to convert some people into customers, even if that is only showing up to your event. Saying “oh we have this amazing event” is not enough. You need to write compelling stuff. That takes a professional.

Who are you going to target?

Facebook ads work because you can target specific people. But how will that work for your community group? The best marketers spend ages zoning in on their ideal customer, then market to them, then retarget them after they have visited their website.

Nobody has visited your website because you’re a community group, and even if they did, you don’t have a retargeting pixel on there.

So you target “people in my city”. Which is the equivalent of sending a blanket mailshot out via the Royal Mail. Most targetted direct mail gets a 1% response rate. Untargeted mail can only dream of that.

Facebook takes time to work

Facebook is very good at working out who your ads should be shown to. But this takes time. You have to spend money before it works. When I started advertising for the WAM 30-day challenge, we were paying £0.60 per click. Thre weeks later we were paying £0.15 per click. Facebook worked out who my ads should be shown to.

But that only happened after several weeks and several hundred pounds spent on ads. The first £100-200 is basically a fee you pay to Facebook so they can work out who to show the ads to. Then you start seeing results. How big is your budget? Probably less than that, right?

People don’t trust you

People are suspicious of paid advertising. They should be: a company is trying to influence them. You might think that you avoid this being a community group. But you’re wrong. You’re in a worse position.

Why? Because it is even more suspicious. ProCook follow me round the internet with adverts for their latest cookware. They know I have been on their website so they target me on Google and Facebook (and all the websites who use their ads, which is everyone). There are ProCook ads everywhere.

But at least I know what is going on here. ProCook is relentlessly targeting me because they are trying to sell me a pan. That’s the deal.

With a community group, it is a whole different ball game. What are they selling? How are they funding these ads? Is it a cult? What is their business model that allows them to run Facebook ads?

People want to discover community groups organically, either by searching for something they are interested in or because a friend told them about it. Seeing paid advertising makes it look like a religious cult or government-sponsored initiative to shift state-provided services off their books and into the hands of private individuals.

There are better things to spend the money on

Like making your events even more awesome. So that people come back. Most groups do not have a promotion problem. They have a retention problem. You only need one new person to come along each week and you have one hundred members after two years of running. But most groups are five years down the line with 20 members.

I’m sorry YOU feel that way (about OUR toilets)

Thursday, March 23rd, 2017 | Thoughts

Earlier this month, we celebrated Elina’s birthday. We went big: giving Venla to my parents to look after while we went on a food crawl around Leeds. By the end of the night, I was taking pictures of toilet signs. Why was this?

First up: what exactly is a restaurant crawl? It’s what you imagine it to be: a pub crawl, but with food, as well as drink.

We started at Yo Sushi. Who charge £1.30 for tap water! I had the soft shell crab tempura, which was good, but not as good as Chaophraya’s version. We moved on to The Alchemist for a round of cocktails, before hitting up Yoko’s Teppanyaki who kindly squeezed us in, before finishing up with dessert at TGI Friday’s.

It was at this point, that I spotted the sign above.

If, for any reason, they do not meet your expectations, please notify one of our team members.

If the toilets were dirty, I think this would put me off speaking to anyone. Why? Because it implies that it is my fault. It is like when you say to someone “I am sorry you feel that way”. That is not an apology: it is making it clear that it is their problem and not yours.

Maybe they want to put people off. However, TGI seems to have a responsible focus on customer service so I will take it as an honest attempt to speak up.

A better way to word it would be to say “if the toilets are dirty”. It is pretty objective, right? The toilets are clean or they are not. People can then make a subjective choice about it. What they do not have to worry about is whether their expectations ae reasonable or not.

The 8 books that changed my world in 2016

Monday, January 9th, 2017 | Books, Thoughts

I read a bunch of brilliant books in 2016. Too many to list here, though you can find them by browsing the Books category of my blog. Really good stuff like The Hard Thing About Hard Things and Zero to One have not made this list. The River Cottage Fish Book reminded me of my love of fish. Amazing fiction like The End of Eternity is missing too. But these books, have changed the way I look at the world.

Predictably Irrational

I kind of knew what this would be about before I opened it. But Dan Ariely provides a series of useful and real-world examples of irrationality in everyday life that you cannot help but see it in your own life. If anything, this book really deserves a second read so I can take it all in, measure my life against it and make improvements.

TED Talks: The Official TEDGuide to Public Speaking

I already consider myself quite a good public speaker and this book covered no new ground for me. However, it did change my opinion on one thing: speed of delivery. At Toastmasters, I am constantly telling people to slow down. When you slow down, your speech is easier to understand, the audience has better comprehension, if forces you to say less and therefore makes the speech more effective. However, Anderson points out that you only need this enhanced comprehension at complicated parts of the speech: the rest of the time people can comprehend words faster than you can say them. So, if you have good enough content, speak a little faster.

The Paradox of Choice

More choice makes people less happy. I see this everywhere in my own life. I need new trainers. Sports Direct’s 4-story mega shop in Leeds city centre has around 1,000 different options. Yet I cannot find the perfect pair. Why? Too much choice! It raises my expectations of finding the perfect pair, which I never do. The same with restaurants: selecting from a huge menu is irritating and tiring. Give people a sensible amount of choice.

Selfish Reasons to Have More Kids

We know from Steven Pinker that parenting only makes up a small part of a child’s nurture-based personality. The rest is external environment. Bryan Caplan points out that this means you do not need to be crazy-obsessive-parent. In fact, if you relax, you will enjoy parenting a lot more and your child will enjoy their childhood at lot more.

The Village Effect

Social connections are the biggest indicator of longevity. Literally, not having a strong social network will kill you. It will take years off your life. Community is worth fighting for because it makes us happier and healthier.

Mindfulness

I completed the entire programme from A practical guide to finding peace in a frantic world before moving on to Headspace. I have not stuck with either because I find it really boring. However, it has convinced me that I need to spend more time focusing on enjoying now in whatever form that might be.

The Happiness Hypothesis

Jonathan Haidt’s book is worth reading for the central analogy alone: that we are made up of an elephant and a rider. The intelligent, rational rider can direct the body as much as it wants. But, when the elephant gets spooked, there is very little the rider can do to calm it down.

Why Smart People Make Big Money Mistakes

Gary Belsky and Thomas Gilovich list of a bunch of ways that we fall victim to our own biases. Chief among them for me was “mental accounting”. There is no such thing as bonus money: a pound is a pound. Every purchase has to be considered in the rational light of day, even if I have just won some money.

Funerals

Wednesday, January 4th, 2017 | Family & Parenting, Life, Thoughts

I have been meaning to write about funerals for a while. Looking back, I think there has been quite a lot of emotional resistance, so I will probably keep this post brief.

I was only six when both my grandfathers passed away, and not much older when my uncle died. Therefore, when my grandma passed away in August, it was the first funeral I had been to as an adult and the first one where I really knew what was going on.

In a way, I was actually curious to see how I would cope with the whole affair. For years I had known that eventually, someone would die, and had no idea how it would affect me. It turns out that I coped just fine. There was no emotional breakdown, nor much in the way of tears. Nor was it a surprise, though: when she was diagnosed with Alzheimer’s, I knew we were on the clock.

Mostly, I felt bitter at the world for my own selfish reasons. Venla, who arrived two months later, would have been her first great-grandchild. I felt I had failed her in some way.

It has been a while since I have been truly nervous before giving a speech. Even my wedding was fine. But delivering the eulogy was a tough one. I always joked at my public speaking club “humour improves any speech: but I have not had a chance to try it out in a eulogy yet”. Well, now I have had that chance, and I can confirm it is a good idea. If anything, humour is even more important at occasions that are bound to include an element of sadness.

The truth is, I already had a few ideas for what I was going to say, should I be called upon to give a eulogy. Because that is what happens when you have an anxious mind that never switches off: you think about all the horrible things that could happen to everyone you love, and what you would do if it happened.

That all sounds very gloomy, and that is not the message I want to convey. Actually, funerals are fun. They are enjoyable, in a macabre way. Not because it is a celebration of life, which it is, but because it is a time when an entirely family comes together.

Over the past year, I have witnessed match and dispatch of the hatch-match-dispatch triangle. These events are important. They bring families together, using social rules and customs that other events have not been able to achieve. You get to see people you do not normally see, and bond over an emotional event, forming stronger ties between those that remain.

Funerals are always going to be bittersweet by nature. But they provide more than closure. More than a celebration of someone’s life. They are part of the social glue that help hold families together.

Happy holidays

Saturday, December 24th, 2016 | Thoughts

Wherever you are this holiday season, I hope you get the chance to take some time out to spend with the people you love.

Are Amazon reviews useful?

Tuesday, December 20th, 2016 | Thoughts

I have previously written about why review sites, such as Trip Advisor, are nowhere near as good as books like the Leeds Restaurant Guide. The problem is that the reviews are inconsistent, lack quality and depth, and may be written by someone who works for the restaurant.

It occurs to be that Amazon reviews might be similarly useless.

Recently, I was searching Amazon for some cake tins. There was plenty of options. However, working out which was the correct choice was a tricky business. Some of them had plenty of five-star reviews with short comments such as “amazing cake tin”. But they would also be accompanied by the odd one-star review saying “it leaks”. The same pattern was repeated over and over.

Then other products had no reviews, so you either had to take a chance or exclude these as options.

This results in me having a huge array of options, but no quick way of deciding which was best. I had to spend time looking through the quality of the reviews to try and discern which ones could be trusted and which could not be. I had to weigh up what the required numbers of reviews were before I could assume the star rating could be trusted.

This also places a huge amount of cognitive processing time on my brain. This kind of decision making is frustrating and tiresome.

Amazon reviews certainly can be helpful in validating our purchasing decisions, or, given a sufficient number of them, helping us make the decisions in the first place. However, I think do not believe they are a perfect replacement for reviews from trusted sources and can often cause more problems than they solve.

We need to talk about Smart Decisions

Tuesday, November 15th, 2016 | Thoughts

doors

When playing poker, there is a term called a bad beat. This is where you do the right thing, and lose anyway. That is poker, there is always an element of chance to it.

For example, the flop comes down and would you look at that, you have hit an ace-high flush. There is nothing else on the board: you know you are holding the best hand here by far. So you bet big. Your opponent keeps calling you.

The turn arrives. It’s a deuce. That is going to do nothing or them. So you continue to bet, but he calls you again. Finally the river: another deuce. Your opponent must be bluffing you think to yourself as you shove all your chips into the middle of the table. They call you, and turn over a pair of twos. Four of a kind beats your flush, and you go home empty handed.

What did our poker player do incorrectly? Nothing! The odds of something being a) stupid enough to call you when there is a good chance you have a flush and all they have is a pair of twos and b) being lucky enough to hit the exact two cards they need in a row are incredibly small. It is a bad beat because you deserve to win the hand.

So what do you do about it?

Nothing. You keep playing how you are playing. Why? Because statistically you are going to win more than you are going to lose. Poker is a game of chance, so if you can tip the odds in your favour it does not matter that sometimes you will take a bad beat. In the long run, you will come out on top if you keep making the right decisions.

What about when I am not playing poker?

It occurs to me that the same thing happens all the time in real life. Often, we can do the right thing, and still get punished for it. It is a bad beat in life. But the same rules of poker still apply to everyday life as well. If we keep making the correct decision, statistically we are going to come out on top.

You are not always going to win at life each day. However, if you can tip the odds in your favour consistently, you can win at life in the long term.

Give me several examples

Once of the best comes from Daniel Kahneman’s Thinking, Fast and Slow. He talks about product warranties. These are profit-making schemes for the companies: they would not offer them if they did not generate money for them.

However, people tend to take them out because they think it is better to insure the risk, or that they will be upset if they have to shell out for a replacement. This may be true, but what is most profitable overall? Sure, if you just have one product warranty, that you turn down, and your electrical item breaks, you are out of pocket.

But each one of us is going to buy hundreds, maybe even thousands, of electrical items over the course of our lives. If we take out extended warranties on all of them, over the long term we are going to be significantly more out of pocket than we would be if we just stumped up to fix a broken product every once in a while.

Example two: automating and passing on a task. If you have a repetitive task that drains your time in short buy annoying chunks you could automate it with a computer, or you could train someone else to do it. Both of these options come with a high setup cost (it takes time to write the computer programme or train the other person) but reduce the amount of time you have to spend on the problem in the long term.

Example three: investing in yourself. How often do you go on training courses that you pay for out of your own pocket? If you are like me, not enough. Yet what if that training course would lead to higher earnings in the long term? Or more time? Or the ability to acquire a much-desired skill? Often this is the case.

How do we apply this to real life?

Winning in the real world requires some luck. However, we can tip that luck in our favour by making sure the decisions we make are Smart Decisions. We will not always win, but by tipping the odds in our favour, we can come out on top on the long term.

How do we do this?

  • Consider the overall implications of your decision, not just the short term
  • Challenge yourself to resist automatically taking the path of least resistance
  • Understand that we have psychological biases to taking the easy route, even though it may not be in our own interest
  • When you take a bad beat, recognise it as a bad beat, and not a bad decision

Follow these principles and I guarantee you will will die a richer, happier, more satisfied person. If not, email me after that time for a full refund.