Money is just an outcome

Money is just an outcome of value creation and capture. Value creation is about bringing something useful to people. For example, you can create a new product or service which helps people in some way.

Now for your efforts to make economic sense, you have to capture some of that value. Value capture is your profit margin. It’s what you get paid at the end of the day. It’s your compensation for all the hard work in bringing something valuable to the market. Google gave us something so valuable in the form of efficient internet search. They have been able to capture a lot of value through their advertising platform. Value capture happens for instance when you run a business at a profit. Yes, you’re helping people but you’re getting paid as well.

The companies which tend to create and capture lots of value are usually monopolistic in nature. Think of the big internet companies. However, even a small business dominating a small niche can capture a lot of value. Think of the guy who owns the only fuel pump in a remote village.

When we are able to create and then capture value, money becomes a natural outcome. So instead of chasing money, we should figure out how to create value and capture some of it.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s