From Vancouver Magazine Fall Issue 2012

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Note: I was inspired by the always-fascinating work of Eric Falkenstein (at Falkenblog) in my application of Batesian Mimicry to consumer behaviour.

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It will have escaped nobody’s notice that Vancouver is a top-ranked city in at least three categories. We’re always high on those “liveable city” lists. We have the most expensive real estate on the continent. And, of course, we’re also among the urban zones most addicted to the roasted seeds of an epigynous berry found on Asian and African shrubs known as Coffea Arabica.

Yeah, we love our joe in this town. We’re boffo for coffee. Two Starbucks per intersection never struck us as ridiculous. A friend from Montreal, visiting for the first time in the early 90’s, described his first experience of Robson and Thurlow. “There were a bunch of bikers at this one Starbucks when I entered. I saw them finish their coffees, get on their motorcycles, and then CROSS THE STREET and go into the other one.”

That’s Vancouver in a nutshell or, in this case, a roasted endosperm.

Of course, most residents also realize that our relationship with the brown bean hasn’t been static. We weren’t born this way. Don’t anybody try to claim that Jack Khatsahlano greeted our city forefathers with high-altitude, shade-grown juice served out of a Belgian gold-plated vacuum coffee siphon. My point being that fine coffee isn’t in our blood. It is a choice we’ve made, socially and economically. And as such, it offers a portrait of, if not who we are, then at least who we think we are.

I found myself considering all this over the past month as I sampled my way through a list of cafes and fine bean roasters in Vancouver recommended to me by my most ardent coffee-loving friends. But I found it brought into absolutely crystal focus while sitting in the boardroom of the Doi Chaang Coffee Company on West Hastings Street downtown. John Darch, the company’s founder and 50% owner (the other 50% is owned, notably, by the Akhi hill tribe in Thailand who farm the beans) had just served me up a cup of their single-estate espresso, which (not to give it away, but…) would prove to be the best cup of coffee I drank during this whole experiment, and our conversation had turned to civet coffee.

You may have heard about this stuff already. The civet, a svelte mammal whose musky body scent is used in perfumery, also happens to be a bit of a coffee fiend. Only, they eat the fruit. The cherry, as it’s known. What emerges from the other end of the civet then, in due course, is the seed of this fruit – the coffee “bean” – neatly de-fruited by that point and (connoisseurs maintain) enhanced in flavor as only possible by exposure to the enzymes in a civet’s digestive tract. It’s coffee scat, essentially. But what Darch wanted me to understand that Doi Chaang’s particular brand of civet coffee scat was special. Sold at $55 for 50 grams, which works out to $1,100 a kilogram, and carried by both Harrod’s and Dean & DeLucca, Doi Chaang’s civet coffee isn’t made using farmed civets who are inhumanely force-fed coffee cherries and whose poop is then combed for seeds. It’s made by wild Thai civets who rove the coffee plantation nocturnally and voluntarily, eating in the manner and pace of their choosing.

“Garbage in, garbage out,” Darch says of other brands. “Our civets are choosing their own cherries. And of course that means they choose only the best!”

It’s a great story. (I’ve been telling it ever since.) And perhaps that is the key point here. Coffee these days is very much about having a great (and ideally heartwarming) story. Google up any of the major players in Canadian independent beans these days, in fact – Ethical Bean, Kicking Horse, Salt Spring Coffee, Doi Chaang – and you’ll find such consistency in the stories it’s hard to believe they weren’t centrally coordinated. No, nobody else boasts of having wild Thai civets custom processing beans for them. And I’m not talking about the product being “organic” or “fair trade”, either, which should be considered the bare minimum entry requirements in this field.

I’m talking instead about other initiatives intended to humanize these companies to the point that they don’t sound like corporations at all and more like non-profits. These are companies touting projects to build schools in Central America (Ethical Bean), or to recycle coffee grounds and bags (Salt Spring), or to funnel financial support to the Canadian Nature Conservancy and local food banks (Kicking Horse). Doi Chaang, whose founder gave half the company to the Thai tribe where he sources his beans is perhaps only pushing farther down the same virtuous avenue. Did he have to? Not legally. But to make a mark in coffee, it was a very savvy move.

“Of course people won’t buy crappy coffee,” he says. “But nobody has a story like ours.”

And as if to underscore that point, he describes how sales of Doi Chaang’s coffee “struggled” for the first two years. Not because of quality. Critic Ken Davis, whose ratings in Coffee Review have become the Parker Points for the beverage, tells me that Doi Chaang coffee is in the top 10% of coffees he has “cupped”, rating around 89-91, where your typical cup of Starbucks is 83-84, and Folgers instant crystals comes in around 60. No, the struggling was story-related, in the sense that not enough people knew about what Doi Chaang was doing. Sales only exploded following the airing of a Global TV documentary on the company’s “Beyond Fair Trade” partnership with Akhi peoples. In one year sales tripled and haven’t looked back.

Which is a curious market feature, when you think about it. We don’t refuse to use Hootsuite unless Ryan Holmes builds a school in Honduras. We don’t boycott Burrowing Owl if they neglect to build their brand around high profile environmental donations. Why then do coffee consumers demand that people in the coffee space go beyond making good juice – and here I mean both wholesalers and retail cafes – and also somehow commit to making the world a happier and more egalitarian place? What the hell is in this stuff other than caffeine, some kind of ethical, high-minded pixie-dust?

Doubtful. I think the answer is, in fact, a lot more scientific and less flattering to us individually. It’s Batesian Mimicry at work, folks. Species copy each other, mimicking high value features, like stripes and spots that signal venom and discourage predators. Perhaps the most famous example is the entirely harmless Scarlet King Snake who copies (not perfectly, but pretty well) the markings of the very-poisonous Eastern Coral Snake, securing for itself a protection that it didn’t actually earn.

Consumers do the same thing, in waves, mimicking high value ideas to secure the returns that they have observed other consumers earlier receive. So the first generation of Starbucks users were able to signal to the world a powerful knowledge, positioning them advantageously relative to coffee drinkers who’d come before. Starbucks consumption indicated that you didn’t drink the watery, flavorless, institutional coffee that had prevailed prior in North America. You’d travelled to Europe. You knew the truth about craft and quality and the way coffee really should be done.

As status accrued to those early adopters, a billion mimics followed, displaying the logo in obedience to the evolutionary code written within: signal what the successful species signals. The cups proliferated. Competitors to Starbucks responded by darkening their own roasts. Starbucks responded by growing, growing, growing. They became a mega-corporation. They started selling breakfast sandwiches and their “cafes” started smelling like cheese. The line-ups grew. And at some fateful tipping point, the exclusivity of the brand collapsed.

Which is exactly what happens to Coral Snake populations when too many Scarlet Kings mimic their markings and dilute the results.

Starbucks may still be profitable. (John Darch observes: “Starbucks changed people from being willing to spend 10 cents on coffee to being willing to spend $2 or $3.”) But they’ll never regain what was lost: exclusivity, the trust of consumers that a status message could be reliably communicated by the simple act of holding one of their cups. That business has now passed on to another wave of merchants and consumers who now position themselves advantageously relative to the Starbucks drinkers who’d come before, signalling that they know the truth about craft and quality and the way coffee really should be done. Only in this iteration of the story, importantly distinguished from the Starbucks version that preceded: humanized, small-scale, socially conscious, non-corporate.

And still expensive. $3 plus still prevails for an Americano, of which Lloyd Bernhardt of Ethical Bean assures me only $.25 or so is actually the cost of coffee. But for that $2.75, we’re getting back the story that we originally craved, the one that distinguishes people on both sides of the Clover.

Has Batesian Mimicry followed? Go read the websites of the major coffee wholesalers and most popular cafés decide for yourself. They all look like Coral Snakes and Scarlet Kings to me. Will there be another bursting of bubbles? A migration of opinion, perhaps very suddenly, away from that which grants status to geeky mustachioed guys in undershirts hunched over pour-over gear and the earnest customers who watch their every move?

Count on it.

In the meantime, sample yourself from what is on offer, and ask yourself how much of the brand promise is in the story told versus the coffee delivered. Highly subjective, of course. But I can start the ball rolling with my own informal survey. I made a short list of cafes to try based on beans served and recommendations from friends. I asked for small Americano in each case. (Except for the civet coffee, which I made myself at home.) Here are the results. I list them in the order sampled for you to dispute, dismiss, or to use in hand-crafting a coffee-story of your very own.

THE ROOMS AND THE BEANS:

Elyssian Room on 5^th Avenue: A jazzy place with geek-chic baristas and dressy clientele. Seen: red lizard wedge hi-heels. Overheard: “What a beautiful necklace!” The Americano: $3.25. Toffee notes, not burnt or oily, but also not particularly rich. Rating: medium good.

Milano on 8^th opposite Jonathan Rogers Park: roast their own beans. Spacious, modern room with superb outlook across the park to downtown. Lovely staff. Seen: software dudes. Overheard: “We have to strategize.” The Americano: $2.65. Blech. Watery, barely coffee-flavoured. A dumbfounding let-down given the room and service and number of recommendations. Rating: bad.

Kafkas on Main off Broadway: Herkimer beans from Seattle. Serious-coffee vibe: siphons available, tasting flights. Eclectic furniture and clientele. Seen: curated art work on the walls. Overheard: somebody growling over a plucked guitar. The Americano: $3.25. Deep molasses and chocolate-y notes, vegetables too. Rating: interesting juice, would try again.

W2: Salt Spring Coffee. Seen: women doing dance gymnastics dangling on bungee cords in the atrium under the Stan Douglas. Overheard: Metric. The Americano: $3.00. Smooth but not heavy or oily, distinct light choco-caramel/tobacco notes. Rating: superior, will return.

Nestors, Woodwards. Ethical Bean Coffee. Drip only available. I tried two: Rocket Fuel and Classic. $3.36 for two cups. Sipped standing outside on Abbot Street with the cups balanced on a newspaper box. Seen: ladies cooing over a Labrador puppy. Overheard: garbage truck backing into an alley. The coffee: hmmm. In a phrase: truck-stop two ways. Rocket Fuel burnt and Classic more or less tasteless. Not, one suspects, how Ethical Bean would want their stuff featured. Rating: bad coffee, though kind of right for the time and place.

Ethical Bean Express in the Granville Skytrain station: giving EB a second chance, I went to their own outlet. Seen: people in a rush. Overheard: the bowels of the city. The Americano: $2.41. Dark to tarry flavor, very intense. Rating: medium.

Matchstick Coffee Roasters at Fraser and Kingsway: roast their own. Aging Brooklyn hipster vibe. Seen: bike hats, grizzly beards, antlers on the wall, subway tiles. Overheard: “Skype me this afternoon.” The Americano: Veering to the black tar end of things, but balanced and rich. Rating: good.

Kranky Coffee on East 4^th off Main: Kicking Horse beans. Eclectic east side vibe. Seen: old books, blue French country style painted counters, bead curtains. Overheard: Beth Orton. The Americano: $2.85. Some acids and fruit, but also deep oily notes. Rating: medium good.

49^th Parallel 4^th Avenue: roast their own. Seen: counter guy in dirty sleeveless undershirt out of which sprouts copious body hair. Brill cream. Siphon on display, seemingly never used. Overheard: EDM. The Americano: $3.00. Disgusting. Oily, burnt, bitter. Rating: threw it out.

Doi Chaang Civet Coffee: made this myself at home according to meticulous instructions found online: bodum, medium grind, 85 degree water. The first cup was weak, without much of a flavor profile. The second, ground finer, steeped longer before the plunge, much stronger. Interesting depth of flavor with no bitterness or oily notes. Way over-priced at $15 a cup for home use, but interesting juice.

Doi Chaang Single Estate Espresso: made for me at Doi Chaang’s office by Tanya Jacoboni, the company’s VP Business Development, served without pretense in a mug I think my grandmother used to own. The Americano: rich, balanced, fruit notes, no oiliness or bitterness. Rating: superior coffee.

1. The Blue Light Project is published in paperback at the same time as being selected as a contestant for a reality-television-styled vote-based Bookie Award.
2. The Red Gate artists’ collective has found a potential new home, but needs City of Vancouver approval to move in as the City owns the property.

The connection is forged by my knowledge that The Blue Light Project might never have been written were it not for the Red Gate.

This is the piece of art that started my whole creative process. 

It’s called Rise Fly Land and the day I first saw it, I stood in that alley for a good twenty minutes staring at it. At that point in my exposure to graff and street art, I didn’t know enough to recognize that signature at the bottom, which is that of the legendary Canadian graff writer (and almost equally legendary train-rider) Take5. All I knew was that there was something mysterious and entire in the image. Rise. Fly. Land. There is a echo of eternity in the phrase. A bass note of wisdom, of peace.

I had only very recently seen Les Blank’s oddly captivating film Werner Herzog Eats his Shoe in which Herzog makes the following slightly enigmatic statement: “We need adequate images. If mankind doesn’t develop adequate images, we’re going to die out like the dinosaurs.”

Somehow standing in that alley off Hastings Street, I felt like I was confronted with an authentic attempt at an adequate image. It was a moment both warming and chilling, if that makes any sense.

Of course, like I said, I had no idea who had made the piece. Until I talked to Jim Carrico at the Red Gate, that is. And he introduced me to Take5 who then told me that he and the artist OTHER had made Rise Fly Land. Take5 also gave me my first glimpse into the world of the street artist in a long and fascinating conversation in the original Red Gate location. From there, literally branching out from the Red Gate and into this hidden community of artists, my interest in the area and my ideas for the book began to surge and take shape.

The Red Gate always was a chaotic place, with no particular central plan or manifesto. But it was from that environment that came the sparks of original idea.

When the Red Gate was threatened with shut-down last year, I lamented the prospect in a Vancouver Review essay called Chaos and Planning. In that piece I argued that the Red Gate was the source of creative chaos that all cities need. Kill these sorts of institutions – out of some hyper-vigilant sense that everything has to be planned centrally in coordination with official messages – and you kill the organic creativity on which all cities depend.

My article didn’t help. The Red Gate lost it’s fight and were evicted. It was a real loss to the city.

Now we come to another turn in the story. The Red Gate has a chance to reopen. The building they want to use is empty. They’re willing to pay rent. And the whole situation is in the hands of the City of Vancouver, as they own the building.

Is it possible that our civic leaders will miss for a second time the contribution that the Red Gates of this world make to the cities where they’re found?

On the cover of the paperback Blue Light are three eyes, by the artist Rich S. For awhile prior to the Olympics in Vancouver, these could be found widely through the downtown east side. I loved those eyes. What a lot they managed to say in one image about the hovering reality, good and ill, of our governments and leaders.

What will our leaders in Vancouver do now?

From the November 2010 Issue of Cooking Light

A couple of hours after setting foot in Brooklyn for the first time, I find the heart of the action. It’s 7 p.m. on a hot summer weeknight, and I’m hanging with a group of fashionable young people, all good-looking and under 30, who favor the uptown stylish look (pressed shirts, nice shoes) or that of the ubiquitous Brooklyn hipster (beard, plaid accents). They’re socializing, having a laugh, and I’m hanging with them. We are not, though, in the latest hot restaurant and bar, nor are we listening to a painfully obscure band. No, we’re standing in the commercial kitchen attached to a store called The Brooklyn Kitchen, canning pickles.

That’s right: hipster picklers. Because whatever you may have read about being on the inside track of cool these days, for these New Yorkers, it’s all about brining vegetables.

As the evening—which is basically a pickle seminar—unfolds, considerable ground is covered by affable expert Bob McClure, 32, co-owner of Detroit-based McClure’s Pickles and a poster boy for a phenomenon sweeping North America: artisanal food production.

“Now for relishes,” asks one pickle pilgrim, who looks like he might be a securities analyst when not brining, “do you use finished pickles or chop up the cucumbers fresh?”

Fresh, apparently. There is much head-nodding and brow-furrowing.

“Artisinal” is the big word in food these days. It attaches to a staggering range of producers, from cheesemakers to chocolate crafters, bakers, condiment producers, sausage curers, microdistillers, and quite a few more picklers than I would have thought the economy could support. The essence of the ethic—more than an idea, it’s an ideal—is independent ownership, hand-crafted food, small-scale (often urban) production, fealty to real or imagined culinary heritage and, often, savvy packaging, canny marketing, social-media outreach and, sometimes, wacky experimentation with flavors (hot-chile-pepper ice cream from Ohio, for example, or jerk-flavored cheese from Seattle). Genuine handmade artisanal food production is a tiny part of the 60 billion dollar “specialty” food industry, but the artisanal movement thrills those who dream of beating back the industrialization of food. It is catnip to foodies, trend-sniffers, and those who survey and supply them: Martha Stewart and Williams-Sonoma both being well aboard the artisanal train by now, along with the Food Network and especially its new expansion effort, the Cooking Channel. At its heart is the conviction that a young country can both recover and invent the sort of real-food heritage that the Old World—whether Europe or Asia—built its cuisines upon. A tall order, but one the indie-food generation is excited to tackle.

Four years ago, Bob McClure was an actor in New York City, working temp jobs on the side. One jar of pickles made from his great-grandmother’s recipe, brought to a dinner party, changed his story arc. McClure’s Pickles now produces 800 to 900 jars a day out of a small Detroit facility run by Bob’s doctoral-candidate brother Joe, and where both their mother and grocery-industry-veteran father are now employed. That’s 800 to 900 quart jars, retailing for 8 to 12 dollars each, of what Brooklyn’s Bedford Cheese Shop proprietor Charlotte Kamin describes as by far the most popular pickles they sell.

It’s easy to taste why: The pickles are a crisp and tangy-fresh delight, and McClure’s pickle-juice-infused Bloody Mary mix is bloody good (it won a Cooking Light first-annual artisanal Taste Test Award last month). Although the factory is where the family is—ravaged Detroit—McClure does new-product development in his Brooklyn “laboratory” and epitomizes the Big Apple small-food movement, selling his product locally in boutique food stores, larger stores such as Whole Foods, and at a pair of curated food-and-collectibles markets called Brooklyn Flea.

Four new picklers have popped up in Brooklyn alone in the past few years, along with chocolatiers, distillers, bakers, and meat-curers. “There are a lot of people out there trying to get in on this food scene,” says Eric Demby, cofounder of Brooklyn Flea. Demby tells me he sorts through thousands of e-mail applications for spots in his two markets, only a fraction of which he can accommodate. The most common applicant is a small jewelrymaker. Second most common is someone making artisanal baked goods.

The bottom line, Demby says: “If you are young and have some business savvy, then you’re starting a food business right about now.”

I tasted artisanal foods and met their makers in two areas, New York and the Seattle-Vancouver corridor in the Pacific Northwest, which is my home (Portland’s thriving food scene will be described in an upcoming issue.)

In New York it was mostly Brooklyn, a borough of 2.5 million people where immigrant foodmakers have long plied their trade—fresh mozzarella in the “pork stores,” kielbasa in the Polski shops—until this new-generation scene really started heating up a few years ago.

In the west—where both the coffee and microbrew beer crazes originated, and where Alice Waters still presides as Queen of the Locavores—there is much ferment as well: There are 23 licensed craft distilleries in Washington State alone, and 20 more area applications are pending. There’s been a microburst of salami makers out there, as in the east. Foraging, smoking, and small-scale urban gardening are booming. And then there are the indie choco-artisans—west, east, and everywhere in between—who have shaped an improbable alternative national cacao economy in less than five years. Every American city, small and large, has gotten at least a taste of the artisan movement.

Which is good news for anyone who loves good food. I like having new local cheese, preserves, and wine options from the region just around my own city—Vancouver—every year, and I like that every other month another chef seems to decide that he simply must make his own charcuterie. More Americans are awake to the pleasures of the local and the handcrafted, and seem willing, even in lousy times, to pay more—which is absolutely crucial to the artisanal economy, because none of this small-scale foodmaking comes cheap, or easy.

“It’s the hardest work I’ve ever done,” says 30-year-old Shamus Jones of Brooklyn Brine, who used to be a chef, not exactly a slacker’s job. His superb asparagus with lavender, along with his carrots with chipotle and garlic, are flying off the shelves. He’s working around the clock. He’s had a relationship go south and troubles with a business partner. He shows me the burns across his forearms from handling the hot brine pots.

Yet he’s absolutely committed. “I’m from here and I want this company to become a New York institution.”

Handmade food is hard work. Brad Sinko, the head cheesemaker at Beecher’s Handmade Cheese in Seattle (whose flagship cheddar won an artisanal award from Cooking Light last month), is up before dawn to stir vats of fresh milk by hand. The Mast brothers of Brooklyn, Rick and Michael, roast cacao beans themselves after traveling to bean-growing countries to meet the farmers who grow them. And Mast Brothers is, after all, a tiny business.

It’s very time-consuming,” admits 37-year-old Robert Belcham of Vancouver tells me, concerning his much-loved Vancouver salami and cured ham business, The Cure, which he runs out of his restaurant, Campagnolo. Curing meat the old-fashioned way also has old-fashioned risks that your average foodie may not think about. “Making charcuterie can also be quite dangerous,” Belcham reminds me. Painstaking care is needed. “You have to follow the time-honored traditions and use the right formulas or you could end up hurting people.” By hurting, of course, he means poisoning.

What keeps these people going? What inspires them? A taste-bud epiphany, usually, plus, in the newer generation, the addition of a thick dollop of youthful idealism.

People who enter the artisanal game later in life tend to have had an aha! moment on the heels of an established career. Wade Bennett, a 54-year-old apple and pear farmer in Enumclaw, Washington, discovered Calvados (French apple brandy) and suddenly began to see his trees in a whole new way. His company, Rockridge Cidery, now makes a range of apple- and fruit-based wines and spirits. Dennis Robertson, the 53-year-old founder of Soft Tail Spirits, in the town of Woodinville, Washington, supplied stone to the construction trade until he discovered grappa while on a business trip to Italy and began to dream of a second act. In 2008 he decided to start a grapparia, and after only a year, his grappa, made from Yakima Valley sangiovese grapes, won a silver medal at the 2010 San Francisco World Spirits Competition.

These are stories of people who had a mid-life awakening and the means and drive to redirect their lives.

Among younger artisans, I heard epiphany stories, too, but there was evidence of something else there, a deep yearning—and a lot more tattoos. When Belcham arduously tracked down a source of heritage-breed pigs on Vancouver Island and started making salami and cured hams, the objective was partly to get a better product than you can buy at the average supermarket. But it was more about reconnecting with lost virtues of self-sufficiency and labor.

“I wanted to make things the way my grandfather and my great-grandparents had done,” he tells me, speaking of his pioneering ancestors who had made similar products with pigs from the interior of British Columbia, where they’d lived. “People living in cities have lost those traditions over the years.”

The fabric of “the small, the local, and the beautiful,” as Eagle Street Rooftop Farm’s Web site describes the emerging ecosystem of Brooklyn restaurants, food growers, and artisans, is complex. Eagle Street takes compost from Brooklyn Brine. Its produce goes to a few local-food restaurants. It hosts “lecture series” featuring people like “locavore heroine Leda Meredith.” One of the farm’s cofounders, Annie Novak, came to artisanal city farming via a family tragedy. Her father was killed in an auto accident in Chicago five years ago. “I started vegetable gardening and began to realize the benefits of working on something very immediate, with your hands, but understanding that it has a long-term focus.”

Brad Estabrooke, 31, realized that something more than a career had gone astray around the time he lost his job on the bond-trading desk at Deutsche Bank (there are more than a few ex-finance people in the artisan game now). It might not be the first thing that would pop into your mind, but Estabrooke decided he was going to make something of his life by making gin. “What was missing was the fact that I wasn’t actually producing anything. I wanted to make something. I wanted to work all day and end up with something delicious at the end of it.”

Estabrooke’s new gin, named with the Dutch spelling of the place it’s made—Breuckelen—is superb, flavored with five botanicals. There is, naturally, an artisanal tonic water to go with it, too—Q Tonic, made with Peruvian bark.

A skeptic might ask how much soul-searching a good gin and tonic requires. A can of Schweppes perhaps has more sugar than you need, and Bombay Sapphire is owned by Bacardi, which sells about 5 billion dollars worth of booze a year, but I’ve never poured the two of them into a glass together with ice and lime and had anything less than a satisfactory experience. Still, over at Q Tonic, founder Jordan Silbert recalls that his eureka moment pivoted around a glance at commercial tonic and feeling what he described as “aesthetic retching.”

It’s emotional, being an artisan, clearly. Matthew Tilden, founder of SCRATCH-bread, which is featured weekly at the Brooklyn Flea, waxes new-age-y: “Bread could be one of the world’s most naturally modest superhuman powers,” he says. “Locally defined, handmade bread, enough for and made in communities all over the globe. It could potentially change our entire beings.”

Your third-generation challah baker in Williamsburg might snicker at this, and it might amuse the ancient Berkeley bread artisans who founded Acme, way back in 1983. But the less giddy artisans make it clear: Big ideas are in play.

“The attraction to craft food is the result of the public wanting authenticity in identity and tradition,” Rick Mast of Mast Brothers Chocolate tells me, stroking his long red beard and staring me straight in the eyes. “This is not a trend-art project. Our goal is to reinvent the family-owned craft business. And we’ll consider ourselves successful when we pass this business on to another generation.”

Or as Kurt Dammeier, founder and co-owner of Beecher’s Handmade Cheese, tells me: “Our mission statement is to change the way people eat.”

Does a sip of Rockridge raspberry wine or a slice of SCRATCHbread have the power to reconnect us to lost values? Can a bottle of corn whiskey by Kings County Distillery or a slice of Flagship cheddar from Beecher’s transform the culture?

Generation F will try.

In the meantime, they’re at least eating better than most of us did in our 20s or early 30s. When I talk to Daniel Sklaar, the 30-year-old founder of Fine & Raw Chocolate in Brooklyn (and a former financial analyst), he tells me that dinner parties have gone potluck in his social scene these days. Before each meal there’s a flurry of Facebook activity as people compare notes on what they’re bringing. That is, what they’re making with their own hands and bringing to the table. “People want authentic food,” Sklaar says. “Food that connects them to other people. They want a communal experience.”

May these artisans thrive; may their numbers grow. We’ll all eat better for it. Some foodmakers, of course, will learn that idealism is not the same thing as expertise or business sense. As Dammeier, in the business for seven years, says, a lot of “wash-out” will happen. “It’s not good enough just to make something yourself. It has to have the quality and the consistency.” And the market, and the business plan. One goat-cheesemaker described to me how many farms fold at the critical moment when the goats multiply to the point that you have a business-sized, not a hobby-sized, herd on your hands. At that point, some dreamers run away, bleating.

And small doesn’t always mean tasty, either. Handmade chocolate turned out to be gritty chocolate on several occasions, and one taste left a burn in the back of my throat like I’d just dry-chewed an aspirin. Not all indie pickles are created equal. Some I tried were murky-tasting and over-flavored. I brought home a handmade cookie that my kid wouldn’t finish, drank coffee just as burnt as any Starbucks ever produced, and ate at least one artisanal sourdough baguette that could have broken a tooth.

There’s also the matter of price. Mast Brothers chocolates, purchased online, including shipping, will cost you $92 for 10 (2.5-ounce) craft bars, which works out to about $60 a pound. Compare that to as little as $8 per pound for Dove chocolate from Amazon.com. Pickled beets can be $2 in a supermarket, $8 or $10 from an artisan. Add a big carbon footprint if you buy artisanal foods by Web and Fedex.

But if this were an investment market, I’d be bullish about continued growth. Artisans, like chefs, drive taste in a nation that simply gets more hungry for fine food and new (read old, authentic) flavors. Expect big brands to explore ways to make themselves seem more artisanal, like the McDonald’s ad campaign that stresses that every French fry in fact comes from a potato (grown in the ground!). In 2009, Starbucks opened an unbranded, artisan-ish coffeeshop in Seattle called 15th Avenue Coffee and Tea.

Meanwhile, the successful artisans will continue to push the definition of authenticity. Bob McClure has considered moving some of his booming pickle operations to a 200-acre farm in Latvia, where his wife inherited some land. Going back to the old country: That’s keeping it real! The Mast brothers are so keen to reduce their carbon footprint that they plan to take part of their early 20th-century production practices back into the 19th century—and bring in their cacao beans from the Dominican Republic by sailing vessel. (Thereby reducing their carbon footprint to zero from what a container shipping insider described to me as “unmeasurably infintesimal” due to the miniscule volume of their shipments.)

8 A.M., Pike Place Market, Seattle. I watch as Brad Sinko makes cheese, mesmerized as he stirs the milk, checks temperatures and gauges, then trots over to a second vat where he has added jerk spices to small curds (yes, jerk spices, for a tasty cheese cleverly called No Woman), getting ready to pack the curds into the presses. The cheesemaking operation is surrounded on three sides by wide glass windows, and crowds of people look in, some shading their eyes for a better view, a couple of kids with their noses pressed right to the glass. How curious they all look. How engaged. How interested. They remind me of Bob McClure’s pickle pilgrims.

“It’s a show!” Sinko quips, noticing me noticing the crowds, which of course he hardly does anymore because they are here almost every day.

It’s a show about cheesemaking, but also about how curiosity can shape our understanding of real food and the appetite for it.

Later I click around the McClure’s pickle Web site, which gives off a fine tang of artisanal character, looking like woodblock on craft paper, containing charming bios of family workers, and holding forth, I notice when I click the “buy” box, a gorgeous bit of slow-food irony in this Web-fast world: You can find McClure’s in 0.32 of a second on Google, but if you want to order a mixed-case online (and they only sell by the case), keep in mind that “It will take approximately one business month from order date to get your product.”

That’s because tiny McClure’s is busy shipping to a growing list of retail shops across the country. It’s no Heinz, but it’s getting a little less local all the time.

Holy stickers Batman. These things have hit Toronto, New York, Halifax… everywhere.

Now they’ve reportedly crossed the pond. They’re going up in the UK now.

Move over Banksy. Or whatever. I have no idea what this means.

Should writers of fiction review the work of colleagues? I avoid it personally, and my rational for doing is the basis for my side of a debate that was part of the CBC Literary Smackdown series recently. The other side of the issue was taken by esteemed Victoria-based novelist and nonfiction writer Robert Weirsma, who also writes a lot of fine reviews.

You can find our respective essays on the topic here, along with a link to the debate as broadcast on Sheila Rogers show Next Chapter.

I enjoyed the discussion because I enjoy talking to Robert. But I knew going in that arguing my side of the resolved was a thankless proposition. That’s because I was arguing that the prevalence of competitiveness and envy in our culture and economy – magnified incredibly, in my view, by the migration of that culture and economy from offline to online – makes the review that one writer writes of another writer highly suspect. Consciously or unconsciously, in other words, insider reviews (positive or negative) end up being strategic, designed in their subtle and not-so-subtle ways to serve the purposes of the reviewer. Better that the writer withdraw from this toxic maeltsrom of mutual appraisal and measurement (as exemplified in our hysterical interest in our own online profiles) and leave reviewing to “professionals”, people who write from within literature but not within the writing community.

Robert’s argument for reviewing was from the standpoint of empathy. As a novelist, he could empathize more with the writer being reviewed than could a non-writer. Empathy, in this analysis, provides the novelist/reviewer with insights into the writing process and the significance of the literary accomplishment as it’s ultimately delivered (or not) on the page.

That point is interesting because it shows that Robert and I come to our respective conclusions in response to our observation of what are closely related human capacities. Empathy, after all, is the mother of envy.

Here’s Martin Amis putting his finger directly on the button in The Pregnant Widow:

“It was only Nicholas, his male flesh and blood, that Karl really envied. And envy, the dictionary suggests, takes us by a knight’s move to empathy. From L. invidere “regard maliciously,” from in- into + videre “to see.” Envy is negative empathy. Envy is empathy in the wrong place at the wrong time.”

That’s a very powerful idea: that “to see into” someone (their work, their tastes and tendencies, their condition) might “by a knight’s move” lead us to “regard maliciously”, wanting what the other has and quite possibly wishing them ill.

Powerful, but as I said, thankless. Who wants to hear that? It self-recriminates. And since we prize independence of mind and the idea of personal autonomy perhaps above all other things in our culture, that very idea that we are vainly comparing ourselves to others and finding ourselves wanting is bitterly distasteful.

Of course, my whole argument was also an abstraction. I wasn’t saying Robert specifically was envious and therefore a strategic reviewer. I was making a point that is as inwardly directed as it is outwardly.

In an interesting Facebook disscussion that sparked to life after Canada Writes posted the essays, the downsides of taking my position were immediately plain, as I was asked to produce my evidence and provide an example from Robert’s reviewing of the envy that I felt prohibited the novelist/reviewer from effectively reviewing a colleagues work.

Fair play. I was in the realm of abstraction. And while I won’t take on Robert’s work, I’ll happily take on my own. Consider this review I wrote of Jason Anderson’s 2006 novel Showbiz, published by ECW. It ran in the Literary Review of Canada, and I now regret writing it. Not because I don’t stand by the points I made, but because I can hear my own strategic positioning in it. I was writing about celebrity myself quite a lot at that time. (The Blue LIght Project was in the works.) So I had criticisms of Anderson’s approach. Far more important is the fact that Anderson and I were doing the same thing at the time. Literarily speaking, we were after the same prize. We were undifferentiated competitors.

Call me a wimp, then, but I still feel icky about that review. Maybe I even withdrew from reviewing books by colleagues because of it. But the story ends well, because in a turn worthy of, I don’t know, Flaubert, my own 2006 novel, Story House, was then bitterly trashed and stomped only six months later *in the same publication* by a reviewer named Adele Freedman.

Story House is about architecture. Freedman is an architecture critic. And she tore me a new egress, to put it politely.

Let’s agree to call that karma.

Man, did I get pilloried for this article online. Lululemon fans thought it was insulting (and I didn’t even get into the whole Who is John Galt business). Worse, someone on Facebook called it a puff piece, because I didn’t get into the real psychology of the CEO in question. Who is Christine Day and why have the ROB editorial staff picked her as CEO of the year?

Well it won’t make any difference to those who hate the piece, but for what it’s worth, Day’s scarcity strategy – described below – is my best answer to the question “why is she the CEO of the year?”. It’s my answer, because it’s the way that Day is approaching the very difficult problem of transitioning a niche brand with a very special aura, over into the big bad world of mass market brands. It’s her canny strategy for preserving something special in a brand that is about to become ubiquitous and ordinary. That takes skill. So credit where due.

A final note. The scarcity model is something that lululemon extends from inventory management to public and media relations. We had no response to interview requests for this piece until the day before my filing deadline. On that day, we were offered one hour. Regrettably, I was on a plane that day, heading off to my next assignment. (The quotes below are from a series of questions she finally answered by email.) So, all that said, psychological insights into the person of Christine Day were circumstantially limited

CEO OF THE YEAR: CHRISTINE DAY

The success of Lululemon Athletica Inc. (LLL-T45.32-1.00-2.16%) has been one of the biggest and arguably most mysterious stories in retail over the past year: a premium-priced product, sold with extensive reliance on feel-good intangibles, flourishing while so many other retailers have flagged. But on a sunny Saturday afternoon in Vancouver, you could pop into any store—the flagship Kitsilano location, for example—and, by doing nothing more than people-watching, easily get a sense of what underscores its success.

What you’ll see: mostly women, the staff youthful, the customers (called “guests” in Lululand) ranging from teenagers up to senior citizens. But it’s not so much how customers and staff look (although it has to be said, there is a common rosy glow about them). It’s more to do with how they sound. All of them are engrossed in avid conversation. Lululemon on Saturdays is a seriously chatty place. Women comparing notes on fabrics or special-edition collars. Staff modelling wraps and toques, detailing product features. Light shimmers of giddy laughter rippling through the lineup to the change rooms.

What’s notable here is that it’s not just shopping that you’re hearing. It’s community building. And if you have any doubt that Lululemon is deliberate in encouraging this sensibility, you need only read the slogans that adorn their shopping bags, advertisements and websites. Communitarian sentiments such as “That which matters the most should never give way to that which matters the least” and “Jealousy works the opposite way you want it to.” “Friends are more important than money” and “What we do to the earth we do to ourselves.” Plus, my personal favourite: “Dance, sing, floss and travel.”

Christine Day, CEO since 2008, tends to reinforce this sensibility. She says that she considers Lululemon to be “part of, and contributing to, a bigger macro-trend that affects consumers from their early teens to their 70s. Investing in your health will pay big dividends for individuals and society…elevating the world from mediocrity to greatness.”

But then, what’s interesting about the chosen quote is that it layers an interest in community over a reference to Atlas Shrugged, Ayn Rand’s treatise on the essential shamefulness of being merely like everyone else and the necessity that truly great people strive through all obstacles toward individual dominance. Rand’s 1957 novel is one of the core documents of libertarianism, bear in mind. Yet Day makes no bones about acknowledging the inspiration of the book and the life of its author. “I believe in a culture of personal accountability and not compromising your values,” Day tells me. “Atlas Shrugged is both about not accepting mediocrity and being personally accountable for the life you are creating.”

Day, who came to Lululemon after 20 years at Starbucks, where she was president of the Asia Pacific Group of Starbucks Coffee International, lives in Vancouver with her husband and the youngest of her three children. Befitting a Lululemonite, she does yoga and lives the Vancouver lifestyle: hiking and biking and walking the seawall. Yet it is her performance as CEO that has mesmerized analysts and the markets. With 122 stores in Canada and the United States, and 100 more now under consideration, this is a company well on its way to mass popularity. Lululemon saw its stock climb to almost $60 this fall, up over 280% from when Day joined the company, and a whopping 250% gain year over year.

If you want to know how Lulu has done it, however, don’t bother reading the financial statements. They reflect good numbers, of course: net revenue up 39% in the second quarter to $212.3 million year over year; comparable store sales 18% higher on a constant dollar basis and income from operations up 74% to $59.5 million (both over the same period). But no matter what the numbers say, when a stock is trading at 48 times earnings in the retail sector, something other than arithmetic is involved. This would be yet another contradiction that Lululemon artfully manages to maintain: in this case, a company seemingly devoted to its “guests” that nevertheless refuses to give them exactly what they want.

Need a Scuba Hoodie? You’re in luck if you like Heathered Rose Petal, but there’s no more in the Blackswan Creekside Camo. Got your eye on an Integrity Hot Tank? No problem, so long as you’re not size 8, 10 or 12. And don’t even ask about the Gratitude Wrap originally released in 2009, which sold out almost immediately and started selling on eBay for $250, because while Lululemon did re-release that item in October, 2011, it did so only in a single store, in Coquitlam, B.C., which then promptly sold out in most sizes.

Frustrating? Über-Lululemon fan and dedicated brand blogger Christina Chalmers certainly thinks so (lulumum.blogspot.com—“a place where fans can drink the lemonade together”). But then, she’s not surprised either. Because, having followed the brand as closely as virtually anyone on the planet over the past few years—Chalmers posts almost daily about company and product developments, including information on products in the pipeline that the retailer has asked her to remove in the past—she also knows that active discouragement is a key part of Lululemon’s very savvy plan. It even has a name.

“It’s called the ‘scarcity model,’” says Chalmers. “And it’s about frustrating the customer.”

Which might sound scandalous, but Christine Day isn’t shy about using the term herself. In a 2010 conference call, when the topic of inventory strategy came up, she said that while Lululemon didn’t want to be running out of core items in stores, “frustrating [customers] on that special jacket in terms of scarcity, I’m willing to do.”

Why would a company treat its guests this way? What seems highly counterintuitive (potentially fatal if publicized) is not necessarily so after considering how this rather unique brand was built and the growth challenges it now faces. According to Vancouver-based retail strategist and Lululemon-watcher David Ian Gray of DIG360 Consulting Ltd., this is a brand that has been built very deliberately. And from the beginning, Lululemon founder Chip Wilson was “very clever about guerrilla-style marketing.” What Gray is referring to is the way that Lululemon promotes itself not merely as a product—with objective features that might be compared to similar premium-priced products—but as a set of ideals expressed in those slogans of well-being and self-worth that adorn its bags, most of which obliquely reference yoga’s spiritual roots.

Which is not to say that the identification with yoga requires you actually to do any yoga. “Lots of people don’t care about the yoga and just buy the product because it makes their bum look good,” Gray says. “But Lululemon has done a great job of wrapping the brand up in a lifestyle.” That is, Lululemon is very skilled at making a healthy-seeming, one-for-all shell around what is essentially an egocentric stab at looking great.

The result is that, compared to more price-driven products, Lululemon apparel gives its customers the feeling that they’re purchasing a lot more than mere “value.” Buy a Cabin Long Sleeve T-shirt and you’re involved in bettering yourself. Pick up one of those cute Lucky Luon headbands and you’re joining a community of like-minded people. Those ideas combine powerfully, creating a sensation quite unlike that which accompanies the purchase of other premium-priced products. Lululemon isn’t an indulgence, like Bordelle lingerie or Dolce & Gabbana pumps. It’s a thing of virtue. Budget in other spending categories if you must, the brand seems to whisper, but don’t stop taking care of your body and building a better society.

With the stores full of shoppers and the stock price rising, it would appear investors believe Lululemon is pulling this off handsomely, creating real-world social networks that support the brand and insulate it from yoga-wear competitors (which now include the likes of Nike, Adidas and Under Armour). The challenges facing Day, however, stem precisely from the fact that investors are the ones making this appraisal. Publicly traded retail operations, Gray reminds me, need to show growth. That can come from same-store sales increases, but, at some point, those top out and the retailer has to expand.

The bigger problem is that Lululemon’s canny branding—which creates that aura of virtue—is fundamentally at odds with the mass popularity that will ensue if Day delivers to investors the growth they’re demanding. The “specialness” of a brand is hard to sustain when you see it on every street corner or, in this case, on every other woman in your yoga class or in the elementary school playground when you pick up your kids. That sense of being part of a haloed community starts to dissipate when the group has grown so big that it encompasses almost everybody—which is exactly what happened mid-’90s to the Gap, or mid-2000s to Starbucks. “Starbucks still has a halo compared to, say, McDonald’s,” says Gray. “But, yes, success does tend to make you ordinary.”

When I ask Day whether expansion represents a threat to brand “specialness,” her answer is unambiguous: “Yes, which is why you see us focus on scarcity of certain product styles. It is our goal not to have women wearing the same thing in their fitness classes.”

The question going forward is whether the balance can be maintained; stripped of their virtuous aura, those Groove Pants are just $98 sweats, after all. According to blogger Christina Chalmers, there are already signs that the brand is in transition from niche to mass, and that the special aura is indeed being dispelled by its ubiquity. “I’m getting a lot of comments from people saying, ‘I went to the gym today and there was another girl wearing my top!’” Chalmers tells me. “And that’s not good.” Meanwhile, in the process of growing more ordinary, Lululemon will also further open itself to comparisons with other ordinary brands, and the inevitable price side-by-sides that will follow. Case in point: a $69 Zellers jacket, released this year, modelled on the $228 Lululemon Audrey Jacket. Zellers reportedly sold out of them within a week in several Vancouver stores.

In the end, the growth-driven transition from special to ordinary may not be one that Day can avoid. But it may not be something investors want her to avoid either. There’s a lot of money to be made in being a massively popular item, even if not a virtuous one. Gray considers this to be part of a natural evolution that brands must follow.

“The management challenge is to have this brand sustain itself,” he says, “but also to reinvent at the appropriate moments. The Gap, Starbucks, Apple—these are all brands that have had their moments of reinvention.”

Lululemon’s expansion, meanwhile, should remain Day’s central concern, Gray argues. “I’m not saying [existing brand features] aren’t important to her, but in terms of day-to-day activities, she has tremendous experience in rolling out a lifestyle brand, and that’s what she was brought in to do.”

Certainly that’s what the analysts seem to think. Although with Day’s remarkable success so far, Edward Yruma of KeyBanc Capital Markets, who follows Lululemon, does not see much upside potential in the stock price; he rates it an underweight. “Lululemon Athletica is one of the best growth concepts in our coverage,” he wrote in a September, 2011, release, “but valuation remains full.” Yruma goes on to say that investors might like to hold off for a better price point before they purchase. In other words: Wait for the inevitable fall.

One gets the feeling that even moderating interest in the stock markets will not deter Day, however. Asked to comment on personal philosophy, she quotes Ayn Rand again: “The question isn’t who is going to let me, it’s who is going to stop me!” I’d say: probably nobody.

The Blue Light Project weirdly presages this extraordinary news story: WikiLeaks founder Julian Assange has told smartphone and email users “You’re all screwed”, as he unveiled his latest publications.

The 287 documents Wikileaks has released point to 150 agencies around the world that are making use of *existing technology* to monitor people’s phones and computers. Software and hardware to perform this “mass surveillance” is being sold by intelligence contractors around the world and allows for data collection targeted at “entire populations”.

That news is strange and scary enough. But in The Blue Light Project, the main character Rabbit has a very particular backstory. He used to work for a secretive company developing phone software. Here’s the relevant excerpt. Bear in mind that what’s being descibed in this passage was SciFi in my mind as I wrote it. But as I was writing about the very near future, it should perhaps be no surprise that the SciFi future was (at least according to Assange) happening already, only in the folds of secrecy that surround our present moment.

Excerpt from The Blue Light Project:

“Nobody was dying as a result of my work, I realize that,” Rabbit told Eve. “There were jobs at Raytheon and Intel where I could have worked on control systems for cluster bombs and joint stand-off weapons. I was working on a phone. I was helping design the newest, latest, hottest version of a device most people use to order pizza, text their friends.”

But what a phone. What an idea. From a technical standpoint, it had been fun to work on. Naturally it was also an internet device and a video camera and a GPS and a music player. And yes, the prototype was also designed with an integrated biometric fingerprint and retina scanner, so the device was useless if it was stolen, and it could also log user medical information like blood pressure, blood type, pulse rates, et cetera. But the fact that it could do all those things was secondary to the phone’s chief innovation, which was a function that would ultimately be invisible to its users.

“And what was that?”

“It listened to you,” Rabbit said.

Eve thought about that one for a second or two. “Don’t all phones listen to you?”

“Not actively,” Rabbit said. “They just transmit. And even so, they generally don’t transmit unless you’re on a call.”

Eve was trying to work this through. “The phone was designed to eavesdrop?”

User intelligence, they called it. Or sometimes: behavioral fingerprinting. The phone was designed to sample the life of its user: ambient noises, television shows on in the background, music choices. The system then synched that data up with all the other information collected—downloads, GPS logs, voice traffic, medical data—and built a user profile that allowed the device to assemble phone books or web links, push ads and suggestions at you through the browser, even dial 911 and transmit medical data in the case of certain medical emergencies.

“Which was maybe a little more phone than some people would want,” Rabbit said. But what was a lot stranger, what really got into Rabbit’s head and wouldn’t come out, was the client-side request late in the project timetable for silent dial-out functions.

“Silent what?” Eve asked.

Dial-out. These capabilities enabled the phone to upload user profile data to pre-set third-party locations.

“As in, without people knowing,” Eve said.

Rabbit shrugged. Conceivably without them knowing, yes. The phone could have been designed to do that. He, personally, never got that far with it.

“Because you realized all this would be completely illegal?” Eve asked.

“It wasn’t illegal to test it,” Rabbit told her. “We were designing a prototype. A feasibility study.”

MADDAM, the client called it. Massively Distributable Data Acquisitions Module. Rabbit didn’t remember thinking once about what the device might represent if half the country or half the world owned one until that late client request that upload features be developed. And if there was any chance Rabbit was going to get his head around that part, there was much less of a chance the following morning when a whole raft of new nondisclosure agreements were shipped over by the client’s lawyer to be signed immediately and returned. Rabbit signed. But why the paranoia? What exactly had they been working on?

“Maybe we really were just tossing around ideas for a super-smart phone,” Rabbit said. “But that morning I realized I just didn’t know. Maybe I was developing the most sophisticated low-maintenance wiretap the world had ever seen. Selling people stuff and surveillance have a big overlap, if you’re seeing my point here.”

“I am. And I’m scared to ask the next part,” Eve said.

Rabbit nodded. He knew where this all led if you thought about it.

“Who was the client?” Eve asked.

“Short answer?” Rabbit said. “Nobody I worked with had any idea. We used a code name in house. Blue 52.”

“Blue 52,” Eve said. “And who did you think that might be?”

*****

Please consider buying the book.

Globe and Mail ROB Magazine

My introduction to the topic of “buyer’s pain” came via a colleague, an editor of an American food magazine, who was describing the excruciatingly long line-ups he had to endure to get a hamburger at the Shake Shack in New York’s Madison Square Park. I’ve never eaten one, but I’ve talked to a few people. This is not a particularly special burger. It has your basic beef patty on a squishy bun plus all the ordinary garnishes: American cheese slice, pickle, lettuce, tomato etc. I’m stymied to think why anyone would wait for up to 2 hours (yes, I actually heard that from someone) all for what another foodie colleague, Amy Rosen, Food Editor at Canadian House & Home magazine described to me as “not mind-blowing”.

Painful, yes. And so, the Shake Shake seems to me a perfect example of what a Carnegie Mellon neurological study published two years ago has shown: that when consumer experience discomfort buying certain products, this frequently enhances the appeal of those same products.

A paradox at first glance, certainly. But on reflection, the endurance of buyer’s pain may be perfectly rational behaviour. Even though I’d never submitted to the Shake Shack ordeal, for example, I could easily relate to the idea of suffering for a purchase. I recall intense discomfort signing my own mortgage document, for example. And it wasn’t merely figurative discomfort, I now understand. The Carnegie Mellon study showed that certain transactions stimulate the pain centers of the brain. High prices produce this effect (or a mortgage with numerous zeros). But other variables do as well. As marketing consultant Roger Dooley wrote in February 2007 on his blog Neuromarketing, it’s the “context of the transaction” that generates negative brain activity. That is, any purchase that is arduous relative to alternatives can have this neurological effect.

The fact that a brand causing pain can succeed is perplexing, admittedly. Salesmen learn early that their job is to make buying easier, not harder. But a whole category of brands defy that wisdom. Ferrari, for example, where your five figure deposit on a 612 Scaglietti only gets you onto the two year wait list. Or the iPhone, for which consumers endure all kinds of deprivation, like lining up at six in the morning as my nephew did recently despite understanding the phone’s antenna issues. And these aren’t isolated examples. Many luxury brands build their reputation on playing hard-to-get. To get their hands on H&M’s Victor and Rolf line, customers literally storm the floor on the release date, grabbing whatever they can. A different example plays out at a Toronto bar/private club called the Toronto Temperance Society. Patrons are required to pay a one-time $300 membership fee to join, a price that isn’t any real kind of barrier. It’s just a pain in the neck.

Why do we put up with it? Neuro-marketers say it’s a matter of cognitive dissonance resolution, drawing on the 1950’s era research by Elliot Aronson of Stanford and Judson Mills of the US Army Leadership Human Research Group. Their seminal study, The Effect of Severity of Initiation on Liking for a Group, found that the harder a group was to join, the more individuals valued their membership in it once membership was obtained. Our brains convince us, in other words, that hard-to-obtain objectives have added value to justify the extra effort we’ve expended getting them.

The explanation is tidy. But it assumes consumers are also deeply irrational. Knowing there are easier-to-access, equivalent-quality alternatives – hundreds of bars in Toronto, or the Porsche Panamera, for example – people wouldn’t waste their money on membership fees or their time on waiting. Certainly nobody would do it three times in one weekend, as Rosen’s colleague did at the Shake Shack on her recent visit to Gotham.

However, if consumers were to derive well-being not from absolute wealth but their position relative to other consumers, then the irrationality disappears. (This idea was discussed in a previous column about “Envy Economics,” and supported by Cornell economist Robert Frank’s research which showed that most people would rather live in a world where they made $100K and their peers made $85K, over one in which they made $110K and their peers made $200K.) In the relative wealth world, consumers don’t compete to acquire the most. They compete to acquire what others would wish to acquire. And they rival with other consumers for goods and experiences that will set them apart and above. In that context, the greater the degree of transaction difficulty, the better. A long line up, in this case, is a two-way signal: It illustrates that many rival consumers want the same thing. It also suggests that if you brave the line, you will have earned bragging rights.

Make no mistake, I’m not suggesting that the Shake Shack designed their business model this way. I’m only pointing out that once the pain threshold was reached – via popularity and the resulting line-ups – the burger joint found themselves in the happy, accidental position of being able to capitalize on consumer rivalry.
For her part, a culinarily-unimpressed Rosen puts it this way: “I think the real appeal is that you’re in Manhattan, lining up in a park, in a bustling city, about to eat familiar food while having the quintessential New York experience.”

A quintessential experience, that is, which eludes most visitors and many locals. An experience that sets you in a select group, willing to bear the pain, to make the necessary investment such that you might reap the status rewards.

So Banksy declares street art dead and apparently nobody was listening. JermIX certainly wasn’t. Working with UK import Vegas – a stencil artist of remarkable skill – Jerm has launched what many consider his most aggressive campaign ever. VTARP, it’s called. Vancouver Transit Adspace Reappropriation Project. Which sounds like a black line item in the DND budget. But which is actually a guerilla program involving dozens of artists who are putting up art on public transit vehicles in empty ad space.

That’s right. The white space between McDonalds and VanCity ads is being filled with art. And Translink is greatly annoyed, although also a bit impressed judging from their very formal, though very cordial letter sent to the two organizing artists.

Of course it’s easy to see why Translink is concerned. Some of the art in question takes open shots at advertisers. Although seriously, making fun of McDonalds is not the edgiest criticism Translink management has ever encountered, one would hope.

Nevertheless, it is this business of confronting advertisers that clearly has Translink most upset. In the letter to the artists, the unnamed Translink manager (unnamed, that is, as a courtesy extended by Jerm and Vegas in their publicizing of the letter) complains that VTARP is actually hurting revenues.

The letter reads in part:

So while the issues you raise in V-TARP are important, your project is sadly affecting a key funding source to make its point. By taking over our ad space and posting works that criticize our ads, V-TARP is creating a negative impact on TransLink’s relationship with advertisers, which is starting to cost our system in revenue.

As hard as it is to believe that the McDonald’s of the world are pulling out of advertising on Translink as a result of VTARP, it still leaves the artists with a question to answer. Continue and potentially face charges or a civil suit? Or, do as Translink is demanding, that is, cease and desist. In fairness, Translink is also suggesting (without commitment, of course) that they will consider an art-on-the-trains type program for the future, and have expressed an interest in working with Jerm and Vegas.

As I’ve written to Jerm separately, I hope that they continue. Only I also hope they can avoid the charge that they’re causing damage by keeping the artwork non-specific in its editorial tone. If taking a criticism of McDonald’s off the table is their only concession, seems like the cost/benefit analysis might play out positive.

But is the experience of a Translink customer improved by this work? Is the city itself improved? It’s a matter of opinion, but I vote yes.

From the Globe and Mail Report on Business Magazine

When Oliver Stone’s upcoming sequel to Wall Street (Wall Street 2: Money Never Sleeps) is released this fall, there will be renewed debate on whether “greed is good.” People may disagree with Gordon Gekko, just as his protégé Bud Fox ultimately did in the original film, but most will accept that greed is, if not good, then at least centrally relevant to the argument. Since the 1980s, you could say that greed has become the economic and cultural meta-factor: either the juice that drives markets and innovation, or the corrosive force bent on bringing the global economy to its knees (again).

But what if the Gekkos and the Foxes were arguing about the wrong variable entirely? What if greed were secondary, a shadow cast by a different meta-factor altogether? That’s what Eric Falkenstein, a U.S. economist with a growing following, argues in his book Finding Alpha, published by Wiley last year. Falkenstein does not believe the market is driven by greed. He thinks the market is driven by envy.

The distinction is critical because of how modern economists define something called “utility,” the pleasure people derive from their wealth and the things they consume. Utility is a matter of individual preference, and economists tend to agree it has diminishing returns. “The 20th Twinkie adds less pleasure than the first,” says Falkenstein, just as a loonie on the street is either a bonanza or hardly worth stooping for, depending on how many you already have.

Nevertheless, the theory assumes that everyone-destitute or possessed of millions-would choose having the loonie over not having it. That would be a “greed-based utility,” where winnings are strictly preferred over losses. It’s not an esoteric idea. Greed-based utility is an assumption lying at the heart of the Capital Asset Pricing Model (CAPM) that has been taught to every finance MBA since the 1960s (including this one), and is the basis for how trillions of dollars of investments are managed in the real world. If utility isn’t greed-based, then CAPM simply can’t explain reality.

And it doesn’t. Falkenstein argues that the real world diverges in two critical ways. The first, captured by something called the Easterlin Paradox, based on the 1974 research of economist Richard Easterlin, shows that reported well-being does not rise with per capita income and actually fell in the United States between 1960 and 1970, even as wealth accumulated.

But even that anomaly isn’t as troublesome to Falkenstein as the absence of market risk premiums. If greed drives our actions, both math and intuition tell us that higher-risk assets-those with higher volatility relative to the S&P 500-should generate higher returns than lower-risk assets. If they don’t, no rational investor would buy them.

But across a range of asset classes-equities, bonds, mutual funds and so on-Falkenstein argues that higher-risk assets do not generate higher returns. Others have scratched their heads over this one. In 1998, an interviewer asked William Sharpe, one of the authors of the CAPM theory, if the model was dead. “It would be irresponsible to assume that it is not true,” he said, adding: “That doesn’t mean we can confirm the data.”

However, if our actions are based not on absolute wealth but relative wealth-an envy-based economy-the market would need no risk premium. Falkenstein developed the empirical case for this in his January, 2010, paper “Risk and Return in General: Theory and Evidence.” But other researchers have pointed to similar envy-indicating results, including Cornell economist Robert Frank, whose research showed that most people would choose to live in a world where they made $100K and their peers made $85K, over a one in which they made $110K and their peers made $200K.

Asset bubbles, likewise, are explained better by envy than greed. Risky investments seem less dangerous when everybody buys them. And in a benchmarking environment, underperforming your peers is itself the riskiest bet. “If you had the foresight in 2002 to avoid the subprime housing bubble,” Falkenstein says, “you would have been underperforming your peers for years. It wouldn’t take long for your boss to say: I want somebody who can make money in this space.”

The implications of an envy-based economy are broad. A recent U.K. House of Commons Treasury report suggested that more women in London City boardrooms might have led to better risk management prior to the market meltdown, the assumption being that women are inherently less greedy than men. As the committee chairman put it, “Diversity at the top is one way to challenge potentially dangerous groupthink.”

But if people are primarily envious, women would arrive at those boardroom tables with the same benchmarking tendencies as their male colleagues, the same acquisitive emulation of their peers, prone to the same envious impulses.

The fact is, investors could actually benefit from a bit more greed. We would then demand the appropriate risk premium for volatile investments and bail out of any risky assets that weren’t paying them. In that sense, Foxes and Gekkos alike might agree to revise the sleek-haired financier’s dictum. Maybe greed isn’t good in an unmitigated sense. But compared to envy, on occasion, greed might actually be a little better.