Wednesday, July 20, 2011

Eliminate The Middleman

Value is created when a sharp tool touches raw material. When a newly washed shirt is ironed. When a brain is led to think in ways it never thought before.

Rather than being value-creators, many people seek gain in life by edging themselves into the delivery system. Buying cigarettes by the pack and selling them one at a time. Offering credit cards for a fee so people can buy today's goods with tomorrow's money.

Making money by facilitating commerce can bring wonderful wealth - but it's a shaky wealth, vulnerable to those who find shorter paths between buyer and seller. eBay, the popular auction house, survives. It links buyer and seller and does nothing more.

An artist could sell through a gallery. The gallery displays the art, sends out mailings, brings in customers. The gallery enables the art to be sold. For a big piece of the action. Or the artist could sell her art on eBay and spend most of her time painting, rather than dealing with marketers.

The most economic transaction is the one that follows the shortest path, eliminating all unnecessary middlemen. The most effective economy is the one with the fewest middlemen.


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