Question #
How does the marketplace value different professions based on the problems solved?
Answer #
However, the marketplace does not place a very high economic value on their contribution and the problem they solve.
A hedge fund manager may have an income of millions of dollars per year plus a percentage of ownership in the fund they manage, which could also be worth millions or even billions.
They are solving a problem for high-net-worth individuals called “how to get higher returns on their money than the market.” The market is usually defined today as the Dow Jones Industrial Average, which is the performance of 30 large, publicly traded companies, and the S&P 500, which is the index of the largest 500 publicly traded companies in the US.
The marketplace today places a much higher economic value on solving the high-net-worth individuals’ return-on-capital problem than on solving the problem of providing fast, inexpensive hamburgers.
You may or may not agree with this reality, but opinion doesn’t change how the marketplace works.
So, what’s the point?
The amount of money you can earn is a function of the problems you can solve.
You can create vast wealth by solving the right problems for the right people.
As I have learned in life, it is often the questions we ask ourselves that determine the quality of our life.
One of the questions I always ask when I am contemplating a new company is, “What is the problem I am solving, and who is it for?”
For example, when I helped form our new self-storage construction company, I saw that smaller investors like myself were losing deals when we got the market’s current normal self-storage contractors to bid jobs.
We were receiving bids in the $90 to $130 psf cost range.
For most small investors, these numbers just make it cost-prohibitive to do most deals today.
So our construction company was formed to solve that problem for the smaller investors.
If there is no compelling answer, or if the people or group you are solving the problem for can’t afford it, you are going to be challenged from the start.
Source: Five Lessons About Business I’ve Learned After 40 Years
