What Does "Value" Even Mean?
Learn the difference between price and value — the foundation of all investing.
The $20 Skin Problem
A rare Fortnite skin costs Epic Games exactly $0 to make. Well, okay — maybe a designer spent a few days on it, so let's say $500 in salary. Then they sell it to 10 million players for 2,000 V-Bucks each (about $20).
That's $200 million from something that cost $500 to create.
Is that a rip-off? Or is that genius?
Here's the thing: both answers are kind of right, and understanding why is your first step to thinking like an investor.
The Big Idea: Price ≠ Value
There are two different questions people confuse all the time:
- "What's the price?" → What someone is actually charging or paying right now
- "What's the value?" → What something is actually worth
These can be wildly different.
Example: Travis Scott x Nike Air Jordan 1
| What You're Measuring | Amount |
|---|---|
| Nike's cost to make one pair | ~€30 |
| Retail price (if you got lucky) | €175 |
| Resale price on StockX | €1,500 - €2,000 |
| "Value" to a superfan who'll wear them forever | Priceless? |
| "Value" to someone who doesn't care about sneakers | Maybe €50? |
So what are they "worth"? It depends on who's asking.
For investors, value means one specific thing: how much money will this thing generate over time?
Three Types of Value
1. Intrinsic Value
What something is worth based on the cash it generates.
A lemonade stand that makes €10/day profit, every day, forever — that has intrinsic value we can calculate.
2. Market Value
What people are actually paying right now.
Tesla stock is "worth" whatever price it's trading at this second — even if people argue whether that price makes sense.
3. Personal Value
What something is worth to YOU specifically.
Your gaming PC might be "worth" €800 on eBay but worth €2,000 to you because of all your saved games, settings, and memories.
The Investor's Focus
Investors focus on intrinsic value, then compare it to market value. When intrinsic value > market value, that's potentially a good investment.
Why Do People Pay Different Amounts for the Same Thing?
Let's look at two nearly identical products:
| Product | Price | What's Different? |
|---|---|---|
| Regular energy drink | €2 | Does the job |
| Prime Hydration (KSI & Logan Paul) | €10+ when scarce | Exact same job, but... cooler? |
Prime costs about the same to make as any other energy drink. So why the price difference?
The answer is: perceived value vs. functional value
- Functional value: Does it hydrate you? ✓
- Perceived value: Does it make you feel like you're part of something? Does it have status? Do your friends want it?
Supreme built a $2.1 billion company almost entirely on perceived value. A Supreme-branded brick (yes, a literal brick) sold for $30. The same brick from a hardware store? €2.
Mini-Exercise: The Valuation Instinct Test
For each pair, choose which you think is worth more.
Pair 1: TikTok Accounts
Pair 2: Store Profits
Pair 3: Ownership Stakes
View Answer Key
Pair 1: B is worth more. Fake followers = €0 in business value. Real engaged followers who trust your recommendations = potential goldmine. A brand would pay serious money to reach 500K real teenagers.
Pair 2: Tricky! The Nike store makes 10x more now, but the vintage shop doubles roughly every 18 months at 50% growth. In 5 years, it could be making €3.8M. This is about growth vs. current profit — a key investor question.
Pair 3: 0.001% of Apple = about $35 million at current prices. The lemonade stand makes €7,300/year. Even if you owned it for 100 years, that's only €730,000. Apple wins by ~50x.
Investment Dilemma: Supreme vs. Shein
Supreme sold for $2.1 billion but had only ~12 stores and maybe $500 million in revenue.
Shein is valued at $66 billion with ZERO stores but $30+ billion in revenue.
Which business model would you bet on for the next 10 years?
The Case for Supreme:
- Brand value is incredibly durable — people will want "cool" forever
- Scarcity model means they never have to discount
- Luxury brands tend to get more valuable over time (look at LVMH)
- Less dependent on fast-changing trends
The Case for Shein:
- 30x more revenue means 30x more customers to sell to
- Their supply chain is a technological moat — they can copy any trend in days
- Data advantage: they know exactly what millions of people want
- Fast fashion might be the future (or might get regulated)
What an Investor Would Notice:
There's no right answer, but the Supreme model is higher margin, slower growth, brand-dependent. Shein is lower margin, explosive growth, execution-dependent. Different risks, different rewards.
AI Lab: Business Model Explainer
Use this prompt with Claude or ChatGPT to understand any company's business model:
Prompt Template
Explain [Company]'s business model like I'm 13. Cover: 1. How do they actually make money? (Not what they say they do - how does cash come in?) 2. What's their "unfair advantage" that competitors can't easily copy? 3. What could kill this business in 10 years? Be specific with numbers if you can find them.
Example: Using this for Epic Games
How they make money:
- Fortnite is free but makes ~$5B/year from skins and battle passes
- Unreal Engine is used by other game developers, and Epic takes a 5% royalty
- Epic Games Store takes only 12% vs. Steam's 30%, trying to steal market share
Unfair advantage: 400+ million registered players who already have the app installed
What could kill them: What if Fortnite stops being cool? (See: what happened to Angry Birds)
Dinner Table Discussion
"What's something our family owns that's worth more to us than we could sell it for? Why is that?"
This could be anything — a pet, old photos, a piece of furniture with memories attached. The point is to notice that "value" isn't always about money.
So What? The Investor Takeaway
Every time you hear a price, your investor brain should ask: "But what is it actually worth?"
- A stock trading at €100 might be worth €50 (overpriced) or €200 (underpriced)
- A "free" game might be worth $30 billion
- A €2,000 sneaker might be worth €30 in materials but priceless to the right buyer
Your job as an investor is to see through prices to find value. When you find something where price < value, you've found an opportunity.
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