For several years now, Vivek Kaul has been writing excellent pieces for the Mint. However, even by his high standards this is an exceptionally insightful piece which is worth reading in full. Whilst Mr Kaul’s piece is ostensibly about conmen, in practical terms it is about four different types of selling techniques.
The first technique is where the salesman is selling something which is flawed but he sincerely believes that what he’s selling is perfect. Mr Kaul calls these people ‘true believers’. He writes, “As Dan Gardner writes in Future Babble—Why Expert Predictions Fail and Why We Believe Them Anyway: “If someone’s confidence is high, we believe they are probably right: if they are less certain, we feel they are less reliable.”
Now, many people who are in the business of professional persuasion—from politicians to conmen to financial influencers and from fund managers to anyone making a presentation to convince their team about something or sell something to the world at large—understand this dynamic. Only when an individual projects confidence about something will he or she be able to persuade others to be confident about it as well.
Further, there are different kinds of professional persuaders who need to project confidence. The first kind are those who truly believe in what they are selling and are confident about it. There is no malice involved in this case. Let’s call them the True Believers…”
The second type of salesman says Mr Kaul are the ‘actual conmen’. “Let’s say someone launches a Ponzi scheme which promises a very high rate of return. A Ponzi scheme is basically a fraudulent investment scheme in which a fraudster promises prospective investors that he can generate very high returns if they invest in his scheme. Such an individual has to project an extreme form of confidence to get investors to invest in the scheme.
As Gardner writes: “People may look and sound more confident than they really are. Con men do this deliberately.” This confidence is projected in how the fraudster talks as well as in the high returns promised, exploiting people’s greed and enticing them to invest in the scheme.
Now, the thing is that the fraudster has no special formula to be able to invest money and generate high returns. He just uses the ruse of high returns to get people to invest in the scheme. Once money starts to come in, he uses the money being brought in by the new investors to pay off the original investors in the scheme.
Two things happen here. First, the story that original investors have made high returns attracts newer investors into the scheme and keeps it going. Second, the original investors become big votaries of investing in the scheme. They become True Believers. They ‘con’ themselves to con others.
This is a trick used by multilevel marketing (MLM) companies as well….”
The third kind of salesman is the ‘professional persuader’ i.e. someone who is not conman nor someone who is naïve enough to believe that the snake oil that he’s selling is the nectar of immortality. Instead, “the third kind of professional persuader with the need to project confidence. These individuals are not trying to run Ponzi schemes and run away with the money that investors invest. Nonetheless, their incentives are such that they need to go out there and sell stuff.
This category includes wealth managers of banks, mutual fund agents, stock brokers and everyone else in the business of getting you, dear reader, to invest your hard-earned money somewhere. As Berger writes: “People prefer confident financial advisers, even when they’re more likely to be wrong.” This is because most people are very busy handling the daily pressures of life, so when it comes to investing, they like being exactly told what to do. This is where confident financial advisers rule the roost and are successful simply because their communication has no ifs and buts. Financial influencers fall in this category as well.
In fact, a whole generation of middle-class and middle-aged Indian men ended up buying unit-linked insurance plans between 2005 and 2010, on the assurance and confidence of insurance agents, who were also middle-aged Indian men, that the investment would double in three years. Of course, they lost a lot of money in the process.”
Finally, we come to the fourth and final kind of persuader who is the most complicated of the lot. “This professional persuader could possibly be a politician or even a bureaucrat who needs to create an environment (or mahaul, as we say in Hindi) in order to push through a particular policy.
Let’s take the case of Lyndon B. Johnson, the 36th president of the US, from November 1963 to January 1969. Before he became president, he was a senator, and as a senator, he practised a technique called “working up”.
As Galef writes: “When he needed to be able to convince people of something, he would practice arguing that position, with passion, over and over, willing himself to believe it. Eventually, he would be able to defend it with utter certainty— because, by that point, he was certain, regardless of what his views had been at the start.”
The logic here was that if he had to convince the world of something, he should first be convinced about it because only then would he be able to project the kind of confidence necessary to convince the world. In fact, this tactic is employed regularly by gurus of all kinds—from management to spiritual. One way to do it is to break down the idea or the proposition that one wants to sell and then go about building a foundation step by step so that as a guru one is confident about the whole thing.
In fact, this was something that Abraham Lincoln, the American president between March 1861 and April 1865, practised.”
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