Value Extraction Vs. Value Creation

[Kung Fu Steve]

Wrote up a little article on extracting value vs. creating it.

Big problem with most would-be entrepreneurs.

Value Extraction vs. Value Creation! | Stephen Hilgart

My question how are you creating added value in your business or soon-to-be business?

 

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[Alan Wu]

Thanks for sharing such a great post with us.

Most people usually aren't stupid.
They see realize when something you offer is of great value
or not worth anything at all.

When you're selling a dollar bill for fifty cents, everyone will buy from you.

 

[socaldude]

Great article Stephen.

Most people don't understand why money is exchanged in society. Money is given to those entrepreneurs who utilize capital and other resources to CREATE products or services that benefit people/consumers(for the right price that is). Its the whole marginal analysis the consumer goes through. A marginal benefit of value exceeds the marginal cost of that product or service. The consumer says to themselves "thats worth it" or "wow that will help me, heres cash money". The people who "do what they love" ignore the "marginal benefit" side of this marginal analysis, they don't care about needs or wants.

The Entrepreneur uses two of the five senses to spot these gaps in the market: Your eyes for perception and your ears for listening to the bitching of consumers. He then uses his abilities and skills(self taught of course :wave to direct capital to create the product or service that solves this pain in the market place. People hand you money. The consumers don't give you money for any other reason other than the fact that your product or service is beneficial to their lives.

There is no such thing as "making money", money is just a piece of paper saying "I added value to someone".

 

[Dan Da Man]

Great article Stephen.

Most people don't understand why money is exchanged in society. Money is given to those entrepreneurs who utilize capital and other resources to CREATE products or services that benefit people/consumers(for the right price that is). Its the whole marginal analysis the consumer goes through. A marginal benefit of value exceeds the marginal cost of that product or service. The consumer says to themselves "thats worth it" or "wow that will help me, heres cash money". The people who "do what they love" ignore the "marginal benefit" side of this marginal analysis, they don't care about needs or wants.

The Entrepreneur uses two of the five senses to spot these gaps in the market: Your eyes for perception and your ears for listening to the bitching of consumers. He then uses his abilities and skills(self taught of course :wave to direct capital to create the product or service that solves this pain in the market place. People hand you money. The consumers don't give you money for any other reason other than the fact that your product or service is beneficial to their lives.

There is no such thing as "making money", money is just a piece of paper saying "I added value to someone".

Very well done. You summed that up pretty nicely

 

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[socaldude]

You summed that up pretty nicely

Warren Buffett said it best, he defines money as "a claim check on society".

Thats perfect. In other words money is something that says "I did something for society now it's society's turn to do something for me"

And the best way you can serve society is to serve its need and wants. Not by throwing out random shit in market by "doing what you love" or "hey lets see if we can make some money".

I think this is one of the reason people fall prey to the sidewalk; because they don't have the right definition or perception about money.

To the sidewalker money=more stuff! So as their income goes up so does their consumption of lavish products and services.

I think this is one of the reasons why people "act rich". Since society says more money=more consumption of lavish products and services so that must mean more consumption of lavish products and services=more money I have. So they live beyond their means. Its kinda like saying all apples are fruits so that must mean all fruits are apples.

The way the Fastlaner views money is; ok I have $250,000, I can either buy a lifetime supply of jelly beans, thousands of pairs of socks or i can buy a lamborghini sports car or i can loan the money out and leverage time as passive income.

This is why I think people need to change the way they think about entrepreneurship. I think a possible alternate name for MJ's book is: "The super leveraged servant of society" meaning an entrepreneur using a leveraged business system solving the needs of society, but that wouldn't work because of branding and marketing reasons. People are automatically attracted to "millionaire!" or "be rich!" not value creation or society serving. Ask any entrepreneur: hey are you a servant of society? their first reaction will probably be "hell no man, ima entrepreneur baby!" or "hell nah man ima future millionaire baby!!"

You see capitalism made it possible for you to accumulate large sums of money simply by serving others through organized capital!