Snake Oil

Early medieval tradition recognised three professions – divinity, medicine, and law. These Professions realised that not all good ideas are good business ideas. The “learned professions” all work in areas that are difficult to commodify (standardise) and where there is clearly unequal negotiating power. You can put a price on anything. It is just a form of communication that lets two people swap something. There is no right answer. Pricing something works best when there is standardisation and lots of people who are both buying, and selling the thing. Pricing is dangerous when the product/service is bespoke. Then what matters is the story. Our obsession with specially tailored solutions that meet our needs as unique snowflakes, opens the door for Snake Oil Salesmen. If you want a rule of thumb that can stop you getting taken advantage of, it is to only buy democratic goods. Things that lots of people can afford. The original professions had “higher callings”. They were paid enough to meet their expenses. That required financing. Capital or patrons that recognised the value, but didn’t pretend to price the priceless.

Market Knowledge

Tacit Knowledge is the idea that there is stuff we know that we can’t explain. Virginia Postrel explores this powerful concept in “The Future and its Enemies”. That was the book that changed my mind about the pipe dream of a benevolent dictator, or even the desirability of central decision making. The stuff we really know is embodied. This means that decisions are best made by the people they affect. Not you. Not me. Not some undiscovered saviour. Real Adam Smith Capitalism is in the market-places where everyone has a voice. Small businesses. Small customers. Where price makes no pretence at being value. It is just an agreement between a buyer and a seller. Just a word that makes both participants happy. Capitalism is not Corporatism. Capitalism is the idea that you can build resources and reinvest them. That money/capital can be paid and our labour can be set free. Community Wealth (Capital) can empower people from the bottom up. Amplifying voices through an exchange is a much clearer indication of what people need, than a powerful representative (hopefully) making (good) decisions on their behalf.

Markets need Bottom Up Power

Worth It

How will you feel in the morning? How will you feel on Monday? I like to buy Democratic Goods. Those where the price is low enough that everyone who wants them can mostly afford them. Dividends of being Cultural Billionaires, sharing in societies compounded cumulative skills and knowledge. Price is relative. Just because the price is high tells you very little about its relationship to value. But a low absolute price does reduce the amount of Due Diligence you need to do. The bigger the number and the less you know, the more research is required. The bigger the number, the fewer other people (also researching) are likely also buying. Bigger number, smaller market. In tiny markets, the story becomes more important. It becomes easier for there to be different knowledge on the part of the buyer and seller, and smoke and mirrors in between. The bigger the absolute price, the more dangerous the epiphany, “I am worth it”. Of course, you are worth it. That doesn’t mean people won’t try sell you a story to get a chunk of that worth. “Is everyone else worth it too?” is a good follow up question.

Is everyone else worth it too?

Your Head

I am a big believer in Institution Building. One of the reasons for the stretching of the pay scale from those on the bottom to the top is that human excellence gets institutionalised. Those at the bottom are paid their cog value (how much it would cost to replace them). Those at the top divide up what is created. I am a Yoga Teacher. In training, and under supervision, I was often reminded not to let students experience of Yoga go to my head. If they love the class, they may give me all the credit. It’s not me. It’s the Yoga. Yes, I played a role. The same is true in big institutions. Decision makers at the top will credit themselves with the full “marginal impact” of their actions. They will justify huge salaries as meritocracy. “What would have happened if I hadn’t done that?”. What they don’t do is say, “What would have happened if the Institution wasn’t behind me?”. We build on what came before. We build together. Every single individual is replaceable if you are thinking in transactional terms.

Personal Gold

If you live hand-to-mouth, and receive a salary, then your work is solving a funding problem. The work you do, as a transaction, pays for the life you live. “The lifestyle to which you have become accustomed”. I believe it is possible to move beyond this. To solve the expenses funding problem. Then the set of “how do we pay for this” questions expands. To how do we solve this. To how do we experience this. It is a coordination issue. How do we become aware of people’s needs, wants, dreams, skills, knowledge, and capacity? Markets are the easy answer, but as they become bigger they lose some of the fuzzy wisdom of intimacy while they gain in the brute strength of scale. Solving our individual base funding problems gives us a buffer of time and space to look more curiously. To look at the problems that don’t scale. That aren’t good business. Personal gold beyond scale.

Moche Gold Necklace

Wrong Price

Pricing is hard. Price isn’t value. It is a point where two parties swap something *of* value. The “right” price is when both parties feel they have more value after the swap than before. Win-Win. When things are hard, we often search for an easier question. Things you can count, are the flavour equivalent of salt, fat, and sugar. It is easy to price “full-time”. It is easy to price by the hour. By cost. By thing. That isn’t value. Value is personal. In big markets the discussion falls away and you get a standard “fixed” price. This simplifies things if you trust the market. I don’t have to look at the price of each and every item I buy in the supermarket, if I trust that there is sufficient competition for businesses not to risk losing my trust. I don’t have to look at individual items if the basket price makes sense. The “conversation” is had on my behalf. The smaller the market, the more specific the item, and the less easy it is to compare, the more necessary a conversation becomes. The more necessary a relationship becomes. The more important it becomes that both parties are fully aware of what is really going on, and no one is being manipulated. There is no “right” price, but there is a wrong price if the swap is Win-Lose.

Netflix the Problem

You can’t quantify value. Pricing and trade are the closest we can get. Price isn’t value. Price is simply a clearing mechanism. A Trader takes how much there is of something (Supply) and the Price goes up until the something is no longer wanted (Demand). Along that path, the price is never “correct”. It feels too much for some, and a deal for others. Compared to whatever else is available in their world, and what their priorities are. Salaries are a price. They are the price of labour. The value of labour is even harder to figure out, and there isn’t a great market (Like houses, which swap infrequently… we change jobs as seldom as we can). A salary Netflixes the problem. It is an all you can eat buffet for your “full-time”. Companies pay a subscription and you pitch up every day. They may pay bonuses and other measures to incentivise you, but this still isn’t value. You, determine value. For you. It is up to you to be aware of what is available in your world, and what your priorities are.

Informed Consent

Nothing kills an activist like work deadlines, a mortgage, and school fees. Markets work best when there is full transparency, understanding, and the intent to build a relationship. Most importantly, markets work best when there is informed consent and no regret. When sellers are not manipulative, and buyers are fully aware of the trade-offs they are making. The number one rule of wealth creation is “Never be a forced buyer or seller”. The word No is the foundation of freedom, even if we are defined by what we say Yes to. As our responsibilities grow, our fixed expenses ratchet up (because of a world where success is defined by more). Each Yes and No becomes embodied rather than a conscious choice. Ironically, it becomes harder to get a gap between income and expenses with each increase (if you expand to fill the space). We can often learn significantly more about controlling our expenses by looking at those with less than us. Those who peddle Abundance may miss the wealth creation skills of those who defeat Scarcity every day.

Be careful your expenses don't ratchet up

Pressure Cooker

Never be a forced buyer. Never be a forced seller. Price is simply a clearing mechanism. It takes all the demand and matches it to the supply. Force manipulates that price. Markets work best when there is full information. When everyone knows, and understands, everything there is to know about the product. When everyone understands all the alternatives that are available. When both parties willingly and eagerly exchange a thing or a service for a price. A price below what the good or service is worth to the buyer. A price above what the good or service is worth to the seller. That is how value is created. Remove transparency, add force, and you create a pressure cooker. Pressure cookers left too long explode. If transactions seem like they are being forced, the best investment decision is normally to walk away.

Under Pressure

Tithe and Stipend

I studied money partly because I hated money. Rather, I hated the control it seemed to have over me. I figured I would get the upper-hand. Rather than working for money, I wanted money to work for me. I am still of the opinion that there are good ideas, and there are good business ideas. Some ideas are both, some are only one, and some are neither.

One terrible idea is that price or salary are a reflection of worth. Price is simply a clearing mechanism. Meaning that for a given quantity of something, there are people who want IT and people who have IT. The price going up will make fewer people want IT. The price will go up until there are only as many people who want it as there is stuff. Cleared. Doesn't matter what IT is. Price is just the story we tell to shift things around.

Money doesn't work well when emotions are evolved. When the thing being sold genuinely matters on a really deep level. Money is terrible in spaces like Law, Mental Health, Religion, Medicine, Education, Housing and all the things that touch us on our studio. Then it doesn't matter how much you have tried to get the upper hand on money. The limit on things that are priceless is everything you have.

I love the idea of a Stipend rather than a salary. A Stipend recognizes that it costs money simply to live. Community Workers and Academics often receive a stipend because there is no market for the work they do. They still need to live. The IT they produce can't be counted which makes it very hard to put a price on. 

That stipend has to come from somewhere. Perhaps a Tithe. 10% is the thumbsuck of the contribution that gets made. In reality, it is just a contribution that recognises that some good ideas need funding because there is no market for them. Things that count, but can't be counted.

What's your Jam?

Markets are transactional. They specialise in clarity. Those who are great at business, are also great at articulating problems so they are like Jam on a shelf. Someone looking for Jam walks into a shop and sees what they were looking for. They buy it. There is a market for Jam that doesn't require any sales process. Of course, if you want to sell YOUR SuperJam©... then you need to articulate another problem. Why is any other Jam not okay? Why is their life not okay without your Jam?

Most of us end up with a clearly defined jam. We specialise in a kind of Jam we know there is a market for. Gradually as we gain experience and expertise, we only sell one kind of Jam. That Jam defines us. What do you want to be when you grow up? A Jam Seller.

The problem is that this makes us really bad at asking for and offering things that aren't Jam. That aren't our Jam. We are spoilt by the clarity of the transaction. I offered Jam. You wanted Jam. You bought Jam. We are done. In the relationships that matter, things are way fuzzier than that. They are relational rather than transactional.

Asking and offering fuzzy things is hard. It requires patience as you tease out with each other what exactly it is you want. Through trial and error. When you eventually discover what it is you want, you may not even be able to describe it. You will either just know, or know you don't have it.

The thing is, relational Jam tastes the best. It comes with conditions, expectations, disappointment, anger, humour, frustration, joy, tears, quiet, panic, anxiety, calm, pride, respect, and love.

Asking and Offering

Those who study animals in the wild have a dilemma. Wild animals spend a lot of time looking for food. If the interested humans provide the food, the animals will come to them. If they don't, the humans need to go looking. Food changes the behaviour though, so even though it is easier - they don't actually get to see what they are looking for. I think the same is true of money. It makes asking and offering a lot easier. I have money. The stuff you are offering has a price. I give you the money. You give me the stuff. Job done. Asking and offering without money or a market, is hard. I don't know what you can do. I don't know what is fair to ask. I don't know what you want to do. I suspect like pigeons who have discovered Trafalgar Square, many of us (myself very much included) are terrible at asking and offering.