The Value of Time → ∞
Jack Groetzinger on the value of time:
The rate at which you value your time value your time is not static; it’s constantly changing. If I’m stuck on a plane with no internet, the rate at which I’m creating value for SeatGeek is low. On the other hand, suppose it’s 3am in the morning and I’m feverishly working on a presentation for a massive client. The presentation will take place in five hours. Here, the rate at which I’m creating value quite high. If two hours magically disappeared from the clock, it could destroy a meaningful amount of SeatGeek’s enterprise value. So I feel justified in, say, asking my girlfriend to get me a Diet Coke so that I don’t have to break my concentration (thankfully she’s an economics student, so she understands).
However, there’s another important note:
The rate at which someone creates value for a company (and thus should value their time, from the perspective of the company) isn’t the same as their wage. In theory, calculating the value of someone’s time is simple: if Bob went into a trance and didn’t work for an hour, how would the company’s DCF of earnings change? The drivers for wage are more complex, but are nicely captured by VORP. In baseball, VORP is a statistic that identifies the incremental value Player A creates vis-à-vis the player that would replace him in the lineup if Player A got injured. If a Player A has low VORP then his team is close to indifferent about keeping him around; he will be paid a relatively low wage.
There are people who create tremendous value but have low VORP.
Sometimes, mindless penny-pinching isn’t always the most efficient and economical use of time.