We no longer know what anything is worth

One of the most urgent needs in tackling all kinds of social, economic and environmental challenges is the need to find an alternative to money. We still need to be able to measure value, but money is no longer the way to do it and here is why…..

MONEY does not equal VALUE

WhatsApp was sold for billions though it was a very small company with modest revenue and one could hardly say its intellectual property was so unique or that nobody else had thought of the idea. Its “value” was a large community of users which Facebook wanted to acquire.

'You have no concept of the value of money.' 'I bet you £150 Billion that I do.'

‘You have no concept of the value of money.’ ‘I bet you £150 Billion that I do.’

Paul Pogba, a young French footballer was sold by Manchester United a little over 2 years ago for less than 2 million euros and was re-acquired by the same club this summer for a world record 100 million euros. Did his value really increase 50 fold in 2 years?

Take Eat Easy, a young innovative Belgian start-up, managed to raise a lot of financing which gave it a fairly high valuation only to go bust in the last few months. Its perceived value, and ability to create it, were disconnected.

The list of examples is endless. One would have to admit that it seems the world has gone a little crazy. As an entrepreneur myself who is involved in multiple start-ups whose goal is to create “value” in terms of jobs, positive ecological impact, positive social impact etc… I can tell you that making money is as difficult as ever even if it seems others are spending it as if it had no “value” at all.

Over the past 2 years I have the impression that the times where I created a lot of value for my clients, I wasn’t paid at all as in many cases they didn’t have the money. There were also cases where I think I was paid well but where I thought I didn’t create a lot of value other than simply speaking for an hour at a conference.

My conclusion is therefore that VALUE does not equal MONEY and that MONEY does not equal VALUE. They are not the same things!!!

 

What is value?

Now that is the first question to ask. This is what I can do and this is what I think it is worth. Over the past two years, I have been trying to redefine what I think value is and how I measure it. It’s a challenge when you have been used to a nice comfortable salary for 15 years and then find yourself with nothing. Value is personal. What it means to me is not the same as what you, the reader, may think it is and therefore why do we all measure it in the same way in euros, pounds and dollars?

For me, value is:

  • The energy I get from social interaction
  • The satisfaction I get from having a positive impact on those I am helping
  • The money I get paid for the time I spend on something
  • The degree to which I have fun in what I do
  • Whether or not what I am doing is interesting

Money and time are just one of the elements which are important but not the only one. I have lots of cases where people around me are in jobs they do not like. In general, my observation is that part of the reason for this is that the only thing they are actively measuring is money & time and occasionally impact. This leads to enormous frustration as either they are getting paid a lot to do very little e.g. Low Impact, High Money (Generally Low Time as they are demotivated) or they feel as though they create a lot of “value” and do not get paid enough e.g. Low Money, High Impact (generally High Time as they are passionate about what they do). In either case, it isn’t positive either for the person or for the people paying them.

Money is no longer fit for purpose. We need additional things.

Alternative to money

The concept of “alternative money” is not new. We already have seen Bitcoin, Sel and other systems. In my humble opinion, one of the problems with Bitcoin is that it was still very much tied to a speculative, capitalist vision of the world. If we are going to create “alternative money” then I think it’s value must be defined taking impact, energy and other things into account.

I am currently in the process of helping to do “pre-money valuations” for 2 start-ups. It’s a really interesting exercise. The difficulty is that most of the things which we are trying to measure are intangible. What is the value of the “strength of the team”, the “brand”, the “social impact” and other elements. @PaulMauhin is helping companies figure this out.

Unfortunately, all of this needs to be translated into money as when we start to spend it, telling the bank we have lots of energy and impact but very little money isn’t going to work. Value is unstable but the way we measure it is relatively static.

Are my observations about this problem shared by you and others? If so, how do you measure value for yourself? Would love the get your input!

Here’s a cool video from @Jean-MichelScheuren with some more food for thought on the emergence of new money

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