127 - The Psychology Behind Why We Fall In Love With Luxury Brands | Rory Sutherland

0:00You could spend an awful lot of money trying to improve something that seems important, but which nobody deep down ever cares about. Meanwhile, there are vastly cheaper solutions which could be game-changing. He's the author of Alchemy, the Dark Art, and Curious Science of Creating Magic in Brands, Business, and Life. He's the only guy that I've ever heard swear in a TED Talk. Who is this guy? Rory Sutherland. Hello, hell yeah. One of the saddest things I always notice is businesses that are very, very good businesses, but they fail because they get one perceptual element wrong. Finance people fetishize cost-saving and automation.

0:34I would argue that frontline service jobs are actually crucial to the future of the economy because most sort of theories around messaging use what you might call the transmission model of how do you get this information from originator to eyeball as inexpensively as possible. What they're not thinking about is what goes on behind the eyeball once that message is received. Do you feel like in today's world, the consumers are just overly sensitive? There's a problem we got here, which is that... quick pause guys i need to tell you something it's that time of the year where everyone's on the winter arc hype where they're building their physique which they plan to reveal at some point in the summer of 2026 but i hate to be the guy that says it most of you are going to end up getting fat you'll be overeating you'll be following some sort of a program which isn't actually going to be getting your results you're going to be improvising on the spot no doubt you won't be tracking there'll be no structure just random exercises with minimal progress seen on a week-to-week basis.

1:31Pretty frustrating, right? Well, that's the whole reason why I built the Thirst app, to help busy people like yourself find a system they can actually stick to over a long period of time. We have thousands of transformations for men and women who just plug into the app and get the exact plan they need for their goals, show up to the gym, and just put in the work, all for less than an hour of their time. You get access to over hundreds of programs and hundreds of different meal plans everything which you could possibly need to get yourself in shape so if you actually want to stick to something and see results without taking things to the absolute extremities click the link in the bio let's get on with the video rory welcome to the show absolute joy to be here real pleasure yeah i wanted to start off by talking about the world of branding and in particular one that's quite fascinating for me is how personal branding has become a lot more of a thing compared to the past and how a lot of founders and CEOs are focusing on building their own personal brand.

2:34Is this because they're doing it as a vanity thing where they're trying to build their status or are they actually doing it because it helps the business that they founded or are running? I would argue that even when we're doing business with highly automated or online business, that there's still an element to us which is judging businesses as if they were people. And I'd also argue that in encounters with businesses, the face-to-face or the human-to-human tends to trump in terms of your perception of that business. the immediate experience of you know human interaction um tends to outweigh an importance in your mind you know other factors now you know obviously i'm not suggesting that just by being really charming face to face you can have an absolutely crap product charge charge an insane amount of money for it but one of the things i think that will happen uh is that um in businesses as AI becomes more and more prevalent in terms of the interactions we have, those now rarer cases of personal service or personal interaction become actually more precious to us and more decisive in terms of how we think.

3:55And so, I mean, it's interesting in a way that, you know, a lot of businesses, particularly if you look at family-owned businesses, they have their name above the door. In some ways, if I feel that the person behind the business, whether it's a Dyson or a Branson, effectively has reputational skill in the game, I would argue that I can trust that business, I think, rather more than I can one which is effectively hiding behind a whole story of screens, you know, the sort of Potemkin village model of a business where, you know, The facade looks lovely, but everything behind it doesn't really exist.

4:33And so, I mean, one of the most interesting things that happened is that in the IPA Effectiveness Awards in 2024, four out of the five gold winners were family-owned businesses. And I'm starting to notice that for a whole host of reasons, family-owned businesses are better at building brands than PLCs are. Because they have the time frame. They arguably have the kind of, I suppose, they have one eye on posterity, but also they're focused on their customers rather than being focused on their shareholders. And you might argue there are a hell of a lot of businesses where the chief executive has a very strong personal brand, but they spend their time building it in the investor and shareholder community, not among the public or their customers or their consumers.

5:21Yeah. Now, I mean, but this whole thing, which is a sort of disintermediation of people in a way, it's massively important in journalism. Because previously, if you think about it, the newspaper brand had the strength. That got the eyeballs. And then if you're an individual star columnist within it, you would get pretty large rewards, you know, for your convening power, your pulling power. but it was already starting to become clear i think to rock star journalists that do you actually need the intervening newspaper brand if i can just be a columnist brand on in my own right but yeah they they do need each other but the balance of power has shifted yeah um and so but no so i think i think that question by the way by the way it's also worth noting that there's a change in expectation.

6:21And by the way, that also applies not just to the relationship, say, a chief executive would have with the customers, but also with the staff, which is, you know, 20, 30 years ago, you know, it wasn't possible, effectively, for your chief executive to make a 20-minute address to the staff and put it on broadcast TV. Now, in an age of YouTube and also where not only can that content be either widely or narrowly cast, but also viewed at a time of the viewer's convenience, our expectation of openness has just changed. Yeah. And, you know, consequently, I mean, it used to happen, the form it used to take 20, 30 years ago is you'd have these massive conventions where you get loads of staff into a football stadium or something like that.

7:10And, you know, there'd be a kind of, you know, big company jamboree. Now, you can now do that digitally, and people kind of expect it in a way they didn't expect the former version. Yeah. Is there anyone in particular you think is doing a really good job of it at the moment? Yeah, well, I think, you know, I think we tend to personify businesses. And I think also that when we judge a business, we tend to, in a way, what Daniel Kahneman used to call, often what we do in our brains is we substitute an easy question for a difficult question. So we create a kind of proxy question. So if you're buying a house, for example, if you're buying a secondhand car, you probably don't know that much about cars.

7:53And so the question you ask instead is, do I trust the person selling it? Yes. And a lot of people would say that's an irrational thing to do. It's not entirely, because we've got half a million years of evolved experience in spotting untrustworthy or trustworthy people. Whereas we don't have any innate evolved experience in evaluating cars, unless we've got an engineering degree or trained with the RAC or something like that. And so quite often, the decisions we make about businesses are, you know, not, in other words, the easy question is maybe not, you know, can I completely trust this, but are the people likable?

8:35And we'll use likability as a proxy. And so it's something that, yeah, if you can do it well. The story I always love about this, which always fascinates me, there's a wonderful guy called Alex Batchelor, who used to be the marketing director of Royal Mail. And at the time, they'd spent an absolute fortune improving their operational efficiency and reliability and so forth, and noticed absolutely no change in consumer attitude, despite a lot of money spent trying to actually instigate operational improvements. And Alex Batchelor said, I think I know where this is. And he set out to test his theory.

9:13And it turned out that by far the biggest determinant of people's attitude to Royal Mail as a brand came down to one thing only, whether they like their postie. And so, you know, even if, to be honest, the service was a bit sporadic. Post never came on a Wednesday. If the postie was the kind of person who went, I knew you're on holiday, so I popped it in the back porch, you basically thought that was the best service in the history of the world. And equally, you could have a really, really reliable next day by 8am service. But if your postie was a grumpy bastard, you basically didn't like Royal Mail.

9:48So that understanding of the extent to which, you know, preferences, particularly with service brands, I think. I think with a service brand, one of the things I repeatedly argue is there should be people in your call center paid six figures. Because the very, very best call center staff, that they're typically experienced, they're also unusually talented, have an amazing opportunity to create what, there's one American agency calls it a brand quake. In other words, you may take someone who at the moment they ring is actually angry and you can turn them from an angry likely defector in a single conversation into a brand evangelist or a brand advocate now i need to do we need more research on this i mean i believe it to be kind of anecdotally true there's certainly a lot of evidence that weirdly a disgruntled customer handled well turns out to be more loyal than if the problem had never occurred in the first place.

10:47But understanding what the heuristics and what the kind of the proxy questions consumers are asking when they decide whether or not to buy your product is really, really important. Because otherwise, you could do what Royal Mail did. You could spend an awful lot of money trying to improve something that seems important, but which nobody deep down ever cares about. Meanwhile, there are vastly cheaper solutions, e.g. you send your 5 % of grumpiest posties off to charm school or something, which could be game-changing. And one of the saddest things I always notice is businesses that are very, very good businesses, but they fail because they get one perceptual element wrong.

11:33Didn't you say something about the Eurostar, how I think the engineers wanted to spend like six billion to that was me sorry yeah yeah speed it up by 40 minutes when you were saying they could literally just take a fraction of that money to improve the london bridge station this morning on a networker train they're horrible i fucking hate them they're the ones where you get three abreast seats i mean yeah you know the people who you know who tag fuck on the outside that's me to be honest i hate them so much you know if you go into the toilet in your networker train and basically there's just obscenity scrawled all over the wall that's probably me as well because i really really hate them and the reason i hate them is partly three-a-breath seating is just horrible if you're sitting in the middle you know you you know it's sort of pervoli weird yeah but they don't have any fucking tables now i had a whole article to write this morning i had emails to do i've got a bloody laptop in my bag that i carry with me i spent 35 minutes on that train being completely useless, effectively.

12:34Yeah. Simply, now, you can get a budget in a rail company to, you know, increase, you know, reduce journey time by 4.7 minutes, and the bloody treasury will give you a stack of money because that's time-saving. But for the sake of just a table, you know, and the odd cup holder, you turn a productive, enjoyable journey into a horrible, useless journey. So it actually didn't waste four minutes of my time. It wasted 25 minutes of my time. And so that utter failure to understand that the metrics that exist within businesses are often completely misaligned with what the customers of those businesses really care about.

13:14And I mean, an awful lot of this, by the way, is, you know, finance people fetishize cost saving and automation because it appears to bring cost cuts and they think this will either, go straight on the bottom line or can be used to reduce price. Those people aren't held accountable for the consumers or customers who disappear because they wanted a personal service. And I would argue that frontline service jobs are actually crucial to the future of the economy because as more and more of the boring stuff gets automated, it's precisely providing that human interface, whether it's problem-solving, sometimes it's just simply being seriously charming, which actually is what people are paying for.

14:07I mean, if you think about it, okay, a farmer's market is the stupidest economic conception in the world because you buy direct from the producer, but you pay a premium for it. And I suspect there are two reasons for it. One of them is delusional, which is because you're making six purchases of nine quid, you're not conscious of spending that much money. Whereas if you go to Tesco and spend probably 54 quid or whatever it is. No, yeah, 54 quid. Ooh, that was a bit expensive. Part of it, I think, is just delusion. But part of it is we like the theater and the attention and the interaction because we've evolved for half a million years craving those things.

14:44And probably they're grotesquely lacking from our lives in many cases. You know, just that nice little exchange. There's a wonderful Chinese proverb, if you find it difficult to smile, do not open a shop. And understanding where you really create value. In other words, what it is that people value about you. And so Dyson and Branson are probably the two best examples of this. um there are also brands which are you know which are obviously not personified by the ceo themselves but they have a kind of spokesperson yeah i mean the genius of howard for the halifax for example you know it's the person as an embodiment of the brand yeah they could never really find anybody who who could replace him in a weird kind of way yeah um and um you know understanding that In a way, we instinctively will choose to judge the personal because it's a lot easier and we're better at it than judging the technical.

15:54And it's a brilliant shortcut question. We've got limited time. We've got limited cognitive resources. And we can't spend our time every time we buy a coffee machine researching the engineering of each individual machine. so what we effectively do is we go you know this person this salesperson seems basically pretty likable and straight i think they would suffer some degree of shame from making a dodgy recommendation to me and therefore i'm happy to go with what they recommend and there are certain categories i think which are very high trust because we don't know much about the category itself i'll give you an example if you went to say richer sounds or you go to a speciality photography shop the what you might call the professional expertise of those people is a kind of badge of honor for them it's you know it's part of their identity yeah they're proud and so someone i always remember in a camera shop uh some sort of relatives of mine who to be honest were fairly minted but in their 70s went in and were going to buy a kind of 900 pound camera and the guy asked them a lot of questions, realized that there was no way they were going to make use of even 4 % of the capabilities of this camera, and downsold them.

17:13Now, why on earth would you do this? You know, a commission would suffer. But his effective, some part of his pride and identity is vested in his, you know, in this case, it was his, actually, probably in shops, it quite often is, his ability to give the right advice and not to actually misdirect someone you could also argue that in terms of lifetime value he may be making a very good decision because you know there's one thing to make an immediate you know maxed out sale there's another thing to create enough customer satisfaction that they come back to you for your next camp their next camera yeah i'll tell you he's done a very good job this is uh at least for me anyway they've completely got me it's emirates because i i now what the jennifer aniston thing no no not necessarily the uh the adverts themselves but the experience i have every time i fly with them yeah like it's it's so good that sometimes i mean this is when i've i mean fortunately i've traveled a few times first class if the flight is less than seven hours i'm actually annoyed because i want the flight to be longer so i can experience the whole thing where i can eat all the food particularly if it's an overnight yeah you can you can sleep for six hours then you can have the shower yeah it's like it's a full-on amazing experience motorhoming we don't you know actually you know you you know what you could have prefabricated housing which you could basically elon's doing this of course because he's he's also got a he's got a tiny home business he's got a solar business uh he's got a starlink business he's you know got a battery business you know my my secret theory about elon is that in a kind of James Bond villain way, his plan is to tank the housing market by making it possible for a factory just to produce perfectly attractive homes where you could temporarily plonk anywhere.

19:08I think that'd be quite popular. No, no, so do I. Yeah, I think there's a, you know, the fact that we still build homes as if it's 1640, you know, from the foundations up, rather than prefabricating them offsite, is like one of the weirdest technological failings when you think about it. I mean, shipbuilding is modular. Everything else you build in a modular fashion. I won't name the venue, but I thought it was brilliant. This was yesterday, one of my favorite cafes. And I chat endlessly to the person who runs a cafe because you learn so much from hospitality about marketing. And her absolute thing is she refuses to serve soup.

19:48So it does wonderful kind of brunch food, you know, eggs, Benedict and goodness, you know, wonderful stuff. and so why wouldn't you serve soup it attracts pensioners i mean i see the problem is is that you know that they she said you know because then if you get pensions they stay a long long time they don't spend very much money on anything else they can't go upstairs because they can't manage the stairs if you put them by the door they complain that there's a draft you see and she said i can make twice as much money from the same table with effectively you know two sittings of you know, people of their 40s.

20:25I've seen some hardcore coffee roasters that advertise the fact that they do not serve matcha. They're like stay away matcha people. This is fantastic. Yeah. Yeah. So in other words, it's, you know, in other words, it's, it's, it, it, I, this is my idea behind bacon sandwich where you wouldn't provide ketchup. You could have brown sauce or nothing. And you'd only serve two drinks, which is builder's tea or champagne. And the argument was that sometimes it's a actually the person who writes about this brilliantly is alex hormosey okay which is speciality enables premiumization to an extent partly it's just a heuristic you know if you only serve four things people absolutely know those four things have got to be pretty good because otherwise you wouldn't still be in business it's like it's also proof of sincerity you see it's we're not just a profit maximizing exercise we believe in what we do so it's almost I'm not the world's biggest fan of the Simon Sinek school of, you know, every brand has to have this high-minded purpose.

21:29But nonetheless, there's a costly signal of we are committed to being good at this one thing, and we're not going to brook any distractions, even if in the short term they may be profitable. Yeah. Yeah, that is – it's kind of like quite a good sign, I think. Yeah. The whole thing fascinates me because it's such a – what I really love is things – I was talking to – to greg who runs octopus energy and my theory is if you could get them to talk together and respect each other if you got 10 absolutely shit hot hardcore systems engineers in a room with 10 shit hot marketers and you got enough drink flowing so they can actually establish a rapport half the world's problems could be solved quite quickly yeah and um because an awful lot of problems i think are a really weird combination of engineering and psychology and most people the value of marketing is not what we do it's how we think i keep reiterating this because the mistake that marketers have made is then we did this hand campaign and then we did this and you there, you know, and look, you know, we spent this and we got that.

22:44You're using the language of finance to justify your own existence. But the real value of marketing is a bit wanky. It's philosophical. It gives the business an entirely new outlook on the world, which then presents totally new and innovative ways of solving problems. Yeah. Speaking of the psychological factors, I've read a few things and seen that there has been a decline in demand for the luxury goods market what's what's going on there um there's a theory i've got we ought to distinguish here and the best people do make this distinction there's the luxury goods market you know probably best exemplified by hermes or some of these very very high-end often italian hermes seems to be the ones actually doing okay but the rest is suffering there's also the luxury brands market which is slightly different uh well it's very different in that um it's more about signaling than it is about the intrinsic it's all about signaling you know um but there's discrete signaling with real luxury where only a select target audience will know uh you know what's going on yeah best exemplified perhaps by the whoever did the costume design for succession you know obviously spent a load of time studying kind of the super rich and it's all sort of max mara cashmere and it's very understated and you know you know other people can tell yeah like lore pianist though yeah you've got it exactly yeah not many people don't but then there's kind of brash luxury now there is an argument that one the luxury brands market as opposed to the luxury goods market sort of jumped the shark a bit and that they got greedy.

24:32There's one theory which says they always had a policy that you ramped your prices up by sort of 6%, 7 % a year. I can remember when I first moved to London, and bear in mind, I was fairly skint, you could go to Harvey Nichols and buy some clothing at a kind of fairly sane price. and i'm sure you can still if you root all around but all that stuff uh has got more expensive than i've got richer over the course of my life and one of the theories is that that works perfectly well that six percent a year stuff until you have four or five percent inflation because if you add the two together people notice yes so you know ten percent inflation compounded people are going into a shop to buy their next pair of church's shoes and going, what the actual fuck, right?

25:28So there's a theory that it was a strategy that worked very, very well. The strategy of premiumization worked very, very well, but it depended on very low inflation. If you wanted to put your prices up by 5%, 6%, 7 % above inflation every year, it helped to have really low inflation because people then didn't notice that much. There's also, of course, an interesting thing, which is that the cars in London used to be a major status play in the 80s and 90s. What car you drove was something you talked about and, you know, it showed off. Status currencies move. So they might, you know, they might, you know, I mean, I would argue that higher education has become a status currency to a large extent.

26:15And then experiences. and experiences have become this is one of my favorite experiments which um was you take an audience of 200 300 middle class londoners and you ask them okay how many people here have been to machu picchu yeah and undoubtedly you know a small little you know there'll be 10 15 hands go then you say how many of you mean to lincoln cathedral and two people put up their hands and they go, but I was born in Lincoln. I went to university in Lincoln. I don't know a scene. I only remember one person who's made the trip to Lincoln from London to look at Lincoln Cathedral. Lincoln Cathedral, first of all, you don't get oxygen deprivation.

27:00It doesn't require a long haul flight to Peru. It doesn't require a grueling trip up some bloody mountain. and not dissing the Peruvians here, but, I mean, architecture, Lincoln Cathedral, shit's on Machu Picchu. Fascinating fact for a Dubai person, by the way, when they built the Burj, Burj Khalifa. It is called the Khalifa. It was the Burj Dubai, but then... That's right. The neighbors forced them to rename. Abu Dhabi. No, Abu Dhabi bailed them out. Bailed them out. Yeah. That was the lovely... did you ever see um andrew schultz doing his live i've seen a few of his clips so he's there in abidami is there anyone here from dubai how does it feel to be among real money anyway sorry that guy's a genius by the way absolutely fantastic comedian um but when the burge was built uh when it reached a certain height when it overtook Patronus Towers or whatever else it was.

28:05The first time in world history that the tallest building in the world had been in the Middle East since 1311, when the Spire of Lincoln Cathedral overtook the Great Pyramid in Giza. So this building in 1311 was the tallest building in the world and held that record until the spire fell down in a lightning strike or something, about 200 years later it's still it's still you walk up the hill this is you know this is transcendent sod all that french shit i mean you know this is transcendent stuff the lincoln cathedral was just and there's a castle right next to it i mean durham's pretty good but lincoln cathedral you know is is is next level and so you get this status thing which is my brother realized it when he was sitting in a hotel room in Singapore and they had a competition.

28:59And the second prize was a fortnight in Bali and the first prize was a week in Lofton.

29:08Everybody in London wants to go to Bali and everybody in Singapore wants to go to London. And you realise it's actually scarcity, signalling to some extent, hasn't it, that we go on these long-haul holidays, not because they're intrinsically better. I'm 60. Do you want to fucking dick around? Don't dick around with a horse fat and stuff. okay january february march piss off to the canary islands or madeira short haul flight lovely weather nice people nice food okay doesn't have any signaling value can't go oh we went to lanzarote everybody moves away right but i mean you can spend three thousand quid having a much worse holiday and so you know you're absolutely right that experiences travel being well traveled we demand campaign uh for expedia about exactly that which is travel yourself interesting that effectively gives you bragging rights.

29:56And of course, as travel becomes less and less expensive, the journeys have to become more and more tortuous for them to acquire any status gains. But I'll still give you that tip. You just piss off to the Canadian. If you're British, just piss off to the Canadian. It's fine. It's lovely. It's fantastic, right? Also, you know, it's an island. There are beaches. Hire a car. You know, tootle around the place. Have a bit of an explore. It's a good holiday, isn't it? One of the coolest things I did in recent times, which I don't think I know anybody that has done it was when I went to Japan when I went to Tokyo so a handful of times per year they do the the main event for sumo wrestling and you can't just buy your way in because they give out the tickets like a lottery to people that apply to them and I think there is some reselling uh you know in the gray market where you can you can pay a premium to get access to this so i fortunately had a contact who was able to get the tickets which i paid for but it wasn't extortionate but then i was there watching this elite sumo wrestling tournament and it was one of the coolest things i've ever done effectively this is the interesting thing because of course there are a lot of very rich people and they're globally mobile so the extent to which expensive things confer status when a lot of the people who are very rich are actually completely random and often not very cool this is the problem perhaps for the luxury brands industry that in other words you you know in other words you're you're in danger of being associated with vulgarity rather than taste yeah um and there is the risk i think that some of those brands jump the shark and what you'll see now interestingly polen did you come across this bag brand it's they've got a shop in region street and it's basically very very high-end sort of 15 000 pound quality handbaggery and they're selling for like 500 quid now interestingly lvmh went and snapped them up recently and i think it's because they perceived it basically as a threat or or an opportunity but you're starting to see these craftsmanship led brands which are which are less overt now even even the replicas are so good now no no i know this is this is the problem you see and these things become ubiquitous and then you get the wrong user imagery and all those problems start to occur and did they just get a bit too greedy i think probably yes you know i mean the other thing is you always you always fall victim to this you know this sort of artisan undercurrent you know what you might call the farmer's market competition and there are some I also think, of course, the interesting thing with Hermes is they've gone to enormous lengths to prevent themselves being taken over.

32:45Because I think, you know, because... How have they done that? It's something to do with corporate governance structure where more or less everything has to be approved by a family member, even if they're a minority shareholder, so that it means that someone who did take them over wouldn't really be able to gain a controlling interest. It's some sort of not quite a poison pill defense but i mean for the most part they're yeah okay i'm sure i'm sure they have you know you know they're high-end sort of pieces of jewelry where the margin is pretty high but i mean they're still a absolute you know craftman purveyor of the stuff um and i don't know if you ever watch those people on youtube who basically take a box cutter a Stanley knife, as we call it, to expensive, not the Hermes stuff, but, you know, 20 ,000 pound bags.

33:40And they basically just cup through it. And yet, to be honestly honest, in terms of build quality and leather, there's nothing special here. You know, this is, you know, you could make this thing for 250 quid. and undoubtedly they possibly you know I think what you will see is you will start to see these more discreet brands now psychologically there's an element to me I had a lovely discussion about this with someone at work which is brands like Versace which is just I'm minted I don't care who knows it i've i've argued that the people who wear that are probably the happiest people where are you uh or the reason being that if you look at the people on this this is gets a bit philosophical um but the people who have to wear that discreet you know i'm just signaling to my fellow billionaires that i'm wearing a vicuna you know cardigan or whatever it may be nobody else on the street will know as far as they're concerned when i'm sitting in a starbucks i'm just some random punter, but this tiny group of people who know and are discerning will spot that it's a, you know, so-and-so purple label, vicuna, and whatnot, right?

35:01What problem with that? You're still worrying about what other people think. And I've often argued that I've always suspected that nouveau riche people are probably very happy because they have all the enjoyment of their wealth without the anxiety of giving any thoughts to how they might be judged. So there's an element there, which is, yes, you're a billionaire, you're buying your Vicuna cardigan, but deep down, you're still deeply anxious about how you may be perceived. Whereas the person who just goes and buys some bling-ass, you know, some item of clothing with machino in it in eight feet high legs.

35:41There's a certain wealth, isn't there, to not caring about the opinions of your fellow man you know that almost is is equivalent it's like moving to a low tax regime well you know about that yeah i mean you can move to a low tax regime you can move to a low rent regime or you can just acquire a certain independence of thought where you spend your money entertaining yourself rather than trying to impress others yeah well it's one thing i've noticed about being in dubai is you there's always going to be somebody there that has so there's no do you always you can't compete there's just people can you count a signaling do you buy like go around in a 2 cv and just pretend not to care about all that stuff i think there's more people do that now you think more people are like yeah just because i remember when i first moved there i would there was this period where you know i got the watch you get the car like you start to buy you know some clothes and then you're just like i just don't care anymore and then because because you can't win yeah for me now my it's like my physique does the talking you know i just it's very minimal sometimes i won't even wear a watch anymore and it's just it's very plain very simple very interesting i mean some because i mean there's the other thing you probably have is that you get a very different patterns of expenditure on luxury goods among men particularly if you have a culture where everybody's new from somewhere else right two combinations there's a wonderful paper about this, which is why Neiman Marcus launched it, effectively was created in Dallas, not in Boston.

37:13So there's new money. There's new arrivals who can reinvent themselves. And you tend to find there's also a surplus of men because the oil industry would create basically a gender imbalance. And so you tend to get quite a lot of macho luxury goods behavior when you get those free qualities because in a place like boston which is historically old money everybody knows who you are where you went to school all that weird bostonian snobbish stuff and so if you turn up there in a massive you know pair of moschino sunglasses if i wandered around in monmouth where i grew up you know town of about what 12 000 people recovering from terrible floods by the way if anybody's feeling charitable um uh if um if you know if i wander around there and kind of machine-made everything yeah i'm absurd austin is a bit like that as well i think well is that is that old money or new no i just don't think you because it has huge huge influxes of people yeah i think there's a lot of people have moved there with a lot of money yeah but there is not a show-off culture there not like in comparison you know miami which is like no no i i find that quite refreshing in a way just because it's so nakedly honest you can't dislike it in a way but also you have that nerd culture don't you which is kind of you know it's it's it's all about you know effectively you know what you've done not what you owe you see yeah what you've built what you've built yeah yeah i know that's actually and also possibly you you're overlaying that on texan culture which can be you know a bit you know a bit different as a work in a way as well but i'm now i find that fascinating the fact that in different places obviously you get luxury goods in cities because people arrive there from somewhere else no one knows who they are they're then anxious about how they present themselves yeah yeah if you if you're some elderly aristocrat in uh you know in a small town in the uk you can go around dressed like a tramp that that that's how old money americans often behave you know you can just go around you know you know basically doing what the hell you like um and so it's fascinating to see the effects because it is very similar to signaling in nature like the peacock's tail or you know the elk's antlers it's a similar thing it's a costly signal you know and because part of the problem was if you get into this business where the luxury brands start selling you can't blame them you attach your brand to you know things like lipsticks which although very expensive are affordable by a very large swath of the population and you maximize the success of that by making the branding very overt on those products so it becomes very very visible then there is a there is a danger that your cachet over time just becomes diluted i mean it's so you know obviously you know it's a bit like catwalk fashion.

40:13The market for catwalk fashion is minuscule, but you do the catwalk fashion for the halo effect it has on your ready-to-wear sales and on your lipstick sales and your perfume sales and everything else. Obviously, I mean, it's all champagne to an extent because also there's the question of gift giving. People want to give gifts where it's obvious that they've spent some money. And so a lot of those things are Veblen goods. In other words, the expensive nature of them is what confers value on them. But you're absolutely right. There is a danger that what will happen is people will see that because the internet has made all that stuff really, really readily available at any time and at any place to any body, some of the sort of artificial scarcity of that stuff was geographical.