This is one of a series of papers examining the interplay between differentiation theory for Lipschitz maps X -> V and bi-Lipschitz nonembeddability, where X is a metric measure space and V is a Banach space. Here, we consider the case V = L-1, where differentiability fails. We establish another kind of differentiability for certain X, including R-n and H, the Heisenberg group with its Carnot-Caratheodory metric. It follows that H does not bi-Lipschitz embed into L-1, as conjectured by J. Lee and A. Naor. When combined with their work, this provides a natural counterexample to the Goemans-Linial conjecture in theoretical computer science; the first such counterexample was found by Khot-Vishnoi [KV05]. A key ingredient in the proof of our main theorem is a new connection between Lipschitz maps to L-1 and functions of bounded variation, which permits us to exploit results on the structure of BV functions on the Heisenberg group [FSSC01].