You Sold Me A Lemon

Why do we call a car that turns out to be a crap car a lemon? Here’s one good (and important) historical reason, one good (and important) marketing-based lesson, and one good (and important) market/information-based concept.

We want all of these lemons in our toolbox (or lemonade or… I don’t know, this is just really interesting to me, ok?).

Lemon used to be slang for a hustle. If someone worked you over, the sour face you made when you figured it out? Well, that’s a lemon.

But, it wasn’t applied to cars until Volkswagen ran one of its most famous ads calling the Beetle a lemon.

It was 1960. It was the era of BIG cars. “Yank tanks” (for the American producers’ preferences). VW’s campaign focused on the killer tag line, “Think small.”

In their most famous ad, they show a Beetle and accuse it of being a lemon. They go on to explain why in a delightfully self-deprecating way, selling you subtly the whole time on how cool and different it is to be a part of this special group of VW enthusiasts. It’s a beautiful lesson in why differentiation matters.

Finally, 10 years after the ad ran, because now cars with defects were colloquially called lemons, George Akerlof published his seminal economics paper, “The Market for Lemons,” on how used-car pricing markets work.

The big idea here is that whenever sellers have more information than buyers you shouldn’t expect a fair price (and so we’re back to a hustle).

Here’s what I’m thinking after putting these ideas all in one place:

1. Words and metaphors are powerful. The poetry and slang of calling something “a lemon” gets into your brain in a way “You sure got taken advantage of” can’t.

2. Expectations and surprises are powerful. Comparing a car that looks nothing like its contemporaries to a hustle surely got some people to agree and read on for confirmation. The jujitsu that follows is why the ad is so damn effective. It’s a twist the industry didn’t see coming and it positions the car perfectly.

3. Curiosity creates markets. It’s how ideas are exchanged. But, we have to be smart about where information may not be evenly spread. If someone likely has more information than we do, we want to explore (and pay) accordingly for assuming that risk.

Now, I’m off to go make a bourbon and lemonade if you don’t mind.

ps. No, not at 6 am, I don’t write these exclusively when you get them you know.