Free Breakfast Hack

There’s always a reason why, and if we can find reasons why that are real, but not acknowledged, there is opportunity. Cruising, for instance, might have some hidden reasons and opportunities. The JTBD framework is built around this idea too. Economists call it stated and revealed preferences.

Danny Meyer noticed reasons-why as a restaurateur. It’s not just the food!

“That’s why people go out to eat, it’s not because they don’t want to cook or do the dishes. They want to be transported to a social environment.” Danny Meyer

As a kid I didn’t get this. Sometime around 1998 we went to Ocean City Maryland or Hilton Head South Carolina for a family vacation. We stayed on the beach. It was great. Each night we walked to a different restaurant for dinner and the only requirement was that it allowed flip flops.

One night we were at someplace on the sea, and I wanted fish, the catch of the day or some-such-thing only to discover that it was flown in from Maine. Huh? If I wanted fish from Maine we’d have gone there for vacation.

The lesson there, and still, is that there are a collection of features (acknowledged or not) that consumers want in a product or service. Seafood tastes better by the water.

But wait, there’s more.

People like to make easy choices for the features. Easy in the sense that the amount of work is appropriate for the amount of reward. Doing your own taxes isn’t necessarily easy, but some find the reward of financial savings, mental stimulation, and personal accountability worth it. The process of making the ledger determines the ease. Home improvement is another area. I’ve started many projects because the ledger making is easy, whereas the actual work became quite tricky, a miscalculation of the work-reward relationship.

One feature hack for easier decisions is free. Free is helpful because it’s an easy input and calculation. This can be seen in the free breakfast effect.

From conclusion of the 2012 paper, emphasis mine:

“Experiment 1 shows evidence of the zero price effect; specifically, the free breakfast effect. Even though people’s preferred alternative is the Meliá, when the cheaper option of the Ibáñez Hotel includes a free breakfast, the demand for the latter increases and for the former it decreases. Especially relevant is the fact that when the breakfast in the cheaper option is only €2 (i.e. a price that is virtually insignificant and very close to zero), people go for the more expensive alternative and are willing to pay the extra cost to stay at the Meliá. No matter how small the price is or that the net benefit for each alternative across conditions is identical, the net benefit for the cheaper option will only be superior to the more expensive option when the former offers a free breakfast.”

A two-buck breakfast isn’t easy to choose because the mental accounting is to ask, what’s the catch? Whereas a free breakfast leads to, well I’m probably paying a smidge more for the room but breakfast is another service like housekeeping, room service, or valet.

Free is a special shortcut in decision making, but not the only one. Fish taste better by the sea. Diners want atmosphere, except for fast food. What’s wonderful isn’t that there is no right answer but that there are so many answers. Like a studio engineer listening to a band, there are many dials to make something work.


Other examples of this idea are: Donation alchemy, “Earned” rewards, and eating vegetarian.
& Rory Sutherland quotes von Mises, the man who sweeps the restaurant floor is as important as the one who prepares the food.

Fifty cent students

CAC is the most interesting problem in business because a low CAC makes for interesting unit economics. And, CACs can have unconventional solutions.

“For kids that have taken the SAT, schools can buy their names for fifty cents a name from the College Board, which oversees the test. Schools get the name and address of a kid who went to the trouble to take the college entrance exam which is a good sign of a prospective applicant and someone where it would make sense to mail a shiny catalog, postcard, or other marketing material.” – Sally Herships, September 2021

Some colleges buy sixty-thousand names! Buying names is a customer acquisition cost. The thinking being that kids who take tests to get into college will be good customer of college. It’s not the best CAC attack we’ve looked at, but here’s a list for you to see for yourself.

In 1912, Leon Leonwood Bean got a list of out of state hunters who might need his duck boots. In 1918 each American G.I. got a Gillette shaving kit. In 1959 Warren Buffett wrote a letter to his shareholders. In 1975 Michael Dell thought the best families to sell newspaper subscriptions to were new families, sourced from the newlyweds section of the paper.

The ’80s Tupperware inspired the ’90s Hotmail signature. In 1999 Zappos paid $18,500 per customer for one advertising campaign. In 2004 Zillow launched with the Zestimate. It was Bill Gurley who told the founders they better think of a way to generate attention (and customers!) because buying ads to sell ads wasn’t a good business. In 2011 antiques attention sold shirts.

So, there’s a lot of ways to test for good customers.


This blog post? A CAC for my Gumroad store, a collection of non-fiction short stories.

NBA 3s

There’s one honest sport.

When asked if the NBA will soon move back the three point line Mike Zarren said probably not. The reason is probably the business model.

“At the end of the day we are an entertainment and I would want to hear from fans that they are not liking the game as much. That’s not what we are hearing now (2021). You have to listen to the customer and people love the NBA right now…

“You also have a problem with the three-point line corners. The further out you move the crest of the line, the bigger the disparity between the corner-three and the other threes, and we’re not going to make the court wider because that would mean less seats and fewer tickets.”

It’s fun to talk about BIG CHANGES rather than “things are going well, let’s keep working hard and marking small bits of progress every day.” So it’s fun to talk about moving the NBA three-point line further from the basket or having a four-point shot or whatever. But those things won’t happen, chiefly because of incentives. The NBA, like movies, is a business, and like movies, those business incentives dictate the easy and difficult changes.

Triangle problems

How do you fit the triangle in the circle?
the triangle problem

One way to think about Alchemy, said Rory Sutherland, is to think of a Sudoku puzzle. In Sudoku each column, row, and 3×3 box must have one through nine once and only once.

Sutherland’s suggestion is to shift back and forth between the rows, columns, and boxes. We’ve highlighted donation alchemy, wine alchemy, and magazine alchemy. Alchemy is like moneyball find secondary things that deliver value. An easy addition, from Sutherland, is good wifi and good seating.

Another way to consider Sudoku situations is as a triangle.

“This is why I like being in the field of addiction. It isn’t just about ‘the drug’ and it’s not just about ‘the person’ and it’s not just about ‘the society’. It’s about all three, it’s this triangle between social factors, personal factors, and drug factors. It’s a very complex equation but it’s fun because you can see different parts of the world and different weightings and different outcomes.” – David Nutt, London Real February 2020

Nutt’s podcast covers a lot of ‘the society’ solutions, where certain locales changed consumption patterns. Mostly the outcome change is about ease. When alcohol is less easy to consume – via where and when it can be purchases or how much it costs – then people drink less.

The triangle feels like a better analogy than Sudoku. The triangle can be rotated like a dial. We can move points A, B, or C or A, B, and C. The triangle also fits with a complex adaptive system view: if we move A down three and over two it will be in the circle but then B will be out. And it could affect C too.

Triangle problems joins our toolbox for problem solving along with: black box problems, profession problems, TiVo problems, and cooking problems. Each of these is a framing, if this is the problem here’s how to approach it.

Thanks for reading.

Tailing Rodgers (part two)

For each thing that happens there is a field of potential things which could happen. Those potential events fill out a distribution where some events are more likely than others. A daughter’s height for instance, could be between four and eight feet but it’s very very likely that her height will be between her mother’s and father’s heights.

Thinking about these distributions of potential outcomes can be helpful because the areas which are not compact, like daughter’s height, are interesting.

Our annual NFL example (last year was Tom Brady passing yards) is Aaron Rodgers over/under 38.5 touchdowns. Here’s how we visualized it in September 2021:

Rodgers chart

The thinking then, as now, was that Rodgers would throw between twenty and fifty touchdowns but not with equal odds. The number of touchdowns would be asymmetrical. It was much more likely Rodgers threw half of 38.5 than double it.

Five games into the season offers a chance to be Bayesians and update our forecast. In addition to the preseason line of 38.5, his career average is 33.4, and his current pace is 32. Mix in the chance of injury, and he could also finish the year with the ten touchdowns he’s tossed thus far.

Let’s tack this on to the 2021 predictions:
– +10 TD, 90%
– +20 TD, 85%
– +30 TD, 50%
– +38.5 TD, 10%

I wanted to go lower on the 38.5 percentage, but one lesson from Cade Massey is to be less certain about extreme events. So in the same way that online doesn’t equate to real life and we should adjust for that, I will adjust my percentages as well.


Daughter height is top of mind because I have eleven and thirteen year old daughters. 😬

Duty Oriented

Terri Gross asked, what image did you have of breaking the sound barrier. Chuck Yeager responded (1988).

“I didn’t give any thought to it to tell you the truth. I was duty oriented at that time. I’d been in a war where a lot of guys got killed and learned to concentrate on what I was doing and forget about the outcome because you can’t do a lot about it anyway. “

Chuck Yeager

Like Fermi Knowledge, this encapsulates a full idea. With Fermi Knowledge it was the question: do I know this so well I can figure it out again? For duty oriented the question is: am I focused on the things I can control to the best of my ability?

It was in 1947 that Yeager broke the sound barrier, Tom Wolfe wrote, “Yeager had always figured it was useless to try to punch out of a rocket plane.”

ps, it’s great that we can hear the man in his own words, with his steady confidence. If you create content, please consider that in 33 years someone will be looking for these ideas again and hidden behind a paywall those ideas will die.

Obama and Eisenhower

Some subversive decision making influences, like a cross breeze in golf, are the unnoticed dynamics. Social pressures, human tendencies (status quo bias for example), status, ego, and so on. But like with a vegetarian diet, it is possible to design around them.

One design choice is incentives. Incentives work as designed sometimes, but other times create yes men and women. YM&W are a completely predictable case of certain incentives within an organization.

To get around this, certain leaders argue well and vigorously debate an issue. The aim is a debate rather than a resolution.

Another path is to not state a perspective and enroll a (similar status) opponent, but to be more of a blank page. It may not be coincidence that at least two presidents followed this direction.

Speaking about his new book, Noise, Cass Sunstein said:

“President Obama was a master of not giving a clear signal of what he wanted to do because he wanted to get as much information as he could and that reduced the noise.” – Cass Sunstein

The book Ike’s Bluff, covered how Dwight Eisenhower used this tool too:

“Despite his open demeanor, at press conferences Eisenhower would from time to time pretend to know less than he did, leaving the illusion that he was distracted and ill informed about matters that deeply engaged him. Indeed, Eisenhower was willing to appear less than sharp, even a little slow-witted, if it served some larger purpose. Unlike most politicians, he was not driven by an insecure need to be loved and recognized. He possessed an inner confidence born of experience.”

There’s as many paths to success as there are organizations trying to succeed. To ‘argue well’ or ‘listen like Ike’ is one of many ways.

Predicting an AA A+

There’s this idea in sports that certain people are “ruining the game”. It’s those baseball people who favor home runs and defensive shifts. It’s the golfers who drive for show and dough.

And we can blame computers.

And us. We’re to blame too.

Computers compress time. I could have mailed this to you as a letter but that would take me buying paper (after a trip to the store of course) writing it…yada yada yada…and you walking to the mailbox. Computers compress all that.

Analytics is a type of compression. Rather than a lot of people and a lot of time to learn about the advantages of home runs or infield shifts in baseball or long drives in golf, a few people with computers thought it might work and ran the data.

This is an issue we will see more of: novel data making interesting predictions.

“We looked on Twitter for anyone who announced they were going to their first AA meeting and we followed what they tweeted after that. Did they stay sober for ninety days or did they go back to drinking? Did they complain about being hungover at work? Did they celebrate their sobriety? Then we took all the data we could model from their Twitter feeds to try to predict if they would be sober. Things like: who do you follow, do they talk about booze, are you over 21, how do you cope with stress? We can predict with 80% accuracy if someone will stay sober or not on the day they decide to go into treatment.” – Jen Golbeck, November 2020

This algorithm, Golbeck notes, is also pessimistic, it tends to say you won’t recover when you will. And it’s confounded by the sample: only certain people announce things on Twitter.

These algorithm approaches will grow in the decision making blend. Part-of-that means understanding the tools. We are time traveling, leaping to the future rather than walking there.

Daters, scammers, and Zeckhauser

Maxim Five: low probability events

When a low probability event occurs (say an underdog wins a sports championship), we tend to come up with reasons why we might have expected it. This phenomenon is often referred to as hindsight bias, a tendency to perceive past events as having been more predictable than they actually were. But if we consider that many events occur in a year, we should expect at least some to be low-probability events. For example, there are many championships in a given year, so we should not be surprised that every year there is a championship outcome in some sport (say tennis, golf, football, etc.) that no one expected.Dan Levy, Maxims for Thinking

Something is always happening because with enough parts, something happens. The odds that one low-probability event, a 100:1 long shot wins an event, occurs is low. But the odds that any low probability event occurs is fair. Tonight many people will go to many bars. To bet that Your Friend will meet their spouse is ridiculous. To bet that Anyone’s Friend will meet their spouse is a no-brainer.

The bar points out the mechanism we use everyday: a filter. Not everyone at the bar will be there to meet a spouse and those that are there for that will very likely leave without doing so, but being at-the-bar is the filtering mechanism. It’s the same mechanism the Nigerian Prince uses.

It’s well noted that scamming emails contain misspellings, outlandish claims, and hard-to-swallow facts as a filter. A scammer, like a dater, only wants to draw from an eligible pool. And the scammer and the dater both have the same reason: resources. A scam email has minimal costs. A visit to the bar has minimal costs. These filters have to exist because the follow up is expensive.

Something is always happening, but we often don’t want ‘something’. We want ‘this thing’. One tool is to increase the probability (p) it occurs. Go to the coffee bar. Send the email with mistakes. Another tool is to increase the number (N). Will Michigan ever lose again as a thirty-point favorite? Maybe. Will a division one football team lose as a thirty point favorite? Probably. Will any football team lose as a thirty point favorite? Definitely.

Low probability events will always occur and the mechanism of a large Number or rising probability influence how often. Maxim 5 is “the world is much more uncertain than you think.” Levy, writing about Richard Zeckhauser notes, “so the next time you find yourself thinking that some event will happen for sure or that some other event has no chance of happening, pause to remind yourself of this maxim.”


Thanks to Eric Bradlow on the Wharton Moneyball podcast for articulating the idea “large N small p”.

Does the bundle explain it?

Defaults are a design tool to frame thinking. One designed-default is mean reversion. For most situations, said Cade Massey, “Try regression to the mean on for size and see if that can explain it.” Another is to start with the base rate: what typically happens in situations like this? During the Summer of 2021 there were many comparisons of vaccinated and unvaccinated Covid infection rates. This was a case of base rate neglect.

Mean reversion and base rates are good starting ideas because they prevent our Narrative Spin Drives from jumping into high-output mode. For instance, there’s an annual NFL video game known as Madden NFL. There’s also a Madden curse. If someone appears on the cover they have a terrible season after. It’s happened to eighty-two percent of the athletes!

Or it is base rates and mean reversion. To earn the cover rights, a player must have an excellent season, and their “success equation” benefited from a few lucky bounces. That happens. But bad luck happens too.

To add to the value of starting with base rates and mean reversion we can add “The Bundle”: the idea that a JTBD is a collection of things.

Marc Andreessen talked about the bundle of education: a dating scene, knowledge, social interactions, signaling, potential professional connections, cheap financing, and so on. Part-of-the-reason education innovation hasn’t gained distribution is that online only addresses parts of the bundle. It’s hard to date or build friendships on a video call.

Another bundle is the meal. Every meal is a combo meal: social interactions, nutrients, calories, taste, and so on. We can see bundles further yet. Food is more than the sum of its vitamins and nutrients. Eating an orange is more than theVitamin C, fiber, and sugar.

Work is a bundle too. Economist Tyler Cowen often notes that part-of-the-problem with Universal Basic Income is that it doesn’t address The Bundle. From NPR:

“Companies, like those in the tech industry such as Google and Apple, built enormous offices and put them all right next to each other in Silicon Valley and the office expanded what it was in people’s lives. They became like a second home. They had fancy food, concerts, dry cleaning, free meals.” – Stacey Vanek Smith, Planet Money, August 2021

Okay, a confession. I love Ted Lasso. It’s my favorite show since Parks and Rec. What I admire about Lasso is that he sets a tone (assuming for a moment it’s a real football club but this ethos may exist in the real production). Players begin the day and “Believe”. That’s what starting with base rates, mean reversion, and the bundle does too. Starting with those prompts prevents the Narrative Spin Drive from generating primarily palatable explanations.


One thing I’ve changed my mind on is reading fiction. Fiction, like Ted Lasso, appeals to us because it is a fake premise sharing a human truth.
Also, the idea of online education needing distribution is from Alex Rampell, a colleague of Andreessen, who asks: Will disruptors gain innovation before innovators gain disruption? This is the “TiVo Problem.”