Michael Saylor is the CEO of MicroStrategy and a prominent holder and proponent of Bitcoin. Basically, I think he’s a brilliant mind in the world of money… specifically Purchasing Power Protection (despite the massive drop in BTC — Ouch!).
Within just 30 minutes my mind was completely blown into another universe and – since then – I’ve been spending my nights after work applying this mental model I picked up from Michael to pretty much EVERYTHING around me.
Here it is (brace yourself for a geek-out)…
Saylor has a fascinating way of comparing ideas (cryptocurrencies, products, companies, etc) to their fundamental physics.
For example, he mentions the impact of JD Rockefeller and Standard Oil on energy prices and how it was one – if not THE – most impactful companies in history.
Why? Think about this…
Prior to standard oil, people would spend large amounts of time gathering firewood or buy expensive and relatively rare whale oil to light & heat their homes.
Back then the average hourly wage for blue color workers was about $.50 and a barrel of oil cost $.61.
As I’m sure you’re also 100% aware and very excited to recall… a barrel of oil contains 1700kWh of energy… and heating a home requires around 41kWh of energy per day.
That’s about 2.4% of a barrel of oil.
And – WAIT FOR IT BECAUSE I KNOW YOU’VE BEEN WAITING FOR THIS – the 2+ manhours per day (worth $1) someone might spend gathering firewood and preparing a fire to gather up the 41kWh to heat a home was replaced with just 1.5 cents of oil.
In other words, Rockefeller created 98.5 cents of value for that same man – all in a single lifetime… Remember… that’s 20% of the average day rate (I know, these are rough assumptions, but hopefully you get the point).
You must be asking, SO WHAT AND WHO THE HECK CARES, MATT?!
When we talk in terms like this, the fog clears and we’re forced to deal with a simple fact… If you’re starting a company and you’re not creating quantifiable value, you’ve still got some work to do.
Are there exceptions? Probably.
Do I know what they are yet? Nope.
But, this is a great mental model and a good exercise for anyone developing products to go through because it helps you gain clarity on specifically HOW you’re creating value and HOW MUCH is being created.