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Will Jack Ma’s quirkiness play in the U.S.?

Fri, 2014-09-19 09:35

There’s no two ways about it. 

Jack Ma is a quirky guy.

From dressing up like Lady Gaga, to belting out the "Lion King" theme song, to revealing on CNBC that his hero is, the decidedly fictional, Forrest Gump.

Jack Ma is Jack Ma. 

And Jack Ma is not the buttoned up (or turtle-necked up) CEO that we’re accustomed to.

But don’t let his antics fool you.

"Everyone seems to underestimate Jack Ma," says Porter Erisman, former Alibaba VP and director of the documentary 'Crocodile in in the Yangtze.'

He calls Jack Ma "incredibly  innovative, very visionary."

Ma is also ambitious. And to achieve his goal of reaching an audience outside of China, some think he'll need to tone his antics down a bit.

"The particular quirky flamboyance that he has historically displayed seems to sell very well there," says Max Wolff, an economist at Manhattan Venture Partners, which helped institutional investors get Alibaba shares. "It won't sell quite as well for a global audience."

But Ma’s flash doesn't seem to be scaring off investors today. Even though the company is set up in such a way that Ma will be in control, not shareholders.

Thousands line up to exchange Ray Rice jersey

Fri, 2014-09-19 08:43

NFL Commissioner Roger Goodell had a press conference today. He said, again, that he's sorry he handled the Ray Rice incident the way he did, that the NFL will do all it can to assist groups that fight domestic violence and that he hasn't thought about resigning.

But on a day when Apple fans lined up by the thousands to get their hands on the iPhone 6, so too did Ravens fans line up at M&T Bank Stadium in Baltimore.

Also by the thousands.

To trade in their No. 27 Ray Rice jerseys.

This is not a line for the new #iPhone! Thousands line up to exchange @ravens #RayRice jersey at #M&TBankStadium pic.twitter.com/W3VBwJHjVX

— Kelly Blanco (@KellyNBC6) September 19, 2014

The numbers for September 19, 2014

Fri, 2014-09-19 07:39

Alibaba founder Jack Ma is having a great morning. After a record-breaking IPO, the Chinese e-commerce company began trading Friday at $92.70, the New York Times reported. That price values the company at more than $228.5 billion.

While we calculate just how much human hair you could buy with that, here are some other stories we're reading — and numbers we're watching — Friday.

55 percent

In a much more decisive vote than expected, the majority of Scots elected to keep the country in the United Kingdom overnight Friday. The full results show a huge turnout, and the BBC reported that the vote has resonated around the world, from secessionists in Spain to state media in China. 

23,000

That's the number of people killed annually by issues stemming form antibiotic-resistance. The White House launched a new initiative to combat the public health threat Thursday, the Times reported, with a $20 million prize for the development of a better resistance test and a suggested $1.7 billion in funding for research and other initiatives.

$400 million

In an unprecedented sponsorship deal, Microsoft reportedly paid the NFL $400 million to get hundreds of its Surface tablets on the sidelines and in coaches booths for the next several seasons. But the Los Angeles Times reported that announcers keep accidentally calling the tablets "iPads," showing just how much Microsoft's key rival owns the tablet industry.

The risks and rewards of Alibaba's IPO

Fri, 2014-09-19 06:54

Alibaba ticks two boxes that get investors very excited: China and technology.

That has investors “salivating,” says Steven Davidoff Solomon, a professor at University of California Berkeley School of Law.

The massive Chinese e-commerce site Alibaba will start trading on the New York Stock Exchange Friday, using the ticker “BABA.” Shares will start at $68, the top of the company’s price range.

There are more people and companies interested in buying stock than there are shares available, but some experts advise caution.

Davidoff Solomon says investors should be aware that the deal is structured in such a way that they’re actually buying into a Cayman Islands company that will receive profits from Alibaba.

“Let’s say that Alibaba China decides just not to pay on those profits,” he explains. “Shareholders would have to sue a Cayman Islands company, gain control of it, and have that Cayman Islands company sue in China. Good luck with that.”

Second, a small group of insiders will retain control of the company and appoint directors, even though they’ll own a small percentage of its shares.

The question then is whether the price is worth these risks.

Matt Turlip, an analyst with PrivCo, has done his own valuation and thinks Alibaba’s shares are actually worth $100 each.

“It’s a giant, profitable company right now that’s growing like a startup still,” says Turlip.

So buy or buyer beware – you decide.

PODCAST: The nuance of inflation

Fri, 2014-09-19 03:00

We have screens at the ready here to watch what happens when stock in the massive Chinese online commerce operation, Alibaba, starts trading in New York. Shares will start at $68, the top of the company's range. But while many investors are eagerly diving in, others are advising caution. Plus, as we've been hearing, the Scots have voted to stay with the United Kingdom, and this--among other things--has a bearing on interest rates. And as Marketplace celebrates its 25th birthday this year, we are looking at the surprising, sometimes delightful and sometimes destructive ways that prices have changed during that quarter century. Last week, we heard a classical definition of inflation from the Harvard professor who literally wrote the textbook definition. But price changes have many causes and can effect people with varying incomes quite differently. Today, we talk to Dean Baker, co-director of the Center for Economic and Policy Research in Washington.

Weekend Brunch: AliBaba's IPO and the Fed's new normal

Fri, 2014-09-19 02:12

Venessa Wong from Bloomberg and Business Insider's Nicholas Carlson chat about the week's news. Click play above to hear them break down the Federal Reserve's latest decision and the AliBaba IPO.

Brunch reading list:

Bloomberg: 3 Photos That Help Explain the Frenzy Over Alibaba's IPO

Businessweek: I Used Alibaba to Make 280 Pairs of Brightly Colored Pants

CNBC: Fed will end QE next month, 'considerable time' remains

Washington Post: Federal Reserve details new exit strategy, keeps record-low rate

 

 

 

Want to sell a house? Head West. Want to buy? Go East.

Fri, 2014-09-19 02:00

Online real estate site Zillow released a study on Friday that listed the markets for sellers and buyers in the United States. 

Stan Humphries, Zillow's chief economist said the lists show an east/west divide.  

Most of the best markets for sellers, says Humphries, are on the West Coast. Markets like San Jose, San Francisco and Seattle top the list. Most of the cities that favor buyers are in the east and midwest. 

"Markets like Providence, Cleveland and Philadelphia. And it’s not necessarily by historical standards that they’re bad markets," Humphries said. 

He said home prices in many of the buyers' markets haven’t risen as sharply, but that also means that when the market slows, home prices won’t crash as hard.

Kevin Hamilton knows all about seller’s markets. He’s with Red Oak Realty in the San Francisco Bay Area.

"You know a lot people think realtors are really excited about this hot market, and truthfully we’re not," he said. 

Hamilton said right now, buyers are offering way too much for houses. While responsible realtors advise against such irrational behavior, he said, when the market slows and prices crash, clients don’t remember.

"Everyone kinda came back and said, 'Why did you tell me to buy this?'" Hamilton said. "You know, well, if you looked back at that day, we didn’t."

Silicon Tally - Mo Money, Mo Facebook

Fri, 2014-09-19 02:00

It's time for Silicon Tally! How well have you kept up with the week in tech news?

This week, we're joined by Jennifer Pahlka, founder and executive director of Code For America. Pahlka also recently served as the Deputy Chief Technology Officer for the United States Government.

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Why you'd pay more for a car with hand-crank windows

Fri, 2014-09-19 01:30

As Marketplace celebrates its 25th birthday this year, we are looking at the weird, delightful and destructive ways that prices have changed during that quarter century.

But first, let's take a ride...back to 1989.

Back then, the cheapest Accord sedan had just 98-horsepower, hand-crank windows, no AC, and retailed for $11,770.

A commercial for the popular automobile posits that maybe one day, someone will build a better car than the Accord...maybe.

 

 

Since then, improvements have been made, and the Honda Accord is currently the best-selling car in America.

But how has the price changed? And when you adjust for inflation, is it more or less expensive than back in 1989?

We checked in with Joe Ciaccia, general manager of Honda Manhattan, to see how much the car will set you back with today's prices. And as for how it compares to its 25 year old counterpart, the answer might surprise you.

Click the media player above to hear more on the surprising affect inflation has had on the Honda Accord.

TV Guide Network creates a POP

Thu, 2014-09-18 13:52

The TV Guide Network is breaking away from the magazine of the same name and rebranding itself as "POP."

The new network is set to launch early next year. Their new demographic? 

An 18 to 54 year old age range who are, "socially engaged and connected and who have a thirst for pop culture," according to the Hollywood Reporter. 

White House and colleges grapple with sexual assault

Thu, 2014-09-18 13:52

If you're in the business of higher education, the issue of sexual assault is on your radar.

The White House is expected to unveil a nationwide plan to address the issue Friday at the same time some 70 colleges and universities are under investigation for how they've handled sexual assault cases.

High-profile lawsuits are grabbing headlines and threatening reputations. As you may expect, all of this is getting the attention of college and university presidents and administrators. 

You don't have to look any farther than the University of California at Berkeley — one of the schools being investigated — to see that sexual violence is becoming a top concern.

This fall, the school made its sexual violence training mandatory and all but several hundred students showed up. Spokesperson Claire Holmes says the clock is ticking for the no-shows.

"If they do not complete the training by Oct. 1, we will put a hold on their registration for the spring semester," she says.

Schools around the nation have gotten the memo, says Terry Hartle, with the American Council on Education. It's certainly in university and colleges' long-term financial interest to toughen up their response to sexual assault, and Hartle says he's seen a dramatic rise in student, faculty and security training.

"That is clearly the most obvious, immediate action," he says. "It is also in many ways the easiest."

Finding ways to investigate and resolve these cases is a more complicated and difficult matter, Hartle says. There's pressure on colleges and universities to act because schools out of compliance with federal Title IX rules could lose funding for student aid.

Attorney Cari Simon, who represents victims of sexual assault, says there are businesses out there ready to offer quick fixes.

"We are seeing folks who call themselves trainers or experts who maybe haven't been around all that long saying 'Pay me this, and I'll get you in compliance.' But it's really about checking the box and not getting at the heart of the issue and changing rape culture," she says.

So, how will prospective students and their parents will know if a school is safe or not?

Diane Rosenfeld, who runs the Gender Violence Program at Harvard Law School, says people must be smart consumers and do some digging.

"See if there are dedicated resources to preventing campus sexual assault, look at statements the president has made [look at] whether the school has been sued or not," she says.

Campus sexual assault by the numbers

One in five

The big statistic here, touted by the White House task force on campus sexual assault and many lawmakers: one in five women will be sexually assaulted during her college years. That figure becomes even more concerning the portion of victims who report their attacks to police — 12 percent — and the way those numbers were found.

5,446

That's the number of respondents to the government's Campus Sexual Assault Study, where the "one in five" figure comes from. The Justice Department distributed web surveys to two major public universities and based their results on the 5,446 respondents, according to a PolitiFact analysis. That very small sample size doesn't invalidate the study's findings — which were consistent with other, wider-reaching studies — but shows just how hidden and difficult to track these crimes are.

480

In July, the Washington Post analyzed sexual assault reports at four-year colleges and universities nationwide from 2010 to 2012. According to their data, 480 schools reported no forcible sex offenses in those three years. Missouri Sen. Claire McCaskill told the Post those schools are more concerning than schools with many reported assaults, and she questions if or how they are encouraging victims to come forward.

Bezos wins a round in the billionaire space race

Thu, 2014-09-18 13:52

Elon Musk of Tesla Motors Inc. has been jockeying to get his Space Exploration Technologies Corporation (SpaceX for short) some work helping NASA build new launch systems. Now he's been one-upped by Amazon’s Jeff Bezos, who has his own spaceship enterprise: Blue Origin.

NASA’s existing supplier has announced that it will use Blue Origin’s technology in its next generation of launchers.

All of which raises a question: Is there money to be made here? Or is this just billionaires with unlimited funds for new toys?

First, there are a couple of big reasons to take on these kinds of projects. To start with, the launch technology we use now is 40 years old, says  Jim Bell, a professor at the School of Earth and Space Exploration at Arizona State. It’s like the Atari 2600 of rockets.

"The existing generation of traditional engines are the Ataris of their time," he says, "and there’s a whole bunch of start-ups out there — Blue Origin being one and SpaceX being another — that are building our modern XBoxes."

Also, the rocket engines we’ve been using since the 1990s is Russian. Ever since tensions flared over Ukraine, that dependency on Russia has been making policy-makers pretty nervous.

There is money in space, but it's mostly in selling satellite services like TV and GPS, less so in the launch technology that Bezos and Musk are competing over.

"If you were looking for the very best money-making machine, I would probably not advise you to invest in starting your own launch company," says Carissa Christensen managing partner at the Tauri Group, a consultancy that specializes in space technology.

"Space is a little like the movie business. Nobody is in it by accident," she says. "Everyone desperately wants to be doing it. There are three people behind everybody who is making money at it, who would like to be involved the industry— and part of it is the allure of it. It’s fascinating."

As for startups looking to do next-generation space tech, Christensen says she’s seen generations of them. This one, which also includes Virgin Group founder Richard Branson, is different.

"The people who are starting these companies are not simply doing it to build the coolest rocket that they can," she says. "They are doing it to prove that you can make money in space. They are doing it with very deep pockets, they are doing it with business expertise from outside the space industry, and they are actually succeeding."

Both companies are private, but the SpaceX website describes the company as "profitable and cash-flow positive."

Blue Origin's "about" page does not mention profits, but refers to the company's mission as "a long-term effort, which we're pursuing incrementally, step-by-step."

Some surprising facts about states and student data

Thu, 2014-09-18 13:41

Open wide: Alaska collects data on students’ oral health, including how many teeth they have. 

Stop picking on me: Many states collect data on students who are disciplined for bullying, but Florida also tracks students who have been victims of bullying and the reasons why (ie., sexual orientation, religion)

Destined to drop out: In Texas, kids can be tagged as “at-risk” of dropping out of school as early as the pre-kindergarten level, based on their performance on a school readiness test.

Don’t ask: School districts in South Dakota, Idaho, West Virginia and Louisiana are forbidden from collecting data on whether a family owns a gun, under new data laws passed this year.

No window to the soul: In many states, school districts are also now barred from collecting biometric data like eye scans and palm prints.

Jail time for bureaucrats: In Louisiana, anyone who knowingly allows a data breach can be imprisoned for up to three years.

Fat chance: In New Hampshire, the state can no longer track the body mass index (BMI) of students under a new law passed this year. Nor can it use surveillance software on school laptops to track activity.

Once upon a time, inflation really was high

Thu, 2014-09-18 12:48

If you turned a Federal Reserve meeting into a theatrical production, the marquee might read “Waiting for Inflation.” That’s the economic bogeyman that keeps Fed members awake at night, even though there are zero signs the inflation monster is stirring.

Why all the angst over inflation? In this country it’s mostly painful memories of “The Great Inflation,” in the 1970s,  and the severe recession that followed it.

Baby boomer Bob Donohue remembers how inflation affected his father. When his dad retired in 1972, he started collecting a pension of $120 a month.

“My father’s pension check, which was fixed in its amount, covered his rent for two months when he retired,” says Donohue. “Less than seven years later, that same pension check only covered two weeks worth of rent on the same apartment.”

During the 1970s, oil prices more than quadrupled. Mortgage rates hit double digits. The inflation rate shot up from 5.7 percent to 13.5 percent in just four years. Wages and prices spiraled out of control.

The U.S. put an end to runaway inflation in the early '80s by tightening the money supply under Federal Reserve chairman Paul Volcker. But it came at an enormous cost. The recession that followed threw millions of Americans out of work.

CORRECTION: The original version of this article misstated the president under which Federal Reserve Chairman Paul Volker raised interest rates to bring down inflation. It was President Jimmy Carter. The text has been corrected.

The shortcomings of the corporate wellness program

Thu, 2014-09-18 11:14

Corporate wellness programs have become a $6 billion industry for one, possibly flawed, reason: they help reduce companies' healthcare costs, while saving their employees money.

To some degree, they have been a success. Growth in premiums has hit its lowest point in the last 16 years. A new survey by the Kaiser Family Foundation shows that 71 percent of employers believe corporate wellness programs are either "very" or "somewhat" effective at reducing spending on providing benefits for their employees, who would be rewarded with these benefits by meeting various incentives.

But companies can also impose a penalty. They can charge an employee more for smoking or being overweight. It's the very reason why, says Professor Nancy Koehn of the Harvard Business School, these programs don't work.

"What's really happening in many instances is that costs are getting shifted to employees, whether it's because they don't meet certain goals or they don't conform in certain ways," she says. "Healthcare costs are going down for companies, but not so much for individuals and families."

And they're not having any lasting effects on their health, either, she adds.

"All these incentives, all these hurdles, greatly increase the cost of testing employees. So these things are more costly than you might think."

 Listen to the full conversation in the audio player above.

.tv and the surge of Internet video

Thu, 2014-09-18 10:15

There's now a billion websites, according to online tracking firm Live Stats, and the internet is getting a little crowded.

A bunch of new top-level domains — those letters that go at the end of a web address — were released to go alongside ".com." We have ".nyc," ".sports," and so on. But one of the most interesting — and popular — domains is ".tv," and it says a lot about the way television is changing.

Marketplace Tech host Ben Johnson says ".tv" has been around for a while, but it’s being used more and more for branding by emerging media companies. That could be good for the tiny island nation Tuvalu, which was originally assigned the domain and has made a pretty penny from leasing it out.

But more interesting than the rise of ".tv" is the parallel rise of Internet video — just look at Twitch(.tv).

"Video is a vastly expanding area of our vastly expanding internet," says Johnson. "Cisco estimates 70 percent of total internet traffic by the year 2017 is going to be video, and a lot of that is going to be mobile video."

That sea change is affecting the physical networks the web is built on and the way video is being delivered to our devices. On a recent visit to Bell Labs, Johnson spoke to researchers looking for ways to make a wireless connection respond to the environment for seamless streaming.

"Say you're a passenger in the seat of a car or maybe you're on a train in the future... and you're about to go into a tunnel," Johnson says. "They want to use the GPS on your device to tell the network you're that going underground, and then they want the network to deliver you more data faster before you go into the tunnel."

So whether your preferred video service is a ".tv" or ".com" website, you're probably taking up a lot of bandwidth, but the Internet of the future is going to accommodate you better.

Nearly half of American households are financially insecure

Thu, 2014-09-18 09:52

Financial insecurity is on the rise in American urban areas, even as the economy slowly recovers from the Great Recession, as unemployment falls, as foreclosures dwindle and as home prices rise again in many markets.

Federal Reserve Chair Janet Yellen highlighted the problem in an address, delivered by video, to the nonprofit Corporation for Enterprise Development’s 2014 Assets Learning Conference in Washington, D.C. 

“The financial crisis and the Great Recession demonstrated in a dramatic and unmistakable manner how extraordinarily vulnerable are the large share of American families with very few assets to fall back on,” Yellen said. “We have come far from the worst moments of the crisis, and the economy continues to improve. But the effects of the recession are still being felt by many families, particularly those that had very little in savings and other assets beforehand.” 

This week, the Corporation for Enterprise Development released new analysis of financial insecurity nationwide, drilling down on data at the state, regional and local levels. The group found that nearly 45 percent of households in cities with population of 200,000 or more, are “liquid-asset poor.” That means they don’t have enough in savings, or in assets that can be easily liquidated (such as stocks, bank accounts or retirement accounts), to cover their basic living expenses for three months. The threshold is set for a family of four living at the poverty level, which would need $6,000 to live.

Andrea Levere, president of Corporation for Enterprise Development, pointed out that this financial insecurity doesn’t just affect the poor, it affects those who are unemployed or working at minimum-wage jobs, too..

“Twenty five percent of American families in the fourth quintile of income — which is roughly $50,000 to $90,000 — are in liquid asset poverty,” said Levere.

Randy Albelda, an economist at the University of Massachusetts-Boston, isn’t surprised by the findings. Or, that levels of financial insecurity have risen during and after the recession.

“Given the very slow recovery for most people, given the last 20 years of very slow income growth for the bottom 50 percent, people have depleted their savings,” Albelda said.

Albelda thinks improvement in the situation would require lower costs for basic necessities such as rent, energy and food, and/or higher wages for a wide range of jobs (from low- to high-skilled), to allow more people to save and build a cushion against financial emergencies. She said a more comprehensive publicly funded social safety net would also help, one that delivered longer-term income support and food assistance for the poor and unemployed.

Levere said financial insecurity would also be less prevalent if mainstream consumer banking services were more readily available to the working poor. People have more financial resilience where there are more banks, and where working people use them. Highly “unbanked” cities, such as Newark, N.J.; Cleveland, Ohio and San Bernardino, California, also have high levels of liquid asset poverty.

“On average, an unbanked person spends $1,000 per year on financial services—getting their checks cashed because they don’t have a bank account, going to payday lenders, or rent-to-own,” said Levere.

Bottom line: It’s expensive to be poor.

View Estimates of Household Wealth and Financial Access in a full screen map

Pliny the Elder: A case study in scarcity marketing

Thu, 2014-09-18 07:54

Pliny the Elder was the Roman naturalist credited with first identifying hops.

Pliny the Elder is also a beer, and, today, a case study in "scarcity marketing," said Natalie Cilurzo, the co-owner of Russian River Brewing Company.

"We don’t do any advertising,” Cilurzo said. “As far as our marketing, I blog very infrequently on our website. We have a Facebook page, I try to post like once a week... maybe."

Despite the sparse marketing, demand for Russian River's signature beer couldn’t be greater. Cilurzo says on weekends, their brew pub in Santa Rosa is packed.

“We usually have lines up front on Friday, Saturday and Sunday mornings before we open,” Cilurzo said. “I heard yesterday, the Google Bus was here.”

Russian River Brewing Company also sells bottles of Pliny the Elder, in limited quantities, to a couple hundred stores in California and Colorado. (The beer, by the way, is pronounced Pline-y, unlike its namesake Roman naturalist whose name is pronounced with a short “i.”)

One of those stores is Ledger’s in Berkeley. I got to to the store at 4:00 p.m., which is when I was told the Pliny gets delivered.

Turns out, the beer came early and they were already out. Aviv Gerber was one of the lucky ones. He’s 29, a bartender, and he found out about Pliny at the dog park.

“I heard it’s only here on Wednesdays, and it’s now limited to one bottle per person. And I was curious,” Gerber said.

Most stores limit the number of bottles a customer can buy because, in the past, one guy would come in and buy the whole lot and anger customers. In fact, the Russian River Brewery now delivers the beer in unmarked trucks because some fans were known to follow the trucks from store to store.

I walked back into the store and spotted Cole Yacco. He’s 32 and works there. Ledger’s is my neighborhood store and so Cole hooked me up with a Pliny. He kept the beer under the counter and out of sight of the customers.

“I’m trying to hide them,” Cole said. “They can’t see, they’ll get really mad.”

I paid for mine and went home.

I have to say, the bottle is a little underwhelming. The label is super simple and you could easily miss Pliny the Elder on a shelf. As for the beer? It’s super dry, super hoppy and totally worth the hassle of tracking it down. Or so it seemed, says Nir Eyal, the author of “Hooked: How to Build Habit Forming Products.

“Scarcity has this effect of making people perceive products as more valuable simply for the fact that they’re scarce,” Eyal said.

He said it’s not just psychological: Studies have shown it’s physiological.

“They took a look at what was happening inside people’s brains when they were trying wine of different price points,” Eyal said.  

In other words, some wines were more valuable and scarce than others. Eyal said its not that people just liked the most expensive wine.

“But their brains actually perceived the wine differently when they tasted the $90 wine versus the cheap wine,” Eyal said. “And then they didn’t tell the participants that it was the same wine all along.”

Eyal said what’s happening is that one piece of information — that something is scarce — is short-circuiting the brain. There’s also the fact that scarcity makes for a good story. Eyal said if you tell people, “Hey, this beer uses high-quality hops and is made in small batches,” nobody is going to remember that.

But if you say, "Hey, I have this crazy story about how you can buy a limited amount and can you believe it and the lines?"

That’s a really easy story for one person to transmit to the other, Eyan says. Eyal said for scarcity marketing to work, the scarcity has to have, at the very least, an aura of legitimacy.

When it comes to Pliny the Elder, scarcity is more than an aura. Natalie Cilurzo  says she and her husband considered making more beer, but that would mean taking on more debt, stress and work.

“This is always been a lifestyle venture for us, you know we’re a married couple,” Cilurzo said. And plus, “scarcity breeds demand and that’s not that by design for us.”

She says it’s been a winning formula.

Pliny the Elder: A case study in scarcity marketing

Thu, 2014-09-18 07:54

Pliny the Elder was the Roman naturalist credited with first identifying hops.

Pliny the Elder is also a beer, and, today, a case study in "scarcity marketing," said Natalie Cilurzo, the co-owner of Russian River Brewing Company.

"We don’t do any advertising,” Cilurzo said. “As far as our marketing, I blog very infrequently on our website. We have a Facebook page, I try to post like once a week... maybe."

Despite the sparse marketing, demand for Russian River's signature beer couldn’t be greater. Cilurzo says on weekends, their brew pub in Santa Rosa is packed.

“We usually have lines up front on Friday, Saturday and Sunday mornings before we open,” Cilurzo said. “I heard yesterday, the Google Bus was here.”

Russian River Brewing Company also sells bottles of Pliny the Elder, in limited quantities, to a couple hundred stores in California and Colorado. (The beer, by the way, is pronounced Pline-y, unlike its namesake Roman naturalist whose name is pronounced with a short “i.”)

One of those stores is Ledger’s in Berkeley. I got to to the store at 4:00 p.m., which is when I was told the Pliny gets delivered.

Turns out, the beer came early and they were already out. Aviv Gerber was one of the lucky ones. He’s 29, a bartender, and he found out about Pliny at the dog park.

“I heard it’s only here on Wednesdays, and it’s now limited to one bottle per person. And I was curious,” Gerber said.

Most stores limit the number of bottles a customer can buy because, in the past, one guy would come in and buy the whole lot and anger customers. In fact, the Russian River Brewery now delivers the beer in unmarked trucks because some fans were known to follow the trucks from store to store.

I walked back into the store and spotted Cole Yacco. He’s 32 and works there. Ledger’s is my neighborhood store and so Cole hooked me up with a Pliny. He kept the beer under the counter and out of sight of the customers.

“I’m trying to hide them,” Cole said. “They can’t see, they’ll get really mad.”

I paid for mine and went home.

I have to say, the bottle is a little underwhelming. The label is super simple and you could easily miss Pliny the Elder on a shelf. As for the beer? It’s super dry, super hoppy and totally worth the hassle of tracking it down. Or so it seemed, says Nir Eyal, the author of “Hooked: How to Build Habit Forming Products.

“Scarcity has this effect of making people perceive products as more valuable simply for the fact that they’re scarce,” Eyal said.

He said it’s not just psychological: Studies have shown it’s physiological.

“They took a look at what was happening inside people’s brains when they were trying wine of different price points,” Eyal said.  

In other words, some wines were more valuable and scarce than others. Eyal said its not that people just liked the most expensive wine.

“But their brains actually perceived the wine differently when they tasted the $90 wine versus the cheap wine,” Eyal said. “And then they didn’t tell the participants that it was the same wine all along.”

Eyal said what’s happening is that one piece of information — that something is scarce — is short-circuiting the brain. There’s also the fact that scarcity makes for a good story. Eyal said if you tell people, “Hey, this beer uses high-quality hops and is made in small batches,” nobody is going to remember that.

But if you say, "Hey, I have this crazy story about how you can buy a limited amount and can you believe it and the lines?"

That’s a really easy story for one person to transmit to the other, Eyan says. Eyal said for scarcity marketing to work, the scarcity has to have, at the very least, an aura of legitimacy.

When it comes to Pliny the Elder, scarcity is more than an aura. Natalie Cilurzo  says she and her husband considered making more beer, but that would mean taking on more debt, stress and work.

“This is always been a lifestyle venture for us, you know we’re a married couple,” Cilurzo said. And plus, “scarcity breeds demand and that’s not that by design for us.”

She says it’s been a winning formula.

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