The Power of Expression, Compression, and Value Capture in the Digital Age


Hatched by Glasp

Sep 10, 2023

4 min read


The Power of Expression, Compression, and Value Capture in the Digital Age

In today's digital age, where information is readily accessible and markets are becoming more efficient, the way we express ourselves, compress our experiences, and capture value has undergone a significant transformation. This article explores the concepts of expression as compression and the idea that whoever generates the demand captures the value, shedding light on the implications and opportunities arising from these shifts.

Expression is Compression

Imagine experiences as raw tree sap that transforms into maple syrup. In a similar vein, experiences become shareable creations through the process of expression. However, full-time authors and writers don't spend their entire workweek typing away. Instead, they dedicate most of their time to collecting experiences. By making sense of existing ideas and compressing them into concise narratives, writers mold the wet clay of experience into shape. This process of compression is crucial because if a story fails to get to the point, it risks losing the audience's attention.

Stephen Sondheim, the librettist of West Side Story, once said, "You have to throw out good stuff to get the best stuff." This notion reinforces the idea that simplifying and beautifying the world through compression is essential. By distilling complex experiences into their essence, authors and artists provide a useful representation, even if it may never fully capture the reality they experienced. As Albert Einstein aptly stated, "Things should be made as simple as possible, but no simpler." Compression allows us to understand and appreciate the world in a more accessible and profound way.

Whoever Generates the Demand Captures the Value

The rise of the internet has disrupted traditional market dynamics, leading to the "death of the middlemen." In this new landscape, the value is captured by those who generate the demand, while middlemen are commoditized as markets become more efficient. The internet has created a barbell effect, characterized by both consolidation and fragmentation. Companies now capture profits by aggregating demand, rather than controlling supply as was the case in the pre-internet era.

The best companies today distinguish themselves by providing exceptional user experiences. This, in turn, attracts a larger consumer base, which in a virtuous cycle, entices more suppliers to join the platform. As a result, value capture aligns more closely with value creation. Companies that excel in this regard stand to make 10x or more than their counterparts. The internet has even started to commoditize suppliers, potentially replacing middlemen altogether.

Venture capitalists (VCs) are a prime example of middlemen who may face significant disruption. As the market becomes more efficient, VCs may find their role commoditized. Venture studios, which offer a more direct and efficient path for startups to access funding and support, exemplify the shifting landscape. The power lies in the hands of the stars, the creators, and the demand generators. If they choose to exercise their influence, they can reshape entire industries and marginalize traditional middlemen.

Actionable Advice

  • 1. Embrace the Power of Compression: Whether you're a writer, artist, or entrepreneur, recognize the importance of compressing your experiences and ideas. By distilling complex concepts into their essence, you can communicate more effectively and capture the attention of your audience.
  • 2. Focus on Demand Generation: In today's digital landscape, the value is in generating demand. Whether you're a content creator, business owner, or startup founder, prioritize building a strong user base and providing exceptional experiences. This will attract suppliers and create a virtuous cycle that enhances value capture.
  • 3. Challenge Traditional Middlemen: If you find yourself in an industry dominated by middlemen, consider banding together with like-minded individuals to create alternative platforms or networks. By directly connecting with your audience or customers, you can capture more value and disrupt the status quo.

In conclusion, the power of expression, compression, and value capture in the digital age cannot be underestimated. By compressing our experiences and ideas, we can communicate more effectively and make sense of the world. Simultaneously, as the internet reshapes markets, those who generate demand stand to capture the most value. By embracing compression, focusing on demand generation, and challenging traditional middlemen, individuals and businesses can thrive in this new paradigm.

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