Tag Archives: Hal Varian

This is what we do to dreamers

memobottle+manLet’s say you are starting a startup and today you are standing in front of a venture capitalist.

With impatience in his voice, the VC says,

“Tell me again exactly what your enterprise is for. How are you going to create value?”

This is what we do to dreamers.

Because the answer to this question almost always comes to you in a mad conceptual scramble for the simplest, most obvious, most literal statement of what your enterprise is “for.”

You stand, you deliver:

“Our product will help people solve problem x for consumer y cheaper than competitor z.”

Whew!

But not so fast. Because now you are wedded to it. Every time someone asks, you are obliged to repeat your simplest, least interesting statement of what your company is for.

It’s the opposite of poetry. Every time you repeat your “value proposition” it gets more obvious, practical, functional, literal, uninteresting and unbeautiful. Your dream is withering.

In the summer of 2015, Hal Varian, Google’s chief economist, insisted, against all measures and most opinion, that U.S. productivity was actually up.

The trouble, he suggested, is that we can’t see these gains because we are using old measures. When the GDP measure was developed in the 1930s, Hal observed, it focused on things like steel and grain. The improvements that come from Silicon Valley are harder to see.

Radical Hal. No, call him Heretical Hal. This was the beginning of the end of capitalism as a blunt object, as a search for mere utility. This was an opportunity to free ourselves from those people who see the world as a solutions to problems, and the more pragmatic and practical the better.

But we can’t complete this heresy until we begin to make certain value visible. We need to show how our enterprise will create value of a social, cultural, human kind. We will have to show that Uber is not merely cheaper than a taxi cab, but a richer, more human way to discover a city. (I set aside the labor issues for another time.) We will have to show the Airbnb is not merely a cheaper hotel room, but that it is a richer, more human way to discover a city. As it stands, and as far as capitalism (and Uber and Airbnb themselves) are concerned, this remains “dark value.”

Sometimes dark value is revealed, but typically this revelation comes late in the process. Ideas happen, capital is made added, enterprise springs into the world, innovations are rolled out. And then someone says, “Er, what about marketing?”  Planners, strategists, creatives, designers, ethnographers are summoned to contemplate this poor, beaten creature.

With any luck the post mortem goes pre mortem. The innovation springs to life, it’s coat glossy with new meaning. But often even this creative genius can’t do anything for the “innovation.” It is beyond all hope. It is designed to solve a problem that no one cares about because it adds virtually nothing to the world. “Whiter whites” are a death mask.

But sometimes these creatives discover, invent, conceptualize dark value. And the consumer will say, “Oh, that’s what it is. You kept telling me what it’s for. No, that I like. I can live that.”

By this time of course it’s all up stream. The creatives are working with something that’s mostly formed and they are working with people who really in their heart of hearts think “all the creativity stuff is really just icing for the cake. It’s the sizzle that sells the steak.  It’s the stuff you have to say to persuade the consumer to buy a product that frankly should have sold itself on the strength of it’s functionality. I mean, really, what is the matter with these people.”

What if we started looking for and working with dark value from the very beginning?

And if this sounds like a good idea, please consider buying my new book Dark Value here. It’s a bargain at $2.99.

Acknowledgements

Thanks to Leora Kornfeld for engaging me this morning with a useful email. And thanks to many people on many media who have offered encouragement for the Dark Value project.

The image is from this website.