The New Science of Effective Weight & What Makes an Idea Scalable

Today, on Something You Should Know, is it really necessary to wash brand new clothes before you wear them? Then, a top researcher explains the latest news on weight loss and what really works to shed pounds. Turns out that people who are overweight are almost always dehydrated.
They're not drinking enough water. In fact, one study showed that people who are overweight or obese tended to be 12 times more dehydrated than the lean people.
Also, how smiling, just smiling, will improve your health. And how good ideas scale and pivot their way to success or failure.
Because in the past, it was move fast and break things. Throw spaghetti against the wall, whatever sticks, cook it, fake it till you make it.
And what I'm adding here is we need science to figure out which ideas are truly scalable. All this today on Something You Should Know.
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Something you should know.

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Today, Something You Should Know with Mike Carruthers. Hello, welcome to Something You Should Know.
Have you ever gotten like a new shirt and got it home and you probably have heard something like you're supposed to wash it first before you wear it, but a new shirt never looks as good after you wash it the first time as it does when you take it out of the package, so maybe you wore it. Well, you really should wash it.
You see, many new clothes have a coating of formaldehyde to prevent wrinkles, and this formaldehyde can cause itching and skin irritations, and in extreme cases, even burning, swelling, and blisters. Now, some countries have strict limits on how much formaldehyde can be put on clothes, but the United States has none.
However, testing has found that the levels tend to be pretty low. The good news is that all it takes is one washing before you wear those clothes to eliminate the problem.
And that is something you should know. Just about everyone, it seems, is concerned with their weight.
Mostly that they need to lose some. If you're concerned about your weight, you've likely read or heard various advice about what causes weight gain and the best way to lose it.
only to find that that advice contradicts some other advice. Maybe it really just comes down to calories.
If you burn more calories than you eat, you'll lose weight. If you eat more calories than you burn, you'll gain weight.
But it all gets very confusing. Ben, there are all the fad diets.
Now, if you're a regular listener to this podcast, you know we don't do fad diets here.

We don't have people on to talk about the latest oddball weight loss breakthrough

because most of the exciting news in weight loss turns out to usually be baloney.

But one person who has spent a lot of time researching the latest science on this is Dr. Richard Johnson.

He's a medical doctor, a professor of medicine at the University of Colorado, and he's been leading research in the cause of obesity and diabetes. His book is called Why Nature Wants Us to Be Fat, the surprising science behind why we gain weight and how we can prevent and reverse it.
Hi, doctor. Welcome to Something You Should Know.
Hi, Michael. Thank you for inviting me.
Sure. So I think a lot of people are skeptical when they hear, oh, there's new news about weight loss because over the years, the advice keeps changing about what makes people gain and lose weight.
So what is this new science that you're about to tell us and And how is it different than what we've heard before? And how do we know it won't change in the future? It's definitely true that, you know, a number of years ago, it used to be thought that it was just calories that drive obesity and basic and basically lack of exercise. So there was a lot of talk originally, you know, that all you had to do was just kind of reduce what you're eating, the amount you're eating and exercise more, and that would cure everything.
And then that became quite apparent that that's not the case and that certain foods make a difference. And over the following years, it became more and more apparent that things like sugar specifically tended to make people more obese and develop metabolic syndrome more than, for example, starch.
So there was a transition where we started realizing that it wasn't just behavior, but that there was something special about the particular foods we were eating. And we were involved in that early work.
But what we've done since then has actually kind of given a new insight. And that is that to gain weight, you actually have to activate a biological switch.
And that when we studied that and identified that biological switch, it did turn out to be due to sugar. And it turns out that sugar contains two, sugar really has two compounds.
There's glucose and fructose. There's two carbohydrates in sugar.
And it turns out that it's the fructose that triggers this biologic switch. So when I think of fructose, I think of fruit, that that's the sugar in fruit.
Isn't that fructose? So fructose is a carbohydrate. It's a type of sugar.
And it's present in fruit and honey, so things that we think of as healthy. But it's also present in table sugar, and it's also present in this sweetener called high-fructose corn syrup.
In high-fructose corn syrup and table sugar, it's actually both glucose and fructose mixed together. Glucose is the main sugar in our blood.
It's really the essential nutrient, the essential carb we use as our fuel for the brain and for our tissues. It's our main carbohydrate fuel.
But fructose is a different fuel, and it's mainly present in these foods. What's unique about fructose is that it triggers the storage of fat as opposed to the production of energy.
It really is there to try to shift the calories we're eating from instant energy to stored energy. So it sounds like you're saying since fructose is the sugar in fruit that we shouldn't be eating fruit, that fruit is fattening? It turns out that our bodies, we have a sort of a shield in our intestine where we inactivate the first four or five grams of fructose that we eat.
So it turns out that natural fruits have only small amounts of fructose. And although it's really sweet to taste, we kind of inactivate the fructose in our gut so that we don't actually get a big load of fructose to our liver where everything happens.
And so a natural fruit does not give you enough fructose to activate the switch. Now, if you drink fruit juice, now you're going to get a large load of fructose and you're going to activate the switch.
There's another reason too. Natural fruits have a lot of fiber and they also have vitamin C and other things.
And it turns out that the fiber slows the absorption and the vitamin C actually helps neutralize the effects of the fructose. So the theory that has long been the basis for a lot of weight loss advice and seems to make a lot of sense is if you burn more calories than you eat, you will lose weight.
And if you eat more calories than you burn, you gain weight. But you point out that there is more to it than that, that when it comes to your health, a calorie isn't a calorie.
It's also about the types of food you eat or don't eat, particularly sugar. So explain that.
When you give animals the exact same number of calories, the weight gain is still a little

bit greater with sugar, but there's a major effect, which is that the other metabolic

effects of the switch, which is to become insulin resistant and diabetic and develop

fatty liver, that still occurs even with controlling, even if you put them on a diet

restriction.

So if you put animals on a caloric restriction, so they're eating less than normal, but they get a high sugar diet, they're still going to become diabetic. They're still going to get fatty liver.
They're still going to get hypertension. So those things are not driven by the excess calories.
Only the weight gain is really driven by the excess calories. You know, that's what drives the weight gain.
But all the other things, you can be skinny and diabetic if you put an animal on a caloric restriction with a high sugar diet. But so often you hear that the real enemy in trying to control your weight is carbs, you know, pasta, rice, chips, those kind of things, which I don't sense have a lot of fructose in them.
So how do you fit that into your narrative here? It isn't just the fructose we eat. What we discovered was that the body can make fructose.
And when the body makes fructose, you can get fat

from the fructose you make. There's only one way to make fructose, and you have to make it from glucose.
And guess what the best source of that is? High glycemic carbs. So when you eat bread and rice and potatoes and cereal and chips, even though they don't contain fructose, even though they don't contain sugar, you can still get fat from them because once you eat them, the glucose can be converted to fructose in the body.
And high glycemic carbs do it. Now, the other big discovery was dehydration.
So when you get dehydrated, that also stimulates the enzymes to convert glucose to fructose. And when we started studying this, you know, we didn't really understand this, but we started saying this and it turns out that people who are overweight are almost always dehydrated.
They're not drinking enough water. In fact, one study showed that people who are overweight or obese tended to be 12 times more dehydrated than the lean people.
So dehydration is very, very common in people who are overweight. And the main reason they do that is it turns out that when you eat sugar, that dehydrates you.
You think a soft drink hydrates you, it doesn't. And you say salty food plays a role in this too.
So explain that. So when you eat salt, the salt concentration goes up in your blood and you get thirsty and you want to drink water, but the salt concentration in the blood activates a biologic pathway to make sugar and it makes it from carbs.
So that's why French fries are so bad because the salt in the French fry actually activates the enzyme to help convert the glucose in the French fry to fructose. And that's why French fries, which have no sugar in them, no high fructose corn syrup, you know, but they're still bad because the salt activates this enzyme that converts the glucose to fructose.
I want to get an idea based on all the things you're saying, how all this information trickles down into specific recommendations on what to eat, what not to eat, when to eat, all of that. But first, I'm speaking with Dr.
Richard Johnson. He is a medical doctor, professor of medicine at the University of Colorado, and author of the book, Why Nature Wants Us to Be Fat.
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So, Dr. Johnson, I'm wondering, given all you know, all the things you've been talking about, how does this affect specifically what you eat and when you eat? What did you have for breakfast this morning? Well, this morning I actually skipped breakfast.
And one you know, one of the things is, you know, it turns out that things like carb restriction and intermittent fasting and all these things that people are recommending, they're pretty effective at losing weight. And the carb restriction in particular is a very, very helpful because it removes not only sugar, but it reduces the amount of starch you're eating.
And remember, the starch can be converted to fructose. So it turns out that that is a major mechanism of protection.
So if you want to lose weight, you know, carb restriction, intermittent fasting are great ways to go. But there's also, you know, what we learned from this is there are a lot of nuances.
For example, it's possible to eat cake and not activate the biologic switch. And the reason is that the way fructose works is it's the concentration that hits the liver.
When the fructose concentration in the liver is high, that's when the switch activates. So, for example, if I did not want to activate this switch, I could eat a piece of cake.
If I could eat a piece of cake slowly, like over a couple of hours, then it wouldn't activate the switch. Now the trouble is of course that we, you know, our desire to eat the cake out beats our logic where we know that it's not good.
It's just like a soft drink. It's hard to tell a person to just sip a soft drink over two hours or over an hour.
Everyone will drink it very quickly. And that's the problem.
But the truth is when you understand the science, you can actually, you know, figure things out. So, for example, if you drink water, if you drink more water, you can block the effects of salty foods.
So we did this. We took people.
We gave them salty soup. And we could show that immediately their blood pressure went up and they activated this switch.
We could prove it, that they activated the switch.

But if we gave the salty soup with water, the salt concentration did not go up in their blood.

They did not trigger that enzyme and they did not develop an increase in blood pressure, nor did they activate the switch.

And when you say to restrict carbs, you don't mean all carbs. You mean the carbs, the simple carbs, right? So what we call low glycemic carbs don't activate the switch.
So vegetables and all those things, they're very good, even though they contain carbs. So you don't have to carb restrict completely.
It turns out that it's certain carbs. It's really only four or five, sugar and high fructose corn syrup.
I put them together. And then the other big ones are bread, rice, potatoes, and cereal.
And those are the main ones that tend to raise glucose in our blood and activate this switch where the glucose gets converted to fructose. So what started this and when did it start? Because if you look back at pictures of people from, you know, the 30s or 40s or 50s or 60s, we didn't have as many overweight people as we do now.
So why is that? You know, I've published on how much sugar people were eating over the decades, actually going all the way back. And really, it started really going up dramatically in the 1970s when high fructose corn syrup was added.
And, you know, we've done studies and high fructose corn syrup tends to be more fattening than table sugar, causes more fatty liver, for example. And, and, and it's because there's a little bit more fructose in it.
And also probably because of its how it's absorbed by the eighties and nineties, that's when really obesity and diabetes went crazy. And they continued to increase.
Now, sugar intake has decreased since 2005, particularly in soft drinks, but there's also been the rise of sugar from power drinks. And we're also eating more salt than we did back in the 60s.
So there's a lot of factors. So given all this about sugar and carbs and all this, what's the advice? What should we be eating and avoiding? In general, you want to avoid liquid sugar because liquid sugar is the worst because you get a lot of sugar in a short amount of time.
Liquid, you know, and I include for sugar, I include table sugar in high fructose corn syrup and things like that. So liquid, you know, soft drinks, energy drinks, drinks that have a lot of sugar in it, anything that has fruit juice, really avoid that.
That's number one. That is your number one activator of this switch.
Reduce your sugar intake. Reduce your high glycemic carbs.
Try not to eat so much salty food and try to drink more water. There's certain umami foods.
Umami is another taste. And they will also enter into this switch, particularly things like beer and alcohol.
But beer in particular, which has brewer's yeast in it, actually will activate the switch as well. You know, a lot of meats are good, especially poultry, fish, unprocessed red meats.
There are a lot of fats that are good. You know, omega-3 fats, saturated fat, you have to be a little careful with.
But you know, there's a lot of monounsaturated fats, olive oil-based diets, Mediterranean diets. These are really basically healthy ways to go.
If sugar is such a big problem and activates this switch, then talk about sugar substitutes, because seemingly that would be a good solution to the problem. Well, there are some problems with sugar substitutes, but in general, the first good thing is most sugar substitutes do not activate this biologic switch.
They do stimulate a pleasure response in the brain, what we call a dopamine response. So they do encourage you to eat sweet foods.
So if you're trying to, you know, stop eating sweet foods, drinking soft drinks that with diet soft drinks are, is still going to encourage you to like sweet foods. And so it doesn't get rid of the craving.
Most of them do not activate the switch. There's a few significant exceptions.
Like there's one artificial sweetener called sorbitol. It's often put in like sugar-free syrups.
That one still activates the switch, unfortunately. So that's really not a good choice.
And then there are also other issues with artificial sweeteners that, you know, are quite bothersome. For example, aspartame has been reported to, you know, affect memory.
And, you know, there's some papers suggesting that if you give large doses to animals, that they have trouble going through a maze. So I'm not a big fan of aspartame.
And, you know, so things like stevia, which is a natural artificial sweetener, Splenda, sucralose, there isn't too much negative about that. But, you know, they are chemicals in some respects.
And, you know, we're still trying to figure out what they do and how safe they are. So help me understand the switch a little better in terms of how much sugar do you have to eat to activate it? When does it just shut itself off? Is it a daily thing? Is it once you've activated it, it stays on for a month? I mean, help me understand how it works.
Yes. So it turns out the switch is a dimmer switch.
What it means that if you take two teaspoons of sugar, you're going to activate the switch, but only mildly. Whereas if you drink a soft drink, you're going to, where it's like nine teaspoons, you're going to activate the switch big time.
And when you do, you drop that energy and it only will last for a few hours. Okay.
And then it will recover and everything kind of goes back, but you've now stored that extra fat, right? So initially it's sort of a short-term effect, but we're eating sugar in almost every meal, you know, it's, it's like in 70% of processed foods. So we're, we're activating the switch a a lot, a lot.
And some of us are almost staying like in an activated state. For so long, we have heard that fat is the enemy, that you're eating too much fat, that all this deep fried goo is making you fat and you're eating too many calories and you've got to cut your calories.
Is that no longer really part of the equation? No, it's still part of the equation, Michael, because the way, again, the way it works is the fructose is the fire and the high fat foods are the firewood. What I mean by that is you have to activate the switch so that you don't regulate your appetite.
So if you eat the fructose, now you're going to be hungry and you're not going to control your appetite. And so now when you could get fat just from carbs, but the carbs are only four calories of grams.
So you would have to eat a lot of carbs to gain weight. The fat is like nine calories a gram.
So it's very easy to gain weight with fat if you can't control your appetite. But if you control your appetite, you're not going to eat excessive fat.
So if you are healthy and you have not activated the switch, you can go on a high fat diet. You won't gain weight.
That's what a low carb diet is. It's a low carb diet tends to be a high fat, high protein diet.
And it doesn't cause weight gain because you're on a low carb diet. It prevents you from activating that switch, which is mainly driven by carbs.
So, so a high fat diet with a low, you know, is not going to cause obesity if the switch is not on. But now let's say I give you sugar and I, I give, I give you a lot of carbs and you've activated the switch.
Now, if you have a diet that has a lot of fat in it, you're going to gain a lot of weight because that fat is so caloric rich. It's calorie dense and you're not controlling your appetite.
Well, we've certainly come a long way from it's all about how many calories you eat compared to how many calories you burn. Obviously, there's a lot of nuance to this, and it's really interesting to hear the science behind it.
Dr. Richard Johnson has been my guest.
He is a medical doctor, professor of medicine at the University of Colorado, a leading researcher in the cause of obesity and diabetes, and his book is called Why Nature Wants Us to Be Fat, and you'll find a link to his book in the show notes. Thanks, doctor.
This has been really enlightening. Thanks.
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I'm sure you've heard people talk about scalable ideas, that for an idea to be truly great, it has to scale. Not just business ideas, any ideas, education or ideas in the community.
Scalable is a real buzzword today. And to oversimplify, if you're selling your time for money, like a teacher, an accountant, a lifeguard, a taxi driver, that generally isn't scalable.
There are only so many hours in the day you can work, so your potential success is limited. Versus an idea that grows beyond just you.
Uber and Lyft, for example, are scalable versus a single taxi driver, which is not. Again, an oversimplified explanation.
But someone who knows a lot about this is John List. John is an economist.
He was an economist at Lyft and has done a lot of research on this. He speaks on the subject and he wrote a book called The Voltage Effect, How to Make Good Ideas Great and Great Ideas Scale.
Hey, John, welcome. Hey, thanks for having me.
Sure. So let's start with an example that helps to explain scalability in a little more detail.
So I started an early childhood program in Chicago Heights, whereby I had teachers teach three, four, and five-year-olds. And those three, four, and five-year-olds learned a lot within six or 12 months.
Now, the problem with that program is when I try to scale it, when I originally did the program, I hired 30 really good teachers. But when I scale it up, I might have to hire 30,000 really good teachers.
So that's a very difficult chore compared to when I hired 30. So that idea is not very scalable.
What I should make sure to do in the original study is to have teachers who I can hire at scale and make sure my program works with those kinds of teachers.

That's one way to think about scalability. So in other words, hiring 30 excellent teachers to make the program work is a relatively manageable task.
Hiring 30,000 excellent teachers, and they have to be excellent to make the program work, that would be difficult. So the only way to make it scale would be to be able to hire 30,000 teachers, some of whom would not be so excellent, but the program would still work.
That's scalable. I think that's right, but it's also true that unique humans themselves don't scale.
And the reason why is because they're unique for a reason, and it's difficult to teach other people to be unique. So in a way, if one of the important elements of your idea is something that you just can't get at scale, it will never scale.
So give me an example that you think has been just an outstanding stellar success as a scalable idea. So let's take ourselves back to the polio vaccination.
And let's think what Jonas Salk did. What Jonas Salk did is he had an idea about a vaccination that could handle polio.

So what he did is he tested it out on his own children to start.

And then he tested again to make sure that the original results were not a false positive.

So he first of all figured out this thing works by testing and retesting. Then what he did is he tried it out on a lot of different kinds of children.
So he found out what is the slice of the pie that my idea can work for. That was step two.
And in step two, he found, wow, it works for all children. Then after he found out that it worked on all children, he went to step three.
And that's how do we actually get it in people's arms? But the brilliance behind the polio vaccination is that we leverage the healthcare system. And what we essentially have done is after you have a child, as those listeners know, if you've had kids, baby comes out, gets whisked away and tested and get some vaccinations.
You bring your baby back in six months, it gets more vaccinations, 12 months, more, 18 months, a few more. So the polio vaccination is given in a natural way.
Step four in my reasoning is, well, does your idea have spillover effects? And in this case, the idea of a polio vaccination has great spillover effects because once you get the vaccination, you can't pass along polio to other children. So that's really good.
And then the fifth hurdle that you have to jump over is how much does it actually cost you to provide it and get it in people's arms? And again, with the polio vaccination, the true expense came in the R&D of the actual product. And because we leverage the healthcare system, it's now a pretty inexpensive way to give to people.
So really the polio vaccination passes over these five hurdles of an idea that is perfectly scalable.

And in a way, it's worked brilliantly. And these features are what is really elemental signatures of ideas that scale.
One of the ideas that you write about that you say is not scalable

is the D.A.R.E. program.
Why is that not scalable? The D.A.R.E. program was a social inoculation program that people basically said, don't use drugs.
That original idea came from an experiment in Honolulu, Hawaii with 1,777 high schoolers that sent a signal that the idea works. But in the end, it was just a false positive.
We ended up trying it in LA, and we tried it in other cities, and we tested it in those other cities, and it didn't work. We then went back to Honolulu and tried it there, and it doesn't work.
So we know that because of science. Yeah, and to be clear, because I read about this somewhere else, when you say it didn't work, is that it wasn't that effective in deterring kids who went through the program from not taking drugs compared to kids who didn't go through the program.
But the D.A.R.E. program is still around.
Well, it's changed. So the D.A.R.E.
program representatives read my book, and they reached out to me after they read the book. And they said, we don't like Chapter 1, basically.
And I said, is Chapter 1 incorrect? And they said no. But the the DARE program has pivoted and they've moved to a new type of

program that they argue now works.

So I haven't looked at the new program, but I told them I will look at the new program.

And if there's voltage there, then in the next edition, I'll make sure to talk about

the new program as well.

So I'm talking about the program in the 80s that was simply a false positive. When we hear about companies, businesses, ideas that scale well, you know, it's Amazon, Uber, Lyft, those kind of very big companies.
But there are a lot of good ideas that aren't that scalable.

And in fact, you talk about your father and your grandfather who are truck drivers. So talk about that.
The idea is not just about growing really, really large and taking over the world. The idea is figuring out how big your idea can be.
And then you have to determine whether you're happy with that. So think about my brother and dad and grandpa.
One man, one truck, one good life. They realize their secret sauce is their charisma.
And they realize that they can have a really good life with one truck and them driving it. They realize that that's the extent that they want to scale.
And they realize that their idea is not scalable. So they have to decide, is that the life that I want or should I try something new? And they're happy with that scalable idea.
So what I'm trying to make the point about is to be scalable, you have to have certain features, but if you don't have all of those features, you still might want to do the idea if that's good enough for you. And there are a lot of ideas that can't take over the world, but there are a lot of ideas that have scaled.
And you think about various products and ideas that work, they have the five features that I talk about. Ideas that might only have two or three of the features might scale, but the tenth is much smaller.
So the idea is understand what are the signatures of an idea, because in the past, it was move fast and break things, throw spaghetti against the wall, whatever sticks, cook it, fake it till you make it. We've all heard these statements, but it's always art.
And what I'm adding here is we need science to figure out which ideas are truly scalable. You did some research on the smart thermostat, which I think most people would agree is a great idea.
A smart thermostat will save energy, will save money. I mean, it's a great idea.
But your research was pretty eye-opening. So talk about that.
So here's kind of what happened. There was an innovation of the smart thermostat.
Put it in your house. It will moderate your energy use over 24-hour day.
And the engineers estimated that we will have huge savings because of the smart thermostat. So here's what we did.
We chose 400,000 households in California, and we sent 200,000 of them the smart thermostat. In the other 200,000, we didn't send anything, and we just observed all 400,000 households.
Guess what happens? There is zero energy savings. Now you can say, wait a second.
Why did the engineers so dramatically overestimate what would happen? Well, here's why. They assumed that the end user was Commander Spock, right? This is a guy who never makes a mistake and he is 100% rational.
That's not who the end users are of this product. The end users are more like Homer Simpson.
Homer Simpson is exactly what I did. I got this new gadget.
I did not read the 28 page manual, how to use it. And then I went in and fiddled with the new gadget and I undid all of the presets.
I undid all of the defaults. That's what the 200,000 households did in California.
They undid them exactly enough on average to undo all of the good stuff with the technology. that's knowing the situation.
Know who's going to use your product and give them technology that they can actually use that will help save the Earth. That's why that idea did not scale from the Petri dish to the large, because we did not understand the end users are very different than Commander Spock from Star Trek.
But wait, smart thermostats are a big thing. I mean, I think most new homes that are built have smart thermostats in them.
I think people believe they work. Couldn't it just be, even if they're not working now, this is just step one, that eventually they will evolve and people will get better at using them.
And this is a necessary step to get to where, I guess, where you were hoping we would be. But let me be clear, they're working for some people.
So when I say on average it doesn't work, that doesn't mean that it's not working for some people. And you're right.
What happens now is you come to smart thermostat level two and then level three, and that product will evolve to be much more user-friendly. I used to be the chief economist at Lyft.
And when we put out products there, whether it's called walk and save or wait and save, there's always some beta testing and then some evolution to make sure people understand the new product. The general idea here though is you might have a voltage drop if your estimates from the beginning were that all the users are going to 100% understand and use a technology as you estimated to start out.

And in many cases, that doesn't happen.

And that's just a general idea of a voltage drop.

When you scale an idea, I imagine that how you pull it off, how you execute it,

has a lot to do with whether or not it'll succeed.

If you don't execute on the idea, if you're not a good manager and make good decisions,

the best idea won't work. But on the other hand, if you're 100% at execution,

if you're trying to scale an idea that doesn't have the good signatures, that won't scale either. So there are ideas all over the world that look good on paper, but because of bad execution, they just don't scale.
Can you give me an example? Many restaurants. When you think about Jamie Oliver, that was really bad execution.
So Jamie's restaurants in the UK were really good early on and the execution ended up faltering. And there are many cases like that.
I think Sears and Kmart were a bit like that too.

Look at the 1955 Fortune 500 companies. In 1955, if you look at those 500 companies, only 70 of those are around today.
Now, in many cases, those are firms like Studebaker, Zenith, et cetera. They just did not pivot.
And when the times caused you to change, they refused to change. Blockbuster is much the same way.
And in many cases, when markets change, if you're not pivoting, this is a lack of execution. The idea looked good early on, but then the market changes and you're not pivoting with it.
So the world is replete with examples now where folks are not using data or not using new elements of data science to help make decisions. And I would say that those firms are endangered.
Blockbuster could have purchased Netflix for pennies on the dollar had they wanted to, but they thought that's not the future. They could have easily pivoted in that direction and said, we're going to do both and we're going to be diversified, but they didn't.
When you look at many firms, they start doing something very different than what they become. Since you were an economist at Lyft, give me an idea, give me an example of an idea that you came up with or worked with at Lyft that was a scalable idea.
Let's think about a pricing idea that I had. and this might be familiar to some of your listeners, and it's called left digit bias pricing.
And the idea is that as humans, we engage in shortcuts. And when we see a number, we focus on the left most digit.
So what does that mean? People open up their apps and say they get a price of $7.93. And then they make a decision whether to take the trip in Lyft or in an Uber.
Now that decision is not very different than if they receive a price of $7.94, because humans see $7.94 as the same as $7.93. Now, let's say I change that just a bit, and I give you a price of $7.99 versus a price of $8.
That's basically the same as the first example. But now, because people are focusing on the seven or the eight, that penny difference makes a big difference in your decision.
Okay? So I tested that idea using Lyft data and using Lyft, a big field experiment on Lyft.

And I find that that one penny change makes a big difference.

And I test it again, and I find it's not a false positive.

Okay.

I then go to the next step to say, who does this work for?

It ends up working for everyone. Everyone has this left digit bias.
Okay, now let's go to the situation. You have business travelers, people travel in morning rush hour, afternoon rush hour, going to the airport.
It works in all of those situations. So now that's great because I can control in a better way using pricing in this behavioral bias.
So I can scale that up and I can effectively impact people's choices because of this simple left digit bias rule. Scalable.
It works. It's not costly to do it because remember, we have to give you a price anyway.
What does it matter if I give you a price of $7.93, $7.99, or $8? So the supply side of it is great. And the spillovers are great too because I can control whether you get it or not.
So if I'm on the bad end of a market, what I mean by bad end is there are a lot more drivers than consumers, I can move consumption. Or if it's more consumers than drivers, I can move consumption.
So now I can use this type of bias that humans have in a way to make the world a better place? Well, I've always wondered why. I'm Amy Nicholson, the film critic for the LA Times.
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I imagine a lot of people, when they need a ride, they'll check both Uber and Lyft and compare the price. And sometimes they're close and sometimes they're not close.
And I never understood why. Yeah, well, here's a hint.
So the main part of both of these algorithms are working on the demand and supply imbalance. So one company might have a lot more demand than they have drivers or vice versa.
That's one reason. Another reason is these companies are always experimenting with pricing.
So you might just be part of an experiment where you got the bad draw from one company and a good draw from the other one. And by good draw, I mean a lower price.
So it could be because of demand or supply or because they're experimenting with the prices, but you're called a dual apper. So a dual apper is always checking both and then taking which one is best.
well as as I said earlier, the term scalable has become such a buzzword that, you know, oh, your idea has to be scalable. It's good to get some insight into what makes an idea scalable and not so scalable.
John List has been my guest. The name of his book is called The Voltage Effect, How to Make Good Ideas Great and Great Ideas Scale.
And you'll find a link to his book in the show notes. Thanks, John.
This was interesting. Mike, thanks again.
It was great chatting with you. I really love your curiosity, by the way.
Well, thanks. People generally smile because they're happy.

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