Freeman Dyson in the report from the 2001 World Economic Forum defined the Precautionary Principle as "that if some course of action carries even a remote chance of irreparable damage to the ecology, then you shouldn’t do it, no matter how great the possible advantages of the action may be. You are not allowed to balance costs against benefits when deciding what to do."
Episode #283: Organization Change Management with Nicole Ripley
Episode #282: The Placebo and Nocebo Effects
Placebo (“I shall please”)
In the 14th century sham mourners were hired to wail and sob for the deceased at funerals. In 1785 the term appeared in New Medical Dictionary, and it first appears in English in 1832. One of the earliest placebo effects was discovered in 1794 by the Italian physician Gerbi, who rubbed worm secretions on an aching tooth, relieving pain for one year. The first clinical trials were done in 1832, in Russia.
The placebo effect has been documented to have 15% - 72% efficacy effect, documenting the power of suggestion.
David Wooten, author of Bad Medicine, estimates that one-third of the good done by modern medicine is the placebo effect. He adds, too bad bloodletting, purging, and emetics weren’t tested against the placebo effect, would have resulted in less harm.See Episode #178 for our show on Bad Medicine.
Nocebo (“I will harm”)
The Nocebo effect are the unpleasant symptoms patients may suffer as a result of being made aware of potential side effects of a treatment they are to receive or a procedure they are to undergo. Doctors hide their ignorance with impressive-sounding Latin terminology, such as idiopathic—the cause of the disease is unknown. We discussed this article from Cosmic Core, Article 241: Human Life—Health & Illness—Part 3—Placebo Effect & Health Studies, which discusses Dr. Lewis Thomas, among others. Dr. Lewis Thomas (1913-1993) was an American physician, poet, etymologist, essayist and researcher who became Dean of Yale Medical School and New York University School of Medicine and President at the Memorial Sloan-Kettering Cancer Center in New York. Dr. Thomas tells of one physician who regularly rid his patients of warts simply by painting a harmless purple dye on them. He feels that explaining this small miracle by saying it’s just the unconscious mind at work doesn’t begin to do the placebo effect justice.
The placebo effect is one of the most striking examples of idealism – that is, mind or consciousness creates reality; or physical reality is created by consciousness. We also discussed the article “The weird power of the placebo effect, explained,” from Vox, by Brian Resnick (July 7, 2017), documenting six placebo effects. In Dan Ariely’s book, Predictability Irrational, chapter 10 is: “The Power of Price: Why a 50-cent aspirin can do what a penny aspirin can’t.” See Episode #43 for our interview with Dan Ariely. Another book that contains information on the placebo and nocebo effects is A Pinch of Salt, by Theodore Dalrymple (real name: Anthony Malcolm Daniels). He has written many books on medical issues, and his time as a doctor working in a UK prison. The ethical dilemma for doctors of the nocebo effect: should the need for honesty trump the ethical injunction to do no harm? Rabbi Lapin points out that the 4-minute mile run by Roger Bannister in 1954, and the successful climb to the top of Mt. Everest in 1953 were both an example of how a lot of barriers are mental, not physical. He says: “We are predominantly spiritual creatures with a physical outfit—souls with a body.” Leading us to ask…
Are expensive consultants just a placebo?
Bonus Content is Available As Well
Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.
Click the “FANATIC” image to learn more about pricing and member benefits.
Here are some of the topics and links Ron and Ed discussed during the bonus episode this past week:
Robert Cross (Episode #35 guest), pricing expert, Chairman at Revenue Analytics, Inc., great article on LinkedIn: “Don’t Panic—The Coronavirus Will Peak mid-April: https://www.linkedin.com/pulse/dont-panicthe-coronavirus-peak-mid-april-robert-cross/
Ron’s dad debunks the NYT article, Will the Coronavirus Cause a Recession? Keep Your Eye on the Barbershops: https://www.nytimes.com/2020/03/03/business/economy/coronavirus-recession.html
Episode #281: Free-Rider Friday, February 2020
What happens when there is just TOO MUCH news to talk about. We free-ride off of the best, most timely topics.
Let’s start off with Ed’s topics:
Don Boudreaux’s Bonus Quotation of the Day from February 25, 2020. It’s from Thomas Sowell’s 1980 book, Knowledge and Decisions: “Ideas are everywhere, but knowledge is rare.”
From Reason, “Michigan Lawmakers Overturn a Bad Regulation Restricting Access to Cancer Treatments,” November 18, 2019. “Certificate of Need” are con laws and should be scrapped.
From the Los Angeles Times, “The new burger chef makes $3 an hour and never goes home (it’s a robot),” February 27, 2020.
And relatedly, from Willamette Week, “Oregon Labor Union Wants Voters to Limit Grocers to Two Sell Checkout Stations Per Store,” September 4, 2019. The Neo-Luddites are at it again!
Tom Peters tweeted: “Every team in the world is very diverse. Think of symphonies or sports teams or classrooms. The good conductors/coaches/teachers treat every member differently every day.”
Here are Ron’s topics:
Hat tip to Paul Dunn, our VeraSage colleague, for sending me these two new subscription offerings.
First up, “Panera debuts $9/month unlimited coffee and tea subscription,” from Fast Company, February 27, 2020.
And this: “Compost your baby’s diapers through this subscription service,” Fast Company, February 27, 2020.
From The Economist, February 15, 2020, “The real-estate racket.”
Hat tip to Robert Wood, “Bob Iger steps down as Disney CEO. Bob Chapek replaces him,” CNN, February 26, 2020.
Deirdre McCloskey (Episode #6) in Reason, “Steal This Intellectual Property,” from the March 2020 issue.
Bonus Content is Available As Well
Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.
Click the “FANATIC” image to learn more about pricing and member benefits.
Here are some of the topics and links Ron and Ed discussed during the bonus episode this past week:
Episode #280: Subscription Pricing, Part III
What a show! The subscription pricing business model continues to evolve as do our thoughts on the topic.
Here are just a few of the topics and links we helped use to drive the conversation during Part III of our Subscription Pricing discussion.
Futurist Dan Burrus distinguishes between hard and soft trends. The Subscription Business Model is a hard trend, and every business is going to have to grapple with it, whether they adopt it or not.
Tien Tzuo dropped a “time bomb” on television—and the NFL—in his February 8, 2020 newsletter, titled “2022: The Last Year of Television?”
You can see the decline in ESPN subscribers here.
During segment two and three of the show, we had on previous guest, Justin Lake, @jlaketx (see Episode #245). We discussed how his business is adopting subscription-based pricing.
Subscription pricing comes to architecture, at Schimberg Group Architects, calling it “concierge architecture.”
Bonus Content is Available As Well
Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.
Click the “FANATIC” image to learn more about pricing and member benefits.
Here are some of the topics and links Ron and Ed discussed during the bonus episode this past week:
The Nissan Switch program, another automobile company offering subscription.
Episode #279: Subscription Pricing in Law Firms Featuring Matthew Burgess
Is subscription pricing having an impact on the legal profession? Based on our guest — Matthew Burgess — the answer is a resounding YES!
Let’s Start with Matthew’s Biography:
Matthew Burgess co-founded View Legal in 2014, having been a partner and lawyer at one of Australia’s leading independent law firms for over 17 years. Matthew’s passion is helping clients to successfully achieve their goals. Matthew specialises in tax, estate and succession planning, providing strategic advice to business owners and high net worth individuals, and recognised in the ‘Best Lawyers’ list since 2014 in relation to trusts and estates and in ‘Doyles’ either personally or as part of View since 2015 in relation to taxation. In 2017 he was also nominated as Tax Partner of the Year (Lawyers Weekly). In part leveraging off the skills he has developed working in the SME market space, Matthew has been the catalyst in developing a number of innovative legal products for advisers and their clients. As an author, Matthew is widely recognised as an expert in his field, who constantly creates bespoke revenue related strategies for the growth, management and protection of wealth. Matthew is regularly published in Australia’s leading monthly tax journal, The Tax Institute’s Taxation in Australia (11 articles since 2012) and the leading weekly tax journal, Thomson Reuters’ Weekly Tax Bulletin (20 articles since 2012). He is the author of 23 books, and is a Practicing Fellow at VeraSage Institute.
Here are Ed’s Questions from the Episode:
You have an interesting LinkedIn profile, going all the way back to grade school. Give us the Matthew Burgess background story.
While you were at Big Law, you read The Firm of the Future and you said it was a two-year journey, what was that process like? Was it a sudden realization, or just over time that you concluded this 18-hours billable per day was nuts?
So did you try to change it inside the firm for a while?
Was that the build-up over time, or was there one incident that was the coup de grâce for you?
Talk to us about the transition, did you have a plan for creating your own firm?
You founded View Legal in August 2014. Were you solo or did you have a couple of partners?
Before we move on to talk about subscription, I wanted to ask you about one more bullet point under “Our Approach,” since it involves my experience in project management in the IT space, having to do with quality:
Old View: Quality is defined by the law firm
View Legal: Quality is defined by the customer
There are a lot of lawyers, and other professionals, who have a big problem with that one?
You were well ahead of even Ron and myself and other thinkers at VeraSage on this whole notion of subscription. One of the things I heard at VeraSage Down Under when I did my presentation on subscription pricing was that it could not work in law. What does subscription mean to you, and how is that different from pure value-based pricing?
What other adjustments did you need to make it sustainable for both you and your customers?
The whole notion of allowing your price to justify your expenditure of costs in the future, this allowed you to create, from a technological perspective, a better experience for those customers coming on?
We might have to combine subscription with something Ron has talked about for years, the TIP Clause.
If you to break your revenue down by percentage of subscription vs. standard fixed pricing, can you give me a percentage on that?
It’s a dual-gated model, the movie theater popcorn situation?
If you look at other industries, such as Amazon Prime, or other subscription models that are out there, are there any that you look to that you’re using to base your future on?
Here are Ron’s Questions for Matthew Burgess:
Your “Why” [Purpose] at View Legal is laid out on your website under “Our Approach.” Describe how you came to your Why:
“At View Legal our mantra is to build the firm our friends would choose.”
Also, “OUR VISION”:
“To achieve our vision, we have set out to fundamentally and radically revolutionise access to high quality legal advice, in our areas of deep specialisation – structuring, tax, trusts, asset protection, business sales, estate and succession planning.”
In a table below the Vision, you contrast the “Old View” of law firms with that of View Legal, with “significant inspiration provided by VeraSage. Partly adapted with permission of George Beaton, Beaton Capital, 2014.” We could spend the rest of the show on this table, but I just want to ask you about a few of the items.
Old View: Bill clients on hourly rates (or various, increasingly elaborate, permutations on the theme) and have no particular interest in client perception of value
View Legal: Customers provided up front ‘SPS Guarantee’ – that is service and price satisfaction is Guaranteed with all work undertaken following upfront fixed pricing
Explain how the guarantee works and what impact it has had on your customers.
When the trigger is pulled by a customer, and you do have to compensate the customer, one of the benefits is you get to fix the underlying problem that happened. Has that been your experience?
Having that guarantee does make you more selective about who you take on, doesn’t it?
Another item:
Old View: Revenue growth the #1 goal
View Legal: Exceeding customer expectations #1 goal
Another one on this table I just love, since diversity is such a hot topic right now in the professional firm space, you contrast:
Old View: Constant focus on the ‘need for diversity’ of gender
View Legal: Only focus on diversity of thought
And I love this one:
Old View: Intellectual property is how we make money and should be guarded jealously
View Legal: Intellectual property is how we create trust and should be shared freely
From Ron: I love that philosophy because I think Paul Arden wrote this in one of his books: I give away all of my intellectual capital because that forces me to replenish it.
View Legal participates in B1G1, 1.2 million+ impacts on your website, as of this morning. Our VeraSage colleague Paul Dunn is involved with B1G1. Describe that, and how it is seen by your customers, team members?
You’ve written 23 books. How many of those are children books?
One of those books, which I just loved, is The Dream Enabler (2014). Ed and I are going to do a show on inequality, and you point out in there that the most common problem faced by high net wealth families is alcoholism? Is that true?
You cite the rule “rags to rags in three generations:”
1st generation makes the money
2nd generation holds or keeps the money
3rd generation loses the money
And you quote Warren Buffett: “A very rich person should leave their kids enough to do anything, but not enough to do nothing.” How do you think about inequality? Does it trouble you?
You also sent me a copy of your Best Ever 101 Lawyer Jokes [2015], and I love the Warning on the cover: “Content May be Considered Offensive (Particularly by lawyers!).” My favorite joke in there is: How many lawyer jokes are there? And people will inevitably respond with, “Millions, infinite.” No, there’s just one, the rest are true stories.
Need more information?
This was a GREAT episode, no doubt. We also have another episode on a law firm that uses subscription pricing, #274.
Bonus Content is Available As Well
Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.
The bonus episode after Matthew Burgess featured……..Matthew Burgess! He was able to stay on with us for an additional hour and it was just as great as the first hour.
Click the “FANATIC” image to learn more about bonus pricing and member benefits.
Episode #278: Memorable Mentors — Clayton Christensen
We paid tribute to Clayton Christensen as a Memorable Mentor in this episode. Buckle up because his contributions were vast and made a big impact.
Clayton Christensen, R.I.P. [April 6, 1952 – January 23, 2020 (67)]
From Wikipedia:
After graduating from high school in 1970, Christensen matriculated at Brigham Young University (BYU). While at BYU, he took a two-year leave of absence from 1971 to 1973 to serve as a volunteer full-time missionary for the LDS Church. He was assigned to serve in South Korea and became a fluent speaker of Korean. Christensen returned to BYU after completing his missionary service, and in 1975 graduated with an Honors B.A. summa cum laude in economics. Upon graduating, he won a Rhodes Scholarship and spent two years studying applied econometrics at Oxford, receiving an M.Phil. in 1977. Christensen then returned to the United States and moved to Harvard University to pursue an MBA at HBS, which he earned with high distinction in 1979. He was a professor since 1992 at HBS. He’s survived by his wife, Christine, and 5 children.
His eldest son, stands 6 ft 10 in tall and played college basketball at Duke University, where he was a member of Duke's 2001 National Championship team.
He wrote: Why I Belong, and Why I believe, about his Latter-day Saint faith, and also: The Power of Everyday Missionaries: The What and How of Sharing the Gospel.
In the spring 2010 he had been diagnosed with follicular lymphoma, a cancer similar to that which had killed my father. Immediately after starting to write his book, How Will You Measure Your Life?, with his cancer in remission, he suffered a stroke, and had to learn to speak again, one word at a time.
Here are some of Ron’s favorite concepts from Clayton:
“You should not have an opinion, the theory should have an opinion.”
“A good theory doesn’t change its mind. It allows you to categorize, explain, and predict Trying to predict the future by collecting data is like driving a car only looking in the rear-view mirror.”
“Conclusive data is available only about the past. If you want to peer into the future, you need a theory.”
The appeal of easy answers—strapping on wings and feathers—is incredibly alluring. Ostriches have wings and feathers, can’t fly. Bats have wings, no feathers, great fliers. Flying squirrels have neither.
Look for the anomalies in your theories.
Investors need to be patient for growth but impatient for profit. Capital that seeks growth before profits is bad capital. Both types occur. When a good strategy has been found, investors need to change: impatient for growth and patient for profit.
Culture in any organization is formed through repetition—it’s like an autopilot, you have to program it.
Here are the books by Clayton we discussed:
The Innovators Dilemma, 1997
Andy Grove stood up with a copy at COMDEX “most important he’d read in a decade.”
A true disruptive innovation, appealed only to a niche market, appeared less attractive to the incumbent it eventually usurped.
Steve Jobs regularly quoted the book, so did George Gilder.
The Economist named it one of the six best business books ever published.
Competing Against Luck, 2016
This is all about the "Jobs to be Done" theory of creating value.
I'm still processing it for professional knowledge firms, as it seems to be more focused on products than knowledge work.
I think it's a useful framework, and I'm trying to reconcile with Pine and Gilmore's The Experience Economy value curve, where the top is transformations.
Given Christensen definition of a "job" is customer progress, I think they might be talking about the same things. In summary, a job is defined as:
A progress that an individual seeks in the given circumstance.
Provides a solution where there are formerly inadequate or non-existent solutions;
It is more than simply being functional – there are important/emotional dimensions that are often more important than the functional aspects.
The cure in the flow of daily life. This is the key aspect – it is not about the characteristic of the customer, product attributes or new technology or trends.
Ongoing – it is not about a selling event.
The question then becomes, which language is more persuasive. I like transformations (or legacy) rather than jobs, at least for knowledge work.
The Prosperity Paradox, 2019
Alleviating poverty is not the same as creating prosperity. We can’t end poverty by focusing on poverty. I was bit surprised by how this book never just says that wealth is the only known antidote to poverty, and how poverty needs no explanation, it’s the natural condition of mankind. What needs explaining is wealth.
This book does explain how to create that wealth, by creating market-creating innovations that are sustainable. I believe Deirdre McCloskey, George Gilder, Michael Novak, among others, offer a better theory of how and why innovation occurs (McCloskey’s focus on rhetoric and Gilder’s on an information theory of capitalism, which is the most innovative theory I’ve ever read), at the macro level.
This book is more at the micro level, but it’s still a worthwhile contribution. I only wish it would have built a stronger moral and ethical case for free markets.
Extreme poverty has decreased from 35.3% in 1990 to 9.6% 2015, 730 million from China alone, 66.6% in 1990 to less than 2%. Yet in Sub-Saharan Africa poverty actually increased, from 1990, 282 million (55% of population), to 2013, 401 million (42% of population).
Since 1960, $4.3 trillion spent on developmental assistance in poor countries. Name one that’s developed because of aid? Not one, which I was also surprised the author’s never delved into.
I’ve always appreciated Clayton Christensen’s attachment to the importance of theory—there’s nothing more practical than a good theory! He’s also very precise in the words he uses, and in defining his terms, such as:
Prosperity: The process by which more and more people in a region improve their economic, social, and political well-being. A country can be rich, but not prosperous (e.g., the resource curse).
Innovation: A change in the processes by which an organization transforms labor, capital, materials, and information into products and services of greater value. They create jobs, profits, and change culture (innovation is not the same as invention, something new. Innovations are usually borrowed country to country).
Three types of innovation: Sustaining, efficiency, and market-creating
1. Sustaining: improvements to existing solutions on the market. Substitutive in character (Lipton Tea flavors, Camry best-selling Toyota), but don’t represent major growth in economy. Most innovations are sustaining in nature.
2. Efficiency: Do more with fewer resources, usually process innovations. Tend not to create jobs (resource extraction, fracking, fewer inputs, greater output). Both Sustaining and Efficiency free up cash for future investments.
3. Market-creating: create new markets that serve people for whom either no products existed or existing products were neither affordable nor accessible for a variety of reasons.
There’s not just one strategy (theory) for development. Japan, South Korea ($200 per capita income 1950s, $27,000 today; high suicide rate, 2.5 times OECD average; highest hospitalization for mental illness), Singapore (60 years ago, 1/5 GDP of sub-Saharan Africa’s), Taiwan, Hong Kong, all developed in different paths, but the common denominator was market-creating innovation.
The authors point out that Mexico has been mostly efficiency and sustaining innovations, but a serious lack of market-creating innovations.
There are a lot of examples of entrepreneurs who are making a dent in these poor countries with market-creating, from mobile phone networks, electronic payments and banking, health care, food, flooring, and many others.
Ultimately, market creating innovators Identify opportunities where there seemed to be no customers. It is difficult to run your ruler over things you can't see. Often, you will not be competing with any existing product, rather you are competing against apathy or nonconsumption.
They also deal with infrastructure, which is more a medium for moving value rather than creating it, and corruption. Corruption, like poverty, needs no explanation. What needs to be explained is why some countries have less of it than others.
Entrepreneurs are good at identifying nonconsumption, which is the authors’ theory for market-creating innovations. They conclude that “We can solve this problem. Not because we’re eternal optimists, but because we have done it before.”
I agree, there’s simply no excuse since we have a much better understanding of how wealth is created. But the focus on the “root causes of poverty” persist, which has always amazed me. What would we do if we learned the “root causes” of poverty? Create more of it?
Ultimately, the book recommends a reframing of the problem for developing countries focused on the following five principles, namely:
Every nation has a potential for extraordinary growth within it – this is referred to as nonconsumption.
Most products on the market today have the potential to creating growth markets when they make them more affordable.
A market creating innovation is more than just a product or service. It is a whole system that often pulls in new infrastructure and regulations and it has the capability of creating jobs.
Focus on pulling, not pushing to solve problems.
With nonconsumption, scaling becomes inexpensive. Once the opportunity is identified in nonconsumption, a business model can be conceived to make a product or service available to a large population of non-consumers, and from there scaling is relatively inexpensive.
But the poverty bureaucracy is entrenched, as the great movie Poverty, Inc. explains. Perhaps this book will get more entrepreneurs to innovate rather than simply providing charity. I hope so.
How Will You Measure Your Life?, 2012, Clayton Christensen, James Allworth, Karen Dillon
How can I be sure that I will be successful and happy in my career? My relationships with my spouse, my children, and my extended family and close friends become an enduring source of happiness? I live a life of integrity—and stay out of jail? (Jeffrey Skilling I knew of from our years at HBS was a good man).
“There are no quick fixes for the fundamental problems of life. I can offer you tools that I’ll call theories in this book. If I had tried to tell Andy Grove what he should think about the microprocessor business, he would have eviscerated my argument. Instead of telling him what to think, I taught him how to think.”
Incentives are not the same as motivation.
“Is this work meaningful to me? Is this job going to give me a chance to develop? Am I going to learn new things? Will I have an opportunity for recognition and achievement? Am I going to be given responsibility? These are the things that will truly motivate you.”
“You have to balance the pursuit of aspirations and goals with taking advantage of unanticipated opportunities. An emergent strategy.”
“I’ve had three careers: first as a consultant, then as an entrepreneur and manager, and now as an academic—none of which I planned.”
In his Staying out of jail chapter he quotes C.S. Lewis
“The safest road to Hell is the gradual one—the gentle slope, soft underfoot, without sudden turnings, without milestones, without signposts. “
“God, in contrast to us, doesn’t need tools of statisticians and accountants. No need to aggregate. His only measure of achievement is the individual.
“The only metrics that truly matter to my life are the individuals whom I have been able to help, one by one.”
Here are a few other resources regarding Christensen:
Podcast: tribute to Clayton, with James Allworth, co-author of How Will You Measure Your Life? https://stratechery.com/2020/exponent-podcast-its-been-a-week/
Article in Deseret News on Clayton, January 24, 2020.
Bonus Content is Available As Well
Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.
Click the “FANATIC” image to learn more about pricing and member benefits.
Here are some of the topics and links Ron and Ed discussed during the bonus episode this past week:
Episode #277: Free-Rider Friday, January 2020
Why does every Free-Rider Friday just FLY BY! This was a great show with LOTS of topics covered. Click play above to listen and use the show notes below to help guide you along.
Ed’s Topics For Free-Rider Friday
“The Economist as Scapegoat,” Russ Roberts, January 30, 2020, Medium.
“Return,” a poem by Russ Roberts, January 22, 2020, Medium.
“GDP and the Subscription Economy,” Tien Tzuo, January 24, 2020.
Now you can subscribe to firewood.
Clayton Christensen, RIP. See his views on the classroom of the future here. We will do a Memorable Mentor show February 7, 2020 on Clayton’s work.
Ron’s Topics For Free-Rider Friday
“Kobe Bryant’s ‘Letter to My Younger Self’ Holds a Lesson for Us All,” FEE, John Miltimore, January 31, 2020.
Russ Robert’s EconTalk episode on Honest Income, with Daniel Klein.
“Don’t Complain—Do!,” Rabbi Daniel Lapin, January 28, 2020, Thought Tools.
“UK offers $130K for software that can trace Bitcoin, Ethereum, and (hopefully) Monero,” Hardfork, David Canellis, January 20, 2020 [Hat tip: Robert Wood].
“Goodwill Sparks Deep Division, at Least on Balance Sheets,” Jean Eaglesham, January 21, 2020, The Wall Street Journal. [Hat tip: Hector Garcia].
Bonus Content is Available As Well
Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.
Click the “FANATIC” image to learn more about pricing and member benefits.
Here are some of the links Ron and Ed discussed during the bonus episode this past week:
“I, Coffee: Why You Should Thank 1,000 People for Your Cup of Morning Joe,” Barry Brownstein, January 6, 2020, FEE.
WSJ - Ignore the Fake Climate Debate - subscription needed
Socialist Venezuela Proposes To Privatize Its Collapsing Oil Industry
Coronavirus task force another example of Trump administration's lack of diversity
Episode #276: More Metric Mania
Episode #276: More Metric Mania!
What you can measure you can manage. Tying metrics to strategy has become critical in business, and this can create all sorts of moral hazards. An article from the September-October 2019 issue of Harvard Business Review explored some of these hazards in “Don’t Let Metrics Undermine Your Business,” by Michael Harris and Bill Tayler. Ed and Ron dig into this article and continue a long-standing conversation about metrics. Below are a few key points. Click play above to listen to the episode.
Strategy is abstract: metrics give it form. Strategy is blueprint: metrics are concrete, wood, drywall, bricks
Trap: focusing on the metrics that represent the strategy.
Wells Fargo opened 3.5M deposit and CC accounts without customer consent—cross-selling strategy (“Eight is great”). This scandal led to the following costs:
Initial fines ($185M)
Reimburse customers: $6.1M
Class-action lawsuit: $142M
2017, accrued $3.25B for future litigation expenses
2018, Fine by Consumer Financial Protection Bureau (CFPB) $1B, and Office of the Comptroller of the Currency (OCC)
CEO Timothy Sloan resigned March 2019
Wells Fargo Bank never had a cross-selling strategy—it had a cross-selling metric! Its strategy was to build long-term relationships but it was hijacked by numbers.
The authors describe this as surrogation: mentally replace a strategy with metrics. They lay out three strategies for reducing surrogation:
Get people responsible for implementing strategy to help formulate it
Loosen the link between metrics and incentives/compensations
Use multiple metrics—no single metric captures the strategy
“As long as measurements are abused as a tool of control, measuring will remain the weakest area in a manager’s performance.”
Ed and Ron also answered the following email question from Jean:
Ron & Ed -
As a fan of your podcast, I thought I would reach out with my question. I co-founded a firm 3 years ago to provide accounting as a service. We target small & mid-size companies who need all the skill sets of a larger company accounting department without all the people. We are growing and would like to add profit sharing and/or bonus to our compensation. I am interested in metrics that other firms use for measuring profitability in general and for compensation. Do you have any recommendations?
Regards,
Jean
[See our Episode #243: Team Member Compensation for Ed’s formula on profit-sharing]
Other books and resources mentioned during the show include:
“I Wish Drucker Never Said It,” September 9, 2015 blog post by Bill Hennessy.
“The rule is simple: be careful what you measure,” The Guardian, February 9, 2008.
Ed’s blog post: “Rethinking Peter Block’s Questions,” VeraSage Institute, December 15, 2010.
The Sum of Our Discontent: Why Numbers Make Us Irrational, David Boyle.
Uncharitable (Civil Society: Historical and Contemporary Perspectives), by Dan Pallotta.
The Great Game of Business, Expanded and Updated: The Only Sensible Way to Run a Company, Jack Stack.
Episode #12: The Moral Hazards of Measurement.
Episode #243: Team Member Compensation.
Bonus Content is Available As Well
Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.
Click the “FANATIC” image to learn more about pricing and member benefits.
Here are the books Ron and Ed discussed during the bonus episode this past week:
You Are Richer than John D. Rockefeller - How much money would it take for you to live 100 years ago?
Why Is Every Streaming Service Using the Same Pricing Model? - Remember the not-so-long ago days when Netflix was the king of streaming services?
Episode #275: The Top 10 Books We Read In 2019
Did you read a good book in 2019? Ed and Ron sure did!
We read some GREAT books in 2019 and we went over them in detail during our show this past week. Click the audio link above to listen.
“I think we ought to read only the kind of books that wound and stab us. If the book we are reading doesn’t wake us up with a blow on the head, what are we reading it for.”
“A good book is the best of friends, the same today and forever.”
Here we are! Starting with Ed’s top 5:
Survivor’s Obligation: Navigating an Intentional Life, Chris Stricklin and Joel Neeb. You can listen to Episode #262 for our interview with Chris about the book.
The Coddling of the American Mind: How Good Intentions and Bad Ideas Are Setting Up a Generation for Failure, Greg Lukianoff and Jonathan Haidt.
Why Catholics Can’t Sing, Thomas Day.
Alchemy: The Dark Art and Curious Science of Creating Magic in Brands, Business and Life, Rory Sutherland. You can listen to our interview with Rory Sutherland on this book at Episode #267.
The Case Against Reality: Why Evolution Hid the Truth from Our Eyes, Donald Hoffman.
…and shifting to Ron’s top 5:
Cents and Sensibility: What Economists Can Learn from the Humanities, Gary Saul Morson, Morton Owen Schapiro.
Being Mortal: Medicine and What Matters in the End, Atul Gawande.
The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty, Clayton M. Christensen, Efosa Ojomo, and Karen Dillon
A Conflict of Visions: Ideological Origins of Political Struggles, Thomas Sowell.
The Experience Economy: Competing for Customer Time, Attention, and Money, B. Joseph Pine II, and James H. Gilmore
Bonus Content is Available As Well
Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.
Click the “FANATIC” image to learn more about pricing and member benefits.
Here are the books Ron and Ed discussed during the bonus episode this past week:
Loserthink: How Untrained Brains Are Ruining America, Scott Adams.
The Personality Brokers: The Strange History of Myers-Briggs and the Birth of Personality Testing, Merve Emre.
Socialism Sucks: Two Economists Drink Their Way Through the Unfree World, Robert Lawson and Benjamin Powell.
Improv Wisdom: Don’t Prepare, Just Show Up. Patricia Ryan Madson.
Caddyshack: The Making of a Hollywood Cinderella Story, Chris Nashawaty.
Episode #274: Subscription-Based Law Firm — Jon Tobin, Counsel for Creators
Certainly Lawyers Cannot Use The Subscription Business Model, Until They Can!
About Our Guest:
Jon Tobin is a graduate of the UCLA School of Law, where he studied intellectual property, business law and international law under the nation’s top-ranked practitioners. While at UCLA Law he served as one of two editors-in-chief of the UCLA Journal of International Law and Foreign Affairs. Before studying law he worked for years as a designer and software developer, so he knows what it means to work in creative industries and how things actually get done. He deals with matters involving copyrights, trademarks, software, design, licensing, business, art law and contracts. Jonathan speaks and writes regularly about legal issues facing technology and creative ventures and has given talks for the American Institute of Graphic Arts, the California Community Foundation, UCLA Law, and at a variety of design and technology conferences. Admitted to practice in California and before the federal court of the Central District of California.
Ron and Ed touched on a wide range of topics about Jon’s business model over the course of the hour-long show. Here are Ron’s questions:
Tell us about your history. You moved from a career in technology to law, and then saw how to combine them?
Did you ever work in a large firm before you started your firm?
You wrote a great article at Attorney at Work, “We Built an Affordable Subscription-Based Law Firm for Creatives,” where you discussed when you started practicing, you tried many things—seminars, consultations, etc.—but then landed on the subscription plans for businesses and created The Creators’ Legal Program. Where did you learn about the subscription model?
This model puts the relationship at the heart of the business doesn’t it?
Before we get into your pricing, one of the questions you must get from your colleagues is “How do you make money like this? What if people keep calling your, or camp out in your office? How do you answer their objections?
You set a $95 per month price level; it’s very reasonable, and it’s quite a constraint. That forced you to do some very innovative things, didn’t it?
You developed your own system to handle the volume of subscriptions. Did you develop your own applications, or were you able to buy program off-the-shelf?
You’re specialized—creative people/industries (writers, artists, app developers, clothing companies, architects). This is a great niche because it’s growing. Talk about how you market to them.
It’s easier to do subscription if you’re niched as opposed to a general practitioner, isn’t it?
Pricers have a saying: Innovate for growth and price for profit. In your article, you discussed adding additional services over time, such as live Q&A, free trademark services, and some services you’ve taken away. Talk about the process you use to decide what to keep and what to remove?
If one of your customers comes to you with a service that’s not covered by the subscription, how do you price for all the other services lawyers do?
What about litigation? [No chance!]
Could you see how it would be possible to do litigation under this model?
When you decide to provide the noncovered service for free, you’re pricing the relationship and not the services. You’re investing in the relationship and building lifetime value.
You also discussed metrics and KPIs. The subscription model demands different metrics/KPIs—they are future directed, not backward looking. You are obsessed with:
Lifetime customer value
Net Promoter Score
Churn rate
Are there any others you’ve found valuable?
Do you find that 20% of your customers utilize 80% of your resources, and many others are paying for that peace of mind?
Have you found other things you can provide to those who underutilize your services?
You wrote you want to move from hundreds of members to tens of thousands. How scalable is this model, Jon?
What advice would you give to a legal firm wanting to convert, or experiment, with this model?
…and here are Ed’s questions:
Explain your customer in-take process? Do people come to you with an event, or do they just want access to a lawyer?
You have four services listed on your website, are the other three services included if you join the subscription service?
Have people come to you with an event, join, discuss the issue with you, and then leave?
You flipped the model, charging for the consultation rather than giving it away in order ot get the services.
Have you found that you don’t need a large customer base, or are you looking for a larger customer base given your price point?
Are you comfortable at the level you’re at, or do you and your partner have plans to expand
You’ll stay in your niche, and build additional services for creative people?
When you refer customers to other firms outside of your niche, do you get referral fees?
Are you trying to develop relationships with other firms that practice within this model?
Have you given any thought to offering different levels to your subscription pricing?
Options would allow you to innovate for growth.
What were some of the unintended benefits you found in practicing this way?
How long have you been around, when did you start your firm? [March 2013, brought partner on 2016, subscription revenue became significant part of the revenue around 2018].
I notice you have a blog on your website. Do you provide those posts to your members before they go public?
Let’s talk about one of your posts, “What Does California AB5 Do?” Give us the background of this law.
What should businesses do because of AB5?
The provisions that affect Uber and Lyft are delayed until 2023, is that right?
One of the articles you wrote talks about LegalZoom (“LegalZoom Alternative: Businesses Search for the Ultimate One”). What are your thoughts on LegalZoom?
Bonus Content is Available As Well
Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.
Click the “FANATIC” image to learn more about pricing and member benefits.
Episode #273: 2019 — The Year in Review
Ed and Ron looked back at 2019 and discussed their favorite TSOE shows, guests, and discussed notable people we lost during the year.
RIP: Gone, but not forgotten
Tim Conway, Conway died on May 14 at the age of 85.
Don Imus, 79, Dec 27th.
Georgia Engel, The Mary Tyler Moore Show star died on April 12, her talent agent Jackie Stander confirmed to PEOPLE. She was 70. Also on Everybody Loves Raymond.
Katherine Helmond, Helmond, who famously portrayed mother Mona Robinson in ABC’s Who’s The Boss? for eight years and Jessica Tate on Soap, died on Feb. 23 of complications from Alzheimer’s disease at her home in Los Angeles. Also on Everybody Loves Raymond.
Doris Day died on May 13. She was 97.
Ken Kercheval, Kercheval, the actor best known for his longtime role as Texas businessman Cliff Barnes on the CBS soap opera Dallas, died on April 21. He was 83.
Carol Channing, the saucer-eyed, gravelly voiced Broadway barnstormer whose offbeat personality and marquee value fueled such Golden Age musicals as Gentleman Prefer Blondes and Hello, Dolly!, died on Jan. 15, her publicist B Harlan Boll confirmed in a statement to PEOPLE. She was 97.
Peter Tork, Peter Tork, the blues and folk musician who shot to stardom in 1966 as a member of the Monkees, died on Feb. 21. He was 77.
Daryl Dragon, Daryl “Captain” Dragon — half of the legendary 1970s pop duo Captain & Tennille — died on Jan. 2, 76.
Denise Nickerson, The actress, best known for playing the gum-chewing Violet Beauregarde in 1971’s Willy Wonka & the Chocolate Factory, died on July 10. She was 62.
Beverley Owen, Owen, best known for playing the original Marilyn Munster on season 1 of The Munsters, died in late February. She was 81. Her costar Butch Patrick, who played Eddie Munster, announced the news on Facebook on Feb. 24, writing: “Beautiful Beverly Owen has left us. What a sweet soul. I had the biggest crush on her. RIP Bev and thanks for your 13 memorable Marilyn Munster episodes.”
Herb Kelleher, 87.
David Koch: The billionaire industrialist and philanthropist died on Aug. 23 at 79 after “many years of fighting various illnesses,” according to his obituary. Koch had assets worth nearly $50 billion.
T. Boone Pickens, 91.
Ross Perot, 89.
Lee Iacocca, 94.
John C. Bogle, 89, Mutual Fund Giant.
Henry Bloch, 96.
John Paul Stevens, The former Supreme Court Justice died on July 16. He was 99. Stevens, who was appointed by President Gerald Ford in 1975,
Gloria Vanderbilt, CNN’s Anderson Cooper confirmed the death of his mother — the heiress, socialite and fashion icon Gloria Vanderbilt — on the network on June 17. She was 95.
Paul Volcker, 92.
John Dingell, a Michigan Democrat and the longest-serving member of Congress in U.S. history — who in recent years delighted his 264,000 followers on Twitter with biting commentary and wit — died on Feb. 7 at home in Dearborn. He was 92.
Carol Spinney, Big Bird, 85.
Ken Baker, Ron’s Brother, R.I.P.
Our Top 5 Favorite Shows with Guests
Episode #257: Third Interview with George Gilder Sep 10, 2019
Episode #262: Survivor’s Obligation — Interview with Chris Stricklin Oct 15, 2019
Episode #263: Interview with Andy Armanino Oct 21, 2019
Episode #267: The REALLY REAL Second Interview with Rory Sutherland Nov 19, 2019
Episode #226: A Priest and a Rabbi... Jan 28, 2019
Our Top 5 Favorite Shows on Topics
Episode #255: The Soul of Silicon Aug 26, 2019
Episode #252: On Rory Sutherland's Book - Alchemy Aug 5, 2019
Episode #233: Pricing at Starbucks March 18, 2019
Episode #250: INFLUXUS RECIPROCI FALSUM Jul 22, 2019
Episode #225: The Real Monopolies: Occupational Licensure Jan 21, 2019
Our Top 5 Most Popular Shows from the Audience
Ron’s Podcast List
Uncommon Knowledge, Peter Robinson
Free Thoughts
The Tom Woods Show
Conversations with Bill Kristol
EconTalk
Conversations with Tyler [Cowen]
Hayek Program Podcast
Planet Money NPR
NPR On Point
Cato Events Podcast
The Remnant [Jonah Goldberg]
Rabbi Daniel Lapin Podcast
Reason Podcast
The Editors (NR)
Mad Dogs and Englishmen
Conversations with Nick
The SoHo Forum Debates
Bonus Content is Available As Well
Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.
Click the “FANATIC” image to learn more about pricing and member benefits.
Episode #272: Free-Rider Friday, December 2019
Our Last Free-Rider Friday of the Decade is Now Available! (…and our first LIVE show of the year this coming Friday)
We had a great conversation and talked through quite a few topics in the grand tradition of Free-Riding with the news. Here are Ron’s links from the show:
Coke’s New Subscription Offering: https://www.zuora.com/2019/12/20/cokes-new-subscription-signals-the-end-of-advertising/
“Why Is Black Friday Called Black Friday?”, Jon Miltimore, FEE, November 28, 2019: https://fee.org/articles/why-is-black-friday-called-black-friday/
“The panic button,” The Economist, November 30, 2019: https://www.economist.com/science-and-technology/2019/11/28/an-emergency-landing-system-that-passengers-can-activate
“Turning a Page and a Brin,” The Economist, December 7, 2019: https://www.economist.com/business/2019/12/05/alphabet-turns-a-page-and-a-brin
“The everything-that-shines store, The Economist, November 30, 2019: https://www.economist.com/business/2019/11/28/lvmh-tests-the-limits-of-luxury
Here are Ed’s links from the show:
The Terrifying Experience Of Trying To Fundraise As A Woman Candidate
Arby’s Launched a Subscription Box, and It Sold Out in Less Than an Hour
From economist Steven Landsburg’s blog, The Big Questions, "Life Lessons"
Don’t forget that you can subscribe to The Soul of Enterprise in your favorite podcast player so that you never miss an episode.
Episode #271: Interview with Dr. Keith Smith, Co-Founder, The Surgery Center of Oklahoma
This was an unbelievable show with eye-opening insight into medical pricing practices!
Dr. G. Keith Smith is a board certified anesthesiologist in private practice since 1990. In 1997, he co-founded The Surgery Center of Oklahoma (SCO), an outpatient surgery center in Oklahoma City. SCO is owned by over 50 of the top physicians and surgeons in central Oklahoma. Dr. Smith serves as the medical director, CEO, and managing partner while maintaining an active anesthesia practice.
The free-market focus of the Surgery Center, the innovator of this free market model in the U.S., has gained the endorsement of policymakers and legislators. Dr. Smith hopes as many facilities as possible will adopt a transparent pricing model, a move he believes will lower costs for all and improve the quality of care. Dr. Smith is also the co-founder of the Free Market Medical Association. The association provides a platform where buyers, both individuals, and employers, who are seeking high quality, affordable healthcare can find free-market minded sellers, both physicians, and facilities.
Dr. G. Keith Smith is a board-certified anesthesiologist in private practice since 1990. The Surgery Center of Oklahoma is owned by over 50 of the top physicians and surgeons in central Oklahoma. Dr. Smith serves as the medical director, CEO and managing partner while maintaining an active anesthesia practice.
Here are Ed’s questions from the show:
Share the origin story of The Surgery Center of Oklahoma.
You mentioned in your podcast with Russ Roberts that you have about 300 companies that engage with you with self-insurance. Are they small or large companies?
Do you fear that government intervention might come along someday and make what you do illegal, or a full-on single payer system?
Do Americans really pay the most for healthcare, or is it all these shadow prices that appear on the Explanation of Benefits form?
Do you think your model could be Uberized, an app that could connect people who need surgeries with physicians? [Yes, check out the Free Market Medical Association, FMMA.org, shop health tab].
Here are Ron’s questions from the show:
In 1977, the Bates case was decided by the Supreme Court, based on a law firm that published prices, [which opened up advertising for professional firms]. I’ve got to imagine that you’ve drawn arrows because prices are published front-and-center on your website?
[The only organization that copied Dr. Smith’s website, without permission, is UCLA].
Your Website shows a Hip replacement = $15,499 (Hernia = $3060), and it’s all in, isn’t it?
Dr. Smith mentioned two clearing houses for medical prices Atlas Billing Company and the other is the Free Market Medical Association [FMMA.org, shop health tab].
How can you do it so cheaply, or a better question, why are others charging so much?
You haven’t raised base prices in 20 years, is that right?
And the fascinating thing is your Surgeons make more than any other facility?
You can’t just compete on price, but also quality. Because your prices are so low, quality is even more salient? How do you convey your quality? With metrics: infections (yours was 0% in a prior year), readmissions, etc.?
You said in the EconTalk episode: “If something doesn’t go well, we don’t make more money?” Explain how you handle surgeon errors.
You gave another example of a guy who had a Hernia operation, the guy goes back to work and lifts, destroys repair, and you waived price and had him just pay the costs of supplies.
You also reduce the surgeon’s fee when they mis-diagnose a patient?
What about the poor who can’t even afford your low prices. As you say, at current prices, we’re all poor!
Here are a few additional resources that we touched on during the show:
Dr. Keith Smith’s interview with Russ Roberts on EconTalk.
Russ Robert’s article, “Health Care Without (much) Government,” November 21, 2019.
Russ Robert’s post-mortem on his interview with Dr. Keith Smith.
Bonus Content is Available As Well
Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.
For this bonus show we were fortunate enough to continue our conversation with Dr. Keith Smith. Click the “FANATIC” image to learn more about pricing and member benefits.
Episode #270: Communist Humor
Karl Marx wrote that “The final phase of a historic political system is comedy.”
Did the telling of jokes tumble the old Soviet system?
George Orwell wrote that “Every joke is a tiny revolution.” Jokes were the communist system’s jazz, the music of the oppressed. Jokes eased psychological pain; helped forge trust between contemporaries; helped make sense of their lives. Join Ed and Ron for a rollicking look at Communist Humor, and some of the better jokes that were told during its reign.
Listen now by using the audio link above!
Episode #269 — The Subscription Model in Medicine
What happens when a smart doctor recognizes that there is a better way?
Is it possible for family physician to operate under a subscription-based business model, priced below what you pay for your mobile phone service? What about services not covered by the subscription? Could those be priced with full certainty and transparency?
For episode 269, we had the pleasure of interviewing Dr. Paul Thomas, founder of Plum Health DPC. Dr. Paul Thomas is a board-certified family medicine physician practicing in Corktown, Detroit. His practice is Plum Health DPC, a Direct Primary Care service that is the first of its kind in Detroit and Wayne County. His mission is to deliver affordable, accessible health care services in Detroit and beyond. He has been featured on WDIV-TV Channel 4, WXYZ Channel 7, Crain's Detroit Business and CBS Radio. He has been a speaker at TEDxDetroit. He is a graduate of Wayne State University School of Medicine and now a Clinical Assistant Professor. Finally, he is an author of the book Direct Primary Care: The Cure for Our Broken Healthcare System.
Below are show notes and questions we asked our guest. Use these to help guide you along when listening to the podcast (embedded above).
Ed’s Questions
What is Direct Primary Care?
Based on an interview I saw you do, there’s no wait time for patients?
Why did you go this route—Direct Primary Care?
You were burned out in your residency. What was the moment that you said I can’t do what most people are signing up to do?
Most time patients do get with their doctors is spent with the doctor typing and facing a screen.
What are some of things that are covered in your clinic?
What you are capable of doing in your practice is probably 80-90% of what a healthy patient would need in a given year?
It would cost me personally about $840 in your practice. If you’re so cheap, why is healthcare so expensive?
It’s said America pays more than the average OECD country, but there’s no price transparency in the system, which inflates those prices, correct?
What are some of the barriers you see that are still in the way of physicians getting into DPC and patients being able to access DPC?
When you did start, did you consider other pricing models? Yours is based on age, but did you consider, for example, response times, or different services you would include and exclude?
Do you have any jumpers, and by that I mean people who pay for a month and then leave, then come back six months later?
You’re now also offering rates to small businesses in your area?
And the companies pay your membership as part of the employees benefit package?
You believe that patients should also have a catastrophic health insurance plan?
We don’t expect our auto insurance to pay for gasoline but we do expect our health insurance to pay for a blood test. It’s absurd?
I was struck that in your TedX talk you used the phrase “living my truth,” take us through that, what does that phrase mean to you?
Ron’s Questions
In your book, Direct Primary Care: The Cure for Our Broken Healthcare System, you cite a 2016 study performed by Medscape found 51% of physicians experience burnout. Burnout is defined as a loss of enthusiasm for work, feelings of cynicism, and a low sense of personal accomplishment. You felt this in your residency. How long did it take you to work up to 500 patients?
How did you market your practice, was it social media, word-of-mouth, press. I know you did a Tedx talk.
I know DPC is in the same family of Concierge Medicine, which has the reputation of being just for the elite, which isn’t true. But the DPC prices are usually less than a mobile phone bill.
On the cover of your book there’s a picture of you trying to catch sand through your hands. Can you explain that analogy?
You talk about technology and how there’s too much borrowing from Henry Ford’s assembly line, treating customers like commodities rather than human interaction. It’s not very efficient to sit and listen to your patient read you poetry. It is, however, highly effective. Would you agree with that?
You also talk how the average of GP doctors have 2,400 patients. Do you think this DPC model will alleviate this GP doctor shortage?
You talk about the growth of urgent care centers in the US is a symptom of a failed primary care system.
Do you feel that people who are not licensed could do some of the work now being done by physicians? What’s your view of occupational licensing and how it folds into this model/
You mentioned to Ed that insurance companies try to get as many dollars passing through the hands. They don’t seem to like the concierge or DPC models, not because they compete with actuarial based insurance but because they compete with pre-paid medical care. Did Michigan pass a law that made it clear that DPC is not an insurance product?
Just seems to be like insurance companies would like to block this model. Is that a fair statement?
There’s obviously some education going on with doctors with respect to DPC, but we also need to re-educate patients to see you even when they are healthy, not just when they are sick. Has that been an educational process to get patients to see you even when they don’t have an issue?
We talk a lot about the market share myth, that growth for the sake of the growth is the ideology of the cancer cell, not a sustainable, profitable business. You phrase it in your book as “Value over volume.” You must be asked a lot that healthcare is different than any other product or service we buy, how do you explain to people that it can be priced like other things we buy
Your model is restoring the sacred relationship between the patient and doctor. You’re bringing this back to the days of Marcus Welby.
I’ve read that most calls (82%) are received during normal business hours, that patients don’t abuse your time off. Has that been your experience unless there’s been an emergency?
Tell us about your new venture, www.startupdpc.com.
If you could wave a magic wand to reform healthcare, what would you do? [Price transparency and quality scores was Dr. Paul’s answer].
Bonus Content is Available As Well
Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.
Here are some links from our bonus show this week. The bonus show, all bonus links, and additional bonus material are available to our Patreon subscribers. Click the “FANATIC” image to learn more about pricing and member benefits.
So what did we discuss during the most recent bonus show?
Episode Reprise — Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays
[Editor’s Note: Some things are just too good not to share again. While our most ardent listeners are familiar with Episode #22, Scroogenomics, many may not be familiar with this specific show. This past Friday was Black Friday in the United States which means it’s time - once again - to talk about why you shouldn’t buy presents. Bah, humbug!!!]
Today, on Black Friday, and right before Cyber Monday—the biggest shopping days of the year—Ed and I thought it would be fun to discuss the interesting, funny, and thought-provoking book by Joel Waldfogel: Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays.
The author makes the case that the deadweight loss to the economy from gift giving, in 2007, totaled $12 billion, out of approximately $66.5 Billion spent (about 12%). Citizens Against Government Waste would classify Christmas as a wasteful government program.
Gift giving severs link between buying decision and item’s value to its user—the transaction actually destroys value. To add insult to injury, we are obliged to pretend to be grateful!
His complaint is not the level of spending or the consumption, but the waste.
We discussed the four ways you can spend money in the economy:
Former Congressman Dick Armey pointed out how difficult spending is in Category II (Gift), let alone Category IV (Government):
Every year, I worry and fret select the right birthday gift for my wife, Susan. Every year, try as I might, I manage to choose the wrong thing. If I can’t figure the needs and desires of the one person who is closest to me in the world and who I deeply love and care for, how can we expect the government to do a better job?
Three groups spend other people’s money: children, thieves, politicians. All three need parental supervision.
Hierarchy of value of gift giving
Aunts & uncles & grandparents = 75%
Parents = 97%
Friends =91%
Siblings =99%
Significant others = 102%
Further, we spend approximately 2.8 billion hours shopping in December. To put that number in context, the old USSR—before it imploded—spent 35 billion hours annually standing in line for everyday products and services.
Infographic from Deloitte’s 2018 annual holiday survey
Economist Ian Ayres said this about Waldfogel’s book:
Joel Waldfogel is one of the smartest and funniest economists on the planet. I think of him every time I start to unwrap a present. Buy Scroogenomics for your friends and family. It makes the perfect Christmas gift.
Episode #268: Free-Rider Friday, November 2019
Our Best Free-Rider Friday Yet!!!
Well, that’s our opinion anyway. It was a great show and flew by as usual with topics ranging from LASIK eye surgery to The Shining to the Pope. The show notes are below and the audio link above is ready for you to hit the play button!
Here Are Ron’s Topics:
New upstart Roadie plans to save money on the “last mile” of a parcel’s journey.
“A Brief History of The Shining,” Kyle Smith, National Review, November 9, 2019.
TSOE Listener Question from Courtney Deagon
Hi Ron, Ed,
Recently I've been wondering about the best progression for those in a pricing career.
Being fairly new to the field myself, and without it being a very established profession (especially here in Australia), it's hard to know what the path 'should' look like, particularly regarding education/qualifications.
I'd be really interested to hear your thoughts on traditional education (e.g. university degree) versus self-paced learning/learning by experience - what do you think are the essential educational/training activities someone in pricing should have?
I have heard the former is more suitable if you're expecting a career in a corporate environment, as opposed to running your own business.
To give a little context, I'm currently studying a business degree, but am starting to see why many consultants skipped this/find their degree isn't as useful to them as a business owner.
Really keen to hear your thoughts on this!
Cheers,
Courtney
Here Are Ed’s Topics:
FedEx responds to The New York Times article from Nov. 17, 2019.
“Pope Francis Owes It to the Poor to Be More Informed about Markets,” FEE, Antony Davies and James R. Harrigan, November 14, 2019.
“How Much Is An Active User Worth? Lessons From the Sale of Fitbit,” Subscribed Newsletter, November 8, 2019, Zuora.
Bonus Content is Available As Well!
Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.
Here are some links from our bonus show this week. The bonus show, all bonus links, and additional bonus material are available to our Patreon subscribers. Click the “FANATIC” image to learn more about pricing and member benefits.
So what did we discuss during the Free-Rider Friday bonus show?
“To save a life,” Obituary Robert McClelland, September 28, 2019, The Economist.
“Down the tracks,” The Economist, October 12, 2019.
“Against Safe Spaces, Kyle Smith, National Review, November 4, 2019.
Episode #267: The REALLY REAL Second Interview with Rory Sutherland
We are excited to welcome back on the show Rory Sutherland, Vice Chairman, Ogilvy in the UK. Rory has delivered several TED talks, along with many others, including our favorite, a Zeitgeist talk he delivered to Google. They are all incredibly thought-provoking, and rooted in behavioral, and Austrian, economics. In his spare time, Rory collects self-aggrandizing job titles.