The anatomy of massive value creation, and massive ROI (1,700%)

[MJ DeMarco]

This weekend I watched my wife make homemade vegan cheese.

If you’re not familiar with vegan cheese, it has the same consistency / look of dairy cheese except it is a bit softer. In my opinion, it tastes very similar to real cheese, although I’ve been vegan for 5+ years so perhaps my taste-memory is not as good as it was.

She made smoked Gouda, pepper jack, and mozzarella. Her recipes were about an average 8 ingredients, depending on the type of cheese. The two primary ingredients are organic cashews and water. The other ingredients typically are seasonings such as lime, salt, apple cider vinegar, etc. There is usually also a natural thickener too, like tapioca starch. The recipe also calls for a great mixer, like a Vitamix.

Anyhow, when she was done, we ended up with 3 lbs of cheese.

When I saw the result, I was astonished. Not because it turned out delicious (it did) but my astonishment was because I saw exactly the amount of ingredients required to create 3 lbs of vegan cheese.

Altogether, it was about $2.75 in raw materials.

Now if you’re not familiar with vegan cheese, it’s as expensive, if not more, than dairy cheese. A 7 oz package retails for an average of $7 bucks (6.99). The kind I like is $8 per package, but let’s use $7. For demonstration sake, it comes out at $1 per ounce sells at retail.

3 lbs is 48 ounces. (3 X 16)

So with $2.75 in raw materials (at a RETAIL level) she created $48 in retail value of cheese.

$48 in retail value was magically created from $2.75 in raw materials and a tool.

This is how value is created.

This is how you take separate items, combine them, and come out with a 1,700% return on investment.

This is how entrepreneurs get rich.

Any index funds or investments paying 1,700%, while also giving you a modicum of control while not being subjected to the economic whims of the market? Bank accounts? Stocks? Crypto?

Now obviously there are other matters to deal with, like packaging, insurance, and shelf-life. The shelf-life of homemade plant-based cheese is only a few weeks. So from a commercialized standpoint, there are probably a few other ingredients needed.

However, this example is mathematically conducted at the retail level; we didn’t acquire raw materials at wholesale prices.

Question is, what raw materials could you be combining to create value?

What raw materials can you combine to cause the whole to be 1700% more valuable than the parts?

This is anatomy of value creation. This example also demonstrates the primary story used to create value in The Great Rat Race Escape ... singular raw ingredients/parts combined for a better whole outcome.

Value creation need not be not rocket science, it’s basic math.

 

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[fastlane_dad]

Question is, what raw materials could you be combining to create value?

What raw materials can you combine to cause the whole to be 1700% more valuable than the parts?

Value creation need not be not rocket science, it’s basic math.

Great post. Literally how fastlane / entrepreneurship / BIG EXITS happen.

This is exactly the type of thinking, mindset, and noticing opportunities ALL AROUND you that lead to the creation of something big.

Many of @NeoDialectic and my previous businesses started off EXACTLY on this premise.

There are various categories (food, personal care products (chemicals), beverages (think red bull), on and on) where this is very applicable, and work very well on this same principle.

 

[MJ DeMarco]

FYI, another similarly mathematically based post was recently posted by @Johnny boy -- if this post on value creation resonated with you, his will also be a worthy read with regard to testing ideas.

 

[socaldude]

I always ask myself what configuration of resources exist where it’s inefficient. That’s where there are opportunities as well. It could be something where we all go “gee, I never thought of it that way, it’s because that’s just how it’s always been done!”. You have to question everything.

Maslow states in The Farther Reaches of Human Nature,

"We fear our highest possibilities. We are generally afraid to become that which we can glimpse in our most perfect moments, under the most perfect conditions, under conditions of great courage. We enjoy and even thrill to the godlike possibilities we see in ourselves in such peak moments. And yet we simultaneously shiver with weakness, awe, and fear before these very same possibilities. So often, we run away from the responsibilities dictated, or rather suggested by nature, by fate, even sometimes by accident, just as Jonah tried in vain to run away from his fate."

The Jonah Complex

 

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[Albert KOUADJA]

This weekend I watched my wife make homemade vegan cheese.

If you’re not familiar with vegan cheese, it has the same consistency / look of dairy cheese except it is a bit softer. In my opinion, it tastes very similar to real cheese, although I’ve been vegan for 5+ years so perhaps my taste-memory is not as good as it was.

She made smoked Gouda, pepper jack, and mozzarella. Her recipes were about an average 8 ingredients, depending on the type of cheese. The two primary ingredients are organic cashews and water. The other ingredients typically are seasonings such as lime, salt, apple cider vinegar, etc. There is usually also a natural thickener too, like tapioca starch. The recipe also calls for a great mixer, like a Vitamix.

Anyhow, when she was done, we ended up with 3 lbs of cheese.

When I saw the result, I was astonished. Not because it turned out delicious (it did) but my astonishment was because I saw exactly the amount of ingredients required to create 3 lbs of vegan cheese.

Altogether, it was about $2.75 in raw materials.

Now if you’re not familiar with vegan cheese, it’s as expensive, if not more, than dairy cheese. A 7 oz package retails for an average of $7 bucks (6.99). The kind I like is $8 per package, but let’s use $7. For demonstration sake, it comes out at $1 per ounce sells at retail.

3 lbs is 48 ounces. (3 X 16)

So with $2.75 in raw materials (at a RETAIL level) she created $48 in retail value of cheese.

$48 in retail value was magically created from $2.75 in raw materials and a tool.

This is how value is created.

This is how you take separate items, combine them, and come out with a 1,700% return on investment.

This is how entrepreneurs get rich.

Any index funds or investments paying 1,700%, while also giving you a modicum of control while not being subjected to the economic whims of the market? Bank accounts? Stocks? Crypto?

Now obviously there are other matters to deal with, like packaging, insurance, and shelf-life. The shelf-life of homemade plant-based cheese is only a few weeks. So from a commercialized standpoint, there are probably a few other ingredients needed.

However, this example is mathematically conducted at the retail level; we didn’t acquire raw materials at wholesale prices.

Question is, what raw materials could you be combining to create value?

What raw materials can you combine to cause the whole to be 1700% more valuable than the parts?

This is anatomy of value creation. This example also demonstrates the primary story used to create value in The Great Rat Race Escape ... singular raw ingredients/parts combined for a better whole outcome.

Value creation need not be not rocket science, it’s basic math.

Entrepreneurship is a lifestyle and once you get into that style, no one can take it away from you except health-related issues.
you would start seeing opportunities everywhere because opportunities always exist and can bring millions once executed/implemented. it may be our inability to detect them or realize them that can be a blockage.


thank you very much for this article which shows us how to create value/wealth from nothing it's great

It's awesome

 

[Jpeveryday]

mj love your work

But you’re not factoring in the cost of her time ….

 

[Guest-5ty5s4]

mj love your work

But you’re not factoring in the cost of her time ….

At 1700% gain, and for a product that can be replicated by simply buying more ingredients (highly scalable), this is not a make-or-break factor.

Yes, it is a factor, but it fits very easily into the 1700%... It's negligible.

 

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[MJ DeMarco]

But you’re not factoring in the cost of her time ….

Wow, you totally missed the point.

 

[Citrusc]

What an inspiration---Keep it coming!

 

[Tammyanne]

This weekend I watched my wife make homemade vegan cheese.

If you’re not familiar with vegan cheese, it has the same consistency / look of dairy cheese except it is a bit softer. In my opinion, it tastes very similar to real cheese, although I’ve been vegan for 5+ years so perhaps my taste-memory is not as good as it was.

She made smoked Gouda, pepper jack, and mozzarella. Her recipes were about an average 8 ingredients, depending on the type of cheese. The two primary ingredients are organic cashews and water. The other ingredients typically are seasonings such as lime, salt, apple cider vinegar, etc. There is usually also a natural thickener too, like tapioca starch. The recipe also calls for a great mixer, like a Vitamix.

Anyhow, when she was done, we ended up with 3 lbs of cheese.

When I saw the result, I was astonished. Not because it turned out delicious (it did) but my astonishment was because I saw exactly the amount of ingredients required to create 3 lbs of vegan cheese.

Altogether, it was about $2.75 in raw materials.

Now if you’re not familiar with vegan cheese, it’s as expensive, if not more, than dairy cheese. A 7 oz package retails for an average of $7 bucks (6.99). The kind I like is $8 per package, but let’s use $7. For demonstration sake, it comes out at $1 per ounce sells at retail.

3 lbs is 48 ounces. (3 X 16)

So with $2.75 in raw materials (at a RETAIL level) she created $48 in retail value of cheese.

$48 in retail value was magically created from $2.75 in raw materials and a tool.

This is how value is created.

This is how you take separate items, combine them, and come out with a 1,700% return on investment.

This is how entrepreneurs get rich.

Any index funds or investments paying 1,700%, while also giving you a modicum of control while not being subjected to the economic whims of the market? Bank accounts? Stocks? Crypto?

Now obviously there are other matters to deal with, like packaging, insurance, and shelf-life. The shelf-life of homemade plant-based cheese is only a few weeks. So from a commercialized standpoint, there are probably a few other ingredients needed.

However, this example is mathematically conducted at the retail level; we didn’t acquire raw materials at wholesale prices.

Question is, what raw materials could you be combining to create value?

What raw materials can you combine to cause the whole to be 1700% more valuable than the parts?

This is anatomy of value creation. This example also demonstrates the primary story used to create value in The Great Rat Race Escape ... singular raw ingredients/parts combined for a better whole outcome.

Value creation need not be not rocket science, it’s basic math.

Glad you enjoyed the results! N ❤ the analogy...makes sense.

 

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[ruzara5]

Such a cheezy story. This one is more motivation in my value engine. It is part of where I go. Food and beverage products. Got to take a deeper look at the frozen foods niche. Just a great post.

 

[msufan]

Another fun method is to do the reverse of what MJ did here, and look at things being sold, and then break down the cost of individual components to find the value skew. I know a few different times MJ has posted items like that that he finds people selling on Amazon -- it seems to me like a worthwhile exercise to kind of have running in the back of your mind.

 

[Jadus]

This weekend I watched my wife make homemade vegan cheese.

If you’re not familiar with vegan cheese, it has the same consistency / look of dairy cheese except it is a bit softer. In my opinion, it tastes very similar to real cheese, although I’ve been vegan for 5+ years so perhaps my taste-memory is not as good as it was.

She made smoked Gouda, pepper jack, and mozzarella. Her recipes were about an average 8 ingredients, depending on the type of cheese. The two primary ingredients are organic cashews and water. The other ingredients typically are seasonings such as lime, salt, apple cider vinegar, etc. There is usually also a natural thickener too, like tapioca starch. The recipe also calls for a great mixer, like a Vitamix.

Anyhow, when she was done, we ended up with 3 lbs of cheese.

When I saw the result, I was astonished. Not because it turned out delicious (it did) but my astonishment was because I saw exactly the amount of ingredients required to create 3 lbs of vegan cheese.

Altogether, it was about $2.75 in raw materials.

Now if you’re not familiar with vegan cheese, it’s as expensive, if not more, than dairy cheese. A 7 oz package retails for an average of $7 bucks (6.99). The kind I like is $8 per package, but let’s use $7. For demonstration sake, it comes out at $1 per ounce sells at retail.

3 lbs is 48 ounces. (3 X 16)

So with $2.75 in raw materials (at a RETAIL level) she created $48 in retail value of cheese.

$48 in retail value was magically created from $2.75 in raw materials and a tool.

This is how value is created.

This is how you take separate items, combine them, and come out with a 1,700% return on investment.

This is how entrepreneurs get rich.

Any index funds or investments paying 1,700%, while also giving you a modicum of control while not being subjected to the economic whims of the market? Bank accounts? Stocks? Crypto?

Now obviously there are other matters to deal with, like packaging, insurance, and shelf-life. The shelf-life of homemade plant-based cheese is only a few weeks. So from a commercialized standpoint, there are probably a few other ingredients needed.

However, this example is mathematically conducted at the retail level; we didn’t acquire raw materials at wholesale prices.

Question is, what raw materials could you be combining to create value?

What raw materials can you combine to cause the whole to be 1700% more valuable than the parts?

This is anatomy of value creation. This example also demonstrates the primary story used to create value in The Great Rat Race Escape ... singular raw ingredients/parts combined for a better whole outcome.

Value creation need not be not rocket science, it’s basic math.

I'm not doubting you but just wondering how on earth it only cost you $2.75 for the raw ingredients? And you didn't buy wholesale? I would think that the organic cashews alone would cost far more than that. They aren't cheap where I live and they grow them here!

 

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[thomashoi]

Another way to look at it is how to simplify products and make it cheaper. There was this dude who couldn’t fit a table into his car and his friend suggested him to saw off the legs. While most people take it as a joke, he invented self assembly furniture and created a new market. He makes customers diy most of the process including buying and transporting the furniture home by themselves and also cutting off the middle man.

 

[Lonnychb]

Question is, what raw materials could you be combining to create value?

What raw materials can you combine to cause the whole to be 1700% more valuable than the parts?

Hi MJ, I'm French my English is very bad

Thanks for the business idea, tell me what price you think I can sell a vegan forming recipe e-book or training video for.

I think we're up to over 1700% right?

 

[polaroid22]

Great post!


I know it's not the point of the post, but I would like to share the following experience..
I have been vegan for a year, and cheese is one of these things that drove me crazy.
- Vegan cheese: was expensive
- The flavour was kind of bland. (I live in Europe, so we got some really good actual cheese choices, so every vegan cheese was way inferior to actual cheese tastewise)
- It didnt melt like regular cheeses. Which sucked for sauces, for pizza's the cheese wouldn't stretch out like mozarella, for pasta's you would have chunky pieces of cheese instead off it would blend in with the rest..

Which brings me also to the point of pizza bottom's, I would prefer a bottom that is not created off white flower as it's unhealthy, but every pizza bottom I tested was so untasty to the point my kids didn't even want to eat pizza for christ's sake.

 

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[Two Dog]

Entrepreneurship is a lifestyle and once you get into that style, no one can take it away from you except health-related issues.
you would start seeing opportunities everywhere because opportunities always exist and can bring millions once executed/implemented. it may be our inability to detect them or realize them that can be a blockage.


thank you very much for this article which shows us how to create value/wealth from nothing it's great

It's awesome

Hmmm, lifestyle or skill? I certainly can't tell the difference at this point. Both developed simultaneously over time.

I only know a handful of people with similar lifestyles that were never entrepreneurs.

Far more E-people doing our thing.

 

[Albert KOUADJA]

Hmmm, lifestyle or skill? I certainly can't tell the difference at this point. Both developed simultaneously over time.

I only know a handful of people with similar lifestyles that were never entrepreneurs.

Far more E-people doing our thing.

I understand your point of view.

 

[georgetod79]

Similarly, we recently made sushi at home.
Here's the breakdown (prices in CAD $, retail prices without discount or sale, rounded higher)

Products:
3 InstantPot measuring cups of rice - $1
Seaweed sheets - $1
1 cucumber - $2
2 avocados - $4
Smoked salmon - $5
Some sauce, sesame seeds, Cling wrap, etc, - $1

1-time Investment (not included in the final calculation) - bamboo mat (for rolling, reusable) - $5

The total cost of materials: $14 + $5 (for the mat)
Time: 1.5 hours (for the first time, with experience it can be much faster)

Result: 49 good rolls (ends removed) - 12 not perfect (unsellable) rolls
The retail price is avg. of $10 for 6 pieces = $80, or 4x-6x return
Even if you include 1 hour's pay ($16 per hour rate), it still makes a 2.5x-3x return.

Enjoy!

 

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