The economics of trading
My favorite thing to watch right now is a series on Instagram from a creator named Herman Jagpal. He’s doing one of those challenges in which you trade a paperclip to a house. I’m watching every single video. Some great trades include a massage ball for a pair of headphones (this one was big early on), and a $200 painting for a $600 diamond. At the time of this writing, Herman has been stuck with a $20,000 voucher from a solar company for about a week.
Two things stick out to me when I watch these videos. First, value is subjective when trading. Cash value is simply a short-hand way for people to agree on what something might be worth. But as I watch these trades play out, I’m realizing that based on supply, demand, and familiarity, people are willing to trade things with a large discrepancy in cash value, based on what they have, need, and want.
Second, businesses have a unique place int he trade market, based on their costs and their inventory. For example, a business might have extra stock of t-shirts. Maybe they’ll only make a 20% margin on each shirt. So they might be incentivized to trade for something of less cash value if they either need it, or if they think they can sell it for its entire cash value.
This series has got me thinking differently about value, time, and trading between businesses. Occasionally, I’ve done some work trades with other creatives. This is a smart way to hack the fact that you have different creatives skills and needs. I’m wondering what other work trades I could negotiate between businesses that have things I need or want.
