20,000×1 != 1×20,000

Alchemy is about taking existing or marginal resources and deploying them for non-linear effect. Sometimes small changes go boom.

One way to see this is in the expression 20,000×1 != 1×20,000. Rory Sutherland introduced this idea through travel. A new rail line, Sutherland said, that saves many people a few minutes is worth less than a change that saves a few people many minutes.

Another example Rory gave was airline lounges. A sole traveler visiting a lounge many times a year gets a small benefit whereas that traveler with their family twice a year gets a huge benefit. In each case the same number of scones are consumed, but the effect to the consumer is different.

A real life example is the Credit Karma Save program.

“One of the things we noticed was that there’s strong deposit behavior around paydays and we wondered if there was a way to do nudging around paydays. So we created a savings boost program where just by depositing a dollar that month you’re eligible to win twenty thousand dollars that month.” – Kyle Thibaut, The Science of Change, October 2021

That’s not all. Credit Karma also offers Instant Karma, a cash reimbursement program for their debit card users. Every transaction is a chance to win that amount back.

I’d wager that the Credit Karma accounting for “customer reward” or “interest paid” or such, is similar in scope to the competition – but having a few large chunks rather than many small ones is a golden idea.


It’s always nice to validate an idea with an “out of sample test”. Does this work elsewhere? Marc Andreessen riffed on the idea that there are only bonds and call options.

Where are the notifications?

One difference between the human brain and the laptop computer is that location matters. A human thinks differently, a computer compiles the same. This makes alchemy possible.

This also makes academia tough.

In behavioral science information presentation is everything. Order your tickets in the next 14:59. Put another way, what we see is all there is. Researchers will find that calorie labels work (!!), conditionally.

To humans, conditions matter. This, is a creativity canvas.

For instance, payment medium matters. People tend to spend differently because the feedback, the salience of paying with a twenty dollar bill is much higher than with a credit card.

“Certain payment systems leave a weaker trace in your memory. When I’m facing a purchase I ask, ‘How much have I spent in the recent past on things like this?’ If the answer is a lot then I’m less likely to make a new purchase, and if I’m paying by credit card I don’t remember those past purchases.” – Dilip Soman, The Decision Corner, October 2021

So, Soman created an app where people could spend and see feedback on their recent purchases. They spent less! Success!! But in 2010 South Korea created a text-message-for-purchases-alert-system and they found the opposite. “On an average,” Soman said, “people who opted in to receive the notifications spent more instead of less.”

The mechanism seems to be that text message information registers in a different way. “When we interviewed people they would say things like, ‘Oh if I ever needed a record I know my phone has it.’ Instead of being more vigilant they outsources that to the phone.”

The replication crisis in behavioral sciences makes me more hopeful about the tool’s potential. Human beings are goofy. Being one place and not another doesn’t matter how hungry I am, but you wouldn’t know by our actions.


Bottom line: the easiest behavioral tool is dialing friction up or down. Thanks for reading and supporting.

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.

Subtraction’s Value

One way to think of a decision is to think of the ‘right’ answer. This has limits. ‘Right’ answers exist within conditional assumptions, and mostly in the mathematics and moral fields. Should I be honest with my partner? has a ‘right’ answer. What’s the optimal distance my 2017 Subaru Outback should follow this other vehicle given these LIDAR, radar, sonar, sonic readings? has a ‘right’ answer. Note, I have no idea how adaptive cruise control works but it is the best automotive technology of the last decade.

‘Right’ answers are limited because of all the conditionals. Self-driving cars are one example. It’s a math heavy domain, the cost and availability of technology (read: number collecting and computing) has fallen, and we’ve never had as many smart-focused-people or as many save-our-collective-butt-companies, and yet it feels slow. Why is self-driving so slow? The conditions! Snow, rain, city, country, semis, motorcycles, bright lights, night lights, desserts, animals, forests, and not least of all: other drivers.

To get the ‘right’ answer to a question like: should the car warn the driver and begin automatic braking? the system needs a pretty tight window of conditions. So if the ‘right’ answer is difficult to come by is there a better option? There might be.

Rory Sutherland’s work comes up a lot here because Rory Sutherland’s work brings up an important idea. Sutherland loves marketing because marketing deals with psychology which is a lot easier to change than the objective thing. Package delivery is an example. Tracking numbers, emails that note your package is on its way, and estimated delivery dates all deliver psychological value. Contrast this with getting a package faster: logistical value, which has a very real cost. It’s not that better package tracking is better than faster package delivery but that it delivers more value than it costs. It’s the same idea of Michael Lewis’ Moneyball: what’s highly (or somewhat) valuable yet costs very little? Sutherland’s tool is psychology. Lewis highlights math. Let’s add another: subtraction.

“It’s an easy problem for a dad to fix, I grabbed a block to add to the shorter column but Ezra had removed a block from the shorter problem. Ezra is normally a horrible subtractor but he plays a lot of Legos and this was an instance where he stumbled upon subtraction.” – Leidy Klotz

Leidy knew how to fix his son’s Lego bridge. Add a block here —>. But Ezra had an idea too. Take a block away here —>.

Whether a situation’s ‘right’ answer is to add or remove is irrelevant – for now. What’s a better car: a Toyota or a Lexus? The question is which costs more?
It’s easy to add. We have a tendency to add. But adding probably costs more and when it’s a costlier implementation but only a marginally better outcome then the better choice might be to subtract.

Donation Alchemy

One fertile area for creativity (and anything new is creativity says John Cleese) is in the area between zero and some. It’s in these places where something moves from free to costing that behaviors change. Oh, and it doesn’t have to be an actual cost. Mental accounting works too.

There’s a concept in charitable giving called overhead aversion.

“We know that donations tend to decrease when overheads increase. That makes sense. People want to feel confident they are having a tangible impact. Interestingly, this only applies when donors have to pay for the overhead themselves. In one study when donors are informed that an initial major donor has covered the overhead, donors are more likely to take an overhead free donation option than opt for a 1:1 matching scheme — even though the matching scheme will yield more for the charity.” – Maddie Croucher

This felt right. My reaction was, well if they muck up the overhead at least I know my money was well spent. This isn’t logical, but I’m not sure it is wrong. At my daughter’s school they collect canned food for a local food pantry. There’s a celebration for the class with the largest mound outside its classroom door.

Now, it would ‘do more’ to donate cash, rather than send food of unknown cost, calories, and willingness to eat, and again I’m not sure it’s wrong. It feels good to know my money was well spent and that the food we bought won’t go to waste.

This school’s canned food drive might be partially driven by the foot-in-the-door effect:

“I always thought that asking small, an ask you can’t refuse from the godfather, works best. If you’re giving three dollars a month it’s much easier to up that to eight or ten than it is to go from naught to fifteen.” – Rory Sutherland

It’s not like I have to find cash or write a check and put it in an envelope. The kidney beans and mac ‘n cheese are within arms reach. Not only that, my kids collect it.

Charitable donation best practices are new to me but I’d wager that what works is ease. Make things financially, intellectually, or socially easy and people will do more. If the overhead is covered that removes the question: will my money go to to those who need it? A small ask might mean that people find doing easier than considering whether or not to. Charities, schools, or businesses can all remove the hurdles for their customers.


One other idea with-regards-to the classroom donations is the social lesson. The food is tangible and the kids collect it. There’s also probably some social signaling pressure among parents to ‘show up’. So net-net is a canned food drive ‘better’?

Danny Meyer is an Alchemist (and you can be too)

“A question that stymied me for years and years, a question I got almost anywhere I went, it seemed like every organization asked, ‘How do you manage to hire so many awesome people?’.

“I said to look for fifty-one percenters, people who are emotionally wired to be happier themselves when they delivery happiness to you.”

Danny Meyer, ILTB

The central idea to Alchemy is to optimize important but overlooked things, with especially large returns from inexpensive yet important finds. How to find these things? Numbers provide a good clue.

When things are easy to measure, they are numerate. These numerate items are easy to discuss, to compare, to enter into spreadsheets then sum, average, and compare again.

Danny Meyer has succeeded (in part) because he competes in new areas. In the beginning of the podcast he tells O’Shaughnessy about competing on food and wine and ambiance and all that, but that’s what everyone does. It’s hard to have THE BEST food when everyone is trying to have that.

THE BEST food has convention. It has history. There are norms. There is price. Having THE BEST food in New York City is like being the best investor in New York. Good luck.

However, being the best at something slightly different is quite a bit easier. There’s a lot more area and a lot less competition if you do things off the beaten path.

Meyer found this in hospitality. Listening, we don’t get the impression that the tag wags the dog, but it’s got to be part of the reason Meyer is around, and talking on the Invest Like the Best Podcast.

Often Alchemy is using (free) psychology rather than (costly) structure. Better service rather than better linens.

One story Meyer tells in the book is about ‘the medicine cabinet’. One establishment was having the normal rumble of friction getting its legs under it and when patrons had a bad time, Meyer and staff offered a glass of dessert wine to soothe their pain.

Not only was the wine complementary, but it was special. At the time, dessert wines were novel so it was a special treat. The kicker was that they were the cheapest wines Meyer stocked.

Alchemy is like improving weaknesses, there is a lot of return for the initial effort, often much-more than optimizing factor f for the tenth time.

Danny Meyer is an alchemist. From the people he hires to the businesses he starts.

You are an alchemist. Find something that’s important but not measured, and deliver that.