What Value Is. And Where It Lives.

Most founders don't get marketing. And most marketers don't actually do marketing. They run campaigns.

I should explain how I got to that opinion, because I'm the last person who would have predicted I'd end up in this profession. I'm the son of an engineer and an immigrant who valued hard work and tangible things. When I was young and ambitious and wanted to do things — sports, hobbies, the equipment and trips and lessons that came with them — I couldn't afford to be marketed at. Marketing was the tax I paid in attention and money to figure out what was actually worth doing. In practice, that meant buying used equipment instead of new. Off-brand items that performed identically to the name brands at half the price. Skipping the marketed-up version of a thing in favor of the underlying value. I learned to ask, every time: what am I actually paying for, and what part of that is just communication wrapped around it? Most of what I sifted was garbage. Some of it wasn't. The skill of telling the difference is what I've spent my career on.

What I've eventually figured out, and what took me fifteen years inside the profession to articulate simply, is this: marketing is the creation of value through communication. That's it. Eight words. Most of what passes for the discipline doesn't pass that test.

And here's the part I didn't expect. After years of working this out anecdotally, I discovered that a group of economists had figured all of this out a hundred years before me. The Austrian school — Carl Menger in 1871, then Mises, Hayek, Bastiat, Rothbard — spent a century working out exactly the questions marketers face every day. Their answers map onto modern marketing problems with uncanny precision, and most of my profession has never heard of them.

This is the first in a series working through what marketing actually is, using the Austrian frame as the lens.

Labor Theory of Value

There's an intuition almost everyone defaults to about value. Hard work creates it. Put in the time, sweat the details, and what comes out has worth proportional to what it took to make. The tortoise beats the hare.

This is the Labor Theory of Value. Marx formalized it. Adam Smith gestured at it. But you don't need to read either of them, because the belief is preinstalled. We learn it as kids when we're told effort matters more than outcome. We deploy it on ourselves through the sunk cost fallacy — the conviction that something we've already poured time into must be worth finishing because of the time we poured in. We cling to it because nobody wants to discover the project they spent six months on produced nothing anyone wanted.

The trouble is that the world doesn't work that way. It takes a ton of work to dig a hole. But if no one asked you to dig it, the hole isn't valuable. The dirt you moved is real. The blisters are real. The hours are real. The value is zero.

The Soviet Union ran on this mistake at industrial scale. Soviet factories had production targets measured in tons of output rather than usable goods produced. So they hit the targets — by making ball bearings, melting them down, and making them again. Hours of work, real material, real labor, zero value created. Nobody wanted what came out the other side. The system rewarded the work, not the outcome of the work, and the entire economy quietly hollowed itself out doing labor that no one was asking for.

I've seen this firsthand running marketing campaigns. We've put real work into ads the market simply didn't respond to. Work isn't sufficient. Work in the wrong direction is just wasted motion. The market doesn't care how hard you tried.

Subjectivity of Value

So if work itself doesn't make something valuable, what does?

The Austrian economist Ludwig von Mises gave the answer in one sentence:

“Value is not in things, it is within us.”

— Ludwig von Mises

Put simply, value is what other people want.

The Subjective Theory of Value tells us that everyone values everything differently and contextually. Here's an example I saw recently: a kid is offered the choice between a stack of $10,000 in cash or a packet of Oreo cookies — and he picks the cookies.

To most of us, this is irrational. Clearly, $10,000 can buy a lot of Oreo cookies. But for this kid, the cookies in that moment were more valuable than a stack of greenbacks. To him, this is perfectly rational behavior. We've all paid for that overpriced hot dog or bottle of water at the stadium too — we wouldn't make those trades if it didn't benefit us.

Contextually, value shifts as well. When you're comfortable at home or at the office, a glass of water provides nearly no value to you. It's effectively free. If you were stranded on a desert island for an entire day with no access to water, you'd happily trade anything in your possession for it.

Communication of Value

This is where marketing comes in. In the cookies-vs-cash example, the gap between the seller's offer and the buyer's perception is just a matter of communication.

“Hey kid, if you take the cash and go to the store, you can get a TON more cookies.”

That information could change his internal value structure and provide more value to him in the long run.

Or how about adding a service?

“Pay me $1,000 and I'll take you to the store with the remaining $9,000, and we'll get a bunch of cookies.”

Everyone wins.

Mutually Beneficial Exchange

The subjectivity of value makes it possible to exchange things and have everyone come out ahead. The greatest example of this is that when you buy a product or service in a polite situation, both people leave saying “thank you.”

When I exchange $10 for a burger and fries, it's because I value the food more than the $10. The person selling me the burger and fries values the $10 more than the food. It's a win/win.

This is the moral foundation of every honest commercial relationship. Both sides leave better off than they started — by their own measure of better. The seller doesn't define what's valuable to the buyer. The buyer doesn't define what's valuable to the seller. Each party is the only authority on their own preferences, and the exchange happens because those preferences happen to be compatible.

In fact, subjectivity of value and mutually beneficial exchange isn't just a feature of trade — it's the precondition for trade to happen at all. Imagine trading things of equal value. Why would I go to a pawn shop to exchange a gold coin for another gold coin of equivalent value? There's no point. The trade only makes sense if we each value what the other has more than what we already hold. That asymmetry isn't a bug in the system — it's the entire engine.

Where This Goes Next

Which brings us back to where we started. Marketing is the creation of value through communication. The job is to identify the value that lives in the customer's head, and communicate accurately and honestly that you have something compatible with what they want. Done well, both sides walk away wealthier by their own measure. Done badly — done as theater — neither side gets their needs met. This idea of subjective value is foundational to the rest of the ideas behind the Austrian School.

The reason most companies fail at this isn't strategic. It's foundational. They've gotten the location of value wrong. They believe value is in the thing they're building, and the customer's job is to recognize what's already there. The classic example is the technical founder of a company falling in love with a solution they've built that addresses a problem that no one has.

That foundational mistake has a name. It's central planning, and it fails for the same reasons central planning always fails — not because the planners are dumb, but because the information they need isn't where they're looking. The rest of this series is about why.