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A man who destroyed his multimillion dollar company in 10 seconds (2018) (thehustle.co)
816 points by dragontamer on Aug 28, 2019 | hide | past | favorite | 478 comments

So I've actually done a fair amount of research on this speech, and there a few skipped points most times people report on it.

Firstly the audience loved the jokes, they laughed at them all. It wasn't like he delivered them to stunned faces and immediate shock. The only thing that brought him down was a newspaper reporter noted it down and newspapers pushed it as an artificial scandal. Everyone buying 5 pound earrings knew they were of very low quality, they just didn't want it being shouted at them in their daily news.

Secondly it wasn't even the first time he had publicly made these sorts of jokes, in fact it wasn't even the first time they had been published in the papers.

This was entirely a newspaper driven downfall, they wanted to see him fail and wanted to sell papers about a scandal, so they did.

Plus it was only the Ratners brand that was damaged. The Ratners group owned a shed load of other Jewellery brands and they were unaffected. The group renamed itself Signet Group and rebranded some the of Ratners stores and closed the rest.

The group carried on and became one of the biggest jewelery companies on the planet.

The speech scandal was merely a blip in the history of the company.

Well it was the Ratners group that lost 99% of its listed value, so not just the Ratner's brand that felt the damage. It definitely affected Gerald more than it did the company though, but there was definitely a touch and go moment there where the group nearly went under entirely. They've managed to recover really well and after it rode it out properly (they fired Gerald a couple of years later then rebranded) they returned to the original stratospheric trajectory.

> it wasn't even the first time he had publicly made these sorts of jokes, in fact it wasn't even the first time they had been published in the papers.

> This was entirely a newspaper driven downfall

That first point is good evidence that the jokes weren't very responsible for what happened.

But it seems like it's just as good evidence that newspaper coverage also wasn't very responsible. Why attribute it to the newspapers this time, when they tried and failed before?

Fair enough question. They didn't try and cut him down before. They just reported his quotes, and had a laugh at them, it wasn't even front page news. But this time they decided it was worth cutting him down, and it was on all their front page with titles like "Ratner sells 'crap'" etc. Previously it was popular to report on him because he was shaking up the industry, and once he'd taken a large portion of it, it became time to create scandal around him. The papers used him for news on the way up, pushed him and then rode him all the way back down again.

Newspapers report on people all the time and then switch when it suits them, it's always trying to move with people. It's also worth noting the reporter, Harry Arnold, worked for The Mirror, a less than reputable rag. Arnold knew ahead of time that Ratner was to make these jokes (heard about it through his assistant I believe) and was there waiting for the moment he could quote him. The scandal was prepared before it had even happened. They didn't force him to say those things, but they sure made an enormous deal out of it.

It wasn't the newspapers, 1991 was the peak of the 1990 recession in the UK:


Raters was well placed amongst jewellers to ride the recession. I remember the news coverage of this well - the decline in sales was rapid and directly attributable to the speech, and the implication that his customers were mugs.

Based on what? they were selling cheap costume jewellery to the working and lower middle class, both of which were exceptionally squeezed by the 10 years of thatcher that had just ended.

Luxuries are typically the first thing to go for those close to poverty in a recession.

I would argue that Ratners were uniquely placed to suffer the worst in a recession, and that they hadn't collapsed during the aftermath of Black Monday is the bigger surprise.

Either way, I guess it's just one of those stories people like to tell because it confirms their biases (always insert your elevator pitch into every conversation, always be super positive about your product, etc etc.)

Maybe different kind of newspaper? Like a tabloid compared to a respected paper, but that is just an educated guess, I don't know the actual story.

At the risk of alienating the same people that Gerald Ratner did (and in full knowledge that all generalisations are false), the people buying the stuff he sold didn't read the broadsheets.

It was the tabloid press, targeting their readers, that brought Ratners down. I don't know why they did it though apart from increasing their sales by generating buzz about a subject maybe.

The people listening to his speech were wealthy people, of course they were not insulted, but his clients who bought the stuff were

Kudos to the guy for bouncing back though !!

“After losing everything, he toiled in misery for years — but he eventually made an improbable comeback. In 1997, he took out a £155k (US$203k) loan on his house, built up a health club business, and sold it for £3.9m (US$5.1m). He then used the profits to start an online jewelry company. (The Ratners Group rebranded as Signet in 1993; today, it is the largest diamond retailer in the world.)”

At the time Ratners already owned Kay and Jared... I think “destroying” the company is a bit overstated/exaggerated. The company itself came out just fine. They still own Jared and Kay, and Zales more recently.

Destroying the brand then? That seems more accurate.

Sounds like a very strategic move. If he already owns two of the leading more expensive jewelry stores, why not destroy a cheaper brand?

If the people that shop at the cheaper brand would never shop at the more expensive stores, why not keep both a cover the entire market?

While he made a successful comeback (however far from his first success), saying he toiled in misery for years is a little bit exagerated. Indeed, he was still the owner of a house (and probably of other goods). And this house was big enough to have a value probably equal to a today million dollars. That's not what I call to be toiled in misery.

Whether or not he toiled in misery is independent of how much money he had. It only depends on whether he toiled, and whether he was miserable doing so.

Indeed. And I dare say living in a million dollar house is not so comforting if you've just forfeited $125m worth of profits year on year :-)

What happened to diversification??

Happiness is relative to expectation.

Most people reading this will never feel extreme hunger and have all their material needs met forever, but they will probably also go through things that to them, feel like miserable failures.

You might even be forced to leave your cushy jobs and take an annual salary that is what 50 African laborers make in year. And it will possibly take years, maybe well over a decade, to live down how bad you feel about yourself.

Zoom out from specific circumstances and it seems like human misery is fairly constant.

Whether you're scrambling around the forest looking for berries and killing things to eat with pointy sticks or working an office job living in a suburb – I don't really think your emotional experience really changes all that much.

I think your misery and delight are driven by the best and worst things in your life and it doesn't really matter all that much what your circumstances are. When things get better you find new things to be miserable about, when things get worse you stop caring about the little things and your misery is driven by the new worst thing.

I don't see standard of living really driving all that much happiness. Maybe some, but much less than I think most people expect.

Spoken like someone who can't comprehend living hand to mouth.

Happiness is definitely a hockey-stick shaped curve, going from 1M to 10M is not going to make you happier, but someone who is making $100k is going to be far far happier than someone making $20k. The difference between scrabbling to pay your bills and keep the heat on, vs actually having some savings and free money for recreation, is absolutely massive.

I’m not so certain about that actually, I’ve certainly seen people making $20k that had more free money and recreation time than some people making $100k. Especially as regards recreation time.

To be fair, making $20k was almost always a choice in those cases.

That’s not consistent with the empirical evidence in sociology research. Reported happiness does drastically change between $20k in the US and $80k specifically.

And in fact it isn’t specifically a choice. Sure you can make choices that, over a long term, will boost your income but it’s rarely a choice.

It doesn't change "drastically," only by a point or so. Knowing the way studies like this typically work, it could also be that if you are smart with your money (e.g. frugal and not chronically short on cash), you're just as happy as making someone more. I'm sure many of the 6's were in the "I'm doing okay, but man my life would be better if I weren't so broke right now" camp.


How were those people living? Are they single people in their mid 20s with no significant other or kids? Are they making enough to put some towards retirement?

I guess if you're willing to sacrifice some things it could work. You're definitely not raising a family of 3-4 in a nicer neighborhood with that amount.

I don't know how other people live, but for me, the overriding expense has always been rent. But in some places I've been, there are apartments with lower than market rent that are reserved for people with low income.

I don't think there is one correct answer to the question of how much money you have to have to live, because it's mostly about your biggest expense, imo. Everything else you can economize on to an extreme if you have to, if you're healthy and sane and frugal.

Once you start talking about a "nice" neighborhood, you're talking about a competitive zero-sum game where the costs can increase without limit.

The median annual household income worldwide is about 10k/year. 20k/year puts you in the 91st percentile globally for person income. So it's perfectly possible to live with that money, most people in the world do.

Cost of goods and services is proportional in most places. Human happiness is often based on perceived social standing rather than objective wealth.

That is assuming your status is above subsistence level in your society.

I figured we were talking mostly about US, so technically until you're a family of 3 you're not living in poverty, which seems pretty reasonable. It also probably greatly depends on where you live. Housing prices closer to major/wealthy cities are more expensive.

Having an income of 20k/year in US puts you at like 16th percentile.

Not everyone considers it a sacrifice to not be married or have kids. For the people who do fewer than half of them are happy that way.

We're all pretty bad at knowing what will make us happy in advance.

I'm not exactly saying not having a family is a sacrifice, but where you want to live. The cheapest apartment I could find in my area (before kids/marriage) was about $700 and that's a few cities away in a no-so-great area where cops were getting called to our neighbors every few days. I could go closer to downtown and be in a worse area.

With kids, the cheaper areas have generally worse schools, parks, etc.

Ah, these people were living in a first world nation with functional social systems, so it wasn’t actually as hard as it might seem.

The neighborhood they were living in was generally fairly average, everything considered. But only one of them had one kid (also single parent though).

Not in a large city. But I’m fairly sure in that case the main downgrade would be the neighborhood.

I strongly agree with this.

A lot of people are happy in college and they're almost all living on less than $24k a year despite working over 40h a week (although schoolwork is a lot more engaging than industry IMHO).

That's because it's expected, all their friends are living in the same way, and they see this as temporary, with a larger income not that far off.

I can say I was very happy with minimal income in my university years, but would not be anymore as my friends are out of the campus and getting forward with their lives.

Yes, so it is not the lack of money that makes one unhappy (say, at ~$24k/yr and no health problems), but comparison to others and attachment to worldly things.

This is what causes people in the West who earn $35k and $350k alike to feel 'poor' despite the fact that even the former income is already in the global 99th percentile.

Yes, but I'd emphasize the "temporary" part: hope of better things in the future is important for the human psyche (for extreme case see religions, for example). Students are full of hope, someone at 24k may feel like they are at a dead end.

Yes, but then we're talking different types of people. Some people are just fundamentally happier than others, it seems.

On average people making $80k are happier than those making $20k, to a greater degree than when comparing $10M to $1M.

Happiness has the absolute strongest correlation with a strong social life and not with wealth. That's why happiness is declining in the WEIRD countries (Western, educated, industrialized, rich and democratic).

And, considering that the homeless don't get a proper social life, that makes them specially vulnerable to unhappiness.

> To draw an analogy: a man's suffering is similar to the behavior of a gas. If a certain quantity of gas is pumped into an empty chamber, it will fill the chamber completely and evenly, no matter how big the chamber. Thus suffering completely fills the human soul and conscious mind, no matter whether the suffering is great or little. Therefore the "size" of human suffering is absolutely relative.

- Viktor Frankl, Man's Search for Meaning

My standard counterargument to this is to look at animals. We know that treating animals better lead to happier animals. Poorly treated and well treated animals do not converge to the same happiness level.

I think there are a few key things that drive happiness. Secure food and shelter. Short commute. Nature. Being able to walk away from toxic jobs and relationships.

> treating animals better lead to happier animals

Treating animals fairly lead to happier animals.

Transform your puppy in an spoiled human baby clothed in expensive ribbons or giving vegan food to your cat will not make it happier necessarily (not to mention the neutering clause in the small letter of the contract). Our definitions of better can difer from theirs.

I think this is also the reason why humans strive to do better. If we're never satisfied with what we have then the only solution is to do even better!

Being rich doesn't make you automatically happy, you can hear many stories about billionaires who have and have achieved everything they could possibly want being miserable – wanting things and then getting them isn't the source of happiness, being faced with this reality firsthand by running out of things to want and still feeling dissatisfied with life can be (imagined at least) really miserable and hopeless.

The line is subsistence, not being a billionaire. If you don’t have food, shelter and health care you are often very very in happy. If you have those, each additional dollar contributes a much smaller degree of happiness. The research suggest the line for diminishing returns in the US is $80k in most cities.

Misery, like happiness, is orthogonal to material possessions.

...above a certain level of material possessions. You cross the barrier down, and that assertion becomes false real fast.

Misery is a state of mind, not of finance. I'm sure plenty of billionaires are personally miserable, despite their ability to do literally anything.

Where do you imagine this fits in?

Just today


Yes, let's all cheer on the guy who has open disdain for his customers. I wonder what he calls his health club customers behind closed doors.

He had distain for his product, not his customers. Self deprecation isn’t the same as insulting others.


I dislike Zuck as much as anyone, and probably more than most. But. I really don't understand why people whine about this particular quote. I think this may be one of the best things I've seen come from him. He is perfectly, one hundred percent correct.

They are dumb fucks for trusting him.

Zuck isn't a terrible person for saying that dumb fucks are dumb fucks. He's a terrible person for building a platform exploiting dumb fucks. He's a terrible person for everything except this particular conversation. Not the other way around.

I doubt almost anyone on HN is squeaky clean with what they said and wrote as a teenager.


Problem is in this particular case it seems highly relevant today as well.

His behavior since then shows very similar contempt for users, privacy, or the rule of law.

I don’t see how that’s relevant. Can’t the same thing be said of the OP’s main character? Why have a story at all?

The point was that Mark Z had the same attitude about the people who shared their data with FB, and the history is replete with FB abusing that trust in myriad ways. Is Mark Z still a teenager? And furthermore, that other CEO guy reformed. Does that mean the story is pointless?

Here is the real point. Both this CEO and young Mark Z were right. They were selling crap and people were buying it. People really did simply share their info and back then Zuck was a little taken aback. The point is that we all collectively as a society buy De Beers and we have collectively begun thinking it’s totally cool to trust some third party with all our private data just so they can connect us. So this is actually a critique of society and how we do exactly the things that they said were pretty dumb - and we really enjoy doing them!

He wasn’t a teenager.

He was 19. Neuroscientists tell us that in most people, the pre-frontal cortex (the rational decision-making part of the brain) doesn't fully form till the mid 20s, which is why everyone says douchey things, well into their 20s.

We have no idea what his real thinking/motivation was behind that comment, but a combination of adolescent bravado and incredulity that this stupid little app he'd hacked together was working so well would suffice, at least as well as casting him as a 19-year-old moustache-twirling super-villain-in-the-making would.

This is the one-and-only such quote of his from that period that gets invoked. If that's the most scandalous piece of dirt anyone could dig up on him from his entire early life, he's not doing too badly.

I sure as hell wouldn't fare so well.

People typically refer to 13-18 as teenage. 18 and over. College in general is referred to as young adult or even adult.

It's a pedantic point and it doesn't contradict anything I wrote in the rest of the comment.

Saying he was a teenager to excuse the morally questionable behavior and reduce his culpability is invalid when he isn’t really a teenager based on legal standards. He would be tried as an adult in any legal proceeding and fully morally and legally responsible for his actions. So my point stands.

Pedantic doesn’t mean anything relevant to this conversation.

We're not talking about an act of criminal violence, or indeed anything illegal at all. We're talking about a private, off-the-cuff remark, isolated from much surrounding context or knowledge of what was going on in his mind or heart when he made it. For all we know it was just a dumb 19-year-old joke, so there's not even any clear evidence of immorality, apart from by the person who publicly shared a private conversation.

OK, I understand that for a lot of people, it's really important to fixate on this "gotcha" instance, to take the view that the worst possible conceivable motive just has to be the only plausible one, even though there is no possibility of undertaking the kind of forensic or judicial examination that would be required to properly determine such a thing.

But seriously, regardless of what it may or may not reveal about Zuckerberg, fixating on it is just not a healthy or productive way to look at the world.

I invite you to explore the psychology concept of the shadow [1], and consider that when we fixate on other people's flaws and transgressions like this, there's very likely plenty wrong that we're not seeing in ourselves, but that we could greatly benefit from paying attention to.

That's is why I call out this trope whenever I see it on HN. Not because it upsets me that people are saying mean things about Mark Zuckerberg. It's that in focusing on other people's supposed sins, they're likely avoiding looking at what they could pay attention to in themselves, and thus embrace big opportunities for their own personal growth.

Say what you like about Zuckerberg and Facebook's current/recent conduct. There's plenty there, and there are plenty of valid and important discussions to be had about the role of Facebook etc in the modern world.

But this 15-year-old comment trivialises these present-day issues, and is also just super-boring.

By the way, the Oxford dictionary and Wikipedia both define "teenager" as any age ending in "teen", so nobody is wrong to use it in that way. You can apply a different interpretation, but it would only be for rhetorical purposes, not to correct any errant assertions of fact.

[1] https://en.wikipedia.org/wiki/Shadow_(psychology)

You’re switching the issue. The debate is whether he was young and therefore excused for saying something dumb. But he was of an age that he would be held responsible for much more serious acts. Joking about disclosing peoples private details without consent is not criminal but he was old enough to be expected to know that would be perceived as wrong. Indeed by alluding to the concept of trust, the comment indicated some awareness. This is not an example of gotcha culture because the point I am arguing against is that a 19 is excused because they are a teenager. He was an adult in the eyes of society based on legal status. I am open to debate about whether that age of culpability needs to be adjusted based on neuroscience.

The shadow is not applicable, and just a red herring, not relevant to whether a 19 year old is an adult. I am not even getting into whether his comment indicates a willingness to log into their email without permission. Why excuse this? If you heard an 19 year old joke about walking into someone’s house would you think they were too young and shouldn’t know better?

As far as the Oxford dictionary, I’ll stick with the general legal definition, as it is more relevant a social measure of whether he should have know better based on generally acceptable measures of conduct at that age, and is fairly held responsible.

This 15 year old comment doesn’t trivialize anything, it serves as an anchor over a 15 year period where the underlying intent is established and the intervening conduct makes more sense and is much worse. It’s impossible to argue that disclosure is inadvertent when this intent was present at the very beginning. He was literally selling peoples information for social credibility with a friend. You may think it’s boring, but I am just as pissed as the first day I heard it and have been off of Facebook for the last 10 years as a result. I hope everyone hears this comment over and over, maybe then it would sink in.

OK, I think we've established that we see this matter very differently and are not going to find consensus, but I'll leave some final points for the record then bounce out.

- Instead of saying "He wasn’t a teenager" and continuing to double down on this, you could have made the discussion a whole lot more productive by just saying "he was old enough to know better". That's a reasonable position that people can have a productive discussion about. As far as I can find, "teenager" has no official legal definition that's separate from the dictionary definition (as distinct from "major" or "age of responsibility" which are legal terms). Using legal conventions is unhelpful. People under 18 (and thoroughly "teenage" by your description) can be legally culpable for murder, yet people in the U.S. are considered too immature to buy alcohol before age 21. Everyone knows maturity and sound judgement is a spectrum and numerical age is only one factor in it.

- I understand that for the people for whom this matter is significant, it stems from the view that Facebook is a wholly malevolent influence on society, and is responsible for much of what is wrong in the modern world, including recent election outcomes and other major world events, and that Zuckerberg is primarily responsible for most of it. I don't share that position, about Facebook/Zuckerberg, or indeed about anything/anyone, really. I regard Facebook and Zuckerberg's persona as having emerged out of their surrounding culture, and like pretty much all people and companies, have done some good things and some bad things. Where they've done good they should be commended and where they've done wrong they should be condemned and motivated/compelled to reform. I think people should generally be given a pass for stupid things they said/did 15 years ago, as most people change significantly in that time, even if they were already grown adults, but even more so if they were young. And I think that the propensity to cast Facebook as a primary cause of the world's ills, including but not limited to unfavourable election outcomes, is another example of avoiding confronting our own failings (i.e., our "shadow"), and missing opportunities for learning and growth. And I think this mindset is particularly counterproductive for those of us in the startup world, where it's impossible to do anything important and impactful without risking getting things wrong at least some of the time.

I understand that the ideas in that last point are unpalatable for some people, and that's OK. My own take on such matters comes after a solid number of years exploring these ideas through particular self-development practices I've chosen to undertake, but I understand and respect that everyone has their own background to their worldview, and people are entitled to see it differently.

Thanks for the discussion.

What he said wasn’t douchey, it showed disregard for the rights and worth of other people. That should be learned in kindergarten. We all make mistakes, but his mistake was not age appropriate.

TY for Posting truths

He was 19.

This is a stupid meme that always gets posted.

The modern examples cited weren't nearly as bad:

- Lulumon didn't seem to be hurt by Chip Wilson. In fact, the "notoriety" made me aware they they sold men's clothes, too, and I went there and bought some great athletic wear.

- Many customers appreciated Barclays' warning not to "pile up debts." That would give me a favorable opinion of a company that offers lines of credit, not a bad one.

Lululemon is genius, their quality is great, but the branding is even better! They revolutionized the exercise wear industry, were single-handedly responsible for "athleisure" and killing denim sales!

Denim killed denim.

For a time, I could buy jeans that fit. That's now all but impossible. Skinny jeans doing much of that.

Prices and fabric quality have gone, respectively, through the ceiling and floor.

I'm approaching a decade denim-free, having broken in my first pair sometime in the 1970s.

I think the sizing issue is due to vanity sizing, a lot of brands label their denim jeans the wrong size. The so called size 36 or 38 are probably actually 38 and 40 respectively. A few international brands like Levi's don't seem to do vanity sizing.

Not just that. Leg diameters are far smaller.

Baggy in the waist, cannot get my thighs in.

>were single-handedly responsible for "athleisure"

Pretty sure that was Nike, Adidas, and Puma.

Nope, it was Lululemon, they were all making sporting apparel which you could wear while working out, but were nowhere close to the fabric, design, and style that Lululemon had, and they were completely clueless and neglecting the women's market. They eventually realized and have IMO caught on ( UA and Nike have great lines which have great fabrics, but am a guy, if you ask my wife she will go with Athleta, which is lower priced than Lululemon, but is comparable in a lot of aspects).

Lululemon has a weak presence in many parts of the EU and we still have people wear gym clothes in their normal lives...

Athleisure was born in Europe in the 80s (shell suits). But lululemon has like 5 shops in total in the continent (Amsterdam, Paris, Zurich, Frankfurt, Berlin).

It has one in Manchester so I imagine it has many more cities than that.

People wearing gym clothes in their normal lives in Europe? Really not as much as in the US.

And what exactly “gym clothes” is? Shorts and a sleeveles shirt? People wear that 50 years ago outside gym. Or someone branded their particular contemporary design as “gym clothes” and pushes that? In my gym, people wear different kinds of shorts and t-shirts, mostly by nike, adidas etc, and they wear similar stuff outside. I wasn’t even aware that there is such fashion movement as “gym casual” that is distinct from “sport casual”, and I thought I was fairly fashion aware (for a guy). But i guess that Europe is now behind the trend in this matter...

Seen hundreds of girls wearing the style in the streets of Madrid and London. Granted London has ONE Lululemon store AFAIK, but it has hundreds of other brands doing the same thing too, so I doubt they set the trend.

I think you're wrong. Walk through working class neighbourhoods in Europe; Adidas track suits are the uniform for the un/under-employed.

For men perhaps, not for women.

Am a guy and buy mostly UA ( their quality is kickass and they fit well). But people swear by Lululemon's quality and its ability to hold up well. IMO they've managed to become Patagonia-like, in gaining a cult-like following.

and maybe it's true that some styles of clothing are "not for everyone"

His comments weren't even controversial, as they echoed beliefs that are held by those in the fashion industry. Lots of clothing companies make it plainly obvious not everyone is supposed to buy their products.

He went into it in detail when he was interviewed by Guy Raz. Wilson defended himself by saying his comments had nothing to do with obesity, but rather material. He is a fabrics guy, and his clothes were being used to shape, a la Spanx, when they weren’t built to shape at all.

It’s a fascinating interview and one of the best in the “How I Built This” series.

I heard a tape of the original interview, too, and I was shocked that certain people with an agenda used it to ruin him. He very gently suggested that wearing them very tight and using the garments as a "spanx"-type girdle to shape wasn't how they're supposed to be worn. Plus-size activists hit the roof, for unknown reasons.

I second this, it was a fantastic interview. One of the things that stood out was how eloquent of a speaker that Chip Wilson is.

Not maybe, definitely. Just one of those things that for some reason isn't acceptable to say despite being obviously accurate.

I mean when I read the comments I rolled my eyes because clearly not all clothes are made and designed for every single human configuration out there.

> Human configuration

Your engineer is showing

Yes, especially for those who can't spend $100+ on yoga pants.

The human mind is easily persuaded

Same with John Pluthero at C&W. I was working there at the time and John was well-known for being brutally honest (his management style was one of the reasons he took over when C&W bought Energis, despite him running the much smaller Energis). It's a while ago now, but he was right at the time and I don't remember anyone disagreeing.

I prefer straight honesty in social dealings, but it is vital in business, even when that is my bossing telling me I did crap, or me telling the boss I think he's wrong. Arsing around gently in business contexts, not giving info that would help even if unwelcome, is plain damaging.

> The modern examples cited weren't nearly as bad


Nowadays, it only takes one tweet to absolutely tank someone's reputation, let alone lose his or her job.

Eh, a few notable counterexamples have popped up since 2016....

Such as?

Try searching twitter for any combination of "Greenland", "King of the Jews", "covfefe" or "Hillary"

When David Shepherd (brand director for Topman) said Topman customers only wore a suit for their first interview or their first court appearance in 2001, I was sure it would be the end of them.

Didn't seem to bother people though. Maybe the "hooligans or whatever" who shop there don't pay any attention to the news?

Turns out that people who don't have a choice don't have a choice.

I've always been amazed at how important it appears to be to lie about selling crap. I find that invariably, businesses who compete on price make it iff they say it's good stuff, even if everybody knows it isn't.

Eg Holland has a number of cheap shoe chains. Schoenenreus and Scapino both breathe an air of cheapness, and one went bust and the other is struggling bad. Their direct competitor Van Haren sells exactly equally crappy shoes, and everybody knows it, but they are thriving, simply because the store feels like a proper high quality shoe store.

Or take ALDI, which competes on price and nothing else. In every country I visited has the words "the ALDI principle: low prices, high quality" printed on every storefront and on every page of their paper promo flyers. Granted, little of what they sell is "total crap", but little is of truly high quality either. Their bread goes stale faster and their coffee is bitter. This surprises nobody.

It appears to me that this weird dichotomy is the only way to successfully compete on price. Make it perfectly obvious that you're cheap and of mediocre quality at best, while loudly shouting that the quality is high. Nobody believes you, but nobody wants to buy from you if you're honest about what you're selling.

I find this surprising because blatant lies don't generally work that well in the long term, so why do they here? I generally hate dishonest messaging. Why don't I mind here? I buy ALDI and Van Haren all the time.

> Their bread goes stale faster

Interestingly, I wonder why this would be a metric of lower quality bread rather than higher? I mean, the obvious way to make the bread last longer would be to pump it full of preservatives, and the white stuff you buy pre-sliced in packs lasts for ages though it is not really bread and the quality is obviously low (or is it? The slices are so smooth, the bubbles so even and the crust not hard at all)

When I have been to France and bought a baguette in the morning, obviously it is normally eaten right away because fresh and delicious, but if you leave it until the afternoon it is already stale and chewy. Does that imply low quality?

(I do buy some food from Aldi, though I prefer my bread from the baker across the road :)

Common baguette is regarded as a low quality, industrial version of "real" bread (in France). Some traditional bakeries still use ancient methods (and flour and yeast), the bread is good to eat for more than a week.

French baguette by law can only consist of wheat, yeast, water and salt. Since there are no addatives, the bread goes stale pretty fast.

The same goes for supermarket bread vs fresh bread from the baker's: supermarket bread is better suited for freezing and thawing later compared to fresh bread from the bakery. The latter tastes much better, but has to be eaten the same day.

> I mean, the obvious way to make the bread last longer would be to pump it full of preservatives

You can use sourdough, which is also "pumping it full of preservatives", just ones that are produced naturally right in the dough while it ferments. Sourdough bread takes more time, so it would make sense for it to be more expensive. So it makes sense for cheaper bread to go stale faster.

AFAIR if you go into a French bakery and order a "tradition" instead of a "baguette" you get a baguette made with sourdough.

old bread dried and lasted much longer without any preservative. The difference is in the shift in production from manual to industrial. Less flour and more water and air means keeping the weight with less raw sources, more earnings for the producer, and more mold.

I think it's Seth Godin who says (paraphrased): "people don't buy a product, they buy a story". You buy something because the story behind it is good, because it makes you feel good. And the story "you buy crap" does not make you feel good, while "best quality for the price" makes you feel like a clever money saver.

I had read that quote before, but your comment made me understand it. This is exactly the reply I hoped for when I wrote my comment, thanks!

>Eg Holland has a number of cheap shoe chains. Schoenenreus and Scapino both breathe an air of cheapness, and one went bust and the other is struggling bad. Their direct competitor Van Haren sells exactly equally crappy shoes, and everybody knows it, but they are thriving, simply because the store feels like a proper high quality shoe store.

Same in the US with Target and Walmart. They sell exactly the same discounted products, in giant stores that carry everything, to exactly the same customers, but Target has cultural cachet (both embodied and mocked as "Tar-jay"), while Walmart and its customers are mocked (if you're nice) and denounced (if you're not) incessantly. Somehow, the giant retail chain corporation based in Arkansas is seen as the embodiment of all that is evil with American business—to the point where San Francisco and New York City don't allow any within their borders—while the giant retail chain corporation based in Minnesota is seen as (relatively) hip and culturally/political acceptable enough to have outlets in the downtowns of said cities.

I've always noticed Targets to be cleaner, better lit, and have more employees available to assist than Walmarts. I also have read many times that Walmart forces manufacturers to cut quality to meet certain price points for products sold in their stores, whereas I haven't heard anything like that about Target. This makes me trust Target more, plus their website doesn't allow resellers.

Everything Walmart does, Target also does, and as impossible as this sounds, Target cares substantially less about its employees.

And walmart.com is built to be a marketplace, like amazon.com, so of course it allows resellers.

You can hate what Walmart is and stands for, but to find Target acceptable is inconsistent.

Target is also really into surveillance capitalism. I don't know how Walmart compares, but Target definitely does its best to do creepytracking of every customer.

> I also have read many times that Walmart forces manufacturers to cut quality to meet certain price points for products sold in their stores, whereas I haven't heard anything like that about Target.

This is less insidious than it sounds. Walmart's strategy is a volume play - they optimize their product mix against selling the highest volume of products, rather than products that may have a higher individual margin but lower sales volume.

They're also intimately familiar with the elasticity of price for everything they sell. If a manufacture comes to them with Product A, Walmart won't purchase Product A if they can't price it at the optimal point for their target market (which encompasses a large cross section of the general population). But their procurement volume is so high that they can commit to absurdly large order quantities. So instead of just walking away, they'll work with the manufacture to comb through the bill of materials[1] and adjust things such that a Variant B of Product A can be produced more efficiently or cheaply, then sold to Walmart at a wholesale rate that allows them to hit their target retail price. This can be as simple an adjustment as reducing a 3 year warranty down to a 1 year warranty. Or swapping out a fragile but sleek looking component with a more robust but worse looking (or heavier) component, thereby reducing expected warranty claims and overall product cost. Or if they feel a particular component is likely to not be used by 90% of their purchasers (i.e. a marketing gimmick the manufacturer threw in for differentiation) they'll ask for it to be removed. Or if a particular component is overbuilt for their audience they'll ask it to be swapped out with a lower quality component (keeping in mind that Walmart has lots of data from returns to understand what does and doesn't work well). Or it could be a feature that is turned off/disabled to give the manufacturer cover for selling (and letting Walmart sell) the product below the equivalent product sold to other retailers.

Keep in mind that returns and warranty claims all cost money, as well. And at the volume of sales Walmart has, even minor increases in these can have very noticeable increases in costs/decreases in profitability and negate the entire benefit of creating a new product variant to hit a specific price point. So in that vein, you can be sure that the new variant will meet the consistent quality expectations of products purchased at Walmart, even if they don't necessarily meet the quality expectations you might have of purchasing that brand elsewhere. It's basically a private label product commissioned by Walmart that still happens to have the manufacturer's brand name attached to it.

Target and other large retailers do the same thing, they just don't necessarily have the volume to have enough leverage to get manufacturers to do it on as many things as Walmart does, nor the internal competencies to do it at such a deep level. They also have different points of price sensitivity for products, based on the particular demographics of their consumers. You're more likely to see fuzzying around with quantities/volumes instead, since the primary manufacturing run is the same and you only require a custom pack during final packaging.

And to that point, manufacturers do the same thing themselves frequently. Consumers are price sensitive and manufacturers for years have been absorbing price increases on raw materials while maintaining price points. They do so by either maintaining the same quality of individual units and just silently shaving off quantity, or else decreasing the quality and maintaining quantity. These changes usually come along with refreshes/redesigns of product packaging, in an attempt to mask them from notice.

The Walmarts I've been in recently have improved considerably on the presentation front.

Shopping at a local Walmart 20 years ago was an unpleasant experience. Junk in the aisles, which were quite narrow, making it hard to maneuver past other shoppers. Insufficient fluorescent lighting. All kinds of things that spoke "cheap". Just overall bad.

Nowadays, there's little to distinguish Target from Walmart... aside from the red vs. blue color scheme.

For what it's worth, I think Ryanair successfully markets itself as both cheap and poor quality. Whenever for example they announce they are considering charging passengers to use the loo, or in fact charging people to carry on a bag, it negatively affects their brand which paradoxically increases their presence in the minds of customers looking to fly in Europe cheaply.

Another comment in this thread suggested that they do this because otherwise people will be afraid they skimp on safety. By treating their customers as cattle, they underlines that that's where the savings are and not elsewhere (eg maintenance).

I guess the trick only works because it's a safety sensitive business, and the same approach wouldn't work for, say, a supermarket or a jewelry brand.

I'm not sure if this is an urban myth or not, but I've heard many times they intentionally had a tacky looking website for years for this reason.

Granted their current website is fairly decent/usable.

>ALDI, which competes on price and nothing else

They offer lots of good quality things, so better to say they have the best price/quality ratio.

And not just that.. they optimize sales as far as they can. Everything is in a box (no need to arrange things carefuly on shelves), huge barcodes (faster scanning), larger items on pallets (just bring a new pallet in when old one is empty), just a few people work there and do everything, etc.

They sometimes also buy everything you have to get a cheaper price (a friend of mine has a rather large vegetable farm, and they offered to buy literally all the produce to get a lower price.. he doesn't have to deal with sales that year, and they get it cheaper).

I like aldi, and buy a bunch of stuff there (i'm not sponsored by them), but at the same time, you know what you're buying - need a drill? They sell a perfectly ok one for really cheap... for a casual user, who uses a drill once every few months.

What I don't like is some other stores selling the same items (just branded differently) for 2x the price. If you need a good drill for professional use, there are just a few companies that make them good - and you probably know them all. If you need something cheap, you'll get it cheaper at a store like aldi (or lidl, or similar) than at [hardware store] under their brand, or even some reputable brands.

Stupid example: https://www.productreview.com.au/listings/aldi-food-dehydrat... This was sold here for 30eur at aldi.

Gorenje is/was a reputable brand here, and they sell theirs for 50eur: https://www.mimovrste.com/susilniki-sadja/gorenje-susilnik-h...

Just look at the photos and compare.

> Their direct competitor Van Haren sells exactly equally crappy shoes, and everybody knows it,

I'm Dutch and I didn't know that. I don't buy shoes frequently enough to notice such things, so I might be fooled by their looks.

So the looks matter.

If you actually dare enter a Scapino, you'll find that the shoes look pretty good. It's just the surroundings that's off-putting.

> but they are thriving, simply because the store feels like a proper high quality shoe store.

Shopping isn't just about the products themselves. It's also about the experience of shopping, wouldn't you say? If I had to choose between cheap + bad shopping experience and cheap + nice shopping experience, the latter would be a no-brainer!

People don't like feeling as if they are buying cheap crap. Making your customers feel comfortable ins stores and on the web is very important.

I would say this is not the Ratner effect but the Othello effect (as in Reversi not Shakespeare)

Ratner merely put down the last piece that flipped almost the whole board. Marketing is usually the uphill struggle to persuade anyone looking at the board that "white is winning" when it is really anyone's game.

But eventually one piece is played, often a public failure, and everyone realises the board was destined to be black anyway.

It's much harder to play this marketing game when you are selling costume jewellery or other fashion lead items. And the odds of someone flipping the board are high without you realising it.

But people play it that way anyway.

That board didn't have to flip. Ratner could have just kept selling the brand instead of stating his true opinions to a media circus. And the brand would have retained its value, perhaps all the way to today if he could have kept the unit economics alive.

What made the brand successful wasn't what Ratner thought it was.

The word at hand here is 'hubris'. Successful people slowly lose touch with the rest of the world and eventually make a colossal screw-up.

No eventually it would flip - it happens all the time. It's just this time the boss of the company laid down the final piece so it sticks in the mind

The re-branded company he was forced out of is now the largest diamond retailer in the world- so I'd say that the problem was him and his mouth, not an inevitable flip in fortune.

It's also possible he wasn't a real problem, but when his remarks caused a temporary (big) problem for the company, other stakeholders saw the opportunity to take control.

There's probably a counterfactual universe where he remained in his position, he learned a valuable lesson on keeping his mouth shut in public, and the company re-branded and recovered on a similar trajectory.

Zuckerbergs infamous "People just submitted it. I don't know why. They 'trust me'. Dumbfucks" springs to mind. While I'm sure there is some amount of long term damage, you'd be hardpressed to say it has crippled Facebook.

The tired analogy is premised of that this was some "final piece".

It wasn't, the company was going from strength to strength.

And whether "eventually it would flip" is another thing, and is irrelevant to this argument. Sure, every company will go down at some point.

That doesn't validate the idea put forward that this was some kind of "final piece" and the company was ready to flip anyway. There's absolutely no evidence for that. Your argument presupposes what it should prove.

"It happens all the time" doesn't have predictive power.

“How did you go bankrupt?” Bill asked.

“Two ways,” Mike said. “Gradually and then suddenly.”

- The Sun Also Rises

This is really applicable to any products that are valued based on their marketing efforts instead of intrinsic value or utility. Costume jewellery, designer clothes, some kinds of art, all derive their value from the story the creators tell. The most expensive art seems to be that which has the most thoroughly verified, or at least the most believable story.

I like to think I’d prefer Apple products over the competition and pay a premium for them even if I didn’t know Jobs or Ive, or watched the marketing videos - but I’m not entirely sure these days. I Tim Cook said Apple products were super cheap to produce, or Ive said he didn’t design any of them and had some intern do it, would sales tank?

Price, value and practical utility are not really correlated.

A Rolex and a Timex will both tell you the time. An iPhone and a $129 Android will do mostly similar things. A Toyota Camry and a Porsche will both get you to work.

But practical utility and value aren't necessarily the most important thing.

Apple intuitively understood this, at a time when other computer companies didn't. Lots of people look at a Macbook and see an overpriced computer that costs a few hundred dollars more than a similarly equipped PC, albeit in a pretty case. But that's the point - lots of people want their computer to look good!

Apple products are relatively cheap to produce - and they make an enormous margin on their hardware. But it doesn't feel cheap. The boxes are substantial. The finishings are high quality. The user experience is taken care of. Other PC makers might have been much cheaper, but you notice that to do so, they've cut corners in places.

I don't think the lesson here is in what he said, but rather that he made his customers feel like idiots. Only a fool would believe that a ring for £1 has the level of quality and craftsmanship that you'd get with a £100 ring, but you don't want to feel like a dumbass for buying it. You don't go to McDonalds with expectations of buying a Michelin Star meal. You go there for something warm & tasty, that comes out quickly.

>A Toyota Camry and a Porsche will both get you to work.

That's not the practical utility people want out of a Porsche. They want the practical utility of impressing people (including the other sex), appearing well off and sporty, etc.

Those are also practical considerations - just not the first that come to mind when one thinks of cars (although not very far).

(Practical as in: not aesthetic but with real life impact on real life goals).

>Apple products are relatively cheap to produce

So they say, but e.g. other manufacturers tried for the first 2-3 years years to get a tablet with the specs of the iPad, and still couldn't get theirs at a lower price...

Or how if you add the same SSD/video/memory/CPU/etc options to a PC laptop, you get close to the same prices. I know cause I've tried to build an equivalent Lenovo (and a few other brands) and it gets so close I might as well just get the MBP.

> They want the practical utility of impressing people (including the other sex)

And it's not gonna do that if the CEO shits on his own product. Things that are good because they are good are less vulnerable than things whose value comes from being impressive because of marketing.

> A Rolex and a Timex will both tell you the time. An iPhone and a $129 Android will do mostly similar things. A Toyota Camry and a Porsche will both get you to work.

If your priorities are telling time, having a smartphone, and commuting to work, I agree with you. But I think the more expensive products you mention offer things the cheaper products don't.

For example, I'd rather have a Camry if I needed a family car with a reasonable total cost of ownership. I'd want a Porsche if I wanted a fast & sporty car.

I think stronger examples would be comparing cheap & quality products that both cater to the same market segment. For example, making a cheap car that cuts corners on expensive parts like emissions controls, safety equipment, and stitching in the seats, but making it look & feel like a Camry. Eventually that a line of cheap cars will develop a reputation for being an overpriced junky deathtraps, and no amount of marketing will hide that.

Alternatively, you can make a Camry with the same quality and cover it with glitzy trim, market it as a luxury car, and sell it at a premium...which we call a Lexus.

The Lexus LS400 debuted in 1989 with a very high tech v8, with the highest r&d budget of any car engine to date. The 1uz-fe was an outstanding engine however you look at it, and so were its derivatives made well into the 00s. Other auto makers including euro brands like BMW had to play catch up. Lexii weren't just glitzed up cheap cars, nor necessarily high margin. There were some models like that, though. The Lexus GS300 was a Camry, if I remember right. And Scion TCs are Toyota Corollas.

The ES is/was the FWD platform that is said to be related to the Camry. Although I seem to remember that these days the ES is more related to the Avalon, a larger, but also FWD car. The GS is a different, RWD platform.

Also, in many cases, Japanese luxury models under their own nameplate were sold under the parent company name overseas, like in Japan. For instance, the original Acura NSX was the Honda NSX elsewhere.

Thanks for the correction, it was the ES line of front wheel drive cars I was thinking of.

Well in fairness, Toyota tends to have a very good reputation, so this is hardly a scam.

I googled "is a Lexus just a fancy toyota" and found this...


My takeaway is that between two similar products, once people discover what is really going on, will they feel misled? And can people become informed in the first place?

In the case of Lexus vs Gotta, I'd guess informed consumers won't feel mislead. In the case of quality Camry vs a junky FauxCamry, it's more about being marketing in the FauxCamry that deceptively over promises is on a car that under delivers.

I think I've stretched this analysis about as much as I can.

I feel the argument but I think I would need different examples to better understand.

There are reasons for owning a watch other than "tell the time," which could include "tell the time accurately without ever needing to change batteries," or "tell the time and date," or "tell the time while scuba diving."

Rolex may be overkill but different watches serve different roles, and it's not just brand name alone that makes Rolex cost orders of magnitude more - in many ways, it really is just that much better of a product. Same for Camry vs Porsche.

An Apple product, particularly a Macbook, on the other hand, not so much. It's a nice aluminum chassis over crappy, cheap internals that break so often people throw around words like "class action" to describe the keyboards. It's like cramming a knock-off Timex movement into a Rolex case.

> Rolex may be overkill but different watches serve different roles

A Casio is going to tell the time better than a Rolex. Quartz watches are much more precise, and they’re powered by batteries, so last much longer without any maintenance. Rolex is simply in the segment of high quality, hand made mechanical watches. A segment people like for reasons other than its precision in keeping time.

Actual scuba divers use a dive computer. Watches are for pose(u)rs.

>Lots of people look at a Macbook and see an overpriced computer that costs a few hundred dollars more than a similarly equipped PC, albeit in a pretty case.

I was shopping for a dev laptop about a year or two ago, and it was more like double the price rather than just a few hundred dollars more.

Definitely. A new MacBook pro with 16GB RAM, a decently speedy 512 GB SSD, the basic display, dedicated graphics, and an 2.3 GHz 8 core i9 costs $2.8K [0].

An XPS 15 with 32GB RAM, a decently speedy 1TB SSD, the basic display, dedicated graphics, and a 5.0 GHz 8 core i9 costs like $2.3K [1].

I couldn't customize the XPS enough to do a direct comparison. But the XPS 15 with the almost the same specs as the MacBook other than having an i7 was about 1.6K.

• 0 https://www.apple.com/shop/buy-mac/macbook-pro/15-inch

• 1 https://www.dell.com/en-us/shop/dell-laptops/new-xps-15-lapt...

Rolex is an interesting example, because their value is actually based on utility, not style. People actually (used to) wear them a mile under the sea, measure oxygen with them while diving etc. You can’t trust a Timex with your life, but a Rolex you can. That establishes baseline value, like a finely crafted Japanese chef knife. My dinner won’t taste any better, but the tool I’m holding is valuable to the people who know their stuff.

I have never seen or heard of someone using a Rolex for diving. As you said, maybe they used to. And that’s the point-they used to, so now that value that was utility is now purely style.

> Price, value and practical utility are not really correlated.

For people interested in reading further, Marx's Capital is excellent at defining these terms very precisely:

https://en.wikipedia.org/wiki/Labor_theory_of_value https://en.wikipedia.org/wiki/Use_value https://en.wikipedia.org/wiki/Exchange_value

Except, of course, that while a Toyota has an excellent reputation for reliability, a Porsche not so much. So the latter may not get you to work at all.

But you'll look damn good sitting at the side of the road...

The value of the well-told story applies equally well to products that do have intrinsic utility. Look at how we developers choose the software we use.

People making these decisions often claim their choices are made on purely rational grounds. But why then do large companies choose to spend so much money marketing things like Kubernetes, React, MongoDB, Red Hat Linux, etc? Surely these high-quality projects would stand their own in a marketplace of open code even without the money...

Some software companies like Oracle tell their stories primarily to corporate buyers, and developers sneer at them, thinking they're too smart to fall for that. Other companies like Google, Facebook and Microsoft have learned to tell their stories in ways that leave developers oblivious that they're being marketed to.

Apple stuff is just so clearly beyond anything the competition provides with regards to software, though. I don’t really buy them for the hardware, I buy them because I don’t like Windows or Android, and I don’t want to futz with Linux. Android is still too inconsistent design-wise.

> Costume jewellery, designer clothes, some kinds of art, all derive their value from the story the creators tell.

As a young lady my GF used to sell her handmade costume Jewelry on the street in New York. She said the key to selling was a card with a story. That was the difference between selling a brooch made of glass, brass and random bits held together with glue for $10-20 and not selling at all.

Things are different with utility items. I remember a retailer (my brain won't cough up the name, but every man over 40 would recognize them). He said his brand was, well made spiffy but not too spiffy men's clothes. His profit margin depended an a working age man being able to go in, buy a couple of shirts, pants, and a coat knowing he wouldn't look like a dork when he wore them to work.

I feel like that's Apple products too.

>I feel like that's Apple products too.

I don't buy Apple products for its story. I buy Apple products because I don't have to spend time doing tech support/dealing with malware for my parents and if something breaks I can go get a replacement at the Apple store immediately.

That's exactly what I tried to convey. The selling point is functional with a reliable lack of hassle.

I buy Apple products in spite of Cook and Ive. I am mostly ambivalent about Cook, though I don't think he's nearly as strong a leader as Jobs was. And I really dislike Ive. If he disavowed his designs as coming from an intern, I'd feel relieved.

Costume jewelry is cheap. Real jewelry is overpriced because of the marketing around gemstones.

"The most expensive art seems to be that which has the most thoroughly verified, or at least the most believable story."

What story does one of the most expensive paintings of all time, Jackson Pollock #5, tell?

The story that the OP is referring to is not the story (if any) portrayed by the art, but the story of the work itself. So it is bound up in the story of the artist, the history of a particular work, and the path from the artist's conception to the the most current owner. You might call that provenance, but it's a wider net than just that.

A story of people who view art as a trophy, or as an ultimate symbol of wealth?


> This is really applicable to any products that are valued based on their marketing efforts instead of intrinsic value or utility

Care to elaborate what your distinction here is? I don't see it.

You also buy Apple products for the software, not only for the hardware.

Comparing a windows laptop with highier specs with a macbook is like to compare a stupid blonde with big tits with a smart, classy and well tempered brunette. The cover is flashier and catch the attention on first sight but it's a burden to live with on a daily basis.

Michael O'Leary being incredibly rude is a key part of Ryanair's branding. If you're paying £19 for a two hour flight, you'll always have the sneaking suspicion that the airline is skimping on maintenance. O'Leary makes it absolutely clear that they save money by treating their passengers like cattle. He carefully cultivates the image of a man who utterly despises his own customers, but is far too miserly to allow an aircraft to crash.


More straightforwardly, the reputation for being massive cheapskates gets its target market of people who don't care about airlines at all and just want a good deal knowing who they are and going straight to Ryanair.com to buy tickets when they need to fly.

Which means that (i) they'll lookup the price and be upsold a package on Ryanair.com rather than finding the price and a different hotel deal on some other price comparison site and (ii) they'll still buy tickets from Ryanair.com at non-promotional rates when they're actually not the cheapest airline offering a viable route and time. And of course (iii) he can fill his flights without sharing revenues with online travel agents and other affiliates, though other low cost airlines without the reputation for taking things to extreme lengths manage that.

Although part of it's probably just his style. Not sure there was any strategy to his comments that "I don't care if no-one likes me. I'm not a cloud bunny or an aerosexual. I don't like aeroplanes. I never wanted to be a pilot like those other platoons of goons who populate the airline industry..."

I agree it’s all marketing for people who feel they can barely afford to fly (but need to fly anyway), and who don’t use/trust comparison sites (middlemen).

I wonder if the aggressive upselling during the booking flow is part of this marketing too. If you really want the cheapest possible flight you will carefully decline all upsells and double-check the final bill for surcharges. This makes you feel you’ve shrewdly whittled the price down as far as possible.

Another way of looking at it is it just wears the customer down. If the booking flow were too smooth and didn’t include many points where the customer is forced to decline added luxuries, then you might be more likely to pause before confirming the transaction, and maybe open EasyJet’s site for a quick price comparison.

(ii) and (iii) evokes parallels to amazon.

I used to use Ryanair... until I found out how they treated wheelchair users. I'm happy for myself to be treated like a piece of meat. Not other, more vulnerable users. Screw Ryanair.

They already know the deal when they buy.

When people die from the way they let people wait, you tend to have a different vision of the whole thing than “you get what you pay for”.

When you entrust care of people you love to a company, you tend to expect more than capitalism tuned to the extreme.

And before you ask, yes, that’s exactly what happened to a family member of mine. “Wheelchair assistance” never showed up.


All caps for emphasis are against the HN guidelines.

What about the one incident in 2004 when they had to be taken to the High Court, on behalf of hundreds or thousands, to provide the legally required wheelchair transfers? Or the one incident where the disabled lad was left behind a day? Or the many one incidents disabled users have reported of being dropped from Ryanair flights because the airline couldn't be arsed to spend the time? Or the many single incidents of wheelchair users reporting that despite the UK and Irish court rulings Ryanair weren't allowing access to the wheelchair at the destination airports?

I've never heard of the incident you mention btw, but the thousands of reports are plenty to give me a view of Ryanair were I ever to end up disabled.

Can you provide details? It seems likely that this incident was overblown in the press but I'd like to know more.

What are wheelchair users vulnerable to besides physical assault? They can still travel just as readily as able-bodied people in planes, cars, trains, boats, etc. Neither can simply walk across the sea to another country.

As an occasional Ryanair user they don't really treat you like cattle and he doesn't seem to despise his customers though if certain ones piss him off he won't necessarily cover that up. People are so snobby about it - I'd never fly a cheap service with cheap people - I'm better than that kind of vibe. Ryanair is run kind of like a bus service really - pay modest money and they ship you from A to B.

I flew only once with Ryan air, my experience was that I was forced to pay 80 gbp because I hadn't checked in online (when no other airlines force you to do that) and they had us all wait on the tarmac under the rain for 45 minutes before boarding. Plus seats were really cramped.

So, no not worth it for the slight difference of price they offer.

You wanted to play the game, but didn't care to lookup the rules.

Well, I didn't have a choice back then to fly ryanair, they were the only flight that flew from where I was to my destination. I just assumed that they followed the same rules as every single other airlines I had ever flown.

Ryanair make their own rules, other budget airlines have started to follow them now too. As a precaution I never fly without checking in online before reaching the airport.

They can be a bit crap like that but I think I've been stung by a similar fee (luggage small print) about once in 50 flights so it still works out cheaper than most rivals. Choosing to delay your return by a day is also often expensive.

Pretty much. They don’t even disguise it - their whole marketing is “if you want to fly cheap fly Ryanair” that’s it.

I've never had a bus service as bad as Ryanair. You get WiFi, and it's usually to & from downtown, it is cramped but reasonable, and the customer/business relationship usually dies not feel adversarial.

So are you expecting WiFi in every single airline that you fly?

Come to the US and ride a Greyhound then.

That's a bit presumptious, isn't it. Half my experience is on Greyhound, and a couple of years ago they started using a new bus fleet with more legroom, wifi, leather-ish seats, plugs at all seats.

I took a greyhound back from prison. We broke down in Cumberland, MD and I spent 8 hours on the side of the interstate. The guy I was with said he takes the route 3x a week and it has happened to him 6 times in the last year. No WiFi but we did have plugs.

I rode the Pittsburgh to Washington D.C./Baltimore route on May 20th 2019.

Sorry I meant it jokingly. Last time I rode them (which was admittedly some time ago) their operational practices were still a complete mess. If they’ve improved that’s nice.

There's a wonderful book out there called "Different" by Professor Youngme Moon [1] which details a few cases like what you said. Her book is about how companies can be different

One case that comes to mind is Ikea with this DIY approach. Is it the most convenient way to buy furniture? Not really given the work you need to do. Prof Moon argues that this paradoxically creates a stickiness to the brand because you have invested something (time and effort).

Another one is the "In-n-out" burger joint(Forgive me if I have gotten the name wrong). Apparently, it takes a full 15-20 minutes to get a burger here but it is thriving in-spite of this difficulty because people know they're not getting some frozen processed food.


I agree. Fellow "cheapskates" who just want to get from Dublin to Edinburgh on a cheap flight probably admire his thrift.

No, Ryanair passengers don’t admire anything about Michael O’Leary. They pay the fare (and the surcharges, and the charge to pay by card) and then tolerate the journey.

No passenger thinks he’s a lovable scamp or a shrewd businessman. They just buy the fare they can afford and justify, if it happens to be Ryanair then ... grin and bear it.

Didn't think they were allowed to charge extra to pay by card in the EU anymore?

Such cheap flights are possible because the airlines aren’t paying the externalities they cause.

Ryanair don’t fly to London btw. Or Brussels.

They don't serve that route, but they do fly from three airports in London (Gatwick, Stansted and Luton) and from Brussels.


None of those airports are actually in London.

Lol wtf? Only one airport is “in” london and that’s London City. Which is an expensive thing mostly made for bankers to go to Frankfurt etc. I assure you all those airports serve London. I live here

Yeah, I know it's just semantics.

I have wasted too much of my time in delayed trains trying to get into London to believe that.

And based on travel times you could add some other airports to that list of London Airports. Southampton Airport is faster to get to than Stansted or Luton for a lot of Londoners. And with HS2 BHX could probably change its name too.

I’ve never had a Stansted Express be late more than 10 min, and I live in east london so it’s super fast to get to Liverpool St. I suppose your travel time varies a lot.

London Ashford is closer to France. I wonder if the airport would close if the CEO admitted that...

I had no idea there was such a thing!

What externalities are they not paying for that other airlines are? Or is this a complain against all airlines?

Well, the issues I'm aware of: Ryanair pay their staff poorly. And that is not cheap enough, so they also employ them under employment law from "cheap countries", to try and circumvent income taxes and other charges of the local countries they service.

Ryanair demand subsidies from local governments to fly to far-flung airports. They can hold these governments hostage, as often the airports fail if they stop their service. Of course, this could be seen as simply "bad management" by our local governments.

And to finish, though this is something that applies to all airlines : no VAT or "eco" tax, that the rest of us have to pay.

People seem to be using the economic word “externalities” as “things I don’t like”.

That is what externality means -- "a side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in the cost of the goods or services involved." (unless this person is affecting the cost somehow as a result of this dislike)

In a sense, economics is entirely about what people like and dislike.

No, an externality is an impact you create that isn't a part of your business model. It can be positive or negative. Most of the time people talk about negative externalities these days, especially with airlines, they're talking about profiting from climate change. (Although I don't know that Ryanair is worse than anyone else.)

So if we priced airlines in regards to all of their externalities, they would have to pay for climate change but would get a portion of the all revenue derived by business trips (ie. the time saved traveling by air compared to other modes of transport and what the employees traveling would have been able to produce during that time). I wonder if they would end up better off under that system.

They’re already capturing those benefits - they are among the reasons customers buy tickets and thus contribute to the price.

I’m sure positive externalities are a thing, but direct benefits to one party in a transaction aren’t externalities.

In the same sense the climate change effects are also priced in as most people in the west use air travel or add enough carbon via other means to have to be personally responsible for any ill effects.

In the OPs example, hiring low wage labor, is in fact reflected in the price.

Can you explain more about how Ryanair refusing to fly to far-flung airports without a subsidy is an externality?

Someone else is paying for something they are using. Better still:they're getting paid to use it.

Of course, nobody is twisting the arm of these politicians. But the fact remains that Ryanair is exploiting this weakness to avoid paying themselves.

Type "Ryanair airport subsidies" in google and have a look at the first couple of titles. It's a mess that has been going on for 10 years now and is only now slowly being called a halt to.


He’s provably referring to ghg emissions, and sure no one pays that (it’s also not something we can conceivably pay for)

Quite possible for Europe to charge landing fees based on ghg emissions for all planes arriving/departing.

That would be great. I think if they were being aggressive enough, there would probably be less demand for airport expansion, because there would be fewer flights. I don't currently see any way to curtail the carbon from the airline industry that wouldn't involve raising the price so drastically that people would fly less often.

I’m all for charging fees (especially when the chargee is not me), but fees don’t put CO2 back in the ground.

The point is they act as a deterrent. The money raised can be used to mitigate the effects of the emissions.

Cap and trade does in fact make it so that polluters pay for ghg emissions. Why do you say that we can't "conceivably pay for"?

if you're saying stansted and gatwick aren't really in london, then neither is heathrow. it's a small list of airlines that fly to/from london city airport

Heathrow is in the London borough of Hillingdon, in TFL zone 6 on the underground, and served by London buses 24/7

You’re having a laugh. Living in east london I can get to Stansted far faster than Heathrow or Gatwick.

They don’t fly to london? I live in London and I fly Ryanair from london Stansted all the time

They do, to Stanstead and Luton.

Stanstead and Luton are 30-40 miles from London

They are less than 1 hour by train, which is about the same as to Heathrow from Oxford Circus. In terms of passenger numbers they are the 4th (STN) and 5th (LTN) busiest airports in the UK, and 22nd and 35th in Europe.

You have no idea what you’re talking about and you’re embarrassing yourself. Going to those airports is piss easy and they are 2 of the 4 airports that serve this city.

They're 45m-1h by train from Central London.

Birmingham airport is 1h06 from Central London

Brussels itself is only 1h54 from central London!

Okay, yeah, but if you were in London, you were flying out of Heathrow, Gatwick, Stansted, or rarely London City. It took longer for me to get from Tower Bridge to Heathrow than to Gatwick. I don't fly Ryan Air, though. Abhor the air line, but they let my parents take me to Europe when I was younger so there's that.

And that distance stuff is normal, because on the longer distances you're going on high-speed trains. If you were a Millwall (a London team) fan who lived just south of The Den and by some divine chance you were to play Arsenal (another London team) at The Emirates (god forbid), it'd take you just as long by transit to get there as it would take someone who's commuting from Market Harborough (80 miles North) to St. Pancras (London's big international rail terminus). But it's laughable to claim that Market Harborough is part of London or that either of the Emirates and the Den are not.

> Ryanair don’t fly to London btw


And they probably swear more than he does.

He carefully cultivates the image of a man who utterly despises his own customers, but is far too miserly to allow an aircraft to crash.

That image will keep them going right up until they have a fatal crash, at which point the press, the government, and victims’ attorneys will use every word he has ever said about being cheap to crucify him and the company. Given their volume of flights, a fatal crash is statistically likely to happen at some point. I would be very careful ever making such statements if I were in such an industry.

They've never had a major crash in almost 35 years. Other budget airlines with few customer perks like southwest have survived crashes with a less stellar safety record.

Which Southwest crashes are you thinking about? They have never lost a passenger in a crash, though one person on the ground was killed in Chicago. There have been two accidental passenger deaths. One was due to engine failure, not a crash, and the other was a passenger who tried to get into the cockpit and died after being restrained.


Admittedly I thought they had more than they do because of all the hoopla about 737s. I guess the one recent incident that comes to mind is the broken fan blade incident that killed a passenger. That could easily be attributed to lack of maintenance but it blew over relatively fast. However, the heroics of the captain created a different story.

^^ this.

Southwest has one of the best, if not the best, safety records of all major air carriers.

The point is that Ryanair is the best.

They are smaller than Southwest on most (not all) metrics, but in the same ballpark.

Their only accident is a bird strike causing 8 minor injuries.

How can you say an airline that is 35 years old is clearly better than one that is 52 years old based on total anything?

Other budget airlines with few customer perks like southwest have survived crashes with a less stellar safety record.

True, but Southwest does not have a CEO that openly flaunts their being cheap either.

They've never had a major crash in almost 35 years.

I once won 15 hands of blackjack in a row, but then I lost a hand. Even the most expensive airlines eventually have fatal incidents, and it would be statistically improbable for Ryanair to not eventually have one as well. They may have an amazing safety record and stellar maintenance program, but the nature of flight is such that it is likely to eventually happen (perhaps through no fault of their own) if they are in business long enough. Whether “cheapness” will actually be a factor in that incident or not, people will take his prior statements and run with them.

All I was saying is that making such statements in a high-risk industry is not a fantastic idea, as those words may come back to bite him.

You’re making no sense. You’re saying Ryanair has an impeccable safety record, but so does every other airline, but when Ryanair gets a crash, people will assume it’s because it’s cheap?

So your entire argument is people are dumb and they will make unwarranted associations. Brilliant

I didn’t say they have an impeccable safety record. I said that even if they did have one at the time of whatever fatal incident they have in the future, they are engaged in a business where they are statistically likely to eventually have a crash.

My argument is that it is idiotic for a CEO in such an industry to make comments about being cheap. It leaves the door open for people to place blame when an accident occurs. It’s like talking to the police if they want to interrogate you. It can’t help, but it can hurt. Why would you risk it?

I would never dream of thinking Ryanair skimps one aircraft maintenance. I’d be concerned by their cabin crew performance given the conditions they work in though.

I think their fleet is quite new as well, and they keep it that way, for fuel efficiency.

The guy is doing a cheap airline, not an unsafe one. He’s not a madman. He’s a ruthless business guy, and he knows a crash due to poor maintenance would end his business.

He's never said his planes are unsafe.

Why would Ryanair ever have a crash? Their airplanes are usually quite new. The EU hasn’t had an accidental plane crash in ages. Have you ever flown Ryanair?

Hang on, the EU has had heaps from small (the Piper that went down over the Alps yesterday and the plane carrying Emiliano Sala come to mind) to large (Air France 447).

I meant large passenger planes. And I meant accidental crashes within the EU territory not extraterritorial. I believe the safety record is pretty good, but can’t tell you it’s perfect

Why would Ryanair ever have a crash?

Because they hurl large, heavy, metal objects with people on them into the sky at hundreds of miles per hour, thousands of times per day. Historically, that activity has resulted in some small percentage of those flights not coming down safely. The math says that it is quite likely to happen over the course of enough flights.

Both Boeing 737 Max planes which recently crashed were also almost brand new.

I have flown Ryanair a few times, I’d rather not go than take them today though.

> Given their volume of flights, a fatal crash is statistically likely to happen at some point.

Has Ryanair flown more flights than all the domestic and international commercial jet flights in Australian history? Because there has never been a crash of a commercial jet here despite several near misses.

Safety culture and training has more of a bearing than statistics.

TIL. I remember seeing incredibly rudely worded Ryanair signs at an airport. That was the final straw to make me not consider the airline for future flights. I am fine with cost-cutting, but rudeness does not save money.

Ironically, I was extremely happy with everything after baggage drop-off. The flight itself was no worse than any other airline, in my eyes (I don't consider ads to meaningfully worsen a flight). The airport (Hahn, serving almost only Ryanair back then) was amazing, with super-friendly airport (not airline!) staff and short walking distances.

But their atrocious web site (AFAIK checking in required you to concatenate two random values and enter them in one form field, in the one working flow out of the 3-4 that were offered) and their outright, aggressive rudeness left a much stronger permanent impression than the (probably low) price, the two-hour bus ride to the middle-of-nowhere airport, or the flight itself.

This isn't really the case anymore. Can't remember when but he was thoroughly reined in a little while ago. All the shock troll PR about standing seats and paid toilets worked for a while til it didn't. They're just a cheap, no-frills airline now.

Ryanair goes quite farther than just no-frills. They are actively preying on unprepared travellers for additional charges: 48-hour online check-in window, seats allocated in a way that you don't sit together with your partner/family, non-EU citizens must _print_ boarding passes event if airport and other LCCs don't require this.

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