Business is Alchemy

I just got an amazing email from Perry Marshal that I thought I just had to share with you, dear readers:

Hi Kelvin,

Listen up, because I’m about to explain one of the most critical, most fundamentally misunderstood realities of economics. This simple truth could change the way you see everything.

People in poor countries are often told that America became successful only by stealing from them. Political liberals often look at the world as a pie that must be re-divided a different way. And although there may be some truth to those ideas, the essential reality is that business is alchemy.

Remember the alchemists from the middle ages? They sought a formula to turn lead into gold. They never found it. But they were right about one thing: Wealth is all about the reinvention of existing resources – transforming useless things into useful things.

Business, at its essence, is all about that very thing. Converting worthless things into items necessary and valuable. Moving resources from areas of low return to high return. Harnessing the forces of nature to produce food and wealth for everyone. Politics may be about the endless arguments about how the pie should be sliced – but entrepreneurship is about baking more pies.

Take two of the most successful companies of the last decade – Intel and Microsoft. Intel takes desert sand – worth less even than lead – and turns it into Pentium chips – which are worth more than gold.

If that’s not alchemy, what is?

Microsoft literally creates software out of thin air. The strings of 1’s and 0’s that make those Intel chips do such amazing things for us.

Does Intel have to steal anything from anyone to make those chips?

No.

Does Microsoft have to steal anything from anyone to write software?

No.

It’s alchemy. Literally the creation of something out of nothing.

–Perry Marshal

What do you think about this?