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 Value is in the Eye of the Beholder
We’ve been thinking a lot about the concept of value lately. In light of recent events, we are revisiting fundamental concepts and questions that are often easy to take for granted in Web3. We’ve written about value when exploring Blockchain’s killer app and Why NFTs. Many even refer to Web3 as the Internet of Value.
One of our biggest beliefs is that Web3 technology will formalize and enable the Internet of Value.
Today we want to explore the idea that value is subjective and is a form of expression. So… why we buy is just as important as what we buy.
Value is a big concept, and we plan to explore this topic from different angles in future essays.
Treat today’s essay as a building block that hopefully offers some food for thought.
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Let’s start today with a story.
There was once a student who studied with a monk in the mountains. Upon completing their studies, the monk wanted to give the student a parting gift to remember this experience.
Monk: I got you a gift.
The monk pulls out a rock and gives it to the student.
Student: Thank you. Is this some special rock?
Monk: No, it’s just a rock I picked up near the river.
Student: I’m sorry, I don’t understand.
Monk: The gift is that I walked 5 miles to get it for you.
I was once told this story in business school by one of my favorite professors. I like to think this story was one about value (among other things) .
The Concept of Value is Everywhere
Most of us have some understanding of the concept of value. But it is a heavily debated concept, particularly when it comes to articulating what it is.
Understanding the concept of value is critical to Web3 because Web3 is the Internet of Value.
Value is a powerful concept because it applies to everything we do as a society, in some way, shape or form. For example:
Why should Company A acquire Company B, when no other company wants to?
Why does one company pay me more than another company for my skills?
Why are companies spending tons of money to acquire my attention?
Why do different people spend their free time differently?
Why do you prefer one car over another?
What makes a piece of art valuable?
Why is money valuable?
What is my time worth?
Why is anything worth anything?
The formal definition for value is: the regard that something is held to deserve; the importance, worth or usefulness of something.
In short, everything is about value on some level because everything is worth something to someone on some level.
Let’s further unpack through some examples.
Cars, Taylor’s Version and Luxury Soda
Let’s start with cars.
Imagine a segment of people who buys cars mostly for utility. They want a car that gets them from point A to point B. Maybe they also consider the size of the car, number of seats, etc. They don’t care too much about style, aesthetics or the subculture behind the car. These are the same people who buy a pair of shoes to have something they can walk in.
In this example, people value cars for their utility or functional value.
Then you have something like Taylor’s Version.
For the uninitiated, Taylor Swift started re-recording all of her albums and calling them Taylor’s versions to control what she can do with her music. Some context: the record label she was with, got sold, and in the process the master versions (and corresponding licensing rights) of her old albums no longer belong to her. To gain back control, she started re-recording her music. Her fans are supporting her by listening to Taylor’s Versions (re-recordings of her old songs). In Taylor’s Version, the music (songs / lyrics) is the same… yet it’s also not.
Taylor’s fans are implicitly saying that the music is not what is valuable, but instead Taylor Swift, the person behind the music, is valuable.
Then you have something like a $4.00 can of soda.
In the essay Life after Lifestyle, the example of Olipop was used to highlight that we may buy a $4.00 can of soda water to signal that we subscribe to a certain ideology. In the image below, the argument is that people can buy a can of soda for $0.50… so why would someone pay $4.00?
The utility derived from buying the product is low, but the purchase decision and participation (owning the product) signals something else more subjective. The difference is ideology.
Value is Subjective
When we buy something, we derive some value from the thing we are buying. But why we buy something is different for everyone (albeit there are some similar reasons across buyers).
An emerging (aka Work in Progress, Half Baked) framework we have on Value:
Buy because of the Product: Utility
Buy because of the Creator: Fandom
Buy because of the Culture: Ideology
Utility (defined as a thing’s functional value) is generally less subjective because it often feels more tangible. If you need to buy a hammer to push a nail in, the hammer provides you value by solving a job-to-be-done. Whereas it’s harder to understand what value you or different groups get from buying a product from a luxury brand.
The world is increasingly filled with examples where consumers make purchase decisions beyond utility.
The value one derives from a product can be due to a combination of different reasons. It is ultimately subjective. E.g. you may look at a car and derive value only from its utility, but I may look at the same car and derive value because of the subculture behind it (in addition to getting some utility from it).
Warren Buffet once said: “Price is what you pay. Value is what you get.”
Value is in the eyes of the beholder.
Formalizing Subjective Value
While all value is subjective, value exists on a spectrum that looks something like this:
Less Subjective: Society has the same or similar shared framework (or definition) on the value of a particular thing.
More Subjective: Different people and groups in society have different frameworks and opinions on the value of a particular thing.
The things that fall into the Less Subjective category are things we as a society have implicitly agreed are valuable. We rarely question whether these things are valuable. Money is a good example.
What’s more interesting are the things that trend toward the More Subjective category.
The rise of things like Taylor’s Version (aka Fandom + Creator Economy) and luxury branded products like soda water (aka Subculture + Ideology) show us that the value we derive from things is increasingly becoming subjective, unique and niche.
This is happening because the Internet led to the proliferation of everything.
What we find valuable drives most (if not all) of our behaviors, decision making and purchase decisions. People organize and come together over the things they find valuable.
And since value is subjective, it becomes a form of expression.
Web3 technology helps us formalize this form of expression — enabling us to come together and organize around things we find valuable in ways not possible before.
So, what’s the value of enabling our innate need for expression?
Well that just might be priceless.
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