Flip the Switch Episode 36: Virtual Reality

John Saunders
By John Saunders

SOPHIA: Today on Flip the Switch. Amazon is giving a big discount to customers heading to Whole Foods. And Walmart is in a bit of a pickle with its investors.

UBS uses AI to predict the 2018 World Cup Winner. And we dive into the new law allowing sports betting.

Our main topic revolves around Virtual Reality and how marketers are using the technology to change the buyers’ journey. We close the show with an oldie but a goody. Terrifying Tech. Let’s get into it.

00:59 AUSTIN: Welcome to Flip the Switch presented by Power Digital Marketing. This is episode number 36. We are very happy that you are joining us today.

01:06 PAT: 36. The Jerome Bettis episode.

01:07 AUSTIN: Very nice. The bus.

01:09 PAT: We’re back on track. Athletes that we care about

01:10 AUSTIN: That we like.

01:11 PAT: That we like. It’s good stuff.

01:12 AUSTIN: Speaking of world time champions, we’re also going to be talking about a few of those in the business world today. We’ve got Amazon coming up. We’ve got Walmart coming up. And we’ve got a very interesting main topic around VR–that’s virtual reality. It’s getting hot in the streets as the kids are saying.

So before we hop into that, let’s do business news and trends.

01:31 PAT: Absolutely. Jumping into the first piece of news here, Amazon–favorite topic–was in the news again this week. It came out that Amazon is going to be offering huge discounts for you if you are a Prime subscriber at Whole Foods.

So way back when this initially went down–I think it was actually the first episode that we ever recorded. We talked about this and covered it pretty closely. Because Amazon is doing what Amazon does. Slashing prices across the competitive line, and then trying to gain market share to get as many people in there as possible.

Obviously that reach is going to be even more widespread, because of a name like Amazon. But now you have this added factor of if you subscribe for Prime, you get a discount that’s even more. So it’s going to get people to probably go into Whole Foods even more which helps Amazon. And more people buying Prime subscriptions–which is more important.

02:21 AUSTIN: The high-level reason, of course, is they want more people to go to their store. And what they want to break out of is that brand affiliation of being almost premium or too good for the general public. There’s always been that stigma of “Whole Paycheck” associated with Whole Foods.

So they’re trying to go kind of the opposite way in showing that they have goods that are priced similarly to your everyday stores. And they can do that a couple different ways.

One, of course, is this discount that you can use every single checkout.

And then they’re integrating that with an app. Showing that they’re technologically savvy and more advanced. Which might draw in people as well. As more and more of us turn towards apps to do everything. From using their credit card to pay for things, to booking a car to go to the airport. Uber. And all that stuff.

So yeah, I get it. Also I think very interesting timing, cause they just jacked up the price with Prime.

03:12 PAT: Intentional timing. It’s the reason why they did that.

03:15 AUSTIN: Yeah. I shouldn’t say very interesting timing, because they did it on purpose. They know that they just raised their price from 99 to 119 dollars for the annual Prime subscription. Meaning they want people to not notice that.

So how are they going to do that? Offering 10% at the place you probably go pretty often, and that’s their Whole Foods grocery chain.

03:34 PAT: Right. And I think there’s a couple of interesting pieces of this. First of all, it’s no surprise and it’s pretty wide-spread news too that Amazon makes a majority of its revenue from those recurring Prime subscriptions. That’s MRR. That’s money that they can bank and forecast for coming in. And that’s growing. The number of Prime subscriptions reached over 100 million subscribers, I think, 2, 3 weeks ago.

That number is climbing despite the price increase.

And this is just a way to get people to get Prime subscriptions who may not have gotten them before. So adding to that monthly recurring revenue number. Or annual revenue per user. Whatever you want to call it.

And then also it’s getting more people into the Whole Food stores. It’s like let’s say that there was somebody who shopped consistently at a Trader Joe’s or a Sprouts, if you’re local, right? And then they see that the prices are comparable at Whole Foods with that discount. They’re probably going to go shop at Whole Foods. So there’s like 2 tiers of acquisition that they’re kind of doing here. It’s either getting people into Whole Foods or Amazon.

I think that the really interesting piece about this though, is the way that you do it is by actively using your mobile phone at the checkout. And you’re using the app. That’s just conditioning people to buy things using an app. Which is what Amazon Prime is.

04:47 AUSTIN: You know that they have all their search data from their store Amazon–and then they’ve seen Google’s which is… 60% of individuals are now searching on their phone… More likely to search on their phone. Which means people are going in the direction of buying more. We do see a tendency between desktop and mobile to be more friendly on desktop for buying. For e-commerce transactions.

But it’s definitely going the other way. That’s been in the past. And now we’re transitioning more so. You can expect Amazon to understand that, and then, of course, like you’re saying, start conditioning their customers to purchase the way that they want them to purchase. Which is to making quick decisions in line, or adding another thing to their basket–their cart. And just not even thinking about the repercussions of the costs so to speak, because they’ll just be able to checkout so quickly with their app.

05:31 PAT: Yeah, exactly. It’s smart across the board. It’s going to make them more money now, and it’s going to train people to checkout more often by using apps down the line. They’re just going to keep making more money. Jeff Bezos well played.

05:41 AUSTIN: As always.

All right, next one we’re going to be talking about Walmart. Another giant. And they’re having a little bit of an issue. First quarter did not pan out the way they wanted to. They’re definitely losing the battle with higher cost. Investors are not happy. Pat, what’s going on here?

05:58 PAT: Right. So this is a topic we like to cover a lot because it’s a good temp. check for the retail space as a whole. We’re covered a lot of different retailers. Toys R Us being one of them. Walmart being one of them. Target being another one.

Walmart is the world’s biggest retailer, and it is slipping right now. And that’s just something that we’ve seen. You can chalk it up to a lot of different reasons. There’s the cost differential of the products sold in a retail brick and mortar as opposed to online.

There’s the added competition that people weren’t necessarily seeing as creeping into their space maybe 4 years ago, which is Amazon. It’s a behemoth now. Taking over the retail space. Even in brick and mortar locations now.

Those things are all factors, but what came out though is that the Walmart results from Q1 were horrible. Horrible.

They showed a 3.1% decline in their first quarter US earnings before income tax or EBIT. WE also saw that they slipped a greater percentage than the S&P indexes gained. So Walmart slipped what was it…? Their year to date decline was 14%.

07:07 AUSTIN: Yeah. 14% against the S&P 500 year to date.

07:12 PAT: Right. And S&P 500’s gain was 2.1% on the year. And their most direct competitor is–at least as far as stock valuations and performance go–or not competitor but baseline–is Kroger Company and that only saw a decline of 7%. So that’s half of what Walmart saw. This is worrisome.

07:29 AUSTIN: And this is being reflected in… When we talked about EBIT. That’s their earnings. So we’re looking at revenue generated, not profitability. And that’s an issue, right?

Cause you expect as a company to continue to grow your revenue, quarter over quarter, and then you become more efficient and economical with your profitability by adjusting things inside the organization.

And as the leading retailer in the United States for quite some time now, I think Walmart was probably used to this. And then we’re seeing this as what has happened to a lot of businesses. They’re not ahead of the curve when it comes to e-comm. And now that they’re kind of reaping the repercussions of that as more and more individuals are going the direction of Amazon. Buying online.

Everything we just talked about with Amazon at Whole Foods–Walmart was not doing. And now they’re trying to do it in other ways. One of the ways they just did that is their rolling out their new website. So I know that we’ve checked this out, and it’s very sleek and minimalist. It reflects, I think, a lot of the ways the brand are going with what they want. Their look and feel to maybe feel a little bit simpler. More aesthetically pleasing.

And then also a bit more personalized. So the checkout process is very simple. Easy. You know where to find your products very quickly.

So I get it. They’re definitely trying to emulate what Amazon’s already done with personalization.

08:46 PAT: Too little, too late, though.

08:47 AUSTIN: I agree. I think once you create a feeling with a brand, it’s really, really hard to change the way people feel about you. And Walmart doesn’t have that e-commerce feeling about it. It just doesn’t. It will always be the Midwestern giant that you go to the store for everything and everything.

09:05 PAT: That’s cheap.

09:06 AUSTIN: That’s cheap. And that’s not resonating nationwide now. We’re seeing that not work as more and more people are going online. So I think Walmart is in a bit of an issue. And the fact that they’re slipping year-to-date against a lot of the major consumers that are in their space is definitely worrisome.

09:22 PAT: Yeah. And another thing to think about too. Going this e-commerce route–they invested a lot of money in this new website and this new feel, and kind of re-brand of their online presence.

And while it might be too little, too late as far as long-term performance–even in the short-term this is going to hurt them. Because they just invested a good amount of money into making that a possibility.

Analysts think that it’s going hurt and stagnate how quickly they can turn core profitability again too. So it’s just like… I don’t understand necessarily the rationale behind it. You can’t expect a shift to e-commerce to be like your saving grace. You can’t be failing as a retailer, go online, and expect all of a sudden the sentiment to change. Because the difference between an online consumer and a retail consumer, while still a little bit different, is less drastic than it was this time even 3 or 4 years ago.

The sentiment that people have about your store in person is the sentiment they’re going to have about your store online.

And ideally, that’s actually what good agencies and marketers are going for. They’re trying to replicate that feeling. To train people to buy online. Because that’s where the company will make a better margin.

With Walmart, might as well be two different companies. Their website’s awesome. Their website is awesome. If I go into a Walmart, it’s going to be kind of dirty. It’s going to be a ton of people there.

10:46 AUSTIN: It’s gigantic.

10:47 PAT: I’m going to get yelled at by one of the cashiers. You know? It’s not a good scenario.

10:53 AUSTIN: I completely agree. The way that their look and feel… and if you’re on your phone or listening right now. Just check it out. Type in walmart.com and compare it to… I’m sure we’ve all been to a Walmart before. And they’re just drastically different.

They have products at the very front that are easy to click to. And you can checkout very simply. There’s large banners across the top. The hero images are nice, and sleek.

And it just isn’t the way that their stores are at all. It’s confusing, it’s cluttered.

So I think that’s definitely going to throw people off.

Also, their target market. I don’t know if their necessarily going to really care about a new website also. So that might be their trying to reach a different audience or potentially invest long-term to attract what would be more our generation. The millennials. That do shop online more so and are more used to it. So that could be the play here too.

11:42 PAT: I think that has to be the play. Because if you look at Walmart’s scenario right now–they’re slipping, they’re doing poorly. They need to recoup those losses in a way that’s going to be sustainable in the long-term. It’s not like they can just have a blowout quarter and all of a sudden be fine.

There’s some kind of fundamental issue with the way that the company operates. And I think that they determined that that’s because they’re targeting a group of people who just don’t have the purchasing power they did 4 years ago.

You have the millennial generation now that this time in 2, 3 years is going to possess the majority of the buying power in the economic market. And they’re trying to appeal to them by emulating some of these websites and some of these e-commerce store like an Amazon.

When I went on Walmart’s new website, I immediately thought that it looked like Amazon, you know? And so they’re trying to emulate that to try to encourage more purchase behavior. But again, I do think it’s been too little, too late.

12:36 AUSTIN: Long-term effects, I think they’re going to be fine. It is Walmart, and right now they’re investing a lot of time and more importantly money, into trying to capture that audience that we just discussed, 2, 3, 4, 5 years down the road. So look for Walmart to potentially take a little bit more of a dive from a revenue standpoint the rest of the year. And then we’ll see how they recover going into 2019.

12:57 PAT: Going to be very telling.

All right, one piece of pretty cool news that we found. And this is very timely, so we went on Ffotune.com and we’ll post these in our forum group after the episode. But it came out this week that UBSes AI predicted the winner of the 2018 World Cup. Spoiler alert. Well, you’re just going to have to read the article.

It ran 10,000 simulations and then calculated the highest likelihood of teams winning in each of those simulations. And then calculated which of the simulations itself was the most likely.

That’s Doctor Strange. From the Avengers?

13:36 AUSTIN: Yeah.

13:37 PAT: That’s exactly what that is. I think that this is really interesting. I will say though, just in looking at the article, it’s nothing that’s unintuitive. Right, they have like Germany, Brazil…

13:50 AUSTIN: Yeah, the top 3 country is that are in the quarters or on every single World Cup. But I think that this is really cool, and why we want to bring this up is it connects really well with where we are. With sports betting.

And I think that this article is definitely geared towards those people that may understand that that’s occurring.

As a lot of you probably know, there was just a… the federal government just said that it was unconstitutional for them to block sports betting on a state level. So now state governments can choose to make sports betting legal.

Which of course, opens the door to a gigantic amount of revenue generated for sports betting parlors if they open, casinos that already exist. Online casinos that already exist. Race-tracks that could integrate that into their sports betting process.

This is a gigantic cash cow. And then what we’re really seeing too, is the media’s going to be the one that’s going to make all this money. Cause now they can offer advertising on their websites for sports betting, when at state level does come legal.

And then start writing articles like this. You’ve got a gigantic door opened where it’s no longer taboo to discuss sports betting cause it’s legal. It’s just like what we’ve seen with marijuana. Not exactly the same thing, of course. But the point being is that something that was once considered taboo by our society is no longer. It’s integrated into our everyday lives.

15:09 PAT: Yeah. And there’s a lot of opportunity for new business growth in that sector too. Just like we saw with the legalization of marijuana, there have been a lot of companies that have come up. And a lot of technological innovation around that.

I read this, and I think to myself if an AI software can essentially predict the winner of a sports game by running simulations, I wonder how many companies are going to start trying to build a business off of that kind of technology and run sports betting companies now.

15:40 AUSTIN: Wow. Yeah, that’s a real interesting idea.

15:41 PAT: That was the first thing that I thought of.

15:44 AUSTIN: You’ve got to imagine that there’s probably people that do that on a small scale. I know people build models to predict who’s going to win games and all that stuff. But if you have enough money, and you’re just sitting around wondering what to do, why wouldn’t you invest in just some predictive type of algorithm where you know that 66% of the time you’re going to be correct or something?

It probably opens the door for a lot more of that too.

16:07 PAT: Yeah, it’s just going to be really cool to watch the innovation that comes as a result of that. I think that was probably the most interesting part… again, going back to the marijuana example. A lot of different technologies, and a lot of emerging science. They’re even calling it “the Green Rush,” at one point.

I see the very same thing happening here. And it’s not like it was… I mean, it was voted on. It was 7 to 2 in favor. You know what I mean? It’s an overwhelming majority of people probably as a sentiment think it should be legal to bet on sports games.

16:36 AUSTIN: This is a very, very fascinating time in just being an American. Cause we’re seeing a lot of change from a societal standpoint of what we perceive to be okay. We’re living in a time where we have seen something like marijuana–now it’s not taboo. Sports betting has become normal. It’s really interesting. Joe, you look like you’ve got something to say.

16:54 JOE: Well, I was going to say, it’s just smart of them to do this. Because it wasn’t stopping anyone from doing sports betting in the first place. Because the Internet allows you to do that legally in some stance. And people were all doing it anyways. So…

17:07 AUSTIN: Why not just tax it?

17:09 JOE: Yeah, why not just tax it.

17:10 PAT: Make a ton of money off of it. But the point that I’m trying to get across though is that’s one side of it. And that’s, again, the side that’s probably going to most immediately affect us. But I bet we’re going to see a ton of innovation to try to capitalize on that.

Because there is some money to be made in this market. And I think that AI could be a great way to do that.

If it’s predictive technology. If it’s predictive analytics–that’s what sports betting is. There’s going to massive bookie companies that are going to invest in AI that can help predict winners of like The Little League World Series, you know what I mean?

It’s going to be crazy. It’s just going to be really fun to watch.

17:45 AUSTIN: It’s going to be interesting to see the impact on college sports. I think that’s going to be a really big issue. They already have such a problem with it, and now this is just another way for the NCAA–one, to make a ton of cash off of advertising for these type of companies and partnerships now that it’s legal. That’s going to be a massive grey area for sure, with the players. Expect a lot of problems to arise from this too. I think.

I think there’s gonna be a ton of issues. Let’s hope the integrity of the professional sports aren’t affected too much.

That is a big worry for me personally, too.

18:16 PAT: I think if anything this helps with that because it’s so objective. I mean, before if you had… take like the 1919 White Sox scandal where these bookies paid off the players to perform badly…

18:30 AUSTIN: “Shoeless” Joe Jackson.

18:32 PAT: “Shoeless” Joe Jackson. There was a movie about that. “8 Men Out.”

They just paid these guys, and told them to throw the game because they just decided that they wanted this team to win. If AI is using predictive technology to determine the winner, that almost makes it more objective, doesn’t it?

It’s almost like at your best skill sets we determine mathematically that this team is better. So there’s no sense in trying to throw a game. And there’s no sense in not trying, you know what I mean?

18:58 AUSTIN: I do to a degree. I also just wonder just what that does for the outcome of the game in general. Does that make the other team–if they know–try harder or does that make them feel like they have no chance because from a predictive/analytical standpoint, they’re just not matched up against the team they’re playing.

I don’t know. That’s a really interesting thought to. And we’re going to see a lot of crazy stuff happening. IN the next 2, 3 years.

19:20 PAT: Maybe a future main topic.

19:23 AUSTIN: I hope so.

19:24 JOE: I’m just surprised by how far we’ve come since the Schwab. Do you think he’ll be out of a job?

19:29 AUSTIN: You know, he has another job. He worked for ESPN for a long time…he’s the guy that has his memory is incredible of anything sports. So he can like name the guy who had the highest batting average in the 1936 National League. That kind of stuff.

But he’s got a different job too. I actually could see a sports betting website using him as a PR resource. I think there’s going to be a lot of sponsorships with guys in sports that do that. That may be really smart.

And also athletes. Like, I guarantee you Steph Curry’s getting sponsorship from Bovada or something.

20:04 JOE: We should get a sponsorship from Bovada.

20:06 AUSTIN: We should. Bovada, if you’re listening, you should sponsor our podcast. We all love sports and more importantly sports betting.

20:16 PAT: All right guys. Moving into the main topic discussion for today. WE alluded to it a little bit in the intro, but virtual reality or VR in business. So we’ve been doing a good amount of research for the last year to 2 years. Because VR really has made an emergence into the forefront of a lot of technological innovation. Like, gaming and stuff like that.

But what I’ve found to be the most interesting is how companies are leveraging VR for what they’re trying to achieve with the customer journey. I think that that’s probably the biggest area that we’re going to see growth with VR over the next few years in terms of how people are using it.

So, kind of the purpose of the topic is to delve into that a little bit. See what companies are doing it right. See what trends are looking like going forward. Then just have a little bit of a discussion about whether that’s good or bad.

21:03 AUSTIN: Absolutely.

21:04 PAT: So jumping right on into it. This is actually an infographic that we saw come from Marketo–which is like a marketing platform agency. And the statistics are pretty staggering…

21:16 AUSTIN: The growth is unbelievable.

21:18 PAT: Exactly. Even like projected growth. So we can see all the way back in 2015, virtual reality active users, about 6 and a half million people. 6.7.

In 2016–so from 2015 to 2016–that grew from 6.7 to 43 million people.

21:35 AUSTIN: Yeah. And then as we get into the back years and going forward in time to 2020. Pulling this from another website called Statista–they’re expected to bring in about 15.6 billion dollars. The economic impact of VR–that’s projected–is staggering to a degree. And just how that’s going to affect the overall market. The national market.

And really the reason we’re seeing this is the interest is growing. That’s the only reason why people are continuing to invest in it, of course. There’s general interest in VR and the platform that it brings. And this new technology has the ability to augment a human’s reality. Which is very fascinating in a society that’s surrounded by technology. I think that this is something that humans may become accustomed to.

Or really like to enjoy on a more addictive level. As we’re seeing with cell phones, right? And now we’re at a point where you don’t look away from the screen, because you’re physically being affected by it. You’re mentally being affected by it. It’s drawing serotonin out of your body. Or you’re using Serotonin when you see the screen.

And this is probably a similar situation. And you know companies know this. That from a scientific level, they can make sure that this market grows and that they generate revenue, because people may become addicted to it.

22:57 PAT: It’s heading in a “West World” direction a little bit to me. Where it’s even more immersive and it’s incorporating different sensory factors. Like, your olfactory receptors. Your touch, your feel, all of that.

It’s pretty interesting. And even just looking at user growth over the last 4 years. 2015 to 2016 there was a differential of 37 million additional people were using it. Then from 2016 to 2017, it jumps from 43 million to 90 million. And then from 2017 to 2018 it jumps from 90 million to 171 million people estimated in 2018. That are going to be using virtual reality in some capacity or another.

Like, how can companies capitalize on this? Because you know that that’s the direction that it’s going. We have examples of a few huge companies and brands that are using it to an extent.

23:48 AUSTIN: And what they’re trying to do is integrate this with something in a consumer’s life that’s very familiar and consistent. So whether that’s watching TV. Whether that’s playing video games. Going to see a movie. Test driving a car. Something that most people would do. They need to affect you and integrate with that feeling and that action so that it becomes more of a normality to use VR for that purpose, whatever that may be.

So something like–I think this is a good one–is Game of Thrones has been using VR. That’s a tactic they’ve been doing to affect the acquisition part of driving people to watch their show. And all that stuff. They’ve been doing some sort of exhibition where you can travel through one of their scenes, and kind of interact with the environment. Makes you really feel everything that is Game of Thrones, outside of just seeing it, you can really start to immerse yourself–your total self–in that scene.

24:42 PAT: It’s pretty interesting cause it kind of goes along with the same… it’s kind of like the freemium mentality. Here’s a little taste of what this product can offer to you at no cost. And you decide your affinity for it. And then you become a customer as a result. And it feels more inbound as opposed to outbound. That’s what VR is achieving with HBO right now. They’re using to acquire customers and show people who don’t know what Game of Thrones is… for example, how cool it is, what it’s all about. Exactly what some of the cornerstone scenes and places and locations and characters look like. And I think that’s so smart.

25:20 AUSTIN: I think a good analogy for all this is the test driving of a car. That’s kind of where the state of all this technology is right now. They’re letting people take it out for a spin for free, see if they like it when they put their pedal down. Put the foot on the gas. And enjoy the technology to a degree and see if it sticks. They really need to understand and we know that data shows revenue growth is showing that it is sticking.

But at what point do you cross that threshold of being in every single house? With every single person?

And the only way to do that is to allow people to try it.

25:50 PAT: Yeah. I completely agree. And that’s the exact same trend that you see with these other brands that have tried it. Samsung, Lowe’s, Toms… Toms does a really cool one. It helps get customers bought into their mission, so it communicates the mission of what they’re trying to do by taking a user, or an audience of customers to a village where children are receiving a pair of their shoes.

Because the whole mission with Toms is you buy a pair, they donate a pair. It shows you exactly… and it gives you that sense of gratification and fulfillment. “I’m the one that is causing this real thing to happen.”

And they don’t have to take you to that village to make that feeling exist…

26:30 AUSTIN: Right. They can bring it right to you in your home.

26:32 PAT: And that’s the most astounding part of this to me. And that’s where I think the most unlocked potential is for VR. Is creating that immediate sentiment that they wouldn’t have felt for a long time…

26:40 AUSTIN: It’s a deeper connection with the brand. Which we’ve never had before of course. It’s always been that seeing it through a screen of maybe that feeling that you have from holding the product. But now the brand is really getting to choose what your reality is when you see and interact with their company.

26:57 PAT: And it’s unlocking the “why.” It’s like getting to the core of the “why.” Why people are buying this product, and why Toms is the company that you should have an affinity for. It’s like everything about that is just genius to me. Because it takes something that should be kind of an objective decision–like “should I buy these shoes, or should I not?”–and puts way more context and way more gravity into the situation that causes people to feel a certain way that makes them want to engage with the brand more.

27:25 AUSTIN: Absolutely. And on a B to B level–so business to business–this has got to be the greatest tool for a company to market now. A lot of times, the way to sell someone is if they can interact and use with it from a business standpoint. So that people can understand how this is actually going to affect their business positively.

So whether that’s a trade show, or a webinar–that’s how typically big brands or someone that’s selling maybe a SaaS platform–Software as a Service–will try to do it. Just actually showcase it and show you how it works.

Now you could just strap on a headset here and fully integrate with the product on a total standpoint, and understand how it affects everything. And I think that that’s a really big jump in selling something. Is you don’t have to expect them to try to understand what you’re selling. You can just simply have them feel that now, and totally see it.

28:18 PAT: And it communicates the same way. And it’s really interesting cause in this article too it talks about how it influences the buyer behavior part of it.

And before we dive into that too much though… We’ve talked about this before, and we kind of brainstormed around how companies could be using this in the future. VR augmented reality. And these are some of the exact ideas that we talked about.

Lowe’s lets you visualize what a piece of home improvement… let’s say you get new cabinets. You’re super-excited about your new cabinets. But you don’t know what they’re going to look like in your kitchen. Those let you visualize what they’re going to look like in real life.

So it also curbs a lot of the hesitancy that would cause a stop in the consumer journey. We talked about that with commercial real estate.

What if you had…? You have somebody that you want to fill a lease. As a potential tenant. And they’re on the other side of the country. Instead of wasting the time to fly them out, so the whole, like… take them to lunch, take them to drinks. Show them around. Talk prices.

You can deliver that tour to them while they’re sitting there and you’re over here. Which mitigates the time cost that you have in trying to prospect that person.

So I just think that this is all super-interesting stuff. But the reasoning and the science behind why it actually influences buyer behavior is pretty interesting.

So VR affects 3 key areas of the brain that influence your behavior. The neo-cortex–which is the part of the brain that is conducive to higher level thinking. So rationalization and decision making. And that’s really why the “Why” of a brand’s mission resonates with people so much. Cause that’s the part of the brain that is kind of apt to think that way.

29:55 AUSTIN: It’s the more intuitive part of it, right?

29:57 PAT: Exactly.

30:00 AUSTIN: It’s being pretty logical and trying to understand a reason for either making a purchase or making a decision even.

30:05 PAT: Yeah, and it’s consistently rationalizing your decision making. So it’s like a predisposed position to “I’m either going to like this or not like this.” And then the neocortex help s fill whatever decision you’re making with reassurances based on logic that it creates for you. “Oh this makes sense. You made the right decision. Here’s 6 reasons why.”

The limbic system. So that’s emotion, behavior and motivation. So that is really kind of tapping into the… what VR can actually offer. This is what makes you feel, what the business wants you to feel when you actually buy the product, right?

30:40 AUSTIN: And that’s kind of where you sell someone on if it makes you happy. If it makes you feel empowered by something. If it makes you feel all right. This is the point where you just have to sell someone on that. There’s really no emulation of trying to get someone… or telling someone to feel a certain way. You need to have your VR really impact them on that level. So that’s where you’ll affect them there.

And that’s the interesting thing too, is it can be like… you can either be trying to make them feel great or you can be trying to induce fear that can cause them to make a decision to.

So there’s 2 different approaches there that tap into that same limbic system.

And then the 3rd thing is the reptilian brain. So that’s primitive instincts. So that’s kind of your subconscious brain, your subconscious decision making and your primal needs and motivators. That we have as human beings.

So it taps into that as well. So one primary motivator that human beings have is a sense of community. Because that’s how we’ve been able to sustain for so many 10s of thousands and millions of years, whatever. Is because we look out for one another.

So when a company like Toms uses VR to put a person in the perspective of “I’m helping my fellow humans by buying this product.” That’s what that is tapping into also. There’s going to be a little overlap where it taps into the limbic system as well. There’s definite crossover, but those are kind of the key areas that it affects.

And if you really think about it, any decision-making that you have… any process that you have for making a decision in your life is utilizing all 3 of those. And VR just kind of hits on those intuitively for you.

32:09 AUSTIN: So what do we think? If you’re a VR company or someone who’s marketing this product for a VR company, what can you do and what can you roll out to really make this a mainstay.

I think one idea that comes to mind for me is, when we look at the general direction of how people are buying. And what companies are choosing to do for their potential customers is personalization. And with VR and augmented reality, there’s going to be some need for that too.

And I think an interesting way that might happen is by bringing people, and connecting with them emotionally to either their memories or what they already know. Look and feel from maybe a relationship standpoint. So saying that you can interact with maybe your loved one who’s on the other side of the world.

Or interact with them if they’re in a different time zone and you don’t get to see them all the time. If they can create that feeling via VR that allows you to be there with them. And either tap into some sort of memory you have, or what it would look and feel like if you were with them. That could be a huge selling point. Because we know that memories and feelings that go away are some of human’s greatest treasures. And a lot of people would do almost anything to feel that again. Whether that’s a great moment in their life that they’ll never feel again. If someone was passed, so…

What I see is somebody out there’s probably trying to figure this out right now. From a scientific level. Can we use memories to recreate them and make them a reality once again? And the way that you would do that is through VR. It would be a full immersion of experiencing that memory once again. For me, that’s what I think of. You have to do something to really make it a mainstay in a house, and it could be something like that.

33:51 PAT: Yeah. I think you hit the nail on the head. It just does an outstanding job of tapping into parts of the human emotion that regular advertising…

33:59 AUSTIN: Is that an episode on “Black Mirror?”

34:00 PAT: I mean, it could be. You could write for Black Mirror.

34:05 AUSTIN: I’ve only seen about 3 or 4 but I feel like that would be on there. So I didn’t steal it. If it’s out there–I don’t know if it is–I didn’t steal it.

34:11 PAT: If it’s out there, we didn’t steal it. But if it is on there it’s just cause it’s a great idea.

34:14 AUSTIN: It’s cause I’m really smart.

Last segment today. We’re doing something a little fun and a little spooky. We haven’t done it in a while. Terrifying Tech. (laughing) I’m sorry, I just used the word “spooky.” That’s kind of funny.

So we’re doing Terrifying Tech and we’ll let Patrick, who is laughing at me, go first, since he thinks it’s so funny.

34:35 PAT: Perfect. So this one is actually terrifying and tech. So there’s a Chinese company claiming… and other companies have come out that do the same thing… so if you submit a 60 second recording of somebody’s voice, their technology can mimic that voice almost pitch perfectly and get it to say anything.

34:56 AUSTIN: Oh my gosh.

34:57 PAT: Yeah. That’s like blackmail and identify fraud in a SaaS offering, right? So it’s like similar to this one that was dropped by a Canadian company called Lyre Bird. Spelled L-Y-R-E, not L-I-A-R. Common misconception.

But the Chinese company’s called Voco. And it’s basically like an audio editing and generating software. And it was originally released–the technology was originally released by Adobe in 2016. And they basically ripped it and made it more practical for their purposes.

35:28 AUSTIN: This seems like a very large issue.

35:30 PAT: Yeah. I don’t understand like what the business model would be necessarily.

35:37 AUSTIN: Right. The only reason why you would use that software is if you’re trying to fake someone’s voice.

35:41 PAT: Maybe it’s like a security company that’s actually backing this product and they’re just like creating a bunch of demand for their product by getting peoples’ identities stolen.

35:52 AUSTIN: Identity theft is huge

35:54 PAT: Identity theft is super-hot right now, so it could be why…

35:56 AUSTIN: It’s happening to everybody.

35:57 PAT: But is that not…? That’s creepy right?

35:59 AUSTIN: That’s very creepy.

36:00 PAT: Also it can manipulate images and video too…

36:06 AUSTIN: Even better. Great.

36:07 PAT: So I don’t know. If that happens we’re all screwed. But that’s terrifying…

36:11 AUSTIN: We’re definitely screwed. That’s gonna for sure get someone to press the nuclear bomb or something.

36:14 PAT: That’s actually terrifying.

36:22 AUSTIN: All right, Joe. Joe you’re going to go next.

36:24 JOE: My terrifying tech is Tesla motors.

36:29 PAT: Oh, savvy.

36:30 JOHN: I thought this was going make it through this episode without Tesla involved…

36:34 JOE: You guys see those recalls?

36:34 PAT: Yeah. I actually did. Wait, fill us in on that a little bit.

36:39 JOE: I just know that they’re recalling a bunch of cars, stock is plummeting, Elon Musk is panicking and he just hired some interns.

36:50 AUSTIN: What are the interns…?

36:51 PAT: That’s just “Tech” right? That’s not even necessarily terrifying, it’s just… So why are they recalling? Is it because the auto-… the self-driving cars hitting people?

37:01 JOE: It’s terrifying because we are always so praising of Elon Musk on this podcast, and now we’re seeing a chink in his armor.

37:08 PAT: That is… that’s like a creative cop-out. John, we’re passing over to you.

37:12 AUSTIN: Just real quick to wrap that up. It’s the power steering is why they’re recalling it. 123,000 of the Model S vehicles have been recalled. There was excessive corrosion in the power steering bolts, which of course affects the ability to turn.

37:27 JOE: I’ve already had to return 2 of mine.

37:30 AUSTIN: Hate when that happens.

37:31 PAT: Yeah, that’s the worst, isn’t it?

37:32 AUSTIN: You still got the Lamborghini though, so…

37:33 PAT: that actually is terrible though for them. Because their stock… there’s so many people that are shorting Tesla stock right now. I was listening to this podcast PNL on Bloomberg and they were talking about it. And this guy that basically runs a fund where he shorts–he was saying the most attractive short in the market right now is Tesla.

37:50 AUSTIN: He nailed it. This is a big gift to all of the shorts.

37:52 PAT: They were already having supply issues, and the fact that they had to recall a bunch of cars because the steering wasn’t working…

37:58 AUSTIN: Seems like Elon did a very bad timing in investing that extra 9 million in his company last week.

38:06 PAT: Still funny.

38:06 JOHN: Can I just say that I’m really disappointed?

38:08 PAT: Why?

38:10 JOHN: That we brought up Elon Musk yet again, and we were so close to not having him on this episode of the podcast.

38:15 PAT: But he listens to every episode, so we have to talk about him. It’s part of the contingency that we have together.

38:20 AUSTIN: You know the deal we signed with him back in 2017?

38:22 PAT: Completely kidding about that. No deal was signed.

38:26 JOHN: All right. And my “Terrifying Tech.” It has to do with scientists pursuing the thought or the product of recording dreams.

38:35 PAT: Oh my God. Okay.

38:34 JOHN: So not just recording them and having them but actually being able to play back dreams. The quote says “One day you may be able to say ‘Alexa. Play back last night’s dream.'”

So it’s very loose right now. All I have is Moran Cerf a professor at Northwestern University saying that there are scientists working on it. And reporters have asked Google and Apple and a bunch of larger tech companies if they have a product in the motion. And they declined to comment.

39:11 PAT: I wonder how… like, how do you do that? You know?

39:14 AUSTIN: Remember earlier when we were talking about the memories thing with the VR? They should call this guy. This is my idea, and it’s happening.

39:20 PAT: We should broker that deal, and take a little bit of a commish.

39:22 AUSTIN: I’ve had a lot of good idea on the show lately. I think we need to start taking a cut.

39:26 PAT: I was actually… so on the Joe Rogan podcast recently there was a sleep doctor and he was saying that there’s evidence to suggest that your brain has memory of every dream that you have ever had. They’re all available, but only a certain amount of them are accessible. The rest of them lie in your subconscious brain. And there’s no way to consciously go and try to retrieve them.

But you can be triggered by something in your real world. Like a Deja vu type moment.

39:51 JOHN: Yeah. The one thing I’m looking at is if they’re just saying this to make it Terrifying Tech, but it’s really just like some wavelength that they’ll be able to see. Not like a video… like a YouTube video of your dream.

40:03 PAT: (laughing) Yeah, an entire YouTube channel of Joe’s dreams just all nightmares.

40:07 JOHN: “Oh, we can record your dreams.” And they hold it up and it’s just “ding-ding-ding.”

40:09 JOE: You wake up the next day, and you’re like “Hey Alexa. Play back my dreams.” And it’s like, “You didn’t graduate from High school. You failed your final.” “But I already graduated from college and I’m going to work.” It’s not that terrifying.

40:25 AUSTIN: (laughing) Joe for sure has nightmares about that.

40:27 JOE: I’ve had that recurring nightmare at least 10 times.

40:28 PAT: Oh, dude. Yeah. Same. High school or college?

40:32 JOE: High school.

40:32 PAT: Dude. Same.

40:35 AUSTIN: Are you serious? You’ve actually had that?

40:36 JOE: I have it all the time.

40:37 AUSTIN: Really?

40:39 PAT: We all graduated with honors though. Austin got it.

40:43 AUSTIN: (laughing) Yeah, I had a 4.0.

All right. Last one. We’re going to be talking about it.

Imagine this. You go into a store and you’re looking around and all of a sudden you start hearing a voice. And the voice is whispering something to you along the lines of “Buy something.”

40:55 PAT: Sounds pretty par for the course so far.

40:58 AUSTIN: You’re starting to freak-out, right? You’re like, “Am I thinking about that?”

No. Turns out there’s a new very, very interesting sound wave technology coming out from a company called Holosonics. And what they developed is it’s a tiny speaker that focuses sound into a very narrow beam. So it’s ultrasonic frequencies that are too high for the human ear to hear and then only if you enter into a certain part of that sound beam, then you would hear it.

So it distorts air to make it sound audible. It’s really crazy, but what they want to do is use it for in-store advertising. So let’s say you’re walking by the milk…

41:39 PAT: And a “Got Milk” commercial comes on?

41:40 AUSTIN: And it’s just like you would hear “Got milk?” And then you’re just like, ‘What just happened.” and it would just be like basically affect your consciousness to make an emotional decision to buy milk.

41:49 PAT: That’s crazy.

41:51 AUSTIN: Isn’t that scary?

41:52 JOE: It’s kind of like the Laurel and Yanny thing.

41:55 PAT: I was about to say that. You’ve heard that, right?

41:58 AUSTIN: Yeah, dude. I heard it. I heard it.

42:00 JOE: What’d you hear?

42:02 AUSTIN: I heard Yanny.

42:03 JOE: I heard Laurel.

42:04 PAT: Dude, I heard Yanny too.

42:05 AUSTIN: Well, just the first time. I haven’t listened to it again, but everybody says the first time…

42:10 JOHN: Did you see the new one? The green needle or brainstorm one?

42:12 PAT: Yeah, you can train your brain to hear which of the two you want. So you know, like, Yanny or Laurel, you’re hearing whatever one, like… And you can’t necessarily change your mind and have it sound correct. With the other one, you can decide which of the two you want to hear, and it’ll just sound like that.

42:28 JOE: That’d be perfect, cause in your example, I would be walking by the milk. I would already be like, “Chocolate Milk. Chocolate milk.” I would buy the chocolate milk.

42:38 AUSTIN: That’s literally what it’s made for. So anyways, be on the lookout for that. If you start hearing voices at the grocery store, don’t you worry. It’s just Holosonics and their ultra-light beam.

42:50 PAT: That is terrifying and that is definitely tech.

All right, you guys. That just about wraps up episode 36 of Flip the Switch presented by Power Digital Marketing. Thank you guys so much for joining us again today. Join our forum group. We have a private forum on Facebook called Flip the Switch podcast forum. Austin is waiting by his computer religiously to add you to the group, so request us. We’ll add you in there. Get to talk, and take some polls. Ask some questions. All that good stuff.

But in the meantime this has been Pat Kriedler, Austin Mahaffy, John Saunders and Joe Hollerup signing off.

John is the Director of Web Development at Power Digital and thrives on the balance between creative and strategy. Using his experience in CRO, John approaches website builds with the user in mind, combining psychological and technical aspects of design.