What a $450 Million Painting can teach you about Value
Unless your Jeff Bezos, Tim Cook, or an Arab Sheikh - probably not.
But, someone did. Today, a classic Da Vinci was sold for 450 million dollars at Christie's Auction which took almost twenty minutes until a buyer had emerged. Like many people of extreme wealth, this buyer is remaining anonymous, but the fact remains: They spent 450 million dollars on a painting that is 17 inches by 14 inches.
For those lacking geometry skills: This isn't the type of painting that dominates a massive wall in a gallery. Instead, at this size you are more likely to place in one of those awkward spaces of wall in between two door frames in your home.
It's possible that it isn't even a real Da Vinci, but I'm far too unqualified to worry about those details. Oh, and it sold for less than 200 dollars back in 1958 and only ten thousand about twenty or so years ago. Yeah - talk about a massive uptick in value over the years.
For a point of reference - the Navy's newest destroyer cost roughly 500 million dollars or a fleet of 27 of the finest military grade helicopters. Yep, for just about half a billion bucks you could either bomb the world back to the stone age or purchase a painting the size of your laptop.
There is a Point Here I Promise
These are the type of stories that you typically scroll past on your news feeds in an effort to see the latest scores, an update on the weather, or your hourly update on the possibility of WW3. Yet, this story is so much more than just a statement of someone's absurd wealth and the apparently skewed perception of value among those to which money is not a concern.
This news bit points at the incredible power of perceived value vs. actual value. More specifically this sale points to the undeniable value of uniqueness, rarity, and timelessness. We'll explore all of this in the coming paragraphs.
It's key to understand the difference between value and perceived value. Knowing this distinct difference is critical to ensure that you buy and sell goods for the correct prices.
Value - The actual monetary value of the goods, the materials, and the experience you buy or sell
Perceived Value - The monetary value of goods based upon opinion, hearsay, uniqueness, and market availability.
A product is only worth what it's made of, the labor hours needed to produce it, and any relevant shipping and handling costs. For example, a new Bentley automobile costs at least 300K retail. Yet, you can be certain that it didn't cost nearly that much. I'm unsure, even after extensive googling (is that a verb yet?), of how much it costs to produce and ship a new Bentley vehicle; but you can be certain it isn't retail value.
Why the difference in cost to sale? Perceived Value
Bentley is such an elite brand, one which doesn't need to market its goods in magazines, or during the Superbowl commercials. Its quality has been proven for years on end, and its luxury raved about by all who ever have the chance to even sniff one.
And so, even if it only costs slightly more to produce a Bentley than it does a Mercedes - you can expect at least a 5x mark up on the car due to the public perception, and reputation, that Bentley is the best of the best. So, people, or at least those who can afford such a luxury, will gladly fork over 300 thousand dollars for an automobile because the world, the brand, and their emotions agree that that worth is appropriate.
Why Does this Matter?
So, most of us will not be purchasing Bentley vehicles or Da Vinci paintings anytime soon. But, we're still going to buy and sell goods on a daily basis. There is a constant transaction of finance, services, skills, and products.
Even your job is a transaction. You pledge your time and skills for financial reward every two weeks. Even a date has these properties. One person is taken as a date for drinks, dinner, or a movie because the other person is extremely interested in them. Motivations aside, this action is a trade of time and finances for time and opportunity.
The difference between successful careers and dates that end in love, or at the very least, steamy lust - is that the perceived value of the individual, whether at work or in a bar, is significantly higher than the competition, and so they win out and are rewarded appropriately.
A great date is one in whose perceived value is much higher than others you may be considering or even the rest of the blokes around the world combined. A rewarding career is one which your employer, or customers, see your value as significantly higher than your competition.
Because these individuals gain their perceived value from a stew of uniqueness, skill set, promise, and ability to meet a demand. All of these factors combine under one roof to dramatically increase the perceived value of a person, thing, or opportunity.
Let's continue the dating analogy -
Someone has two dates lined up this weekend.
One is with a young guy, say 24 - currently jobless and living on his friend's sofa, but he is funny, seems to work out a lot, and has a lot of big dreams. He always skips on plans, would rather watch Netflix than take a hike, and only gets motivated when something happens to benefit him.
Another date is with a 26 year old investment banker who speaks Spanish, likes long runs, comes from a educated background, has the cutest puppy ever, and always seems to be there for their friends.
Their VALUE is the same. They are both men in their mid-twenties. Assuming they have fully functioning sex organs, no major health conditions, and have similar sanity - they are equal..they are men.
Which one has the higher percieved value?
One man might be a bit more random and exciting, while the other seems to do everything right. A big laugh versus a big heart.
Sure, some might think the banker is a pompous ass and see more value in the 24 year old bro. Yet, most I'd argue would look at the 26 year old as a very eligible bachelor, and one they'd love to go on a few dates with.
There is just a better look to the second option than there is to the first. That doesn't make it right - just as a Mercedes isn't always better than a Honda, but the point still remains - perceived value matters.
Understanding that perceptions matter demonstrates why prices can be set where they are and why some people always have suitors. There are 3 factors that are responsible for value -
2. Market Need
Being unique means that you stand out from your peers. You present value that isn't found everywhere. Now, this is a double edge sword. Some people and products try way too hard to be unique and end up ruining their value by being too far away from the expectations.
Having market need expresses that you'll be bought out of the pure need and desire of the human condition. Cars will sell and so will refrigerators. Single people will always be valuable because there are other single people. Sometimes though, a person or product must adjust itself in location or market in order to be more valuable.
Lastly, consistency is the idea that you are always that good. History is littered with products and people who were flash in the pans. Some car companies used to be known for quality, but recently are seen as quite the opposite. Some people put on quite the ruse on a few dates, but quickly revert back to who they are once they get what they want.
Yet, the best always perform and show up. They don't have large variations in quality.
A Bentley sells for three-hundred thousand plus because they aren't as available as a Honda Civic and there is a market of wealthy people who want to own one, or at the very least, lease one. Most importantly, you never hear about a recall for Bentley automobiles. They are great vehicles.
Why this matters to you
I could easily write this section and focus specifically on the fitness industry. As a trainer - I clearly understand my industry. Yet, I'd rather extrapolate it outwards and include all professions.
As a professional you'll want to present yourself as a unique asset to your company or customers so that you stand out from your competition. Yet, you don't want to be so unique that your message sounds like bullshit. Personal training is full of people who make claims they could never follow through on. So too is Wall Street and Washington DC.
You'll want to deliver consistent professionalism, consistent results, and always be willing to go an extra mile. You'll want to constantly present yourself as a person who fills a need. Whether your customers, your boss, or your industry asks - you need to the be the person.
All of these things apply to yourself as a person too. You'll want to be unique from others, but not so eccentric that people think you are off your rocker. You'll want to be there for friends in need, never be that person who flakes on plans, and probably skip out on Irish exits too. People want good people in their lives - so you'd be surprised just how many people love you if you do these things.
This whole blog is meant to say one thing: Be the 450 million dollar painting.
Have a value that makes you the most irresistable version of yourself you can.