A charity is when your customers capture value when you don’t.
A scam is when you capture value but your customers don’t.
A business is when you and your customers both capture value.
There are only a few legal ways via which businesses/individuals make money.
- Offering time
Let’s say it takes an hour to clean your house.
You can do it yourself or you can hire a maid to do it.
When you hire a maid, you clearly signal that your time is more valuable than hers.
Tons of similar businesses like made-to-order food operate on the same principle.
What they are selling is not the expertise of any form but pure commoditized time.
- Offering expertise
Lawyers, CPAs, accountants, and even creative workers like UX designers fall into this category.
They are offering specific expertise in areas that are unfamiliar to you.
And the reason you pay them is, primarily, to avoid developing that expertise yourself.
Some expertise like medical knowledge is deep.
Some others say social media marketing is shallow and erodes much more quickly.
A business can serve more customers by combining identical requests from multiple users.
For example, Walmart ship trucks full of Coca-cola and then retails them over time.
For example, Google maintains one index of the web that can serve billions of users every day.
A counter-example of this is Uber, which appears to batch but, so far, has not succeeded in doing so.
A brand is a form of monopoly.
Being the only food shop inside an airport is a monopoly.
The only authentic item of its type is monpoly e.g. Pyramids or French Polynesia.
In our age of consumer romanticism, people are willing to pay for unique experiences.
And that’s why Coca-Cola can charge more than RC Cola.
Or Facebook followers are more valuable than say Pinterest followers.