Free samplesPosted: May 22, 2023 Filed under: America Since 1945, business 1 Comment
I was in See’s Candy the other day, as I am on many a weekend, and it dawned on me that two of the classic Buffett/Munger businesses, Costco and See’s Candy, are places that offer delicious free samples.
Go to a Costco and you’ll likely get a tasty snack or two, go to See’s and you’ll get whatever the day’s sample is (yesterday it was salted dark chocolate caramel).
Buffett and Munger are all about urging people to be rational, and managing their own emotions (“I can’t recall any time in the history of Berkshire that we made an emotional decision”) but a huge part of their success and what makes them interesting is their awareness that some businesses are sort of magical. They’ve got a grip on customers that’s beyond rational, that exists in the worlds of love and nostalgia and strong emotion. Buffett raving about the iphone, for instance:
If you’re an Apple user and somebody offers you $10,000, with the the only proviso [that] they’ll take away your iPhone and you’ll never be able to buy another, you’re not going to take it
If they tell you [that] if you buy another Ford motor car, they’ll give you $10,000 not to do that, [you’ll] take the $10,000 and buy a Chevy instead.
I mean, it’s a wonderful business. We can’t develop a business like that, and so we own a lot of it. And our ownership goes up over time.
People had “taken a box on Valentine’s Day to some girl and she had kissed him … See’s Candies means getting kissed,” he told business-school students at the University of Florida in 1998. “If we can get that in the minds of people, we can raise prices.”
“If you give a box of See’s chocolates to your girlfriend on a first date and she kisses you … we own you,” the investor said in “Becoming Warren Buffett,” an HBO documentary.
(That U Florida interview is one of my favorite Buffett texts, you can see not just the sunny old grandpa but the rapacious capitalist).
There is an accounting term that attempts to quantify some of this, goodwill, but this quality is not measurable in any exact way. In Munger’s famous talk on The Psychology of Human Misjudgment, he talks about how he didn’t learn about any of this at Caltech or Harvard Law School. Being rational is wise, even a moral duty as Munger often says, but you’ll miss out on human decisionmaking if you don’t look for and acknowledge the power of essentially magical forces at work.
The gap between rationality and the way people actually behave due to romantic attachments, sentimentality, brand loyalty, etc is a source of humor, as well as an opportunity for price increases. Buffett and Munger seem to see both.
One example I can think of where free samples didn’t work: the teriyaki place at the mall. Did you have these? At the mall food court the kid at the teriyaki place would often have a plate of free samples. Yet the one time I tried a full plate it was kind of repulsive. I didn’t finish. Too sweet or something, or just not good at scale.
Coke has no taste memory. You can drink one of these at 9 o’clock, 11 o’clock, 3 o’clock in the afternoon, 5 o’clock. The one at 5 o’clock will taste just as good to you as the one you drank early in the morning. You can’t do that with cream soda, root beer, orange, grape, you name it. All of those things accumulate on you. Most foods and beverages accumulate on you — you get sick of them after a while. There is no taste memory to cola.
So says Buffett, perhaps related to “the teriyaki problem.”
Maybe the free sample method only works with a quality product. Sometimes the samples at Costco are bad. Remember when they used to give a sample at Trader Joe’s? Covid has killed that I guess. It worked on me.
Giving out free samples, in both See’s and Costco’s case, represents a strong investment on serving customers. Giving out free samples is a pain in the butt. A business that has the abundance to consistently deliver is probably confident and well-managed. Is this blog a form of free samples?
we’re all eating wood pulpPosted: May 13, 2023 Filed under: Uncategorized Leave a comment
This piece in Bloomberg by Ken Parks about a wood pulp mill in Paraguay caught my attention. In trying to learn about “tons of cellulose” as a product and measurement I learned that they really mean like plant meal, which we then eat.
A 2014 NPR piece by Allison Aubrey sums it up with the headline: From McDonald’s to Organic Valley, You’re Probably Eating Wood Pulp
but don’t worry, the people putting wood pulp in our food say that it’s fine:
“A good way to think about it is to ask: Would our food be any better or worse if the cellulose used was sourced from another plant?” And Coupland says the answer is no. “Cellulose is just a molecule, and probably one we want more of in our diets.”
“Ah, yes, the ‘wood pulp in cheese’ stories,” Elizabeth Horton of Organic Valley responded to us when we asked her about the headlines.
Paraguay has had a rough go, something like half the country or more died in some meaningless war in the 1860s. The photos of it can look eerily like photos of our Civil War, happening at the same time.
polar bear cub with sunglassesPosted: May 11, 2023 Filed under: animals, Canada Leave a comment
pretty obvious how I found this (reading Mari Sandoz’s biography of Crazy Horse -> Mari Sandoz wikipedia page -> wikipedia page for “snow blindness”)
I’m all right on that onePosted: May 11, 2023 Filed under: America Since 1945, business Leave a comment
And there used to be a politician in Nebraska, and if you asked him some really tough question like, you know, how do you stand on abortion, he would look you right in the eye and he’d say, “I’m all right on that one.” And then he’d move next.
very Warren Buffett joke from Warren Buffett.
You know, Tom Murphy, the first time I met him, said two things to me. He said, “You can always tell someone to go to hell tomorrow.” Well, that was great advice then. And think of what great advice it is when you can sit down at a computer and screw your life up forever by telling somebody to go to hell, or something else, in 30 seconds. And you can’t erase it. …
And then the other general piece of advice, I’ve never known anybody that was basically kind that died without friends. And I’ve known plenty of people with money that have died without friends, including their family. But I’ve never known anybody, and you know, I’ve seen a few people, including Tom Murphy Sr. and maybe Jr., who’s here, (LAUGH) but certainly his dad, I never saw him, I watched him for 50 years, I never saw him do an unkind act.
And we had as much fun out of deals that didn’t work in a certain sense as the ones that did work. I mean, if you knew you were going to play golf and you were going to hit a hole in one on every hole, you just hit the ball, and it went in the hole that was 300 yards away, or 400 yards away, nobody would play golf.
I mean, part of the fun of the game is the fact that you hit them to the woods. And sometimes you get them out, and sometimes you don’t.
So, we are in the perfect sort of game. And we both enjoy it. And we have a lot of fun together. And we don’t have to do anything we don’t really believe in doing.
And it has limited magic in sort of the adjacent West. It’s gravitational, almost. And then you get to the East. And incidentally, in the East, people prefer dark chocolate to milk chocolate. In the West, people prefer milk chocolate to dark. In the East, you can sell miniatures, and dark — in the West —
I mean, there’s all kinds of crazy things in the world that consumers do.
Talking about Netjets:
CHARLIE MUNGER: I used to come to the Berkshire annual meetings on coach from Los Angeles. And it was full of rich stockholders. And they would clap when I came into the coach section. I really liked that. (LAUGHTER) (APPLAUSE)
(he doesn’t fly that way anymore)
from this CNBC transcript of the afternoon session of the annual meeting. I couldn’t find a transcript of the morning session.
OppenheimerPosted: May 8, 2023 Filed under: America Since 1945, writing Leave a comment
I watched the new trailer for Christopher Nolan’s Oppenheimer movie. Can it top Cormac McCarthy in three pages in The Passenger?
Murals of the Zimmerman library, University of New MexicoPosted: May 5, 2023 Filed under: New Mexico Leave a comment
Here we see the Zimmerman Library on the main campus of the University of New Mexico, Albuquerque. The building was designed, like so many buildings in New Mexico, by John Gaw Meem.
Meem used architectural forms such as battered walls, vigas, and stepped parapets in combination with modern building techniques and materials to evoke the past without imitating it directly. He explained in a 1966 article that he used symbolic forms to “evoke a mood without attempting to produce an archaeological imitation.”
Meem’s finest works all found resonance with the soft, earthbound forms and materials that were part of the vernacular architecture of the Old Southwest.
Meem also headed the committee that wrote the 1957 Historical Zoning Ordinance for Santa Fe, which locked in the city’s distinctive style. I pilfer from Wikipedia a gallery of some of his works and restorations:
A personal favorite is La Quinta, at Los Poblanos Ranch and Inn.
We poked our heads into the Zimmerman library to see Kenneth Adams’ WPA-era murals, Three Peoples. However, the librarian informed us these are now covered, because, as she put it, some people find them offensive.
(lifted from here).
Kind of get it. These murals loom over big rooms at the library of the school, whose undergrads are 46.4% Hispanic. You can arrange to see the murals apparently, but checking them out online was good enough for us.
Strangely there’s another mural, the history of which I don’t know, which remains uncovered:
Another good mural in New Mexico: