Why We Buy

by Paco Underhill

  But that’s why I’m positive convergence will take place first in an emerging country. At which point, someone in the U.S. will exclaim, “Hey, why the heck don’t we have that here?”

  One of the most remarkable things about the World Wide Web is that even its most grizzled veterans lack a clear-eyed understanding of how it works. Most of us have accepted it, embraced it and sworn at it, but it’s in our homes and in our coffee shops and in the air, whether we use it for Hollywood gossip, stock trading, or simply as a combination electronic post office and gigantic animated Encyclopaedia Britannica.

  So what would happen if there were a cyber war and the net collapsed? What if an organization or foreign nation decided that the best way to assault the United States would be to sabotage the web? If we think about terrorism and the fallout from 9/11, what happens when the terrorist moves beyond dreaming up simple stupid viruses and figures out some way to make the web disappear? What happens then?

  Rather than sitting around figuring out what the next Facebook will be in this money-crazy culture, it’s worth setting aside a little time to think about that.

  But enough with worst-case scenarios involving nefarious plots. Let me leave you humming a few bars of music.

  I have a professional friend, a guy I don’t see as much of as I’d like, but someone I’m always happy to run into when I do. He has three interconnected vices—he runs marathons, smokes a half-pack of Marlboros a day and is a total music junkie. Every time we meet up at some conference or another, he’ll pass me a fervent note that says, “Check out these guys,” before listing off a few musicians he stubbornly believes no contemporary iPod owner should live without. The last band he recommended was called Balkan Beat Box—a fusion of Middle Eastern music tangled up with electronica, with a heavy bass beat behind it. Terrific dance music that sounds just as good when you’re bopping down the street with headphones on.

  So I went to the iTunes store, typed in “Balkan Beat Box” and up they came. Two albums’ worth, some twenty-five songs in total followed by a ten-line description of what the music was about and a few customer reviews. That was it. Hardly enough to chew on—extremely frustrating. I ended up buying three or four songs at ninety-nine cents a pop, plus some songs from a couple of other bands my buddy told me about, and I put together a mix, which I’ve been enjoying, as it’s pretty complex, wonderful stuff.

  But if my friend hadn’t brought the band to my attention, chances are high that Balkan Beat Box and I would’ve never found each other. Why? Because for all the talk about iTunes being this revolutionary new medium for sampling and downloading digital music, let’s face it, it’s a pretty limited site—and I’m a lifelong Apple fan.

  Example: Why doesn’t iTunes offer me any song samples longer than thirty seconds? Sometimes the vocals or the melody don’t even begin to kick in by then. Why doesn’t the site request more personal information, including where I live and what kinds of music I’m interested in, so it can tip me off to local concerts based on my preferences or on the music I’ve downloaded already? Why doesn’t it permit me to buy, say, a three-play version of a song for twenty-five cents, so I can decide whether I want it in my permanent music library or not? iTunes also can’t seem to figure out why a guy who buys Balkan Beat Box also gets a kick out of vintage Eartha Kitt. Plus, where are all the liner notes? I love reading liner notes. It turns out I can peruse them only if I buy the whole album for $9.99 or $11.99 or $18.99, or however much the site is charging me.

  Where’s the information explosion here?

  There’s another issue: I’m at a point in my life where I own four iPods, each with its own speaker system. I keep one such sound device in my living room, another apparatus in my kitchen, a third in my office and a fourth…well, it migrates. But why hasn’t Apple recognized the revolution it’s created and facilitated it? It should be selling me—all of us—much broader solutions than it does now, other than just simply being the latest, coolest new distribution system. Because the site is preoccupied with selling me songs for ninety-nine cents—as well as audiobooks, TV episodes, music videos and just-released DVDs—it isn’t giving me the tools to manage my fleet of iPods. I want Apple not just to sell me content, but to expedite and simplify the role of its products in my life.

  Recently I met up with a senior group of executives at Sony BMG, the global music conglomerate. As a lot of people know, CD sales are in a downward spiral, and in 2007 they declined again by some 30 percent. Strange fact: The only places where CDs are doing okay are in niche markets. For example, polka is holding its own. Same goes for Latin music. Little indie stores with focused and dedicated clientele are surviving. But the rest of the industry is suffering.

  There’s a lot wrong with this picture. Because today we find ourselves at a time in history where there’s never been a more voracious appetite for music. A typical fifteen-year-old kid in 2008 has a working vocabulary of all different varieties of music. He or she knows something about trance, blues, rock, reggae, heavy metal, country, rockabilly, stoner music, the British Invasion, contemporary, hip-hop, world music, even the Christmas Peanuts soundtrack. Yet in spite of the knowledge and appetite out there, the Internet doesn’t have the tools yet to indulge it wholeheartedly. It can’t penetrate its outermost edges. It can’t get us psyched about listening to good new stuff.

  I know, I know, online music sales are booming, but the thing is they’re not even close to matching the falling sales of CDs. Again, that’s not because digital downloading is anything terrific, or the quality of the sound is all that excellent, or managing your MP3 sound files is any easier than juggling your ancient vinyl collection.

  To blame file sharing or online piracy is a copout, too. In 1959, the typical American household had 1.7 sound reproduction devices—the parents had their stereo and maybe the kids had a portable record player upstairs. We placed the needle reverently on vinyl, cocked our ears and listened. We couldn’t move (or dance), because the needle might skitter across the record. Today we do just about everything to music—cook, read, work out, make love. Music has become the soundtrack to our multitasking lives. Yes, I have four iPods of various styles and sizes, but in total, my house has twenty-three sound reproducing devices. I’ve bought one particular Doors album four times, on vinyl, cassette, CD and as MP3s. Yes, kids are trading music—for God’s sake, why wouldn’t they if for almost twenty years we made them buy pricey CDs rather than 45s that conformed to their budgets? Problem is, the music industry has historically been closer to the musicians than the consumers.

  Music has flourished online because of the failure of the music industry to recognize that consumers don’t want to buy the whole cake—we want to buy the stuff by the slice. We don’t want to shell out $13.99 for The Best of the Troggs or $24.99 for Arthur Rubenstein: Chopin Noc turnes. Maybe we just wanted “Wild Thing” and Nocturne op. 15, no. 3 in G-Minor. Did the music industry intuit this about us? No—they’re still putting out music the way they did back in the days of Chuck Berry, and now they’re paying the price.

  That said, if iTunes is the only music portal out there, I think we’re all in trouble. If Sheryl, my significant other, who’s a professional musician, is hunting down an obscure piece of chamber music, she isn’t about to find it on iTunes. There was a time not so long ago when she could pay a visit to Tower Records near Lincoln Center, and some shy, knowledgeable clerk would know exactly what she was talking about, and the various versions, and why the 1962 studio version recorded in Vienna was superior to the one done live in 1978 at the Concertgebouw. But Tower is gone, Barnes & Noble is unlikely, Wal-Mart is out of the question and Sheryl is stuck.

  One of the questions I put to the Sony executives was, can you figure out a way to put your catalog in a place where people can access it? It almost suggests the need for a company portal for their entire classical backlist. As I said, the appetite for music today is overwhelming—it’s just a matter of helping consumers find it. If I want a classica
l compilation with a title like Chill with Beethoven or The Most Relaxing Classical Album in the World, I can download it off iTunes, no problem. But wouldn’t many of us pay a premium for a Sony-led chat room, where, say, we could pick and choose from a complete catalog of music, and the host—some distinguished, goateed professor of music from Berkeley or Juilliard—would ask us what type of recording we wanted, if we preferred a live or studio recording, how old we are, what our ears are like and all that, before directing us to the perfect piece of music? Whether we walk away with something digital or a real CD—or even a bracelet with earphones attached to it—it’s an opportunity that’s just waiting for someone to invent the process. Techies?

  A music store or bookstore of the future—couldn’t it be similar? It might resemble the comic-book clubs they have in Japan, where you can go in, rent a chair and read all your favorites. You would pay a small admission fee. In return, someone whose taste you admire and appreciate would serve as the emcee. Your fellow members would be men and women who like and appreciate the same music you do. Maybe the club could serve drinks and feta-stuffed olives and a wheel of Epoisses cheese. The people who run the place would know what you like and even hand-sell you stuff, including vintage collectibles.

  Imagine—you could cyber-experience a concert, anything from Balkan Beat Box to Maurizio Pollini. You could rent it, buy it, mix it or go to a club and actually attend a concert. An expert would guide you every step of the way. And your connection to the place would be fostered by an online community.

  Now that’d be music to my ears.

  EIGHTEEN

  Come Fly with Me

  Here’s a boarding pass. Step on it—the gate’s closing. Pop a Xanax, fasten your seat belt, extricate that blue blanket from its shrink-wrap.

  Oh, and the aisle seat is mine, an anatomical necessity for a guy with long legs.

  Time for a trip around the globe, from Italy to India, with a few stops in between. Business and a little pleasure.

  In the late 1980s, Envirosell found itself at a fortuitous crossroads, in that whatever direction we chose to take was going to lead us somewhere new and promising. We could either plow time, energy and resources into expanding our business here at home, or we could train our binoculars on the great big world out there. A trade-off, absolutely, but for me the decision was easy: go global.

  If we’d stayed put, we’d probably be a lot bigger in the U.S. than we are today. But from a strategic point of view, transforming Envirosell into a business that understood the needs of international retail and shopping was a huge plus in terms of what we could bring to the table in the U.S.

  I’m also totally at home traveling—about as comfortable boarding an airplane and navigating the wild world as just about anyone I know. Having a fiercely independent live-in significant other and no kids freed me up to spend good chunks of time on the road, too. Once I’ve cleared customs, my adaptive skills are up to speed as well. I’m not talking about backpacking in the Himalayas or finding the best B&B in Chiang Mai. I’m talking about being able to competently go around the world in ten days, in and out of multiple time zones, and stay more or less sane, healthy and in a good frame of mind. Plus, it’s a thrill to be able to fold up your American glasses and try on your new gafas, your magane, your occhiali, your óculos. You see everything in a new light. Such as, what are some of the things that make this store or mall here in Cape Town or Shanghai work that wouldn’t go over in Colorado Springs or Austin, Texas? Or, why the heck hasn’t an American retailer ever thought of this? Truly, under the best of circumstances, and even the worst, it can be a revelation.

  My only wish? That I slept better on airplanes. Sleeping in public is hard, and I’m no good at it. My theory is that the people most at ease doing it grew up sharing a room with a kid sister or brother and got used to it. I slept alone back then.

  Buckled in? Up we go. First, though, let’s backtrack a little.

  In the early ’90s—remember, this was before e-mail—my fax machine whirred out a sheet of paper. The fax came from Alberto Pasquini, who was then the managing partner of Creativity Italia, a point-of-purchase agency. He’d read about Envirosell in one of the trade magazines and invited me to visit him in Milan. I was already sold on the idea of opening up a European office and was commuting back and forth across the pond, trying to scare up business. I happened to have a trip planned the following week and was able to get my airline ticket changed so that I could fly into Geneva and back home to the States from Milan. Ten days later, I took the train from Lausanne, Switzerland, to Milan to meet up with the guy who’d sent me the fax.

  Alberto was born to have an exclamation mark at the end of his name—maybe half a dozen. Flamboyant, snowy-haired and in his late forties when I first met him fifteen years ago, he was a sort of Mediterranean P. T. Barnum. On that first visit to Milan, Alberto took it upon himself to introduce me to a woman he knew by the name of Giusi Scandroglio, who ran a small market research company called QT. “Here,” he said in his charming fractured English, “is your future partner.” I can remember thinking, What are you talking about here, Alberto? But Giusi and I shook hands and made all the right small talk. And things went no further than that. Over the next year or two, I found reasons to go back to Italy. Each time I went, it dawned on me that Alberto had managed to choreograph my schedule so it involved—somehow—Giusi.

  Italy as a concept is only one hundred and fifty years old. Then and now, the country is a collection of city-states, each one with its own distinctive character. Giusi is Genovese by birth and Milanese by choice. The Genovese historically wandered the Mediterranean mostly as merchants and occasionally as pirates—call it the light and the dark sides of the Genovese identity—whereas Milan is a city of industry, persistent, hardworking, focused, controlled. Almost everything of interest or significance in Milan happens behind a high wall or a closed door. It isn’t so great a city to visit as a tourist—in twenty-four hours, you can see just about everything—but with a guide or mentor by your side, Milan can be a magical place.

  Thanks to Alberto, meetings happened and before I knew it I needed an Italian office sooner rather than later, and who else to run it? Giusi Scandroglio. A woman who by taking the reins of Envirosell Milan has turned out to be exactly the person we needed, as well as purely Milanese in her values—focused, independent, knowledgeable, tireless and tenacious. Not an easy combo of attributes to come by, particularly for a female living and working in a male-dominated country like Italy.

  Rule of thumb: With international expansion comes worry, tossing and turning at night and readjusting your vision to the local ways of doing things. In Italy, the payment system is enormously complicated. Every project you take on first has to be financed by a third party, typically a bank. That means that when someone signs a contract with you, it’s more than likely you may not be paid for 180 days or so. I was willing to take a fall personally, but I didn’t want Envirosell itself to be jeopardized. So I took an ownership position in our first overseas office. Like so many journeys, the scariest step is that first one.

  Once we’d broken into the Italian market, one thing led to another. One of our first Italian clients was Levi’s Italia, and while we already had the company as a client here in the U.S., Levi’s Italia led us to the jean market all across Europe. Within a few years, we were looking at Levi’s and Dockers sales in Amsterdam, Stockholm, Lisbon and elsewhere. Before long, thanks to an alliance Envirosell had formed with the John Ryan Company, a Minneapolis-based retail bank marketing agency, we were introduced to the world of Brazilian banking; our first effort came when we worked for a company known as Banco Itaú.

  Itaú is a completely vertically integrated bank. They make the furniture that goes into the bank, they assemble their own ATMs and computers, they own the construction companies that build their branches and they operate the complexes that house their staff. It’s a privately held company that throws off more than a billion dollars a year in profits
. Though who really knows—it’s nothing at all like Chase, Citi or Bank of America. But then, it is Brazil. The typical Itaú branch could have as many as a hundred tellers. The first branches we saw had towers in the middle of the floor with hard-eyed security guards equipped with machine guns keeping close watch on the floor.

  In Banco Itaú, we were looking at in-store signage issues, points of service, the design of teller stations and so forth, but instead of doing it at a three-thousand-square-foot Citibank in midtown Manhattan, we were carrying out our research in a twenty-thousand-square-foot Brazilian bank. Also, in Brazil, people’s concepts of wait time are different. As I said earlier in this book, in the U.S. our internal clocks begin to ding after about three minutes, signaling impatience, but Brazilians’ internal clocks swell to about five minutes, since they’re far more accustomed (or resigned) to waiting. Another thing that surprised me was the complete absence of privacy, or more likely the resigned indifference to the fact that your most intimate affairs will be made public. If you’re applying for a loan or a mortgage in the U.S., typically you take a seat at a bank desk and some officious vice president will ask you what your annual salary is, what your monthly credit card payments are, whether you have any additional sources of income etc. In Brazil, you’ll be asked these same questions, but the thing is there’ll be half a dozen other customers awaiting their turns a foot away from you, and no one blinks an eye. It’s not an ideal culture for someone who has a lot to hide.

  In Brazil, like in many developing countries, much of the economy functions on cash. The employer might issue a check, but the check is then taken to the bank to be cashed. Many companies have a prescribed day and time when their employees descend en masse to get their checks cashed, and I can remember one afternoon when five hundred bus drivers turned up at our test branch. Also, in Brazil many people pay their bills, including rent, electricity and phone service, with cash at the bank. The branch is divided up according to different classes of trade. The lower-class cash-based customers, known as “Amigos,” go to one part of the bank, while the middle-class “Star” customers make their way to another. It’s a noisy, hectic and altogether difficult environment. We loved it, though, and it turned out that Itaú loved us back. Within a year John Ryan had moved on, but Envirosell was invited to stay. Soon we added Brahma, the huge Brazilian brewer, to our client mix and found ourselves shipping members of our New York staff down to São Paulo left and right.