Passion, Profit, and Value
Here’s a simple model I’ve been using lately to help some friends think about the infamous passion vs profit question. I actually like to think of it as a passion AND profit … and value question. It really is a simple model, but it helps highlight a couple of key points. For one thing, the saying do what you love, and the money will follow, is misleading. I have a passion for driving my Jeep with the top down on sunny days, playing my favorite songs. It doesn’t create much value, except for me, and I don’t expect to make a profit. Some things really are just for fun.
Sweet Spot – The Intersection of Passion, Profit, and Value
Passion, profit, and value is the key to sustainable results:
- Passion. Your passion is your fuel for making things happen. In today’s skill-for-hire economy, one of your most important assets is your passion. It’s you’re staying power, and your get up and go, especially when you get knocked down. It’s how you get up again. Passion is also a proxy for your values, strengths, and purpose. Strengths can be skills, but in this case, I’m also thinking about your natural strengths … the stuff that comes easy for you, but might be tough for others. We tend to love what we’re awesome at, and, our passion tends to help us get awesome to begin with.
- Profit. This is about how much you can make. Just because you create tons of value, doesn’t mean you can make a profit, especially in an economy where free is the new price, and your competition gives away what you try to sell. How do you know what’s making a profit? You ask. This is where your network comes in. Also, your friendly neighborhood accountant might be the perfect source for knowing what’s making money, and what’s not.
- Value. The idea here is that if you’re creating value, you have a better chance of getting rewarded. Value is in the eye of the beholder. This means staying aware of what the market values and knowing that the market doesn’t always drive the right thing. This also means being aware of intrinsic vs. market value. Intrinsic value is what something is really worth, while market value is what people are willing to pay, which could be wildly inflated. Personally, I like to optimize around providing value for basic needs, and I’m cautious when market value and intrinsic value are out of whack … market corrections can be painful.
To give you an example of the passion, profit and value intersection, I have a passion for making others great. There’s a certain market value to that. I already do it for free, but if I wanted to profit from it, I would take on certain clients. For example, if Obama wanted me for his results coach, I’d give him my special presidential discount, but I would still expect to profit from the value I create. OK, fine, I’d do it for free, so it’s not a great example.
Cutting Questions
Here are some cutting questions to help find and test your paths …
- What would you do for free?
- What’s the minimum you need to make?
- What’s your minimum and ideal life style?
- How much do you need to fund your ideal life style?
- Who has the job that you want that you can model from?
Getting Results
Some guidelines for results …
- Find the intersections of your passion, profit, and value.
- Passion, profit and value are sliding scales … this gives you a lot of flexibility as well as trade-offs.
- If you’re creating all value, and no profit, that’s a charity, and that won’t pay your bills.
- If you’re playing to your passion, but creating no value, that’s a hobby.
- If you do what you hate, you’ll suck your life force dry.
- Find the job you love, or love the job your with.
- You can love the job you’re with, by changing your why or changing your how.
- Some hobbies can be turned into profit, if they create value.
- Sometimes the key to unleashing your profit potential, is simply finding the right channel or platform.
- Be careful what you get paid for, because if you externalize your reward, you can kill your passion.
- Knowing the market demand and the profit potential can help you follow the money.
- Money is a means, not an end. When you’re below the line, it means everything. Once you’re above the line, happiness is doing what you love and service to others … you know, the stuff Maslow taught us.
One important point here is that life’s not static and neither is the market. One strategy is to follow the growth. This includes following the growth in the market (think biotech, green, … etc.) as well as following paths that lead to your own personal growth. It’s one way to keep the skills that pay the bills.
Nice list. I’m going to brainstorm new ideas for businesses, and this list will be useful to me.
Hi JD,
I loved the last line!
This subject has been on my mind a lot and you provided some interesting points. Thank you!
“Find the job you love, or love the job your with.”
That one really grabbed me – the second part of it. A lot of times we have to adjust our attitude to make the best of what we have. It’s all inside, eh?
Passion, profit, and value are so related and I’ve never really realized it until reading this post. As always, I love the way you’ve laid it out here. It’s easy to read, which means easy to learn! Like Jannie, this really jumped out at me: “Find the job you love, or love the job your with.” It’s so true!
@ Oscar
I highly recommend checking out the E-Myth. I have some book nuggets you can scroll through on the sidebar. The E-Myth is the Enreprenurial Myth and it’s a great model for thinking about how to design your business as a system and how to deal with your multiple hats — the entrepreneur, the manager, and the technician.
@ Nadia
Thank you. I see too many people get the short end of the stick and what they don’t know can hurt them. I’m a big believer in following your passion, but I also know that value and profit are the secret sauce that makes it sustainable for the long haul when it comes to funding your life.
@ Jannie
Too true. I constantly re-invent my job and I re-invent myself in the process. It’s like you drive or you get driven.
@ Positively Present
Thank you. While I didn’t entirely connect all the dots, I thought that as long a the visual is simple and folks can remember to think passion, profit, and value, then they’re in good shape.
Good warning for being careful for what you are paid for…
[...] Passion, Profit, and Value – Sources of Insight [...]
This is what I thought. Time is going to be in value. Always. You cannot give time for free, right? Said that, being a consultant who passionate to produce value for his customers while saving time…. i think i found my sweet spot, eh?
@ Alik
Time is your most valuable resource.
Getting paid for time you put in, is more of an industrial age construct. Getting paid for value is more of a knowledge worker concept. The more effective you are with your time, the more you can compete on speed, or drive more value for a lower cost. In fact, innovating in your process is key or you can end up priced out of the market.
Thank you for suggesting the E-myth JD.
There has been a related post on “what consumes me”: how to be happy in business – venn diagram
This is powerful stuff. All obvious once you think about it, but brilliant to write up in a clear analysis.
@ Rob
I like it. There’s a lot of power in sharing mental models.
[...] Passion, Profit, and Value Inspirational. Some points worth contemplating. [...]
Hi J.D.
A great tool and simple to understand. I love this one.
This post hit the sweet spot!
Great job, thanks for sharing.
Giovanna Garcia
Imperfecct Action is better than No Action
@ Giovanna
Thank you! I hope it helps people realize that making a living is more than just passion, but that you shouldn’t sacrifice your passion in the process. Instead, find the blend or the angle that combines passion, profit and value. In a changing world, you can continuously find ways to blend these 3.
Profit and value are same at some cases, they are all what we want to get, they are our goal.
[...] Passion, Profit, and Value – Sources of Insight [...]
I’m Interested in your thoughts.. Does 37signals or E-myth have the right philosophy for business start-ups today? http://www.purlem.com/blog/?p=38
[...] Passion, Profit, and Value – Sources of Insight [...]
this is a really an eye opening guide,which cannot be under estimated,the PPV is a revolving word.
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