Creating Value isn't Secret to Success. It's Common Sense.
I keep hearing the phrase “Value Creation leads to Wealth”. It’s true to a large degree, but not the complete truth.
Value Creation => Wealth?
People in general tend to overuse the phrase “Value Creation” all the time, simply because it’s good to hear.
Oh, look at Google, Amazon and Apple: they are all creating value for large number of users, and that’s why they are so successful! It’s logical. Makes sense. And satisfies our inner desire of becoming wealthy with coherence.
The truth is every startup every business is creating something of value. There’s no startup or business that’s just trying to fraud users or trying to build something that’s completely useless.
Actually, I take that back. There are some startups who are making stuff like that, and many of those have been very successful in the past.
World is IRRATIONAL
The world is not a rational but an irrational place. Lot of things that happen don’t necessarily have to make sense. They could make sense if we change our perspective.
We are Irrational.
Look at most startups in the tech industry and over 90% of them fail without actually making profit for the founders (unless of course they raised a lot of capital).
But look at the non-tech industry, for ex. fashion, clothing, mock jewellery and so on and you will see that a large number of businesses in that industry are hyper successful.
Yes, there are not so many hundred billion dollar companies but there are many businesses that which are very successful.
As an example let’s take “drop shipping”.
If you don’t know what it is reach this section, else skip to next one.
What is Drop Shipping?
Imagine someone wants to buy product X. There’s a seller Y that sells X but has a poor site, design and reach. You create a better site, do great marketing, and start getting organic traffic.
Everytime someone places an order to your site, you instead make that order on original seller Y, and give the customer’s address for delivery.
You neither had a product, nor managed any part of the entire product’s journey. But you made a profit at customer’s expense.
“Value Creation” in Drop Shipping
There’s no “Value Creation” in Drop Shipping. Product already existed, need and customers already existed. You simply created a fancy website, marketing, and an added commission to the product. Essentially a longer route for the same product sale.
Well you may say that this new fancy site, and its listing helps users to discover the product.
But the truth is that the users would’ve found the right website on their own if the internet wasn’t stuffed with these unnecessary complicated routes of Drop Shipping websites.
It’s a similar reason why Amazon is full of product listings of the same product with different difficult to pronounce Names.
Another industry is clothing, for ex. t-shirts, dresses and common wearables.
Most white T-Shirts for example cost three or four dollars in a regular store but there are many brands which are selling the same t-shirt for hundreds, or even thousands of dollars.
They are generous. They didn't charge $699. $9 savings for you :)
Why? Because the expensive T-Shirts are branded much differently.
They hire famous, good looking models, and run expensive Ads to build this brand value and image over time.
Events from Last Year!
Do all the events in 2020-2021 make logical reasoning of Value Creation?
From Meme Currencies (yes, Doge Coin), the undisputed and most controversial NFTs, and all the other stocks that grew 10x because of Short Squeeze, there are enough examples that we can discuss with no end in sight.
The reason for all of the above examples is not value creation. That’s inherent in everything we as humans do.
The reason for success of these products, ideas and services is perceived value creation
In other words if you make something that has a very high perceived value even though the product may not be of high value, the chances or the likelihood that you will succeed is very high.
Whereas if you create something of value which has nil or no perceived value it’s going to fail regardless of how big impact that may thing might have on the world.
You may say this makes a lot of sense and it’s also common sense but it’s not if it were most of the businesses and startups would not start with the with creating a product by spending hours and hours of writing code and building a product.
Instead they would spend that time and resource in making something of high perceived value, even before it exists.
The question is how do you make something of high perceived value?
The answer is by ‘not making a product’, but instead spending all the energy and resources in making the hype around the product.
It’s commonly known as Marketing. The loop hole in the Value Creation theory.
YRL → VIRAL
While you’re still here, you might want to check out what I’m building.
It’s “real value creation” to create “perceived value creation”.
YRL enables individuals to create CPC and CPA campaigns to partner with any creator.