Value

We’ll start by defining ‘value’ as a product or service that somebody needs or wants. Their desire is strong enough that they are willing to pay something to get it.

There is a personal cost, in that money -- particularly when it comes from salary -- is an aspect of time. You have to spend time in your life to earn it. So, spending that money is also accepting that that time is gone too.

It is extraordinarily difficult to create value. Very few people can do it by themselves. There are not that many more people who can drive others to do it with them. Often it requires manifesting something complex, yet balanced, out of imagination, which is why it is such a rare ability.

Once value exists, lots of other people can build on top of it. They can enhance or expand it. They can focus on whatever parts of the production are time-consuming and minimize it. Value explodes when it is scaled; doing something for ten people is not nearly as rewarding as doing it for thousands.

The difference between the cost to produce and willingness to pay is profit. There is always some risk, as you have to spend money before you will see if it pays off. For new ideas, the risk is very high. But as the value proves itself those risks start to diminish. At some point, they are nearly zero, this is often referred to as ‘printing money’. You just need to keep on producing the value and collecting the profits.

At some point, the growth of the profitability of any value will be zero. The demand is saturated. If the production at zero is smooth, the profits are effectively capped. There is nowhere to go except down.

The easy thing you can do with value is degrade it. You can fall below the minimum for the product, then people will gradually stop wanting to pay for it. If it’s been around for a while habits will keep some purchases intact, but it will slowly trickle away. The profits will eventually disappear.

A common way to degrade value is to miss what is most valuable about it. People may be buying it, but their reasons for doing so are not necessarily obvious. The secondary concerns may be what is keeping them coming back. If you gut those for extra profit, you kill the primary value.

People incorrectly assume that all value has a life span. That a product or service lives or dies fairly quickly, and that turnover is normal. That is true for trendy industries, where the secondary aspects are that it is new and that is popular, but there is an awful lot of base value that people need in their lives and they do not want it to be shifting around. Trustworthy constants are strong secondary attributes. The market may fluctuate slightly, but the value is as strong as ever. Stable business with no growth, but good long-term potential.

Exploiting value is the core of business. They find it, get as much money out of it as possible, then move on to something else. When the goal is perpetual growth, which isn’t ever possible, the value turns over too quickly, leading to a lot of instability. That is a destabilizing force on any society.