Create Value. What does it mean?

[MJ DeMarco]

"Don't focus on the money, create value and the money will come."

Exactly. It's redefining how money is acquired. To create a velocity of money flow into your direction, you have to HAVE what money is attracted to, and that is VALUE. Value is defined by NEED, DEMAND, or WANT.

Think of value/money relationship like a magnet: Value is the positive charge, money is the negative charge. Put the two charges (negative and positive) together and create attraction. The magnet moves and creates a bond.

Unfortunately, it the world of "money making" -- people approach money on a polarized basis; they attack money with a negative charge (I wanna make money! I wanna get rich!) and you know what happens when you inverse a magnet? You repel the two forces. Two identically charged magnets face to face will repel each other. This simple analogy (positive charge/negative charge) is why most people never make money. To attract money, you must reverse your polarity from negative (repel) to positive (attract).

(This shit is probably going into my next book if I have one... consider it a preview =))

Value is defined as delivering something that someone else needs to another member in society.

Bingo.

the more money you have the more value you've provided to others.

True. This is why anyone who begrudges "rich people" they are actually begrudging value creators and job creators. Class warfare is nothing but an attack on the very people who create value in our world. I'd don't mind a billionaire moving into my town if he provides 1,000 great jobs, or spends millions at the local stores. I love rich people because they advance our society via a value exchange. Rich people typically both produce and consume heavily - both are fundamental to a robust economy. You don't get jobs from poor people.

To make more money, provide more 'value'. That is: be more useful to more people. Solve their problems, give them something. Doing something like google 'sniping' a niche site for adsense clicks, you provide questionable value, its more like hacking a temporary system to cheat your way into money, which is why a simple algorithm change can screw over your business.

This is why I'm not big on AM as a primary revenue driver, but a complement. For example, the affiliate ads at this forum are complementary- they aren't my bread-n-butter. It's the salt on the steak.

A lot of money is also made by arbitrage and scalping where arguably no value is created. I create money this way.

Au contraire.

If you buy a house in Phoenix, you bought it because you felt the market UNDERVALUED it. YOU saw value. When you buy a stock, you feel it is UNDERVALUED via its stock price versus its management and earnings potential. You are speculating on your ability to be a better determinant of value, and your ability to forecast value into the future.

When I buy stock options, I am making a value bet. I bet that the price will be valued higher or lower in the future.

If I sell naked RIMM calls, I'm saying "These call options are overpriced and worth selling: this company is valued too high - the price will be lower in the future"

Every action, or non-action is a value assessment.

When you purchase an undervalued house, fix it up, and rent it for $1000/mo, you are "creating" value. Your business is also high in the business of "assessing" value.

If you love coding, i would not say it can't make you rich.

It will make you rich if you translate it into value that others can consume.

MJ writes about this in TMF . Think of value in terms of your customer's perceived perspective rather than in terms of your perspective, that was my biggest problem with understanding value.

Any time you hear someone saying "money" -- replace the word with "value" -- that helps.

Similarly, anytime I hear a politician say "we must tax the rich" -- I replace "the rich" with "the value creators".

The big problem for me always is to get not hung up with all these terms. "Shit, I need to give value"... It sounds really heavy.

Sometimes value can be reframed just by presentation. This is the art of assessing value. (Like in finding undervalued stocks, real estate, etc.)

Buy something at Craiglist with one blurry picture. Take it home, clean it up, paint it, do whatever; take 10 High-Def photos and relist for more. You just reframed value.

 

[socaldude]

Bro, the best way to look at it is this: There is no such thing as "making money". Money is simply evidence/proof of your value contribution. Whether you cleaned toilets in public restrooms in downtown Los Angeles or whether you own a company. Whether you are an employee or an entrepreneur you contributed VALUE, except the entrepreneur leverages capital, and therefore can contribute MORE value than an employee. plain and simple. forget this whole non-sense concept of money that most people are totally stuck with.

Value is defined as delivering something that someone else needs to another member in society. An entrepreneur simply molds resources such as human capital and other economic resources such as plastic, wood, metal, computers, software etc. into something that someone else NEEDS. That right there is value.

 

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[DennisD]

Bro, the best way to look at it is this: There is no such thing as "making money". Money is simply evidence/proof of your value contribution. Whether you cleaned toilets in public restrooms in downtown Los Angeles or whether you own a company. Whether you are an employee or an entrepreneur you contributed VALUE, except the entrepreneur leverages capital, and therefore can contribute MORE value than an employee. plain and simple. forget this whole non-sense concept of money that most people are totally stuck with.

Value is defined as delivering something that someone else needs to another member in society. An entrepreneur simply molds resources such as human capital and other economic resources such as plastic, wood, metal, computers, software etc. into something that someone else NEEDS. That right there is value.

This. Historically, money is an IOU for a barter system. Money is proof you provided service to another person, and the more money you have the more value you've provided to others.

To make more money, provide more 'value'. That is: be more useful to more people. Solve their problems, give them something. Doing something like google 'sniping' a niche site for adsense clicks, you provide questionable value, its more like hacking a temporary system to cheat your way into money, which is why a simple algorithm change can screw over your business. If you had a niche site that provided actual value (in depth original articles/advice/tutorials), you'd have a thousand people naturally linking to you, and that traffic would keep you alive no matter what google did.

 

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[wade1mil]

What I use to think value was: Create a brand new product nobody has ever heard of and show them why they need it.

What I now think value is: Offer something people want or need. If you sell computers cheaper than everyone else, you've created value by saving them money. If you create a new gizmo that people want, you've created value by giving people something they want. If you sell toilets (or any other product that already exists) and market it under your own brand, you've created value by making it easier for customers to buy what they want. If you install solar panels, you've created value by installing something the buyer wouldn't know how to install himself. Making something cheaper, better, easier, faster, more professional. MJ writes about this in TMF . Think of value in terms of your customer's perceived perspective rather than in terms of your perspective, that was my biggest problem with understanding value.

 

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[MJ DeMarco]

I am all about free enterprise but have seen the affects first hand of what the wealthy can do to an industry they want 100% control over and have the money to influence the outcomes they want.

You've responded to my comments as if they are spoken in absolutes. They are generalizations.

Sure there are many rich people (Err, I should say corporations made up of individuals) who might have acquired their wealth via predatory practices but the their numbers are far less than the rich people in this country who are starting businesses and creating value.

IMO, the value betrayal you describe evolve from the big public companies where stakeholder priorities change: Whereas a private company/entrepreneur creates customer-centric value (they have positive charge), the public company demotes the customer in favor of "shareholder value" (switching from positive to negative) ....this is where value is eroded in favor of greed and profit - the customer simply isn't the #1 priority -- money is. (Shareholders demand profits! Shareholders demand ROI! Investors need a return! Wall Street wants our earnings to grow at X%!)

A great example is Bank of FN America. I hate them and they would sell your mother for a $15 service fee. Think they care? Nope. Profit is priority - customer satisfaction isn't.

 

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[kurtyordy]

just a reminder of the no politics rule here. don't want one of the mods coming in here and smacking you all upside the head.

 

[Rickson9]

This is neither here nor there, but one wealthy entrepreneur told me, "Entrepreneurs and employees work at cross purposes. Employees want to extract as much money for as little work possible. Entrepreneurs want to extract more productivity for as little money possible. Eventually all employees go lame and have to be replaced." I though that that was an interesting perspective.

 

[Yussef]

Ok I have been out creating value what did I miss? Oh more politics? Let me share this thought if I may, since I am the one that started this thread.

I am pretty sure MJ is a pretty stanking rich dude with access to a lifestyle that some of us dream of having some day. Yet regardless of his political views, social status, education, religion, race, or gender here we all are with a platform to not only voice our opinions but to receive feedback from those that have been to the summit.

There are members that don't like me, but guess what, if they post some good shit I still eat it up and ask them a question or two because it's still good shit. There are members that I disagree with 99% of the time but if they drop a jewel that remaining 1% of the time...I am on it. One important thing that I have learned from being on this forum is to be malleable. MJ told me that I needed thicker skin because I was taking things way too personal. Guess what? I changed, because he was right and that not only opened my mind up to receiving more on the forum but it also helped me be a stronger leader of my company.

So in closing I want to say that $1 Trillion dollars in currency trades circle the globe everyday and I want my cut. A closed hand receives nothing and a closed mind gets even less.

 

[Rickson9]

A lot of money is also made by arbitrage and scalping where arguably no value is created. I create money this way.

 

[Skys]

Making something cheaper, better, easier, faster, more professional. MJ writes about this in TMF . Think of value in terms of your customer's perceived perspective rather than in terms of your perspective, that was my biggest problem with understanding value.

This is so awesome about TMF (fastlane book). Some books have a certain quality to them, that when you read it again you just hear different things that the first time. The reason is obvious: The reader has a deeper understanding of the concepts and now hears different things. MJ's book has this quality. Not many books do.

 

[Yussef]

How I applied this today in real time

I own a home healthcare based business and I focused about 3 hours of my time today on developing 3 packages of care ranging from a basic home based healthcare service, to an elite level, 7 day per week package in which I offer (along with the home health services) Therapeutic Massage from a contracted partner and concierge services for busy professional family members (also available through a contracted person I know). Although these are both optional in the elite package I wanted to bring something I have not seen my competitors offer. My value contribution for the day. Thanks guys.

 

[socaldude]

Any time you hear someone saying "money" -- replace the word with "value" -- that helps.

Similarly, anytime I hear a politician say "we must tax the rich" -- I replace "the rich" with "the value creators".

You can look at it the other way too. =) Scammers and Money Chasers are Value DESTROYERS.

Money chasers are one level above scammers in my book. You throw out a shitty product or service as a crow bar to pry the money out of people's hands. When you open up a new business for the purpose of "lets see if we can make money". You will fail. And when you do that you just destroyed your OWN value(you lose your money on your shitty venture) and OTHER people's value(buyers remorse, "damn that product/service sucks a$$" comments from consumers).

Who can contribute more value? A janitor employee or a big a$$ corporation? This is why Entrepreneurs are usually rich because they can contribute more value than joe blow the employee who is limited.

I think ever since we were little kids we were NEVER taught that wealth is created by helping others in society(value contribution).

When someone says "money/wealth" MOST people think of stacks of benjamins, boats, mansions, fancy cars etc. NOT value contribution to strangers in society.

The more you help society the more society will help you. You see when you contribute one million dollars worth of value to society; society owes you one million dollars worth of value(lamborghinis, houses, jelly beans, hamburgers etc). This is why i say that piece of paper in your wallet is simply evidence/proof of your value contribution.

For example: when someone sells you a hamburger, you give them money. Then business that got your money now has evidence that it contributed value to YOU.

Every entrepreneur needs to get rid of this whole non sense idea of "making money" and start focusing on helping others/ contributing value.

all entrepreneurs should ask themselves: am I a value creator(quality product/services that others need) or a value destroyer(money chasers)?

 

[Kak]

Uh, yes Kak I must correct you. For me to "demonize" business would be shooting myself in the foot . I am a business owner! I respect your perspective on regulation, although I do not agree with it, but I think regulation is necessary in some industries, even if only minimally so.

Yussef, I respectfully understand how you may feel like this about regulation. But what I want you to do is stand back and take a look at how messed up government is. Do you really want that monstrosity regulating business freely? They don't even have their own shit together, why should they tell us what to do?

Business should be regulating government, not the other way around. These idiots can't even make a budget.

I am against either party regulating business the way they do.

 

[Yussef]

So it seems that money, in most cases is evidence of value. What about power, influence, and branding? Are these things also a product of value?

I am beginning to believe that convenience is a form of value relative to saving people time. One example I can think of is McDonald's. Obviously they do not serve the best tasting or most nutritious food in the entire restaurant industry but they provide a quick solution to a problem that all humans experience. Hunger.

So is it safe to say that if I don't have the greatest product online I can offer quicker more convenient shipping (possibly even cheaper) and still create value via convenience? I am not trying to be too deep but if I can clearly define as many ways to create value and apply a few of them that should really compound the results.

 

[Milkanic]

So is it safe to say that if I don't have the greatest product online I can offer quicker more convenient shipping (possibly even cheaper) and still create value via convenience? I am not trying to be too deep but if I can clearly define as many ways to create value and apply a few of them that should really compound the results.

Yes, look at Gap, INC. They own Gap, Old Navy, and Banana Republic. Each store basically offers the same things (pants, shirts) but the value is completely different.

Check out the book "Personal MBA", the first couple chapters are dedicated to this concept and how various businesses offer value.

 

[Amail]

I'm not a professional marketer, and I didn't stay at a Holiday Inn Express last night, but I do have some opinions on this.

Value means different things to different people, and it can be subtle. Good marketing can add a lot to value. Consider a simplistic example - Advertisements for a watch:

Craigslist Ad 1: For sale - men's watch. Works. $50

Craigslist Ad 2: For sale - men's G-shock watch in excellent condition [photo of watch]. Black with gold trim, no scratches. Automatically sets its own time to the atomic clock signal - no need to ever set the time again! Low, low price of $50.​

The customer knows exactly what he's getting with ad 2. You've given him insight, which is value, and you'll profit by actually selling the thing instead of it sitting forever on your shelf.

There's also perceived value, which you can offer by making the customer comfortable with choosing your product over somebody else's. Again, good marketing can do this for you. Portray your product as the second coming, complete with over the top descriptions, glowing recommendations, happy happy words combined with a no BS approach and you can sway people into buying your product over someone else's.

At least that's the theory I'm going with. :smx9:

 

[Amail]

Nice! It seems that would be an easy industry to get complacent and stop being innovative. Had you tested the concept with any customers beforehand to gauge the level of interest?

Another service you might offer is dog visits. I've heard good things about bringing dogs into rest homes to visit interested patients. Very therapeutic. I love dogs, so someone damn well better bring one around to visit me when I'm creaky and ancient!

 

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[throttleforward]

I really like the dog idea. I also think some sort of mental health counseling would be helpful. Depression is a serious problem for older folks.
Have you thought about expanding beyond healthcare? What about other senior services (house calls for minor desktop computer teaching/repair so they can keep in touch with their kids, housecleaning services through another vender, etc.)?

 

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[Yussef]

Srsly! Therapy Dogs International

I think the dog idea was a good one but your comment about getting old and cranky was hella funny.

 

[socaldude]

"I know of nothing more despicable and pathetic than a man who devotes all the hours of the waking day to the making of money for money's sake."-John D. Rockefeller

"Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer."-Adam Smith

Even these two Bros were Fastlane =)

 

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[Rickson9]

""Our enormously productive economy demands that we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfactions, our ego satisfactions, in consumption. The measure of social status, of social acceptance, of prestige, is now to be found in our consumptive patterns. The very meaning and significance of our lives today expressed in consumptive terms. The greater the pressures upon the individual to conform to safe and accepted social standards, the more does he tend to express his aspirations and his individuality in terms of what he wears, drives, eats- his home, his car, his pattern of food serving, his hobbies."

 

[Yussef]

Wow. That pretty much summed it all up. Thank you.

I know this sounds really basic but I guess it goes back to the old adage "You must give in order to receive." Which helps to make MJ's magnet analogy make sense to me because (and I may be getting way too deep here) if money is seeking to capture a worthy owner, and you are seeking to capture money you are in fact repelling what it is that you seek. In contrast we must transform ourselves, goods and services into the very things that money (wealth) seeks to capture and in essence what we are doing is making ourselves bait by becoming value creators?

I really get this but I made it sound a little weird I think but that's just how I understand things better. Through weird analogies. This has been golden.

 

[socaldude]

A funny way to think of this is: When you have a million dollars because you contributed a million dollars worth of value to society(production). You can then convert that(consumption) to whatever you want: A million dollars worth of jelly beans or 4 lamborghinis.

 

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[Yussef]

True. This is why anyone who begrudges "rich people" they are actually begrudging value creators and job creators. Class warfare is nothing but an attack on the very people who create value in our world. I'd don't mind a billionaire moving into my town if he provides 1,000 great jobs, or spends millions at the local stores. I love rich people because they advance our society via a value exchange. Rich people typically both produce and consume heavily - both are fundamental to a robust economy. You don't get jobs from poor people.

MJ I love and respect what you have created and your mind is brilliant when it comes to wealth creation..but I think I know where you were kind of going with this comment and I love rich people too (who act like they have good sense), but that does not necessarily equate to me loathing people who have less.


I believe we must be very careful as we acquire financial intellect that we do not become socially autistic. I know you didn't say this but let me clarify that all people that are wealthy are not good and all people that are poor are not bad. Nor can they all be separated into groups of job producers and job destroyers.


I really do not believe there is a class war in this country regardless of what the political spin suggest. I confess that I have my days when my employees make me feel like I would vote to make complacency a capital offense if someone caught me at that moment. But bro there have to be checks and balances so that we all can continue to have the opportunity to get this money.


I am all about free enterprise but have seen the affects first hand of what the wealthy can do to an industry they want 100% control over and have the money to influence the outcomes they want. I witnessed corporate giants zero in on mental health services in my state and convince the governor and health and human service secretary to change regulations that would basically force smaller agencies to close their doors by regulating new expenditures 3 times what they had been incurring. After these businesses closed their doors the consumers left behind had no options available but the big guys. But things did not work out as planned unfortunately. Many mental health consumers opted not to receive services from these companies which left many emergency rooms overwhelmed with manic patients. The problem has not been fixed yet and that was almost 2 years ago.


Now did the rich create jobs in this case? Yes they did. They hired many of the spill off from the smaller agencies that had to close..even did it for much less than it cost before because demand for mental health positions shot up but the supply fell drastically but in the end the people that needed the services lost out because they were robbed of their right to choose.


So yes in a sense your right you don't get jobs from poor people, but on the flip side of that coin sometime you loose the one you have to overzealous rich people. We need a healthy balance. Just my 2 cents.

 

[Kak]

I am not preaching politics... Government regulation and utter stupidity comes from both sides of the isle.

 

[andviv]

Speaking as a mod, I am pretty close to pull the trigger. Politics will take us nowhere anyway.

Government regulation and utter stupidity comes from both sides of the isle.

Yes, we all agree. Now the question is, how do we profit from it? Otherwise, there are gazillions (yeah, real number) of forums to talk about politics out there.

So, going back to the original topic.... Are we close to a good agreement --or at least a good discussion-- about what creating value is?

 

[Yussef]

he gave me the same advice about taking things personally years ago! it is excellent advice!

do you trade currencies?

No I don't trade currency but have studied a little about it. My knowledge in it is very novice so I know I am not ready.

 

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[Yussef]

I like things simple. I have heard it said time and time again not only on this forum but in just about 90% of anything business related that I pick up. It's the same saying or something similar "Don't focus on the money, create value and the money will come."

I would like value defined by some of you that feel you have created it, and what you feel the evidence of this created value was.

I found a short snippet on e-how about creating value but I am hoping to get something epic here.

Oh by the way I am not challenging this thought. I believe it but would like a deeper understanding so that I can connect to the concept. Thanks in advance.
How to Create Value in Business | eHow.com

 

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[Kak]

Think of it this way. If you had 20 dollars and someone said they would sell you a crisp $50 bill for your $20 would you do it? Of course! Now think of a product that you think is easily worth $50, if someone can sell it for $35 they created value to you.

If most people think what you offer is worth the money they pay then you created value.

 

[Yussef]

Think of it this way. If you had 20 dollars and someone said they would sell you a crisp $50 bill for your $20 would you do it? Of course! Now think of a product that you think is easily worth $50, if someone can sell it for $35 they created value to you.

If most people think what you offer is worth the money they pay then you created value.

Hmmm. Ok. Thanks for this. Your reply made me realize that value is very subjective, depending upon which industry your in.