Episode 342: Interview with Charles C. W. Cooke, Senior Writer for National Review

Ron’s Questions: Segment One

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so their organizations can thrive. I'm Ron Baker, along with my good friend and VeraSage Institute colleague, Ed Kless. And on today's show, folks, we have Charles Cooke, senior writer from National Review. Hey, Ed, how's it going?

Ed

Outstanding, Ron. Really looking forward to this conversation.

Ron

Me, too. Let me read an abbreviated bio: Charles CW Cooke is a senior writer for National Review, and the former editor of National Review Online. He is a graduate of the University of Oxford, at which he studied modern history and politics. He's the co-host of Mad Dogs and Englishman podcast, which he does with Kevin Williamson, also a previous guests on the show [Episode #322], and as a regular guest on HBO’s Real Time with Bill Maher, which I've got to ask him how he puts up with that. He is also the author of The Conservatarian Manifesto: Libertarians, Conservatives, and the Fight for the Right’s Future, which was published in 2015. He is also a roller coaster fan, so we'll definitely talk about that. Welcome to The Soul of Enterprise, Charlie Cooke.

I want to dive right into your book, The Conservatarian Manifesto: Libertarians, Conservatives, and the Fight for the Right’s Future. I have to tell you, I love the term. I know it's awkward. I know it's a mouthful, but I think it conveys the right spirit. And you write in the book that the term first appeared on your radar in 2006. And there's a fantastic insight, and I can't tell you how true I think this is: When I'm around conservatives, I feel like a libertarian. And when I'm around libertarians, I feel like a conservative. I was at a Libertarian Party event with Ed, and I was sitting at the table and we were all talking about what we were and I said I'm a Conservatarian. I got blank stares. They were like, “What is that?” So Charles, what is a Conservatarian?

And the other thing that I really loved is you quoted one of [Ronald] Reagan's most famous statements, “The very heart and soul of conservatism is libertarianism.” And without it, the Right is nothing. Ed's a Libertarian, and I'm more of a Conservatarian, in the William F. Buckley and Thomas Sowell strain. I do have a big conservative streak thanks to National Review, but I agree with Ed on 70 or 80% of issues. He's not my enemy. He's my friend. Do you think fusionism, or a return to fusionism if it's splintered, is possible?

You do a great job in the book talking about the weaknesses of Libertarians, and the weaknesses of Conservatives. And then I think about an issue like the right to guns, where we say you can't blame an inanimate object for killing somebody. But then when it turns to drugs, Conservatives turn into the Nanny State. I look at the victories that we're having with marijuana legalization, and maybe other drugs like in Oregon, and I think that's a great example of the benefits of this fusionism idea.

Those are great points. You also cited Margaret Thatcher who said, “Europe was created by history. But America was created by philosophy.” And you've experienced both Charlie. You came here voluntarily and became a citizen. What does this difference mean to you?

Well, I love talking to immigrants to this country, because they seem to have a different perspective, and they really appreciate liberty, whereas sometimes I think we natives take it for granted. So I really appreciate your passion for the country.

Well, we're lucky to have you. Unfortunately, we're up against our first break.

Ed’s Questions: Segment Two

And the book is The Conservatarian Manifesto: Libertarians, Conservatives, and the Fight for the Right’s Future. We are talking with Charles Cooke today. I want to talk to you a little bit about China. You've written extensively about that. But, before I do, the Libertarian in me can't escape the conversation that you were having with Ron and ask you about immigration. What about federalism applied to immigration, since in theory, immigration is not mentioned in the Constitution, just the process of naturalization? Could we have a workable immigration policy that is also federalist?

Yeah, it's clearly a challenge. It's one of those things where people of good faith have great arguments on both sides and can make intelligent arguments about it. Turning to China, I want to ask you this question that we've asked a number of people. We thought back in the 1990s, when China began to liberalize, that there would be, first, they would liberalize from an economic standpoint, and then the political liberalization would follow. How’d we miss it? What did we get wrong? Or have we just not waited long enough?

Well, maybe it's just we’ve got to send the right sport. And that would be baseball, in my opinion. Because, I mean, it worked in Japan after World War II is all I'm saying.

More seriously, we've had father Robert Sirico on [Episode #318], as well as Peter Robinson [Episode #320], who both mentioned their relationship with Jimmy Lai. And they both interviewed him, who is unfortunately now in prison, I think still in Hong Kong, which is good, I guess. Is Hong Kong lost in your opinion?

Ron and I have talked about that on some of our bonus episodes, that that would be the smart move, without question, to throw our arms open to all of those folks [emigrating from Hong Kong]. And now, turning your attention, do you think Taiwan is going to suffer the same fate? Do you think the US has enough backbone to resist this? And then I have a very specific question on this with regard to the Second Amendment. Do you know about gun ownership in Taiwan? Do a lot of individuals have guns? And would that make a difference, potentially, if the citizenry were to be as Second Amendment friendly as we are here in the States?

It's a very practical, potential solution and relatively, in the long run, inexpensive. But we are up against our break.

Ron’s Questions: Segment Three

Welcome back, everybody. We're here with Charles Cooke, senior writer at National Review. And Charles, one of the things I've heard you talk about, and rail against, is this idea of how we pay homage to our politicians by calling him “Governor Romney.” And you say we don't have royalty in America, we have employees. And boy, did this really hit during COVID? It seems like we were being ruled. I'm in California, so you can imagine why I feel that way.

That's a good point. I'm going to have some rapid fire questions for you, you can still take your time. What do you think about our policy in Cuba? Obama relaxed it, Trump restored some of the sanctions. What's your position on Cuba?

Do you favor term limits?

I'm a roller coaster nut because I know I'll never fly with a Thunderbird in an F-16. What got you into them?

Are you a wooden or steel fan?

Have you seen Falcon’s Flight at [Six Flags] Qiddiya, which is outside of Riyadh, in Saudi Arabia? It's opening in 2023, it's 2.5 miles long, 155 MPH, with a 525 foot drop.

Awesome. Well, that's great. Unfortunately, Charlie, we're up against our next break.  

Ed’s Questions: Segment Four

We are talking today with Charles Cooke, and Charles I wanted to talk to you a little bit about a speech that you gave in Utah about why we need weirdos. To quote from the speech, I love this line, “Excluding people who are different will exclude people who make a difference.” Talk about that.

I think it's George Bernard Shaw who said, “All progress depends on the unreasonable man.” [“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man”].

I do another podcast for Sage and I have an exit question. It's a short form podcast. And the exit question is, “Who is a hero of yours and why are they a hero?” And it's interesting to hear the response, oftentimes, the answer is prefaced with the following. “Well, I don't have any heroes, but I do admire people greatly.” And to your point, how would you respond to this, that we have, in some ways, misunderstood the term hero. Heroes usually have a tragic flaw, that's actually part of being a hero, and we have mythologized heroes to be what my Catholic faith would call Saint. And that's not what we're talking about here at all?

Yes, absolutely. That's the commercial that Apple had. Here's to the rule breakers, that great, great commercial. We have about a minute left, just want to see what's coming up for you, Charles Cooke, do you have another book in the hopper maybe?

All right. Well, Charles Cooke, senior writer with National Review, thanks so much for being on The Soul of Enterprise today.

Ron

Thank you, Charles. Ed, what do we have coming up next week?

Ed

Coming up next week? I was supposed to ask you that question. But I have to pull up my spreadsheet. We’re talking about factors and price sensitivity and the subscription model. So that's going to be two topics that we love talking about combined into one.

Ron

Awesome, I'll see you in 167 hours.

---

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.

This week is bonus episode 342 - Personality Profile Update and Tariffs

Here are some links discussed in the bonus episode:

• US authorities move to double tariffs on Canadian lumber despite a meteoric rise in prices and demand | Markets Insider

• Actor John Cena apologizes to China for calling Taiwan a country

• ExxonMobil and Chevron suffer shareholder rebellions over climate | ExxonMobil | The Guardian

• Steve Jobs puts Apple on one P&L after learning the company was losing $1 billion per year while each division was reporting a profit: This Was Steve Jobs' Most Important Observation When He Returned to Apple. It Changed Everything
  It had nothing to do with the products.

• KPMG launches relaxed work policies to combat remote work fatigue | Accounting Today

• KPMG Convinced itself it could change the world

• Four-day working week would slash UK carbon footprint, report says | Greenhouse gas emissions | The Guardian

• CA Governor Announces Vaccine Lottery

• This Might Be the Most Bizarre Baseball Highlight in Years - WSJ

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode 341: Interview with Corey McComb, Productivity Is For Robots

Ed’s Questions: Segment One

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so their organizations can thrive. I'm Ed Kless with my great friend and co-host, Ron Baker. And on today's show, folks, we are pleased to have with us author, Corey McComb. Ron, how's it going?

Ron

It's going great, Ed. And I'm so looking forward to this. You know, I read Corey’s book, about a month or two ago and I thought it was brilliant, so this is going to be a fun conversation.

Ed

It absolutely is. We're going to welcome him into what we lovingly refer to as the ‘Effing Debate. We'll explain that to him in a little bit. But let me bring him on. Corey McComb is a writer based in San Diego, California. And I love this bio guys, wait till you hear this. After being kidnapped by the rock and roll circus at the age of 16, he was forced to strum his way across the country and back again. He then toiled as a peon in parking garages and seedy telemarketing pits until becoming an international man of mystery (It's still classified by the way). In search of free concert tickets, he moved on to music journalism and began a steamy love affair with the blank page. Corey now helps people in companies validate ideas, tell their stories, and launch products. His own writing focuses on the sweet spots in life where human connection, creativity, and personal growth intersect. His book, which is the main topic of today's conversation, is Productivity Is For Robots: How to (Re)connect, Get Creative, And Stay Human In The New World. Welcome to The Soul of Enterprise Corey McComb.

I have to tell you, yours is the second best bio I think we’ve had. Our first guest ever is an economic historian named Deirdre McCloskey [Episode #6], who to this day still has the best bio. And we'll just mention that and you can read it at another time, and you can see if you agree, it's just absolutely fantastic. It ends with “who is a woman who once was a man.” So you really had a high bar. So it's all good. But Corey, I'm going to start with a meta question here, because your book is meta. I'm going to ask you to tell the story of the story of your book.

Yeah, I was reminded of a great line, as I was reading the early portion of your book, “One day on my way to bed, I passed myself on the way to work.” And when you alluded to it just a little bit in your answer there, but I want you to expand on this line, because this is, I think, the third highlight I made in your book, and this is a fantastic line, “Technology was meant to set us free. Instead, we've chosen to imitate it.”

Well, let's just do this if I could. One thing that struck me, the way that I would describe your book is that productivity and creativity are not the same thing. And for some reason, we seem to be letting them conflate in our minds—that being productive and being creative are the same thing. And it’s not.

My personal Why is “I believe that entrepreneurs continue the work of creation.” We're not going to be creative by having the latest apps. It's not all about the apps, we don't need apps for everything. And one thing that really struck me about your book was a quote that I had heard a number of years ago, that said, “If your job can be completely taken over by bots, your job pretty much sucks.” And we're trying to force ourselves to get our jobs to be taken over by bots, and then only to find more bots. It's a crazy rat race.

Pittman Magee, whom I believe is a business philosopher as well an ordained minister, said that “The opposite of love is not hate, but efficiency.” One of the lines that I love is “The same habits which make us flawed at efficiency can be turned into strengths and effectiveness.” And my note to myself in the book is you were having the internal ‘Effing Debate. So let me tee up what the ‘Effing Debate is. Ron founded a think tank called the VeraSage Institute a number of years ago, and one of the main threads of the original blog that we had was this ‘Effing Debate, efficiency versus effectiveness. And the whole notion is who cares if you're efficient if it's at the wrong thing? And what your book did for me is help to clarify that, am I spending too much time trying to be efficient on the wrong stuff? So anyway, really good there. I've got to leave it. I'm going to let Ron pick up from there because we're up against our first break.

Ron’s Questions: Segment Two

Welcome back, everybody. We're here with Corey McComb, the author of Productivity Is For Robots: How to (Re)connect, Get Creative, And Stay Human In The New World. And as I said, Corey, I just absolutely loved this book, and knew I had to get you on the show after I read it. Your book is divided into three parts: (re)connect, create, and flow, which you say is kind of a circle. And I really liked that as a metaphor. But let me just ask you about this. You wrote “Without purpose, what good is productivity?” And I know later on in the book you quote from Viktor Frankl, who said, “What good is freedom without purpose?” So what do you mean by, Without purpose, what good is productivity?

Right, it's really about not confusing being busy with being effective, or purposeful, or impactful, however you want to say it. The other thing that I really liked is you told Ed that we try to meet technology halfway, and that is so true as the bots and AI get better, we try to imitate it. And I think it was in The 8th Habit where Stephen Covey wrote, “We can be efficient with things, but not with people.” And I guess my question to you is, why do you think businesses have such a hard time understanding that; we all pay lip service to being a relationship business, but you can't be efficient with relationships? Nobody defines their marriage as efficient.

I think the two are mutually exclusive, because you can be highly efficient without being at all effective, but not the other way around. Usually, if you're effective, you also tend to be efficient.

You make another point about how time with other humans is a vital part of being creative. And the time we spend with others is not a luxury, it's actually a necessity. Do you think we understand that better now, after COVID? After being locked in our houses for a year?

You also talk about the importance of play, and I love how you cited Timothy Walker, who moved from Boston to Finland to become a fifth grade teacher, and he said that they have something like [two] hours a day of recess, where in the US it’s like 27 minutes. And that's why they're so much more relaxed [have behavioral issues] and all of that. And then you wrote this, and I absolutely love this, “In 401k adulthood, many people trade in their dreams for smart goals. Our inner child looks at this like a plate of vegetables.” And [then you quote] Dr. Seuss, “Adults are just obsolete children.” Explain that, because I love the concept of play and how important it is, and it's not the opposite of work?

Ricardo Semler, who's written a couple great books, asks why do we think the opposite of work is leisure when in fact, it's idleness? So play is just another form of work. The other thing I love that you talked about is the ability to change your mind, and have that open mind and be curious. And far be it for me to quote from Timothy Leary like you did, but he said, “You're only as young as the last time you changed your mind.” We did a whole episode on that [Episode #147]. Corey, what was it like for you? What was this process of going from this productivity paradox, or trap, you were in to the way you see the world now? Was it a slow, gradual process, or was it like a BFO, a blinding flash of the obvious?

It's so liberating, literally, to say, “I don't know.” And yet so many of us are afraid of saying that. Was it Richard Feynman who said, “It's so easy to fool people, and the easiest person to fool is yourself.” Corey, this is great. Unfortunately, we're up against our next break.  

Ed’s Questions: Segment Three

The book is Productivity Is For Robots: How to (Re)connect, Get Creative, And Stay Human In The New World. The author is Corey McComb. Corey, I want to drill down a little bit more on the notion of creativity that you were talking about with Ron. During the break, we were mentioning that we had interviewed George Gilder [Episode #207] and this is a sentence from your book, you say, “Technology can never replicate human creativity, because codes and algorithms are built on predictions of what's expected to happen. Creativity is the unexpected.” That's in total alignment with what Gilder is saying; he says, “Creativity always comes as a surprise to us. Otherwise socialism would work.” Because it could be planned. But we can't plan creativity. And the other thing that I want to get your reaction to is the following quote from another mentor of mine who said, “Creativity and anxiety are always inversely proportional to each other.” So the more anxious you are, the less creative you can be. And you can't turn on creativity, you can only lower anxiety, that's the only thing that we have the ability to do. So talk a little bit about that. I think that's very much in alignment with your notion of creativity as well.

You quote Dave Chappelle who says, “Let the ideas drive.” Talk a little bit about that.

And Chappelle says, “Well, sometimes you're in the passenger seat, and sometimes the idea throws you in the trunk.” I thought this is an interesting transition, because I'm now teaching my 15-year-old son how to drive. And it's interesting to see how much brain power he has to apply to driving that I, myself as a 30 plus-year driver, don't have to do it. And I think in the book called Flow, a number of years ago, one of the examples of getting into flow that we all experience is driving, which I think is pretty interesting. Because we can do it without being fully conscious of it, yet be fully competent at it. And I'm always struck by that, that all of us are capable of flow, because we can do it while driving. We just have to now figure out a way to apply it to other places in our lives to get into that state of flow. So talk a little bit about flow.

I think that's a great point. Because not every day for us is the fifth, or sixth, or seventh game of the NBA Finals, where you have to leave it out there on the court, which makes sense. But we see that and have to take that with it. Recently, and I don't know if you saw this, but on Hemingway, there's a PBS special on Hemingway. And the other thing that struck me when watching that, he also said, “All I have to start out with every day is one true sentence.” And I just love the notion of one true sentence and go from there.

I'm not, I have to tell you. I like Hemingway, I don't like his writing. He's fascinating. Old Man and the Sea never did it for me, and I even read it as an adult. But we don't want to go down that rabbit hole. It is a great thing, I think, to never leave that well empty. That's such an important message for all of us. I want to talk to you a little bit about this one quote that you have. It's a first world dilemma, you say, to explore or to be productive? What do you mean by that?

Another quote that I just absolutely love is this, you say, “There's an important distinction to make between delusions of grandeur and delusions of possibility.” Unpack that for me.

Love that, great stuff, Corey. Thank you so much. Ron's going to take you the rest of the way home in the last segment.

Ron’s Questions: Segment Four

Welcome back, everybody. We're here with Corey McComb, he’s the author of Productivity Is For Robots: How to (Re)connect, Get Creative, And Stay Human In The New World. And Corey, I found this to be incredibly thought provoking. You say, “When I look back at the mindsets that crippled me into a burned out robot, lack of patience tops the list.” Why?

That's such a great point that we look at others, like you said, the highlight reel on social media, or look at somebody like Stephen King, and think, I'm a slouch. This guy writes 10 books a year, or something. It's amazing. The other thing that I really liked is when you said, “When we focus on competition too much, not only does that lead to things getting watered down, replicated versions of what we're competing against. But it's also a fast track toward another human nature land mind: Envy.” Explain that?

There's so many lessons in that. I think of market share, companies that are so focused on the competition, all they care about is their market share. And yet companies that don't really care about that, they are more customer focused, tend to do a lot better, because they're not, like you say, their stuff doesn't get watered down, they're actually different.

Such a good point. Envy is such a destructive thing. In fact, I've been threatening Ed for the last two years, we're going to do a show on envy because it's such a deleterious thing over time. So this is your your first book. How has it been received so far?

Have you gotten any emails? And let me just ask you this, this is really self-aggrandizing, are we your first interview on the book?

Yeah, no, we did read it. When you're an author, there's nothing more frustrating, because an author can tell right away if the person's read their book or not. You just know, because you've lived with it for so long. Ayn Rand used to say, “I'm with novel.” That is kind of how it feels. So you wrote towards the end, “You're a first time author with dreams of writing more.” What's next, if you're willing to talk about it?

Excellent. Well, hopefully you'll come back when that comes out. Thank you so much, Corey. This has been an honor. Ed, what do we have on store for next week?

Ed

Next week, Ron, our interview with Charlie Cooke. His book is The Conservatarian Manifesto.

Ron

Ah, the right honorable Charles CW Cooke, Ed.

---

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.

This week is bonus episode 341 - Stealing Monkeys and Ron's UFO Theory

Here are some links discussed in the bonus episode:

• Thieving monkeys, The Economist

• 'Not a family': Shopify CEO tells staff the company will focus on business, not solving social ills | Washington Examiner

• KPMG Canada announces Finance Plus, a new cloud accounting service

• Masks as Virtue Signaling

• The US Federal Reserve to start a cryptocurrency?

• Where the Rubber Meets the Road: Bridgestone Turns Tech Investments Into Recurring Revenue | Subscribed.com

• Calm Down, Everyone: The ‘UFOs’ Aren’t Aliens

• Texas Becomes Third State To Pass Free-Range Kids Law – Reason.com

• Ron’s theory of what’s really going on with the UFO sightings

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode #340: Interview with Tony Dolan, Chief Speechwriter for Ronald Reagan

Ron’s Questions: Segment One

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so that organizations can thrive. I'm Ron Baker, along with my good friend and VeraSage Institute colleague, Ed Kless. On today's show, folks, we are honored—we have Tony Dolan, former President Reagan's Chief Speechwriter. Hey, Ed, how's it going?

Ed

Great, Ron. I can't wait to talk to Tony. It's going to be fantastic.

Ron

Yes, we're making our way through Reagan’s speechwriters. This is wonderful. So let me read Tony’s Bio, and I can’t do it justice because it's incredible [see below for full Biographical information]. Anthony Dolan is a Pulitzer-Prize winning journalist, at the age of 29, and was chief speechwriter for President Ronald Reagan, from March 1981, until the end of 1989. For a time he was a conservative folk singer who put out the album, “Cry, The Beloved Country.” He wrote two of Reagan's most famous speeches, “The Ash Heap of History” speech and “The Evil Empire” speech. Tony Dolan, welcome to The Soul of Enterprise.

So Tony, how did you go from having a youthful indiscretion of supporting JFK in 1960, to being chief speechwriter in the Reagan White House?

That's incredible. I never had the chance to meet William Buckley or Reagan, for that matter. And you were a pallbearer at Buckley's funeral. What was he like, Tony?

Excellent. I will check that out [see National Review links below for more of Tony’s writings]. That's wonderful. Because everybody says he had such a magnetism about him, and he was just such an energetic guy. When you talked to him, you felt like you were the only person in the room.

I want to talk to you about Reagan's four speeches that framed the Cold War. And of course, you're responsible for a lot of these, your fingerprints are on them. But the British Parliament speech, where he announced his strategy in 1982; the Evil Empire Speech, where he made the moral case for pursuing his strategy; the Berlin Wall speech, of course, where he pressed his advantage with Gorbachev; and then the Moscow State University speech where he took his victory lap, I guess you could say. You wrote the first two of those—the first, the British Parliament speech is phenomenal. What's the backstory with that?

Tony, that's fantastic. And unfortunately, we're up against our first break.

Ed’s Questions: Segment Two

And we're back with presidential speechwriter for Ronald Reagan, Tony Dolan. Tony on the speech at the House of Commons that you were just talking to Ron about, Ronald Reagan had a reputation for being a war monger. But at least twice, if not three times in this speech, he clearly says I'm willing to negotiate. I want to negotiate. Talk a little bit about why you think his reputation has been so tarnished. It's a bizarre thing to me when he was clearly willing to negotiate.

There's a great moment in the speech, and it comes just before the ash heap of history line, that I sort of remember from the time but really came into full view after re-listening to it, when he invites Brezhnev to speak on American TV in exchange for allowing him to speak on Soviet TV. Was that Reagan? Was that something that you came up with? What's the origin of that? Do you recall?

Yet it was one of the few lines that provoked a response from that audience. There was almost absolutely no response, positive or negative, for the entire speech with the exception of that invitation to Brezhnev. I thought that was quite interesting.

It was just an interesting thing, he wraps up by saying, in the most optimistic Reagan voice, “A new age is not just possible, but probable.” Every speech I think I’ve ever heard from him ends on an optimistic note. That's just his personality wasn't it?

Outstanding. Well, we're up against our next break.

Ron’s Questions: Segment Three

We're here with Tony Dolan, who was the chief speechwriter for both terms of Ronald Reagan's presidency. Tony, amongst the Reagan administration, there were people who were labeled “true believers,” and “the pragmatists,” and of course, one of the pragmatists was David Gergen. This guy's a textbook pragmatist. Anytime I want to know what the conventional wisdom is in Washington, I listen to David Gergen, because that's about all you're going to get. But he said in a 2000 interview, and I'm sure you're aware of this, I just wanted to get your reaction. He said, “I hate to admit it. Tony Dolan was right. And I was wrong. That phrase, the evil empire allowed Reagan to speak truth to totalitarianism.” How's that make you feel?

The way [Reagan] framed the Cold War, Tony, has always fascinated me. He said, basically, “We win, and they lose.” It's simple, but it's not easy, which is a sign of remarkable ingenuity and creativity. But you explain that by saying he was an actor, he's used to alternative endings. And I think that's a profound insight.

Tony, Clare Boothe Luce said, “A great man is one sentence.” What do you think Reagan's one sentence is?

Yes, Margaret Thatcher, I think, said “He won the cold war without firing a shot.”

Excellent. Well, Tony, thank you so much. Ed's going to take you all the way home, but I just wanted to say thank you, this has been an absolute honor to be able to talk to you.

Ed’s Questions: Segment Four

And we're finishing up here with our guest, Tony Dolan, Reagan's chief speechwriter for all eight years in the White House. Tony, I'm going to go back to the Evil Empire speech and I have to ask this question. The joke early on that he tells about the politician and the clergyman going to Heaven. Was that his joke? Was that something he collected?

In the speech, I think, he quotes from [Alexis] de Tocqueville, “If America ceases to be good, it will cease to be great.” And then Reagan mentions that the turn to secularism is beginning to happen in the in the United States, but they're not a majority yet, he says. Do you think the secularists are a majority now? And are we ceasing to be good?

I have a question for you about speech delivery. As you saw with Reagan, he clearly was the master of the teleprompter and did it really well. But I did notice in preparing for this interview that when he would quote from someone, he would look back down in his notes, rather than read it off of the teleprompter. Was that something that he just did naturally? Or was he really searching to get the quote right?

We've got only about one minute left. And the one last thing I want to ask you about is, I heard a quote that you said about Reagan: that he did not mind people calling it [The Strategic Defense Initiative, SDI] Star Wars. Talk a little bit about that, if you recall?

So true. Well, the last quote I have is from speechwriters. I think Peter Robinson said, “We stole from him” and another speechwriter said that “He was the best editor I ever had.” Tony Dolan, thank you so much for appearing today on The Soul of Enterprise. We really enjoyed this conversation. I hope maybe you'll come back and maybe we can get a better connection next time. Thanks again, Tony.

All right, Ron, what do we have coming up next week.

Ron

Next week we have Cory McComb. He's the author of Productivity Is For Robots, a book I thoroughly enjoyed. 

Ed

Alright, that's it outstanding. I'll see you in 167 hours.

More Information on Tony Dolan

ANTHONY R. DOLAN 

• Pulitzer Prize at 29 for investigative reporting for exposes of the Gambino crime family and corrupt cops and politicians.

• Chief speechwriter for eight years for President Reagan.

• Special Adviser to Sec of Defense Donald Rumsfeld for six and a half years.  (In the Pentagon on 9\11. Briefer for SecDef, Joint Chiefs Chairman, and combatant commanders before news conferences.)

• Senior Adviser to Secretary of State Colin Powell.

• A veteran of  eight presidential campaigns and many state and national contests, Produced many noted TV spots and media campaigns for candidates and SuperPacs.

• Special Assistant to President Donald J. Trump and Advisor on Planning, 2017-2021

BIOGRAPHY   
 
      Anthony R. Dolan is a graduate of Fairfield Preparatory School, and Yale University, where he majored in philosophy and history.     

     Beginning with F. Clifton White Associates in the early 1970s, he has worked as a political consultant on many campaigns and held staff positions on eight presidential campaigns.

     As a reporter for the Stamford Advocate, he won six journalism awards for his exposures of organized crime and public corruption including the 1978 Pulitzer Prize for investigative reporting. His work in Stamford and exposure of mob influence reaching into the state capitol was recently written about in Roguetown, a book by undercover police officer Vito Collucci who dedicated the volume to him.

     Mr. Dolan’s stories resulted in the resignation or dismissal of more than 15 local and state officials as well as multiple indictments of organized crime figures, corrupt police officers and others.  His series exposing Gambino family ties to government officials and the many personal threats of physical violence it led to were the subject of a 1981 Rolling Stone feature article and the 1983  development of a movie script at Paramount Studios. (Later the also the subject of a Hollywood Reporter column by legendary film authority Robert Osborne.)  Two years later  the Connecticut State Supreme Court – in a  unanimous decision written by the Chief Justice that was seen as an affirmation of reporters’ First Amendment rights --  ruled against Connecticut’s State Senate Majority leader (who had been defeated for reelection due to Dolan’s stories about mob influence) and affirmed the disputed stories were not only protected from a libel action under Times-vs-Sullivan precedent but were also true.

       
    Mr. Dolan was the only member of President’s Reagan’s senior staff to serve all eight years at the White House where he was chief speechwriter and Special Assistant and Deputy Assistant to President Reagan. In addition to supervising the speeches at four Reagan-Gorbachev summits, he worked with President Reagan on many foreign policy speeches including the "evil empire" speech in Orlando Fla., the  "asheap of history" speech to the British Parliament at Westminster Hall, London, and “Tear Down the   Wall” in Berlin.  The story of the latter speech is found in his Wall Street Journal article called “Four Little Words.”  Mr. Dolan also worked closely with President Reagan on a July 1981 Address to the Nation on tax-cuts that sparked a strong public reaction and overcame entrenched opposition to the legislation.  His speech drafts in the campaign of 1980 and through the early years of the administration emphasized Ronald Reagan’s desire to celebrate American heroes especially those in the US military. One national tradition, presidential phone calls on Christmas to members of the five services, grew out of Mr. Dolan’s initial suggestion.

      In June of 1982, at the invitation of Attorney General William French Smith, Mr. Dolan made a presentation on organized crime and public corruption to the Justice Department senior staff and played a major role in developing the Reagan administration’s October 1982 plan for a crackdown on the mob that led to a quadrupling of prosecutions and disintegration of seveal mob families. In addition to a Loa Angeles Times story on his behind-the-scenes work, then FBI Director William Webster referred to him as “the guiding spirit” behind the plan. Along with famous undercover FBI agent Joseph Pistone (“Donnie Brasco”) Mr. Dolan was one of two speakers to address the organizational dinner meeting of the President’s Commission on Organized Crime in 1984.
        

        In the field of foreign policy, he has served as a special adviser to the US. Delegation to UNESCO in Paris France (1984) and the UN Disarmament Conference in Geneva Switzerland (1988).

       On the last day of the Reagan administration Mr Dolan received a handwritten note from President Reagan that said "Tony ….you were keeper of the flame."

       A friend of President George HW Bush, Mr. Dolan was an unofficial adviser during his term in office. In the administration of George W Bush, Mr. Dolan was at the State Department during the presidential transition and then was Senior Adviser to Secretary of State Colin Powell until July 2001.  For the next six and a half years, he served as a Special Adviser to Secretary of Defense Donald Rumsfeld.  Mr. Dolan, who was in the Pentagon on 9\11, had a principal role in briefing the Secretary of Defense, Chairmen of the Joint Chiefs as well as Combatant Commanders before each news conference. A former US Army Specialist 4, Mr. Dolan was the recipient of the Department of Defense's civilian award, The Medal for Public Service. He also wrote and broadcast for Our American Network a tribute to wounded and fallen war heroes (especially those he knew) called “They Will Be Remembered” .

        He then served as Special Adviser on the presidential campaigns of Fred Thompson (2008), Newt Gingrich (2012) and Ted Cruz (2016).

         Mr. Dolan has run his own communications strategy firm working with a wide array of major associations and corporations as well as political clients. His work producing TV spots and media campaigns for candidates and SuperPacs have drawn widespread commentary during the last ten years.  His writings have appeared in a variety of journals and newspapers from National Review and the Washington Monthly to the op-ed pages of the New York Times and Wall St. Journal.

         His writing career began in the late ‘60s when he began a close friendship with National Review editor William F. Buckley Jr, and for whom he was a pallbearer at his 2008 St Patrick’s Cathedral funeral. In the late 60s and early 70s, Mr. Dolan also wrote music and recorded an album as well as performed four nights a week at Finnegan’s Wake on New York’s Upper East Side.  

Tony’s writing in National Review 

Blood of the Father

Reagan and His Favorite Magazine

Reagan Revisited

---

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.

This week is bonus episode 340 - Masks and Flying Taxis

Here are some links discussed in the bonus episode:

• California Population Fell By More Than 180,000 in 2020

• Want a New York Times obituary? Coin a word

• Flying taxis take off at last

• A New Age of Reconnaissance

• The World’s 10 Highest-Paid Athletes: Conor McGregor Leads A Group Of Sports Stars Unfazed By The Pandemic

• The Liberals Who Can’t Quit Lockdown - The Atlantic

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode #339: Interview with Patrick Reasonover, Producer of “They Say It Can’t Be Done”

About Patrick Reasonover

Patrick Reasonover is the lead Producer on They Say It Can’t be Done. He previously produced the award-winning feature-length documentary Of Dogs and Men. He is co-creator and producer on an animated comedy web series based on the NY Times bestselling book series, “The Politically Incorrect Guides,” also to be released Fall 2020. Through his work with corporate partners, Patrick has produced more than 300 animated, documentary, virtual reality, and narrative projects. He holds a B.A. from Emory University in Creative Writing and Philosophy.

Ed’s Questions: Segment One

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so their organizations can thrive. I’m Ed Kless with my good friend and co-host, Ron Baker. And folks, on today's show, we are pleased to have our interview with Patrick Reasonover. Let me quick read the bio and bring him on. Patrick Reasonover is lead producer on the movie, They Say It Can't Be Done. He previously produced the award-winning feature length documentary Of Dogs and Men. And he is the co-creator and producer of an animated comedy web series entitled, based on the New York Times best-selling books, The Politically Incorrect Guides, has been released in 2020. Through his work with corporate partners, Patrick has produced more than 300 animated documentaries, virtual reality and narrative projects. He earned a BA from Emory University in creative writing and philosophy. Welcome to The Soul of Enterprise, Patrick Reasonover.

I first got introduced to you, one of your publicists got in touch with me. And we did an episode of the Sage Thought Leadership podcast together, which was about three months ago, and talked for about 10 minutes. And I said this is a really fascinating documentary, I’ve got to get this guy on The Soul of Enterprise. So I sent it over to Ron and he took a look at it and said, yeah, this is a great topic for us. Patrick, let's talk about They Say It Can't Be Done. Talk a little bit about the film, [which was released on March 23, for rental and purchase, on all kinds of major platforms: Apple, YouTube or pretty much wherever you want to stream. It is rolling out internationally as well in Japan, and now I think in Arabic, across the swath of those countries, we’re very excited to finally get it out there. What's the initial reaction so far so good?

The film focuses on four different companies, or industries, or problems: Just, the alternative meat; The Center for Negative Carbon Emissions; Regenerative Medicine; and the Catalina Sea Ranch, and the story then weaves together around what they propose as these innovative solutions. But then also goes back and forth with the regulations and the challenges that these folks face. And I think you've done a pretty fair job of showing both the pluses and the minuses [of regulation]. I didn't find this to be hugely skewed one way or the other. Others might not think that, maybe that's just confirming my biases, I suppose it's possible. Is that something you strived for, a balance, because it comes across to me in the film?

What I thought was really neat about it, you also had some experts, such as Alex Tabarrok, Tom Bell, Clark Neily, Adam Thierer [and others]. Adam Thierer has been a guest on the on the show, talking about Permissionless Innovation [Episode #294]. But you also had folks who were regulators who you interviewed as well. And I thought that was an interesting balance. Tell me a little bit about those conversations that you had with those folks, before we get into the meat, if you will, of the documentary?

One of our former guests, Steven Landsberg [Episode #106], suggested that the FDA be paid in pharmaceutical stock to counteract that problem.

I forget which economist, might have even been Steven Landsburg [it was]: The two words that all economists agree on is incentives matter, everything else is commentary. That's certainly what we have. Just a quick story, we'll get into some of the different stories that you had in the documentary, but my son, curiously, is having a pizza party with his friends tonight, they're coming over, and they'll be ordering, I'm sure they'll be ordering cheese pizza and pepperoni pizza. And what I learned from your documentary is that cheese pizza is regulated by the [FDA], and pepperoni pizza is regulated by the [Department of Agriculture]. And it's just a great example of the confusion, and not the regulator's fault, per se, right? That's just the system that they were dealt, but they've got to square that circle in many cases.

That’s also brought up in the Catalina Sea Ranch problem, too. One other scene we'll talk to you about is when Tom Bell goes through all of the different offshore regulations back and forth, “we can't figure out how to regulate it so you can't sell your product.” Wait, what? Really crazy stuff? Well, Patrick, we're up against our first break. The time is flying by as we knew it would.  

Ron’s Questions: Segment Two

Welcome back everybody. We're here with Patrick Reasonover, the producer of They Say It Can't Be Done. Patrick, it's great that you have a degree in philosophy because I want to ask you a big question. The documentary opens by saying, Throughout history, the idea was that God would bring the world to an end. But then after Hiroshima, man figured out that we might be able to do this ourselves. Why is it that doomsayers always underestimate the human ingenuity of man?

And human sanitation as well, not just horses, right? I thought that was a great analogy. One of my main takeaways from the documentary, and Jane Jacobs, Virginia Postrel, and George Gilder, have all written about this: that the real conflict is not the rich versus the poor, Democrats versus Republican, it's the past versus the future. Are we going to let the future unfold, from these innovators, and from these creators, because the status quo, obviously, has a lot of people who are invested in it, and they don't like change. And your documentary also does a great job with that, especially when it starts looking at the alternative foods, and the meat producers and the cattle producers.

And like Ed said, you focus in the documentary on four areas: regenerative medicine, , food, climate and Aquaculture. I'm just curious, how'd you land on those four, because I'm sure you had a much longer list?

That's great. The drug one was fascinating, the kid who you profiled who got the new bladder. And he said he was one out of 10 who has had that in 18 years, is that right?

And the 3-D printing of the ear and the other thing that blew me away, and you talked with Ed about this, which regulatory agency has jurisdiction. The FDA is great with food, cosmetics, and drugs, because those are mass market. But all of these organs, these are bespoke. So who has got regulatory Control. And if it is the FDA, are they really set up for it? Those are fascinating issues to contemplate.

I remember when I watched the documentary the first time, about three months ago, I remember talking with Ed and said, the biggest oxymoron I learned was the term “regulatory science.” Didn't Richard Feynman say anytime you have to qualify science, it's not science. And of course, the definition she gave for what “regulatory science” meant. It reminded me of Feyman’s line that “Science is the belief in the ignorance of experts.”

Good, I'm glad you did, because that was just really strange. I totally agree with what Ed said, too. The way it started, when I first watched it, you were quoting all these governmental officials, and I thought, “Oh, geez, it’s going to be one-sided. And then all of a sudden, you have all these economists and all these different think tank people that we recognize. But it's really well balanced. It's said throughout the documentary that there is a need for regulation, sometimes regulation can spur innovation. Do you have a personal opinion on where you come down between command-and-control regulation and performance-based regulation? Because I see a big difference between those two.

Yes, and we think reputation would probably be on that list as well. Well, Patrick, this is awesome. And really great job on the documentary, it's thoroughly enjoyable. So we will definitely link to it in the show notes and where you can get it.

Ed’s Questions: Segment Three

And we are back with Patrick Reasonover, the film is They Say It Can't Be Done. There’s also some screenings list and take a look at that. Patrick, I want to ask you straight up. Did you taste the alternative meat?

Amazing. Did you have any hesitancy in tasting it? Was there a little bit of like, wait, this is weird, or no?

Great, now I really am looking forward to that making it out to an actual product in the market. One of the things that your film really brings out, and Ron and I have talked about this on previous shows, is how often incumbents in the industry are behind the regulation, and big businesses actually love regulation. There's a real misperception out there, and the way it has manifested itself in this particular group, for the Just company, is that the meat growers, or the meat producers, want to define meat as harvested from animal flesh, even though chemically the stuff that Just is producing is the same. To me, it's the absolute inverse of the transubstantiation in the body of Christ. It's like the opposite of that. So talk a little bit about that, that big businesses, or regulations, are often done by the incumbents.

That was brought up briefly by one of the regulators, the Bootlegger Baptist coalition, which Ron and I have talked about, that's always very interesting to figure out who's the bootlegger, and who's the Baptist. I wanted to turn over to the regenerative medicine piece, and 3-D printing of organs. You talked about that with Ron, absolutely amazing. But I think we saw a little bit of this with regard to the COVID-19 vaccines, the same kind of regulatory problem with the FDA, that they're not set up for it. We have a vaccine, which is different from high blood pressure medication—we’ve got to test that to make sure it's safe, then does it actually reduce high blood pressure. But if you're producing a vaccine, test it, make sure it's safe, then get it out there. Tell people, “Hey, continue to social distance, we'll compare you to people who are not vaccinated at all.” And if it goes down, well, we know that the vaccine is effective, right? So that we can do this a lot quicker by what they call [human] challenge trials. I think that would be much more effective. So talk a little bit if you have a comment around that. What would be helpful there?

Right, it’s the seen versus the unseen. How absurd is it that they still are not technically approved [the COVID vaccines]. There's only a temporary authorization, by the time you get around to the actual approval, it'll be completely gone.

I see, yes, that's another ancillary benefit. That's wild. We had Ronald Bailey on the show [Episode #307], and I think this was the first time he actually said it publicly, and Reason magazine has just come out with a cover story on this, that this might be the last pandemic because of the mRNA technology platform that was developed, and they've been pretty successful with AIDS as well. Well, I only have two more minutes with you, and I wanted to ask you one more question about the Catalina Sea Ranch. Another thing from a regulatory perspective, the woman from the company says, the problem is that the testing requirement was done for a naturally recurring heard of muscles, which takes place over a much, much greater area then how they grow them. It sounded like the regulators just threw up their hands and gave up, saying, “Well, we don't know what to do. So you can't sell your product.” Is that what happened to them?

Really, that's great. Well it's bad for us, good for them. We are up against our last break here, thank you so much Patrick, Ron's going to take you the rest of the way, we really appreciate you appearing today.

Ron’s Questions: Segment Four

Welcome back, everybody, we're here with Patrick Reasonover, the producer of They Say It Can't Be Done. Patrick, on the climate change aspect, the taking of CO2 out of the atmosphere, that was just really awesome. His whole prospect of geoengineering. Are you optimistic that we will solve the climate challenge with innovation and technology?

You know, it's those types of innovations that make me think about the very small segment in the film about the losses from companies like Solyndra. I think there were 12, or 11 others that lost a total of $6.5 billion, and it made me think of George Gilder and his famous line that the dog is always the politicians’ best friend. If the government is going to pick winners and losers, it's always going to pick the past, it's never going to fund the entrepreneur with the crazy idea of sucking CO2 out of the atmosphere. And I just wonder about the technology and how much more we would have, and how much more innovation we would have, if the government wasn't subsidizing these relics?

On top of the don't bet against human ingenuity, I also thought one of the takeaways that your documentary made me think of was Hayek’s saying that the mind can't see its own advance. If you would have said to a regulator, what about Uber? Well, you're not supposed to take rides from strangers. The whole innovation of Uber and Airbnb sounds so counterintuitive. This tension between permissionless innovation and the precautionary principle, as Adam Thierer explains, it's on a spectrum. I just feel like we've been living under the precautionary principle for the last year with this COVID pandemic. Are you optimistic that we can go back to the permissionless innovation side?

Well, you're the exception to that Patrick. It's a great job [on the documentary] and it's got a fantastic message, and we'll do everything we can here to promote it. So, thank you so much for appearing on The Soul of Enterprise. Stay with us for a minute as we go through a live close. Ed, what do we have next week?

Ed

Next week, as we make our way through the rest of the Reagan speech writing team, we have the top dog, Tony Dolan.

Ron

Awesome, looking forward to it. See you in 167 hours.

---

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.

This week is bonus episode 339 - The Last Pandemic, Bourdain, and Profitable Solutions

Here are some links discussed in the bonus episode:

• Clayton Christensen’s prediction about the iPhone, National Review

• Postal Banking: A Solution in Search of a Problem, National Review

• America’s Most Libertarian State Is…?, FEE

• The Trouble with Duty-Free, The Economist

• Anthony Bourdain, Don’t Eat Before Reading This, April 12, 1999, The New Yorker

• Profitable Solutions

• Why COVID-19 May Be the Last Pandemic – Reason.com

• The Covid-19 Emergency Did Not Justify Lockdowns – AIER

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode #338: Interview with John Tamny, When Politicians Panicked

Before we get into how amazing this interview was, let’s learn a bit about more about John Tamny

John Tamny is Political Economy editor at Forbes, senior economic advisor to Toreador Research & Trading, and editor of RealClearMarkets.com (RCM). A spin-off of the policy website RealClearPolitics.com, RCM seeks to compile top-quality information and opinion about the stock markets and global economy.

View fullsize

Ron’s Questions: Segment One

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so that organizations can thrive. I’m Ron Baker, along with my good friend and VeraSage Institute colleague, Ed Kless, and on today's show, folks, we're talking with John Tammany, the author of When Politicians Panicked. Hey, Ed, how's it going?

Ed

Great Ron, looking forward to this show.

Ron

Me, too. Let's get John in here. I'm going to read his bio real quick. John Tamny is Political Economy editor at Forbes, editor of RealClearMarkets, VP at FreedomWorks’ Center for Economic Freedom, and libertarian star of RealClearMarkets, [and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). His new book is When Politicians Panicked: The New Coronavirus, Expert Opinion, and a Tragic Lapse of Reason. Other books by Tamny include They're Both Wrong: A Policy Guide for America's Frustrated Independent Thinkers, The End of Work, about the exciting growth of jobs more and more of us love, Who Needs the Fed? and Popular Economics. John Tamny, welcome to The Soul of Enterprise.

I think we have a lot of mutual friends. We've had Jeffrey Tucker on. We've had George Gilder on three times. We've had Steven Landsberg, David Friedman, Mark Skousen. So we know a lot of people in common but, John, this this book of yours, When Politicians Panicked: The New Coronavirus, Expert Opinion, and a Tragic Lapse of Reason, this is a daring book. You essentially argue that we suffered not a medical crisis, but a political, economic and institutional crisis. How so?

You point out that even if the initial projections, like the Imperial College models, had been real, that the lockdown still wouldn't have been justified because you don't fight an illness with unemployment and bankruptcy and mass desperation. Why do you think people can't grasp that this is about tradeoffs?

It's a great point, I love that chapter. That thought experiment of this taking place back in 2000. And like you point out, for 63% of the workforce, work is a place, like it or not. And so are you saying, John, you don't say this directly in the book, but I get the sense, that this lockdown only happened because of our wealth.

Right now you say we ask too much of our experts, but we also rely on them too much. You continuously point out that our knowledge of COVID won't age well. Most of our medical knowledge has not aged well, if you look back through time. And then you make a really interesting point, or thought experiment: too bad Dr. Fauci wasn't a shill for Disney. Because if he was he would have paid for his mistakes.

I think you quote Jeffrey Tucker, or somebody, who says “The market pays for its mistakes, but politicians weaponize theirs.” And stupid should hurt, right? We analyze the market every single day with failure, and they pay for it. So it's a great point. The other thing that really blew my mind, John, from your book is you discuss a March 18, 2020 interview with FedEx founder and CEO, Fred Smith. Talk about that, because that was fascinating.

I love it. You pointed out that the old Soviet Union couldn't keep Chernobyl off the front pages. And that was back in the 1980s, when we didn't have the communication technology that we have now. And even the California Gold Rush in the 1800s brought folks from around the world. So word gets out and word certainly would have got out about that. Those are some great points. Well, John, unfortunately, we're up against our first break.

Ed’s Questions: Segment Two

Our guest today is John Tammany. His book is When Politicians Panicked: The New Coronavirus, Expert Opinion, and a Tragic Lapse of Reason. John, I just wanted to clarify something just because I want to I know what your position is, I think, and I want to articulate it. It's clear that Coronavirus was worse than the flu. It's pretty well documented that 10% to 13% of additional deaths, whether or not they were all attributed to the virus or not, I believe can be disputed. But there was something going on there. So you're not disputing this, you're not saying that taking precautions during a pandemic was unnecessary. But your subtle point is, you're saying that government telling us what those precautions were, when they should be in place, and for how long, was the problem. Did I state that well?

And the argument is, “But we had to protect them from themselves, John, don't you understand?”

I'm going to turn your attention a little bit to the beginning of the virus. We had Ronald Bailey on the show. And he shared with us that the Moderna company had taken the genome sequence that was sent to them by the Chinese on January 19 I believe it was, of 2020. And it had produced its vaccine and had the prototype in less than 48 hours, which leaves it at about January 21, of 2020. So before it even hit our radar, a vaccine had been developed. And the rest of the time was spent with delays in the approval process of the same government that shut us down. If there's anything about this that gets me violent, it's the fact that this vaccine was withheld from human beings for so long under the guise of we have to make sure it's safe for you.

Yes, and we can't know, you're certainly correct about that. But I think the thing that bothers me is the whole notion of even if you buy that the FDA should exist in the first place—and we've done shows with Mary Ruwart and we don't think it should exist—there's got to be a difference between approving a drug to reduce high blood pressure, which we all have because of this situation, and preventing you getting a disease and a vaccine, it’s a different framework, a different metaphor. Yes, you want to prove that it does what it says it's going to do, but a vaccine, once you prove that it's safe, you inject it into 1000 people, and if no one dies immediately, let it go. Let it out into the universe.

No, any company, once they establish themselves in the marketplace, like the idea of regulation? Facebook is all about regulation now. The last thing I want to talk to you about, and then I have some other questions on different subjects for the last segment. But are you concerned that politicians will panic again in the future, specifically over China, and maybe ask you this: Are they already?

Wow, all right. Well, hopefully, I'm going to take some breaths, turn it over to Ron, because we have to pay our bills, John, and I know you appreciate that.

Ron’s Questions: Segment Three

Welcome back, everybody. We're here with John Tamny, the author of When Politicians Panicked: The New Coronavirus, Expert Opinion, and a Tragic Lapse of Reason. John, one of the points you make beautifully in the book is that wealth creation has solved most of our medical issues, and you profile Rockefeller, Johns Hopkins, and you could go on and on with the Koch brothers, Sloan, etc. Talk about that, because I think that's a really important point that wealth is the ultimate get out of these crises.

You're so right about that. And the only known antidote to poverty is wealth creation. You also have another chapter, Chapter Five, where you say, “Don't insult recessions by referring to this as a recession.” Gene Epstein called this “The Great Suppression, which I've always loved. But then you argue in that chapter that recession is actually a sign of recovery. Explain that?

I love it. You say command and control actually asphyxiates an economy. There was no booms and busts in the Soviet Union, it's a great point. The other thing, talking about the bailouts, the PPP loans, all that junk that the government did with outrageous spending. You say—and this is pretty controversial, I think, to most people—far from being the engines of economic growth, small businesses and the jobs they create are most often a consequence of big business. Explain?

Absolutely right. You also talked about the GDP being double counting, which is why politicians love it, because of course it tracks consumption. But consumptions is the consequence of economic growth, not the cause of it. Again, why do so many people misunderstand this, even the popular press?

You just explained the supply-side mandate beautifully. I mean, consumption is the consequence of growth. And it's the easy part, like you say, production is harder. And I think it was George Gilder who wrote in his 1981 book, Wealth and Poverty. Even Marx understood this. After all, he didn't want to socialize the means of consumption [but rather the means of production].

John, are you worried about all the spending coming down the pike? I mean, not only what we spent last year, but what is being proposed for this year? It's in the trillions. It's unbelievable.

You make the point that if government allocates the capital, then the outrageous ideas are not going to get those dollars. And that's where you get the Peloton and our groceries delivered, and all those great things. And as [Jeff] Bezos said, “You know, I made billions of dollars of failures in Amazon.” Thank Heaven for those people,

Yes, the dynamism. You know, I think Gilder said the dog is the politician’s best friend. So knowledge is always about the past, but entrepreneurship is about the future. Well, John, this has just been great. Unfortunately, we're up against our next break.

Ed’s Questions: Segment Four

Author of When Politicians Panicked: The New Coronavirus, Expert Opinion, and a Tragic Lapse of Reason and They're Both Wrong: A Policy Guide for America's Frustrated Independent Thinkers is our guest today, John Tamny? John, I've got a question for you that's a little different angle, let's put it that way. George Gilder, who is a three-time guest of The Soul of Enterprise, wrote the Foreword to your book, so that's always appealing to us. But recently, you appeared on a video about six months ago for the Atlas Society. Ayn Rand used the occasion of her last public speech to take down George Gilder and his book, Wealth and Poverty. Square that up in your mind for me.

She really despised the concept that he said that profit is an index of our altruism.

I think Rand had a tendency to take words that had other definitions, define them the way she wanted to define them, and then eviscerate you if you didn't agree with her definition.

I agree. I think some of it is just the infighting among people who agree is sometimes worse than those outside of our thoughts. So along those lines, though, do you think we're in, as Ayn Rand would say, a sanction of the victim situation? Are we there right now?

She would say a sanction of the victim like that we because the question is, Why don’t we go to Galt’s Gulch? Why do you continue to write, why do Ron and I continue to do this show? Why, you know, shouldn't we just be going to Galt’s Gulch, because we're just feeding in to the very people who want to destroy us.

And let me beg your indulgence on a question that is, I think, a little bit negative. We have got about two minutes left. But I really wanted to ask you this. Why no inflation? Why haven't we seen inflation with all of the spending going on in Washington?

Fair enough. Great answer. We're already at the end of our show here. Ron, what do we have coming up next week?

Ron

We have Patrick Reasonover, the filmmaker of the documentary: “They say it can't be done.”

Ed

Well, I look forward to that. I'll see you in 167 hours.

---

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.

This week is bonus episode 338 - Congress, Columbia House, and Chartr

Here are some links discussed in the bonus episode:

• Florida and Texas gain House seats, and CA and NY lose them

• What “Bless Your Heart” Really Means in the South

• COVID Conspiracists, Kevin Williamson

• LANBY, a NYC DPC Launch

• Why Going to the Doctor Sucks

• A Uyghur-American Journalist, Jay Nordlinger

• China Creates it’s own digital currency, Wall Street Journal

• Mark Cuban’s Health Plan, John Goodman

• Microsoft is changing the default Office font and wants your help to pick a new one - The Verge

• Make No Mistake: Programmable Digital Currencies Are Weaponizable Money – AIER

• Chartr: Data Storytelling

• Luxury Vacation Rentals | Vacation Club | Inspirato

• NASA Astronaut Who Captured All of Humanity in a Single Photo Has Died | PetaPixel

• Facebook Is Not Dead — Chartr: Data Storytelling

• Columbia House Business Model

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode #337: Interview with Jonathan Stark, Author — Hourly Billing Is Nuts

First, a bit about Jonathan Stark

Jonathan Stark is a former software developer who is on a mission to rid the world of hourly billing. He is the author of Hourly Billing Is Nuts, the host of Ditching Hourly, and writes a daily newsletter on pricing for independent professionals.

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Ed’s Questions: Segment One

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so their organizations can thrive. I'm Ed Kless with my friend and co-host, Ron Baker, and folks on today's show, we are pleased to have with us our interview with Jonathan Stark. Hey, Ron.

Ron

Hey, Ed. How's it going?

Ed

Good. Good week here in Texas beautiful, we still have cool weather, which you know I love.

Ron

That's awesome, it’s beautiful here, too. Hey, listen, I'm really excited about this because this is way overdue. I think I've been on Jonathan's podcast two or three times maybe? And so I’m just thrilled to finally get him on our show and turn the tables on him.

Ed

Absolutely. I've only been on once, but my claim to fame is—it was episode five—and I believe, if I'm correct, I was the first ever guest. So let's get the particulars over with. Jonathan Stark is a former software developer who is on a mission to rid the world of hourly billing. He is the author of Hourly Billing Is Nuts. The host of Ditching Hourly and the Business of Authority podcasts. He writes a daily newsletter on pricing for independent professionals. Welcome, long overdue, to The Soul of Enterprise, Jonathan Stark.

Jonathan, I gotta tell you that your sample questions that are on your website basically suck for us, because I'm not gonna say what is so bad about hourly billing. I'm not gonna ask you that question, we're not gonna go there. We're gonna go right into the love fest portion of our program. Since we're all on the same side of this. I will give you a chance to talk a little bit about your background, but the first thing I want to ask you is, tell me about Fred, the story on your website?

So did you have resistance with some of those early customers who were like, “No, no, just give me your hourly rate?”

The statistics on that are unbelievable. I remember reading some of the Standish Group stuff on it. Alright, so at this point you would say that you're offering a fixed price. What led you then to value pricing?

We talked on your podcast about the Backward Bicycle and the absolute rethinking that you have to go through in your mind to shift. What I wanted to get to, though, is this. So you you've made this transition, you've now studied you're Alan Weiss, you're doing value-based pricing for your software consulting. Then what led you to the transition to say, you know what I want to do though, is I want to coach other people and help VeraSage, who I didn't know about at the time, bury the billable hour. Where was that transition?  

All right, outstanding. Well, that brings us right to our break.

Ron’s Questions: Segment Two

Welcome back, everybody. We're here with the host of the Ditching Hourly podcast, Jonathan Stark. And Jonathan, I'm curious, you've been at this for a while, as you were talking about with Ed. And you're probably very familiar with the Crossing the Chasm diffusion curve, the early adapters and all that. Where do you think your sector is, the software developers and all the different sectors within that space that you work with? Where do you think they are on that curve in terms of getting rid of the billable hour?

That's awesome. We try and keep track of that for the different professional sectors. I think in accounting, we're actually approaching the early majority.

Law a little bit slower, advertising agencies are really adopting it at a good rate. So it's just interesting, like you were talking with Ed, the unlearning that has to take place is massive.

The other question I want to ask you about, because I think this is the real cancer, and that is the timesheet. I mean, we are what we measure, right? And if you're measuring yourself, like you were saying in the first segment, in six minute increments, and that's what you think you sell, how do you help or coach your folks to get rid of that timesheet, that measurement? And because there's all those defenses? Well, we needed to figure out if we're efficient, we need it for project management, we need it to do this or that.

Accountants have the same problem with the “I've got to know the time” because they want to check it after the fact. They've got this fetish about “We projected so many hours, now we want to compare it to actual.” It's crazy. I'm going to go off of the billable hour now, Jonathan, and ask you about this. You had Blair Enns on your show on February 9, 2021 [What Is Strategy?]. It was a terrific discussion about strategy, all the cliches about the definitions of strategy. It's one of those terms that when you ask people, and they have to really think about it, they don't really know what they mean by strategy. You know the typical answers, “It's knowing what not to do.” “It means having a plan, having a smart plan,” and all these things. And Blair's favorite definition—and he's got a weird hobby, too, by the way, he collects definitions of strategy. We've had Blair on the show [Episode #188], I love Blair. He's great. He's really brilliant. But his favorite definition of strategy is, “The idea that describes a journey to a position of advantage.” And I thought that was pretty interesting. But you have a very interesting, favorite definition. What's yours?

I love that definition. I especially like the surprise, and Blair even alluded to this in the conversation with you. It comes from George Gilder’s book, Knowledge and Power [Episode #60], it's his information theory of capitalism, which is information equals surprise. Creativity, and innovation always takes us by surprise. And that's why that definition is so great. And we've had on Rory Sutherland [Episode #267], and in his book, Alchemy, he talks about if your strategy doesn't have an element of surprise it's kind of worthless. He compares it to the military, you've got to have an element of surprise, otherwise, the enemy knows what you're up to?

It's really hard, because of all these definitions, like you say, many of them are not helpful. And then when you start parsing even the ones you like, you run into these walls. I'll give you mine favorite definition of strategy, and it comes from Jules Goddard [Episode #27 and Episode #315]. He wrote a book called Uncommon Sense, Common Nonsense. He’s a management Professor out of the UK, and I love this because it speaks to me; let me get your take on it: “Strategy is the rare and precious skill of staying one step ahead of the need to be efficient.”

What I love about it is it bakes in innovation. But like you said, if that's not the goal, if your goal is to maybe be the low-cost leader. But you know, I think this strive to be efficient is an innovation destroyer, innovation and creativity is the antithesis of efficiency.

Yes, that book [Good Strategy, Bad Strategy, by Richard Rumelt] is a bit dense, but it was a thought- provoking book.

We've only got about a minute, but I have to ask you about this, too. Pricers have a pretty interesting saying, “Innovate for growth, price for profit.” How do you think and advise your customers around innovation? And I'm not just talking about the new iPhone, I'm talking about innovation broadly. How do you think about it?

That's been my experience, too. We always talk about how you can innovate your language, you can innovate your sales approach, the questions you ask, your why conversation, can all be part of massive innovation. So, Jonathan, this is great, it’s flying by.

Ed’s Questions: Segment Three

And we are inspiring people today by talking to Jonathan Stark, who is the host of the Ditching Hourly and the Business of Authority podcasts. Jonathan, I want to throw you a change-up here. Ron said he threw you a curveball during the break. I want to throw a change-up. I'm a big baseball guy. What are your thoughts on subscription pricing?

The reason why I wanted to ask you about that is because of the nature of the customers that you have, which is software development. And oftentimes this is what I hear—I’m in an adjacent space, software implementation. But then we do have partners at Sage who also do custom development work as well. But the thing that I hear from them is, “This is a one-off thing, it’s just a one-off thing. They aren’t going to subscribe to me to do just this one-off project.” What's your reaction to that?

That's why I wanted to talk to you about what you are advising the people that you work with now to try to adopt a subscription model, where possible, and if so, what has been the reaction from the people you're working with?

Thanks for that. Just to give you a quick introduction, Ron and I are just relaunching our Patreon site with additional subscription offerings. So that was a great tie in, and I wanted to ask you this. I was poking around your website preparing. Are you going to move some of the stuff that you have right now as one-offs, which includes your book, you have three levels of buying your book, and there's some content. Are you going to move yourself to a subscription model on the content you offer now?

If you haven't read Tien Tzuo’s book, Subscribed, we highly recommend it. He's been a guest on our show as well [Episode #230]. What you're describing is what he calls “swallowing the fish,” because it's this graph that happens when your expenses go up, and your revenue potentially goes down at the same time. And then they cross somewhere in the future, but you want that future to be as quickly as possible.

You’re figuring out how to swallow the fish. Well, that's great stuff. We're up against our last break. 

Ron’s Questions: Segment Four

Welcome back, everybody. We're here with Jonathan Stark of the Ditching Hourly podcast, which I highly recommend. You put out great content on that show, Jonathan, every week, it's really good. Even your short, little three minute ones are incredibly thought provoking, so I congratulate you, it's just a great job. The late Andy Grove, founder of Intel, said, “Disruptive threats come inherently not from new technology, but from new business models.” How do you deal with business model innovation in your coaching? I know we think, for example, I work with a lot of accountants, [and we think they] only have one business model. But that's not necessarily true, we have a range that we can pick from. How do you deal with business models?

You've probably heard about the firm Pilot, which is an accounting firm that Jeff Bezos’ family office recently invested $300 million in, along with some other venture capitalists. That puts the valuation of that accounting firm, with about 1000 customers, at $1.2 billion, with a B dollars. That makes them the eighth largest accounting firm in the country, as most accounting firms are valued at one times revenue. I know you had John Warrillow on your show talking about his book Built to Sell, and we had him on to talk about his book, The Automatic Customer, which is his subscription book [Episode #327], which we also recommend highly. What [Pilot] tells me, Jonathan, even if you don't want to sell your business, the market is screaming at businesses, “Hey, we value businesses that have annual recurring revenue at much higher multiples than even value pricing.”

Oh, you can swallow the fish. We're finding the fish to be more like a minnow in a lot of firms, rather than a big Marlin. We've only got about four minutes left. You have a concierge doctor, it’s one of the reasons I came on your show, because I think that is the model for accountants and lawyers going forward. Tell me about that experience. And I want the psychological reasons that you see incredible value, because those are the hardest to get on a spreadsheet.

Well, that's awesome. Jonathan, unfortunately, we're at the end. And we really want to thank you for coming on. It's been an honor to have you on here. Keep up the great work over at Ditching Hourly. Ed, what's on store for next week?

Ed

Ron, we have John Tamny, author of They're Both Wrong.

Ron

Yes, and author of When Politicians Panicked. Looking forward to that, I'll see you in 167 hours.

Ed’s and Ron’s Appearances on the Ditching Hourly podcast:

Burying the Billable Hour with Ed Kless, October 17, 2016

The 8 Steps to Value Pricing with Ron Baker, December 8, 2016

The Ethics of Hourly Billing with Ron Baker, May 22, 2017

Ron Baker on The Subscription Economy, December 17, 2019

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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.

This week is bonus episode 337 - New Tiers and the USPS

Here are some links discussed in the bonus episode:

• Anthony Clark in The Economist

• Caitlyn Jenner Files to Run for CA Governor

• Hong Kong, Stay Strong

• Amazon’s foray into hair

• Do Not Split, Youtube Video on Hong Kong Protests

• The Postal Service is running a covert operations program

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode 336: Interview with Leah Power, Institute of Communication Agencies (ICA)

First, a bit about Leah Power

A proven results-oriented finance and operations executive, Leah has 20 years of experience supporting agency leaders develop and achieve strategic plans that lead to consistent growth and award-winning client work. She has advised C-level execs at the operational, regional and global levels on issues of financial leadership, agency acquisitions, operating system implementation, information technology integration, agency transitions, management of Capital projects, as well as fee, scope and contract negotiations. Her agency experience includes time most recently at Grey Canada as Chief Operating Officer plus financial leadership roles at Grey SF, DDB Canada, Downtown Partners, Echo Advertising, and Rapp Collins Worldwide.

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Ron’s Questions: Segment One

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so their organizations can thrive. I’m Ron Baker, along with my good friend and VeraSage Institute colleague, Ed Kless. On today's show, folks, we're talking with Leah Power from the Institute of Communication Agencies. Hey, Ed, how's it going?

Ed

It's good Ron. It's cool in Texas and it's mid-April, so I will take every cool day I can continue to get.

Ron

It's nice here, too. So I'm excited about today's guest. I know we both read the report that she edited. And let me read her Bio so we can get her in here. A proven results-oriented finance and operations executive, Leah Power has 20 years of experience supporting agency leaders develop and achieve strategic plans that lead to consistent growth in award winning client work. She's advised C-level executives at the operational, regional and global levels on issues of financial leadership, agency acquisitions, operating system implementation, and a whole bunch of other things. Her agency experience includes time most recently at Grey Canada as Chief Operating Officer plus financial leadership roles at Grey SF, DDB Canada, Downtown Partners, Echo Advertising, and Rap Collins Worldwide. Leah Power, welcome to The Soul of Enterprise.

I got to meet you when you brought me up to do a talk to the ICA, and that's where I met Blair Enns [Episode #188] for the very first time in my life, as we had corresponded a lot but I never got to meet him. So I credit you for that meeting. And also, I met David Meikle, who we’ve also had on the show [Episode #206].

It was fascinating to meet David because, as you know, he spent time working in Russia with Ogilvy, wasn't it?

He told me just so many stories about what it was like to work in Russia. It was just great. But Leah, how have you been doing this year? It's been a crazy year.

How have agencies been doing up in Canada? We hear from Tim Williams a kind of lay of the land when we talk to him. But how are they, in your field of vision, doing this past year?

It seems like a lot of the professions are doing okay. I think this whole thing has brought us closer to the customers and probably deepened the relationship a little bit. We certainly see that in accounting, where all of the loans and bailouts ran through the accounting. So the accountants were in great demand for the past year. You published the QBS Agency Search Guide back in 2019 and it was authored by Cal Harrison, and you edited it. Why is it time to change the agency selection process, which is what this report is about?

That's a great point. You do a wonderful job in the report of tearing down the price-based Request for Proposal [RFP] process. And you've probably heard us talk about the author of Let's Get Real or Let's Not Play. His name is Mahan Khalsa. He's got a line in the book, he thinks dysfunctional buying processes resulted from dysfunctional selling processes. And I can't think of anything more dysfunctional than the billable hour. And that is something that we as professionals foisted onto the customer; the customer didn't ask for it. And Tim Williams has a great saying, “If you want to avoid procurement, stop selling things that can be procured.” What do you think about that?

And you landed on this Qualifications-Based Selection [QBS] process, which was developed decades ago in engineering and architecture, is that right?

There's a derivative of Murphy's Law that I like. When a pilot gets into the fighter jet. [“Never forget that your weapon is made by the lowest bidder.” ––Law Number 20 of Murphy’s Laws of Combat]. You want the person or the firm that can build it the best, like you say. What I found fascinating about QBS is it doesn't initially evaluate price. But I'm sure Ed's going to take you further into this conversation but unfortunately we're up against our first break.

Ed’s Questions: Segment Two

We are with Leah Power, the editor of the QBS Agency Search Guide. And Leah, Ron set me up perfectly for what I wanted to talk to you about. I'm just going to quote a little from the report. We'll talk about each of these. In the report it says, “While it appears to be a reasonable and balanced procurement process, the typical price-based RFP has many issues, many of which are not immediately obvious, but real and costly nonetheless.” And then you talk about some of them and illustrate some examples. I'd like you to give me a chance to talk about each of them. But the first one I think is probably the most insightful for me as an outsider to the agency space, is that price often becomes the deciding factor, even when it is weighted only as little as five or 10%.

That brought up a question in my mind as I was reading through this. As you know, one of the things that Ron and I advocate for is giving the customer choices. And what have you seen, if any, the reaction of procurement when you provide in your response three choices, rather than one particular price? What happens?

That's the axiom of the presenting problem, right? The presenting problem isn't necessarily the real problem that the customer has, or even thinks they have. But is there a positive or negative reaction, or neutral reaction, among procurement people when an agency provides choices when they're not asked for them? I'm just really curious about that?

The second one in the list has got to hit people like a ton of bricks. And that is, “Suppliers are incented to focus on providing the least [viable], instead of the most valuable solution.”

I'm skipping a little bit ahead here, but I think it's an appropriate point to bring up. There's a story in here, where the author was speaking at a conference and told them that they needed to disclose a budget for procurement. Someone said, “But if I disclose my budget, that's all we're going to get is the bids in line with the budget.” And he said, “Well, that's a huge difference, because that way, they're all working toward the same thing. And that way, you'll get to find out who's going to be the most innovative within that constraint of the budget.”

Yes, it's critical. I'm skipping to the third because you dealt with it, which is about the time-consuming process. I'm going to the fourth in this section, which is “The most qualified firms are the least likely to respond to a price-based RFP.” Yeah, that's what I want. Give me the crappiest people, please. That's what I'm looking for.

And the last one—we’ve only got about a minute left—is that “RFP projects begin agency relationships as adversarial while the QBS is far more collaborative.” And by the way, this is absolutely true in just about every professional space that I've worked in, especially with regards to say ERP systems, which is my background. Why are we starting our relationship off on an adversarial basis? So talk briefly about that.

Outstanding. Well, we're up against our next break.

Ron’s Questions: Segment Three

Welcome back, everybody. We're here with Leah Power from the Institute of Communication Agencies. Leah, I wanted to ask you about in QBS, there's no spec creative. And this must be an objection you hear all the time from the client side, “Well, how can I evaluate them without seeing their creative work?” But creative work done, as you say, without client direction really has no value?

Ed mentioned in your report you talked about the best agencies might not even get involved in a price-based RFP. Can you imagine the day, because this is my dream world, where agencies would charge for an RFP, because competition is useful and valuable to the buyer. Why shouldn't they charge for it?

When you talk about how QBS lowers costs, fosters communication and collaboration, and it's a true relationship, one of the greatest pieces of empirical evidence to back that up, is you cited a 2009 American Public Works Association and American Council of Engineering Companies study that said, most projects have about a 10% change order cost of the total project. Whereas in QBS, it's 3%. I know, Ed, you run around with some statistic that's mind blowing about scope creep, and cost overruns. But this seems to be really good at controlling that. Do you think, Leah, that's because there's better communication and better diagnosis being done up front?

By the way, one of the things I thought of, looking at the list of all the different advantages of QBS: It lowers cost, fosters communication, all these different things that it does. And I was thinking, because QBS is in 47 States here in the USA, what happened with the Obamacare website? I wonder if that went through some QBS process because that was a disaster from start to finish, but that's an unfair question, it’s just commentary on my part. So this report has been out there for a couple of years. Obviously buyers and agencies have to have to buy into it. But I would think there's more onus on the buyer’s side, the client side, than the agency side, since they control this whole RFP and agency search process. Have you seen success in getting some clients, some advertisers, to adopt this model?

It's a great point. Another idea that's been around for a long time, maybe not as long as QBS, is value pricing. In the last couple of minutes that I have you here, I wanted to ask you, how has that been going with agencies? Do you see more agencies adopting what Tim Williams and Blair Enns and what I've been talking about, what we've talked about on the show all this time?

Great point, the billable hour does commoditize the relationship, that's one of the things that's most pernicious about it. It just turns everything into commodities, like you said. But Leah, unfortunately, I'm up against my last break with you, and Ed's going to take you home, but I just want to say thank you so much for appearing on The Soul of Enterprise, it's been a great discussion. And we're going to link to where folks can get a copy of this report (ica.ca/qbs). And if you're at all involved in RFPs, procurement, you need to take a look at this. There's some really fantastic ideas that, by the way, apply to all professions, not just agencies. I can see accounting firms and law firms learning some useful things out of this. So thank you for all of that.

Ed’s Questions: Segment Four

We're talking with Leah Power. And Leah, as you and Ron were talking toward the end of the last segment, this thought came to my mind: We could take this report and cut and paste it and use it to buy accounting software. And it's almost worse, because in the mid-market space that many Sage partners work in, they're not dealing with procurement. It's worse. They're dealing with finance, directly. I did want to ask you this. There's a whole section you have on creating your QBS document, which is great. We don't have time to go through each of them. One I wanted to ask you to explain is you say that price compliance is mandatory but not evaluated. Talk a little bit about that.

And number seven in this list is never request free consulting in a proposal. You talked a little bit about that with Ron, but when I read that section I was immediately reminded of the great scene that Ron and I have played at many presentations with Don Draper and Conrad Hilton, from Mad Men. [Connie’s] basically asking for one for free? And Don Draper has that great line, which I've encouraged others to use, “Connie, it's my profession. What do you expect me to do?” And I really love that, and I really wish that far more professionals would have the self-esteem to be able to say that and stick to their guns about it. They think they have to give away something for free in order to prove their worth. And I think if you withhold it, that is what is actually proving your worth, which is what the great Don Draper does.

We've got about four minutes left. And you and Ron were talking during the break about the possibility of bringing a subscription-based pricing into the mix here. And you said that you were a big fan. I want to hear more about that. Do you think that would be another potential either solution to this problem, or tool in the in the belt of agencies, to be able to use subscription pricing for some of this stuff?

It's similar in a way to the space that I'm in with ERP software, and what most buyers think they're buying is a transaction, they're buying the implementation of the new system, or they're buying some creative work from an agency. But the good ones know that, long term, it's more you're buying a relationship, not just the initial thing that the RFP was sent out for to begin with.

Well, outstanding. Leah Power is the editor of the QBS Agency Search Guide. We're so happy to have had you on The Soul of Enterprise, Leah, we hope you come back another time.

And Ron, what do we have coming up next week,

Ron

Next week. And we have [Jonathan Stark, host of the Ditching Hourly podcast], which is just fantastic.

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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.

This week is bonus episode 336 - More QBS and why car companies blew it on subscription

Here are some links discussed in the bonus episode:

• Why are all the car subscriptions gone?

• A debate between a bull and a bear on the future of Tesla, The Economist, January 23, 2021

• The Economist reviewed Alex Nowrasteh’s book, Wretched Refuse?, January 30, 2021

• Charles Cooke on the FDA’s J&J Vaccine Pause, National Review, April 13, 2021

• HIV vaccine based on same mRNA technology as COVID-19 vaccine shows promise (hat tip: Robert Wood)

• Chief Revenue Officer hiring is up 2019 to 2020 by 26.8%, The Economist, “Hail to the ‘chiefs,’”, January 30, 2021

• NFL settles for a field goal

• Corporate Taxes: Rates Down, Revenues Up | Cato at Liberty Blog

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode 335 - Interview with Alex Nowrasteh

First, a bit about Alex Nowrasteh

Alex Nowrasteh is the director of immigration and trade at the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies. His popular publications have appeared in the Wall Street Journal, USA Today, the Washington Post, and most other major publications in the United States. His peer-reviewed academic publications have appeared in The World Bank Economic Review, the Journal of Economic Behavior and Organization, Public Choice, and others. Alex regularly appears on Fox News, MSNBC, Bloomberg, NPR, and numerous television and radio stations across the United States. He is the co-author (with Benjamin Powell) of the book Wretched Refuse? The Political Economy of Immigration and Institutions (Cambridge University Press, 2020), which is the first book on how economic institutions in receiving countries adjust to immigration. He is also the co-author (with Mark S. Krikorian) of the booklet Open Immigration: Yea and Nay (Encounter Broadsides, 2014) and has contributed numerous book chapters about immigration to various edited volumes.

Ed’s Questions: Segment one

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so their organizations can thrive. I’m Ed Kless with my great friend and co-host Ron Baker, and folks, on today's show we are honored to have with us from the Cato Institute. Alex Nowrasteh.

Ron, how you doing?

Ron

I'm great. I always love having Cato guys on. They're wickedly smart.

Ed

Absolutely, looking forward to having Alex on. And a quick shout out to my friend Kathleen Stokes, who is the one who connected us with Alex. She worked on the Joe Jorgensen campaign and ran across paths with Alex, I think in Michigan if I've got that correct, but maybe not. I'll have a talk about that with Alex. Let me get the bio out of the way and get right to the interview. Alex Nowrasteh is the director of immigration and trade at the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies. His popular publications have appeared in The Wall Street Journal, USA Today, The Washington Post and other major papers and publications in the US. He is the co-author with Benjamin Powell of the 2020 book, Wretched Refuse: The Political Economy of Immigration and Institutions, which is the first book on how economic institutions in receiving countries adjust to immigration. Welcome to The Soul of Enterprise, Alex Nowrasteh.

Well, first off, Alex, congratulations. I understand you're a new dad.

Well, congratulations again. That's awesome. Since you bring up children, I'm going to go right to one of the first things that I posted of yours back on Facebook, and through the magic of logging my Facebook posts and doing a name search on it, I came up with something that you posted back in July of 2014. It was a podcast that you did with Cato Daily. The podcast, which title was “Unaccompanied children in limbo.” I don't know if this is ringing a bell for you, Alex, this topic seems to still be a problem. Has it changed? Or could you just replay that 2014 podcast, and we would be good to go on it.

And obviously, in you calling for different policies resolutions back then I assume that some of them are still in order? And the question is, why haven't we dealt with this, if this is a constant crisis? My perception—and I don't want to be too cynical—is that this is a great fundraising opportunity for both sides. So that's why we don't fix immigration.

Well, thank you for that. I wanted to address that first. It's obviously currently in the news, and we're dealing with it, but I'm going to take you a little bit back now, we've got five minutes left in this first segment, roughly. I've run for office before as a Libertarian, I'm in Texas, so this does tend to come up. And one of the things that I've come across is that immigration is actually not mentioned in the Constitution, at all. The word naturalization is used, and naturalization—my understanding, and correct me if I'm wrong—is the process of becoming a citizen. Whereas immigration is the entry into the country. In my view, especially if you're a strict Constitutionalist, shouldn't that mean that immigration is really an issue for individual States to discern how to handle, and what would be wrong with going back to that and then let the federal government decide who is and who is not a citizen.

And correct me again if I'm wrong, and I'm sure I heard this from you on the various podcasts that I listen to, but Canada does do immigration by Province, correct? Or there is at least some authority over immigration by Province, and it seems to work fairly well for them.

I just think it would make a much better system. From my perspective, like I said, it gets local control back to where it’s needed. If you need more agricultural workers, you let in more agricultural workers, it just makes so much more sense. I think there are two things from Canada I think we should import, maybe more, but at least two. One is their immigration policy, and two is the privatization of air traffic control. Both things that I think they do better than us. But we are up against our first break.
 

Ron’s Questions: Segment Two

Welcome back, everybody. We're here with Alex Nowrasteh, the Director of Immigration and Trade at Cato Institute. Alex, I grew up on The Ultimate Resource, and The Economic Consequences of Immigration by Julian Simon, which had a profound influence on me, and George Gilder who said Castro set out to build the world's greatest city, and he did so, in Miami, Florida. These were all pro- immigration. I mean, without immigration, we wouldn't have been able to build the bomb and then the war, we wouldn't have got Hollywood. According to what I've read, half the companies in Silicon Valley had been founded by immigrants. Is there an Einstein Effect? You hear this argument, or at least I used to hear this argument from the right, that, hey, if we get one Einstein in, one incredible founder, a Google Sergey Brin, someone like that. And it pays for a lot of costs that immigration may bring with it. Is that still talked about?

And not that college is the only way to become an entrepreneur. In fact, I think most great entrepreneurs probably didn't go to college. But that said, the people that are here in college and graduate, shouldn't we make it easier for them to stay here? It seems like we make it really difficult.

And then when you get into the whole illegal crossing, and the argument, “Oh, they're taking our jobs at the low end. And they're driving down wages for the unskilled worker.” I look at this stuff, and yeah, I might say there's some affect there. But isn't there a grand fallacy here, the Lump of Labor Fallacy, that there's only so many jobs (a fixed number of jobs in the economy).

Alex, one of the things that I've learned from Thomas Sowell is in economics, there are no solutions, there's only trade-offs. And Thomas Sowell is not an open immigration economist. I'm sure you're familiar with some of his work. He takes it to task, and he said, “You can't talk about immigration in general, because there's no such thing.” And he kind of takes you around the world and proves this. And basically says there are no solutions to this. There's only tradeoffs, the best economists can do is ask politicians the questions that they're going to need to answer. What's your take on Sowell’s work?

Well, I think he would say—and I don't want to try and speak for him, we did have him on the show. And I did ask him this question about immigration. But one thing he writes about, and basically it's in his book, Applied Economics, if you want to see where he really goes into this topic. Then he's got a scholarly Trilogy as well, that gets into immigration, migration, and culture [Migrations and Cultures, Race and Culture, and Conquests and Cultures]. But he said this, in equating human immigration with trade. He said, when you buy a Toyota and the Toyota crosses the border, it doesn't have little Toyotas. And it doesn't bring a culture, and it doesn't demand the new country accept its language. And it comes with its own culture, which affects behavior. It's not simply a movement of people. And I think he's also worried about the cultural impact, the crime is part of it, but just the culture, kind of the same point that Samuel P. Huntington makes, and I wanted to ask you about his work as well, because he's brought up some of these cultural and spiritual issues that don't really relate to the GDP and some of the economic impacts that we normally talk about around this issue.

And like you say, our culture is so ubiquitous and overwhelming in this country how can you not adapt to it.

I like that. Well, Alex, this is great. Unfortunately, we're up against our break.

Ed’s Questions: Segment Three

And we're back on The Soul of Enterprise with Alex Nowrasteh. Alex, great segment with Ron. I was waiting for him to spring the Sowell on you. When we were prepping for the show earlier he said he was going to do that. So I was really interested in your answer. But I'd like to take you through some of the cliches that are still out there. The first one: illegal immigrants are, by definition, criminals.

You anticipated my next question. So I can go on to the third question, which is—and I love this, it is my all-time favorite, and Ron alluded to it earlier—"Illegal immigrants simultaneously take away jobs and have come here just to collect welfare.

So wait, there's not a box with my name in it that has all my money that I've been sending in? This is great stuff. And what I have heard, and this is kind of interesting to me, the argument, “Well, they come and they use our schools.” And I'm like, isn't educating them a good thing? Because then they go on and like you said, produce more stuff here. I never quite understood that, and what percentage of the school system is illegal immigrants? It's not that tremendous, I can't imagine it is, anyway.

We have about one minute to the break. One of the things when I was running for office that we often talked about—to allude to Texas again—is we don't have a state income tax, but we do have a sales tax, which people who are legal or illegal pay into that system, whereas Arizona does not, they have an income tax, and that's where they fund it. And so there's clearly, I think, more of an immigration problem in Arizona because of the state tax law. Would you agree with that as well? 

Great stuff, Alex, and we're up against our last break.

Ron’s Questions: Segment Four

Welcome back, everybody. We're here with Alex Nowrasteh talking about immigration. And Alex, Samuel P. Huntington makes this point, which I find interesting. He says, you hear the partial truth, as he calls it, that “we're a nation of immigrants.” But he draws a distinction between settlers who form new societies, and then immigrants who come later who were attracted to those societies. How do you see that? Or how do you think about that?

Yes, [Milton] Friedman's question, “So what?” I know you're a Southern California boy, and I’m  Northern California, born and raised here as well. And one of the things that frustrates me about this whole topic is the caricatures and the cliches thrown around, like we're a nation of immigrants. How do you specifically answer this, I'm sure you've heard this a million times: “If you want to see the effects of illegal immigration, look at California, a red state up through 1998 and now look at it, it’s a complete economic basket case in a lot of respects.” What's your response to that?

Alex, if you were in charge of immigration, how would it work? What would you do? I know you'd refuse that job, but if you were in charge?

Excellent. Well, Alex, thank you so much. This has been an honor to be able to talk with you. Thank you so much for appearing on The Soul of Enterprise. Ed, what do we have coming up next week?

Ed

Next week, Ron, we have Leah Power from the Institute of Canadian Advertisers to talk to us about her work.

Ron

I think it's the Institute of Communication Agencies, actually. Well, I’m looking forward to it. I'll see you in 167 hours.

---

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.

This week’s is bonus episode 335 - More on immigration and Guest Garrett Wagner

Here are some links discussed in the bonus episode:

• Putin stays in power

• Caitlyn Jenner, possible run for CA Governor

• Why the Captain of the Ever Given Should Get a Medal, Tom Palmer, FEE, April 8, 2021

• People Initially Called Crazy Who Were Right All Along

• 2003 California Recall and Governor Ballot - hysterical

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode 334 - Interview with Dre Baldwin

Dre Baldwin’s Biography

Dre Baldwin is a graduate of Penn State University and had a nine-year career as a professional basketball player. He’s a noted expert in discipline, confidence, mental toughness and personal initiative. He authored 27 book and holds a YouTube Silver Play Button (100,000+ downloads). Today, he makes it easy for entrepreneurs to have consistent mental toughness and confidence to deliver their best, mentally and physically, even when they least feel like it. Learn more at www.workonyourgame.com and www.dreallday.com.

Ron’s Questions: Segment One

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so their organizations can thrive. I’m Ron Baker, along with my good friend and VeraSage Institute colleague, Ed Kless. On today's show, folks, we've got the pleasure of interviewing Dre Baldwin. Hey, Ed, how's it going?

Ed Kless 

Ron, it's going great, baseball season is back upon us. That makes me happy, of course. Unfortunately, my New York Mets have been COVID’d out because the Nationals ended up with the Rona again. So I have to wait until Monday. But other than that everything is great.

Ron Baker

I’m looking forward to today we this. Dre Baldwin is a graduate of Penn State University and had a nine year career as a professional basketball player. He's a noted expert in discipline, confidence, mental toughness and personal initiative. He's authored 27 books, I feel like a piker Ed, and holds the YouTube silver play button, which means he's got over 100,000 downloads. Today, he makes it easy for entrepreneurs to have consistent mental toughness and confidence to deliver their best mentally and physically, even when they least feel like it. You can learn more about Dre at www.workonyour game.com Dre Baldwin, or Dre all day, welcome to The Soul of Enterprise.

You shot a three minute video to both me and Ed, as a way to get on the show. I have to tell you, it was one of the most innovative ways we've ever been asked to have a guest come on the show. So we had to have you on. So it's an honor that you're here.

I've been dying to talk about your story, there's so much to talk about. But one of the things I gleaned from browsing your website this morning is you've always been athletic. You finally make the high school varsity team, basketball team, as a senior but you sat on the bench all year. You didn't make the NCAA team, but then you succeeded at the professional level. Dre, how did you not get discouraged?

That's why you should feel right at home here because we're contrarians as well.

So you had a nine-year professional basketball career, you played in eight countries. Which league was that?

You name some of the countries, Lithuania and Germany, Mexico, did you have a country that you liked best or saw things that you wanted to go back to?

Dre, what were the fans like, compared, to say, the USA?

Even before you started to play pro, you started building your personal brand, blogging and going on YouTube, and now you're involved with marketing campaigns with Nike and Wendy's and a whole bunch of others. You did this all with no advertising. What was your motivation to share so much knowledge, because you have a ton of great content on your website—that’s free?

That's phenomenal, because as I was going through all of your content, you share the same philosophy that Ed and I have, which is we give away our knowledge. And the philosophy is if you give it away, then you have to replenish it. So you're always at the contrarian edge, or the cutting edge. You seem to share that philosophy.

You're an accomplished speaker, I give you credit because you stand and when you present, you command the audience, and I'm really interested in what you have to say. In 2009, you formed the Work On Your Game, Inc. You've got over 400 products. Again, you've written 27 books. Tell us about that journey. I know we've only got a couple minutes, so it's a little bit unfair, but tell us about the journey, of starting this enterprise. 

That's awesome. Well, Dre, this is flying by. We're already at our first break.

Ed’s Questions: Segment Two

And we are back on The Soul of Enterprise with Dre Baldwin, #workonyourgame. Dre, I wanted to ask you about mental toughness. You said earlier that you were a little bit of a late bloomer with regard to basketball. When did you become aware of your mental toughness, and how were you able to use it better than other people to your advantage?

That’s one of the things that continues to amaze me about professional athletes at any level, but especially those that get to play professionally. We see the games, right? We see the games that are starting at eight o'clock at night or whatever. But what we don't see is the sweat out there on the practice court for hours and hours every single day. Is that where the mental toughness really comes in? I mean, you’ve got to be mentally tough in the game. The mental toughness to just continue to work at the, in football they call it the block and tackle stuff, the very basics over and over and over again. Talk a little bit about that.

Did you see the ESPN documentary on Michael Jordan, Last Dance? Have you had a chance to see that? The basketball story is obviously well known and the mental toughness that Michael Jordan had but the thing that I really got from that was—it wasn't a surprise to me—how focused he was when he played baseball. Like how intense he was, he was just as intense trying to play baseball as he was playing basketball. And that just blew me away, the incredible tenacity that it takes to do that.

And we saw that with Tim Tebow, too, with my Mets for the last couple of seasons that he was able to just even make his way through the minor leagues to where he got was amazing. Let's bring it to business now, what are the things that you take away from the mental toughness that you brought to your basketball playing career, and how do you apply them in the business setting now?

How about the application to teamwork? I mean, there is a great video, I have to see if I can dig it up. It was Peter Drucker and, I think, Magic Johnson, going back and forth about basketball versus teams in business. And they're talking about the same thing. What did you learn from the application of playing a team sport to the business world, because I know you have a team because we've interacted with a couple of folks on your team who have been sending us emails and stuff. So talk about that aspect of the team part of business.

That's a great point. One of my favorite stories and this was, I think, about seven or eight years ago, there was a major league baseball game. One of the guys on the bench, who’d been riding the bench most of the year, noticed that a runner missed second base. And he was the only one other than him and the umpire who noticed it. They actually called an appeal play, and they got the guy out at second, but only because the guy on the bench was paying attention to what was going on on the field. I just see that as such an important role, being part of the team even on the bench. I coach my son's team. And one of the things that I would tell the kids because I was a bench coach was, “I'm going to teach you how to be on the bench.” We would go through that process.

That's great. I think my coaching days are done. My son is now in his freshman year in high school, and he's beyond me from a skill standpoint, which I'm pretty happy about. This is, as Ron said, flying by. We're up against our second break.

Ron’s Questions: Segment Three

Welcome back, everybody. We're talking with Dre Baldwin from WorkOnYourGame.com. Dre, I was listening to some of your talks this morning, and you said something I thought was incredibly profound that I want you to explain. You said, “To be the Best You, it's the permission you give yourself to not conform to who you've already been up to this point.” Explain that.

And along those same lines, it might have been the same talk or a different one, but you asked the audience, “How many times have you been too confident, too arrogant, too cocky? And compare that to how many times you didn't go far enough, you stopped short.” It's like we place our own limitations. And then you say, “If you're going to make a mistake, which one do you want to make?”

Then you said, “The difference between the amateur and the professional is changing the word If to Until. I thought that was brilliant, too.

Do you think, Dre, we learn more from success or failure?

One of your podcast episodes I listened to this morning was “mental errors are unacceptable.” We love to quote Yogi Berra’s, “We made the wrong mistakes.” Why are physical errors okay, but mental errors are unacceptable?

You've got a new product coming soon, called Raise Your Value. And Ed and I are pricing consultants, so we spend a lot of time on value pricing. You say it's time to up your worth and time to start demanding and getting it from the marketplace. Can you share anything about that product? Or at least your philosophy behind it?

That's so true. And it's part of your contrarian philosophy too, because the last thing we want is our dumbest competitors setting our price.

Dre, I have to ask you this, should NCAA players be paid? 

Excellent. That's one of the best explanations I've heard, thank you for that. Unfortunately, we're up against our next break.

Ed’s Questions: Segment Four

We are back with Dre Baldwin. The website is www.dreallday.com where you can look at an unbelievable amount of free content. Plus, take a look at some of his Master Classes and what he's got coming up with for you in the next couple of months. We look forward to looking at that as well. Dre, I wanted to just jump back quickly, since Ron stole my question about the NCAA. I wanted to jump back quickly and ask you about the whole confidence thing, and contrast confidence with arrogance. Because, like you, I think there's a missing element of confidence for a lot of people. And I think it's because people are afraid to be perceived as arrogant. That's what they're worried about. Arrogance is a whole other level. And it's not confidence. And I try to explain that those two things are not the same. But unfortunately, they're perceived as the same by a lot of people.

I believe it was Pete Rose, who's not the best role model admittedly, but he said something like, “It ain't bragging if it's true.”

Well, I always say he bet on his own team. It wasn't like he was betting against his team, he bet on his team to win. That’s confidence.

You're talking a lot here about what I see is a lot of folks are envious of others. We hear a lot talked about inequality in the world today. And there certainly is. But Ron and I are big believers what we absolutely need is equality of opportunity. It doesn't guarantee equality of outcome. And if you're looking for equality of outcome, that's not really a world that I want to live in. What are your thoughts on that?

Yeah, I've heard it put this way: At the Olympics, the bronze medalist hates the silver medalist and the gold medalists. The silver medalist hates the gold medalist, but the person who finishes 15th is just happy to be there.

I absolutely love the phrase “Ethical, unfair advantage.” I think that is a great phrase because you're making a connection here of something you said earlier when you were talking about the hedgehog principle, right? The Venn diagram, it's almost the same question, isn't it? That's what you're looking for in the intersection of that Venn diagram.

All right. Well, we've got only got about a minute left. I know you can't talk about it officially. But what what's coming up for Dre?

All right, @Dreaallday and #workonyourgame on Twitter, Dreallday.com is the website, any place else somebody should go to try to find your, Dre?

Outstanding. Dre Baldwin this has been such a pleasure. Really happy to have you on the show today. Ron, what do we have coming up next week.

Ron Baker

Next week, we're going to be talking to Alex Nowrasteh from the Cato Institute about immigration.

Ed Kless

I look forward to that. He's a really brilliant mind. Well, I'll see you in 167 hours.

---

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.

This week’s is bonus episode 334 - Warren Newsom Buckley and Rothbard

Here are some links discussed in the bonus episode:

• Buy American BS

• Elizabeth Warren is a Crackpot:

• Unintended Consequences of Anti-Price Gouging Legislation

• Did Anti-Price Gouging Laws Lead to More COVID-19 Deaths? – Reason.com

• Governor Gavin Newsom Recall Update:

• The EU’s Greed

• Celebrating William F. Buckley, Jr. and Murray Rothbard

• Vaccine passports: Will I have to get one?

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode 333 - Interview with Matthew Stewart - The Management Myth

Ron’s Questions: Segment One

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so their organizations can thrive. I'm Ron Baker, along with my good friend and VeraSage Institute colleague, Ed Kless. On today's show, folks, we're going to be talking about The Management Myth with the author that we've been trying to get since day one of our show, Matthew Stewart. So Ed, how's it going?

Ed Kless

I'm really excited to be on today. I'm really thrilled that Matthew has finally been able to join us. He was, as you were saying to him, the most mentioned author on our show, and was mentioned in show number one.

Ron

And I'll talk to him about that. Matthew, welcome to The Soul of Enterprise.

Your 332 shows late as far as we're concerned, but that's okay. We eventually got you. Matthew, I don’t even want to take time reading your biography, other than to say that you graduated from Princeton University in 1985, with a concentration in political philosophy. And then you went to Oxford, where you earned a Doctor of Philosophy in 1988. And I think German philosophy, 19th-century German philosophy, if I'm not mistaken. How does a guy who's got a doctorate in philosophy end up in management consulting?

There's going to be some problems to solve some things to think about that will have some impact somewhere so i think i think there was a you know, a good a good side to that accident, too.

I think we crossed paths. I went into business as a CPA, and now later in life, I wish I had the degree in philosophy instead; you went the other way. And then you probably learned to appreciate philosophy more once you started getting into the management literature?

Your book, The Management Myth: Management Consulting Past, Present, and Largely Bogus, which came out in 2009, is based on an article you had written published in The Atlantic first, as we talked about, in June 2006. And we're going to put both on the show notes; folks, you've got to read both, you've got to read the book, and you've got to read The Atlantic article, because they really go well together. And the book traces, like you say, the genealogy of the management literature, and the discipline, whatever you want to call it, you expose its flaws. And then you want to replace it. And you say, it's not a discipline, but an idea of one. And I always thought the two biggest oxymorons were political science and scientific management. Scientific management isn't a science, is it? It's a business.

I love how you say that management theorists lack depth, because they've been doing for only about a century what philosophers have been doing for millennia, which is, studying human behavior. And we have a saying around here that if you want knowledge read nonfiction, but if you want wisdom, read literature (or philosophy, I'd probably add).

And this is a scary question for me, Matthew, as the author of seven “business books.” But how can so many bad books sell so well?

No, no, you don't have to qualify, I'm very aware of it. We joke around here that the library shelves in Hell are stocked with business books, and the ones in Heaven have literature. You quote an old Professor, Matthew, and I love this. He says, “How can so many, who know so little make so much by telling other people how to do the jobs they are paid to know how to do? Do you have a theory for why organizations continue to hire consultants? or theories?

I think you nailed it. I think bringing in that outside perspective because you can't be a prophet in your own land. So if some outside expert—you know, confirmation of authority—comes in and says, “Oh, you need to be doing this,” or whatever, then people are more likely to buy in. I think there's, like you said, multi-factor reasons for it. You know, Matthew, I read your book on a plane to Australia. And I had already written a couple books trying to trash [Frederick Winslow] Taylor and I thought I did a pretty effective job until I read your book. You tore him down from his pedestal and buried him in the ground and nailed the coffin shut. And yet he keeps rearing his ugly head. We have a special loathing here for Frederick Taylor because he influenced the first lawyer to implement both the billable hour and the timesheet into a law firm in 1919, a Harvard grad lawyer [Reginald Heber Smith], heavily influenced by the zeitgeist of the day, which was Taylorism, scientific management, the whole nine yards. And it has been a blight on the professions ever since. And it's still around, and it's 100 years later!

And you do a great job pulling down all the other gurus from Collins, Peters, even Drucker, and Drucker is kind of a saint around here with recognized flaws. And you pointed them out and I think you nailed it. Unfortunately, Matthew, we're up against our first break. 

Ed’s Questions: Segment Two

Folks, we are back with the author of The Management Myth: Management Consulting Past, Present, and Largely Bogus, Matthew Stewart. Pleased to have you on Matthew, and I want to just jump in from page three of your book: “Like all consultants, I owe my education to the extraordinary generosity of my clients.” And I wrote next to it in the margin, “Amen.” And one of the things that I think is important to me as a professional consultant for a long time, when I did much more consulting day-to-day, was some of the philosophies of Peter block, who taught me that when done well, and I agree with you that it's often not done well, consultants can be a model for behavior for how organizations should move forward even after the consultant moves on. And one of the best compliments that I ever received in a consultant role was when they would say to me, Ed, you've taught us how we can begin to solve our problems on our own once you're gone. And I think when done well, that can be one of the powers of consulting. Your thoughts on that?

Well, one of the things Ron and I talk about is social capital. And in a way consulting can be a form of social capital as you move from organization to organization and bring some of those, as you say—I hate the term best practices—really more the philosophical point. But this leads me now to something that I've been wanting to ask you for a long long time ever since I read your book. I want you to talk to us about the tool, the main tool in any consulting engagement, The Whale.

“The Whale” as described by Ron and Ed during the show.

It's a great tool. I'll often put that graphic up and shout out, “Thar she blows!” You find it everywhere. It's a truism in a lot of places. I wanted to share this with you, it got expressed to me this way in one organization: “Ed, you have to understand here at X organization, the spreadsheet is mightier than the sword.”

One of my favorite insights was in one of Edward R. Tufte’s books, and he is citing somebody else—I can't remember the name of the other author who did an executive summary of executive summaries. He read like 10,000 executive summaries and then wrote an executive summary of them. And it came down to three points, and it's, One, some do, some don't. Point number two, the differences aren't very great. Point number three, it's more complicated than that. And that's ultimately what The Whale tells you; it can give you some insight, as you say, depending upon how The Whale is drawn in a particular company. But what you then have to do with it is really up to you. I want to share with you one other thing that has happened to me as an inspiration to you. I was in a meeting a couple of years ago, I've been with Sage for 17 years. So this is a previous regime that really got into ROI analysis, what's the ROI? So we had the spreadsheets of ROI, and you had to fit your thing into the ROI. And I asked during a meeting, again, inspired by you, “Has anyone done the ROI of the ROI tool?” And of course, the answer's no. They look at you like you're insane, because it's self-evident, right Matthew? It's the ROI tool, it must be right.

Well, one last question before the break. You talk about the impact of your customers, as we would say, had on you and the learning that you've done from them, and I think that’s great. Did you ever have an experience where the client was inviting you into their bubble, and wanted you to be part of their bubble? In other words, we talked earlier about sometimes being the outsider is helpful, but a lot of cases they want you to continue the self-deception. Did you ever have experience with that? Where they'd want that, to just continue with this the bad story that was happening?

Well, Matthew, this is great, but we're up against our break.

Ron’s Questions: Segment Three

Welcome back, everybody, we're here with Matthew Stewart, the author of The Management Myth: Management Consulting Past, Present, and Largely Bogus, and Matthew, if you want to get Ed really upset, say something like “If you can't measure it, you can't manage it,” and then attribute that saying to Peter Drucker. We've combed through Drucker, and he never really did say it. The closest I could find of anybody who said it was Marvin Bower from McKinsey, called the McKinsey Maxim. But here's my question, kind of like Ed's meta-question [on ROI]. How do you measure the effectiveness of management itself?

Judgment is so much more important in a lot of areas than measurement itself. You wrote that “Our motto might well have been if you can't manage it, measure it.” And it seems like a lot of organizations do that. Well, the more we measure, the more we'll accomplish. And I actually think the most precious things in life can't be measured. I think about the Declaration of Independence, life, liberty, and the pursuit of happiness. Tell me how you measure that? But those ideals are principles that we all aspire to, and that can't be measured. The whole cult of measurement drives me crazy, it bleeds through your book, too, and it bleeds through our work, we hate it.

Just like you talked about Robert McNamara and his one metric, “body count,” during the Vietnam War, which he apologize for later in his autobiography. We always joke that if Disney had hired efficiency experts, or maybe Frederick Winslow Taylor himself, he would have ended up producing Snow White and the Three Dwarfs. Efficiency can come at the expense of doing the right thing. And that's where it gets really dangerous.

Matthew, the other thing that you wrote that is absolutely profound. And I think only a philosopher could have written this. You said, “Theory X and Theory Y depend on Theory U, for utopian. And you say really, it's about Theory T, for tragic. Shakespeare, our framers, the ancient Greeks, maybe without Plato, but most successful managers are T-types. Unpack that for us, because I think that's phenomenal.

It reminded me of Thomas Sowell’s book, A Conflict of Visions, where he talks about the constrained and unconstrained view of man, same type of thinking. I just thought it was a brilliant insight to apply it where you did. We couldn't agree more with you that business is not a profession. And Ed’s got a great saying, “Business ain't science.” But let me ask you this, because you take on this issue, too, and Peter Drucker did in his own way as well. He thought business was a branch of the humanities, basically. Do you think, Matthew—and this is an impractical question, but I can do that because I'm talking to a philosopher—would society be better off without business schools?

Like you say, it's all about people. And the key has never been to study human relations. It's to become a better person. I just absolutely love that. Well, this has been a real honor to have you on the show. Ed is going to take you home, but I just want to say thank you so much. This has been great.

Ed’s Questions: Segment Four

We are on with Matthew Stewart, the author of The Management Myth: Management Consulting Past, Present, and Largely Bogus, debunking modern business philosophy. Also his books include The Courtier and the Heretic: Leibnitz Spinoza and the Fate of God in the Modern World, and Nature's God: The Heretical Origins of the American Republic, and the upcoming book, The 9.9 Percent: The New Aristocracy That Is Entrenching Inequality and Warping Our Culture. Matthew, please come back on after that [last] book is out, we'd love to talk to you about that as well. But let's finish up on The Management Myth conversation so we can put this to bed. In doing the research for our interview today and revisiting your work, I came across this sentence and it says “Americans often fell in love with the effects of science, not the method.” And that struck me with regard to what we're seeing with COVID-19. And we had a guest about a month ago, Donald Hoffman [Episode #329], who is at UC Irvine and his book is called The Case Against Reality, which will let you figure that out. He said this, “Science isn't dogmatic, but scientists are.” And I think the same thing is happening in leadership and management today. There's a lot of dogma that has really no basis in fact. Talk a little about your observations of that.

Nothing is less scientific than the phrase, “It's settled science.” If the science is settled, well then by definition it's not science, right? We’re supposed to be questioning it, that's the point. I wanted to share with you something. One of the other business philosophers, and in fact CEO, that I'm a big fan of is John Mackey at Whole Foods. He has a really interesting way of thinking about business and profitability. He says profit is like the red blood cells in your body. You die without red blood cells, but you don't think, “Hey, I got to make red blood cells today.” That's not why you wake up in the morning. And he also compares businesses with giraffes. And he says, “People see businesses making a profit as surviving, and say, therefore, they must be in business to create a profit.” The reality is you're in business for some other purpose, and the ones that survive happen to have profits, just like the giraffes that survive happen to be the one that have longer and longer necks to get to the higher and higher leaves. So what is your thoughts on Purpose in business?

All right, I'm going to do something totally unfair to you, Matthew. In 30 seconds, the 9.9% [Matthew’s book due out October 12: The 9.9 Percent: The New Aristocracy That Is Entrenching Inequality and Warping Our Culture]. What do you got?

Well, outstanding. We look forward to reading it and having you back on to discuss it. Ron, what do we have coming up next week?

Ron Baker

We have got Dre Baldwin, basketball player and entrepreneur, and he's going to tell us his story.

---

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 #332: Why Do Consumers Love Subscriptions

In 2020, Zuora and Subscribed Institute commissioned The Harris Poll international survey on what consumers most value about subscriptions: The latest “The End of Ownership” report.

And some fascinating findings from the latest Subscription Economy Index™.

We’ll also answer a listener’s question on pricing and offering options, and how they are different under Value Pricing 1.0 and 2.0.

Why do consumers love subscriptions?:

• Convenience (42%)

• Variety (35%)

• Cost Savings (35%)

The benefits aren’t just seen as transactional or incidental. They actually have a cumulative, qualitative effect on building a relationship between brands and consumers.

Other adjectives: Transparency, efficiency, flexible (upgrade, downgrade, pause, etc., as needs change). No more ownership lock-in (depreciation, repairs, recycling, etc.), more variety. Always up-to-date

Jennifer Hyman, co-founder and CEO of Rent the Runway: “The world of fashion rests upon a myth. It does not work unless it convinces you, as the consumer, to buy more and more things that you don’t need. I’m saying the pride of ownership is dead, and the pride of access is the new luxury.” Ed: Is this true in IT? Apple?

There is no other business model that guarantees regular check-ins and active customer participation better than subscription.

Subscription Economy Index™ (SEI)

In 2020: Subscription business grew 11.6%, while product-based companies declined by 1.6%.

In FY2020 Q4: subscription businesses experienced 21% growth versus 3% for S&P 500 companies (a factor of 7 higher growth).

From TSOE Listener Lee Handley

“Have you seen ‘The Last Blockbuster’ “documentary on Netflix?] What a perfect topic to tie into a “Flawed Business Model” discussion. It helped me articulate an insight from your book. If the model is wrong, the business will fail—it’s only a matter of time.”

The Economy in Mind

In the March 13, 2021 Zuora newsletter, Tien Tzuo interviewed Jonathan Levin,

Dean of Stanford Graduate School of Business.

For the S&P 500, intangibles accounted for 17% of total assets in 1975, and 90% last year. For Microsoft, only 1-2% of its market value is accounted for by tangible assets.

This has major implications for national statistics and business cycle analysis. Historically, investments in assets were a leading indicator, but it’s been falling in recent decades.

Perhaps this is why, even with all the government COVID spending, there’s no inflation?

At the risk of discussing monetary policy, just recall the monetary equation:

            Money Supply x Velocity (the turnover of a $1) = Gross Domestic Product

Take the money supply as a given, though economist Deirdre McCloskey [Episode #293] thinks it needs to be a global measure, not just one country, because of globalization and the interdependence of supply chains, etc. 

What if the economy is bigger than we think. The GDP, as currently measured, was approximately $21.43 trillion in 2019.

We’ve had Mark Skousen on the show [Episode #205], and discussed his GO Index [we also discussed it on Free-Rider Friday #98]. It’s also discussed in Mark’s book, The Structure of Production: New Revised Edition, 2015:

• On April 25, 2014, the Bureau of Economic Analysis (BEA) at the U.S. Department of Commerce announced a new data series as part of the U.S. national income accounts, and the BEA began reporting “Gross Output by Industry”

• Cato Podcast with Mark Skousen, George Gilder, Steve Forbes

• Government now recognizes the critical importance of Gross Output (GO).

• GO measures spending throughout the entire production process, not just final output like Gross Domestic Product (GDP)

• GO measure total sales volume at all stages of production, includes all business-to-business (B2B) transactions that GDP leaves out

• In the third quarter of 2014, GO hit $31.3 trillion, almost twice the size of GDP, which was $17.6 trillion. GDP measures the “use” economy, GO measures the “make economy”

• GDP is comprised of consumer spending, government spending, investment, and net exports, with the first two of these being the biggest contributors

• GDP overemphasizes consumer and government spending as the driving force behind the economy because it ignores supply-side benefits of saving, business investment, and technological advances.

• GDP shows Household spending generates more than two-thirds of total economic output, latest U.S. data on GDP, $17.6 trillion, consumer spending $12 trillion (68%), government spending at $3.2 trillion (18%), Private investment $2.9 trillion (16%), (Net exports at -2 percent.)

• The GO statistic, by contrast, shows consumers less than 40 percent ($31.3 trillion), while spending by business is $16.6 trillion, more than 50 percent of economic activity

• Consumer spending is largely the effect, not the cause, of prosperity

• GO is over $23 trillion in 2014. GO is significantly more sensitive to the business cycle than GDP. In 2008–2009, nominal GDP fell only 2 percent, GO fell by 6 percent and B2B spending collapsed by 10 percent

• BEA’s measure of GO does not include all sales at the wholesale and retail level.

• Wholesale and retail trade figures are included in GO only as “net” or value added

• Skousen believes this is a serious omission, comprising more than $7 trillion dollars in business spending in 2014

• We need to include gross wholesale and retail trade figures. They are legitimate B2B transactions that deserve to be counted

• Skousen created his own aggregate statistic, Gross Domestic Expenditures (GDE), which includes gross sales at the wholesale and retail level and is therefore significantly larger

• GDE in 2014 is over $37.5 trillion, 25 percent higher than GO and 120 percent more than GDP.

• Consumer spending actually represents only about 31 percent of the U.S. economy using the GDE statistic

• The adoption of Gross Output is the most significant advance in national income accounting since World War II.

• GO is a reflection of Say’s law (supply creates demand), a supply-side statistic, while GDP is a symbol of Keynes’s law, a demand-side number

• Gross output [GO] is the natural measure of the production sector, while net output [GDP] is appropriate as a measure of welfare. Both are required in a complete system of accounts

So what if the GDP side of the monetary equation is a lot higher? There would be a lot more room for government spending without inflation.

---

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.

This week was bonus episode 332 - Leaving Cal and Silent Cal

Here are some links we discussed:

• DST is a Problem We Can Easily Fix

• Encountering Thomas Sowell

• Are You Creating Thick or Thin Value for Your Clients

• Calvin Coolidge Speech on the Declaration of Independence

• From Kevin WIlliamson - Words on Words

• You Think Dr. Seuss Is Bad? Here Are 12 More Children

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode #331: Interview with Joshua Gilder, Former Reagan Senior Speechwriter

Ed and Ron were honored to have Joshua Gilder on the show. As former President Ronald Reagan’s senior speech writer, his first speech for the President won acclaim for the line “Go Ahead, Make My Day!” He co-authored two State of the Union addresses and contributed to many of the President’s televised speeches from the Oval Office. He wrote Mr. Reagan’s highly regarded 1988 Moscow Summit address to students at Moscow State University, which opens our show.

Ron Baker’s Questions: Segment One

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so that organizations can thrive. I'm Ron Baker, along with my good friend, and VeraSage Institute colleague, Ed Kless. On today's show, folks, we have former Reagan senior speechwriter, Joshua Gilder, who wrote the speech that you just heard a part of. How's it going, Ed?

Ed Kless

Other than the chills I just got by listening to the speech again, and having the author present with us, I'm doing great.

Ron

I know, this is great. Let me read Joshua Gilder into the show. He served as President Reagan’s senior speechwriter from early 1985 until mid-1988, and he is a founding director of the White House Writers Group. In 1989, he was appointed by President George Bush to be Principal Deputy Assistant Secretary of State for Human Rights, leaving in 1991 to help David Rockefeller write his autobiography. He's written two books, Ghost Image, which is a medical thriller novel, published in 2002, and his scientific history of the dramatic collaboration of Johannes Kepler and Tycho Brahe, Heavenly Intrigue, which was published in 2004, and he wrote with his wife. Joshua, welcome to The Soul of Enterprise.

Josh Gilder

Thanks for having me. It's great to be here.

Ron

It's an honor to have you. So tell us. I know you attended Sarah Lawrence College, you studied literature and music [and painting and theater]. How did you end up in the White House?

Okay. Ed's also theater. I'm sure you guys will have lots of talk about.

Well, I could talk to you for hours about your cousin [George Gilder] because he's been a 40 year mentor to me. In fact, his book, Knowledge and Power, he quoted me in it. And for me, that was an absolute thrill to be quoted from the one author that I admire the most. But Josh, I’ve got to ask you this, there's so many speeches I want to talk to you about, and Ed will have to carry this on, but give us the backstory to the Moscow State University speech. I know you flew over there in advance. I know you saw the setting, the bust of Lenin, the mural of the Russian Revolution. And you thought originally we’ve got to get rid of that. But then you change your mind. What was the backstory to that speech?

Well, hold that thought, Josh. I'm sure Ed's got follow-up questions for you on that.

Ed’s Questions: Segment Two

We are back with the author of the opening epigraph of our show, the [Ronald Reagan] Moscow State University speech. Josh, I wanted to ask you, when you were telling the backstory. Were you present at the speech when Reagan delivered it? Or were you gone by then?

So did it live up to exactly you thought it was going to be, based on the situation and the setting?

And one of the things I noticed in watching the speech again is that there were no applause lines, mostly because, clearly, most people were listening to it in translation. But then the applause at the end lasted last a good solid minute, maybe even a little bit more. They were genuinely touched by the speech.

Have you ever heard from anyone who was present at that speech? Any of the students who came back to you afterwards and talked to you about it?

I’m wondering—you said you watched the speech on television—if you have any recollection of the Q&A afterwards, because that's also out there. And I watched that as part of prep here. If you don't have anything to say about this, I totally understand. But two things that struck me, one, they say he's going to stay on for 15 minutes. And it was 35 minutes of Q&A. And second, is that this is late in Ronald Reagan's second term, where the story is now that he had, quote, “lost it.” And it's clear from his ability to take the Q&A that was going on there that there was no [mental decline], maybe he was a little bit slower than he was four years ago. But he was still on top of absolutely everything from policy standpoint. And from a rhetorical standpoint.

Well, rather than stuff one more question that would give you only a minute, I'm going to jump to our break and perhaps pick it up with you in the fourth segment.

Ron’s Questions: Segment Three

Welcome back, everybody. We're here with former Reagan senior speechwriter, Joshua Gilder. Josh, talking about the Moscow State University speech, you consulted with a Yakov Smirnov for that speech?

Did George [Gilder] look at the speech before it was delivered?

That's how George gets to say the most quoted economist by Reagan.

I know there's a picture of Reagan with a copy of Gilder’s book [Wealth and Poverty, 1981 first edition]. I think he gave it to every one of his cabinet members.

My dad read the Playboy interview with Gilder and told me, “You need to read this guy's book,” and I kind of poo-pooed it because I had just read Milton Friedman’s [Free to Choose], and he finally bought me a copy. I read it in one sitting; it changed my life. It just turned everything I was learning in college upside down in terms of economics. I have to ask you this, too, about what Marlin Fitzwater [Reagan’s Press Secretary] said about the speech. And this, of course, is in Three Days in Moscow, by Bret Baier, who I know talked with you about the speech. Fitzwater said, “If anybody would ever appreciate Lenin having to spend an hour and a half looking at the backside of Ronald Reagan, it would be the president.” I thought that was a great line. And, Josh, you wrote the Vatican speech, which I think was delivered about a week before the Berlin Wall speech that Peter Robinson had a big part in [Episode #320]. And you had a line in there that I do think is really good: “The freedom that God gave us all when he gave us a free will.” How was that received?

Except the Moscow State University speech flew through [approval process] pretty easily, didn't it?

Josh, I think the Moscow State University is Reagan's best speech. I’ll just go on the record saying that, but outside of that one, what is your favorite Reagan speech? 

You got to write the victory lap speech, I love it.

Fantastic. Unfortunately, we're up against it. And Josh, Ed's going to take you home, but I just want to say thank you so much. This is, like I said, a bucket list item for me to have you on.

Ed’s Questions: Fourth Segment

We are back with the founding director of the White House Writers Group, Joshua Gilder. Josh, I want to ask you, following up from the speech. How do you think Russia has done? Do you think they've just shrugged off one autocracy for another?

Well, we got about four minutes left. I want to try to add a little levity to this. How do you think Ronald Reagan would have used Twitter?

Maybe he would have put out the stuff that the speech writers wrote that the State Department ripped out.

Yeah, he would have responded, “It's more complicated than that,” and then posted a link to a big long speech. Random curiosity question. Did you watch any of the series, The Americans?

Any thoughts on it? You didn’t stick with it, so you must not have gotten too much into it?

Yeah, I just re-watched that about a month ago. In fact, Ron and I have talked about it. William F. Buckley said it was the best movie he’s ever seen. Totally unfair question, we've got 90 seconds left. What did you think of your cousin's article, The Huawei Test [George Gilder].

Okay. Well, we'll have to have you back on because it deserves its own show.

Well, this has just been absolutely great, we're so pleased to have you on and wanted to thank you again for coming on today and sharing this with our audience. As we said to Peter Robinson as well, it's like living with history. So we really appreciate it.

All right, Ron, what do we have coming up next week.

Ron Baker

Next week we have John Tammany, author of They're Both Wrong, so that'll be really interesting. 

Ed

All right, well, I'll see you in 167 hours.

---

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 #330: In Search of Relationship Value

This topic was inspired by Fender, founded in 1946: It discovered that 90% of new guitar players quit within 3-6 months, many within 30 days. Those who stick with it for one year become a customer for life.

So it created the Fender Play app, a digital library of over 3,000 online video lessons on how to play the guitar. It attracted around 130,000 subscribers within 3 years, with a 95% retention rate.

Subscribers spent 40% more on Fender products.

During COVID Fender offered a free trial to Fender Play, and attracted 1 million subscribers within several months. We can learn three lessons, according to Tien Tzuo’s newsletter:

1. Practicing experimentation makes perfect—It’s OK to admit you don’t know what you don’t know. “You find holes by falling into them. Then you fill them and you never do that again.” Constantly tinker with pricing and packaging.

2. Stay in tune with the customer: understanding the qualitative human elements of the customer experience

3. Listen to the analytics: retention is important, but so are harder-to-quantify metrics like engagement. People are messy and complicated

Even Value Pricing 1.0 pays lip service to the customer relationship, relative to the subscription business model. There is no better outward-focused business model than subscription. The relationship is at the center of the business. It also does the following:

• No silos, smashes bureaucracy (timesheets have no place)

• Bakes innovation into the model

• Constantly adding value, surprise and delight

• The empirical evidence is overwhelming, from Unicorns and John Warrillow’s examples [Episode #327], to the many Direct-to-Consumer brands and B2B subscriptions, and the overall growth in the subscription eclipsing traditional transactional businesses.

• Higher valuations upon selling the business when it has annual recurring revenue and a track record

Words Matter

We don’t have an adequate vocabulary yet to describe all the aspects of this model. As National Review’s [and previous TSOE guest, Episode 316] Jay Nordlinger wrote: “The more experience I have, the more I think that definitions are virtually the whole ballgame. What do you mean? What do you mean by that word or phrase? Once this is sorted out, conversation can proceed.”

We talk about price the customer in VP 1.0 and price the relationship + the portfolio in VP 2.0. But the insurance analogy has been taken too far. 

We are really spreading activities among a portfolio of customers (some use more, some less, etc.). This is why one-off services is such a powerful objection and hurdle to implementing this model. We will figure this out through trial, error, and experimentation.

A “choice architecture” business model

The psychology is different with subscription compared to transactional. You are entering a relationship that requires an action to cancel.

Convenience + Peace of mind + front of the line service are powerful drivers of value, even if not fully utilized.

Simplicity, Frictionless, and Transparency, fosters Trust

There is too much friction in the VP 1.0 model. If the customer needs something different, a Change Request process needs to happen [read: hassle, bureaucracy, and friction for the customer], whereas simplicity, frictionless service and transparency in pricing fosters trust.

All of VeraSage’s work has been around increasing pricing power:

• It’s why we work with sellers, not buyers

• Penetration/Neutral/Skim pricing strategies, with our focus on Skim (not that the others are invalid)

• Branding, strategy and positioning, from our colleague, Tim Williams

• The Adaptive Capacity Model (Are you busy? Raise prices!)

• Unlimited Access/Value Guarantee/Perpetual Fixed Price Agreements

• Niche, Innovation

• Business advisory services: pricing, KPIs, etc.

• Customer profit focus/lifetime value vs. transactional profit to the firm only

More Vocabulary

Joseph Pine and James Gilmore refer to buyers as aspirants—they aspire to be someone or something different. Here is where “Transformations” enter the model, and how they explain them in their book, The Experience Economy:

• “Without a change in attitude, performance, characteristics, or some other fundamental dimension of self, no transformation occurs.

• “Transformations are individual. No individual can undergo the same transformation twice; the second time it’s attempted, the individual would no longer be the same person. With transformations, the customer is the product!”

And they explain the various aspects of insurance, depending on the nature of the offering:

• Services Insure: Secure payment in the event of a loss.

• Experiences Assure: Secure confidence, encouragement, trust, or feeling of satisfaction.

• Transformations Ensure: Secure event, situation, or outcome.

“Think about the emblems aspirants purchase [or receive] to commemorate the transformations they undergo. Rings, crosses, flags, trophies, pennants, medals, badges, medallions, insignias, diplomas, certificates, and other such emblems all tangibly signify that their bearers have transformed themselves in some way: from single to married, from team to champion, from civilian to soldier, from soldier to hero. Transformations cannot be extracted, made, delivered, or even staged; they can only be guided.”

This economic offering requires three separate phases: diagnosing aspirations, staging transforming experience(s), and following through.

Other Resources

Net Revenue Retention (NRR) rate: https://www.klipfolio.com/metrics/saas/net-revenue-retention-rate 

Harrys sale was blocked by the FTC; They also blocked a women’s razor brand sale. Chilling effect on the DTC model?

• Dollar Shave Club: https://www.nytimes.com/2016/07/20/business/dealbook/unilever-dollar-shave-club.html 

• Harrys (sale blocked to Edgewell/Shick): https://www.theverge.com/2020/2/4/21120241/ftc-blocks-harrys-dollar-shave-unilever-schick-gillette-razors-edgewell 

• Billie (women’s razors): https://techcrunch.com/2020/12/08/ftc-sues-to-block-pgs-acquisition-of-billie-a-razor-startup-for-women/

---

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.

This week was bonus episode 330 - “AOC, Texas, and Cookie Dough”
Here are a few links discussed:

• AOCs Terrible Minimum Wage Argument

• AOC’s Denmark Comparison on the $15 Federal Minimum Wage, Debunked - Foundation for Economic Education

• Why the CDC is Delaying Its Vaccine Guidelines

• Elizabeth Warren's Wealth Tax - Three Practical Questions

• 35 of Ayn Rand's Most Insightful Quotes

• Prediction Markets - Betfair, Metaculus, PredictIt and Smarkets

• Who Was the First Woman to Receive an Electoral Vote?

• Say No to Raw Dough

• Scotch whisky tariffs suspended in new US agreement

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode #329: Interview with Donald Hoffman - The Case Against Reality

Ron and Ed welcomed to the show the author of Ed's favorite book of 2019, The Case Against Reality, Professor Donald D Hoffman. (Or do they.) The show notes are below.

But first a bit more about Dr. Donald Hoffman…

Donald D Hoffman received a Bachelor of Arts degree in quantitative psychology from the University of California at Los Angeles (UCLA) in 1978 and earned his Doctorate of Philosophy in computational psychology at the Massachusetts Institute of Technology (MIT) in 1983 under David Marr and Whitman Richards. He was briefly a Research Scientist at the Artificial Intelligence Laboratory of MIT, and then became an assistant professor at the University of California at Irvine (UCI) in 1983. He has remained on the faculty of UCI since then, with a sabbatical during the 1995-1996 academic year at the Zentrum für Interdisziplinäre Forschung of Bielefeld University.

Ed’s Questions: Segment One

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way we think and work so organizations can thrive. I’m Ed Kless, with my friend and co-host, Ron Baker. And folks, on today's show, we are very pleased to have our interview with Professor Donald Hoffman. Hey, Ron, how's it going?

Ron Baker

Very good, Ed. Looking forward to this.

Ed Kless

Yes. We’ve been marinating in Dr. Hoffman's work all morning, have a little bit of a headache, I must say. But that's okay. We will somehow persevere through this. Let me get the introduction done and over with so we can get right to the content here. Professor Donald D. Hoffman received a Bachelor of Arts degree in quantitative psychology from the University of California at Los Angeles and his doctorate in psychology in computational psychology from Massachusetts Institute of Technology. He was briefly a research scientist at the Artificial Intelligence Laboratory at MIT, and then became an assistant professor at the University of California at Irvine, where he remains on the faculty. Welcome to The Soul of Enterprise, Donald Hoffman.

So I have to give you the quick background story about how I came across your work. I'm almost certain that it was a reference that another one of our guests, Rory Sutherland [Episode #9 and Episode #267], who is the vice chair of Ogilvy and Mather, made to a TED talk that he saw you give, and I went through, and this is probably four years ago, loved it, went out and purchased your book, Visual Intelligence: How We Create What We See, and was so overwhelmed, and showed my daughter this, the picture of the thing called the ripple, which just absolutely blows me away every time I look at it, it is a two dimensional image, that when you look at it, you cannot but see it in three dimensions. And it is a wild, wild thing. So that was my quick introduction. I think it's on page two of this book. But I want to ask you a little bit about where did you come across this ripple? What, the background story about how you got to this visual intelligence piece before we get into the newer work of yours?

No, that would be very bad. So that image, the ripple, a computer would just see that as a 2d image because that's what a computer does at least initially, right?

So this led to your work on visual intelligence and then the your later work gets you to The Case Against Reality: Why Evolution Hid the Truth from Our Eyes, which is where I think we want to spend most of our time talking to you about. Before we start to get into the details of it, what was the transition like? You were coming from visual perception, then all of a sudden, the ideas of consciousness came into being? I'm trying to make that connection.

I love this, you write: “Cats can't do calculus, monkeys can't do quantum theory. So why do we assume that homo sapiens can demystify consciousness? Perhaps we don't need more data, perhaps what we need is a mutation that lets us understand the data that we have.”

Perhaps one of the more bizarre things that I came across after reading your work, that at least made me stop and go, hmm, maybe there's nothing to this, but there was a position that was put forward that said, perhaps people with advanced autism are an evolutionary step forward in their ability to process some of this stuff. And when you hear that initially that just seems ridiculous. But I guess it's theoretically possible that they are just perceiving things differently than we are.

Sure. Wow, this is just fascinating stuff. Thank you, Professor Hoffman, we are at our first break already, I can't believe it.

Ron’s Questions: Segment Two

Welcome back, everybody. We're here with Donald Hoffman, the author of The Case Against Reality: Why Evolution Hid the Truth from Our Eyes. Don, as we were talking about during the break, this book just really makes you think, and I love some of the metaphors you use, like the email on your desktop: it's there to hide the truth from you, and help you do useful things. And you say that's what evolution has done. And then you wrote this, you said, “The truth won't make you free, it will make you extinct.” And that's kind of where you begin to talk about the Fitness-Beats-Truth (FBT) theorem. Can you explain that?

You mentioned eye candy, and you have a beautiful discussion about beauty, and how it's not about objective reality. It's about fitness. And I just thought that was great. I remember, Ed mentioned Rory Sutherland, we had him on, and he says this all the time, that the peacock uses its tail as a way to signal and this is why women chase guys with Ferraris, not truck drivers.

That's amazing. The other thing I have to ask you about because it’s just mind blowing. If I'm sitting here looking at a spoon, and I turn away, is it still there? And you wrote well, “something is there, but it's not a spoon, and it's not in space and time”?

You even anticipate some skeptical questions, like, “If I don't see reality, why does my camera see what I see?” Or, “How does a driverless car work”? Can you explain that, because I can see people raising those types of objections?

Don, this is great, we’re up against our break. It’s like being in a graduate seminar. I really appreciate this.

Ed’s Questions: Segment Three

The book is The Case Against Reality: Why Evolution Hid the Truth from Our Eyes. The author is Professor Donald D. Hoffman, who is with us today on The Soul of Enterprise. And, Don, I want to ask you now about the concept of consciousness. You write: “All attempts at a physical theory of consciousness have failed. They have produced no scientific theory and no plausible idea of how to build one. The failure, I think, is principled, you simply cannot cook up consciousness from unconscious ingredients.”

So the assumption that neurons create, or that physical systems like the silicon circuits, create consciousness or could create consciousness is wrong from the get go, because we're assuming those things have an objective reality, and they don't.

It's funny, a high school friend of mine just posted an article last week from those two scientists that you mentioned about the microtubules. So thanks, you already covered the question that I had for you around that. So then you go the other way and say, okay, well, then what we need to do is we need to argue that consciousness is the foundational building block, and that it is conscious units that create more consciousness. Do I have that sort of right?

The book came out about two years ago [2019], at the end of the book you mentioned that you're starting these calculations with your team. I assume that since you're still talking to us two years later about it, you haven't falsified it yet?

Well, I've got only about a minute left with you and want to ask you what might be a deep question. And if it's out of bounds, please let me know. Has your research and work changed anything about how think about the divine in any way?

Wow, Amazing stuff. Thank you so much. Ron's going to take you the rest of the way home in the last segment. But I just wanted to thank you for appearing on the show today. It's been great to talk to you and a deep honor.

Ron’s Questions: Segment Four

Welcome back, everybody. We're here with Donald Hoffman, the author of The Case Against Reality: Why Evolution Hid the Truth from Our Eyes, which we highly recommend; I think it was Ed's number one book from last year. And Don, I wanted to ask you, on this consciousness topic, you seem to be fairly optimistic, or believe, that Artificial Intelligences can create real consciousness?

We've had George Gilder on the show [Episode #207], and he wrote Life After Google. He's an economist, he's got an information theory of capitalism which I find absolutely fascinating, and talks about some of the same things you do, some of your work overlaps. And I just wanted to get your reaction to this because he doesn't think that AI can, or could, create consciousness, and he wrote this: “The blind spot of AI is that consciousness does not emerge from thought; it is the source of it. The Oracle programmer must be outside.”

This is a business show, so I wanted to ask you about this because I found this fascinating in your book as well. You consulted, I think, for a jeans company, and you were an expert witness for T-Mobile. And you're talking about color psychology and how different colors conjure up different emotions and things like that. And I guess you coined the term “chromatures,” which give a richer structure, and trigger more precise reactions. You give the example of the magenta, T-Mobile's brand color. And I thought of the Tiffany's blue box, or whatever. Do you see this being used more in business and advertising and marketing?

You have a great picture in the book of a gal wearing jeans and both half's are different. And it's just fascinating. How's the book been received, Don?

Have you ever had a debate, like with a Michael Shermer, some type of skeptic about it?

[See YouTube podcast with Michael Shermer and Donald Hoffman here].

Science advances by dissent, not consensus, right?

Don, in the last half minute, do you got another book coming out, or in the works?

Well, if you do put out that book we'd love to have you back on to discuss that one. We're big fans. So Don, thank you so much for coming on the show. This has been an honor, as Ed said, and I really enjoyed the book and best wishes with your research. It is fascinating. Ed, what's on store for next week.

Ed Kless 

Next week, Ron, we're going to talk about “In Search of Relationship Value.”

Ron Baker

Awesome. I will see you in 167 hours.

---

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.

This week was bonus episode 329: “It's Por-SCHE, not Porsh”
Here are a few links discussed:

• Costco lifts minimum wage above Amazon or Target to $16 per hour | Reuters

• Power Industry Pleads for Priority COVID-19 Testing, PPE for Mission-Essential Workers

• Lockdowns and the Texas Power Disaster – AIER

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode 328 - Interview with Gene Marks

Ed’s Questions: Segment One

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so their organizations can thrive. I'm Ed Kless, with my friend and co-host, Ron Baker, and folks on today's show, we are pleased to have with us for the first time, Gene Marks. Hey, Ron, how are you doing?

Ron Baker 

I'm doing good, Ed. I had an eye doctor appointment this morning, so my eyes are dilated and full of stuff, so I can barely see you. But I can listen, so that's good.

Ed

Let's get Gene on and welcome him to the show. Gene is the CEO of the The Marks Group, and also the host of the weekly podcast called Small Biz Ahead [presented by The Hartford]. And also Gene marks.com, to read his blog and other fun stuff, welcome to The Soul of Enterprise, Gene Marks.

That’s great. We've recently had Peter Robinson on from Uncommon Knowledge [Episode #320], who was a speechwriter for Reagan and wrote the “Mr. Gorbachev, tear down this wall” speech. And he told us the backstory to that, which was absolutely fascinating. The other thing is that speech that we play as an introduction is from his speech to Moscow State University. And it was delivered with the bust of Lenin is behind him. And he's talking about this economy and mind, no bounds on human freedom to create being the most precious natural resource, and we just think about that. And we think it's perhaps Reagan's best ever speech and the author of that speech, Joshua Gilder, is coming on in a couple of weeks [March 12, 2021].

I personally think that he was right about the Cold War, the Soviets just couldn't keep up with us from an innovation standpoint. And that's one of the reasons that this show is The Soul of Enterprise, because we believe that business has not only a material but also a spiritual component to it. And that was one of the things that was missing in the Soviet Union, not the religious, but spiritual component of business and the creativity.

He was great at that, Let’s hire good people and get the hell out of their way,” that was his motto. So Jean, there's so much we could talk to you about, but the thing that jumped out at me today in news: Bitcoin is over a trillion dollars in market cap. I'm fortunate enough to have some that I bought a long, long time ago, and I'm already out, and have gotten out what I put in. So now it's all house money. So now I'm like, it's either going to change my life in the future, or it's not. That's where I am with it. But I think this is a significant moment, or at least maybe through the next couple of months. I looked at this as a Crossing the Chasm kind of thing. Today, we are about 10% of the market cap of gold. And you know, that Crossing the Chasm, Mark, is that, you know, 10 to 14 to 18%, when you cross the chasm, and then boom, you get all of the early adopters who just completely come online. And, we're at a point now I think, an inflection point, a serious inflection point, whether this is going to make it or we're going to break it in the next couple months. Thoughts on that?

One of the things that Elon Musk talked about, and Greg [Tirico] who runs our social media, and I were talking about this earlier today is, first of all, he always clarifies that it wasn't himself who made the investment, it was Tesla who made the investment. And the rationale for it is really so that they would be less beholden to the volatility of it when they start taking payments in it. That was the thought process. Now, if this starts to happen with other companies, if Walmart, Amazon, starts to hold large amounts of Bitcoin, that's where you see…

I completely agree. So we've got about two minutes left on this segment, so I'm hesitant to bring up a completely different subject. I wanted to get your thoughts. Have you looked at all at the Australian link tax that's come out recently? I tried to post something today on Facebook and was told, nope, you can't do it because there's a link to Australia in there somewhere, And Australia has now put a thing where if you want to put a link up, there's a tax that has to be paid to do this. This is a really bad idea.

That might well be, but posting a link and a tax on a link seems to me that's not content, you're not publishing content when you're publishing a link. It seems to be a silly argument.

All right, we are up against our first break.

Ron’s Questions: Segment Two

Welcome back, everybody. We're here with Gene Marks. And Gene, I feel like we could go a million different places because I know you're a KPMG alma mater, but let me ask you this. This caught my eye looking at your bio, tell me about your book, In God We Trust: Everyone Else Pays Cash.

Fantastic. Let me ask you this, because I know you're a CPA, as am I? Do you think our profession is serving small businesses in this area of cash flow? Cash is king, right? It seems like we play historian with bad memories with the financial statements, but we don't help them model cash.

It seems like we pay lip service to the relationship we have with the customers that we're privileged to serve.

Tell me about your book, The Small Business Book of Lists.

That's phenomenal. It reminds me of the book, The Checklist Manifesto, but on steroids.

Ed and I work in the pricing space, and there's been this pricing revolution going on since at least the mid 1980s, in big business. And my question for you is, do you think that's filtered down into smaller business? In other words, have smaller business gotten more sophisticated with respect to pricing, moving away from the idea of cost-plus pricing and more to value pricing?

And it's good enough, right? It's what one economist called “satisficing,” we just do good enough, we don't set out to optimize or to maximize, we just do good enough?

I couldn't agree more. It is a totally amazing opportunity. And we've been trying to get CPAs to do it for their customers. And Gene, we've had more luck with bookkeepers; they can advise their customers because they seem to have a better relationship with them.

I was thrilled to hear you say that you've got an opinion on everything. So I'm going to switch gears really hard on you here. Grade president Trump's economic policies.

It's a great point. It creates a climate of uncertainty. I think you can equate it back to FDR during the Great Depression, all the programs he tried created enormous uncertainty in the markets. It probably stalled the recovery for more years. Gene, this is great. This is flying by.

Ed’s Questions: Segment Three

And we are back with the CEO of The Marks Group, Gene Marks, and also host of the weekly podcast Small Biz Ahead with The Hartford. Gene, you were talking pricing with my partner, Ron, and we have been doing a lot of shows in the last 18 months or so, including an interview with Tien Tzuo [Episode #230], who wrote the book Subscribed, about the move to the subscription economy. I’d love to get your thoughts on subscription based pricing, especially in the professions.

Let me recommend that you listen to our show from last week with John Warrillow [Episode #327], author of The Automatic Customer, who told a story very similar to yours, how he was working with one client of his that was ready to walk away. John’s big thing is built to sell, that's the name of his system. And he said the one customer in professional services industry, they were getting offers of 70 to 75 cents on the dollar of revenue. Another company, in the same industry, it was media. So search optimization, that kind of stuff, but it had a subscription model, they were getting offers of 13 times revenue.

Let's turn our attention to your latest article and talk a little bit about this, because I think that there might be something here. Your latest article in Forbes, published this morning, says that 48% of sales leaders say their CRM system doesn't meet their needs? Alright, so the good news is that's fixable. All right, why is it and how is it fixable? And let me pose this to you: Why can't you as a business owner make a subscription model around fixing it?

And that's the problem. I did implementations for a long time, both of CRM systems and accounting. And I always felt that the project is this summit, we always use this climbing the mountain metaphor. I was like a Sherpa, and I was helping my client get to the top of the mountain. And then I was taking a helicopter off and saying, “Good luck getting down.” And I think that's really the problem. So I think that by applying the subscription model, look, not every customer is going to want it, and it's going to be significantly less customers that do this. But I think that's really the issue. Let me tell you a quick story before the break. But here's an example of a great CRM system. USAA insurance, I had a little fender bender about two years ago, this was before COVID. So I call up USAA and they say, first of all, “Are you safe?” That's their first thing, customer service. Are you feeling safe? Yes, I'm feeling safe. That's great. Thanks, Mr. Kless, that's wonderful. Oh, and by the way, thank your father-in-law for his service.

Bang.

Remember Martha Rodgers and Don Peppers wrote all those marketing one-to-one books. I saw Martha Rodgers speak at a conference and she called it the “Dory effect.” Remember Dory from Finding Nemo? She had no memory. What paper would you like? The Wall Street Journal like I said yesterday.

Alright Gene. Well, thank you so much. I'm going to let Ron finish up with you for the last 15 minutes so let me say thanks for appearing today. We'll have to have you on again sometime, love talking to you.

Ron’s Questions: Segment Four

Welcome back, everybody. We're here with Gene Marks. Gene, you are an author, you've written some books. So let me ask you, we love to ask our author guests this question. What are some of the business books that have had a major impact on your worldview, your thinking, your behavior?

One of the books we highlighted on our show, Best Books of 2020 [Episode #326], and the one for me was Humanocracy by Gary Hamel [Episode #313]. I don't know if you've had a chance to read it. It is phenomenal. It’s a screed against bureaucracy in business. And it's, as usual, he's just way ahead of his time with that book.

I agree with you reading history, reading biographies, autobiographies, that's where it's at. I learn more from that. You mentioned the FDR book. I wanted to tell you about one of Richard Nixon's books. He wrote many books. He's got one called Leaders that I thoroughly enjoyed. It's one of the best, because I can't stand books on leadership. There's too many of them, they all sound the same. His is completely different, it profiles some of the greatest figures in history. And it's a really interesting perspective on leadership. Really, really good.

And I noticed just looking through your blog scroll that you tackle economic issues. So who are some of the economists that have influenced you over the years?

That's awesome, we're economist junkies. We've had a lot of guests that are economists. Are you familiar with Russ Roberts’ podcast, EconTalk?

In the spirit, since you like James Pethokoukis, you might also check out John Tamny, over at Freedom Works. He's written many books on economics just for the layperson, and he's got a different perspective—he bashes both sides. It's just really interesting [John Tamny will be on the show March 19, 2021].

And if there's inflation, we'll just raise taxes and suck the money back out.

Thanks so much, Gene. This has been wonderful having you on. Will definitely want to do this again.

And stay with us as we do our live close. Ed, what do we have on store for next week?

Ed Kless

Ron, next week, we are talking to Donald Hoffman about his book, ready for this folks, The Case Against Reality.

---

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.

This week was bonus episode 328: “Ed Is Off His Meds”
Here are a few links discussed:

• U.S. Life Expectancy Falls amid Pandemic in Biggest Drop Since WWII

• Fiverr Launches Subscriptions to Build Long Term Relationships with Freelancers

• Bloomberg: Venezuela Turns to Privatization After Being Bankrupted by Socialism

• #FreeBritney and the Importance of Self-Ownership

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode 327 - Interview with John Warrillow - The Automatic Customer

Ron and Ed welcomed the author of The Automatic Customer, John Warillow. John's work has been a staple of the presentations that Ron and Ed have given on subscription-based pricing since the beginning. His nine models for subscription businesses lay the foundation for almost all subscriptions you will encounter. Join us for what promises to be an enlightening conversation.

Ed’s Questions: Segment One

Well, let me get to the particulars and we'll get John right on because we have been looking forward to this day for quite some time. We've been following John's work for the better part of two years or so, since we've been starting to get into subscription economy. John Warrillow is the founder of the value builder system, a simple software for building the value of a company used by 1000s of businesses worldwide. He is the author of the best-selling book Built to Sell: Creating a Business That Can Thrive Without You, which is recognized by both Fortune and Inc. magazines as one of the best business books of 2011. His next book, which is the one that came to mind to Ron and myself, is The Automatic Customer: Creating a Subscription Business for Any Industry. This was released by Random House in February of 2015 and translated into eight languages. His latest book, which we'll perhaps talk a little bit about, released in 2021, is The Art of Selling Your Business: Winning Strategies and Secret Hacks for Exiting On Top. Welcome to The Soul of Enterprise, John Warrillow.

Well, I'm going to start with subscription. Let's dive full in: subscribers are better than customers. Explain.

And that was pre-COVID numbers. I'm sure it's even higher since then. One of the things that Ron and I had talked about in the professions is getting people to change from using the term client to using customer because of the nature of the word customer, it comes from the word custom, it is their custom to repeat business with you, it is their custom when they came into town to stop by your store. But do you like the term subscriber, or even member, better? For those reasons? Do you think changing that language has an impact?

Yeah, that's how we felt to, especially with the term customer. But I'm starting to like member better, what I think back is to that American Express ad campaign from, I don't know, maybe 20 years ago, membership has its privileges.

What are some of the key mindset shifts that a business owner needs to change when they're going to a subscription model from a product based model, let's say?

I listened to an interview in preparation for the show that you did probably four or five years ago now. And you were critical of Microsoft and how they were rolling this stuff out. Do you think they've improved on what they've done with Office 365? Or are they still struggling a bit in your view?

That was certainly one of our challenges at stage two. We sell business software as well. One of the things, and honestly, I don't know where Ron and I picked up this line from, it may have been your book. And as I was flipping through, I couldn't find the exact line. But our mantra has been that we need to price the portfolio in the subscription model, not price the customer or even the service. Because what you're really looking to do is you're trying to spread the risk pool, it's almost insurance, across the entirety of the pool. And I want to get your comments on that. Did we steal that line from you? Or is that not something you remember writing in the book six years ago?

I love talking about this stuff because people think, “Well, there's always some reason my business can't be subscription,” right? You just gave a great example of selling flowers. But what if I'm retail flower shop, I can't be subscription, can I? And I think, of course you can, maybe you could you could sell some subscriptions. And one of the things I like that you talk about, it's not about becoming a subscription model so much as it is expanding into one. Talk a little bit about that difference? I think it's a subtle but very important point.

I love that. As we would say in America, niche down, but I like niche much better. I think that's a a great phrase to “niche down,” to try to get to where you want to be. Well, this is flying by as I knew it would. We are already up against our first break.

Ron’s Questions: Segment Two

Welcome back everybody. We're here with the author of The Automatic Customer: Creating a Subscription Business for Any Industry, John Warrillow. And John wanted to ask you, by the way, I loved your book, I thought your book was excellent. How you laid out the nine subscription models, which was absolutely beautiful. You even gave a little bit of a history of how the European map publishers were the first to really offer subscription, which I found fascinating. But why do you think this subscription Renaissance is happening now? You mentioned the Columbia Record House, which ended up filing bankruptcy—I still think they're charging me by the way—but why do you think that this subscription Golden Age is happening now?

Sure. You wrote that nothing has been as successful in getting people to shop in new product lines. And what I love about this model is it does put a premium on the customer relationship, experience, innovation is baked into the model. You're constantly delighting the customer, you have to constantly exceed their expectations, don't you?

Because you’ve got to develop them into that habit of using you and make it part of their life. I love how you say “communicate like a giddy lover.” But if you do that too much, you can be too needy and annoying. That was a great analogy. I'm going to take your subtitle to heart: creating a subscription business in any industry, because we've been trying to do this, as we said before we went live, in the CPA, legal consulting, and advertising agency space. And I think the model is the concierge or direct primary care medical practice that, I don't know if you're familiar with this—I know you're in Canada—but throughout the United States there's about 14,000 of these general physicians that work in this practice where they have member subscribers paying them anywhere from a cell phone bill a month, or maybe a cable package a month, for access to their doctor: telemedicine, same day appointments, house visits, you name it. And it's just basically saying, look, you're covered for all your health needs, anything that we're capable of doing; if they have to go to a specialist or something that would be separate, their insurance might kick in. But I think that's the model, John, and that model has been around since 1996. A real smart team doctor from the Seattle Sonics founded this company called MD Squared. Do you think this subscription model is possible in the professions?

You mentioned the front-of-the-line model. And in terms of this concierge practice, I want to ask you about this too, because I also think it's tapping into your convenience model and your peace-of-mind model. And I think those are two areas that professional firms completely under invest in. We don't realize how good those make the customer feel. I remember talking to Jonathan Stark, he's got a concierge doctor. He's never used him in 10 years. He said, but I know if I need them, he's there, he'll be right there for me. He says I gladly pay for that. It's kind of like insurance, isn't it?

That's awesome. John, this is just flying by, but it’s great, thank you so much.

Ed’s Questions: Segment Three

Our guest today on The Soul of Enterprise is John Warrillow, author of the book The Automatic Customer: Creating a Subscription Business for Any Industry, published in 2015. Ron and I both highly recommend the book and it's been on our hit list for quite some time. John, I want to stay on the theme that Ron has been talking to you about and that is the nine subscription models. When you were developing the book, what was the process for limiting it to nine, to get to the point where you had something discreet about each of these, that made sense in your mind?

And for that [certainty] most of us would pay a little bit of a premium. One of the things I've heard you talk about is, and I love this analogy, the mindset to get into, rather than try to think about a way to give somebody a 10% discount for coming on board a subscription. What can you do to do something so that it's a 10x better than? So talk a little bit about that? I think that is a great way to think about things.

And people probably would use the carwash more, but that's okay. If I paid $30 a month for a carwash I would more likely use it than not, but that's okay.

Off the top of your head, of the nine models that you talk about in the book, have you seen any new ones emerge that made you say, “Ah, there were there was one I missed. I really need to include that if I ever do version two of the book.?”

Another great example of what you called earlier “niching down” that's a great example of that.

Another question that I have for you, you’re probably aware of Tien Tzuo, the CEO of Zuora [Episode #230] and his book Subscribed. His newsletter is fantastic, another one of the other sources that Ron and I go to. He has been begging Apple to get into the subscription business for their products. Right now, I think, about 70% of their revenue is subscription services, a lot of people don't realize that. But he's been begging them to do this for their products. Any idea on your part, why do you think Apple's hesitant to get into the subscription model for its products?

Outstanding. All right, we’re up against our last break.

Ron’s Questions: Fourth Segment

Welcome back, everybody. We're here with John Warrillow. And John, I want to stay on the professional firm and ask you this, talk me off the ledge on this because a lot of people say, “Well, for a law firm or a CPA firm, we have these big projects, or black holes, they're not common. They don't come up all the time. So we couldn't possibly put that on subscription.” Now, I don't buy that. But I know that you profile that Hassle Free Home Services business that will carve out a one-time project, build my deck or remodel my bathroom, and they charge those as one-offs. Is it possible to run a hybrid business model? That is, partly transactional and partly subscription, because that's where I get hung up, because I think these are such different mindsets, that the two don't play well together?

I couldn't agree more. And people are fighting about that with us. I don't know if you've read No Rules Rules by Reed Hastings of Netflix? But it just seems like this model does so many great things. First off, it puts the relationship at the center, but it also blows up silos, and it blows up bureaucracy. Everything revolves around the customer at Netflix. I learned this from the book, they don't have individual KPIs. You can do that in a subscription model. There is no way you can do that in a transactional model.

You've talked about multiples of earnings being the sales price. And I was just wondering, in the professional space, do you have any experience on what most accounting firms sell for, it’s usually one times gross [revenue]? I think if they are subscription they'd go for a higher multiple. Do you have any evidence to support that claim?

They just have to get over that all-you-can-eat fear, like the carwash owners, “Well, what if they come in a million times in a month.” And like you said, and it was a great point, if they did come in that much, it just shows you how much they value your service. It's going to diminish over time, but the value stays there.  Another question I have for you is, and we talked a bit about this during the break, but why do you think companies like Audi and BMW have canceled their automobile subscriptions?

They have that one-on-one relationship, just like Harry's Razor and Dollar Shave Club, that direct-to- consumer is really powerful.

Any new subscription businesses that have come online that have impressed you, or that you've raised an eyebrow, we've got about half minute?

Brunswick is doing a subscription model with boats, and Roam is doing housing around the world, you can live in a house on subscription basis. John, this has been fantastic. Thank you so much. We are big fans of the book. We recommend it all the time. It's all over the place when we talk about this model, really honored to have you on. Ed what's on store for next week?

Ed Kless 

Next week, Ron, we have author, columnist, keynote speaker, and small business expert Gene Marks.

---

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 326: The Best Books of 2020

An annual favorite, Ron and Ed talked about the best books they each read in 2020. Sometimes there is overlap, other times none. All book links are below including a special top 5 list that specifically includes authors interviewed on the show.

Let’s start with a quote:

“You don’t have to get people to burn books to destroy a culture. Just get people to stop reading them.” —Ray Bradbury, Sci-fi Writer

Ron’s Top Five books from authors we have interviewed (more in the bonus show)

5. How Ronald Reagan Changed My Life, Peter Robinson (Episode #320)

4. Snapshots from Hell, Peter Robinson (Episode #320)

3. Evasive Entrepreneurs, Adam Thierer (Episode #294)

2. The First Cell, Dr. Azra Raza (Episode #289)

1. Humanocrarcy: Creating Organizations as Amazing as the People Inside Them, Gary Hamel (Episode #313)

Ron’s Top Five Books of 2020

5. They’re Both Wrong: A Policy Guide for America’s Frustrated Independent Thinkers, John Tamny, 2019

Love this from the Foreword: “Just because an idea appeals to a lot of people doesn’t mean it’s wrong. But that’s a good working theory.”

4. How Innovation Works: And Why It Flourishes in Freedom, Matt Ridley, 2020

An excellent account of innovation, along with one of my favorite definitions for innovations: “Enhanced forms of improbability.”

Also, “The number of people predicting the death of Moore’s law doubles every two years.” –Peter Lee of Microsoft Research, 2015

3. Countdown 1945: The Extraordinary Story of the 116 Days that Changed the World, Chris Wallace, 2020

A page turner most momentous decisions in history made by a president who had no knowledge of the Manhattan Project. It was a day, he later said, “when the world fell in on me.”

2. Empires of the Sky: Zeppelins, Airplanes, and Two Men’s Epic Duel to Rule the World, Alexander Rose, 2020

Dr. Hugo Eckner, once the most famous person on the planet, and Juan Trippe, the founder of the first world-wide airline, Pan American. Ultimately the birds would conquer the clouds.  

1. Witness, Whittaker Chambers, 1952

After his early years as a Communist Party member (1925) and Soviet spy (1932–1938), he defected from the Soviet underground (1938), worked for Time magazine (1939–1948), and then testified about the Ware group in what became the Hiss case for perjury (1949–1950), often referred to as the trial of the century, all described in his 1952 memoir Witness.

This is a classic, a work of deep philosophical meaning. His opening letter to his children is profound.

Ed’s Top Five Books of 2020

5. Apocalypse Never: Why Environmental Alarmism Hurts Us All, Michael Shellenberger, 2020

4. Gospel Parallels: A Comparison of the Synoptic Gospels, New Revised Standard Version, Burton H. Throckmorton, Jr., 1992

3. Why Liberalism Works: How True Liberal Values Produce a Freer, More Equal, Prosperous World for All, Deirdre Nansen McCloskey, 2019

2. The Great Gatsby, F. Scott Fitzgerald, first published in 1925

1. The Fabric of Civilization: How Textiles Made the World, 2020 [Episode #325]

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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.

This week is Bonus episode 326 - More books and more. Here are just a few links discussed during the bonus episode:

• Ron’s Next Five Best Books from Bonus Show

• Coyote Blog » Blog Archive » Repost for the New Administration: Trans-partisan Plan #1: Addressing Man-Made Global Warming With A Plan That Could Be Supported By Both Democrats and Republicans

• Larry Fink Calls for Net-Zero Economy in Latest CEO Letter

• Why Chick-fil-A Is so Much More Efficient (and Friendlier) Than Government - Foundation for Economic Education

• A Chick-fil-A manager saved a drive-thru Covid-19 vaccination clinic after traffic backed up

• 5 Socialism Myths: Part 1

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode 325 - Interview with Virginia Postrel

Ron and Ed were honored to welcome Virginia Postrel, author of The Fabric of Civilization: How Textiles Made the World. Virginia is also a columnist and speaker whose work spans a broad range of topics, from social science to fashion, concentrating on the intersection of culture, commerce, and technology. Writing in Vanity Fair, Sam Tanenhaus described her as "a master D.J. who sequences the latest riffs from the hard sciences, the social sciences, business, and technology, to name only a few sources."

Ed Questions: Segment One

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so their organizations can thrive. I’m Ed Kless with my friend and co-host, Ron Baker, and folks on today's show, we are honored to have our interview with Virginia Postrel. Let's do the formalities here and welcome Virginia Postrel, who is an award-winning journalist and independent scholar, a columnist for Bloomberg Opinion. She previously served as columnist for The Wall Street Journal, the Atlantic, The New York Times, and Forbes. She has authored highly acclaimed books, The Substance of Style, The Power of Glamour, The Future and Its Enemies, and the book we're going to talk about mostly today, The Fabric of Civilization: How Textiles Made the World.

Welcome to The Soul of Enterprise, Virginia Postrel. I became obsessed with this book around Thanksgiving. And I'm going to tell you a story. We have at Thanksgiving, we were able to go over to my in-law's house despite COVID which we're very excited about. And we have a tradition in the family that everybody goes around and says something that they're thankful for, which is very nice. Usually people say the usual, family and all kinds of stuff like that. Well, I said fabrics. And that got uproarious laughter from the dinner table. But Virginia, I really want to know, I think we should be. Why should we be thankful for textiles?

And later in the book, you have one of my favorite quotes, which is “We suffer textile amnesia, because we enjoy textile abundance.”

It really starts with thread, doesn't it? That's kind of the basis for it. So talk a little bit about the origins of thread.

And it's so interesting, you wonder what possessed somebody say, “If I do this, I'm going to get this long piece of whatever, right? I mean, where do we even start with that, that's the thing that amazed me?

And that's unbelievable. At one point you say a queen size sheet is 37 miles worth of thread. Stretching you from the Washington Monument to Baltimore.

Quickly, I wanted to just tell you this, I actually worked for a sheet producer at one time, I did their software installation. And one of the things that these guys told me was always buy irregular [sheets]. And the reason is, there's actually no difference between irregular sheets and regular sheets, except every so often we put like on 20% of them, we just say they're irregular. And those never come back. But the other ones we guarantee. But there's no quality control.

So I have so many questions, we’ve only got about two minutes left in this segment. What's the relationship of textiles to mathematics?

And the really fundamental algorithms built in the looms. So the first algorithms, you say, were those that were produced at the loom?

Which is actually the same way I believe that computers ultimately do division. That's how it works out in machine language. Anyway, we're already done with our first segments, it’s flying by.  

Ron’s Questions: Segment Two

Welcome back, everybody. We're here with Virginia Postrel, one of my favorite authors, and Virginia, if you would have told me at any point that I would read a book about sewing and weaving and fabrics, I would have said you're nuts. But your book just held my interest the whole time. It's just a great, great story. And you're so right that we take this for granted.

Well the link between dyeing and chemicals was absolutely fascinating. Just by itself. You're right. This is a business book, really. In many dimensions.

Your discussion about how textiles were used for money, and the sumptuary laws, ff course, were absolutely fascinating, too. I love the line about how husbands used them as an excuse not to buy a nice wardrobe for their wives.

That's awesome. Well, you've convinced me that we should no longer call it the Stone Age, it should be called the String Age.

One of the most fascinating stories in the book, it just blew my mind. Ed and I have done a few shows on the history of medicine, surgery, anesthesia, and germ theory. Explain the link between silkworms dying which led to germ theory.

It makes sense because so many other things came out of thinking about all of this, such as dyeing and chemicals, polyester and nylon, and all of that.

That was an incredible story. So unfortunately, we're at our break, this is just flying by, Virginia.

Ed’s Questions: Third Segment

We are back on The Soul of Enterprise with Virginia Postrel. Her book is The Fabric of Civilization: How Textiles Made the World, and folks, I can't recommend this book enough, please go get it and read it. It's a great story. And we're only scratching the surface with Virginia today on what's in this book. And Virginia, I want to ask you a little bit about your process of writing this book, because it is so deep and so rich, was it like a term paper, like note cards? I have this vision of you having note cards all over your dining room table to try to put this together?

Do you use Microsoft Word, type it out, and then edit from there?

It’s just a fantastic book. And I love the fact that you include links to YouTube videos, because in many cases. I must have watched half a dozen videos that you recommended in your book, because you want to see, okay, this drop spindle thing that you're talking about, you really have to see that to fully appreciate it.

Well, I've got about five minutes left, I want to ask you a very specific question. And that is did you come across a song called “The work of the weavers” in your travels?

The Clancy Brothers did a version of it. It’s actually a Scots tune. I'm going to give you a little bit of a sample right now, are you're ready?

[Ed sings a part of this song. The printed word can’t do it justice—a must listen!]

And of course the weavers got themselves into a pinch, because…tell that story…

And maybe this is apocryphal. But the saboteurs, wasn't that a similar story, the sabo, with the shoes and such.

I think Don Boudreaux has something on it and that's where I remember reading it. But the last question I have for you is about your Afterword, which is really an essay that can stand on its own. It's just such a great piece. I'm curious, was there a rationale for putting it as an Afterword versus a Foreword, because you could almost argue that it would have set you up for the whole book? I was just curious about that.

It's a magnificent piece. But it can stand on its own as a tease for the book, because it really leaves you with all of these dangling questions. Well, Virginia, thanks so much for appearing. Ron is going to take you the rest of the way home the last 15 minutes. But I just want to thank you for coming on the show today. This is just a great honor for me. And as I said, I was obsessed with the book. So just a lot of fun to talk to you.  

Ron’s Questions: Fourth Segment

Welcome back, everybody. We're here with Virginia Postrel, and Virginia, another book of yours, I absolutely loved was The Substance of Style, which came out in 2003. In there, you talk about Maslow's hierarchy of needs. And everybody talks about this like it's Gospel, the Oracle of Truth. But you don't think it's a good explanation?

It’s like you say, you don't have to wait to have a full stomach or until your roof doesn't leak. The poor built cathedrals, and made pottery and jewelry. It's a really, really excellent point. The other thing I wanted to ask you, and another book of yours that I absolutely loved because, well, for one thing, you signed it for me, it's behind me, is The Future and Its Enemies. And we're going to link to all of your books, and more, on our show notes. But you write in the Introduction to that book, “The central question of our time is what to do about the future? And that question creates a deep divide.” Is that still true?

No, that's really true. It reminded me very much, the whole theme of the book, of Jane Jacobs. She wrote a lot about that bottom-up, trial-and-error process. Hayek, obviously, and George Gilder was another one who I thought of a lot. It's a fantastic book. The other thing I liked that you pointed out is Al Gore wrote Earth In the Balance but the earth doesn't have an equilibrium. There's no static standard for natural.

You wrote very eloquently articles in The Atlantic and on your blog about donating a kidney to an acquaintance, I think back in 2006. And I am, of course, interested in your ideas about the waiting list, how many people die waiting for a kidney and what a tragedy that is. But just that whole process, you talk about how the process is really difficult for the donor?

“Here’s Looking at You, Kidney,” June 2006

“The surgery was simple; the process is another story,” October 23, 2006

“With Functioning Kidneys for All,” The Atlantic, July 2009

It’s laparoscopic surgery, right?

I take it you support a market for kidneys?

I think Iran is the only country that allows that legally?

Well, Virginia, thank you so much. This has been such an honor to be able to talk with you. I'm really excited. And love your books. And we'll put up full show notes, where to contact you, and all the other stuff that we talked about. Ed, what do we have on store for next week?

Ed

Next week, Ron, we're going to be talking about our Best Books of 2020. And you may hear about this one again.

Ron

Excellent. I'll see you in 167 hours.

---

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.

This week is Bonus episode 325 - GameStop, Please STOP!. Here are just a few links discussed during the bonus episode:

• Covid-19 Vaccine Rollout Is Being Slowed by Too Many Government Rules - Bloomberg

• Pandemic has "wiped out ten years of progress in older industrial Britain" - New report | Bdaily

• Carlsbad, CA Says No More to Lockdowns. May It Be a National Model! | RealClearMarkets

• 3D Print Your Own Sad Bernie Sanders

• North Dakota Bill Would Create Process to Review and Reject Presidential Executive Orders | Tenth Amendment Center Blog

• Dismiss All the Populist GameStop Hype: Short Sellers Are Heroes – AIER

• GameStop’s Reddit Rally, National Review, Daniel Tenreiro

• Gamestop’s Power to the People: Celebrating the Investor Revolution in the Making, By Jennifer J. Schulp, Cato Institute

• A GamesStop Explainer, Jim Geraghty, National Review

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode 324 - Interview with Anne Janzer

On Friday Ron and Ed were pleased to welcome to the show, Anne Janzer, the author of Subscription Marketing, and four other books on writing. In addition to being an award-winning author, Anne is an armchair cognitive science geek, nonfiction author coach, marketing practitioner, and blogger. She’s on a mission to help people spread important ideas through writing.

Ron’s Questions: Segment One

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so that organizations can thrive. I'm Ron Baker, along with my good friend and VeraSage Institute colleague Ed Kless, and on today's show, folks, we are honored to be talking with Anne Janzer, author of Subscription Marketing. Hey, Ed, how's it going?

Ed Kless

It's going great, Ron, I mean, who would have thought that the nation would come together so quickly? On Wednesday, and of course, I'm not talking about the inauguration, I'm talking about over the Bernie memes that we all seem to have united around.

Ron Baker

I just saw him with the guys from the Great White North in Canada, SCTV sketch.

Ed Kless 

No, I think that Bernie has been true to his socialist word, he has been a burden on productivity now, this is just what everybody's been doing the last two days? That's all we've done.

Ron Baker

All right, well, let's bring in Anne Janzer, an award-winning author, armchair cognitive science geek (I love that), nonfiction author, coach, marketing practitioner, and blogger. She's on a mission to help people spread important ideas through writing. She's the author of many books on writing, Get the Word Out, Writing to Be Understood, The Writer’s Process, The Workplace Writer's Process, and of course, Subscription Marketing, which is now in its third edition, which we'll talk to her about. Her books have won numerous awards, and they've been translated into Japanese, Korean, and Russian language editions. So that's great news. Anne, welcome to The Soul of Enterprise.

So before we get into subscription, which is why we brought you on, I want to ask you, what's it like to teach writing to business professionals? Have you been able to remove their jargon?

The Economist has this columnist I just love, Bartleby. And he constantly rails on the terrible language and writing skills of most business people. They write memos that are indecipherable, and just full of jargon. And he just really takes them to task. I just love the guy. Anne, what motivated you to write a book on subscription marketing?

I bet, because revolutions always start from the bottom up, right? They don't start from the big companies down. You know, we've had Tien Tzuo on [Episode #230], the CEO of Zuora and author of Subscribed and he is, I would say, one of the chief evangelists for this business model. He wrote in his book that “In five years, you won't buy anything, but you'll subscribe to everything.” And I actually like how you put it in your book, you say, “In five years, you'll have the option to subscribe to everything and every business will have to accommodate that fact.” But what we see, Anne, is a lot of inertia. Why do I have to accommodate it, it’s not going to affect Me? How do you respond to that?

That's a great point. We have a saying around here that you compete against any organization that has the ability to raise customer expectations. And how many of your customers are comparing your experience with their experience on Amazon, or when they visit Disney World? This model requires such a different mindset. We always talk about how difficult it is to unlearn. Sometimes unlearning is harder than learning something new. Like I think about Fender guitar, I don't know if you've run across them, but their Digital Play, and they are just a phenomenal success story during this COVID pandemic. They're not really selling guitars, they're selling you how to play the guitar and how to play it continuously better. And that's just not the same thing at all, is it?

Right, and rather than just focusing on the transaction, I love what the fender CEO said: If I sell somebody a guitar, and they try to play it, and they get frustrated, and it goes under their bad, and then they give it away, that's another sale that I don't get to make in the future. So just that whole mindset of customer success and in the book, you talk about Inadequacy marketing. And I love this idea: The prospect lacks something that only can be fixed with our product or service. This idea that we're selling solutions, it seems to me you have an issue with this?

And [Apple] has done this since day one. They show the one user using their product, and they are the hero. Yeah, it's such a narrow mindset to think we sell solutions to problem. It's broader than that, its possibilities and opportunities as well.

We talk a lot about value pricing, Ed and I are faculty members of the Professional Pricing Society. We teach value pricing, and [what we call] value pricing 1.0 was all about pricing the customer. Now we talk  about VP 2.0, which is subscription, where you price the relationship. And people say, “Well, that's just semantics. What's the difference between the customer and the relationship?” There's a big difference. Because with Fender, you have a relationship with the customer, it's a direct relationship, they're invested in your success.

You call it Value nurturing. Can you explain that? Because I love that, too.

You’ll get a royalty when we say it.

Right, and you talk about five approaches to this idea of value nurturing, and I love the content and community. Sometimes just leveraging your community of users or members can make a big difference.

I think about Harley Davidson, that's a way of life. It's not just a motorcycle.

Ed’s Questions: Segment Two

Our conversation today is with Anne Janzer, author of Subscription Marketing: Strategies for Nurturing Customers in a World of Churn, and Anne I want to ask you about a couple of quotes in the book that I've picked out. One of them is this, quote, “I've become convinced of the following truth. Organizational boundaries are the enemies of the subscriber experience.” Expound on that

Ron and I are tied into economics as well. Ludwig von Mises is an economist who said that you cannot parse value, right? You can't break down the difference between the value of the experience in a restaurant of the waiter, the food, or the cleanliness. I mean, if one of those things fails, we judge it all the same. So even if the waitstaff is stellar, but a cockroach runs across your meal, it doesn't matter. I want to just take this to the next level, because later on in that same chapter, you say, “In a subscription based business, everyone is in marketing.” period, really, period, which I loved. But when I read that for the first time, I thought, what is also interesting is how some people in marketing are actually resentful of that.

That's such an important point. I think that the challenge is, of course, when I read that phrase the first time through the book, you think, “Oh, everybody in marketing wants that to happen;” but they don't, they really do sometimes want to hold on to the different pieces. And it's really up to them to educate out. I think that's a great, great point. I wanted to talk to you a little bit about Amazon Prime, and what a great success story that is. It offers you the discounts to be able to do the “Subscribe and Save” choice. And I just want to get your thoughts on this. I think Amazon has made it too easy to order and messed themselves out of Subscribe and Save. I subscribed and saved to some things and found myself unsubscribing because it was so easy to just order it when I need it instead. That's the bizarre part, right?

Yeah, and I can't believe it won't be too long before it's not just COVID tests, but also COVID vaccines. In my fantasy world we have Amazon doing the distribution and Chick-fil-A doing the actual injections, I think we'd have a much better experience overall.

Apparently, in fact, our social media person, Greg Tirico and I talked earlier, [Dave Clark, CEO, Worldwide Consumer] wrote a letter today that has appeared about that very thing—offering Amazon up to do a better distribution of the vaccine. So we'll see how that that plays itself out. This next topic I know is a passion of both Ron and I, and that is, you're talking about the common adaptation models of subscription: the trial, the segmented approach, all-in approach pivot as a marketing subscription. And one of the things that you say is the low-risk strategy of dipping your toe in the water is, inherently, a lack of commitment, and it may doom the trial to failure? Can you talk a little bit about that because I think that's a critical point for people to understand who are trying to transition, that you can't be a little bit into subscription.

This goes back to Peter Drucker, this inherent tension between sales and marketing. In so many companies people say, “If marketing would just do their job,” and others say, “If sales would just do their job,” this back and forth. And I think part of it stems from something that was a problem that emerged out of the ‘80s and ‘90s, was marketing's belief that they were there to just provide leads, right? In fact, compensation systems were built totally on just delivering leads, regardless of how crappy they were, it didn't matter. And I think subscription just completely jettisons that idea. So expand on that a little bit, if you would.

It was interesting reading through your book, a concept flew into my mind, which was how poorly some companies that were subscription based performed early on in this subscription marketing world. I'm thinking specifically of cable and cell phone companies. These companies had the model but just then performed completely poorly, and today are still recovering, in my view. So thoughts on that? Why did that happen? Where did they get lost? They had it.

One of my jokes is I'm pretty sure I'm still subscribed to Columbia House Records. I'm pretty sure that somewhere, if I combed through all of my credit card statements, they're getting money from me somewhere.

Ron’s Questions: Third Segment

Welcome back everybody. We're here with Anne Janzer, and her book Subscription Marketing, which we highly recommend. Ed and I both loved it, and if you do run out to Amazon and get it make sure you get the latest edition, which is the third edition. Anne, you were talking with Ed about your adoption models: The trial, the segmented approach, and the all-in pivot. And I just wanted to get your take on the news reports in the last week or so that BMW, Audi, and Mercedes, all have given up on their subscription trials. BMW might bring theirs back, Audi has no plans, and Mercedes, they'll probably bring it back at some point. Why do you think they failed? I have strong opinions about it, but I'd love to hear what you think.

The legacy systems with the dealer networks are definitely an issue. But, and you probably know this as well—I learned this from Tien’s newsletter—Porsche Drive has been expanding, they are in six cities now. And 80% of the people that have signed up for it are new to the brand. They're flourishing with it. In my mind, they're no different from BMW, another fantastic brand. They're the two most profitable car companies in the world. I think BMW just can't get out of the mindset that they're selling cars. And Porsche says, “No, no, you're subscribing to Porsche. You have a direct relationship with us.”

Obviously [Porsche’s] regular customers are getting older, they're dying off. And they're going after a younger demographic, which is probably going to really be helpful in the future. I'm so glad I asked you during the break about direct primary care and concierge medicine, because you said you have a DPC doctor now. And when I look at those practices, and I've done a deep dive on them, and I realized that a house can't stand if it's divided. You can't be a DPC practice and still have fee-for-service and take insurance. You've got to be one or the other. It's kind of like the problems BMW is having [with its subscription trial]. How do you advise, especially smaller firms, like Ed said, you can't be half pregnant with subscription. You're either all in or don't do it?

One of the things that impresses me about the DPC movement is that they're saying that this is why I became a doctor in the first place, to help people. And the typical general practitioner has 3000+ patients, which is why you can spend seven minutes with them when you have an appointment. And now, because they’ve reduced their panel of patients—like you were saying, not all growth is good growth—they might have 600 patients, but now it's not just about treating you when you're sick, it's also keeping you healthy. And they have the capacity to do that. And, to me, that model just makes so much more sense.

It's really fascinating. Most DPC doctors’ patients have less emergency room visits, less hospitalizations, they even take less drugs, which even the pharmaceutical companies are noticing. It's just like you say, it aligns the incentives, which is great. Greg Tirico actually asked this question, and I thought it was a really good one. He said the number one question he gets, and he's never had an answer for is, “What if someone signs up and then leaves in 30 days with all their stuff?”

One of the biggest challenges, and frankly Ed and I've been working on out on this, and still wrestling with it, is when you convert a CPA firm or a law firm that does litigation, or an IT firm that does massive software installations, they have these one-off projects that are really, really expensive, and loaded upfront with a lot of work. Are you okay with carving out separate prices for large projects, and not having those on subscription, but then the ongoing relationship on subscription?

For projects that come up all the time, then my attitude is you can just bake it in. I think we are really hard on ourselves on this because we don't think we're thinking far enough outside the box. We're still thinking we're selling guitars. We're not thinking like we're helping you play better.

When I when I look at, like you say in the book, even marketing powerhouses like Procter and Gamble and Coca Cola are confronted with these direct-to-consumer brands, like Warby Parker, Casper, and Harry's Razors? Didn't Unilever buy [Dollar Shave Club] for $1 billion?

How do you how do you recommend that firms overcome subscription fatigue? This is another pushback we get?

It comes back to that relationship. And the other thing is the innovation, like you said before about [Amazon] Prime, the innovation baked into this model, which I just love about it. You continuously add capacity but it doesn't change your price, necessarily.

Well, and this has been great, Anne, unfortunately we're up against our next break.

Ed’s Questions: Fourth Segment

We are talking subscription marketing with Anne Janzer, the woman who literally wrote the book on that subject. Anne, I wanted to pick up on another sentence that jumped out at me. At first I had a negative reaction to it. But then over time I've come a little bit more accustomed to what it is that you were trying to say, because I read further in the book. You say, “Upselling and cross selling, these are important results of successful value nurturing.” And here's the thing I objected to, “but never mistake selling for creating value.” Why should we never mistake selling for creating value?

My objection was based on my priors, right, which is this notion that, to me, sales is about what we call the value conversation. It is about having that conversation with a prospect. Keep in mind, we sell large systems to accountants, and also people who need accounting solutions, which is, by the way, one of the few areas that is extraordinarily sticky, and switching costs, even in subscription, are astronomical, because nobody wants to change their accounting system. So it's one of the few exceptions to your rule. I think that was my reaction to it. But I think you make a very important distinction there. Because so many people think that, oh, if I just tell them what the features are, they will miraculously say, “Oh, I get it now.” And that's just not the case.

I want to quickly explore something and I have to set this one up. Ron and I do an exercise that we call the Value Gap, and you write eloquently about economic value. And one of the things that we suggest people do is look at their relationship with a current customer and ask themselves, How much value have they actually created for that customer? And then think, How much value can I create for them in the future? That exercise, to me, has really come home with the notion of subscription, because of what Ron was talking about—the continuous need to innovate. So this idea of what can we do for current customers to create value for them tomorrow? Explore that a little bit with me?

The great example from your book that I love is the MailChimp hang 10 when you successfully launch your campaign, which makes me happy when it happens.

And if they took it away, I would miss it. I wanted to get to this, too. I love your conversations about the launch plan. And by the way, folks, you have to buy this book because it is chock full of not only the great theory, which Ron and I love, but the practical little tips that you can do to make this really, really work. So that's one of the reasons why we love this book, there's a great balance. Back to the launch plan, what I'm finding, and I wonder if you're finding this, and you probably are overly critical of this as well, these email campaigns to get you to use. I'm like, “Stop, please.” They're all the same now. People have to innovate around them now, don't they?

Please, please shut up. If you stop I will continue to subscribe. As long as you leave me alone.

It's like the Brazilian steakhouse with the green and red card that you flip over when you want them to bring more meat? The other thing I want to ask you about is what you call the 90/10 rule that applies to new subscribers. If a customer doesn't start using your solution within 90 days, there's only a 10% chance that they'll become a loyal customer. Is that still true? Is that something that continues to bear itself out in your latest work?

Which leads me to a question that we talked about with Robbie Kellman Baxter as well [Episode #319]. And you do mention this a little bit in your book. I'm curious, and Tien Tzuo is absolutely convinced that freemium is dead—long live the free trial. Robbie says he's a provocateur. What are your thoughts on freemium versus free trial? Has there been any clarity from your perspective on that?

That's a great answer, and this has been terrific conversation. The hour flew by. Ron, what do we have coming up next week?

Ron Baker 

Next week, Ed, we have Virginia Postrel, the author of The Fabric of Civilization.

Ed Kless 

I can't wait. That's going to be great. I'll see you in 167 hours.

---

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.

This week is bonus episode 324 - Bernie memes and more. Here are a few links discussed during the bonus episode:

• Put Bernie Anywhere

• American Airlines has so much extra wine that it is starting a delivery service

• Amazon offers Biden help with Covid-19 vaccine distribution

• Hall of Famer Henry "Hank" Aaron dies at 86

• UK gives 5.4 million Hong Kong Residents a new visa

• Governor Cuomo’s testing the Laffer Curve

• Obamacare Taxes Lost Money!

• Audi and BMW stop subscription programs

• Portland Rioters Attack ICE and Local Democrat Buildings after Biden Inauguration

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode 323: Interview with Art Carden

Ron and Ed welcome economist Art Carden, co-author of Leave Me Alone and I'll Make You Rich: How the Bourgeois Deal Enriched the World, with three-time Guest Deirdre McCloskey to the show. He is a Professor of Economics at Samford University’s Brock School of Business. In addition, he is a Senior Fellow with the American Institute for Economic Research, a Senior Research Fellow with the Institute for Faith, Work, and Economics, a Senior Fellow with the Beacon Center of Tennessee, and a Research Fellow with the Independent Institute.

Ed Kless

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so their organizations can thrive. I'm Ed Kless with my friend and co-host, Ron Baker. And folks, on today's show, we are privileged to be interviewing economist Art Carden. Hey, Ron, how are you doing this week?

Ron Baker 

I'm great, Ed, this year is starting off with a blast.

Ed’s Questions: Segment One

Well, the best meme I saw was the 2021 saying to 2020, “Hold my beer.” This is where we are. We have a lot to talk about with Professor Carden, so let's do the Bio. Art Carden is a Senior Fellow at the American Institute for Economic Research and Associate Professor of Economics at Samford University in Birmingham, Alabama, and a Research Fellow at the Independent Institute, and he is the co-author, with Deirdre McCloskey—a [two] time guest here on The Soul of Enterprise—of the book, Leave Me Alone, and I'll Make You Rich: How the Bourgeois Deal Enriched the World. Welcome to The Soul of Enterprise, Art Carden.

Well, as I was telling you before we got on the air, Professor McCloskey was our first ever guest [Episode #6, and Episode #293]. And what I want to hear is the story of how your partnership with her came about.

Wow, what brought it about? She wanted a summary of [her trilogy], because that's effectively what you were able to do here.

Yes, a 1700 page trilogy with about 500 pages of endnotes. The first question I have for you coming from the book now is you use the word innovism, if I'm even saying that right, and when Professor McCloskey was on our show, the first time she talked about something called “market tested innovation and supply. Is innovism the new distillation of that concept, or is it a little bit different?

So it incorporates all of those things because I think what a lot of people miss is that the market testing part of it, that's what shakes all of this out.

And then, of course, the supply part is then also important, too. No more interesting than the supply of, let's say, COVID vaccines.

Yeah, it's really been interesting, because I'm sure you've seen this, too. The vaccine from Moderna was developed within 48 hours of them getting the virus genome, and the rest of this time has been delayed from a supply standpoint. Really?

I've said, and you probably have heard this, too, that if we had put Amazon and Chick-fil-a in charge of vaccine distribution, it would be done. And, they would do it with a smile on their face and tell us it's their pleasure.

And then of course, I think it was announced either yesterday or today that Biden has tapped the ex- FDA chief to lead Operation Warp Speed now.

The pigs are now in charge of farm production. Kind of scary. I've got a few minutes with you and I want to get back to the book a little bit. I want to hear your take on this, because I've heard Deirdre’s. What is The Great Enrichment?

I wanted to take a quick side trip on this, because you mentioned this, Thomas Malthus was the one in 1798 who predicted gloom and doom. He does get a particular bad rap, though, doesn't he? I mean, given what he was given at the time, his hypothesis sort of made sense, at the time.

To that end, I want to ask you this. You write in the book, “Will it continue? [talking about The Great Enrichment]. And people are always saying, ‘No.’ Well, you're mistaken. You may be cherishing as you imagine sophistication and good hearted pessimism, more than the scientific fact fullness from realistic [Hans] Rosling, or the historical economic truth of the mindful McCloskey and candid Carden. But let me ask you this, is it in danger with the restrictions that we've seen imposed by what we like to call The Great Suppression that we've seen in the last year?

Yes, and of course, we won't know, right? That's one of those things that's going to be an unseen thing as we approach it. I would like to get your thoughts on this, we have got about a minute left in this segment. What was so interesting, I thought, was the governmental reaction to this crisis treated it as if it were a demand problem, like it always has. But the reality was it was a supply issue, we were restricting, suppressing supply. And that's really, to use a word from to 2020, unprecedented. We've never restricted supply?

I guess you could say it's the equivalent of a war, which effectively creates a supply problem as well. Interesting stuff. Well, we're up against our first break.

Ron’s Questions: Segment Two

Welcome back, everybody. We're here with Art Carden, Senior Fellow at the American Institute for Economic Research, and co-author, along with Deirdre McCloskey, of the book Leave Me Alone, and I'll Make You Rich: How the Bourgeois Deal Enriched the World, which is just a fantastic book, Art, I thoroughly enjoyed it. As you said, as we were talking before the show went live, it's a distillation of Deirdre’s trilogy, which I think you guys just did a great job doing. Towards the beginning of the book you say, “We're not talking about anarchy here. We accept that some government is necessary. McCloskey thinks so at any rate, but [Art] Carden is more sanguine about the viability of a sort of anarchy.” We had David Friedman on [Episode #117], and of course his book, The Machinery of Freedom. Are you an anarcho-capitalist?

I love thinking about those alternate world that David posits in his book. I would love to see it enacted as an experiment. So you talked about The Great Enrichment with Ed, and you made a comment, I just wanted to ask you real quick, you said it was one of the two most important things in history. What was the other one?

The Great Enrichment, just to put some context around it. You cite a statistic that in 1800, worldwide, consumption was about three bucks per person per day. In the United States, Holland, and Britain it might have been six bucks per day. And now we are at $130 per day in the US and $33 worldwide. This doubles every generation. And this is a 3,000% increase. I mean, this is massive. The whole of wealth creation is relatively new in human history. 

Right, and I want to ask you about that, because you wrote an article that 2020 was not the worst year ever, not even close. It’s so true when you think about it from a historical perspective. You know, we've had George Gilder on the show, and he's been a longtime mentor of mine as well. And he wrote in one of his books that the notion that people get rich at the poor’s expense is popular in two places: prison and Harvard. And you write in the book that isn't the West rich, because other countries are poor. In other words, we took it from poor countries, we exploited them, colonialism, slavery, whatever. And yet, as you point out, if predation could cause a Great Enrichment, it would have happened millennia ago. 

You mentioned Neil Ferguson, the historian, and he talks about these “killer apps” that you need to achieve this Great Enrichment: property rights, work ethic, consumer society, competition, modern medicine, and science. And you guys are like, No, that's not it, you have another argument for why the Great Enrichment took off when and where it did.

And you say what is sufficient to do that is a change in ethics, rhetoric and ideology. I mean, it's ideas, and to some extent, even language. And that's just so powerful. We talk about business a lot on this program, because it's a business show, but we have a lot of economists on. And we talk about how if you want to change something, that all change is linguistic, change your language and you change the conversation, and that can certainly happen inside of an organization. But then the example I love is this happened in the world, this was what caused The Great Enrichment. That's just really powerful.

And innovation was in some respects illegal. The king would shut it down or cut your head off, right? That’s a big deal.

I think it was Matt Ridley who pointed out in his book, How Innovation Works, that one of the reasons they didn't like the coffee houses was people gathered there and talk about how bad the king was doing.

Art, this is fantastic. I can't wait to dive in a little bit more when we go out in the last segment.

Ed’s Questions: Segment Three

And today we are on with Art Carden, co-author of the book, along with Deirdre McCloskey, Leave Me Alone, and I'll Make You Rich: How the Bourgeois Deal Enriched the World, highly recommended by both Ron and I. It's a terrific book, great, great, read, funny, laugh out loud in some places, which is just terrific. And Art I want to turn our attention to the middle section of the book where you talk about the pessimisms. I'll, leave it to the readers to read about the seven old pessimisms on their own, and they absolutely should read through those chapters carefully. But let's talk about the three new ones. And I'll just read them: That environmental decay is an existential threat; that humanity is being ruined by a new era of inequality; and that technological unemployment from artificial intelligence is the general fate. Let's talk first, environmental decay is an existential threat.

Ironically, part of that is the people who were No Nukes back at the time when you and I were growing up that scared the crap out of us because of nuclear weapons, and we won't allow nuclear power plants to be built, which is one of the answers to the problem. I'd love to go down that path, we could spend a whole hour on that, but I want to get to other topics. You write in the book that “material equality is not an ethically relevant goal.” What do you mean by that?

Absolutely. And by the way, the math doesn't work even if you do just redistribute it anyway, right? It's not even close. Lastly, turning our attention, this is something our audience is particularly attuned to, is this whole artificial intelligence argument. And here's from the book again: “But artificial intelligence is different, you say, stupid technologies like railways always replace sweat and manual labor. But smart technologies are going to replace the problem solving and mind work, my work,” we're all going to die, Art.

Because the artificial intelligence doesn't ask new questions, right? It just helps us answer your questions. It doesn't come up with new and better questions.

There was a big over the summer with that Netflix mockumentary-documentary kind of thing on artificial intelligence, and how it was manipulating us, and I just thought it was a load of garbage. George Gilder, who Ron mentioned earlier, in his book, Life After Google, talks about how the fact that all of these things might come to pass, we might have driverless cars, and drones, and people that do accounting bots, and all of these things. But, the human species is incredibly adaptive at figuring out ways to serve one another. And this gets back to your Baptist line that you said during the break. There’s a marriage there, which is one of the reasons why this show is called The Soul of Enterprise because we believe that business has a spiritual component.

That's right. As Gilder puts it, innovation always comes as a surprise to us. Art, thank you so much for appearing today. Ron's going take you the rest of the way home on the fourth segment. But thanks again, I want to say for me, hopefully you’ll come on again sometime. There's so much more in this rich book that you have. The book again is Leave Me Alone, and I'll Make You Rich: How the Bourgeois Deal Enriched the World. But right now a word from our sponsor and my employer, Sage.

Ron’s Questions: Fourth Segment

Welcome back, everybody. We're here with Art Carden, the co-author of Leave Me Alone, and I'll Make You Rich: How the Bourgeois Deal Enriched the World. And Art, Ed and I are big fans of Charles Dickens’ Christmas Carol and his other books. He was a fantastic writer. I just read an article in The Economist that he developed over 1000 characters, if you look at his Wikipedia page, and we're still talking about these characters. Yet, he was a lousy economist. You talk about one of his books, Hard Times, as muddle-headed in its understanding of industry and capitalism. He really didn't get it, did he?

There's a defense of the miser. I think Walter Block wrote the book, Defending the Undefendable. Another question I have to ask you, because this certainly has become, I think, more salient during COVID. This whole movement of eating and buying local. I think about even my local coffee shop, say as opposed to Starbucks, buys internationally. I mean, I doubt their espresso machine was made within 100-mile-radius, or even the coffee. And you guys quote a friend of yours, “What will be next, 100-mile-sourced medicines, 100-mile-sourced ideas. I mean, this is a ludicrous idea and movement, isn't it?

You were talking about jobs and artificial intelligence with Ed, and we all know that jobs isn't the right way to measure an economy—it’s not about producing jobs, right, otherwise, Milton Friedman’s line about give everybody spoons. But, are you in favor of a universal basic income, or some type of adaption thereof?

So you would support more of the Charles Murray idea where he gets rid of everything, including Social Security, Medicare, and gives everybody 12 grand [per year], and he even wants to pass a Constitutional amendment to make sure that all this other stuff goes away.

Right, I couldn't agree more. They should apply that same logic, I think, to the distribution of this vaccine. They seem to be botching that up as well. Art, on December 19, I think it was for the Independent Institute [and AIER], on their websites, you wrote an article, “2020 Was Not the Worst Year Ever. Not Even Close.” Would you defend that.

You guys quote Thomas Babington Macaulay in the book, and he says, “On what principle is it that when we see nothing but betterment behind us, we are to expect nothing but deterioration before us.” That such a good point.

Like you said, we've eliminated poverty and wealth creation did that because it's the only antidote to poverty. Art, this has been fantastic. Again, thank you so much for coming on. We love the book and we’re going to recommend it highly all over the place. And folks we will post full show notes. Ed what do we have up for next week?

Ed Kless

That's a great question. I do not have my spreadsheet open. So…

Ron Baker 

Well, I'll tell you, it's Anne Janzer, author of Subscription Marketing.

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This week is bonus episode 323 - Subscription and other musings. Here are a few links discussed during the bonus episode:

• Coronavirus Will Resemble the Common Cold, Scientists Predict - The New York Times

• BMW becomes the latest automaker to shut down its subscription service - The Verge

• Section 230 Basics: There Is No Such Thing As A Publisher-Or-Platform Distinction | Techdirt

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