Monthly Archives: March 2015

The Significance of Experience

I had a conversation with a friend the other day. “I can hardly get my head around consumer branding.” He replied: what do you mean? “Consumer branding is the essence of societal manipulation. Consider GAP, for instance. Their three most recognized brands are Old Navy, Gap Stores, and Banana Republic. In ascending order, each ‘brand’ distinguishes itself from the other by way of its luxury appeal. At the end of the day, their items are manufactured at the same plant, packaged in the same facilities, and delivered in the same trucks. It’s quite entertaining to contemplate the extent by which these corporations define want, need, and societal status. It seems like a large responsibility to me: to develop a notion of desire.”

I frequent a coffee and bagel shop that never fails to lure my attention when I’m in the mood for a nice, warm cup of coffee: Noah’s Bagels. My go-to “neighborhood” blend at Noah’s is the vanilla hazelnut drip coffee.  Since I’d moved to San Francisco, I’d taken interest in this particular blend as it’d been vaguely reminiscent of another blend I’d frequent during undergrad at a very similar bagelshop: Einstein’s. For over a year, I’d marveled at the parallels between Einstein’s and Noah’s: the variety in coffee, breakfast selection, and marketing design. I pondered: did Einstein’s own Noah’s? Did Noah’s own Einstein’s? Following a cursory search, I discovered that Einstein’s acquired Noah’s New York Bagels in 1995, and following bankruptcy in 2000, the two were acquired by New World Coffee. The consolidated entity traded on the NASDAQ using the ticker “BAGL” until 2014, when it was taken private by JAB Holding Comapny for $374mm. JAB controls a majority stake in Peet’s Coffee & Tea as well as the Caribou Coffee Comapny and D.E. Master Blenders.

The JAB Holding Company profits from efficient allocation of capital, corporate expansion, and marketing efficiency. Not only that, JAB is the beholder of the breakfast experience. I’m lured to the shop precisely because of the parallels I draw upon the aroma and taste I associate with their coffee: I’m reminded of the wonders of discovery and exploration I’d pondered when I was still in school.

I spent 630 days in undergrad (this figure excludes vacation time, etc). It’d be impossible to recount each and every day. There’s a simple explanation for this.  From an evolutionary perspective, very exciting (ie – painful, happy, etc) events are vividly recounted and remembered to communicate with our brains the significance of a specific event to enable an individual to recount the context surrounding an event to recall the appropriate actions in response to an event in the future. Our sensory responses react to stimulus (hot stoves, arousal, cold weather) in order to input in our “internal” databases the best means by which to optimize survival (put simply – Avoiding action A to avoid result X; or conversely, to repeat Action B to attain result Y). Similarly, different regions of our brain are activated when posed with tasks we’ve repeated numerous vs. new challenges. When an individual does something familiar, the basal ganglia fires a sequence of commands without much conscientious thought. Alternatively, when posed with decision making that requires a solution to a problem, the prefrontal neocortex is activated – the region of the brain which controls logic and rational thinking. This is how habits are formed. When an action is consistently activated, the basal ganglia begins to generate a known pattern and suppresses alternatives. As a result, the prefrontal cortex is left to contemplate other matters. This is why famous business people like Steve Jobs and Mark Zuckerberg are acclaimed for limiting choice in their lives: it enables them to address larger, more pressing problems, or, as Rob Rhinehart once put it “the automation of basic tasks frees the mind to focus on higher arts.”

At its root, every species has a single objective which is grounded in survival. Studies have demonstrated that in the modern era, human society has developed with such rapid velocity that the environment in which our brains evolved are mismatched with the current environments we exist in. As a result, humans are easily manipulated to form addictions to sweets (which formally signaled the presence of complex carbohydrates mostly found in fruits), fats (which formally signaled the presence of nutrient dense lipids + proteins), pornography (which takes advantage of our reproductive instincts), or TV (which replicate social interaction). These “rewards” are much more commonly found and exploited as a result of technological innovation. As a species, these stimulus are exacerbated and exploited (mostly at the hand of consumer capitalism; eg – McDonald’s, Brazzers). Consider the following: have you ever wondered why television sitcoms and movies cut from shot to shot with such a high level of frequency? The reason for this is that humans are conditioned to notice swift and abrupt actions (which formerly presented risks in our evolutionary environments). It is difficult for one to sustain focus during long, dreary, drawn out scenes. In the present day (at least for those in most developed countries), survival, for the most part, is a given. Life becomes routine and mundane, and it becomes difficult to develop an idea of “significance.”

We’ve discussed the meaning of “significance” on a physiological basis – novel experiences trigger a dopamine response in reaction to a violation of expectation; or, put simply – the mismatch between reality and one’s perception of reality. Recall: when an individual travels down a familiar route, the basil ganglia fires an exact sequence of commands without consciously having to think about it; alternatively, an unfamiliar route activates the prefrontal cortex enabling us to consider several operations: (should we turn left or right? Which street will have the most traffic?). We are armed with memory consolidation to recall the context surrounding puzzling activities to learn how to react in the future. As a result, memories are most vivid when our expectations of reality are violated. This, in turn, has given rise to new (or not so new) subcultures in the modern era (think foodie culture: which enables individuals to experience otherwise “untraditional foods”; the deep house movement: which celebrates the freedom of movement and complexity of rhythmic design; or the desire to seek thrills: skydiving, bunjee jumping). Because these outlets enable individuals to break from the drear of daily dispositions, individuals enable themselves to participate in novel experiences, which become significant to memory, and enable a semblance of significance.

It is important to consider that memory is malleable. We recall “significant” events in our lives because these events (on a rudimentary basis) equip us with the tools for survival. We remember the context surrounding these events because our memories have consolidated the details such that we understand what actions to repeat or avoid in the pursuit of an anticipated outcome. For instance, the significance of vanilla hazelnut coffee ignites a semblance of enthusiasm associated with the prospect of wander and discovery, enabling me to control my mood; and more often than not, improving it. This memory came as a result of the activation of my five senses both during the times these developmental memories were formed, and at the time of recollection: the taste (of vanilla hazelnut coffee), the touch (of the warm cup as my hands envelop the drink), the smell (of freshly ground, smoothly roasted coffee beans), the sight (of familiar deep oak liquid), and sounds (of busy people coming to and fro Noah’s – or Einstein’s – Bagels). My expectation of reality: that a cup of vanilla hazelnut coffee will make me happy, is confirmed, whenever I take the first sip and am “brought back” to those days in undergrad which I associate with those memories. Memories, and expectations, I have personally crafted.

While it may be difficult to develop a construction of significance in the modern era (where people in most developed countries need not try very hard to guarantee survival), understanding the physiological basis associated with human reactions to external stimulus enable one to understand with greater depth the motivation associated with particular wants or desires.

The Continued Proliferation of Mobile Payments

Consumers want ubiquity, and is the basis for why Whatsapp was able to drive a premium valuation from facebook. FB messenger has ˜200m users while Whatsapp has ˜˜600m. In order for FB to stay relevant in the face of WeChat + Line (who have already launched mobile payment solutions) it had to beef up its relative scale (Line has ˜600m users, WeChat ˜450m) (side note: interesting that Viber doesn’t have anything yet considering that they’ve got ˜600m users). In this period of tech adoption/ transformation, its interesting that we’ve got so many different apps which address such a simple and logical need (payments). It seems like the future of payments is relevant only to the OS (similar to how texting + phone calls are considered utilities on a regular cell phone). The only reason why Skype + Viber etc exist is to capitalize upon Wi-fi utilization in the face of (relatively) expense data costs imposed by cell phone carriers. At the present time, the afermentioned apps are most poised to capitalize upon mobile payment integration because users have developed a sense of trust and familiarity with those apps. As i mentioned above, the future of mobile payments will be native to the OS. What is the technology best positioned to realize this ubiquity? Bitcoin.

Source for user statistics: