Understanding the World in Simple Terms
I first got interested in business during a freshman-year politics (ideological and moral education) class. I was deep in a nap when the teacher called on me to answer a question.
"What's the reasoning behind the equation: one sheepskin equals two chickens equals one pig?"
Honestly, I was completely lost. But that class taught me the first foundational logic of business: value determines price, and price always fluctuates around value.
I once wrote about a short-term trading strategy based on this very principle. Your value dictates your price, and all your fluctuations revolve around that value—buy at the lows, sell at the highs, and as long as you can identify those turning points, you won't lose.
This basic commodity exchange system relies on the same logic. By expressing commodity value through a unified medium—money—we can conduct relatively fair exchanges, instantly solving the messy problem of barter. Society then accelerated its development.
So early commerce was simple: manufacturers set a price and sold directly to consumers.
Layer two: information asymmetry and intermediaries.
We often feel the world is unfair, and one major source of that frustration is intermediaries. People get scammed when renting apartments or job hunting (I know of a young woman who barely escaped after almost being tricked into sex work—she fled with nothing but her wits).
Is that the intermediary's fault? I'm not trying to whitewash them, but intermediaries do drive social progress.
Take my own ad agency, for example. Without intermediaries who aggregate various WeChat public accounts, how would advertisers find the right platforms to advertise on? By the time they figured it out, their market would already belong to someone else.
This is the result of commercial prosperity and extreme abundance. New supply chains have emerged, inserting more middlemen between manufacturers and consumers—distributors, retail stores, e-commerce platforms.
Whether you acknowledge it or not, you now have access to more products, more choices, more opportunities, even if everything seems pricier.
Isn't life itself just a game of resource exchange? We trade money for time, for efficiency. This formula has spawned countless businesses—WeChat, the telephone, for instance. They all exist because they dramatically improve communication efficiency.
Or take those WeChat account owners mentioned in Cao Zheng's article, buying products from Pinduoduo and reselling them… Call it what you will, it's a blatant play on information asymmetry.
The third type of business behavior stems from the separation of price and value, usually amounting to speculation.
How much did WeChat pay for its domain? Millions? Hundreds of millions? I don't know. But http://fuck.qq.com got fined heavily, and there are plenty of speculators in this space.
A ordinary domain might cost just a few dozen yuan a year, like http://renzhishengji.cn at 25 yuan annually, while http://qq.com could fetch tens of thousands… or hundreds of thousands.
Here, price and value are completely detached.
The same goes for cryptocurrency in the blockchain space. On paper it has value, but the active participants are mostly speculators, and its actual worth remains decoupled from its price.
Sports betting… has the separation of price and value occurred there?
I'm not entirely sure what I've just said, but here's a blind summary:
1. The most authentic business models address rigid demands based on the principle that value determines price.
2. The next tier improves efficiency, helping people live happier lives within their limited time.
3. The most sophisticated models detach price from value, leveraging relative scarcity to make money.
Everything ultimately circles back to scarcity, though society now adds a prefix to that word: relative.
An era of relative scarcity.
My upcoming articles will focus more on advertising, since I currently work at an ad agency. If you're interested, follow my personal account to watch an advertising novice grow and think through it all.