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I feel you are mixing value capture with value generation. If GM produces cars with the same level of margins as Facebook or Google, things will be different. L

by imachine1980_ 3y ago

I feel you are mixing value capture with value generation. If GM produces cars with the same level of margins as Facebook or Google, things will be different. LVMH (Louis Vuitton Group) holds a value equivalent to that of Toyota, Volkswagen, and two-thirds of Ford combined. Louis Vuitton alone was valued more than Red Hat a few months ago. This doesn't mean that Louis Vuitton is more valuable than Red Hat, but rather that it captures Value more effectively than Red Hat.

eru 3y ago
> This doesn't mean that Louis Vuitton is more valuable than Red Hat, but rather that it captures Value more effectively than Red Hat. What definition of 'valuable' are you using here?
- bee_rider 3y ago
  Probably something like market cap (although I guess it would have to be based on the past now that Red Hat has been bought), or there are nebulous measures of brand value out there. I think it is a fair point TBH, my original comment could have been more clear about this aspect.
bee_rider 3y ago
I think I may have just skipped a step or not expressed myself very well. What I’m saying is, I suspect information technology has made classic production companies vastly more efficient and productive. To the point where we can afford to have massive companies like Facebook that are almost entirely based on value capture. That’s my speculation at least. Your example puts me in a tough spot, in the sense that Louis Vuitton is pretty old and pretty big. I’d have to know more about the company to quibble, and I don’t feel like researching it. I wonder if the proportion of their value that comes from pointless fashion branding was originally smaller. Or if the whole pointless fashion branding segment was originally just smaller itself. But I’m just spitballing. In the past we also had mercenary companies and the like to capture value without producing much, so I could just be wrong.

eru 3y ago

> This doesn't mean that Louis Vuitton is more valuable than Red Hat, but rather that it captures Value more effectively than Red Hat. What definition of 'valuable' are you using here?

bee_rider 3y ago
Probably something like market cap (although I guess it would have to be based on the past now that Red Hat has been bought), or there are nebulous measures of brand value out there. I think it is a fair point TBH, my original comment could have been more clear about this aspect.

bee_rider 3y ago

I think I may have just skipped a step or not expressed myself very well. What I’m saying is, I suspect information technology has made classic production companies vastly more efficient and productive. To the point where we can afford to have massive companies like Facebook that are almost entirely based on value capture. That’s my speculation at least. Your example puts me in a tough spot, in the sense that Louis Vuitton is pretty old and pretty big. I’d have to know more about the company to quibble, and I don’t feel like researching it. I wonder if the proportion of their value that comes from pointless fashion branding was originally smaller. Or if the whole pointless fashion branding segment was originally just smaller itself. But I’m just spitballing. In the past we also had mercenary companies and the like to capture value without producing much, so I could just be wrong.