Perhaps the best business is to manufacture nothing.

Whoever can put the right parties at the same table can share in the value without having to own the product.

For two years I have been writing about selling. Last year I began thinking about money as a product and about the possibility of taking part in the circulation of capital without necessarily owning the capital. Now I realize I was perhaps looking at those two things separately when, in fact, there is something between them.

Intermediation.

The word is not beautiful. Perhaps that is exactly why it is economically interesting.

We have a certain tendency to respect whoever produces and to distrust whoever stands in the middle. The factory is concrete. The intermediary looks like a fellow who shows up once the work is done, introduces one party to another, and walks off with a percentage. It is easy to see him as someone extracting value without producing anything.

Perhaps sometimes that is exactly it.

But I am beginning to suspect that description is lazy.

There are intermediaries who exist because the market has not yet found a way to eliminate them. Those are probably doomed. They charge merely because they control information that sooner or later everyone will know, or because some regulation artificially placed a gate in the path.

But there are others whose presence makes the transaction itself happen.

Without them, the two parties might never meet. Or meet too late. Or lack the trust to negotiate. Or be unable to assess each other. Or spend so much time searching that the operation stops being worthwhile.

In that case, the intermediary is not simply taking a slice of something that already existed.

He takes part in creating what will be divided.

That difference looks small only until you start looking for examples.

A piece of news from the last few days brought me back to that question. Google apparently tried to buy a company called Groupon for something between five and six billion dollars.

The company refused.

That alone would already be curious. The figure is absurd for a company created so recently. What interests me more, though, is trying to understand what exactly Google was willing to buy for a few billion dollars.

Groupon does not build the restaurants whose discounts it sells.

It does not cook the food.

It does not own the beauty salons.

It does not perform the treatments.

It does not build the hotels.

It does not manufacture the advertised products.

It does not even seem to depend on a technical invention impossible to copy.

What it has is something else.

People on one side.

Merchants on the other.

And a way of putting them in motion at the same time.

That may look less noble than manufacturing cars or building towers. But five or six billion dollars have the unpleasant ability to make discussions about nobility a little less interesting.

The market does not seem to pay a premium for physical effort, the weight of inventory, or the number of machines.

Sometimes it pays precisely for the elimination of those things.

Perhaps what is being valued in Groupon is distribution. Perhaps audience. Perhaps the relationship with merchants. Perhaps the ability to provoke demand quickly. It is probably a mixture of all of it.

I do not know the company well enough to claim more.

Nor do I know whether it is worth six billion. It would be ridiculous to conclude that every valuation offered is a precise description of value. Companies buy others for strategic reasons, make mistakes, compete for assets, and sometimes spend shareholders' money with a serenity they might not have using their own.

But the offer is real enough to make the question interesting.

How does a company that manufactures almost none of the products traded through it become so valuable?

Perhaps because producing is not the only way to create value.

Perhaps it is not always even the best.

When I started working in real estate, my view was naturally concentrated on the product. Land, design, location, construction, finish, price. A building is a concrete thing. There is something satisfying in looking at it and knowing it exists. Perhaps that is why physical businesses convey so much respectability.

You can photograph the factory.

You can touch the building.

You can count the inventory.

Relationships do not show up as well in a photograph.

Neither does distribution.

Trust even less.

But some of the most valuable assets seem to have exactly that characteristic: they cannot be seen easily, though they can disappear overnight and take a good part of the business with them.

A real estate broker seems to me a good example.

He may not own a square meter of what he sells.

Even so, he can earn more on a given transaction than someone who worked for months inside the construction site.

The first reaction is to consider that unfair.

The second, more useful one, is to ask why.

The worker was paid for the work agreed.

The broker was paid because the sale happened.

They are different risks.

One is paid for activity.

The other is paid for result.

If the property does not sell, part of the construction work was done anyway. The wages were paid, the material was used, the energy was consumed, the land is still tied up.

The broker can work for weeks and receive nothing.

That does not mean every commission is fair. It merely means that comparing amounts received without comparing what each person risked or made possible produces an analysis that is morally comfortable and economically useless.

Perhaps the salesman looks expensive precisely because his pay becomes visible at the moment the money appears.

Nobody looks with the same attention at all the costs absorbed before.

There is something similar in the financial market.

Last year I began thinking about selling money and about how someone could take part in that activity without owning a fortune. The most obvious answer is beginning to appear.

You can stand between whoever has the capital and whoever needs it.

That sounds simple to the point of being offensive.

But most good mechanisms look simple once understood. The difficulty lies in building the position, not in describing it.

If a company needs ten million and an investor has ten million available, someone could say the intermediary is unnecessary. Just put them in the same room.

But that sentence hides all the hard things.

How does the company find the investor?

How does the investor find the company?

How does he know the numbers are true?

How does the company know the capital really exists?

What is the price?

What is the tenor?

What collateral makes sense?

Who knows the alternatives?

Who knows whether the operation is being structured correctly?

Who can say that a given financier will never accept that risk and save two months of useless conversation?

Who knows that another institution has appetite for exactly that?

When you take all of it away, what remains is the fantasy of two people meeting spontaneously and arriving at the best possible solution because markets are efficient and everyone has enough information.

It is a wonderful theory, especially for someone who has never had to close an operation.

In real life, information is scattered.

Trust is scattered.

Capital is scattered.

So is need.

And perhaps an enormous part of the economy exists simply because someone can organize things that are scattered.

The good intermediary shortens distance.

The bad one merely occupies space.

I want to learn to tell the two apart.

There is a curious tendency to call every intermediary a parasite when his margin looks high. Perhaps it is resentment. Perhaps it is ignorance about the work. Perhaps in many cases it is a correct criticism.

But there is a question that settles a good part of the discussion:

would the operation have happened the same way, in the same time, with the same result, if he had not been there?

If the answer is yes, the intermediary is probably fragile. He is living off a temporary imperfection.

If the answer is no, he has a function.

It may even be a function that is hard to replace.

That brings me back to Groupon.

The restaurant can distribute its own coupon.

It does not need the company.

It can print thousands of pieces of paper, hire someone to hand them out, or advertise in a newspaper.

In theory, the intermediary is dispensable.

But there is a difference between being able to do something and being able to do it with the same efficiency.

Groupon gathers millions of people already predisposed to look at offers.

The merchant buys access to that attention.

The user receives offers.

Groupon sits in the middle.

The real product may not even be the discount.

Perhaps it is the concentration.

Concentration of buyers on one side and concentration of establishments interested in buyers on the other.

The larger one side, the more attractive it becomes to the other.

That creates an interesting dynamic.

An isolated restaurant cannot gather millions of consumers.

An isolated consumer cannot negotiate a collective discount with hundreds of companies.

The platform organizes both.

I do not know whether that model will last. It looks relatively easy to copy and there are already competitors. Perhaps the very success will attract so much competition that it destroys the advantage. That is one of the ironies of good businesses: when they become obviously good, they start becoming worse because everyone wants in.

Profit attracts its own predators.

But the mechanism stays interesting even if that particular company disappears.

Perhaps there are businesses in which owning the product matters less than owning the encounter.

That idea runs against much of what we normally associate with wealth.

We are taught to think the economically strong man is the one who owns things: properties, machines, land, inventory.

And there is certainly safety in ownership.

But ownership has weight.

The owner pays maintenance.

He pays taxes.

He runs the risk of depreciation.

He has capital tied up.

He can get stuck with the asset.

The intermediary, when his function is real, takes part in the movement without carrying the same weight.

He can earn on a house he did not buy.

On a cargo he did not transport.

On money he did not accumulate.

On a company he did not found.

That is a form of asymmetry that deserves attention.

The upside can be tied to the value of the transaction.

The capital required to take part can be far smaller.

It does not mean an absence of risk.

The risk merely takes another form.

Reputation.

Time.

Relationships.

Cost of acquisition.

Dependence on third parties.

Regulation.

The possibility of being cut out of the chain.

A company that builds a factory puts the risk in physical assets.

An intermediary puts a good part of the risk in relevance.

While he is useful, he earns.

When he stops being necessary, he can evaporate quickly.

Perhaps that is why good intermediaries need to accumulate something beyond commission.

They have to turn transactions into relationships.

A commission ends.

A relationship can generate the next operation.

That point is beginning to seem very important to me.

Whoever has only one opportunity has to find another once it ends.

Whoever has a network can discover new opportunities inside the network itself.

Perhaps networks are a kind of inventory that does not appear on the balance sheet.

A strange inventory, because it can increase in value the more it is used.

A merchant who knows ten suppliers and ten buyers has a hundred possible combinations, even though he owns no merchandise.

Add more suppliers, more buyers, more information about who keeps his promises, and the potential value grows in an unintuitive way.

I am not saying it is enough to collect business cards.

There are people who confuse knowing many people with having relationships.

They are different things.

An address book full of numbers that do not answer when you call is worth little.

A relationship is when there is some degree of trust, reciprocity, or recognized usefulness.

Perhaps a good network is measured not by how many people you can call, but by how many answer.

That difference seems particularly important in finance.

If someone needs to move a lot of money, he is not merely looking for information.

He is looking for trust.

A proper introduction from a trustworthy person can be worth more than a hundred cold contacts.

Then reputation and intermediation begin to feed each other.

You do a good operation.

The parties are satisfied.

One of them introduces you to another.

The next operation begins with less distrust.

If you keep delivering, the network thickens.

After a while, part of the work of searching disappears because opportunities start circulating through you.

That is very different from selling an isolated product.

You are not merely accumulating revenue.

You are accumulating position.

Perhaps position is a better word than network.

Network describes the connections.

Position describes the place you occupy inside them.

Two people can know exactly the same individuals and hold completely different positions.

One is sought out for important decisions.

The other is remembered only when someone needs to fill a dinner table.

The number of contacts is the same.

The relational capital is not.

I want to understand how that position is built without falling into the caricature of the fellow who spends his life "networking."

That expression bothers me.

It suggests a man walking through rooms handing out cards and silently calculating each person's usefulness.

Perhaps it works for some. To me it sounds cheap.

I prefer a simpler logic: be useful on real problems.

If someone can solve something difficult, people have a reason to remember him.

Usefulness creates the relationships that forced sociability tries to imitate.

Perhaps it is slower.

But it is probably more resistant.

There is another aspect of intermediation beginning to catch my attention: it produces transversal knowledge.

Whoever works inside a single company knows that company deeply.

Whoever stands between several companies begins to see patterns.

A broker who takes part in a hundred negotiations may notice something the buyer, who will make three property purchases in his life, will never see.

Not because he is smarter.

Because he has more observations.

Experience is not automatic wisdom. A person can repeat the same mistake for thirty years and call it experience. But exposure to many operations at least creates the possibility of comparison.

Whoever has seen twenty similar deals can notice when the twenty-first looks odd.

That has value.

Perhaps part of the intermediary's commission pays precisely for a track record the client cannot buy instantly.

In the financial market that must be even more important.

A company seeks credit a few times.

An institution analyzes dozens or hundreds of operations.

An intermediary who circulates between both can learn which structures work, which institutions have appetite for which risks, which stories repeat before a default, and which requirements are merely a given creditor's bureaucracy.

That turns information into judgment.

And judgment can be a far bigger advantage than raw information.

Information is becoming easier and easier to find.

Judgment remains expensive.

The internet may widen that difference even further.

Many people believe more information eliminates intermediaries. In some cases it certainly does.

Travel agencies seem to be an example. Before, you needed someone to find a ticket, check availability, and organize information the ordinary client did not have. Now part of that work can be done directly.

The intermediary whose advantage was hiding information suffers.

But another form of intermediation may emerge.

When information becomes abundant, the problem stops being finding it and becomes filtering it.

A thousand options can be worse than five good ones.

The intermediary changes function.

From owner of the information to selector.

That should serve as a warning to anyone who lives off charging because he knows something secret.

Secrets get cheap when technology learns to distribute them.

Judgment, trust, and responsibility may age better.

It is curious to think about that precisely while looking at companies like Google and Groupon.

The internet was presented for years as a force capable of eliminating intermediaries.

And now some of the most valuable companies on the internet appear to be gigantic intermediaries.

Google sits between whoever searches and whoever wants to be found.

Groupon sits between merchant and consumer.

eBay sits between buyer and seller.

The companies changed.

The middle stayed.

Perhaps technology does not eliminate intermediation.

It eliminates bad intermediaries and creates far larger ones.

That is an important distinction.

When a local middleman is removed and a worldwide platform takes his place, there was not necessarily disintermediation.

There was concentration of the intermediation.

Perhaps the word "platform" is merely a more modern and respectable way of saying "intermediary that achieved scale."

There is something slightly comic in that.

We call the small broker a middleman.

We call the billion-dollar company a platform.

The mechanism can be similar.

The difference lies in the size of the road.

That is probably one of the reasons distribution has interested me since 2008.

The business is not merely taking part in a transaction.

It is building a place transactions start coming to.

There is an enormous difference between seeking each buyer individually and owning a channel where buyers show up.

The first activity is selling.

The second starts to look like infrastructure.

A person who sells a hundred units made a hundred efforts.

A person who builds a market where hundreds of people buy and sell created a machine.

Perhaps that is a way of thinking about business more ambitiously.

Not merely asking "how do I make a sale?"

Asking "how do I build a place in which sales happen?"

I am still very far from knowing how to do that.

But the question changes everything.

An excellent salesman is still limited by his own time.

A distribution structure can operate while he sleeps.

A well-built network can expand someone's capacity without requiring his presence to grow in the same proportion.

That is true leverage.

Not merely working faster.

Separating result from presence.

I am starting to see that wealth seems to depend heavily on that separation.

As long as every real requires another hour of mine, there is a ceiling.

I can make my hour more expensive.

I can work more.

I can get better.

But the day still has twenty-four hours, an inconvenient limitation that motivational speeches have not yet managed to abolish.

Some mechanism is needed to decouple the production of income from the individual clock.

Capital does that.

Ownership does that.

Distribution does that.

Systems do that.

Perhaps intermediation, when structured correctly, does too.

That brings my thinking back to money.

Last year I was asking how someone could sell money without owning the money.

Now the answer looks a little less foggy.

Perhaps by starting with control of the path.

Not "control" in the sense of preventing others from passing. That would be a fragile advantage and probably illegal in many cases.

Control in the sense of being the person who knows the map.

Who has capital.

Who needs it.

Who accepts which risk.

Who wants which tenor.

Who has which collateral.

Who should not be put at the same table because they will never agree.

Who looks incompatible but could negotiate if the structure changed.

That does not necessarily require being a bank.

It requires being close enough to both sides.

Perhaps there is a profession there.

Or a business.

I do not know yet.

I do not want to name it too early.

There is a dangerous habit of naming an ambition before understanding it. Then the person starts defending the name instead of continuing to investigate the problem.

I prefer to keep the questions.

One of them is this: if the intermediary does not own the product, what exactly does he own?

In the weakest case, only information.

In a better case, relationships.

In a still better case, trust.

Perhaps in the best of all, process.

If someone depends merely on knowing a person another does not know, he is vulnerable. After the introduction, he can be discarded.

If he can organize the negotiation, structure the terms, reduce the risk, and make repeatable what was previously improvised, he already has something harder to remove.

Perhaps that is the path from brokerage to infrastructure.

The broker builds the bridge.

Infrastructure makes the bridge permanent.

I do not know why that idea strikes me as important, but it does.

Probably because it solves an obvious fragility of intermediation.

If your income depends on being personally present in every transaction, you merely traded a job for commissions.

You may earn more, but you are still the bottleneck.

If, on the contrary, you learn to turn knowledge into method, method into process, and process into a structure other people can use, something changes.

Income can start growing faster than your presence.

Perhaps I am over-sophisticating a simple idea.

Maybe.

But I prefer that mistake to the opposite: reducing everything to "work harder" and discovering at fifty that I worked four times as much to earn three times as much.

Effort without a multiplier is a socially admired prison.

People admire the exhausted man.

They rarely ask whether the exhaustion was necessary.

Perhaps one of the biggest advantages of learning about business early is losing respect for difficulty itself.

Hard does not mean valuable.

Sometimes hard merely means badly designed.

There are companies that seem proud of their own complexity. Many employees, many stages, many controls, much work. As though operational suffering were proof of importance.

Perhaps it is the opposite.

A genuinely good structure eliminates work that should not exist.

A good intermediary should do that too.

If his presence adds ten meetings, twenty documents, and three weeks to an operation, he may be destroying value and calling it service.

If he cuts ten meetings to two, organizes the documents, and brings the right parties together, his commission may be cheap even if it looks large.

Price should be compared to the problem avoided, not to the number of hours spent.

That is especially important for services.

There is a temptation to charge in proportion to effort because effort is easy to measure.

But the client should not want your effort.

He should want the result.

If I can solve in one hour what another person would take a hundred hours to solve, it would be absurd to charge less because I was better.

The market frequently penalizes whoever sells time for exactly that reason.

The more efficient he becomes, the fewer hours he can bill.

It is an almost comic incentive structure.

Perhaps the best businesses are those in which being better increases your pay instead of reducing it.

A commission per transaction can do that.

Equity can do that.

A share of value created can do that.

Once again I come back to position.

The form of compensation changes behavior.

Whoever is paid by the hour gains when the problem drags on.

Whoever is paid to close gains when the problem ends.

Whoever earns a percentage may prefer larger transactions.

Whoever puts up his own money cares more about downside.

It is not necessary to accuse anyone of dishonesty to predict behavior.

It is enough to look at what rewards each choice.

Perhaps I am beginning to see that a large part of economic life is better explained by incentives than by intentions.

People like to talk about intention because intention is beautiful and impossible to audit.

Incentives leave traces.

A manager can say he takes care of the client.

If his pay depends on selling a certain product, it is not prudent to ignore that information.

A broker can say a given property is the best opportunity.

If he is paid only on that property, it is worth understanding the structure.

A bank can recommend an operation.

It is worth knowing how it is paid.

None of that proves bad faith.

It merely prevents naivety.

I want to learn to always look at who has exposure to the result.

Who gains if it works?

Who loses if it fails?

Those two questions are probably worth more than many presentations.

I also want to apply them to myself.

If someday I am intermediating an operation, what incentive do I want to create?

Being paid merely to introduce may be comfortable, but it may encourage quantity.

Being paid when it closes brings my pay closer to the result, but it can create the urge to close a bad operation.

If part of the reputation depends on what happens afterward, perhaps there is a better brake.

It seems there is no perfect structure.

Only structures in which the defects are more visible.

Perhaps financial maturity is abandoning the search for the absence of conflict and learning to design tolerable conflicts.

There is always someone wanting a higher price and someone wanting to pay less.

Someone wanting a long tenor and someone wanting to be paid early.

Someone wanting risk and someone wanting protection.

The market does not eliminate those conflicts.

It organizes a way of negotiating them.

The intermediary stands exactly at the center of those forces.

Perhaps that is why he can be so well paid when he is good.

And so hated when he is bad.

He charges for resolving tension.

If he merely increases the tension, he becomes disposable.

I come back to Groupon because the episode is useful as a warning too.

Refusing five or six billion dollars is an extraordinary decision. Perhaps it is brilliant. Perhaps it is a historic stupidity. Today nobody knows.

That uncertainty interests me more than the headline.

When someone offers billions for a young company, everyone starts treating the valuation as reality.

It is not.

It is a proposal.

A valuation only becomes real money for whoever can realize some part of it.

There is a difference between "my company is worth six billion" and "someone transferred six billion to me."

Paper accepts any wealth.

Liquidity is less polite.

Perhaps that is a principle to keep: do not confuse an indicated price with realized wealth.

A businessman can hold a theoretically valuable stake and still be unable to pay a bill without selling something.

A property can be appraised in the millions and take years to find a buyer.

A company can look extraordinarily rich on paper and need cash tomorrow.

Value and liquidity are relatives, not twins.

That will probably matter more and more if I stay interested in finance.

Money has a characteristic other assets do not have to the same degree: it ends discussions.

A property "is worth" what someone believes until the moment it has to be sold.

A company "is worth" a certain multiple until it has to raise money on bad terms.

A portfolio "is worth" a certain price until everyone tries to leave at once.

Money is already the exit.

Perhaps that is why whoever controls liquidity holds disproportionate power in moments of difficulty.

When everything is fine, assets look like power.

When everyone has to sell at once, cash becomes power.

That kind of asymmetry interests me.

Not for the pleasure of seeing others in difficulty. That would be moral idiocy and also economic idiocy.

It interests me because it reveals that the value of a position changes with the environment.

What looks unproductive in normal times can become precious when the scenario changes.

The man who keeps liquidity looks conservative during the euphoria.

Then he buys assets from whoever discovered too late that illiquid wealth does not pay an immediate obligation.

The intermediary with strong relationships looks unnecessary when capital is abundant.

Then he becomes valuable when nobody knows whom to call.

Many advantages only appear when conditions worsen.

Perhaps that is a good definition of robustness: owning something whose relative value increases when the environment stops cooperating.

I still do not know how to build a career that way.

But I know I do not want to depend exclusively on favorable conditions.

If someone earns only when everything is perfect, he probably did not build a business. He built a disguised bet.

Likewise, if a profession depends on holding information that technology is making public, it is prudent to look for the next layer of value before the market does it for you.

Perhaps that is the larger lesson of intermediation.

Never fall in love with your current position.

The intermediary should always be asking why he is still necessary.

It is an uncomfortable question.

That is why it is a good one.

If the answer is "because the client does not know how to do it himself," perhaps tomorrow he will.

If it is "because I have exclusive access," perhaps tomorrow that access will be opened.

If it is "because the law requires it," perhaps the law will change.

If it is "because I reduce risk, save time, have judgment, and can make the parties trust each other," there is a stronger defense.

Even so, nothing is permanent.

The person who thinks he has found an eternal toll eventually meets someone willing to build a road alongside.

There is no vested right to profit.

There is only renewed usefulness.

That idea pleases me because it reduces arrogance.

The market owes nothing to whoever was useful yesterday.

It has to be convinced again.

Perhaps that is why selling keeps appearing behind everything I am trying to understand.

Even the intermediary has to sell his relevance.

Even a platform has to sell access.

Even a bank has to convince depositors, investors, or borrowers.

Even a dominant company has to keep offering a reason for people to stay.

Selling did not disappear.

It merely changed level.

In 2008 I thought of it as an individual skill.

In 2009 I began thinking about the object of the sale.

Now I am starting to see that it may be possible to turn the very ability to connect supply and demand into a product.

That appears to be intermediation.

And perhaps the next step is discovering how to turn intermediation into something less dependent on individual presence.

I do not yet know how.

Perhaps it is not necessary to know.

There is a common defect in long-term plans: they give psychological comfort at the cost of presuming a world that does not yet exist.

I am twenty.

Anyone who tells me exactly where I will be fifteen years from now is selling fiction, even if that person is me.

I prefer direction to script.

The direction beginning to appear is quite simple.

I want to understand selling.

I want to understand capital.

I want to understand the space between the parties of a transaction.

And I want to find out where someone's presence can produce a result larger than the capital that person had to put up.

That last sentence may be the most important.

Almost all large wealth seems to involve some form of leverage.

Not necessarily debt.

Leverage in the sense of controlling a result larger than the resource of your own that is employed.

A businessman uses other people's work.

A brand uses accumulated reputation.

A company uses systems.

An investor uses capital.

A distributor uses a network.

An intermediary uses relationships and information.

None of those things is free.

The question is which kind of leverage fits best with what I want to build.

I do not yet have enough capital for capital to be my main advantage.

I do not own a factory.

I have no special interest in spending my life managing inventory.

Perhaps relationships, selling, and judgment are more accessible assets to start with.

Not accessible in the sense of easy.

Merely not requiring millions of reais before the first attempt.

It is possible to start small.

One relationship.

One sale.

One negotiation.

One operation.

Then another.

Learning from what actually happened, not from what should have happened according to some book.

Perhaps it is a slower education.

But reality has a quality teachers rarely manage to reproduce: it charges for mistakes.

When an academic hypothesis is wrong, you get a bad grade.

When a business hypothesis is wrong, you lose money.

Pain improves memory.

Perhaps that is why I prefer to learn some things in real operations, provided the size of the mistakes is small enough to survive.

That is probably another rule worth keeping.

Do not avoid mistakes.

Avoid terminal mistakes.

Whoever has to be right every time to stay alive started with a bad structure.

It is better to be able to be wrong ten times cheaply and discover something than to put everything into a single elegant certainty.

Perhaps that applies to professional choices too.

I do not need to decide today what my definitive activity will be.

I need to choose positions that increase what I can learn and preserve future options.

Selling does that.

Intermediation may do even more.

Whoever circulates among companies, clients, investors, and operations sees different pieces of the economy.

He can discover later where he holds a real advantage.

That is better than deciding too early that you belong to a specific industry and spending twenty years defending an identity built before you knew the alternatives.

Identity is another form of illiquidity.

When someone invests too much in appearing to be a certain thing, he starts refusing opportunities that threaten the narrative.

I do not want that.

I want to be able to change products without having to rebuild the ability to produce income from scratch.

That may be the deepest reason intermediation is interesting me.

The product can change.

The position between whoever has and whoever wants remains.

Today it may be property.

Tomorrow it may be capital.

Then something else.

If the skill lies in understanding both sides, organizing information, creating trust, and making the transaction happen, the object can change without destroying everything that was learned.

It is a form of optionality.

Perhaps that word is too sophisticated for something quite simple: I want more paths than obligations.

Whoever owns an entire factory built for a specific product earns a great deal if that product remains wanted.

But he is exposed if the world changes.

Whoever owns a network capable of distributing different products may earn less per unit but be able to adapt.

I do not know which structure is better in absolute terms.

Probably neither.

Each wins under different conditions.

The mistake would be to choose one without understanding which risk is being accepted.

This is where the week's news becomes useful again.

Groupon does not have to be right to teach me something.

It can refuse the billions and later be worth much more.

It can refuse and disappear.

Those are questions for the future.

The relevant fact today is that someone is willing to pay billions for a machine that organizes economic encounters.

That is enough to destroy the idea that only whoever manufactures something physical produces serious value.

Perhaps some of the most powerful companies of the future will be precisely those that manufacture fewer things and organize more relationships.

I do not know.

But I want to watch.

And if that is correct, perhaps the best business is not to manufacture the product.

Perhaps it is to build the place the product has to pass through.

There is an important difference between owning merchandise and owning a market.

The merchandise has to be sold.

The market is where others come to sell.

I cannot imagine a much more interesting position.

Nor can I imagine a position that attracts more competition if the margins are good.

So it is not a magic formula.

There are no magic formulas. Only people who have not yet discovered the risk hidden inside the formula.

But there is a mechanism.

And mechanisms deserve study.

Two years ago I wanted to learn to sell.

Last year I began asking how one sells money.

Now I add a third question:

what if I do not have to own what I sell?

Perhaps this is where the two investigations meet.

If I can build trust between whoever has and whoever needs, I can take part in an operation without carrying the whole asset on my own balance sheet.

If I can repeat that, perhaps there is a business.

If I can turn the repetition into method, perhaps there is a company.

If one day it becomes possible to turn that method into a place where many other people can do the same, then perhaps there is something much larger.

But that last part is still speculation.

I prefer not to run ahead of what I understand.

For now, the discovery is more modest.

Ownership and economic control are not the same thing.

Whoever owns the product has power.

So does whoever owns the client.

Whoever owns information may have it.

Whoever owns trust may have even more.

And whoever can organize the encounter among all those things may be able to share in values far larger than what he had to own.

That changes the way I think about getting rich.

Perhaps the question "what should I buy?" comes too late.

Before it there is:

"What position should I build?"

It is possible to own a lot and occupy a bad position.

It is possible to own little and occupy an excellent one.

The first looks rich until he needs liquidity.

The second looks small until a large transaction has to pass through him.

I want to learn to recognize that difference.

I have no intention of romanticizing intermediaries.

Perhaps most are perfectly replaceable.

Perhaps many make money merely because a given industry is still inefficient.

But that does not diminish the importance of the mechanism.

It merely makes selection more necessary.

If I ever choose to work in the middle, I will have to deserve the middle.

I will have to make the operation better by my presence.

Faster.

Safer.

More likely.

More understandable.

Better structured.

Otherwise I will merely be waiting for someone to realize he can remove me.

That does not look like a good way to build a life.

A good position has to survive the question:

"Why do we need you?"

I want someday to be able to answer without mentioning a title, a position, or a tradition.

Because I can make this happen better than it would happen without me.

Perhaps that is enough.

The future will say whether the intuition is any good.

For now I keep the question.

Perhaps the best business is to manufacture nothing.

Perhaps it is to manufacture encounters.

Leo Bentier