<story><title>Dollar Shave Club and the Disruption of Everything</title><url>https://stratechery.com/2016/dollar-shave-club-and-the-disruption-of-everything/</url></story><parent_chain><item><author>AnthonyMouse</author><text>&amp;gt; Value Destruction&lt;p&gt;These words, they are not what is happening.&lt;p&gt;Value is the thing the shaver gets from having a razor. P&amp;amp;G doesn&amp;#x27;t get any value from giving you a razor, that&amp;#x27;s why you have to pay money to get them to do it. You have to transfer some of the value you get back to them in cash form.&lt;p&gt;If razors now cost 25% of what they used to, there is still exactly the same amount of value in existence. There are the same number of razors and the same number of dollars, only now more of the dollars stay with the customer. Probably there is &lt;i&gt;more&lt;/i&gt; total value because at a lower price people will buy more of the thing.&lt;p&gt;This may be more easily confusing because we have become used to measuring the economy by stock prices. But stock prices are a measure of the &lt;i&gt;inefficiency&lt;/i&gt; in the economy. They&amp;#x27;re a measure of the return on capital. The amount more that companies skim off the top between what the customer pays and what was necessary to produce it.&lt;p&gt;A company that makes products for $5 and sells them for $5 may have a negligible stock price while creating an enormous amount of value. A company that buys products for $1 and sells them unchanged for $10 may have a high stock price while creating no value at all.</text></item></parent_chain><comment><author>marcosdumay</author><text>I like the term &amp;quot;market destruction&amp;quot;.&lt;p&gt;I&amp;#x27;m sure there&amp;#x27;s a name for that somewhere on The Innovator Dilemma, and if somebody finds it I&amp;#x27;ll gladly change my usage. But yes, calling it &amp;quot;value destruction&amp;quot; is stupid.&lt;p&gt;Anyway, It does not change anything on the overall idea, but your last paragraph is not really correct. If the company added no value at all, it wouldn&amp;#x27;t be able to sell the product. It may add value in distribution (yes, there is such a thing), or even just branding, but it better add more value than the price of the product, otherwise, people just won&amp;#x27;t pay.</text></comment>
<story><title>Dollar Shave Club and the Disruption of Everything</title><url>https://stratechery.com/2016/dollar-shave-club-and-the-disruption-of-everything/</url></story><parent_chain><item><author>AnthonyMouse</author><text>&amp;gt; Value Destruction&lt;p&gt;These words, they are not what is happening.&lt;p&gt;Value is the thing the shaver gets from having a razor. P&amp;amp;G doesn&amp;#x27;t get any value from giving you a razor, that&amp;#x27;s why you have to pay money to get them to do it. You have to transfer some of the value you get back to them in cash form.&lt;p&gt;If razors now cost 25% of what they used to, there is still exactly the same amount of value in existence. There are the same number of razors and the same number of dollars, only now more of the dollars stay with the customer. Probably there is &lt;i&gt;more&lt;/i&gt; total value because at a lower price people will buy more of the thing.&lt;p&gt;This may be more easily confusing because we have become used to measuring the economy by stock prices. But stock prices are a measure of the &lt;i&gt;inefficiency&lt;/i&gt; in the economy. They&amp;#x27;re a measure of the return on capital. The amount more that companies skim off the top between what the customer pays and what was necessary to produce it.&lt;p&gt;A company that makes products for $5 and sells them for $5 may have a negligible stock price while creating an enormous amount of value. A company that buys products for $1 and sells them unchanged for $10 may have a high stock price while creating no value at all.</text></item></parent_chain><comment><author>tuna-piano</author><text>Actually, there&amp;#x27;s not the same amount of value in existence, there&amp;#x27;s most likely more value!&lt;p&gt;When prices go down, people buy more razors. What does this mean? It most likely means that people get to shave with sharper blades, as it&amp;#x27;s now worth it for them to buy fresh ones and not use an old one.</text></comment>