The History of Creating Value – How Humans Made Money In Different Eras

At this point in history, startup entrepreneurship has become the fastest way of creating value, and thus the fastest way to move upward in life. But this opportunity is unlike other opportunities humans had in history. Here is how you could create value before:

the history of creating value infographic

 

You can see that Gross World Product (all the stuff the world produces) grew exponentially after industrialization because serious mass production became possible.

Creating Value in Different Periods

The Hunter Age. After hunter-gatherers became growers and herders, some people realized that it is faster and easier to go take other people’s crops and cattle than grow your own. War became popular. And wealth got a bad reputation.

The Warrior Age. Going to war was the way of creating value for the king. If you came back alive he would give you land and slaves in exchange (you became his vassal).

The Craftsmen Age. The world pretty much stayed that way until about 9th century, when some people (who were too smart to be peasants but not aggressive enough to be vassals) realized that they could avoid being plundered by kings and their soldiers if they organized themselves into bigger groups – that is how cities were born. This is the time people first got the incentive to work harder and smarter, in other words be entrepreneurs. In cities, these people, called craftsmen or artisans, created value by making both useful and decorative artifacts.

The Explorer Age. Cities changed everything. Ideas swirled around and the more unscared ventured out to find the far away lands. They came back with silks, spices and other things people wanted but could not have before.

The Merchant Age. Once the far away lands were discovered, people who didn’t mind the risk of sailing really far to bring back exotic goods became the merchants.

The Mechanization Age. As craftsmen kept perfecting their skill, they came up with machinery. With machines you could mass produce things,  thus creating value a lot faster. Owning a machine became the next big thing.

The Industrialization Age. When electricity came around and machines became electric-powered, they started producing even more even faster. Industrialists became the big guys.

The Oil Age. Around this time, cheap cars and trucks came around. With the demand for fuel growing, people realized they could drill for oil. Like the Rockfellers and the Gettys, you would have been big if you discovered oil (or bought up oil futures, or oil companies.)

The Corporate Age. Now that you have trucks, you can distribute your factory’s goods almost anywhere. Factories realized they could reach a lot more consumers, so they organized themselves into factories with lots of departments – that is corporations. Being a corporate executive was the best thing you could do.

The Financial Age. As corporations grew very large, creating value in the order of billions, banks realized that they could buy corporations and resell them for more. Since the corporations were so expensive, even making a small margin on the sale was a lot of money. Being a banker (and doing lots of leveraged buy-outs) became the best thing to do in life.

The Information Age. When corporations started employing hundreds of millions of people, and these people started spending money, banks started to need to manage the transactions – a lot of data. The information age  started and technology developed rapidly.

The Startup Age. Corporate workers started realizing that in a group as large as a corporation their contribution was not visible, and even if they wanted to work 10 times harder they could not ask their boss to pay 10 times more. Technology lowered the cost of starting a company. And now being a startup founder is the best you can do.

All of the above ways of creating value still exist. Startups today are the way to create value with the most impact.