Wednesday, November 08, 2006

Art vs. Profiteering

Perhaps one of the antogonistic values in entrepreneurship is creating art versus making a profit.

The artist is more concerned about creating art but may starve because no one buys his/her work. While the profiteer tries to palm off as much as he can to unsuspecting customers.

The answer in solving this dillemma is to create value and to educate people on value.

Value is subjective. Much like the adage, if a tree falls down in the forest does it make a noise?

A piece of art may double or triple in value the next day just because the artist died of a pulmonary heart attack. The molecules in the piece of art didn't change, the world's climate didn't change. It is merely the perception of value.

Value only exists in the mind of the beholder. It is abstract, unreal in the sense of not being physical. And people pay for value. People pay for an abstraction.

Even a car would be valueless in a nation of blind and deaf men. It is only if the buyer believes that anything he pays for has value would he pay for it.

Therefore, in order to be entrepreneurial we create value. We find or create some product of service that in the mind of the buyer is of value, that is the seller moves towards the buyer. Secondly, we can market and advertise or sell the product, i.e. bring the buyer towards the seller by creating more value in his mind about our product.

In the first, we know of Google and Microsoft. In the second, we know of Pet Rocks, and Insurance.

The artist creates art for himself and his own satisfaction, and that is fine if all he wants is to do it for himself. But to sell it involves a second party which is the buyer, and it is in the buyer's mind whether he believes that that piece of art is of value.

As a buyer we must beware of profiteering. That is when there are so many alternatives of the same value available. Caveat emptor is the key word as a seller can label anything with a price, but we as the buyer are the ones who chooses to place value and who ultimately forks over our hard earned dollar. Does Nike profiteer versus an alternative unbranded shoe, or is it selling value? We pay more for better quality. But a bad buy is when the are cheaper alternatives of better quality and of lower price or in reality does not really satisfy our needs.

The profiteer is one who preys on weak and unsuspecting customers and hides information, uses pressure and psychological tactics to sell rather than to create value in the mind of the customer.

I believe it all comes down to serving the customer. Choosing exorbitant prices may work in the short term but it will hit the seller back in the long run unless he/she serves the customer. Walmart is an example of serving the customer by finding ways to source for the cheapest products for the customer.

The entrepreneur serves by creating value for the customer.

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