Tag: value

Be Your Own Credential

We talk a lot at Praxis about building a better signal than generic degrees and institutional imprimaturs.  Whether or not you have a degree, you need to learn to 1) create value and, 2) signal your ability to create value to the world.  Degrees are a very weak way to achieve either.  You need something more.

I got an email today from a guy who decided to put that advice into practice.  Check out what Daniel Myers had to say:

Hey Isaac,

You know how Praxis always talks about creating value? About taking the entrepreneurial route in your work? Well, I decided to do just that, by writing a 44-page report on business and entrepreneurship for a venture capitalist firm here in TN. I had read an article this past Fall on the Praxis website about value creation for a company instead of just shooting a CV/Resume out to everyone and expecting it to do all the work. This report has been well received by the public and has truly allowed me to create a name for myself, rather than just being another undergrad with “some resume”.

All this said, I want to thank all of you at Praxis for what you do. I am continually inspired by all of you at Praxis and hope you all continue to be successful in all your endeavors. Again, thank you for your inspiration!

Best, Daniel

P.S. I’m reading Derek’s book on “How to Get Any Job You Want“. It aligns perfectly with what I did and will continue to do in my career.

Here’s a link to Daniel’s report on startups in TN.

I don’t know how long it took for Daniel to put together such an in-depth report.  But compared to what?  How does time spent creating a valuable resource like that compare to time spent sitting in a classroom, blasting out generic resumes, or waiting and hoping for a cool opportunity?

Daniel gained not only a great signal of his value creating potential, but a lot of knowledge, skill, confidence, and even some free PR along the way.  In short, by creating value now instead of waiting to be invited to with a formal job offer, Daniel became more of who he wants to be, instead of waiting for someone to tell him what to do.

Go start building now.  What are you waiting for?  And of course, if you need some help, a great apprenticeship with an entrepreneur, and an intense year-long experience in value creation, discover Praxis.

‘Will a Good School Accept Me?’

I answered a question on Quora (well, I guess I didn’t really answer the question, but spoke to the ideas behind it) about getting into a top university without straight A’s.  You can read the question here.

—————

First and foremost, don’t stress.  This won’t make or break your life.

I don’t know what those institutions require for admission but I have another idea: don’t spend your time trying to get approval and acceptance from academic institutions but instead go create value for yourself and the world.

Our world is awash in official accolades and credentials and padded resumes.  You’ll realize when you get into the world outside the education bubble none of that matters much for value creation and personal fulfillment.

Identify what you want in life, identify the obstacles to getting it, and create challenges and habits to help you overcome those obstacles.  All of this can be done without the official sanction of formal institutions.

If what you want is to be a professor or to work within academia, then of course that’s the way to go.  Or if you simply wish to enjoy college as a very costly consumption good, go for it.  But the notion that you must jump through the right hoops to earn the approval of X or Y university is backwards.  You want skills and experiences and knowledge and a network.  You’re the customer.  See if you can think of the best, most effective, quickest, least expensive, and most enjoyable way to get them.  The question isn’t whether those universities will take you, the question is whether you’ll deem them worthy of your time and money.

Whatever path you take, good luck!

Ask Isaac: Marginal Utility for Beginners

In this episode I answer a very simple but incredibly important question from listener Steve Thomas:

  • Please explain the theory of marginal utility and give a few practical examples.

Through riddles and illustrations I try to make the ideas of value subjectivity and marginal utility easy to understand and recognize in everyday life.

Got a question? Ask here.

This and all episodes are available on SoundCloud, iTunes, and Stitcher.

How to Search for a Job

unnamed

From Life Learning on Medium.

A lot of people are looking for jobs. The thing is, not all job searches are equal. “Looking for a job” might actually mean hoping someone finds your resume online, shooting out a few emails, or posting unsolicited comments on Facebook pages that say, “Are you hiring?”

If you want a job — really want a job — you’ve got to go level five with your job hunt. And call it a hunt, not a search. You’re not hoping to stumble into a pot of gold, you’re tracking your prey and bagging it.

Let’s take a look at how to do it.

Level 1: A Good Resume

While most of the best jobs you’ll get in life will be gotten without a resume, if you’re job hunting you should have one on hand. I don’t particularly like them, but a lot of people expect them. A good resume will never get you a job, but a bad resume could lose you one.

For a resume to actually convey something, serve as a starting point for interview questions, and keep you from being dismissed out of hand, there are really just two main features: Nice appearance and outcomes-based content.

For appearance, keep it simple, clean, a single page, uniform use of line breaks or bullets, not too many indents and sub-sub points, and a clear order top-to-bottom of what’s most important. (Hint: experience is more important than education to most people, even if you assume otherwise). Oh, and get your spelling and capitalization triple checked.

For content most people simply list credentials they have and activities they engaged in. This is boring and conveys a lot less about your ability to create value than what kind of outcomes you produced. Don’t just list that you were a digital marketing intern and ran email campaigns. Show that your A/B test improved open rates by 10%.

Even if you were waiting tables, see if you can demonstrate value created. “Server at Applebee’s” is less interesting than, “My section consistently brought in 15% more tips than average sections.”

Anyone can have a title and do a task. The good ones create value and can show positive outcomes.

Level 2: Good Profiles on LinkedIn, etc.

Whether you like it or not, LinkedIn is hugely valuable in the working world, especially for those making hiring decisions. Have a profile. Have a decent headshot that actually looks like you. Have accurate information. Keep it up to date.

Your LinkedIn profile should be consistent with your resume, but it is not the same thing. It allows you to go a little deeper into who you are, what drives you, who you’ve worked with, what you did, etc. Same goes for Twitter, Facebook, and whatever else you kids are using these days. Be you, but use good judgement. If someone only ever found your online accounts, would they have an accurate idea of who you are and what you want to be known as?

Many people fear all social media and online presence because they think of it as a liability. Some people try to stay undiscoverable online as a protective measure. This is a terrible idea. First, always assume if some hacker wants to find your stuff bad enough they’ll find a way, regardless of your settings. But more importantly, seeing social media as a liability blinds you to the fact that it can be a huge asset. There is no neutral. It’s either helping you or hurting you. Being completely anonymous online hurts you. Take charge of your online presence and make it an asset.

Level 3: A Personal Website

It’s easier than ever to setup a personal website. If you’re serious about finding a great job, just do it. Go over to WordPress and get started. In a few hours you can have a clean, simple website that serves as a repository of all the things you enjoy and want to be known for.

A personal website gives you far more control than profiles on third party sites. You can feature whatever you wish, you can blog, share video, include a longer bio, express aspects of yourself you wouldn’t cram into a LinkedIn profile, and really use the blank canvas to create whatever you wish.

But more than what you have on your site is the fact that you have one. Anyone who has put together a basic, neat, up to date personal website stands out. Not many people do, despite how easy it is, and if you do you’ll have something that gives you far more cred than just a decent resume in a pile.

If you really want to gain an edge, overcome fear, build confidence, and become a better communicator and thinker then take the next step and blog on your site regularly. I recommend blogging daily, but if that’s daunting, try weekly. You can always hide bad posts, but the act of doing it and knowing it can be seen by others will do more for your creative capacity and productive power than any other simple activity I know of.

Level 4: A Portfolio of Projects

If you’ve already setup your personal website here’s a way to really beef up the value. Beyond a nice homepage and about page with a bio your website can feature projects you’ve completed.

Remember when I said the resume should show outcomes instead of just telling about activities? A portfolio allows you to show in much greater detail what you’ve created. It’s especially easy for those with skills in art or coding or engineering to share publicly what you’ve produced. You may think that your management or communication or sales skills can’t really be put into a portfolio that shows what you’ve done, but it can.

Go to a freelancer website and pay someone $50 to design a nice one-pager that shows the results of that event your organized and executed. Have someone build an interactive graph tracking your fundraising or sales campaign. Show articles you’ve written and clicks they received.

If you can think of nothing tangible that you’ve completed to put in a portfolio it’s a good sign you should get cracking! Writers and photographers know that their portfolio of work is what really matters. If they have none, they start out just doing things for free to build it up. You can do the same. Just get started creating something and share the results. Do projects for free that will help you get something under your belt.

The great thing is, the success or failure of your projects is less important at this stage than that you completed it. I’ve talked with tech companies who say they’d rather hire someone who built a cheesy, non-innovative notepad app than someone with a stellar resume who never built and “shipped” anything at all.

Level 5: Unique, Stand-Alone Websites, Videos, InfoGraphics for Your Target Company

Here’s where the great stand apart from the very good. If you really, truly, deeply want to work for a company why not devote yourself to studying them in depth and presenting your unique take?

Remember Nina, whose resume was lost in the heap at AirBnB? She went level five and became internet famous. She put together an impressive site that deserved attention, still it’s telling of just how low the bar is among job-seekers that a simple website was such a viral sensation. No one is doing this. But you can.

One thing employers will tell you when sifting through job applications is that too many people talk about themselves and too few talk about the company they claim to want to work for. “I’m Joe and I’m great at XYZ” tells me nothing about why Joe applied specifically for my company. Does he just want a paycheck, or is he passionate about my business? Does he even know what we do and what we value?

There’s no better way to demonstrate your knowledge and passion for a company than to dig into the industry, business model, customer base, competitors, and build something unique that describes what you love about and what you would do for the company. Don’t think about what would make you look good, think about what would actually be valuable to the company.

I guarantee spending 30 days doing a deep dive on your target company will be more valuable than spending an entire year getting a second major and more clubs to list on your resume. If you can create something of value to the company before you’re even working for them that sends a strong signal that you’re a person they want on board.

What Are You Waiting For?

One of the reasons I launched my company Praxis is precisely because so few young people realize that they have the power to create their own professional future. There are more tools available than ever and more opportunities but so few realize it. You can’t sit on the conveyor belt and expect it to drop you at a fulfilling job.

Look, I’m not saying it’s easy. But don’t tell me there’s no way to get a great job if you aren’t willing to push yourself to level four, or ideally level five. You can probably think of ten more things I didn’t even list here if you really try.

The days of buying a degree and hoping it buys you a job are over. Be your own credential and prove through the work you do that you can create value.

Marketing Creates Value

Near the end of the classic movie “It’s a Wonderful Life,” George Bailey saw reality in a whole new light. He glimpsed a world in which he was never born and realized just how important he was to those around him. This experience instantly and dramatically changed George’s outlook on life. In a matter of minutes, he transitioned from attempted suicide to pure joy at the fact of his own existence. No material facts changed. George Bailey was still stuck in Bedford Falls. He was still hard of hearing. He was still in deep legal and financial trouble. The angelic Clarence did nothing to improve the external condition of Mr. Bailey’s life, but he saved it nonetheless. He saved it with marketing.

Marketing is often criticized as being deceptive, slimy or at least economically wasteful. How could anyone justify a $2 million dollar Super Bowl ad about a bottle of Coke? Skepticism of marketing springs from an overly narrow and simplistic view of value. In the real world, the line between the real and perceived characteristics of an economic good is all but nonexistent. Our knowledge of and beliefs about goods are just as much a part of their value as anything that can be weighed or measured.

Economists have long understood that value (in the economic sense) is subjective. There is no universal formula to determine how much a good or service or experience is worth, because each person has different tastes, preferences and needs, and each will value things differently with changing circumstances. This means that how we feel about a good and what the good is made of are equally important in determining its value to us—i.e. how much satisfaction it brings. If making a better mousetrap can make lives better, so too can making people feel more confident in their mousetrap. This is not trickery; it’s value creation. Confidence in my mouse trap might help me sleep better at night and enhance my quality of life in a very real way.

We’ve all seen news stories about blind taste tests. They are meant to reveal consumer stupidity and branding smoke and mirrors. I recall reading about customers given a cheap beer and told it was a more expensive brand. They reported that it tasted much better than what they were told was the cheap beer, but was in reality the more costly. When they were told the opposite, the results reversed.

The report was framed as some kind of “gotcha” moment, as if a great hoax had been revealed. Why should these results be surprising? If you’ve ever picked up a glass of milk, thinking it was water, and taken a swig, you’ll understand. Even if you like milk you are likely to spit it out. Your beliefs about what you are consuming prepare your brain and your taste buds for a certain experience. The knowledge you have about what you ingest literally changes the experience of consumption. Try smoking a good cigar while stressed or in a hurry and see if it tastes even remotely similar to the same cigar when you have an hour to kill with nothing on the mind.

They say marketing is all about the sizzle, not so much about the steak. Why shouldn’t it be? Steak without sizzle is little more than raw meat; carrion fit for vultures and wild dogs. Steak beautifully plated and garnished creates more value for the person consuming it. Sight, sound, smell and taste are all part of the experience, and the brain is the crucial interface. Even if you have a purely utilitarian approach to eating and care only for the sustenance, you can’t ignore the mind. What you believe about your food actually affects how much it satisfies you.

My father suffered a closed head injury many years ago which affected, among other things, the communication channel between his brain and his digestive system. His brain always tells him he is hungry, no matter how much he eats. It is a near full-time job to convince him that he is full and doesn’t need any more food—that’s some serious marketing. In fact a great many people without head injuries resort to all kinds of tricks and techniques to convince themselves of the same thing in order to stay trim.

I recall talking to a friend who had no taste for coffee. I convinced her to try a sip only after closing her eyes and letting me describe step-by-step the growth, cultivation, harvesting and roasting process. She admitted that, while she still didn’t love it, she began to enjoy the taste a good bit more and understood why I love it so much. I know of people who can no longer stand the taste of meat because they observed the operations of a meat-packing factory. The meat did not change, yet its taste changed with their knowledge and feelings about it. The value of the product radically shifted with a change in perception.

If marketing makes us love a product more, and therefore makes us happier, it has indeed created value. Love for a new car comes not only because it is red, weighs 2,500 pounds and has four doors—all things that can be measured objectively—but also because it is safe, one-of-a kind, and edgy, all subjective to the person experiencing it. The purely informational role of an advertisement is no more valuable than its ability to make us proud of what we purchase. But how valuable is it?

We can get a rough idea of the minimum value created by marketing in dollars and cents. This does not, of course, measure the subjective value to each consumer, but it reveals how much value consumers placed on the marketing in money terms. If a marketing campaign costs $10 million and it results in an additional $11 million of revenue, we know that it has created more than $1 million in value, as judged by those who willingly spent money on the product. If the campaign made the product more valuable to more people and induced them to buy more or buy at a higher price, that is a reflection of the fact that the consumers felt the product and associated satisfaction created by marketing was worth more than the money they gave up to get it. Real value was created. If it was not, people would not have willingly parted with their money in exchange for the good. Better marketing can often be a cheaper and more effective way of improving a good and making people happier than altering the product itself.

Goods and the knowledge and feelings that come with them cannot be separated. New tile floors and soft lighting may be just as important as variety and good service at a clothing store. An inspiring ad campaign may bring just as much happiness as new features on a smartphone. This is no scandal, but a fact of the human experience of reality.

Rather than denigrate it as some kind of fraud or waste, we should applaud good marketing. Not only does it enhance the value of the products we buy, it enhances our quality of life even when we don’t buy the products being marketed. TV ads are often funny and entertaining. Billboards and magazine ads are sometimes works of art. Good marketing is a free gift to all, and it makes all our lives better. A world without marketing would be dull and far less fulfilling.

Altering our perceptions of reality is one of the best ways of improving our quality of life. It’s powerful stuff. Clarence saved George Bailey’s life with a recasting of the facts, and set him out with a full heart ready to take on the world. The creative efforts of marketers everywhere have the same power to make our lives richer and better.

Originally posted here.

Was Adam Smith Wrong?

Here’s an article I originally wrote for the Prometheus Institute.

————————————————————-

Disagreeing with a man whose face appears on the necktie of many a freedom-lover is perhaps dangerous, but sound reason can’t be sacrificed on the altar of great men – and Smith was a great man.

Indeed, Adam Smith, in his depiction of the division of labor in a pin factory and his timeless prose on the invisible hand and the self-interest of the butcher, offers some of the greatest explanations and defenses of capitalism ever written, even some 230 years later. I consider Smith a great thinker, and a hero of liberty. That doesn’t mean he was never wrong; particularly when it comes to the question of value.

Smith’s thoughts on the derivation of value in his Wealth of Nations laid the groundwork in this area for later thinkers like David Ricardo (another brilliant mind who was right about many other things) and eventually Karl Marx. In the case of the latter we have clearly seen how bad ideas can have horrific real-world consequences. As John Maynard Keynes famously remarked,

“Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.”

I might add too the bad ideas of otherwise good economists.

Smith essentially, though somewhat confusedly, argued that the value of any good was ultimately derived from the amount of labor it took to produce. Money or commodity prices reflected only the nominal but never the real value of a good. In this way he described the different prices of different goods as a simple formula:

“If among a nation of hunters, for example, it usually costs twice the labor to kill a beaver which it does to kill a deer, one beaver should naturally exchange for or be worth two deer.” (The Wealth of Nations, Book I, Chapter VI)

Smith elaborated further by describing other costs of producing a good, including the role of the entrepreneur and capitalist and the profits they require. Unlike Marx, Smith never denigrated the role of the capitalist or the profits they earned, but his conception of value resulting from the cost of production (ultimately labor) opened the door for the idea that anything charged or earned above the cost of real inputs is unnecessary; excellent fodder for anyone anxious to obtain power by appealing to an envious middle class.

The problem with Smith’s analysis is not that the cost of production has no link to the value or money price of a good – indeed, the two are closely connected. He merely had the relationship backwards.

In reality, prices reflect the money equivalent of the value a buyer places on a good. That is to say, an individual who wishes to have a good places an entirely subjective value upon that good as compared to other goods, and the difference is typically expressed in terms of money. If in Smith’s example no one cared for beavers, the cost of killing a beaver wouldn’t matter; the beaver would sell for little or nothing. There is no one value of a good, but each individual values each good differently, as compared to other goods. It is the same for Smith’s supposedly changeless measure of value, labor. An hour of the same kind of labor may be valued (or disdained) to different degrees by different people.

It is for this reason that price is merely the reflection of the amount of money an individual was willing to give up to obtain a given good in the most recent exchange.

However, Smith was correct in seeing a relationship between the cost of production and price: Once a producer or entrepreneur has an indicator of what someone was willing to pay for a good, he can speculate how much others will be willing to pay in the future. He may be incorrect, but he will start with an estimate based on past experience and hope to get an equal or higher price. It is the estimated price (which reflects the value others place on the good) that will dictate how much he can spend on production. If a producer expects a good to sell for $1, he will be willing to spend up to $0.99 to produce it. (This is obviously a simplification, as he may be willing to take short term loss if he expects long term gains, he may want more than a $0.01 profit, etc.) In other words, the amount of labor and other costs of production flow from the expected sale price of the good, not the other way around. No one will spend more to produce an item than they believe others will be willing to pay to buy it.

Smith correctly saw that the various costs which go into production must be paid by the sale price of the final good. What he failed to see is that the costs of production do not create the price of the final good or imbue it with some objective value, but that the subjective value that each consumer places on the good sends signals backwards to producers and tells them how much they can expend on production without suffering a loss.

That Smith saw the factors which go into the production of a good as the cause of the price, rather than the effect, may seem like a small error. But economics, like all attempts to study the behavior of human beings, is a subtle science which requires great attention to the correct logical progression of actions. A misunderstanding between cause and effect can be fatal.

A slight adjustment to the angle of a satellite signal can, when extrapolated over thousands of miles, result in a beam nowhere near its target location. Likewise, looking at an economic phenomenon, such as the price of a good, from an even slightly incorrect angle can result in consequences far greater than imagined when spread over time and by different minds in different cultures. I would never single-handedly blame Adam Smith for the horrors of socialism. But his backwards theory of value contributed, over time and space, to a set of ideas which laid the theoretical groundwork for socialism – a philosophy completely contrary to the views of Smith.

I still admire and respect Adam Smith as one of the world’s great minds and a positive force in the battle for liberty. His conclusions and prescriptions were correct, even though his methodology was sometimes flawed. However, the lessons to be gleaned are to never let admiration for a great mind blind you to areas in which they are in error; and that even correct conclusions, if based on incorrect reasoning, can be dangerous.