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Welcome to the GrowValley Newsletter! ??
Your beacon in the world of venture building and innovation. ????
In this edition, we go back to Econ 101 and delve into the fascinating connection between luxury goods, value and pricing. ???. We'll also unveil top tech highlights from AI & Metaverse to regional major events such as Gitex.
As the world undergoes seismic shifts, we're here to help you stay ahead of the curve and cut through the noise. Join us on this exhilarating journey as we uncover the limitless possibilities in the ever-evolving realm of GrowValley. ????
Without further ado, let's dive into the latest news and explore the captivating stories that await! ????
?? The Age of Luxury Beliefs: When Price ≠ Value ??
In the world of economics, we often discuss the Law of Demand, which describes the inverse relationship between the price of a product and the quantity demanded. However, there are intriguing exceptions to this rule. Situations where demand actually increases as prices rise. One such fascinating anomaly was explored by Norwegian American economist Thorstein Veblen. ??
Veblen Goods: From the Gilded Age to Luxury Beliefs
Veblen's studies unfolded in the backdrop of the Gilded Age (1877 – 1899), a period in American history characterized by remarkable economic growth. Often referred to as the era of the Robber Barons, it was a time of extreme wealth disparities, with both glaring poverty and ostentatious displays of affluence. ????
This extravagant display of wealth led to the emergence of high-quality luxury items that defied conventional economic logic. Prices soared, and so did demand. These unique products are now known as "Veblen goods," exemplifying how snob value and status can sometimes outweigh practical utility. ??
Fast forward to today, and the concept of Veblen goods has evolved considerably, revealing a more profound phenomenon. From luxury goods, we've transitioned to what I'd like to call "luxury beliefs." ??
The Shift to Luxury Beliefs and Conspicuous Consumption
Veblen's work was not just about luxury items; it was part of a broader treatise on the leisure class, exploring the downstream effects of wealth pursuit and possession. One key concept that emerged was "conspicuous consumption," where immensely wealthy individuals shifted their focus from productive activities to endeavors that contributed little to the economy. ????
In the years following the Gilded Age, conspicuous consumption often manifested as high-quality luxury items, accessible only to a select few. However, advances like the assembly line and quality control innovations enabled the mass production of goods without sacrificing quality. ??
For instance, the first digital watch, developed by the Hamilton Company, sold for an astounding $2,100. Just five years later, you could own one for $10. Today, digital watches are commonplace, with the Casio F-91W representing a symbol of accessibility. ???
The democratization of once-exclusive products showcases the erosion of value over time. Affluent individuals recognized this shift and adapted by moving away from flaunting material possessions. Instead, they've chosen to signal their status through their beliefs, which can often be quite costly to uphold. ????
The Power of Beliefs and Symbols
In the UAE's thriving startup scene, consider the rise of "impact-driven" investments. As more investors seek to align their capital with social and environmental causes, startups focusing on sustainability and social impact have seen growing interest.
Despite the higher costs associated with sustainable practices, investors and consumers alike are increasingly drawn to these businesses. This is a real-world illustration of how beliefs and values can drive demand, even when prices are elevated. ????
As my colleague Rob Henderson aptly puts it, "The affluent have decoupled social status from goods and reattached it to beliefs." ????
When status becomes intertwined with beliefs, it no longer has a physical counterpart but becomes a noetic concept based on our shared understanding of what defines a 'high-status individual.' ????
However, beliefs have a unique characteristic - they're not bound by the laws of physics. They spread rapidly and can influence entire societies in a short time. This shift towards belief-driven status-seeking inevitably leads to the creation of symbols that propagate these beliefs. ????
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Symbols and Representations: The Map vs. the Territory
Symbols emerge seemingly overnight, representing ideals associated with status. Yet, herein lies a challenge: the risk of mistaking the symbol for the substance it signifies. ????
Our continuous quest to understand the material world has led to the creation of representations - maps to navigate the territory. We know that a map is not the territory it represents, but that doesn't deter cartographers and scientists from enhancing these representations for greater accuracy. ?????
This urge to create more precise representations has only intensified with technological progress. However, it's vital to remember the cautionary words of Alfred Korzybski, who emphasized that a correct map should have a similar structure to the territory. ?????
Jorge Luis Borges further explored this idea in his tale, "On Exactitude in Science," where a map became so extensive that it rendered itself useless. ????
Today, symbols and representations have a profound influence on our mental landscape. For instance, why is a higher price often perceived as an indicator of higher quality? Why are elite degrees considered proxies for competence, despite evidence to the contrary? ????
While we might attribute this to convenience and outsourcing value identification, a deeper reflection reveals a more complex and subtle phenomenon we often acknowledge but rarely discuss. ????
Thank you for being part of this engaging conversation. ????
?? Tech Highlights
Get ready for your weekly dose of captivating tech updates that will keep you on the edge of your seat. ??
????Curious Cats ??
??? Podcast Recommendation : "Scaling Duolingo, Embracing Failure, and Insight into Latin America’s Tech Scene"
Join Lenny and Gina Gotthilf, COO of Latitud and former head of growth at Duolingo, as they unravel the secrets behind Duolingo's remarkable journey, from early growth to international expansion. Discover life-balancing strategies, tactical growth tips, and Gina's passion for Latin American tech. ??
Don't miss this captivating episode! ??
?? Listen Now
Stay tuned for our next newsletter as we continue to bring you captivating insights, innovative ideas, and the latest happenings in the world of startups and investments. Thank you for joining us on this journey of discovery and inspiration! ?????