Uncertainty, admission of downside, variance, signaling

I recently read Alchemy: The Dark Art and Curious Science of Creating Magic in Brands, Business, and Life which was 💯. You may recognize Rory Sutherland from popular Ted Talks: life lessons from an ad man, perspective is everything and sweat the small stuff. Favorite ten takeaways below 👇

(1) Uncertainty matters more than duration in the pain of waiting

An unknown, 5-minute wait feels worse than a known, 10-minute wait. Don’t spend $3,486,686,433 to speed up your train – instead, spend 0.05% on a sign that shows when the next train arrives.

(2) Admission of a downside makes you more trustworthy

Rahul Moodgal (Master Fund Raiser) said on Capital Allocators the best pitches had two admissions of downsides: (1) “when you were wrong and what you learned” and (2) “why people don’t invest with you.” What are ways to actually try this?

(3) People care about expected outcomes but also the possible variance

People will pay a premium (i.e. take the “longer backroads” to the airport) to avoid the terrible (i.e. an accident or major traffic on the highway). Same for buying brands – you’ll pay a premium to ensure non-terribleness. Real life Sharpe ratios.

(4) Spreadsheets are a “dangerous technology”

Don’t be over-reliant on numbers and metrics – “what gets mis-measured gets mismanaged.”

(5) People use “reason” for “appearance of being reasonable” (not better decisions)

A “reason first, discover later” mentality is wasteful because humans are complex systems. Move fast and break things.

(6) Signaling must be expensive

Humans attach significance to a communication (“meeting” or “wedding invite”) proportional to the cost of generating it (“flying to them” or “fancy card”) i.e. why getting in a plane or car to see a client / prospect matters instead of a phone call.