1 00:00:17,560 --> 00:00:21,919 Speaker 1: Pushkin too quick. No, it's perfect pushkin stuff. You got it? 2 00:00:24,040 --> 00:00:27,760 Speaker 2: Hey, Malcolm Gladwell here. This special episode of Business History 3 00:00:27,840 --> 00:00:31,680 Speaker 2: is part of a larger series exploring trust. We're understanding 4 00:00:31,920 --> 00:00:35,240 Speaker 2: where it comes from, the moment it's earned, and where 5 00:00:35,239 --> 00:00:38,280 Speaker 2: we decide to place it. This episode is sponsored by 6 00:00:38,320 --> 00:00:43,400 Speaker 2: PayPal Open, trusted by consumers, built for all business. Wherever 7 00:00:43,480 --> 00:00:47,360 Speaker 2: commerce moves next, you can rest assured PayPal Open has 8 00:00:47,400 --> 00:00:50,200 Speaker 2: your back. And with that, Jacob and Robert are taking 9 00:00:50,240 --> 00:00:53,519 Speaker 2: a deep dive into the history of consumer reviews and 10 00:00:53,560 --> 00:00:56,960 Speaker 2: how they impact who and what we decide to trust. 11 00:00:57,600 --> 00:00:59,040 Speaker 2: Five out of five stars from me. 12 00:01:10,520 --> 00:01:14,120 Speaker 1: Roberts Roberts Robert Oh, if you say it three times, 13 00:01:14,120 --> 00:01:15,640 Speaker 1: it sounds weird, Robert Smith. 14 00:01:15,720 --> 00:01:19,960 Speaker 3: I'm going to read you two user reviews. Okay, they're 15 00:01:19,959 --> 00:01:22,160 Speaker 3: of the same thing, and I want you to tell 16 00:01:22,200 --> 00:01:27,199 Speaker 3: me what they are. Reviews of got It first one 17 00:01:27,880 --> 00:01:32,840 Speaker 3: five stars headline best business history podcast, Wait don't know 18 00:01:32,880 --> 00:01:36,880 Speaker 3: this one second review four stars from user named Pitter 19 00:01:36,920 --> 00:01:41,319 Speaker 3: Patter two o eight headline love the pod, just one thing. 20 00:01:41,959 --> 00:01:44,680 Speaker 3: The review says, I'm a new listener and I love 21 00:01:44,680 --> 00:01:46,480 Speaker 3: the podcast and the hosts. 22 00:01:46,880 --> 00:01:47,600 Speaker 1: So far, so good. 23 00:01:48,000 --> 00:01:52,840 Speaker 3: Please please please stop saying, right after every other sentence, 24 00:01:53,080 --> 00:01:57,320 Speaker 3: the show's business history, right, Yes it is, that is right, 25 00:01:57,400 --> 00:02:00,080 Speaker 3: and I am sorry, pitter Patter two o eight. We're 26 00:02:00,080 --> 00:02:02,760 Speaker 3: working on it, Honestly, we are working on it. And 27 00:02:02,800 --> 00:02:05,160 Speaker 3: thank you pitter Patter two o eight for rating and 28 00:02:05,200 --> 00:02:08,839 Speaker 3: reviewing the show. Truly, truly, there is a reason that 29 00:02:08,880 --> 00:02:12,359 Speaker 3: we and other podcasters are always asking listeners to rate 30 00:02:12,519 --> 00:02:14,880 Speaker 3: and review the show. And it's not because we are 31 00:02:14,920 --> 00:02:18,760 Speaker 3: needy and insecure a little bit, We're not not needy 32 00:02:18,800 --> 00:02:23,600 Speaker 3: and insecure. But also, more importantly, in the twenty first century, 33 00:02:24,320 --> 00:02:27,400 Speaker 3: user reviews are not just as they say in business, 34 00:02:27,440 --> 00:02:30,360 Speaker 3: a nice to have, there a need to have, a 35 00:02:30,480 --> 00:02:34,920 Speaker 3: must have. Because in the peer to peer world that 36 00:02:34,960 --> 00:02:39,320 Speaker 3: we live in today, reviews, taken together, aggregate information. They 37 00:02:39,320 --> 00:02:43,280 Speaker 3: tell us what's reliable and what is not reliable. You know, 38 00:02:43,480 --> 00:02:46,880 Speaker 3: when we're deciding whether to take an uber or a lyft, 39 00:02:46,960 --> 00:02:49,640 Speaker 3: or to rent a place on Airbnb or vrbo, or 40 00:02:49,680 --> 00:02:53,760 Speaker 3: buy something on Amazon or eBay, the review helps us 41 00:02:53,800 --> 00:02:58,680 Speaker 3: solve the essential problem of commerce, the problem of trust. 42 00:02:59,320 --> 00:03:02,320 Speaker 3: If I were reviewing the review as a concept, as 43 00:03:02,360 --> 00:03:04,639 Speaker 3: a theme in the history of business, I would give 44 00:03:04,639 --> 00:03:07,959 Speaker 3: it five stars ten of ten would review again. 45 00:03:08,480 --> 00:03:11,760 Speaker 1: I'm Jacob Wildstein, I'm Robert Smith, and this is Business History, 46 00:03:12,200 --> 00:03:15,560 Speaker 1: a show about the history of business today. 47 00:03:15,600 --> 00:03:20,000 Speaker 3: On the show an ode an encomium, an homage to 48 00:03:20,080 --> 00:03:24,280 Speaker 3: the user review, the secret hero of twenty first century business. 49 00:03:24,400 --> 00:03:27,960 Speaker 3: Come Robert for the copper merchant who provided such bad 50 00:03:27,960 --> 00:03:30,679 Speaker 3: customer service that we're still talking about it thousands of 51 00:03:30,760 --> 00:03:34,840 Speaker 3: years later. And stay for George Washington's reviews of the 52 00:03:34,880 --> 00:03:38,520 Speaker 3: taverns of early America. Before there was the user review, 53 00:03:39,120 --> 00:03:42,040 Speaker 3: there was the customer complaint. So we are going to 54 00:03:42,120 --> 00:03:44,880 Speaker 3: start with the first customer complaint in the history of 55 00:03:44,920 --> 00:03:47,280 Speaker 3: the world, or at least the first one that we 56 00:03:47,400 --> 00:03:52,000 Speaker 3: know of. It is roughly three thousand, seven hundred and 57 00:03:52,240 --> 00:03:54,040 Speaker 3: seventy five years old. 58 00:03:54,160 --> 00:03:58,120 Speaker 1: Which is amazing. Coins themselves are what three thousand years old? 59 00:03:58,760 --> 00:04:02,760 Speaker 3: They're about twenty six hundred years old, so one. 60 00:04:02,560 --> 00:04:07,080 Speaker 1: Thousand years before or before coins people are complaining. 61 00:04:07,520 --> 00:04:10,560 Speaker 3: This complaint we know about because it was carved in 62 00:04:10,840 --> 00:04:15,080 Speaker 3: cuneiform into a clay tablet. I mean, I say clay 63 00:04:15,080 --> 00:04:17,880 Speaker 3: tablet because people always say clay tablet. But as I 64 00:04:17,919 --> 00:04:20,799 Speaker 3: was studying this one, I realized it's only like five 65 00:04:20,840 --> 00:04:22,720 Speaker 3: inches by two inches, quite small, so. 66 00:04:22,680 --> 00:04:24,120 Speaker 1: It's not the Ten Commandments. 67 00:04:24,159 --> 00:04:27,560 Speaker 3: It's not the Ten Commandments. It's more like a clay postcard. 68 00:04:27,960 --> 00:04:30,039 Speaker 3: And it was in fact used as a postcard to 69 00:04:30,080 --> 00:04:31,000 Speaker 3: send a message. 70 00:04:31,120 --> 00:04:34,320 Speaker 1: I saw this little tablet in the British Museum. It's 71 00:04:34,360 --> 00:04:37,040 Speaker 1: not even featured prominently. It's down a little bit on 72 00:04:37,080 --> 00:04:41,159 Speaker 1: the shelf, and the label is amazingly understated. The label 73 00:04:41,160 --> 00:04:44,560 Speaker 1: on this tablet says complaint about delivery of the wrong 74 00:04:44,760 --> 00:04:45,640 Speaker 1: grade of copper. 75 00:04:45,720 --> 00:04:48,600 Speaker 3: It's not wrong, it's not wrong, but it undersells it. 76 00:04:48,640 --> 00:04:50,600 Speaker 3: I think it under sells it the delight of it. 77 00:04:50,760 --> 00:04:54,400 Speaker 3: So this tablet slash postcard was discovered in modern day 78 00:04:54,400 --> 00:04:58,839 Speaker 3: a rock in what was Mesopotamia thirty seven hundred years ago, 79 00:04:59,120 --> 00:05:00,800 Speaker 3: and it was found in what seems to have been 80 00:05:00,839 --> 00:05:06,280 Speaker 3: the house of a merchant named Aa Nutser in the 81 00:05:06,320 --> 00:05:09,640 Speaker 3: city of Or. And we know he was a copper merchant, 82 00:05:09,720 --> 00:05:12,640 Speaker 3: and we think it was his house because all these 83 00:05:12,839 --> 00:05:17,080 Speaker 3: clay postcards addressed to him were excavated from this house. 84 00:05:17,320 --> 00:05:17,919 Speaker 1: Here's a hoarder. 85 00:05:17,960 --> 00:05:21,240 Speaker 3: He kept them all apparently apparently. And so the complaint 86 00:05:21,279 --> 00:05:24,560 Speaker 3: we're talking about is one of these postcards from a 87 00:05:24,600 --> 00:05:29,279 Speaker 3: customer named Nanni, and Nanni trusted an Nutzier to supply 88 00:05:29,480 --> 00:05:33,560 Speaker 3: the copper as promised, and then Nanni sent a messenger 89 00:05:33,680 --> 00:05:36,279 Speaker 3: to pick up the copper. But the deal did not 90 00:05:36,440 --> 00:05:38,640 Speaker 3: go down the way it was supposed to go down, 91 00:05:39,160 --> 00:05:44,520 Speaker 3: and so Nanni sent this clay complaint to an nutzer Robert, 92 00:05:44,520 --> 00:05:45,120 Speaker 3: give us a hit. 93 00:05:45,279 --> 00:05:48,760 Speaker 1: I'm so excited for this. You did not do what 94 00:05:48,800 --> 00:05:52,000 Speaker 1: you promised me. You put ingots which were not good 95 00:05:52,080 --> 00:05:54,960 Speaker 1: before my messenger and said if you want to take them, 96 00:05:55,040 --> 00:05:56,960 Speaker 1: take them. If you do not want to take them, 97 00:05:57,000 --> 00:05:59,479 Speaker 1: go away. What do you take me for that? You 98 00:05:59,560 --> 00:06:02,480 Speaker 1: treat somebody like me with such contempt? 99 00:06:03,000 --> 00:06:07,240 Speaker 3: What do you take me for you think I am not? 100 00:06:07,520 --> 00:06:08,000 Speaker 3: Is that done? 101 00:06:08,080 --> 00:06:08,240 Speaker 1: Note? 102 00:06:08,320 --> 00:06:10,279 Speaker 3: Is that done? It's a tiny little postcard, but he 103 00:06:10,279 --> 00:06:12,440 Speaker 3: seems to fit a lot of quto four on there. 104 00:06:12,480 --> 00:06:14,880 Speaker 1: He's really working the clay on this one with anger. 105 00:06:15,080 --> 00:06:17,480 Speaker 3: Next move, ask for a refund, go ahead. 106 00:06:17,720 --> 00:06:21,359 Speaker 1: I have sent as messengers gentlemen like ourselves to collect 107 00:06:21,360 --> 00:06:24,359 Speaker 1: the bag with my money deposited with you, but you 108 00:06:24,400 --> 00:06:26,760 Speaker 1: have treated me with contempt by sending them back to 109 00:06:26,800 --> 00:06:31,000 Speaker 1: me empty handed several times, and that through enemy territory. 110 00:06:31,160 --> 00:06:34,680 Speaker 3: Yeah, bad news for Nanni. The money back guarantee is 111 00:06:34,720 --> 00:06:38,040 Speaker 3: not going to be invented for more than three thousand 112 00:06:38,120 --> 00:06:41,239 Speaker 3: years anyway. Give us the conclusion of this the oldest 113 00:06:41,240 --> 00:06:43,719 Speaker 3: complaint that we know of in history. 114 00:06:44,200 --> 00:06:47,000 Speaker 1: I shall from now on select and take the ingots 115 00:06:47,080 --> 00:06:50,839 Speaker 1: individually in my own yard, and I shall exercise against 116 00:06:50,839 --> 00:06:53,839 Speaker 1: you my right of rejection, because you have treated me 117 00:06:54,080 --> 00:06:54,920 Speaker 1: with contempt. 118 00:06:56,520 --> 00:06:59,400 Speaker 3: HM. One of the really interesting things about this story 119 00:06:59,480 --> 00:07:04,040 Speaker 3: is this was not the only complaint excavated from an 120 00:07:04,240 --> 00:07:08,000 Speaker 3: nut Seer's house. There's this whole trove some reason, you 121 00:07:08,040 --> 00:07:11,400 Speaker 3: gotta call it a trove, trove tablets, trova trova tablets. 122 00:07:11,440 --> 00:07:14,560 Speaker 3: There's a letter from one of his partners trying to 123 00:07:14,600 --> 00:07:17,600 Speaker 3: get him to just like be decent to customers. 124 00:07:17,720 --> 00:07:20,880 Speaker 1: Basically starts, Come on, man, act in such a way 125 00:07:20,880 --> 00:07:22,680 Speaker 1: that eden scene will not become angry. 126 00:07:22,880 --> 00:07:26,640 Speaker 3: Come on, man. There's another one from a disgruntled customer 127 00:07:26,640 --> 00:07:28,280 Speaker 3: that really speaks to me. 128 00:07:28,520 --> 00:07:28,960 Speaker 1: I could do this. 129 00:07:29,520 --> 00:07:31,640 Speaker 3: It sums up a lot in just a few words. 130 00:07:31,680 --> 00:07:34,200 Speaker 3: So it's customer and he writes to an nutser. 131 00:07:34,000 --> 00:07:36,520 Speaker 1: Do you not know how tired I am? 132 00:07:37,040 --> 00:07:39,680 Speaker 3: Do you not know how tired I am? This is 133 00:07:40,160 --> 00:07:43,480 Speaker 3: the cry from the heart of everyone who will get 134 00:07:43,520 --> 00:07:46,360 Speaker 3: stuck in a customer service doom loop for the next 135 00:07:46,480 --> 00:07:48,080 Speaker 3: thirty seven hundred years. 136 00:07:48,520 --> 00:07:51,960 Speaker 1: There is a bigger idea here. The economist George Akilov 137 00:07:52,000 --> 00:07:55,280 Speaker 1: wrote about it in this famous paper called The Market 138 00:07:55,320 --> 00:07:58,200 Speaker 1: for Lemons. It was not about fruit. It was about 139 00:07:58,520 --> 00:08:01,800 Speaker 1: used cars, which used to be called lemons. If you know, 140 00:08:01,840 --> 00:08:04,760 Speaker 1: the wheel would fall off or the engine wouldn't work. 141 00:08:05,120 --> 00:08:09,000 Speaker 1: And the paper basically won a Nobel Prize. And what 142 00:08:09,080 --> 00:08:14,320 Speaker 1: it's about is we think about markets as working well 143 00:08:14,400 --> 00:08:16,320 Speaker 1: in our economy, which they do, but they only work 144 00:08:16,360 --> 00:08:20,400 Speaker 1: well if everybody knows the same thing. This paper was 145 00:08:20,440 --> 00:08:23,720 Speaker 1: about asymmetric information. When one person knows more than the 146 00:08:23,800 --> 00:08:26,680 Speaker 1: other person, then it makes it hard for a market 147 00:08:26,720 --> 00:08:30,600 Speaker 1: to truly work efficiently. And oftentimes the seller knows more 148 00:08:30,640 --> 00:08:32,760 Speaker 1: than the buyer. Like in a used car, you don't 149 00:08:32,839 --> 00:08:35,840 Speaker 1: know if it's been in a wreck or copper ingots. 150 00:08:35,960 --> 00:08:38,199 Speaker 1: You don't know the quality of ingots because you have 151 00:08:38,240 --> 00:08:40,640 Speaker 1: to go through enemy territory just to look at them. 152 00:08:40,760 --> 00:08:45,280 Speaker 1: And Agnlof makes a particular prediction if you are buying 153 00:08:45,320 --> 00:08:49,760 Speaker 1: a used car, you will rationally assume that it's a lemon. 154 00:08:49,800 --> 00:08:52,280 Speaker 1: You will offer less money than you otherwise would have 155 00:08:52,320 --> 00:08:53,680 Speaker 1: because you don't know if you're going to have to 156 00:08:53,720 --> 00:08:56,959 Speaker 1: fix it, and this ends up being bad for everyone. 157 00:08:57,000 --> 00:08:59,360 Speaker 1: It's bad for me because I don't know the car 158 00:08:59,400 --> 00:09:01,400 Speaker 1: I'm going to get, but it's bad for someone who's 159 00:09:01,400 --> 00:09:02,920 Speaker 1: selling a good car, who wants to sell a good 160 00:09:02,960 --> 00:09:05,640 Speaker 1: car at a fair price, and everyone just assumes it's 161 00:09:05,679 --> 00:09:08,880 Speaker 1: a lemon, assumes it's bad, and the market breaks down 162 00:09:09,000 --> 00:09:11,000 Speaker 1: a little bit. It's not as efficient as it could be. 163 00:09:11,240 --> 00:09:14,360 Speaker 3: It's painful. It's painful for all of us to live 164 00:09:14,400 --> 00:09:17,080 Speaker 3: in this world where we don't know what's good. We 165 00:09:17,120 --> 00:09:19,880 Speaker 3: assume it's bad. We think we're going to get cheated. 166 00:09:20,240 --> 00:09:23,320 Speaker 3: And I feel like that's part of the reason the 167 00:09:23,360 --> 00:09:27,160 Speaker 3: ant seer, you know, thirty seven hundred year old customer complaint, 168 00:09:27,200 --> 00:09:32,080 Speaker 3: is so delightful, frankly, so resonant. There is this incredible 169 00:09:32,400 --> 00:09:37,280 Speaker 3: sort of modern life that this ancient tablet postcard, this 170 00:09:37,320 --> 00:09:40,040 Speaker 3: first customer complaint has had, and as far as I 171 00:09:40,040 --> 00:09:43,680 Speaker 3: can tell, it started in twenty fifteen when somebody took 172 00:09:43,679 --> 00:09:47,000 Speaker 3: a picture of this tablet in the British Museum, the 173 00:09:47,080 --> 00:09:50,000 Speaker 3: same thing you saw, and they posted it on Reddit 174 00:09:50,520 --> 00:09:54,760 Speaker 3: with the caption seventeen hundred and fifty BC problems and 175 00:09:54,840 --> 00:09:57,319 Speaker 3: even today I was looking as I was putting together 176 00:09:57,360 --> 00:10:00,480 Speaker 3: this story. There is this subreddit that is still quite active. 177 00:10:00,480 --> 00:10:03,400 Speaker 3: People post to it all the time, devoted entirely to 178 00:10:03,880 --> 00:10:06,880 Speaker 3: ant Seer and his poor quality ingots. Just in the 179 00:10:06,960 --> 00:10:10,559 Speaker 3: last month or so, the guy posted a picture of 180 00:10:10,640 --> 00:10:14,240 Speaker 3: himself in the British Museum standing in front of the 181 00:10:14,280 --> 00:10:17,160 Speaker 3: case where the tablet's supposed to be. But there's a 182 00:10:17,200 --> 00:10:21,160 Speaker 3: sign that says the tablet is out on loan, which 183 00:10:21,160 --> 00:10:23,720 Speaker 3: is kind of perfect, right, Like now you can complain 184 00:10:23,840 --> 00:10:27,160 Speaker 3: about the complaint being not there. There's something great about it. 185 00:10:27,200 --> 00:10:30,240 Speaker 3: And anyway, the guy in the picture is making a 186 00:10:30,280 --> 00:10:34,120 Speaker 3: thumbs down sign, huge smile on his face, clearly very 187 00:10:34,200 --> 00:10:36,679 Speaker 3: pleased with the whole situation, and he's wearing a T 188 00:10:36,800 --> 00:10:42,520 Speaker 3: shirt that says an Nutseer's fine quality copper ingots. Established 189 00:10:42,760 --> 00:10:46,839 Speaker 3: seventeen fifty BC, so I am a member of the subreddit. 190 00:10:46,880 --> 00:10:50,880 Speaker 3: It have been since long before we started this show, 191 00:10:51,559 --> 00:10:52,680 Speaker 3: and I don't know why. 192 00:10:52,720 --> 00:10:54,080 Speaker 1: It's so delightful. 193 00:10:54,800 --> 00:10:59,880 Speaker 3: It is fun to imagine aa nut Sar as a 194 00:10:59,920 --> 00:11:06,160 Speaker 3: cartoon villain swimming in a bathtub full of complaints, like 195 00:11:06,200 --> 00:11:11,640 Speaker 3: Scrooge McDuck swims in gold coins. Just delighting reading all 196 00:11:11,679 --> 00:11:15,880 Speaker 3: of the messages from the customers he screwed over. There 197 00:11:15,960 --> 00:11:19,680 Speaker 3: is a simple problem that is revealed by this story, 198 00:11:19,720 --> 00:11:22,520 Speaker 3: and it's a problem that we are going to spend 199 00:11:22,520 --> 00:11:24,800 Speaker 3: the rest of the show talking about how people have 200 00:11:24,880 --> 00:11:29,320 Speaker 3: tried to solve. When you buy something, for example, some 201 00:11:29,360 --> 00:11:33,559 Speaker 3: copper ingots, how do you know if you're buying from 202 00:11:33,640 --> 00:11:36,079 Speaker 3: a merchant who's going to give you what you need, 203 00:11:36,480 --> 00:11:38,560 Speaker 3: or from somebody who is going to provide you with 204 00:11:38,600 --> 00:11:41,440 Speaker 3: poor quality ingots? Is the person going to be nice 205 00:11:41,480 --> 00:11:43,120 Speaker 3: to you? Or are they going to send your messenger 206 00:11:43,200 --> 00:11:46,360 Speaker 3: back empty handed through enemy territory. And the problem for 207 00:11:46,440 --> 00:11:51,360 Speaker 3: buyers in Mesopotamia was the customer complaints were going only 208 00:11:51,559 --> 00:11:55,040 Speaker 3: to ANNT. Sir so annat Seer knew his customers were 209 00:11:55,080 --> 00:11:56,199 Speaker 3: not and he was hoarding them. 210 00:11:56,240 --> 00:11:58,560 Speaker 1: I mean if they had somehow been posted on a 211 00:11:58,600 --> 00:11:59,480 Speaker 1: wall or something. 212 00:11:59,760 --> 00:12:03,360 Speaker 3: Yes, yes, this is the difference between a customer complaint 213 00:12:03,880 --> 00:12:07,679 Speaker 3: and a customer review. The review is out there for 214 00:12:07,760 --> 00:12:12,800 Speaker 3: everybody to see, and without reviews, other potential customer don't 215 00:12:12,840 --> 00:12:16,440 Speaker 3: know what they are getting into. And of course, of 216 00:12:16,480 --> 00:12:20,720 Speaker 3: course interestingly, but of course the other potential customers knew 217 00:12:20,760 --> 00:12:25,199 Speaker 3: that they didn't know they were operating in this world. 218 00:12:25,240 --> 00:12:27,559 Speaker 3: That was a low trust world. It was a low 219 00:12:27,640 --> 00:12:31,000 Speaker 3: trust equilibrium. And so in this kind of world where 220 00:12:31,040 --> 00:12:33,120 Speaker 3: you know that you don't know, you have to spend 221 00:12:33,200 --> 00:12:36,360 Speaker 3: a lot of energy trying to figure out if the 222 00:12:36,400 --> 00:12:39,400 Speaker 3: person you're doing business with is going to do what 223 00:12:39,480 --> 00:12:42,440 Speaker 3: they say. And this is not an ideal world. 224 00:12:42,559 --> 00:12:45,480 Speaker 1: Not he just wants to make his copper whatever, bracelets. 225 00:12:45,760 --> 00:12:47,440 Speaker 1: He doesn't have to deal with this stuff. 226 00:12:47,760 --> 00:12:50,080 Speaker 3: He just wants to buy the copper. He's got the money, 227 00:12:50,360 --> 00:12:52,600 Speaker 3: he wants to spend the money. He just wants to 228 00:12:52,600 --> 00:12:57,680 Speaker 3: get high quality ingots and have his messenger treated with respect. Now, 229 00:12:58,040 --> 00:13:02,120 Speaker 3: it is worth noting that most business, for all of 230 00:13:02,240 --> 00:13:06,240 Speaker 3: history is not this kind of long distance, high value 231 00:13:06,640 --> 00:13:11,920 Speaker 3: maybe one off exchange. Mostly what people buy is bread 232 00:13:12,120 --> 00:13:14,600 Speaker 3: from the bakery down the street, the kind of thing 233 00:13:14,640 --> 00:13:18,200 Speaker 3: that you buy every day, every week, again and again. 234 00:13:18,760 --> 00:13:21,439 Speaker 3: And this is quite a different kind of transaction. 235 00:13:21,760 --> 00:13:24,480 Speaker 1: You know, if you buy a stale loaf of bread, 236 00:13:24,760 --> 00:13:26,400 Speaker 1: you're not going to go back to that baker again, 237 00:13:26,600 --> 00:13:28,240 Speaker 1: and you're going to tell everyone in the village you're 238 00:13:28,240 --> 00:13:29,520 Speaker 1: going to go to a different baker. 239 00:13:29,600 --> 00:13:32,360 Speaker 3: Yeah, it's a repeated game. It is in fact, not 240 00:13:32,520 --> 00:13:35,160 Speaker 3: in the narrow self interest of the baker to give 241 00:13:35,200 --> 00:13:38,160 Speaker 3: you old bread because it's bad for business. When you 242 00:13:38,240 --> 00:13:41,000 Speaker 3: look more broadly at the history of the ancient world, 243 00:13:41,600 --> 00:13:47,760 Speaker 3: you do also see systems start to develop over long 244 00:13:47,800 --> 00:13:51,720 Speaker 3: distance commerce, over commerce that is not necessarily a repeated game. 245 00:13:51,920 --> 00:13:54,679 Speaker 1: More recently, we talked about A ANDP in our story 246 00:13:54,720 --> 00:13:59,280 Speaker 1: about grocery stores and about how they developed store brands 247 00:13:59,320 --> 00:14:00,640 Speaker 1: as a way of ensuring quality. 248 00:14:01,200 --> 00:14:04,920 Speaker 3: They are one of the early modern examples of store brands. 249 00:14:04,960 --> 00:14:07,880 Speaker 3: But brands themselves go back a very long way, not 250 00:14:08,280 --> 00:14:11,200 Speaker 3: as far as we know to annt seer, but you 251 00:14:11,240 --> 00:14:15,440 Speaker 3: can find some brand like in the Roman Empire. In 252 00:14:15,480 --> 00:14:19,760 Speaker 3: the Roman Empire, you see Amphora. You know Amphora, those 253 00:14:19,800 --> 00:14:24,920 Speaker 3: clay vessels. You see Amphora with writing on them. And 254 00:14:24,960 --> 00:14:28,840 Speaker 3: the writing doesn't just say what's inside, it says where 255 00:14:28,840 --> 00:14:33,160 Speaker 3: the product comes from. There's one example from around seventy 256 00:14:33,240 --> 00:14:36,080 Speaker 3: a d That I particularly like. It says on the 257 00:14:36,160 --> 00:14:41,040 Speaker 3: side Lucius Tetius Africanus. That's the name of the guy 258 00:14:41,080 --> 00:14:48,000 Speaker 3: who distributed it. Finest Fish Sauce from Antipolis. M finest Antipolis. 259 00:14:48,280 --> 00:14:49,560 Speaker 3: I think that's how you say it. I don't know 260 00:14:49,680 --> 00:14:53,160 Speaker 3: is Antibue today in the south of France, and this 261 00:14:53,280 --> 00:14:57,360 Speaker 3: vessel was actually excavated in London, so hundreds of miles away. 262 00:14:57,400 --> 00:15:01,280 Speaker 3: So it was fancy imported fish sauce the finest. 263 00:15:01,560 --> 00:15:04,760 Speaker 1: Wait, that's what it says on the laybel. We don't 264 00:15:04,800 --> 00:15:07,720 Speaker 1: know what was inside, but yes, yes, it says it's 265 00:15:07,720 --> 00:15:08,600 Speaker 1: the finest. 266 00:15:08,240 --> 00:15:13,240 Speaker 3: And presumably you get your You get your Lucius Tetius 267 00:15:13,280 --> 00:15:16,280 Speaker 3: Africanus fish sauce, and if you like it, you keep 268 00:15:16,320 --> 00:15:19,520 Speaker 3: buying it. It's a brand. You know it's the finest, 269 00:15:19,600 --> 00:15:21,680 Speaker 3: or at least you know you like it. So this 270 00:15:21,760 --> 00:15:26,000 Speaker 3: is a version of people figuring out ways to solve 271 00:15:26,000 --> 00:15:30,360 Speaker 3: the trust problem. But again, fish sauce is something maybe 272 00:15:30,360 --> 00:15:32,320 Speaker 3: you buy every week or every month. It is still 273 00:15:32,360 --> 00:15:37,240 Speaker 3: a repeated game. There is one aspect of commerce where 274 00:15:37,280 --> 00:15:42,600 Speaker 3: this trust problem proves particularly hard to solve because it 275 00:15:42,680 --> 00:15:45,200 Speaker 3: is kind of inherently a one time game, or tends 276 00:15:45,240 --> 00:15:48,080 Speaker 3: more to be a one time game, and as the 277 00:15:48,120 --> 00:15:52,359 Speaker 3: world becomes more globalized, it becomes more of an acute problem. 278 00:15:52,720 --> 00:15:55,600 Speaker 3: After the break, we're going to talk about how the 279 00:15:55,760 --> 00:16:00,280 Speaker 3: user review was invented to solve the trust problem in travel. 280 00:16:22,280 --> 00:16:24,880 Speaker 3: I would say the classic time to get fleeced in 281 00:16:24,920 --> 00:16:27,440 Speaker 3: the modern world is when you are traveling. 282 00:16:27,120 --> 00:16:29,920 Speaker 1: Whole family gets off a plane, you haven't slept in 283 00:16:30,000 --> 00:16:33,320 Speaker 1: twenty four hours, and somebody's like, we got a good 284 00:16:33,360 --> 00:16:34,160 Speaker 1: restaurant here. 285 00:16:34,880 --> 00:16:37,360 Speaker 3: Yes, it is a problem, and it has been a 286 00:16:37,360 --> 00:16:42,400 Speaker 3: problem forever. And so we're gonna jump forward thousands of 287 00:16:42,480 --> 00:16:46,880 Speaker 3: years and we're gonna do two things. First, we're going 288 00:16:46,960 --> 00:16:50,240 Speaker 3: to talk about how profound the problem of trust was 289 00:16:50,440 --> 00:16:53,480 Speaker 3: for travelers, even if you were the president of the 290 00:16:53,600 --> 00:16:56,960 Speaker 3: United States of America. And then we'll talk about how 291 00:16:57,000 --> 00:16:59,880 Speaker 3: the power of the user review solved the problem, or 292 00:16:59,920 --> 00:17:01,240 Speaker 3: at least helped to solve them. 293 00:17:01,280 --> 00:17:01,760 Speaker 1: Let's do it. 294 00:17:01,920 --> 00:17:03,640 Speaker 3: The president we're going to talk about. It's not just 295 00:17:03,680 --> 00:17:06,640 Speaker 3: any president. It's the big man, the General, the pride 296 00:17:06,639 --> 00:17:07,800 Speaker 3: of Mount Vernon. 297 00:17:07,560 --> 00:17:10,679 Speaker 1: Number one, George Washington. 298 00:17:10,800 --> 00:17:13,080 Speaker 3: He's gonna do something no would have wanted to do 299 00:17:13,159 --> 00:17:15,480 Speaker 3: if they didn't kind of have to, which was go 300 00:17:15,560 --> 00:17:19,000 Speaker 3: on a tour of all thirteen states of America. Hard 301 00:17:19,000 --> 00:17:21,320 Speaker 3: to do it first in the late seventeen hundreds, and 302 00:17:21,480 --> 00:17:24,679 Speaker 3: because he was a president and not a king, a 303 00:17:24,800 --> 00:17:28,159 Speaker 3: man of the people, he decided that he was not 304 00:17:28,200 --> 00:17:31,479 Speaker 3: going to stay in the fancy estates of his rich friends. 305 00:17:31,520 --> 00:17:34,080 Speaker 3: He was going to stay where the people stay in 306 00:17:34,160 --> 00:17:37,119 Speaker 3: public houses, and public houses were more or less what 307 00:17:37,160 --> 00:17:39,760 Speaker 3: they sound like. They were houses that were open to 308 00:17:39,800 --> 00:17:42,720 Speaker 3: the public. This is, in fact part of the regulatory 309 00:17:42,760 --> 00:17:45,920 Speaker 3: regime at the time. The deal was if you wanted 310 00:17:45,920 --> 00:17:49,159 Speaker 3: to sell alcohol to the public, essentially a bar, you 311 00:17:49,240 --> 00:17:51,000 Speaker 3: had to pay a fee to the government and get 312 00:17:51,040 --> 00:17:54,800 Speaker 3: a license and rent out rooms in your house so. 313 00:17:54,680 --> 00:17:57,359 Speaker 1: That no one's trying to ride their horse home drunk. 314 00:17:57,680 --> 00:18:00,640 Speaker 3: And as you probably know, this is where pub comes from. 315 00:18:00,680 --> 00:18:04,280 Speaker 3: Pub as in public. As George Washington found out on 316 00:18:04,400 --> 00:18:07,880 Speaker 3: his tour of America, a lot of public houses were 317 00:18:08,600 --> 00:18:11,600 Speaker 3: terrible places to stay. And we know this because he 318 00:18:11,720 --> 00:18:14,960 Speaker 3: kept a diary. Helpfully. At one point in his travels, 319 00:18:14,960 --> 00:18:18,359 Speaker 3: he was in North Carolina. It was raining, he wanted 320 00:18:18,359 --> 00:18:20,919 Speaker 3: to find a place to sleep, so he went and 321 00:18:21,040 --> 00:18:23,719 Speaker 3: looked in at the public house. Robert Smith give us 322 00:18:23,720 --> 00:18:24,879 Speaker 3: the report from his diary. 323 00:18:24,920 --> 00:18:28,200 Speaker 1: Oh I got to do, George Washington. Now, no rooms 324 00:18:28,400 --> 00:18:31,800 Speaker 1: or beds which appeared tolerable, and everything else having a 325 00:18:31,840 --> 00:18:34,760 Speaker 1: dirty appearance. I was compelled to keep on. 326 00:18:35,640 --> 00:18:38,360 Speaker 3: Okay, But how about Georgia. How is Georgia? 327 00:18:39,000 --> 00:18:42,160 Speaker 1: The accommodations on the whole road to Savannah we found 328 00:18:42,240 --> 00:18:47,119 Speaker 1: extremely indifferent, the houses being small and badly provided either 329 00:18:47,160 --> 00:18:51,280 Speaker 1: for man or horse. Not good enough. 330 00:18:51,720 --> 00:18:55,840 Speaker 3: Horse, not even a horse should sleep. It could have 331 00:18:55,880 --> 00:18:57,560 Speaker 3: been worse. It could have been worse. There is this 332 00:18:57,760 --> 00:19:00,879 Speaker 3: great story from the revolution from during the time of 333 00:19:00,880 --> 00:19:05,080 Speaker 3: the Revolutionary War when John Adams and Ben Franklin stayed 334 00:19:05,080 --> 00:19:07,560 Speaker 3: in a public house where they had to share a bed, 335 00:19:08,280 --> 00:19:12,920 Speaker 3: which was apparently common normal at the time. Sometimes you 336 00:19:13,040 --> 00:19:15,840 Speaker 3: check in, get in bed, fall asleep, and then a 337 00:19:15,840 --> 00:19:18,480 Speaker 3: few hours later some stranger would just climb into bed 338 00:19:18,520 --> 00:19:22,119 Speaker 3: with you. Apparently, Adams and Franklin were legged there in 339 00:19:22,160 --> 00:19:25,720 Speaker 3: their bed, arguing over whether it was healthier to sleep 340 00:19:25,720 --> 00:19:29,119 Speaker 3: with the window open or closed, and kind of perfectly 341 00:19:29,640 --> 00:19:33,679 Speaker 3: Franklin starts lecturing Adams about why open is better. 342 00:19:33,960 --> 00:19:35,600 Speaker 1: He loves the fresh air, he loves the. 343 00:19:35,560 --> 00:19:38,480 Speaker 3: Fresh air, and Adams just falls asleep with Franklin talking, 344 00:19:38,520 --> 00:19:41,080 Speaker 3: which you could imagine Franklin never stopped talking. 345 00:19:41,280 --> 00:19:43,440 Speaker 1: I love bed. Franklin, worst roommate ever. 346 00:19:43,600 --> 00:19:47,840 Speaker 3: The whole thing about staying in a public house was 347 00:19:48,320 --> 00:19:50,840 Speaker 3: essentially a shot in the dark. You roll into a 348 00:19:50,840 --> 00:19:53,600 Speaker 3: strange town, you try and figure out if there is 349 00:19:53,640 --> 00:19:56,359 Speaker 3: a public house where there is a public house, no 350 00:19:56,480 --> 00:19:58,560 Speaker 3: idea if it's going to be a nice place for 351 00:19:58,680 --> 00:20:01,520 Speaker 3: man or horse or not, or if you can trust 352 00:20:01,560 --> 00:20:04,080 Speaker 3: the proprietor, or if he's gonna rip you off. You 353 00:20:04,400 --> 00:20:09,199 Speaker 3: just don't know, we should say. In defense of American 354 00:20:09,440 --> 00:20:14,560 Speaker 3: hospitality circa seventeen ninety, George Washington did find some nice 355 00:20:14,600 --> 00:20:17,359 Speaker 3: places on his trip. He was apparently so impressed with 356 00:20:17,480 --> 00:20:20,879 Speaker 3: mister Brown's fine tavern in Newhaven that he paid for 357 00:20:20,920 --> 00:20:24,240 Speaker 3: the mayor, the governor, and the Lieutenant governor all to 358 00:20:24,359 --> 00:20:27,359 Speaker 3: join him there for dinner. But he can't tell the world. 359 00:20:27,440 --> 00:20:30,760 Speaker 3: He can't leave five stars on mister Brown's website. Sure 360 00:20:30,840 --> 00:20:34,160 Speaker 3: George Washington slept here, but did he like it? 361 00:20:34,440 --> 00:20:35,240 Speaker 1: This is the problem. 362 00:20:35,280 --> 00:20:37,600 Speaker 3: This is the problem. It applies to good businesses as 363 00:20:37,600 --> 00:20:40,399 Speaker 3: well as bad customers know, but they can't tell the world. 364 00:20:40,520 --> 00:20:45,120 Speaker 3: And overtime, travel expands, and the eighteen hundreds railroads come along, 365 00:20:45,160 --> 00:20:48,200 Speaker 3: and travel starts to become open to more of the public. 366 00:20:48,480 --> 00:20:52,160 Speaker 3: And that is when the world finds its first solution 367 00:20:52,440 --> 00:20:56,399 Speaker 3: to this problem. The guidebook, the travel guidebook. 368 00:20:55,960 --> 00:20:57,760 Speaker 1: The thing you can buy and carry along with you 369 00:20:57,880 --> 00:21:00,960 Speaker 1: on your travels, which I would argue is the first 370 00:21:01,240 --> 00:21:04,360 Speaker 1: user review. This is the first time someone has broadcast 371 00:21:04,440 --> 00:21:07,240 Speaker 1: to the world here's what I think about places, good 372 00:21:07,280 --> 00:21:08,560 Speaker 1: and bad, here's my advice. 373 00:21:08,840 --> 00:21:12,359 Speaker 3: And this is one of those simultaneous inventions stories that 374 00:21:12,400 --> 00:21:15,080 Speaker 3: we've talked about, the kind of thing where lots of 375 00:21:15,160 --> 00:21:18,800 Speaker 3: people have the same idea around the same time. You 376 00:21:18,840 --> 00:21:21,920 Speaker 3: see guidebooks in the first half of the eighteen hundreds 377 00:21:21,960 --> 00:21:24,960 Speaker 3: popping up in the US, in the UK and Europe. 378 00:21:25,680 --> 00:21:29,200 Speaker 3: But there is one guy who does it best becomes 379 00:21:29,280 --> 00:21:33,399 Speaker 3: the biggest and most famous guidebook writer. His name is 380 00:21:33,480 --> 00:21:38,840 Speaker 3: Carl Bedeker German, German. His family was in the publishing 381 00:21:38,840 --> 00:21:41,920 Speaker 3: business and they ran a bookstore and he actually saw 382 00:21:42,000 --> 00:21:45,800 Speaker 3: British tourists coming into the bookstore with their guide books. 383 00:21:46,200 --> 00:21:48,560 Speaker 3: A lot of them were basically just lists. 384 00:21:48,920 --> 00:21:51,119 Speaker 1: You know, here's one hundred hotels, which you. 385 00:21:51,119 --> 00:21:54,840 Speaker 3: Know that's better than nothing. But Bedaker decides he's going 386 00:21:54,920 --> 00:21:58,080 Speaker 3: to get into the guidebook game and he personally is 387 00:21:58,119 --> 00:22:00,639 Speaker 3: going to go everywhere. He's going to walk every path, 388 00:22:00,720 --> 00:22:03,760 Speaker 3: check out every hotel, so that when you were reading 389 00:22:04,280 --> 00:22:08,080 Speaker 3: a Bedaker guidebook, what you were reading is what he saw. 390 00:22:08,280 --> 00:22:12,719 Speaker 3: And I admire his commitment to to his In one 391 00:22:12,760 --> 00:22:16,280 Speaker 3: of his early guidebooks. He describes a trip between two towns, 392 00:22:16,680 --> 00:22:20,200 Speaker 3: and what he says is the writer of these lines 393 00:22:20,240 --> 00:22:23,000 Speaker 3: made the trip at night and regrets that he can 394 00:22:23,040 --> 00:22:27,000 Speaker 3: report nothing about it. Honest, honest, and like, when somebody 395 00:22:27,040 --> 00:22:30,359 Speaker 3: tells me they don't know, I trust them more then 396 00:22:30,359 --> 00:22:32,600 Speaker 3: when they're telling you what they do know, I'm like, oh, well, 397 00:22:32,680 --> 00:22:35,680 Speaker 3: I presume they do know. Bettecar starts writing these guidebooks. 398 00:22:35,760 --> 00:22:39,640 Speaker 3: They're very popular. They become a multi generational thing where 399 00:22:39,680 --> 00:22:43,240 Speaker 3: his sons get into the business, and they really are 400 00:22:43,880 --> 00:22:47,800 Speaker 3: user reviews. They really are telling you what they liked 401 00:22:47,920 --> 00:22:49,320 Speaker 3: and also what they did not like. 402 00:22:49,600 --> 00:22:50,040 Speaker 1: Give us a. 403 00:22:50,000 --> 00:22:53,320 Speaker 3: Little hit of the Bedeker description of Marseille in the 404 00:22:53,400 --> 00:22:54,000 Speaker 3: south of France. 405 00:22:54,080 --> 00:22:56,840 Speaker 1: The atmosphere of the town in summer is hot and oppressive. 406 00:22:56,840 --> 00:23:00,240 Speaker 1: He got that right. Those therefore, who contemplate a sojourn 407 00:23:00,280 --> 00:23:02,600 Speaker 1: of several days during the warm season are recommended to 408 00:23:02,640 --> 00:23:06,320 Speaker 1: select the Hotel des Catalans. And there's a little star 409 00:23:06,440 --> 00:23:09,480 Speaker 1: next to it in the immediate vicinity of the Sea Bass. 410 00:23:09,560 --> 00:23:12,800 Speaker 1: The situation is delightful in the house, spacious and comfortable. 411 00:23:12,880 --> 00:23:15,640 Speaker 3: That little asterisk that you mentioned next to the hotel's 412 00:23:15,720 --> 00:23:21,479 Speaker 3: name is, in fact Bettecker's official recommendation. We're not in 413 00:23:21,520 --> 00:23:25,240 Speaker 3: the one star, two star, four star, six star whatever 414 00:23:25,320 --> 00:23:28,040 Speaker 3: world's star inflation sore inflation has not yet taken off. 415 00:23:28,080 --> 00:23:32,159 Speaker 3: One star is good. On very rare occasions, he'll do 416 00:23:32,240 --> 00:23:35,919 Speaker 3: two stars, typically for a site and not a hotel, 417 00:23:36,000 --> 00:23:38,720 Speaker 3: like the Parthenony Absolute Mucies. Well here let's do one. 418 00:23:38,760 --> 00:23:44,240 Speaker 3: So the collection of ancient frescoes in the Museo Nazunale 419 00:23:44,480 --> 00:23:46,240 Speaker 3: in Naples gets two stars. 420 00:23:46,560 --> 00:23:49,879 Speaker 1: These works are almost the only specimens of ancient painting 421 00:23:49,920 --> 00:23:52,000 Speaker 1: which have come down to us and are therefore of 422 00:23:52,080 --> 00:23:56,320 Speaker 1: extreme value. Many of them are beautifully conceived and executed 423 00:23:56,359 --> 00:23:59,920 Speaker 1: with an easy, masterly touch, compelling two stars. 424 00:24:00,119 --> 00:24:03,280 Speaker 3: Two stars. It's Naples. So these are from you know, 425 00:24:03,400 --> 00:24:08,240 Speaker 3: Pompeii and Herculaneum. I'm literally going, I have wanted to 426 00:24:08,240 --> 00:24:09,400 Speaker 3: go now I want to go. 427 00:24:09,480 --> 00:24:10,040 Speaker 1: Yeah. 428 00:24:10,200 --> 00:24:13,080 Speaker 3: So Betaker tells you that's great, what you know the 429 00:24:13,200 --> 00:24:16,320 Speaker 3: must sees. But honestly, and this goes back to Annet's 430 00:24:16,359 --> 00:24:19,199 Speaker 3: here my favorite parts, and it seems like Beneker's favorite 431 00:24:19,240 --> 00:24:24,680 Speaker 3: part is when they are advising travelers what not to do, 432 00:24:24,800 --> 00:24:27,680 Speaker 3: how not to get ripped off. Like there's this one 433 00:24:27,680 --> 00:24:29,840 Speaker 3: detail from the entry on a hotel in. 434 00:24:29,920 --> 00:24:33,720 Speaker 1: QS in Tuscany, the landlord offers Etruscan relics for sale 435 00:24:33,800 --> 00:24:37,560 Speaker 1: at exorbitant prices. Travelers are cautioned against making purchases of 436 00:24:37,600 --> 00:24:42,080 Speaker 1: this description. Where the manufacture of spurious antiquities is greatly 437 00:24:42,119 --> 00:24:44,520 Speaker 1: in vogue. 438 00:24:44,000 --> 00:24:48,120 Speaker 3: Don't buy him. Betakar also sort of goes beyond reviews 439 00:24:48,160 --> 00:24:51,840 Speaker 3: of specific places to kind of take the vulnerable traveler 440 00:24:51,920 --> 00:24:54,720 Speaker 3: under his wing, you know, to protect, to protect you 441 00:24:54,760 --> 00:24:57,240 Speaker 3: from the scoundrels out on the road, like, for example, 442 00:24:57,400 --> 00:24:59,200 Speaker 3: always get a written itemized bill. 443 00:24:59,320 --> 00:25:02,520 Speaker 1: A waiter's arithmetic is faulty, and the faults are seldom 444 00:25:02,560 --> 00:25:05,280 Speaker 1: found to be in the favor of the traveler's Funny 445 00:25:05,280 --> 00:25:06,399 Speaker 1: how that works, Yeah, weird. 446 00:25:06,600 --> 00:25:09,280 Speaker 3: Another one for when you're checking out of the hotel. 447 00:25:09,560 --> 00:25:11,760 Speaker 1: A habit too often prevails of presenting the bill at 448 00:25:11,800 --> 00:25:15,000 Speaker 1: the last moment, when mistakes must be submitted to for 449 00:25:15,119 --> 00:25:17,760 Speaker 1: want of time to investigate them. And then he says, 450 00:25:18,280 --> 00:25:19,840 Speaker 1: if you're going to check out early in the morning, 451 00:25:19,920 --> 00:25:22,439 Speaker 1: you will do well to ask for your bills on 452 00:25:22,480 --> 00:25:25,120 Speaker 1: the previous evening. Good advice, Yia. 453 00:25:25,440 --> 00:25:30,680 Speaker 3: The books become wildly popular. They're translated into French and 454 00:25:31,040 --> 00:25:35,680 Speaker 3: into English, the word Betaker becomes synonymous with travel guide 455 00:25:35,720 --> 00:25:40,560 Speaker 3: for a while, and along with this popularity comes a 456 00:25:40,760 --> 00:25:45,840 Speaker 3: really interesting shift in the power dynamic between buyers and 457 00:25:45,880 --> 00:25:49,440 Speaker 3: sellers in the travel industry, and you can really see 458 00:25:49,440 --> 00:25:53,720 Speaker 3: it in one story in particular, it happens when a 459 00:25:53,800 --> 00:25:58,679 Speaker 3: hotel owner sues Bedeker because he doesn't like what the 460 00:25:58,760 --> 00:26:02,240 Speaker 3: guidebook says about his hotel, and in fact the owner wins, 461 00:26:03,280 --> 00:26:06,399 Speaker 3: and in the next edition Betaker doesn't list the guy's 462 00:26:06,440 --> 00:26:08,800 Speaker 3: hotel at all. He's like, you don't like it, okay, 463 00:26:08,840 --> 00:26:11,159 Speaker 3: I'll just take you out, leave me alone. And not 464 00:26:11,240 --> 00:26:14,080 Speaker 3: long after that, the guy's hotel goes out of business. 465 00:26:15,400 --> 00:26:18,600 Speaker 3: Bad review in Beteker is better than no review at all. 466 00:26:18,720 --> 00:26:22,120 Speaker 1: This is this information asymmetry we talked about before guide 467 00:26:22,119 --> 00:26:25,159 Speaker 1: books in the dynamic between the hotel owner and the guest, 468 00:26:25,600 --> 00:26:28,560 Speaker 1: the guy running the hotel the public house had more 469 00:26:28,600 --> 00:26:30,960 Speaker 1: power in a way than the president of the United States. 470 00:26:31,480 --> 00:26:34,080 Speaker 1: If your guest you had to show up and take 471 00:26:34,160 --> 00:26:37,320 Speaker 1: what you got, and now you had a little thing 472 00:26:37,400 --> 00:26:40,200 Speaker 1: you could tuck in your pocket that gave you power. 473 00:26:40,840 --> 00:26:44,199 Speaker 3: You could say, oh, there's another hotel down the street. 474 00:26:44,359 --> 00:26:46,160 Speaker 3: If you're going to give me a bad deal. I'll 475 00:26:46,240 --> 00:26:48,320 Speaker 3: just go stay at the next place. The guidebook is 476 00:26:48,359 --> 00:26:52,560 Speaker 3: solving that asymmetric information problem, the market for Lemon's problem. 477 00:26:52,680 --> 00:26:56,520 Speaker 3: At least it's sort of solving it because it's really 478 00:26:56,960 --> 00:27:00,720 Speaker 3: just one guy's opinion. It's Betaker's opinion or Betaker's son's opinion. 479 00:27:01,000 --> 00:27:04,479 Speaker 3: It's way more than nothing. But if Betaker's style is 480 00:27:04,520 --> 00:27:07,040 Speaker 3: not your style, if you happen to like different things 481 00:27:07,080 --> 00:27:11,120 Speaker 3: than Betaker, it's not as helpful. And this is kind 482 00:27:11,119 --> 00:27:13,760 Speaker 3: of the next app in the story. As we get 483 00:27:13,800 --> 00:27:17,160 Speaker 3: into the twentieth century, there is this explosion of guide 484 00:27:17,160 --> 00:27:19,920 Speaker 3: books for all different kinds of people. In the US. 485 00:27:19,960 --> 00:27:23,359 Speaker 3: There is famously The Green Book. Perhaps you saw the film, 486 00:27:23,680 --> 00:27:27,400 Speaker 3: which was a guidebook for black people in America, which 487 00:27:27,440 --> 00:27:29,400 Speaker 3: was important in the first part of the twentieth century, 488 00:27:29,400 --> 00:27:31,879 Speaker 3: a time when black people were not allowed to stay 489 00:27:31,880 --> 00:27:34,080 Speaker 3: in many places, when it was unsafe for black people 490 00:27:34,080 --> 00:27:37,560 Speaker 3: in many places. There were guidebooks for rich people, for 491 00:27:37,800 --> 00:27:38,920 Speaker 3: college backpackers. 492 00:27:39,080 --> 00:27:41,520 Speaker 1: I was a rough guide person myself. 493 00:27:41,760 --> 00:27:44,080 Speaker 3: I was a lonely planet guide. But basically the same 494 00:27:44,200 --> 00:27:47,320 Speaker 3: narcissism of small differences, and of course the other thing 495 00:27:47,359 --> 00:27:52,600 Speaker 3: that flourished in the twentieth century in travel was brands. 496 00:27:52,960 --> 00:27:55,960 Speaker 3: Just like fish sauce in the Roman Empire. You saw 497 00:27:56,000 --> 00:27:59,760 Speaker 3: in the twentieth century hotel brands that promised you a 498 00:27:59,800 --> 00:28:03,440 Speaker 3: similar experience wherever you stayed. You stay in a whatever 499 00:28:03,520 --> 00:28:06,840 Speaker 3: holiday in Marriott, whatever it is in one city, it's 500 00:28:07,000 --> 00:28:09,160 Speaker 3: going to be pretty similar to another city in another 501 00:28:09,200 --> 00:28:11,680 Speaker 3: part of the world. And if you zoom out we've 502 00:28:11,680 --> 00:28:15,080 Speaker 3: been talking about travel, but if you zoom out beyond travel. 503 00:28:15,440 --> 00:28:19,480 Speaker 3: I feel like by the late twentieth century, certainly in 504 00:28:19,520 --> 00:28:25,200 Speaker 3: the US, we were maybe at peak trust in commerce. 505 00:28:25,640 --> 00:28:28,080 Speaker 3: There were a million brands you could choose from and 506 00:28:28,240 --> 00:28:31,240 Speaker 3: know that you're going to basically get the same thing 507 00:28:31,280 --> 00:28:34,560 Speaker 3: every time. It was reliable, and people didn't mind this, 508 00:28:34,920 --> 00:28:36,920 Speaker 3: and in part they liked it because if or when 509 00:28:36,960 --> 00:28:39,360 Speaker 3: you wanted to be more adventurous, go to the weird 510 00:28:39,400 --> 00:28:42,960 Speaker 3: little restaurant, take a wild trip, there were a million 511 00:28:43,000 --> 00:28:46,760 Speaker 3: guidebooks exactly for you that could tell you everything. 512 00:28:46,440 --> 00:28:48,400 Speaker 1: You needed to know. It was a golden age. 513 00:28:48,440 --> 00:28:50,280 Speaker 3: It was a golden age, and it's all about to 514 00:28:50,400 --> 00:28:56,200 Speaker 3: change at the end of the twentieth century because the internet's. 515 00:28:55,600 --> 00:28:57,560 Speaker 1: Shaking my fist at you Internet. 516 00:28:58,440 --> 00:29:00,760 Speaker 3: After the break, we're going to talk about the Internet, 517 00:29:01,280 --> 00:29:25,560 Speaker 3: the user review, and trust in commerce. Robert Smith. It's 518 00:29:25,600 --> 00:29:31,560 Speaker 3: the late twentieth century, the era of the world Wide Web. 519 00:29:31,880 --> 00:29:34,480 Speaker 3: Remember when we surfed the world Wide Web. 520 00:29:34,360 --> 00:29:35,440 Speaker 1: The dub dub dub. 521 00:29:35,560 --> 00:29:39,840 Speaker 3: Of course, somewhere right now, my teenage children are cringing 522 00:29:39,920 --> 00:29:43,320 Speaker 3: and they don't know why. They just feel some great 523 00:29:43,760 --> 00:29:46,760 Speaker 3: disturbance in the forest every time I say surfing the 524 00:29:46,840 --> 00:29:51,320 Speaker 3: world Wide Web. But that was what we did in 525 00:29:51,360 --> 00:29:54,720 Speaker 3: the nineteen nineties when the World Wide Web came along 526 00:29:54,840 --> 00:29:59,720 Speaker 3: and changed commerce completely. And it's interesting in the context 527 00:29:59,720 --> 00:30:04,800 Speaker 3: of this story because in some ways the web passed 528 00:30:04,880 --> 00:30:08,760 Speaker 3: us back into that ancient world of AA nutser where 529 00:30:08,960 --> 00:30:10,320 Speaker 3: you didn't know who to trust. 530 00:30:10,760 --> 00:30:12,920 Speaker 1: The world Wide Web is not, if not, a sea 531 00:30:12,960 --> 00:30:15,240 Speaker 1: of strangers in hostile territory. 532 00:30:15,640 --> 00:30:19,240 Speaker 3: But this time, this time, people are going to figure 533 00:30:19,240 --> 00:30:23,560 Speaker 3: out how to do more than write strongly worded tablets 534 00:30:23,880 --> 00:30:25,520 Speaker 3: to merchants do. 535 00:30:25,680 --> 00:30:26,720 Speaker 1: The story it. 536 00:30:26,720 --> 00:30:30,240 Speaker 3: Begins in the summer of nineteen ninety five when a 537 00:30:30,280 --> 00:30:33,880 Speaker 3: computer programmer was having dinner with his fiance. They had 538 00:30:34,000 --> 00:30:38,200 Speaker 3: just moved from Boston to Silicon Valley. And a thing 539 00:30:38,240 --> 00:30:42,800 Speaker 3: about moving is you have to solve a million little 540 00:30:42,840 --> 00:30:45,440 Speaker 3: problems that you didn't even know where problems. They were 541 00:30:45,480 --> 00:30:47,480 Speaker 3: just things that worked in your life before you moved in. 542 00:30:47,560 --> 00:30:49,560 Speaker 3: Now they don't work. And there is a story that 543 00:30:49,600 --> 00:30:53,240 Speaker 3: they told later. And let me say clearly, I think 544 00:30:53,280 --> 00:30:56,480 Speaker 3: this story was apocryphal. It is probably apocryphal, but it's 545 00:30:56,480 --> 00:30:59,120 Speaker 3: a good apocryphal story, so we're going with it. The 546 00:30:59,160 --> 00:31:03,400 Speaker 3: fiance was telling the computer programmer about one of the 547 00:31:03,440 --> 00:31:06,000 Speaker 3: little moving problems she was trying to solve, and that 548 00:31:06,320 --> 00:31:09,160 Speaker 3: was she was into collecting Pez dispensers. 549 00:31:09,920 --> 00:31:13,840 Speaker 1: Remember, pest dispensers. Pens dispensers are a cylinder of candy. 550 00:31:14,000 --> 00:31:16,000 Speaker 1: The candies are little ingots, actually. 551 00:31:17,560 --> 00:31:19,040 Speaker 3: Are, and there's a head and you lift ahead of 552 00:31:19,040 --> 00:31:20,320 Speaker 3: the candy of life, so it comes out of the 553 00:31:20,320 --> 00:31:25,000 Speaker 3: mouth them say collected Pez dispensers. And in Boston she 554 00:31:25,200 --> 00:31:29,520 Speaker 3: had this group of other Pez dispenser collector friends heads 555 00:31:29,720 --> 00:31:33,200 Speaker 3: trade with each other. But since she had moved, she 556 00:31:33,240 --> 00:31:36,360 Speaker 3: hadn't found her Pez people in California. You know, where 557 00:31:36,440 --> 00:31:41,080 Speaker 3: is a great place to find Pez dispenser collectors, The 558 00:31:41,120 --> 00:31:42,320 Speaker 3: World Wide Web? 559 00:31:43,560 --> 00:31:45,920 Speaker 1: You should surf that it is. But where would you 560 00:31:45,960 --> 00:31:46,920 Speaker 1: go on this web? 561 00:31:47,360 --> 00:31:49,880 Speaker 3: Well, there was nowhere to go yet in nineteen ninety five, 562 00:31:50,760 --> 00:31:55,040 Speaker 3: But it's it's the perfect place for aggregating people. Ultimately, 563 00:31:55,120 --> 00:31:57,840 Speaker 3: that is fundamentally what the web does. So the programmer 564 00:31:57,840 --> 00:32:00,160 Speaker 3: here's this story. He realizes this, and he spends a 565 00:32:00,200 --> 00:32:04,959 Speaker 3: weekend writing code for a website he calls auction Web, 566 00:32:05,800 --> 00:32:09,000 Speaker 3: because there's going to be auctions on the web. 567 00:32:09,200 --> 00:32:13,320 Speaker 1: This is making me feel old, older than talking about Mesopotamia. 568 00:32:13,400 --> 00:32:16,400 Speaker 3: Yeah, we weren't even children when this happened. And this 569 00:32:16,600 --> 00:32:20,960 Speaker 3: programmer's core idea was he didn't want to buy anything 570 00:32:21,320 --> 00:32:24,239 Speaker 3: or sell anything on the web. He just wanted to 571 00:32:24,280 --> 00:32:29,640 Speaker 3: create a marketplace, a venue where buyers and sellers could meet, 572 00:32:29,680 --> 00:32:35,480 Speaker 3: where anybody could auction anything off or anything legal, and 573 00:32:35,560 --> 00:32:38,680 Speaker 3: anybody else could bid. This is, in fact an ancient idea. 574 00:32:39,000 --> 00:32:42,800 Speaker 3: There were the trade fairs in medieval Europe. Less important 575 00:32:42,880 --> 00:32:44,560 Speaker 3: in the history of the world, but more important in 576 00:32:44,600 --> 00:32:47,320 Speaker 3: my own life. Was the Escondido swap meet. Oh I 577 00:32:47,360 --> 00:32:51,520 Speaker 3: love a swap meeting, kid, big parking lot. You'd pay 578 00:32:51,720 --> 00:32:53,320 Speaker 3: a couple bucks to go in, and it's just people 579 00:32:53,360 --> 00:32:55,880 Speaker 3: would drive in there and sell stuff on a blanket 580 00:32:56,000 --> 00:32:56,960 Speaker 3: next to their car. 581 00:32:56,960 --> 00:33:01,080 Speaker 1: And they would sell things like one fork. Other people 582 00:33:01,080 --> 00:33:02,719 Speaker 1: would look at the fork and be like, huh. 583 00:33:02,760 --> 00:33:05,240 Speaker 3: How much for this fork fork? Not much. The key 584 00:33:05,240 --> 00:33:08,400 Speaker 3: figure is not much for one fork. The other thing 585 00:33:08,480 --> 00:33:12,520 Speaker 3: about the swap meet is it tended to be pretty 586 00:33:12,600 --> 00:33:18,600 Speaker 3: generic stuff because the Escondido Swap Meat is people from Escondido, 587 00:33:19,240 --> 00:33:23,120 Speaker 3: maybe maybe a few from San Marcos Valley Center, but 588 00:33:23,280 --> 00:33:26,040 Speaker 3: it's it's people coming from a relatively small area. So 589 00:33:26,040 --> 00:33:28,400 Speaker 3: it has to be stuff that appeals to everybody. There 590 00:33:28,400 --> 00:33:30,800 Speaker 3: are not going to be many people at the Escondido 591 00:33:30,880 --> 00:33:34,959 Speaker 3: Swap Meat who are into, say, collecting old pez dispensers. 592 00:33:35,760 --> 00:33:40,800 Speaker 3: But the World Wide Web was really different because everybody 593 00:33:41,200 --> 00:33:44,120 Speaker 3: could trade with each other, could buy from and sell. 594 00:33:43,880 --> 00:33:44,680 Speaker 1: To each other. 595 00:33:45,200 --> 00:33:48,480 Speaker 3: So if you could build a marketplace on the web, 596 00:33:48,840 --> 00:33:51,480 Speaker 3: a web swap meet, it could be an incredible business. 597 00:33:51,560 --> 00:33:53,960 Speaker 3: You can just charge a fee on every sale for 598 00:33:54,040 --> 00:33:57,480 Speaker 3: the service of running the marketplace. And this is in 599 00:33:57,520 --> 00:34:02,360 Speaker 3: fact going to become one of the central business moves 600 00:34:02,360 --> 00:34:05,160 Speaker 3: of the twenty first century. You don't want to sell stuff, 601 00:34:05,360 --> 00:34:07,200 Speaker 3: you don't want to buy stuff. You don't want to 602 00:34:07,240 --> 00:34:09,880 Speaker 3: ship stuff, you don't want to store stuff. You just 603 00:34:10,000 --> 00:34:12,640 Speaker 3: want to build a marketplace. It'll come to be called 604 00:34:12,720 --> 00:34:17,160 Speaker 3: peer to peer commerce because it's not some company selling 605 00:34:17,200 --> 00:34:21,600 Speaker 3: stuff to people it's just people selling stuff to other people. 606 00:34:22,000 --> 00:34:26,279 Speaker 1: Seems like a sure thing, but there is a problem. Thousands, 607 00:34:26,560 --> 00:34:29,879 Speaker 1: hundreds of thousands of strangers just dealing with each other 608 00:34:29,960 --> 00:34:32,239 Speaker 1: on your platform. You don't know who these people are. 609 00:34:32,320 --> 00:34:34,480 Speaker 1: You don't know if they have ill intentions. You know, 610 00:34:34,520 --> 00:34:37,040 Speaker 1: if they're going to cheat your other customers. You could 611 00:34:37,040 --> 00:34:39,399 Speaker 1: become I think the technical term on the world Wide 612 00:34:39,400 --> 00:34:42,240 Speaker 1: Web is a cesspool of bad commerce. 613 00:34:42,480 --> 00:34:46,280 Speaker 3: It's a problem for buyers and for sellers. It's recreating 614 00:34:46,800 --> 00:34:49,560 Speaker 3: the EA nutzer problem. It's the moment the EA nut 615 00:34:49,640 --> 00:34:51,919 Speaker 3: seers of the world have been waiting for. In fact, 616 00:34:51,960 --> 00:34:55,359 Speaker 3: they've been hoarding their poor quality ingots for thirty seven 617 00:34:55,480 --> 00:34:59,480 Speaker 3: hundred years, just waiting to unload them on a worldwide 618 00:34:59,640 --> 00:35:05,319 Speaker 3: web of chumps. And of course everybody knows this. It's 619 00:35:05,440 --> 00:35:10,360 Speaker 3: back to that old market for lemons, low trust equilibrium. 620 00:35:10,680 --> 00:35:13,840 Speaker 3: In nineteen ninety five, the web web is new. Almost 621 00:35:13,880 --> 00:35:15,760 Speaker 3: nobody has ever bought anything online. 622 00:35:15,840 --> 00:35:19,560 Speaker 1: Oh here's my credit card, total stranger whom I can't 623 00:35:19,600 --> 00:35:21,799 Speaker 1: even look in the eye. I don't know where you are, 624 00:35:21,880 --> 00:35:23,319 Speaker 1: but sure take my credit card. 625 00:35:23,560 --> 00:35:26,200 Speaker 3: People didn't do it. People didn't do it because they 626 00:35:26,239 --> 00:35:28,759 Speaker 3: didn't trust the Internet. They didn't trust the people on 627 00:35:28,800 --> 00:35:31,520 Speaker 3: the internet. They didn't know who to trust. And to 628 00:35:31,640 --> 00:35:36,799 Speaker 3: solve this problem, the people at auction Web had an idea. 629 00:35:36,920 --> 00:35:40,840 Speaker 3: They called it the feedback Forum, and they posted a 630 00:35:40,920 --> 00:35:42,920 Speaker 3: letter on the site to explain it. 631 00:35:42,960 --> 00:35:46,720 Speaker 1: They had to explain it. Love that use our feedback forum. 632 00:35:46,800 --> 00:35:50,040 Speaker 1: Give praise where it is due, make complaints where appropriate, 633 00:35:50,320 --> 00:35:52,160 Speaker 1: deal with others the way you would have them deal 634 00:35:52,239 --> 00:35:55,760 Speaker 1: with you. Remember that you are usually dealing with individuals 635 00:35:55,840 --> 00:35:59,200 Speaker 1: just like yourself, subject to mistakes, well meaning but wrong 636 00:35:59,280 --> 00:36:03,360 Speaker 1: on occasion. That's just human. Oh, that's very though good faith. 637 00:36:03,520 --> 00:36:06,880 Speaker 3: It's full of this idea of acting good faith, which 638 00:36:06,920 --> 00:36:10,160 Speaker 3: is nice. And on top of that, maybe because this 639 00:36:10,320 --> 00:36:13,480 Speaker 3: was a company built by engineers, they came up with 640 00:36:13,520 --> 00:36:16,719 Speaker 3: a way to quantify this feedback. Users were allowed to 641 00:36:16,719 --> 00:36:19,160 Speaker 3: give each other a rating of plus one for good 642 00:36:19,280 --> 00:36:22,880 Speaker 3: or minus one for bad or neutral, and the site 643 00:36:22,960 --> 00:36:26,080 Speaker 3: automatically summed up the ratings to create a score, and 644 00:36:26,120 --> 00:36:28,040 Speaker 3: it put the score right next to the username. 645 00:36:28,760 --> 00:36:31,000 Speaker 1: So now it's the answer. 646 00:36:31,160 --> 00:36:34,879 Speaker 3: It's the answer. If a seller tries to unload poor 647 00:36:34,960 --> 00:36:36,040 Speaker 3: quality ingots on. 648 00:36:36,000 --> 00:36:38,759 Speaker 1: You, you can do that once or twice, but you 649 00:36:38,800 --> 00:36:41,280 Speaker 1: know ten people and you've got a minus ten rating. 650 00:36:41,120 --> 00:36:45,480 Speaker 3: And this isn't perfect. People you know, join up to 651 00:36:45,520 --> 00:36:49,200 Speaker 3: inflate each other's reviews, for example, but overall it works 652 00:36:49,440 --> 00:36:54,720 Speaker 3: and they add stars and percentages and details, all built 653 00:36:54,760 --> 00:36:59,160 Speaker 3: on this foundational idea. Everybody can see what buyers and 654 00:36:59,200 --> 00:37:03,520 Speaker 3: sellers think of each other. At some point, auction Web 655 00:37:03,640 --> 00:37:07,040 Speaker 3: changed its name to eBay. Perhaps you've heard of it, 656 00:37:07,680 --> 00:37:11,480 Speaker 3: and it was clear pretty quickly that online auctions were 657 00:37:11,520 --> 00:37:14,480 Speaker 3: a good idea, and other companies jumped in to compete. 658 00:37:14,840 --> 00:37:19,759 Speaker 3: There was auction Universe on Sale Exchange, and there is 659 00:37:19,840 --> 00:37:24,040 Speaker 3: this movement that's really interesting and telling when some of 660 00:37:24,080 --> 00:37:28,200 Speaker 3: these other auction sites want to let users import their 661 00:37:28,280 --> 00:37:32,319 Speaker 3: user reviews from eBay, and eBay says, you can't do that. 662 00:37:32,920 --> 00:37:36,440 Speaker 3: The reviews, the aggregated reviews, belong to us. They have 663 00:37:36,520 --> 00:37:37,440 Speaker 3: to stay on eBay. 664 00:37:37,560 --> 00:37:38,480 Speaker 1: They're valuable. 665 00:37:38,600 --> 00:37:43,040 Speaker 3: They're valuable, They're part of what makes eBay work. They're 666 00:37:43,080 --> 00:37:45,839 Speaker 3: not just some really thing on the side. They are 667 00:37:46,280 --> 00:37:51,680 Speaker 3: an essential component of online commerce. And as everybody starts 668 00:37:51,680 --> 00:37:55,040 Speaker 3: to go online, it becomes clear that you need user 669 00:37:55,080 --> 00:37:59,000 Speaker 3: reviews for all kinds of peer to peer commerce, really 670 00:37:59,560 --> 00:38:04,680 Speaker 3: because in the aggregate reviews do the work that a 671 00:38:04,800 --> 00:38:08,680 Speaker 3: brand does in traditional commerce, they tell you if the 672 00:38:08,760 --> 00:38:11,759 Speaker 3: seller is reliable, if the seller can be trusted to 673 00:38:11,760 --> 00:38:13,520 Speaker 3: say and do what they say, they're going to send you. 674 00:38:13,760 --> 00:38:16,960 Speaker 1: And unlike a guide book, it doesn't cost anything to 675 00:38:17,040 --> 00:38:20,239 Speaker 1: have the customers rate the products. You don't have to 676 00:38:20,280 --> 00:38:23,680 Speaker 1: send someone with a backpack climbing over hills and staying 677 00:38:23,680 --> 00:38:25,719 Speaker 1: at all these hotels, which means. 678 00:38:25,440 --> 00:38:29,080 Speaker 3: Reviews can scale infinitely. You can have as many reviews 679 00:38:29,080 --> 00:38:30,279 Speaker 3: for as many buyers. 680 00:38:29,920 --> 00:38:32,799 Speaker 1: And sellers as you want. We love scale, we love infinite. 681 00:38:32,920 --> 00:38:35,400 Speaker 3: And so you see, as we get into the twenty 682 00:38:35,400 --> 00:38:38,839 Speaker 3: first century, this wave of peer to pure commerce and 683 00:38:39,000 --> 00:38:42,879 Speaker 3: more potential trust problems. Not you know, would you buy 684 00:38:42,880 --> 00:38:46,360 Speaker 3: this pe dispenser from a stranger, but would you ride 685 00:38:46,360 --> 00:38:49,839 Speaker 3: in a stranger's car? Would you sleep in a stranger's 686 00:38:49,880 --> 00:38:50,800 Speaker 3: spare bedroom. 687 00:38:50,920 --> 00:38:53,480 Speaker 1: If you had asked me that twenty thirty years ago, 688 00:38:53,800 --> 00:38:56,440 Speaker 1: it would seem insane that you would stay in a 689 00:38:56,480 --> 00:38:57,560 Speaker 1: room in someone else's house. 690 00:38:57,880 --> 00:39:01,080 Speaker 3: This is what venture capitalists said when you know, when 691 00:39:01,120 --> 00:39:04,120 Speaker 3: Airbnb went out and tried to raise money for this business. 692 00:39:04,440 --> 00:39:08,920 Speaker 3: But kind of amazingly, reviews were able to solve the 693 00:39:08,960 --> 00:39:11,759 Speaker 3: trust problem here as well. So now we live in 694 00:39:11,800 --> 00:39:18,080 Speaker 3: this world where everybody reviews everybody. Not only do riders 695 00:39:18,120 --> 00:39:21,719 Speaker 3: review drivers and guests review AIRB and B hosts, but 696 00:39:21,880 --> 00:39:25,960 Speaker 3: drivers review writers and AIRB and B hosts review guests. 697 00:39:26,040 --> 00:39:29,600 Speaker 1: We even let listeners to podcasts review podcasts. 698 00:39:30,040 --> 00:39:34,040 Speaker 3: What what this is the moment, Robert, when our showrunner 699 00:39:34,120 --> 00:39:37,200 Speaker 3: Ryan Dilly has told me we need to mention his 700 00:39:37,680 --> 00:39:42,360 Speaker 3: one hundred percent positive rating on eBay, where he buys 701 00:39:42,840 --> 00:39:46,080 Speaker 3: vintage World War two gear. He has provided us reviews 702 00:39:46,120 --> 00:39:50,440 Speaker 3: from sellers. It says an excellent, no messing buyer, yes, 703 00:39:50,600 --> 00:39:54,440 Speaker 3: also prompt payment, astute customer that he is, and of 704 00:39:54,480 --> 00:39:58,080 Speaker 3: course those positive reviews make it much easier for him 705 00:39:58,120 --> 00:40:00,839 Speaker 3: the next time he wants to buy a Royal air 706 00:40:00,880 --> 00:40:04,880 Speaker 3: Force cap size large, because every seller wants a no 707 00:40:04,960 --> 00:40:06,760 Speaker 3: messing buyer astute. 708 00:40:07,200 --> 00:40:10,520 Speaker 1: I don't want to sound naive here that user reviews 709 00:40:10,560 --> 00:40:12,759 Speaker 1: are the end of the road, because I feel like 710 00:40:12,840 --> 00:40:16,200 Speaker 1: these days when I read user reviews, especially on the 711 00:40:16,200 --> 00:40:19,040 Speaker 1: big sites, I do worry a little bit that they've 712 00:40:19,080 --> 00:40:22,759 Speaker 1: been paid for, or that bots are doing this now, 713 00:40:22,880 --> 00:40:26,360 Speaker 1: or that AI is doing this now. We've reached the 714 00:40:26,360 --> 00:40:29,000 Speaker 1: point of a little bit of doubt coming back in. 715 00:40:29,320 --> 00:40:32,160 Speaker 3: That is fair, as I was putting this together, I 716 00:40:32,200 --> 00:40:36,200 Speaker 3: did find some interesting literature. Basically, there's like an academic 717 00:40:36,280 --> 00:40:40,880 Speaker 3: literature of user reviews by this point. Economists love user reviews, 718 00:40:41,800 --> 00:40:44,640 Speaker 3: and it was comforting to me. I want to talk 719 00:40:44,640 --> 00:40:48,680 Speaker 3: about two in particular because they fit the themes of 720 00:40:48,719 --> 00:40:52,200 Speaker 3: what we've been talking about on the show. Study number 721 00:40:52,239 --> 00:40:55,799 Speaker 3: one could headline it. User reviews are a big deal 722 00:40:55,840 --> 00:40:58,960 Speaker 3: for some restaurants, but not for others. This is a 723 00:40:59,000 --> 00:41:02,280 Speaker 3: really interesting working paper that a Harvard Business School professor 724 00:41:02,320 --> 00:41:05,600 Speaker 3: published a while back. The professor was able to get 725 00:41:05,760 --> 00:41:10,160 Speaker 3: revenue figures from all the restaurants in Seattle, and he 726 00:41:10,239 --> 00:41:14,440 Speaker 3: looked at what happened before and after Yelp came on 727 00:41:14,520 --> 00:41:16,920 Speaker 3: the scene in Seattle. This is back in the aughts, 728 00:41:17,400 --> 00:41:20,759 Speaker 3: and what he found was Yelp reviews mattered a lot 729 00:41:21,000 --> 00:41:24,799 Speaker 3: for revenue for small restaurants, but they mattered not at 730 00:41:24,800 --> 00:41:26,239 Speaker 3: all for chain restaurants. 731 00:41:26,400 --> 00:41:29,160 Speaker 1: Which makes sense if you have a big brand. If 732 00:41:29,200 --> 00:41:32,600 Speaker 1: you're entering a famous fast food restaurant, you're not checking 733 00:41:32,840 --> 00:41:35,160 Speaker 1: is it a four point two or a four point three. 734 00:41:35,280 --> 00:41:37,160 Speaker 1: You know what the French fries are going to taste like. 735 00:41:37,200 --> 00:41:39,760 Speaker 3: That's the point of delition. Yes, But for a small, 736 00:41:39,920 --> 00:41:42,080 Speaker 3: you know, mom and pop restaurant that you've never heard of. 737 00:41:42,880 --> 00:41:45,799 Speaker 3: Reviews are a big deal. That's where they matter. One 738 00:41:45,880 --> 00:41:48,799 Speaker 3: other macro finding in this paper that I found particularly 739 00:41:48,880 --> 00:41:53,360 Speaker 3: interesting was the emergence of Yelp seemed to be good 740 00:41:53,600 --> 00:41:59,480 Speaker 3: overall for non chain restaurants because their overall share of 741 00:41:59,680 --> 00:42:02,719 Speaker 3: restaurant revenue went up. Or, as the author put it, 742 00:42:03,280 --> 00:42:08,480 Speaker 3: the increased information about independent restaurants leads to a higher 743 00:42:08,560 --> 00:42:13,760 Speaker 3: expected utility conditional ongoing to an independent right higher expected utility? 744 00:42:13,760 --> 00:42:14,839 Speaker 1: What more could you want? 745 00:42:14,920 --> 00:42:19,880 Speaker 3: Ed? Or means er it's better basically in expectation. Okay, 746 00:42:19,960 --> 00:42:22,960 Speaker 3: that's study number one. Study number two, I'm calling it 747 00:42:23,040 --> 00:42:26,480 Speaker 3: Nanni's revenge. Nannie, of course, was the dissatisfied customer of 748 00:42:26,560 --> 00:42:31,359 Speaker 3: an Nutzier. This is an elegant study where these economists 749 00:42:31,400 --> 00:42:35,920 Speaker 3: looked at sales of old US pennies on eBay like 750 00:42:36,000 --> 00:42:42,080 Speaker 3: collectible pennies, And the reason for focusing on collectible pennies 751 00:42:42,160 --> 00:42:44,600 Speaker 3: is there is a book value for each one, you 752 00:42:44,760 --> 00:42:47,840 Speaker 3: know what it sort of should cost, and they could 753 00:42:47,880 --> 00:42:52,399 Speaker 3: control what the expected sales price the book value would 754 00:42:52,440 --> 00:42:56,799 Speaker 3: be and see how the seller's reviews affected the price 755 00:42:56,840 --> 00:42:59,080 Speaker 3: they actually got for the pennies that they sold and 756 00:42:59,120 --> 00:43:04,840 Speaker 3: what they found was good reviews. Increases in the positive 757 00:43:04,840 --> 00:43:09,840 Speaker 3: feedback rating had no significant impact on the prices people 758 00:43:09,880 --> 00:43:17,160 Speaker 3: were willing to pay, but bad reviews negative feedback did 759 00:43:17,200 --> 00:43:20,760 Speaker 3: have an impact. When sellers got negative feedback, the prices 760 00:43:20,800 --> 00:43:23,919 Speaker 3: that buyers were willing to pay for their pennies went down. 761 00:43:24,080 --> 00:43:25,879 Speaker 1: This is telling us that user reviews are at least 762 00:43:25,920 --> 00:43:30,879 Speaker 1: a partial solution to this market for lemons. Reviews may 763 00:43:30,920 --> 00:43:34,200 Speaker 1: be flawed, but they do tell buyers who to trust 764 00:43:34,280 --> 00:43:36,959 Speaker 1: and who not to trust, and eventually how much money 765 00:43:37,040 --> 00:43:38,880 Speaker 1: they should offer in an auction site like this. 766 00:43:39,280 --> 00:43:44,240 Speaker 3: Yes, it does seem like in this world of user 767 00:43:44,280 --> 00:43:47,080 Speaker 3: reviews that we live in today, it would be much 768 00:43:47,120 --> 00:43:52,280 Speaker 3: harder for Eatzer to unload his poor quality ingots. Eat 769 00:43:52,400 --> 00:43:54,480 Speaker 3: Seer would be cooked. 770 00:43:55,400 --> 00:43:57,360 Speaker 1: Part of me wants to encourage people to leave a 771 00:43:57,400 --> 00:44:00,399 Speaker 1: positive review for the show, but I guess it would 772 00:44:00,440 --> 00:44:02,640 Speaker 1: be better if I said, leave an accurate review of 773 00:44:02,680 --> 00:44:03,400 Speaker 1: the show. 774 00:44:03,280 --> 00:44:05,280 Speaker 3: And if you don't like the show, don't feel compelled 775 00:44:05,280 --> 00:44:06,120 Speaker 3: to leave very view. 776 00:44:07,480 --> 00:44:10,120 Speaker 1: You could send us an angry tablet. In that case, if. 777 00:44:10,000 --> 00:44:12,719 Speaker 3: You don't like the show, please send us an retablet. 778 00:44:13,040 --> 00:44:16,880 Speaker 3: We're at business History at pushkin dot fm. If we 779 00:44:16,920 --> 00:44:19,759 Speaker 3: have delivered you poor quality ingots, if we have sent 780 00:44:19,800 --> 00:44:23,520 Speaker 3: your messenger away through enemy territory, please tell us. You 781 00:44:23,560 --> 00:44:27,040 Speaker 3: can also tell us on x Classic place to send 782 00:44:27,040 --> 00:44:30,960 Speaker 3: angry tablets. I'm at Jacob Goldstein. You're at Radiosmith on LinkedIn. 783 00:44:31,680 --> 00:44:33,640 Speaker 3: We do love to hear from you. We do, and 784 00:44:33,800 --> 00:44:36,960 Speaker 3: user reviews really do make a difference. Our show today 785 00:44:37,520 --> 00:44:41,720 Speaker 3: was produced by Gabriel Hunter Chang, was engineered by Sarah Buguaire. 786 00:44:42,320 --> 00:44:48,200 Speaker 3: Our video editor is Matt Nielsen. Our showrunner and editor 787 00:44:48,360 --> 00:44:53,719 Speaker 3: is Ryan Dilly. Size large head. Writing and research for 788 00:44:53,760 --> 00:44:57,799 Speaker 3: today's show was contributed by Ryan Dilly and Gabriel Hunter Chang. 789 00:44:58,160 --> 00:44:59,160 Speaker 3: I'm Jacob Goldstein. 790 00:44:59,239 --> 00:45:00,960 Speaker 1: I'm Robert Smith. Thanks for listening.