The creating value vs capturing value is a fascinating one to think about. You want to build a business that produces more value than it captures, but where you are positioned and what leverage you have to capture varies quite a lot. One I find quite interesting is US entrepreneurs who leverage Shenzhen to build their product and then ar…
The creating value vs capturing value is a fascinating one to think about. You want to build a business that produces more value than it captures, but where you are positioned and what leverage you have to capture varies quite a lot. One I find quite interesting is US entrepreneurs who leverage Shenzhen to build their product and then are faced with low cost competitors on Amazon almost immediately. The value of their idea can be quite fleeting. (though on the flip side locking down value for hundreds of years with copyright is not ideal either).
It's a very interesting dance/interplay between these variables, and I feel like it's important enough that we should hear more about it (I don't hear zero about it, but I don't hear nearly as much as on other topics).
I think the idea business is probably one where value capture goes up over time, but SLOWER than additional value creation, so that you build up a lot of goodwill/pricing power for some day in the future when you may need it.
It's a different type of thing, but this is one reason why I didn't have a paid option on this newsletter for the first ˜8 months, and didn't have a paywall after that. I wanted to see if I could capture a very very small fraction of the value I created, but then work really hard to create more value and hopefully the captured part would scale to enough that it would make is sustainable and in the end it'd be win-win (ie. more people can read than with paywalls, so that creates more value).
The creating value vs capturing value is a fascinating one to think about. You want to build a business that produces more value than it captures, but where you are positioned and what leverage you have to capture varies quite a lot. One I find quite interesting is US entrepreneurs who leverage Shenzhen to build their product and then are faced with low cost competitors on Amazon almost immediately. The value of their idea can be quite fleeting. (though on the flip side locking down value for hundreds of years with copyright is not ideal either).
It's a very interesting dance/interplay between these variables, and I feel like it's important enough that we should hear more about it (I don't hear zero about it, but I don't hear nearly as much as on other topics).
I think the idea business is probably one where value capture goes up over time, but SLOWER than additional value creation, so that you build up a lot of goodwill/pricing power for some day in the future when you may need it.
It's a different type of thing, but this is one reason why I didn't have a paid option on this newsletter for the first ˜8 months, and didn't have a paywall after that. I wanted to see if I could capture a very very small fraction of the value I created, but then work really hard to create more value and hopefully the captured part would scale to enough that it would make is sustainable and in the end it'd be win-win (ie. more people can read than with paywalls, so that creates more value).